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Lease Pak Limited
Annual Reports 2003
CONTENTS
Company Information
Notice of Annual General Meeting
Directors' Report
Six Years' Financial Summary
Pattern of Shareholding
Statement of Compliance
Auditors' review report on code
Auditors' Report to the Members
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Notes to the Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
COMPANY INFORMATION
Chairman Mian Omer Rehman
CEO/Director Immad Iftikhar Malik
Directors Mr. Tariq Rehman
Agha Najeeb Raza
Mian Assad Shuja-ur-Rehman
Mr. Khurshid Ahmad
Mr. Ansar Sohail Malik
Audit Committee Mian Misbah-ur-Rehman
Mr. Tariq Rehman
Mian Assad Shuja-ur-Rehman
Company Secretary Mr. Yousaf Mehmood
Auditors Anjum Asim Shahid Rahman
Chartered Accountants
Bankers Prime Commercial Bank Limited
Allied Bank of Pakistan Limited
Legal Advisor Cornelius Lane & Mufti Advocates & Solicitors
Share Registrars M/s. Softlink (Pvt) Limited
183 Attaturk Block, New Garden Town, Lahore.
Registered Office & Head Office 5/7-B, 7-Canal Bank Road,
Aziz Avenue, Gulberg-V, Lahore
Tel: 92 42 576 463 1,576 4641
UAN: 111 111505
Fax: 92 42 571 3080
Email: lplpak@dancoml.com.pk
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 12th Annual General Meeting of Lease Pak Limited will be held at its
Registered Office at 5/7-B, 7-Canal Bank Road, Aziz Avenue, Gulberg V, Lahore on Monday, 8th
December 2003 at 11:00 A.M to transact the following business:
ORDINARY BUSINESS
1.          To confirm minutes of the 11th Annual General Meeting held on 31 December 2002.
2.          To receive and adopt the audited accounts of the Company for the year ended 30"' June, 2003
together with Directors' and Auditors' Reports thereon.
3.          To transact any other business with the permission of the Chair.
SPECIAL BUSINESS
4.          As special business pass with or without amendment the following special resolution.
RESOLVED that the Company be de-listed from the Karachi Stock Exchange (Guarantee)
Limited at buy-back price of Rs. 4/- per share. Mr. Immad Iftikhar Malik Chief Executive and
Mr. Yousaf Mahmood Secretary of the Company are hereby authorized to take necessary action
as deemed fit in this regard.
By Order of the Board
Lahore:                                                                                                      Yousaf Mahmood
Date: 17th November 2003                                                                             (Company Secretary)
NOTES:
1.          The share transfer books of the Company will remain closed from December 02,2003 to December
08, 2003 (both days inclusive)
2.          A member entitled to vote at the meeting may appoint another member as his/her proxy. Proxies
in order to be effective must be received at the registered office of the Company duly stamped,
signed and witnessed not later than 48 hours before the meeting.
3.          Shareholders are requested to notify the Company of any change in their address.
4.          Statement u/s 160(1) (b) of the Companies Ordinance, 1984 is sent to the members along with
this notice.
STATEMENT    U/S    160(I)(b)    OF    THE    COMPANIES    ORDINANCE,    1984
Due to inability of the company in raising the Paid up Share Capital to the desired limit the Directors
of the company decided to surrender their leasing license to Securities and Exchange Commission of
Pakistan and also decided to de-list the company from the stock exchanges of Pakistan.
Further, it was decided by the Directors of the Company that financial position of the Company is not
good and due to closure of the leasing business, the company is not in a position to meet the rules &
regulations of the Exchanges and Corporate Governance.
Subsequently, the Company requested for its de-listing from Karachi Stock Exchange.
Karachi Stock Exchange (Guarantee) Ltd., vide its letter no. KSE/C 836-8630 dated November 5, 2003
has accepted Company's request and approved De-listing. The Karachi Stock Exchange has further
required the Sponsor to Buy-Back the shares of the Company from the Minority Share Holders at Rs.
4/- per share and seek voluntary De-Listing of the Company from the Exchange under the Listing
Regulation No. 32. This price was approved by the Karachi Stock Exchange.
The Board of Directors, therefore, considers it appropriate to seek the approval of the Share Holder in
this regard.
