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INTERNATIONAL MULTI LEASING CORPORATION LIMITED
Annual Reports 2003
CONTENTS
CORPORATE INFORMATION 
NOTICE OF ANNUAL GENERAL MEETING
DIRECTORS'REPORT
PATTERN OF SHAREHOLDING AS AT JUNE 30, 2003-
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE
AUDITORS' REPORT TO THE MEMBERS.
BALANCE SHEET AS AT JUNE 30, 2003
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2003-
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2003-
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2003
NOTES TO THE ACCOUNTS
BOARD OF DIRECTORS
1.    Mr. Agha Fasih-ud-Din Khan Director
2.    Mr. Muhammad Yaqoob Director
3.    Mr. Muhammad Sarwar Sh. Director
4.    Mr. Sh. Nadeem Naeem Director
5.    Mrs. Ayesha Begum Director
6.    Mrs. Ruby Anwar Director
7.    Mr. Kamal Khan Chief Executive
COMPANY SECRETARY
Muhammad Azhar Siddique
AUDITORS
M/s. Avais, Hyder, Zaman, Rizwani
Chartered Accountants
BANKERS
Habib Bank AG Zurich
LEGAL ADVISOR
Irfan & Irfan
Attorney at Law
REGISTRARS & SHARE TRANSFER OFFICE
Software (Pvt.) Limited
5/79 Usman Block
New Garden Town, Lahore.
Ph: 042-5865795
REGISTERED AND HEAD OFFICE
T-02(B), 3rd Floor, Rehman Business Centre
32/B-3, Gulberg-lll, Lahore
Tel : (042) 5877331-2 Fax: (042) 5873350
KARACHI OFFICE
1106-111 OKashif Centre,
Shahrah-e-Faisal, Karachi.
Tel:  (021)5662054
Fax:(021)5683010
NOTICE OF THE ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT 13th Annual General Meeting of International Multi Leasing
Corporation Limited will be held on Saturday September 13, 2003 at 10.00 a.m. at its Registered
Office, T-02(B), 3rd Floor, Rehman Business Centre, 32/B-3, Gulberg III, Lahore, to transact the
following business:
1.       To confirm the minutes of the Extra Ordinary General Meeting of the company which was
held on February 21,2003.
2.       To receive, consider and adopt the Audited Accounts for the year ended June
30,2003, together with Directors' and Auditors' Reports thereon,
3.        To appoint auditors and fix their remuneration. The present auditors M/s. Avals Hyder
Zaman Rizwani, Chartered Accountants, retire and being eligible offer themselves for
re-appointment.
4.       To elect seven (7) directors as fixed by the Board of Directors in the meeting held on
August 8, 2003 for a period of 3 years commencing from October 21, 2003 in
accordance with Section 178 of the Companies Ordinance, 1984.
Th following directors shall retire on October 20, 2003 in accordance with the
requirement of Section 180(1) of the Companies Ordinance, 1984:
The retiring Directors are eligible for re-election.
5.        To transact any other business with the permission of the Chair.
Lahore                                                                            By order of the Board
August 23, 2003                                                             Muhammad Azhar Siddique
Company Secretary
NOTE:
1.        The Register of Members of the company will remain closed from September 7, 2003 to
September 13,2003 (both days inclusive)
2.        A member eligible to attend and vote at the meeting may appoint another member as
his/her proxy to attend and vote instead of him/her. Proxies in order to be effective must
be received by the Company at the Registered Office not less than 48 hours before the
time for holding the meeting.
3.        The beneficial owner of shares recorded at Central Depository Company of Pakistan
Limited (CDCP) are required to bring their National Identity Cards and in case of
institutions being the beneficial owner, notarially certified copy of the power of attorney or
other authority, together with the proof of identity of such nominee, is required for
admittance to the meeting of the members.
4.        Shareholders are requested to notify the change of address, if any, to our Registrars,
M/s. Software (Pvt) Limited 5/79 - Usman Block, New Garden Town, Lahore. Telephone
No. 5865794-5.
1. Mr. Agha Fasih-ud-Din Khan 2. Mr. Muhammad SarwarSh.
3. Mr. Muhammad Yaqoob 4. Mrs. Ayesha Begum
5. Mrs. Ruby Anwar 6. Sh. Nadeem Naeem
7. Mr. Kamal Khan
Directors Report
The Directors are pleased to present their 13th Annual Report together with the
Audited Accounts of INTERNATIONAL MULTI LEASING CORPORATION LIMI1
for the year ended June 30, 2003.
Financial Results (Rs.)
Income from Operations 8,262,453
Expenditure
Administrative and operating expenses 10,220,240
Financial Charges 242,773
10,463,013
Operating Loss -2,200,560
Provisions for potential lease losses 12,048.94
Profit before tax 9,848,383
Taxation 9,268,141
Profit after tax 580,242
Un-appropriated Profit Brought Forward 17,906,205
Profit available for Appropriations 18,486,447
Appropriations:
Transfer to Capital Reserve - Statutory Reserve 116,048
Un-appropriated profit Carried Forward 18,370,399
Operating Results
Your company has reported an after tax profit of Rs. 0.580 million for the financial year
ended June 30, 2003, as compared to a aftertax loss of Rs. 5.31 million for the year ended
on June 30, 2002. The prime factor for the aforesaid profit figures is adjustment of
provisions against now settled/rescheduled earlier stuckup cases.
In the face of drastically falling return rates all around we made full efforts to improve upon
seetjfjn-g* jwefttebte teases, staff strength was
trimmed and more effective controls were exercised to control and reduce expenditure
under various heads. Inspite of these efforts desired results could not be achieved owing
to our company being dragged in courts by Calcorp forforced amalgamation with them.
Significant Event
During last quarter of the year your company suffered business restrains due to negative
propaganda by Calcorp through press and public. Your company's bank accounts were
unilaterally, unjustifiably and illegally got frozen.
Immediately after amalgamation order of March 4, 2003 a number of our shareholders
brought to our notice that besides other irregularities the net value of the Calcorp was
below Rs. 4.0 per share vis-a-vis Rs. 1 3.07 breakup value claimed by them while inducing
us for a swap ratio of 1 to 1. We, therefore, filed suit in the Lahore High Court that since
the amalgamation order has been obtained based on misrepresentation and
concealment, therefore, the same should be set aside. Our application for setting aside
the merger order is before Honourable Lahore High Court and the next date of hearing is
September 16,2003.
Economy
The economy of the country had long been under pressure. However, a growth rate of
4.6 percent of GDP was reported for the year ended June 30, 2003 as compared to 3.60
percent for the year ended June 30, 2002. The foreign debts had come down to $ 36
billion as compared to $ 38 billion. The liquidity position became better with the gradual
increase in foreign exchange reserves which are now around $ 10.70 billion. Foreign
direct and portfolio investments are expected to improve in light of upgrading of credit
rating of the country.
Statement in Compliance of Code of Corporate Governance
The Board of Directors state that:
•        The financial statements of the company annexed to this report, present fairly its
state of affairs, the result of its operations, cash flows and changes in equity;
•        Proper books of account of the company have been maintained;
•        Appropriate accounting policies have been consistently applied in preparation
of financial statements and accounting estimates are based on reasonable
and prudent judgment;
•         International Accounting Standards, as applicable in Pakistan and relevant
directives from the regulatory authority have been followed in preparation of
financial statements and any departure there from has been adequately
disclosed;
•        The system of internal control is sound in design and has been effectively
implemented and monitored;
•        There are no significant doubts upon the company's ability to continue as a going
concern;
•        There has been no material departure from the best practices of corporate
governance, as detailed in the listing regulations and;
•        Key operating and financial data is annexed to this report.
Audit Committee
The Board of Directors in compliance with the Code of Corporate Governance has
established an Audit Committee Consisting of the following directors;
1.        Mr. Agha Fasih-ud-Din Khan Chairman
2.        Mr. Muhammad Sarwar Sheikh Member
3.        Mr. Muhammad Yaqoob Member
Meetings of the Board of Directors
During the year under review ten meetings of the board of directors of the company were held.
Mr. Agha Fasih-ud-Din Khan attended all these meetings while M/s. Muhammad Sarwar Sheikh
and Muhammad Yaqoob attended 9 meetings. The number of meetings attended by other
directors are written against their names.
•          Mr. Arshad Al'a Syed retired as IML director in April 2003 and to fill this vacancy   Sh.
Nadeem Naeem was appointed as director.
•          Mr. Kamal Khan 7
.         Mr. Arshad Al'a Syed 5
•          Mr. Muhammad Rafiq 2
•          Sh. Nadeem Naeem 1
Mrs. Ruby Anwar, a director of the company, remained abroad for the whole year. Mrs. Ayesha
Begum, a director of the company did not attend any meeting, however, both these directors
were granted leave of absence.
Value of Investment of Provident Fund and Gratuity Fund
The company is operating fund based provident fund and gratuity schemes. Both these
schemes are recognized by the income tax authorities. The members balance in these
schemes as at June 30,2003 in accordance with their audited accounts were as under:
Rs.
Provident Fund 230,584
Gratuity Fund 105,905
Outstanding Statutory Payments
There is no outstanding statutory payment due on account of taxes, duties, levies and
charges except for routine nature.
Auditors
The present auditors, M/s. Avais Hyder Zaman Rizwani, Chartered Accountants, retire and
being eligible, offer themselves for reappointment.
Pattern of Shareholdings
The pattern of shareholdings as on June 30, 2003 is enclosed in the Annual Report.
Acknowledgment
Your management wishes to place on record its appreciation for the guidance provided by the
Securities & Exchange Commission of Pakistan. The management and staff members are
continuously playing their role for the growth of your company, which is highly appreciable and
commendable.