IN THE NAME OF ALLAH, MOST GRACIOUS, MOST MERCIFUL
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED JUNE 30, 2003
The Board of Directors of your company feel pleasure in presenting the Audited Financial Statement for the perioi
ended June 30, 2003. The financial statements annexed to this report, present fairly its state of affairs, the result o
its operations, cash flows and changes in equity. Proper books of account have been maintained. Appropriate accountinj
policies have been consistently applied in preparation of financial statements and accounting estimates arc based 01
reasonable and prudent judgment. International Accounting Standards, as applicable in Pakistan, have been followei
in preparation of financial statements and any departure there from has been adequately disclosed
FINANCIAL RESULTS & REVIEW OPERATIONS
As informed earlier the Company ceased to operate as a leasing company following voluntarily surrendering of tin
leasing license to the Securities & Exchange Commission of Pakistan due to our failure to raise the capital of tin
company to Rs.200.0 million as required under Leasing Rules. As a result the management reduced its expense
substantially and made all efforts to settle the debts, with nearly all the financial institutions. No new business wa
undertaken during the year under review. Since most of the leases have matured hence the gross revenue decreaset
to Rs. 19.40 million from Rs.54.62 million as compared to last year, but also reducing the administrative expense
from Rs.20.95 million of last year to Rs.15.93 million (exclusive of write-off amount of Rs. 16.0 million of PEI
DAEWOO) during the fiscal year 2003.
The operating results for the year under review are given below:
Gross revenue Rs. 19.40 million
Administrative charges Rs.3 1.93 million
Financial charges Rs.2 1.72 million
Net Loss for the year Rs.36.24 million
As stated above, the Company could not declare any dividend / bonus for the year under review.
SECTORAL DISTRIBUTION OF LEASES
As the Company's going concern is to focus on recovery, and there was no lease disbursements during the year so
there is no sector wise disbursement. However the break up of net exposure of outstanding leases in different sectors
at 30m June 2003 was as under.
SECTORS NET INVESTMENT PERCENTAGE
Sugar & Allied 2,060,000 1.96
Energy,Oil, Gas 13,106,912 12.48
Steel, Engineering & Automobile 1,034,048 0.98
Electrical & Electrical Goods 15,038,567 14.32
Transport & Communication 2,597,393 2.47
Chemical /Fertilizer/Pharmasoticals 682,879 0.65
Textile 5,202,339 4.95
Banaspati & Allied 622,620 0.59
Construction 828,148 0.79
Leather,Footwear & Tanneries 2,093,219 1.99
Food, Tobacco & Beverages 9,519,940 9.07
Health 685,869 0.65
Idividuals 51,539,614 49.08
Total 105,011,548 100
AUDITOR'S REPORT
A perusal of the Auditors report would indicate that the management has achieved considerable improvement in the
financials of the company. Further, most of the qualifications mentioned in the last Auditors report have duly been
addressed. Qualifications which do not find mention in this report have been duly addressed to the entire satisfaction
of the new Auditors including the PEL Daewoo matter involving Rs.36.609 million and the issue relating to the Ex
Chief Executive involving a sum of Rs.6.5 million which has been recovered. As far as the matter of outstanding
leases is concerned as mentioned in the report, the management has made substantial and bona fide efforts to follow
up recoveries from the lessees with a reasonable degree of success. As far as the loans are concerned complete
disclosures are made in the accounts and would be completely settled in the near future. We are hopeful that the
situation will improve during the current year.
DE-LISTING OF THE COMPANY FROM THE STOCK EXCHANGES
Giving due consideration to the continuing losses of the company. It was not wise to keep on depleting the equities
of the small shareholders. Therefore, keeping this view in mind your management decided to de-list the company
by giving a premium of Rs.2/- per share to the small shareholders. After long consideration and talks with the KSE
your company managed to have a clearance from the KSE to de-list the company at Rs. 47- per share giving the
maximum benefit to the small shareholders. After having approved by the Board of Directors on the 15 November
2003 this offer is formally being placed before the shareholders of the company at the AGM, which is to be held
on the 8th December 2003.
CORPORATE AND FINANCIAL REPORTING
Securities and Exchange Commission of Pakistan ("the SECP") in assistance with Institute of Chartered Accountants
of Pakistan formulated a Code of Corporate Governance ("the Code"). The Directors have confirmed the following
as required by clause (xix) of the Code of Corporate Governance, issued by Securities and Exchange Commission
of Pakistan;
a.            The financial statements, prepared by the management present fairly the Company's state of affairs, the
result of its operations, cash flows and changes in equity.
b.            Proper books of accounts have been maintained.
c.            Appropriate accounting policies have been consistently applied in preparation of financial statements.
d.            International Accounting Standards, as applied in Pakistan, have been followed in preparation of financial
statements.
e.            The system of internal control of the company is in place and is sound in design and effectively monitored.
f.            The Company is not a going concern due to heavy losses and its inability to raise capital to Rs. 200 million.