On behalf of the Board
Lahore
August 22, 2003                                                                                                 Chief Executive
KEY OPERATING AND FINANCIAL DATA
BALANCE SHEET 1997 1998 1999 2000 2001 2002
Equity
Share Capital 50 54 54 54 54 54
Reserve & Retained Earnings 24.05 25.63 27.45 31.97 32.63 27.32
Total Equity 74.05 79.63 81.45 85.97 86.63 81.32
Liabilities
Long Term & Deferred Liabilities 13.7 16.97 16.74 17.1 15.13 13.83
Current Liabilities 30.12 35.67 45.5 31.04 28.95 14.14
Total Liabilities 117.87 132.27 143.69 134.11 130.71 109.29
Assets
Tangible Fixed Assets 1.91 2.1 2.1 1.65 2.49 2.09
Net Investment in Lease Finance 57.45 64.76 71.41 59.85 42.07 22.48
Other Long Term Assets 1.54 1.42 2.05 1.96 2.45 11.39
Current Assets 56.97 63.99 68.13 70.65 83.7 73.32
Total Assets 117.87 132.27 143.69 134.11 130.71 109.29
Significant Ratios
Break-up Value (Rs.) 14.81 14.75 15.08 15.92 16.04 15.06
Current Ratio 1.89 1.79 1.5 2.28 2.89 5.19
INCOME STATEMENT
Income 22 22.7 24.55 23.91 22.6 16.57
Expenses 15.39 16.12 17.21 19.1 15.9 28.63
Taxation 1 1 0.12 0.3 6.04 -6.75
Net Profit 5.61 5.58 7.22 4.51 0.66 -5.31
Significant Ratios
Earning per Share (Rs.) 1.12 1.03 1.34 0.84 0.12 -0.98
Revenue per Share (Rs.) 4.4 4.2 4.55 4.43 4.13 3.07
PATTERN OF HOLDING OF SHARES (Including CDC)
HELD BY THE SHAREHOLDERS AS ON JUNE 30, 2003
Share Holding No. Of Total
From To Shareholders Shares Held
1 100 457 17,616
101 500 258 66,280
501 1000 497 280,212
1001 5000 234 429,016
5001 10000 23 146,808
10001 15000 6 69,244
15001 20000 6 106,920
20001 25000 7 152,764
25001 30000 3 81,936
30001 35000 4 127,012
35001 40000 1 38,620
45001 50000 1 47,100
50001 55000 1 54,000
65001 70000 1 65,124
75001 80000 1 76,680
105001 110000 1 108,000
115001 120000 1 118,800
150001 155000 1 150,100
500001 505000 1 502,848
2760001 2765000 1 2,760,920
1,505 5,400,000
Categories of Shareholders (Including CDC) Number Share Held %age Share Held
Individuals (Including Directors) 1483 2,195,372 40.66
Public Limited Companies 3 134,000 2.48
Private Limited Companies 4 155,316 2.88
Banking/Investment Companies 4 60,552 1.12
Insurance Companies 1 38,620 0.72
Modaraba Companies 6 17,940 0.33
Mutual Fund 1 4,800 0.09
Others 3 2,793,400 51.72
1,505 5,400,000 100
CATEGORIES OF SHAREHOLDERS AS ON JUNE 30, 2003
DIRECTORS No. OF SHARES %age OF HOLDING
Mr. Agha Fasih-ud-Din Khan 2,000 0.04
Mr. Muhammad Sarwar Sheikh 138,500 2.56
Mr. Muhammad Yaqoob 1,000 0.02
Mr. Sh. Nadeem Naeem 10,800, 0.2
Mrs. Ayesha Begum 3,000 0.06
Mrs. Ruby Anwar 31,212 0.58
186,512 3.46
PUBLIC LIMITED COMPANIES
Alliance Textile Mills Limited 24,000 0.44
International Multi Foods Limited 108,000 2
Prudential Capital Management Limited 2,000 0.04
134,000 2.48
PRIVATE LIMITED COMPANIES
Quality Foods Products (Pvt) Limited 150,100 2.78
N. H. Holding (Pvt) Limited 108 -
Sarfraz Mahmood (Pvt) Limited 108 -
Millwala Sons (Pvt) Limited 5,000 0.09
155,316 2.87
BANKING/INVESTMENT COMPANIES
Investment Corporation of Pakistan 47,100 0.87
Prudential Investment Bank Limited 2,772 0.05
National Development Finance Corporatio 4,880 0.09
Hijveri Holdings (Pvt.) Limited 5,800 0.11
60,552 1.12
INSURANCE COMPANIES
Gulf Insurance Company Limited 38,620 0.72
38,620 0.72
MODARABA COMPANIES
First Tri Star Modaraba 1,600 0.03
First Prudential Modaraba 600 0.01
Second Prudential Modaraba 2,000 0.04
Third Prudential Modaraba 4,100 0.08
First Pak Modaraba 3,916 0.07
First Providence Modaraba 5,724 0.11
17,940 0.34
MUTUAL FUND
Prudential Stocks Fund Limited 4,800 0.09
4,800 0.09
OTHERS
Multi Med 32,400 0.6
Ejaz Traders 80 -
CDC of Pakistan Limited 2,760,920 51.13
2,793,400 51.73
Individuals 2,008,860 37.19
2,008,860 37.19
Total Share Holding 5,400,000 100
STATEMENT OF COMPLIANCE WITH THE CODE OF
CORPORATE GOVERNANCE
This statement is being presented to comply with the Code of Corporate Governance contained
in listing regulations of the stock exchanges in Pakistan for the purpose of establishing a
framework of good governance, whereby a listed company is managed in compliance with the
best practices of corporate governance.
The Company has applied the principles contained in the Code in the following manner:
1.        The Company encourages representation of independent non-executive directors and
directors representing minority interests on its Board of Directors. At present the Board
includes 5 independent non-executive directors and 2 executive directors representing
minority shareholders.
2.        The directors have confirmed that none of them is serving as a director in more than
ten listed companies, including this Company.
3.        All the resident directors of the Company are registered as taxpayers and none of them
has defaulted in payment of any loan to a banking company, a DPI or an NBFI or, being a
member of a stock exchange, has been declared as a defaulter by that stock exchange.
4.        A casual vacancy occurring in the Board on 29.04.2003 was filled up by the directors
within 11 days thereof.
5.        The Company has prepared a "Statement of Ethics and Business Practices", which
has been signed by all the directors and employees of the Company.
6.        The Board has developed a vision/mission statement, overall corporate strategy and
significant policies of the Company. A complete record of particulars of significant policies
along with the dates on which they were approved or amended has been maintained.