It has applied for delisting from all Stock exchanges and has got clearance subsequent to balance sheet date
from KSE to buy back shares of minority shareholders.
g.            The Company has followed the best practice of Corporate Governance, as detailed in the listing regulations,
h.           During the year nine meetings were held. Attendance by each director was as under:-
S. No     Names of Director Meetings Attended
1 .           Mian Misbah-ur-Rehman (Ex Director) 8
2.           Mr. Tariq Rehman 6
3.          Agha Najeeb Raza 9
4.           Mr. Abdul Rehman (Ex Director) 2
5.           Immad Iftikhar Malik 9
6.           Assad Shuja-ur- Rehman 6
7.           Mian Omar Reham 1
8.           Mr. Ansar Sohail Malik 0
9.           Mr. Naveed Masud (Ex Director) 0
10.         Kurshid Ahemd 0
Mr. Misbah-ur-Ranman resigned on June 06, 2003 and Mr. Ansar Sohail Malik replaced him, however he
did not attend any meeting as no meeting was held after his appointment.
Mr. Naveed Masud / Khurshid Ahmed representing ABL could not attend the Board Meeting due to his
other commitments.
i.           There are no statutory payments on account of taxes, duties, levies and charges, which are outstanding,
except as disclosed in the accounts.
j.            Key operating  and  financial data of last six years are annexed (Annexure A and B).
k.           No dividend or bonus shares have been declared as the company is in the process of delisting.
1.            Its Directors CEO, CFO, Company Secretary and their spouses and minor children have carried out no trade
in shares of Lease Pak Limited during the year,
m.          The company due to its inability to raise its capital and heavy losses has surrendered its lease license and
has applied for delisting from all Stock exchanges. Currently the company is involved only in recovery of
existing leases and to settle the outstanding liabilities with banks and financial institutions.
PATTERN OF SHAREHOLDING
The pattern of shareholding as required by Companies Ordinance, 1984 as well as by the Code of Corporate Governance
as at June 30, 2003 are annexed (Annexure C and D).
AUDITORS
The auditors M/s Anjum Asim Shahid Rehman Chartered Accountants retire and offer themselves for re-appointment.
ACKNOWLEDGEMENT
We would like to acknowledge our deep appreciation to the various financial institutions and regulatory authorities
in  particular  who   have   extended   continued   support   for  managing   the   company's   affairs.
Your  Directors   express  their  gratitude  to  lenders  and  regulatory  bodies   for  their  support.
For and on behalf of the Board of Directors
Immad Iftikhar Malik
Chief Executive
BALANCE SHEET AS AT 30TH JUNE
2003 2002 2001 2000 1999 1998
ASSETS
Cash and bank balance 10,421,714 96,678 7,524,207 7,399,972 844,333 2,405,478
Advances, prepayments and
other receivables 31,821,874 33,544,682 83,594,138 50,382,688 74,742,895 51,715,102
Long Term Advances and Loans 41,666 7,491,105 152,832 249,248 764,184 5,342,899
Long term investments 89,504,348 87,552,800 9,380,474 17,119,326 22,723,445 37,282,496
Short Term Finances 4,000,000 4,000,000 4,000,000 37,267,597 40,300,000 35,300,000
Long term deposits and
deferred cost 526,050 888,650 4,463,121 4,996,361 2,259,687 5,69U,267
Net investment in leases 77,146,182 141,254,705 295,090,340 322,453,531 354,993,156 461,356,689
Investment property 6,500,000 - - .    - - -
Tangible operating fixed assets 2,389,165 4,664,387 15,620,349 23,534,218 13,617,020 15,431,860
TOTAL ASSETS 222,350,999 279,493,007 419,825,461 463,402,941 510,244,720 614,524,791
LIABILITIES
Dividend payable 167,393 168,149 168,149 168,149 168,552 204,475
Provision for Taxation 358,540 - 331,835 263,493 195,942 177,111
Accrued and other liabilities 42,525,631 25,431,054 46,295,011 28,413,621 41,616,608 21,939,983
Short term borrowings 1,111,111 14,016,894 46,782,364 37,550,000 40,234,644 79,351,256
Long term loans 85,886,574 97,179,139 121,404,868 118,237,698 116,905,887 135,148,667
Liability against asset subject
to finance lease 1,085,936 3,327,231 7,314,389 3,353,779 2,632,270 3,903,465
Long term deposits 43,595,912 51,671,728 78,448,007 80,811,672 74,138,479 77,434,997
Deferred Liabilities 11,408,184 11,688,464 9,204,750 8,900,000 9,334,550 759,801
Redeemable capital 38,000,000 45,500,000 44,500,000 46,220,000 88,920,000 103,220,000
Certificates of Investment - - - 30,000,000 30,250,000 45,000,000
Surplus on revaluation of
fixed assets - - 1,936,250 8,486,782 - -
Total Liabilities 224,139,281 248,982,659 356,385,623 362,405,194 404,396,932 467,139,755
NET ASSETS -1,788,282 30,510,348 63,439,838 100,997,747 105,847,788 147,385,036
Represented by:
Share capital 133,201,800 133,201,800 133,201,800 133,201,800 133,201,800 133,201,800
Reserves -134,990,082 -102,691,452 -69,761,962 -32,204,053 -27,354,012 14,183,236
-1,788,282 30,510,348 63,439,838 100,997,747 105,847,788 147,385,036
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 30™ JUNE
2003 2002 2001 2000 1999 1998
(Rupees) (Rupees) (Rupees) (Rupees) (Rupees) (Rupees)
REVENUES
income from leasing
operations 16,697,551 34,824,333 38,573,320 55,064,827 77,024,493 86,766,663
income from bank deposit 136,042 20,863 110,488 276,236 75,455 335,488
income from long term
investments 1,029,708 17,387,390 667,484 2,384,130 858,858 983,151
Other income 1,540,152 2,392,096 1,989,919 1,108,995 5,961,010 10,709,260
19,403,453 54,624,682 41,341,211 58,834,188 83,919,816 98,794,562
EXPENDITURE
Return on borrowings &
financial charges 21,720,678 32,433,059 41,219,922 43,942,290 66,172,035 70,290,582
Administrative and
operating expenses 31,932,053 20,954,934 17,375,666 13,953,974 18,018,653 15,029,417
Amortization of
deferred costs - - - - 284,937 1,069,784
53,652,731 53,387,993 58,595,588 57,896,264 84,475,625 86,389,783
(Loss)/Profit before
provisions and tax -34,249,278 1,236,689 -17,254,377 937,924 -555,809 12,404,779
Provision for diminution
in value of shares - - 9,625,947 2,324,200 15,451,070 5,046,990
Provision for doubtful
debts 1,999,772 35,524,405 9,877,585 2,563,765 15,455,369 1,665,401
1,999,772 35,524,405 19,503,532 4,887,965 30,906,439 6,712,391
(Loss)/Profit before tax -36,249,050 -34,287,716 -36,757,909 -3,950,040 -31,462,248 5,692,388
Provision for taxation
- Prior year '    - - - 85,273
- Current year 550,000 400,000 800,000 900,000 1,175,000 914,727
- Deferred tax - - - 4 8,900,000 -
550,000 400,000 800,000 900,000 10,075,000 1,000,000
(Loss)/Profit after tax -36,799,050 -34,687,716 -37,557,909 -4,850,040 -41,537,248 4,692,388
APPROPRIATIONS:
Interim dividend Rs. - - - - - 12,000,000
Transfer to Capital reserve - - - - - 940,000
Reserve for contigencies - - - - - 2,460,000
- - - - - 15,400,000
PATTERN OF SHAREHOLDING
AS AT JUNE 30, 2003
(SHAREHOLDING) 
No. of Shareholders From To Total Shares Held
15 1 100 1500
83 101 500 37500
121 501 1000 119600
127 1001 5000 325209
24 5001 10000 197200
8 10001 15000 97900
3 15001 20000 50500
2 20001 25000 45000
1 30001 35000 31500
1 35001 40000 40000
4 45001 50000 2000000
1 65001 70000 70000
1 75001 80000 78000
1 80001 85000 82000
1 145001 150000 146500
1 155001 160000 156000
1 165001 170000 170000
3 175001 180000 540000
1 210001 215000 211500
1 225001 230000 230000
1 245001 250000 246500
1 250001 255000 255000
1 355001 360000 360000
1 535001 540000 535500
2 585001 590000 1175000
1 600001 605000 602000
1 690001 695000 690500
1 715001 720000 720000