7.        All the powers of the Board have been duly exercised and decisions on material
transactions, including appointment and determination of remuneration and terms and
conditions of employment of the CEO and other executive directors, have been taken by
the Board.
8.        The meetings of the Board were presided over by a Director elected as Chairman of
meeting. The Board met at least once in every quarter. Written notices of the Board
meetings, along with agenda and working papers, were circulated at least seven days
before the meetings. The minutes of the meetings were appropriately recorded and
circulated.
9.        The Board arranged three orientation courses for its directors during the year to apprise
them of theirduties and responsibilities.
10.      The Board has approved appointment of CFO, Company Secretary and Head of Internal
Audit,  including their remuneration and terms and conditions of employment as
determined by the CEO.
11.       The directors' report for this year has been prepared in compliance with the requirements
of the Code and fully describes the salient matters required to be disclosed.
12.      The financial statement of the Company were duly endorsed by CEO and CFO before
approval of the Board.
13.      The directors, CEO and executives do not hold any interest in the shares of the
Company other than that disclosed in the pattern of shareholding.
14.      Company has complied with all the corporate and financial reporting requirements of
the Code.
15.      The Board has formed an audit committee. It comprises of 3 members, all of whom   are
non-executive directors including the chairman of the committee.
16.      The meetings of the audit committee were held at least once every quarter prior to
approval of interim and final result of the Company and as required by the Code. The
terms of reference of the committee have been formed and advised to the committee for
compliance.
17.      The Board has set-up an effective internal audit function by suitable qualified and
experienced personnel for the purpose and are conversant with the policies and
procedures of the Company and they (or their representatives) are involved in the
internal audit function on a full time basis.
18.      The statutory auditors of the Company have confirmed that they have been given a
satisfactory rating under the quality control review programme of the Institute of
Chartered Accountants of Pakistan, that they or any of the partners of the firm, their
spouses and minor children do not hold shares of the company and that the firm and all its
partners are in compliance with  International  Federation of Accountants (IFAC)
guidelines on code of ethics as adopted by Institute of Chartered Accountants of
Pakistan.
19.     The statutory auditors or the persons associated with them have not been appointed to
provide other services except in accordance with the listing regulations and the auditors
have confirmed that they have observed IFAC guidelines in this regard.
20.     We confirm that all other material principles contained in the Code have been complied
with.
Date: August 22, 2003                                                                          Chief Executive
Place: Lahore
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST
PRACTICES OF CODE OF CORPORATE GOVERNANCE
We have reviewed the statement of compliance with the best practices contained in the Code of
Corporate Governance prepared by the Board of Directors of International Multi Leasing Corporation
Limited to comply with the listing regulations of the Stock Exchanges in Pakistan, where the company
is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of
Directors of the Company. Our responsibility is to review, to the extent where such compliance can be
objectively verified, whether the statement of Compliance reflects the status of the Company's
compliance with the provisions of the Code of Corporate Governance and report if it does not. A
review is limited primarily to inquiries of the Company personnel and review of various documents
prepared by the Company to comply with Code.
As part of our Audit of financial statements we are required to obtain an understanding of the
accounting and internal control system sufficient to plan the audit and develop an effective audit
approach. We have not carried out any special review of the internal control system to enable us to
express an opinion as to whether the Board's statement on internal control covers all controls and the
effectiveness of such internal controls.
Based on our review, on the aspect of the statement of compliance with the best practices of
Corporate Governance, nothing has come to our attention, which causes us to believe that the
statement of compliance does not appropriately reflect the company's compliance, in all material
respects, with the best practices as contained in the Code of Corporate Governance.
Date: August 22, 2003                                                                            AVAIS HYDER ZAMAN RIZWANI
Chartered Accountants
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of INTERNATIONAL MULTI LEASING CORPORATION
LIMITED as at June 30, 2003 and the related profit and loss account, cash flow statement and
statement of changes in equity together with the notes forming part thereof, for the year then
ended and we state that we have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of our aud it
It is the responsibility of the company's management to establish and maintain a system of
internal control and prepare and present the above said statements in conformity with the
approved accounting standards and the requirement of the Companies Ordinance, 1984. Our
responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan.
These standards require that we plan and perform the audit to obtain reasonable assurance
about whether the above said statements are free of any material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosure in the
above said statements. An audit also includes assessing the accounting policies and significant
estimates made by management, as well as, evaluating the overall presentation of the above
said statements we believe that our audit provides a reasonable basis for our opinion and, after
due verification, we report that:
a)    in our opinion, proper books of account have been kept by the company as required
by the Companies Ordinance, 1984;
b)    in our opinion;
i) the balance sheet and profit and loss account together with the notes thereon have
been drawn up in conformity with the Companies Ordinance, 1984, and are in
agreement with the books of account and are further in accordance with the
accounting policies consistently applied;
ii) the expenditure incurred during the year was for the purpose of the company's
business; and
iii) the business conducted, investments made and the expenditure incurred during the
year were in accordance with the objects of the company;
c)   In our opinion and to the best of our information and according to the explanations givento
us, the balance sheet, profit and loss account, cash flow statement and statement of
changes in equity together with the notes forming part thereof conform with approved
accounting standards as applicable in Pakistan, and, give the information required by the
Companies Ordinance, 1984, in the manner so required and respectively give a true and
fair view of the state of the company's affairs as at June 30,2003 and of the profit, its cash
flows and changes in equity forthe yearthen ended; and
d)    in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance,
1980 (XVII of 1980).
Without qualifying our opinion, we draw attention to Note 1 in the financial statements,
which explains the current status of amalgamation of the Company with Capital Asset
Leasing Corporation Limited, the amalgamation with which was undertaken to raise share
capital upto Rs.200 million, the minimum prescribed limit for a leasing company. The
company's ability to continue as a going concern is dependent upon its ability to fulfill the
minimum paid-up share capital requirement.
Date: August 22, 2003                                                              AVAIS HYDER ZAMAN RIZWANI
Place: Lahore                                                                            Chartered Accountants
BALANCE SHEET
AS AT 30 JUNE 2003 Notes 2003 2002
(Rupees) (Rupees)
NON CURRENT ASSETS
Tangible fixed assets 3 1,163,557 2,089,524
Investment in lease finance 4 37,800,653 6,996,125
Long term investments 5 195,228 109,504
Long term finances 6 11,590,075 17,902,647
Long term deposits 7 313,000 1,033,000
Deferred tax asset 8 980,363 10,248,504
52,042,875 38,379,304
CURRENT ASSETS
Current portion of long term finances 6 8,114,066 3,547,353
Current portion of long term investment 5 50,000 50,000
Net investment in lease finance-Current maturity 4 20,016,810 53,777,841
Advances, prepayments and other receivables 9 7,164,316 3,257,763
Short term deposit 8,500,000 -
Cash and bank balances 10 1,087,357 10,274,222
44,932,549 70,907,179
Less: Current liabilities 11 -2,996,673 -14,140,543
Working capital 41,935,876 56,766,636
Total capital employed 93,978,751 95,145,940
Less: Long term deferred liabilities
Obligation under finance lease 12 - 690,033
Marginal deposits on lease arrangements 13 12,079,479 13,136,877
12,079,479 13,826,910
Net capital employed 81,899,272 81,319,030
REPRESENTED BY
Share capital 14 54,000,000 54,000,000
Capital reserve - Statutory reserve 15 9,528,873 9,412,825
Capital reserve - Deferred taxation 16 - -
Unappropriated profits 18,370,399 17,906,205
Contingencies and commitments 27 - -
81,899,272 81,319,030
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2003
2003 2002
Notes (Rupees) (Rupees)
Revenue
Income from lease operations 17 5,118,598 10,782,551
Other income 18 3,143,855 5,783,008
8,262,453 16,565,559
Expenditure
Administrative and operating expenses 19 10,220,240 15,146,925
Financial charges 20 242,773 2,267,969
10,463,013 17,414,894
Operating Loss -2,200,560 -849,335
Provision for potential lease losses 12,048,943 -11,211,035
Profit before tax 9,848,383 -12,060,370
Taxation 21 9,268,141 -6,748,504
Profit after tax 580,242 -5,311,866
Unappropriated profit brought forward 17,906,205 20,618,071
Profit available for appropriation 18,486,447 15,306,205
Appropriations-
Transfer to capital reserve - Statutory reserve 116,048 -
Transfer from capital reserve - Deferred taxatior i -2,600,000
116,048 -2,600,000
Unappropriated profit carried forward 18,370,399 17,906,205
Earning per share 22 0.11 -0.98
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2003
2003 2002
Notes (Rupees) (Rupees)
Cash flow from operating activities
Profit before tax 9,848,383 -12,060,370
Adjustment for:
Depreciation 458,563 881,383
Profit on disposal of fixed assets -447,595 -49,154
Provision for doubtful debts -12,022,073 11,211,035
Bad debts written off 980,989 2,230,935
Provision for CED - 445,786
Unrealized (profit)/loss on investment -85,724 130,036
Provision for unrealized mark up -8,282,381 -
Financial charges 242,773 2,267,969
-19,155,448 17,117,990
-9,307,065 5,057,620
(Increase)/Decrease in current assets
Short term deposits -8,500,000 -
Advances, prepayments and other receivabk 3S 7,496,401 232,553
-1,003,599 232,553
lncrease/(Decrease) in current liabilities
Current liabilities -7,947,917 -11,265,710
-18,258,581 -5,975,537
Financial charges paid -556,673 -1,954,069
Tax paid -3,120,573 -7,901,098
Dividend paid -70 -1,615
Net cash from operating activities -21,935,897 -15,832,319
Cash flow from investing activities
Purchase of operating fixed assets - -553,103
Sale proceeds of fixed assets 915,000 127,200
Net investment in lease finance 13,997,587 20,687,586
Long term deposits 720,000 -143,500
Long term finances 1,745,859 5,400,000
Marginal deposits on lease arrangements -3,654,254 -2,263,865
Long term investments - 1,350,000
Net cash used in investing activities 13,724,192 24,604,318
Cash flow from financing activities
Payment of obligation under finance lease -975,160 -447,891
Net cash used in financing activities -975,160 -447,891
Net increase/(decrease) in cash and cash equivalents -9,186,865 8,324,108
Cash and cash equivalents at the beginning of the year 10,274,222 1,950,114
Cash and cash equivalents at the end of the year 1,087,357 10,274,222
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2003
Share Statutory Capital Unappropriated
capital Reserve Reserve profit Total
Rs. Rs. Rs. Rs. Rs.