1 820001 825000 821000
1 960001 965000 965000
1 1320001 1325000 1320180
1 2795001 2800000 2799591
413 13,320,180
CATEGORIES OF SHAREHOLDERS
AS AT 30 JUNE 2003
CATEGORIES OF NUMBER OF SHARES HELD PERCENTAGE
SHAREHOLDERS SHAREHOLDERS
Individuals 399 8,341,900 62.626
Investment Companies 4 725,309 5.445
Joint Stock Companies 4 2,878,091 21.607
Financial Institutions 1 400 0.003
Modaraba Companies 2 300 0.002
Leasing Companies 2 54,000 0.405
Others 1 1,320,180 9.911
413 13,320,180 100
DETAIL OF PATTERN OF SHAREHOLDING AS PER REQUIREMENTS
OF CODE OF CORPORATE GOVERNANCE
AS AT JUNE 30,2003
CATOGERIES OF NUMBER OF SHARES HELD Percentage
SHAREHOLDERS SHAREHOLDERS %
Associated Companies, Undertaking,
Related parties
Mutual Fund 1 7,700 0.06
Direcotrs, Chief Executive Officer &
their spouse and minor children
Mr. Immad Iftikhar Malik 1 1,176,500 8.83
Mr. Tariq Rehman 1 307,000 2.305
Mrs. Shahima Rehman 1 50,000
Ms. Maha Rahman 1 50,000
Agha Najeeb Raza 1 535,500
Mrs. Faryal Agha 1 587,500
Mian Misbah-ur-Rehman 1 690,500
Mian Tariq Rehman 1 821,000
Mian Khalid Rehman 1 170,000
Mian Qasjm Rehman 1 70,000
Mrs. Yasmeen Rehman 1 162,200
Mian Omer Rehman 1 246,500
Mian Assad Shuja-ur-Rehman 1 180,000
Mr. Ansar Sohail Malik 1 35,000
Public Sector Companies and Corporations . .
Banks, DFI's, NBFI's, Insurance Companies,
Modarabas & Mutual Funds 8 779,000
Joint Stock Companies 4 375,600
Individuals 385 5,756,000
Foreign Investors - -
Executives - -
Others 1 1,320,180
Total 413 13,320,180
LIST OF SHAREHOLDERS HOLDING
10 PERCENT OF TOTAL CAPITAL
Shares Held Percentage
Total: - -
STATEMENT OF COMPLANCE WITH THE
CODE OF CORPORATE GOVERNANCE
FOR THE YEAR ENDED JUNE30, 2003
The  company  has   applied  the  principles   contained  in  the  Code  in  the  following  manner:
1.           The Company has stopped doing leasing business and is in the process of delisting and eventually winding
up. However other business transactions are carried out in accordance with the Code of Corporate
Governance requirements.
2.           The Company encourages representation of independent non-executive directors and directors representing
minority interests on its Board of Directors (BOD). At present the Board includes at least four independent
non-executive directors and one independent director representing institutional equity interest.
3.           The directors have confirmed that none of them is serving as a director in more than ten listed companies
including this company.
4.            All resident directors of the Company are registered tax payer and none of them have defaulted in payment
of any loan to a banking company, a DPI or a NBFI or being a member of a stock exchange has been
declared as a defaulter by that stock exchange.
5.           Mr. Khurshid Ahmed, Nominee of Allied Bank of Pakistan limited has been appointed as director as on
September 13, 2002 in place of Mr. Naveed Masood during the period under review. Mr.Abdur Rehman
resigned on June 06, 2003 and Mian Omer Rehman replaced him immediately. Mr. Misbah-ur-Rahman
resigned on June 06, 2003 and Mr. Ansar Sohail Malik replaced him on the same date.
6.           All the powers of the Board have been duly exercised and decisions on material transaction, including
appointment and determination of remuneration and terms and conditions of employment of the CEO and
an Executive Director, have been taken by the Board.
7.           The meetings of the Board were presided over by the chairman and the board met at least once in every
quarter. Written notices of Board meetings, along with agenda and working papers, were circulated at least
seven days before the meetings. The minutes of the meeting were appropriately recorded and circulated.