Balances as at 1 July 2001 54,000,000 9,412,825 2,600,000 20,618,071 86,630,896
Net profit/(loss) for the year - - - -5,311,866 -5,311,866
Appropriations - - -
Capital reserve - Statutory reserve - - - - -
Capital reserve - Deferred taxation - - -2,600,000 2,600,000
Balances as at 30 June 2002 54,000,000 9,412,825 - 17,906,205 81,319,030
Net profit for the year - - - 580,242 580,242
Appropriations
Capital reserve - Statutory reserve - 116,048 - -116,048 -
Capital reserve - Deferred taxation - - - - -
Unappropriated profit - - - - -
Balance as at June 30, 2003 54,000,000 9,528,873 - 18,370,399 81,899,272
NOTES TO THE ACCOUNTS FOR THE
YEAR ENDED 30 JUNE 2003
1.     THE COMPANY AND ITS OPERATIONS
The Company was incorporated as a public limited company on 25 April 1990 and is listed on the
Lahore, Karachi and Islamabad Stock Exchanges. The Company is engaged in the business of
lease financing.
In order to comply with the minimum paid up capital requirement of Rupees 200 million in
accordance with the Leasing Companies (Establishment and Regulation) Rules, 2000 the
Company initiated the process of amalgamation with Capital Assets Leasing Corporation Limited
(CALCORP) which amalgamation was approved by Hon'able Lahore High Court, Lahore on 4
March 2003.
Soon thereafter the Company filed a petition before the Hon'able Lahore High Court praying for
setting aside the amalgamation order due to disclosures/requests from certain shareholders and
certain actions by CALCORP about which the management of the company had seriously
reservations. The Hon'able Judge of the Lahore High Court in its order dated June 12,2003 decided
the petition against the company against which the company filed an Intra Court Appeal before the
Division Bench of the Lahore High Court which ordered for the status-quo to be maintained till its
final decision. As the case is still pending in the court, the final out come is not yet known.
The management of the company, however, intends to initiate steps to raise the paid up capital of the
company to the minimum prescribed level depending upon the out come of the final decision of the
court.
2.     SIGNIFICANT ACCOUNTING POLICIES
2.1    Basis of preparation and presentation
The financial statement have been prepared under the historical cost convention except
investment in listed securities which are measured at fair value as at balance sheet date.
2.2   Overall Valuation Policy
The financial statements have been prepared in accordance with requirements of
Companies Ordinance, 1984 and International Accounting Standards as applicable in
Pakistan.
2.3   Tangible fixed assets and depreciation
Owned
Fixed assets for own use are stated at cost less accumulated depreciation. Depredation on
these assets has been calculated using the straight line method whereby the cost of the
asset is written off overtheir estimated economic useful lives.
Full year's depreciation is charged in the year of addition and no depreciation is charged in
theyearofdisposal.
Repairs and maintenance costs are expensed out as and when incurred. However, major
improvements are capitalized. Gain or Loss on disposal of fixed assets is charged to the
profit and loss account for the year.
Leased
Assets held under finance lease are stated at cost less accumulated depreciation at the
rates and basis applicable to company owned assets. The obligation under the lease
finance charges allocated to future periods, are shown as liability. The finance charges are
calculated at the interest rate implicit in the lease and charged to profit and loss account.
2.4   Employees'retirement benefits
The Company operates an approved contributory provident fund for all its permanent
employees. The contributions are made by the company and the employees in
accordance with the employment rules of the company.
In addition, the company also operates an approved defined gratuity scheme for all its
permanent employees who have completed two years of employment from the date of
joining. The benefit, based on final salary, is payable to employees on cessation of
employment. The company makes monthly contribution to the fund for meeting its
obligation.
2.5   Investments
All investments are initially recognized at cost, being fair value of the consideration given
including acquisition charges associated with the investments and are classified as held
for trading, held to maturity and available for sale.
Held for trading
These are securities which are either acquired for generating the profit from short term
fluctuation in prices or securities in which a pattern of short term profit taking exists.
These investments are subsequently re-measure at fair value.
Held to maturity
Investment with fixed maturity for which management has intention and ability to hold till
maturity are classified as held to maturity investment. These are included in current or n o n
current assets keeping in view their period of maturity as at balance sheet date.
Investments, which are maturing in twelve months from balance sheet date, are
classified as current and the remaining are classified as non-current.
Available for sale
The investments, which are intended to be held for indefinite period of time, and which may
be sold in response to the needs for liquidity or change in interest, are classified as
available for sale. After initial recognition these investments, are measured at fair values.
These are classified as non current assets unless the management has intention of
holding them for less than twelve months from the balance sheet date in which case
these are classified as current assets.
Gains and losses (realized or unrealized) arising due to changes in the fair value, of
investments are recognized as income or loss in the period of change.
General
All purchases and sales of investments are recognized using the trade date
accounting, being the date on which the company commits to purchase or sell the
investment.
2.6   Revenue Recognition
The company recognizes all direct leases, sale and leaseback and hire purchase
contracts of financing nature as finance leases. The total unearned income which consists
of excess for aggregate lease rentals over the cost of the leased asset is deferred and
amortized to income over the lease term using annuity method so as to produce a
systematic return on net investment in lease finance. Front-end fees, commitment and
other charges are taken to income on receipt basis. Other income is accounted for when it
becomes receivable.
Mark up earned on finance under musharika arrangements is recognized on a time
proportion basis.
Profit on Modaraba Certificate is recognized on receipt basis.
Return on investment is recognized at the rates specified in the respective investment
schemes and accrued for the period. Income is recognized on the assumption that such
investment will be held till the terminal date.
2.7   Taxation
Current
Income for the purpose of computing current taxation is calculated under the provisions
of existing income tax law which provides that the lease rentals received or receivable by
the company shall be deemed to be the income of the company. Provision for taxation is
thus based on income calculated in accordance with the accounting policy of the
company and adjusted in accordance with the income tax law.
Deferred
The company accounts for deferred taxation using the liability method on temporary
differences arising from using the different methods in the recognition of lease
transactions for tax purposes and accounting purposes as well as for all other significant
temporary differences. Deferred tax assets are recognized for all deductible temporary
differences, to the extent that it is probable that future taxable profits will be available
against which these deductible temporary differences can be utilized..
2.8   Provision for doubtful receivable
Provision for doubtful receivables is made as required by relevant legislation and which in
the judgment of the management is sufficient to provide for any overdue rentals considered
bad.
2.9   Borrowing cost
Borrowing costs are recognized as an expense, when incurred.
2.10 Cash and cash equivalents
For the purpose of cash flow statement, cash and cash equivalents comprise, cash in
hand and at banks.
2.11  Financial Instruments
Financial assets
Financial assets of the company comprise net investment in lease finance, investments in
securities, cash and bank balances and short term finances. Net investment in leases is
shown at their nominal values as reduced by its provision while all other financial assets,
except investments are stated at cost.
Financial liabilities
Financial liabilities are classified according to the substance of contractual agreements
entered into. Significant financial liabilities are security deposits on lease arrangements
and running finance. Security deposits are shown at cost. Running finance has been
shown at their nominal value along with its collateral and other terms and condition in Note
11 to these accounts.
2.12 Offsetting of financial assets and financial liabilities
A financial asset and a financial liability is offset and the net amount is reported in balance
sheet, if the Company has the legally enforceable right to set off the transaction and also
rntends either to settle on a net basis or to realize the asset and settle the liability
simultaneously.
3.   TANGIBLE FIXED ASSETS
Owned Assets COST DESCRIPTION
Note Particulars 1 JULY 2002 Additions/ (Deletions) Adjustments 30 June 2003 Rate % 1 July 2002 Additions / (Deletions) Adjustments 30 June 2003 {Book Value as at June |  30,2003
Leasehold Improvements 158,449 - - 158,449 15 23,767 23,767 - 47,534 110,915
Furniture & Fixtures 431,616 431,616       10-15 229,982 26,290 - 256,272 175,344
Computers 401,300 - - 401,300 20 291,926 37,480 - 329,406 71,894
Office & electric equipments 686,590 - 686,590 15 465,554 52,233 517,787 168,803
Vehicles                3.1 2,237,535 -1,239,508 1,430,518 2,428,545 20 1,673,052 318,793 572,203 1,791,945 636,600
-772,103
3,915,490 -1,239,508 1,430,518 4,106,500 2,684,281 458,563 572,203 2,942,944 1,163,556
-772,103
ASSETS SUBJECT TO FINANCE LEASE
Vehicles                 3.2 1,430,518 -1,430,518 572,203 -572,203 - -
2003 5,346,008 4,106,500 3,256,484 458,563 2,942,944 1,163,556
-1,239,508 -772,103
2002 7,375,852 1,243,853 5,346,008 4,880,002 881,383 3,256,484 2,089,524
-3,273,697 -2,504,901
The depreciation has been charged to administrative & operating expenses.
3.1    Detail of Fixed Assets Sold
Book Sale Profit / Mode of
Particulars Cost Value Proceeds (Loss) Sale Particulars of purchaser
(Rupees)
Suzuki Mehran 341,180 68,236 235,000 166,764 Negotiation Sold to Syed Amir All
LX'J 4354 R/oH.#185. St. #5
Model 1999 Madni Colony, Lahore
Suzuki Mehran 349,570 69,914 250,000 180,086 Negotiation Sold to Syed AmirAli
LXJ 1639 R/oH.#185. St. #5
Model 1999 Madni Colony, Lahore
Suzuki Cultus 548,758 329,255 430,000 100,745 Negotiation M. Rafiq Chaudhry
LXV 1471 Ex-Chief Executive of the Company
Model 2000 122-C New Muslim Town Lahore
1,239,508 467,405 915,000 447,595
Note: Except as disclosed above, no assets were sold to Chief Executive, Directors, Executives or Shareholders with
more than 10% of paid up capital.
3.2    The leases have been terminated during the year and the assets are transferred to owned assets.
2003 2002
Notes (Rupees) (Rupees)
4.   INVESTMENT IN LEASE FINANCE
Lease rentals receivable 55,605,164 69,544,385
Residual value of leased assets 10,244,090 13,319,744
Gross investments in leases 4.1 65,849,254 82,864,129
Less: Unearned mark-up 4,565,224 6,601,523
Net investment in lease finances 61,284,030 76,262,606
Less: Current maturity including overdue renta Is 20,016,810 53,777,841
41,267,220 22,484,765
Less: Provision against potential lease losses 4.2 3,466,567 15,488,640
Long term portion of net investment in lease finance 37,800,653 6,996,125
4.1    Gross investment in the lease finances and present value
of minimum lease payments are regrouped as under:
Minimum lease payments
Less than one year 14,073,436 57,016,277
More than one year and less than five years 51,775,818 25,847,852
65,849,254 82,864,129
Present value of minimum lease payments
Less than one year 11,346,273 51,912,559
More than one year and less than five years 49,937,757 24,350,047
61,284,030 76,262,606
4.2 Provision against potential lease losses
Opening balance 15,488,640 4,277,605
Provided/(Reversed) during the year -12,022,073 11,211,035
Closing balance 3,466,567 15,488,640
5.   LONG TERM INVESTMENTS
Available for sale 5.1 195,228 109,504
Held to maturity 5.2 - -
195,228 109,504
5.1    Available for sale securities
First Hajveri Modaraba - Cost 5.1.1 500,000 500,000
Less: Provision for re-measuring to market value
Opening balance 390,496 260,460
Additions/(reversals) during the year -85,724 130,036
Closing balance 304,772 390,496
Market Value 195,228 109,504
2003 2002
Notes (Rupees) (Rupees)
5.1 .1   This consists of 68,440 (2002: 68,440) Modaraba
certificates of Rs. 107- each in First Hajveri Modaraba
including 18,440 bonus modaraba certificates of
Rs. 10/-each
The company's holding does not exceed 10 percent
of equity of the investee company.