8.           The board has approved the appointment of company secretary, and head of Internal Audit department
including their remuneration and other terms  of employment as  determined by CEO.
9.           The directors' Report for this year has been prepared in compliance with the requirement of the Code and
fully described the salient features required to be disclosed.
10.         The financial statements of the Company were duly endorsed by CEO before approval of the Board.
However the CFO could not endorse the statements as he resigned prior to the year end in April 2003 and
his vacancy remained unfilled by the year end as the company is in the process of winding up its operations.
11.          The meetings of the audit committee were held at least once in every quarter prior to the approval of
interim and final results of the company and as required by the Code.
12.          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.
13.         The Company has complied with all the corporate and financial reporting requirements of the Code.
14.         The Board has formed an audit committee. It comprises of three members, of whom two are non-executive
directors including the chairman of the committee.
15.         The Board has setup an effective internal audit function.
16.          The statutory auditors of the Company have confirmed that they have been given a satisfactory rating
under the Quality Control Review program of the institute of Chartered Accountants of Pakistan (ICAP),
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.
17.          The statutory auditors of 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 the IFAC guidelines in this regard.
18. We confirm that all other material principles contained in the Code as applicable to the listed companies
have been complied with except the matters mentioned above, as the company has no business activity
and is in the process of delisting. It is envisaged that before the next year end the company will be delisted
from all stock exchanges .
immad Iftikhar Malik
Chief Executive
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 Lease Pak Limited to comply with the Listing Regulations No
37, chapter XIII and regulation 36 of the Karachi, Lahore and Islamabad Stock Exchanges respectively, 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 the Code.
As part of our audit of the financial statements, we are required to obtain an understanding of the accounting and
internal control systems 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 controls.
Based on our review, we report that the company has stopped doing leasing business and is in the process of delisting
and winding up in due cqurse. In view of above it has stopped the process of preparing and developing statement
of ethics and business practices, mission statement and other corporate strategies and policies.
Except for the facts stated above 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 contained in the Code of Corporate Governance as applicable to the company for the year ended June
30, 2003.
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Lease Pak 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 audit.
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
requirements 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures 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)    The company extended lease finance facility amounting to Rs 29.5 million to various parties during the
year 2002 against which full provision of principal amounting to Rs.25 million was incorporated as being
considered doubtful of recovery. During the year an amount of Rs. 0.600 million was recovered against
such leases which has been accounted for in the accounts. However the balance amount remained unverified
in the absence of direct confirmation from the related parties;
b)    The redeemable capital as referred to in Note 15, long term loans as referred to in Notes 16 and short term
borrowing as referred in note 13 remained unverified and unconfirmed as to their terms, repayments, and
balances as on balance sheet date in the absence of relevant documents and direct balance confirmation;
c)    The terms of short term finance as referred to in Note 5 and some of the bank balances mentioned in Note
3 remained unverified and the balance remained unconfirmed in the absence of statements and confirmation
from relevant party;
d)    Available for sale investments are disclosed at market value in financial statements however these are
appearing in the books at their average cost. Thus amount appearing in the accounts is not supported by
books of accounts. Moreover unrealized gain relating to investments sold during the year has not been
transferred from equity to profit and loss account which is in contravention of the requirements of
International Accounting Standard 39;
e)    The company has not carried out actuarial valuation as required by the International Accounting Standard
19 "Employee Benefits" of the defined benefits relating to gratuity scheme as at balance sheet date or any
near date;
f)     The company during the year surrendered its license of lease operations to Securities and Exchange
Commission of Pakistan. Subsequent to the balance sheet date the company has received acceptance letter
from Karachi stock exchange for buy back of shares of minority shareholders by sponsors and subsequent
delisting of its shares from all stock exchanges. It has stopped all fresh leases; however it continues its
operations for recovery of its dues under lease agreements and settlement of all outstanding liabilities of
financial institutions and other creditors. The company incurred after tax loss of 36.799 million for the
year ended June 30,2003 and has accumulated losses of Rs 155.387 million. Its current liabilities exceed
current assets by Rs. 78.660 million. These events indicate the company's inability to continue as going
concern and therefore it may be unable to realize its assets and discharge its liabilities in the normal course
of business. The financial statements (and notes thereto) do not disclose this fact;
(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  accounting  policies   consistently  applied;
ii)       The expenditure incurred during the year was for the purpose of the company's business; and
i       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 given to us, the balance
sheet, profit and loss account, cash flow statement and statement of changes in equity together with the
notes forming part thereof, except for paragraph (e) 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 in view of paragraph ( f) above do not give a true and fair view of
the state of the company's affairs as at June 30, 2003 and of the loss, its cash flow and changes in equity
for the year then ended; and
(d)      In our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII
of 1980)
We like to draw attention to note 8.4.1 the amount at which investment in TFCs is appearing shows the principal
and profit capitalized till last year. Afterwards neither further TFCs have been received nor their redemption has
been started due to default made by the borrower. However no provision has been made for any diminution in
value of investments.