5.2      Held to maturity investments                         5.2.1
Federal investments bonds 50,000 50,000
Less: Current portion -50,000 -50,000
5.2.1   These carry interest @15% per annum. Federal
Investment Bonds have been matured during the
year but not yet encashed.
6.   LONG TERM FINANCE - SECURED, CONSIDERED GOOD
Al-Zamin Leasing Modaraba 18,260,058 20,000,000
Eveready Pictures (Pvt) Ltd. 1,444,083 1,450,000
6.1 19,704,141 21,450,000
Less: Current portion
Overdue amount 1,851,494 -
Due within one year 6,262,572 3,547,353
8,114,066 3,547,353
11,590,075 17,902,647
6.1 These finances have been provided under musharika arrangements.
These are secured against promissory notes, personal guarantee
of directors and hypothecation of stocks. The expected rate of profit
ranges from 10% to 11% (2002: 16% to 23%) p.a.
7    LONG TERM DEPOSITS
Securities deposit with leasing companies - 620,000
Other deposits 313,000 413,000
313JJOO 1,033,000
8.   DEFERRED TAX ASSET
Deferred tax asset due to
Deductible temporary differences 6,327,348 10,248,504
Taxable temporary differences -5,346,985 -
980,363 10,248,504
2003 2002
Notes (Rupees) (Rupees)
9.   Advances, Deposits, Prepayments and
Other Receivables
Advances to employees - Considered good 9.1 43,146 273,886
Advances to suppliers 215,000 215,000
Less: Provision for doubtful advances -215,000 -215,000
Prepayments 71,885 127,202
Accrued mark - up 9.2 1,975,864 903,827
Income tax receivable 5,064,859 1,944,286
Central excise duty receivable 445,786 445,786
Less: Provision for doubtful advances -445,786 -445,786
Other receivables 8,562 8,562
7,164,316 3,257,763
9.1   It includes advances to
Chief Executive - 65,412
Other Executives 33,750 162,323
Maximum aggregate amount outstanding at end of any month
against advance to:
Chief Executive 55,400 175,544
Other Executives 117,613 193,843
These advances are given for different purposes as per company's
employment rules and are free of interest. These are deductible
from the salaries of employees on monthly basis.
9.2 Accrued mark - up
Unrealized mark - up on lease operation 1,739,918 9,357,406
Mark-up on short term finances 1,553,628 1,146,484
3,293,546 10,503,890
Less: Provision for unrealized mark-up -1,317,682 -9,600,063
1,975,864 903,827
10.   Cash and Bank Balances
Cash at bank
In saving accounts 3,580 9,807,267
In current accounts 894,456 456,363
898,036 10,263,630
Cash in hand 189,321 10,592
1,087,357 10,274,222
2003 2002
Notes (Rupees) (Rupees)
11.   Current Liabilities
Current portion of
obligation under finance lease 12 - 285,127
marginal deposit on lease arrangements 13 2,508,663 5,105,519
Running finance under mark-up arrangement 11.1 - 7,499,063
Accrued expenses 245,514 694,368
Mark-up on secured loan - 313,900
Unclaimed dividend 242,496 242,566
21,996,673 14,140,543
11.1 Running finance under mark-up arrangements -secured
This represents running finance utilized against facilities from commercial banks. The
mark-uprates range from Rs. 0.46 to Rs. 0.49 per-Rs. 1,000/- per day and was
payable on quarterly basis.
The finance was secured by way of first part passu charge on leased out assets of the
company, to the extent of Rs. 12.50 million and on personal guarantee of the directors
of the company and has since been fully settled.
12.   OBLIGATIONS UNDER FINANCE LEASE
The rate of interest used as the discounting factor (i.e.implict in the lease)
ranges from 16.75% to 22.50% per annum. The amounts of future payments and
the periods during which they fall due are:
year ending June 30,
2003 - 325,272
2004 - 691,682
- 1,016,954
Less: Unamortized finance charges - -41,794
- 975,160
Less: Current portion shown under current liabilities - -285,127
- 690,033
12.1 Minimum Lease Payments and their present value are regrouped as below:
Minimum lease payments
Less than one year _ 325,272
More than one year and less than five years - 691,682
- 1,016,954
Present value of minimum lease payments
Less than one year - 285,127
More than one year and less than five years 690,033
- 975,160
Notes 2003 2002
13.   MARGINAL DEPOSITS ON LEASE ARRANGEMENTS (Rupees) (Rupees)
Security deposits on leases
Less: Current maturity shown under current liabilities 11 14.588,142 18,242,396
-2,508,663 -5,105,519
These represent interest free security deposits received from 12,079,479 13,136,877
leases against contracts. The amounts are adjustable/repayable
at the expiry of the respective lease period.
14.   SHARE CAPITAL
Authorized
10,000,000 (2002: 10,000,000) ordinary