The financial statements for the year ended June 30,2002 were audited by another firm of Chartered Accountants,
who expressed an adverse opinion in their report dated December 09, 2002.
BALANCE SHEET AS AT JUNE 30,2003
Note 2003 2002
ASSETS Rupees Rupees
*
Cash and bank balance 3 10,421,714 96,678
Advances, deposits,prepayments and other receivables 4 31,838,542 33,597,612
Short term finance 5 4,000,000 4,000,000
Current portion of net investment in lease finance 9 30,967,262 43,175,948
77,227,518 80,870,238
Long term deposits 6 526,050 888,650
Long term loans and advances 7 24,998 7,438,175
Long term investments 8 89,504,348 87,552,800
Net investment in lease finance 9 46,178,920 98,078,757
Investment property 10 6,500,000 -
Fixed assets-tangible 11 2,389,165 4,664,387
145,123,481 198,622,769
222,350,999 279,493,007
LIABILITIES
Current maturity and overdues of long term liabilities 12 111,724,766 82,393,771
Short term finances 13 1,111,111 14,016,894
Accrued and other liabilities. 14 42,884,171 25,431,054
Unclaimed dividend 167,393 168,149
155,887,441 122,009,868
Redeemable capital 15 - 17,500,000
Long term loans-secured 16 23,358,485 50,996,538
Liability against asset subject to finance lease 17 663,480 2,409,568
Deferred liabilities 18 11,408,184 11,688,464
Long term deposits 19 32,821,691 44,378,221
68,251,840 126,972,791
224,139,281 248,982,659
Net Assets -1,788,282 30,510,348
REPRESENTED BY
Share capital 20 133,201,800 133,201,800
Capital reserve 21 7,639,000 7,639,000
Revenue reserves
Reserves for contingencies 22 6,500,000 6,500,000
Unrealised gain 23 6,258,646 1,758,226
Accumulated loss -155,387,728 -118,588,678
-142,629,082 -110,330,452
Contingencies and Commitments 24 - -
-1,788,282 30,510,348
The annexed notes form an integral pert of these accounts.
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2003
Note 2003 2002
Rupees Rupees
INCOME
Lease revenue 25 16,697,551 34,824,333
Mark up on bank deposits 136,042 20,863
Income from long term investments 26 1,029,708 17,387,390
Other income 27 1,540,152 2,392,096
19,403,453 54,624,682
EXPENSES
Administrative expenses 28 31,932,053 20,954,934
Financial expenses 30 21,720,678 32,433,059
53,652,731 53,387,993
Profit/(loss) before provisions and taxation -34,249,278 1,236,689
Provision for doubtful debts 9.5 1,999,772 35,524,405
Loss before tax -36,249,050 -34,287,716
Provision for taxation-current year -550,000 400,000
Loss after tax -36,799,050 -34,687,716
Accumulated loss brought forward -118,588,678 -83,900,962
Accumulated loss carried forward -155,387,728 -118,588,678
Earning per share 32 -2.76 -2.6
The annexed notes form an integral part of these accounts.
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2003
Note 2003 2002
Rupees Rupees
Net cash flow from operating activities A -30,868,739 -7,146,766
CASH FLOW FROM INVESTING ACTIVITIES
Increase in fixed assets/Investment property -6,500,000 -660,453
Sale proceeds on disposal of fixed assets 799,684 9,638,018
Net investment in lease finance 65,642,854 127,384,11.1
Long term investments 2,548,872 -76,674,100
Long term loan and advances - recovered 11,264 99,902
Long term loan and advances - given 7,438,175 -7,438,175
Long term deposits & deferred cost 362,600 1,359,100
Net cash flow from investing activities B 70,303,449 53,708,403
CASH FLOW FROM FINANCING ACTIVITIES
Redeemable capital -7,500,000 1,000,000
Long term loan -9,625,891 -14,225,733
Long term placements -1,666,674 -9,999,996
Obligation under finance lease - repaid -2,241,295 -3,987,158
Marginal deposit on lease arrangements - net -8,075,816 -26,776,279
Net cash flow from financing activities C -29,109,676 -53,989,166
Net (decrease)/increase in cash and cash equivalents (A+B+C) 10,325,036 -7,427,529
Cash and cash equivalents at the beginning of the year 96,678 7,524,207
Cash and cash equivalents at the end of the year 10,421,714 96,678
The annexed notes form an integral part of financial statements.
NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2003
Note 2003 2002
Rupees Rupees
A.          CASH FLOW FROM OPERATING ACTIVITIES
Net loss before tax -36,249,050 -34,287,716
Adjustments for:
Depreciation 1,709,625 2,094,017
Gain on disposal of fixed assets -242,288 -2,051,870
Provision for doubtful debts -1,765,389 35,524,405
Provision for gratuity and other benefits - 2,683,715
Other receivables written off - 831,474
Amortization of deferred costs - 2,215,371
-298,052 41,297,112
Operating profit/(loss) before
working capital changes -36,547,102 7,009,396
(Increase)/decrease in:
Advances, deposits, prepayments
and other receivables 2,002,065 9,134,518
Short term investments - 260,000
2,002,065 9,394,518
Increase/( decrease) in:
Short term finance -12,905,783 -32,765,470
Accrued and other liabilities 17,054,578 10,170,646
4,148,795 -22,594,824
Gratuity paid -280,280 -200,000
Dividend paid -756 -
Income tax paid -191,461 -755,856
-472,497 -955,856
Net cash flow from operating activities -30,868,739 -7,146,766
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2003
Unrealized Gain
Reserve On Unappro
Share Capital for long term priated
Capital Reserve contingencies investments Profit Total
........... R    u    p e    e    s ...........
Balance as on July 01, 2002 133,201,800 7,639,000 6,500,000 - -83,900,962 63,439,838
Net loss for the year - - - - -34,687,716 -34,687,716
Effect of remeasurement of
available for sale investments
to fair value - - - 1,758,226 - 1,758,226
Balance as on June 30, 2002 133,201,800 7,639,000 6,500,000 1,758,226 -118,588,678 30,510,348
Net loss for the year - - - - -36,799,050 -36,799,050
Effect of remeasurement of
available for sale investments
to fair value - 4,500,420 4,500,420
Balance as on June 30, 2003 133,201,800 7,639,000 6,500,000 6,258,646 -155,387,728 -1,788,282
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 2003
COMPANY AND ITS OPERATIONS
1.1      The company was incorporated in Pakistan on January 29, 1994 as a public limited company under
the Companies Ordinance 1984 and is listed on Karachi, Lahore and Islamabad Stock Exchanges.The
company is principally engaged in business of leasing.
1.2      The registered office of the company is in Lahore.
1.3      During the year the company suspended its lease operations and has surrendered its licence for
leasing business to SECP and also applied for delisting of shares from all stock exchanges. Subsequent
to the balance sheet date company has received acceptance letter from Karachi stock exchange for
buy back of shares of minority share holders by sponsors and delisting of shares of the company.
The company is presently engaged in recovery of dues under lease arrangements and settlement
of outstanding liabilities to financial institutions and other creditors.
SIGNIFICANT ACCOUNTING POLICIES
2.1      Accounting convention
These financial statements have been prepared under the historical cost convention except for
investment in equity securities which are stated at that fair value.
2.2      Statement of compliance
The accounts have been prepared inaccordance with the approved accounting standards as applicable
in Pakistan and the requirements of the Companies Ordinance, 1984. Approved Accounting Standards
comprises such international Accounting Standards as notified under the provisions of the Companies
Ordinance, 1984 and the directives issued by the Securities and Exchange Commission of Pakistan
(SECP). Wherever the requirements of the Comapnies Ordinance, 1984 or directives issued by the
SECP differ with the requirements of these Standards, the requirements of the Comapnies Ordinance
or the said directives take precedence.
2.3      Tangible fixed assets and depreciation
Owned
These are stated at cost less accumulated depreciation. Depreciation on these assets is calculated
by applying the staright line method whereby the cost of assets is written off over their estimated
useful lives.
Depreciation on fixed assets is charged proportionately from the month of acquisition upto the
month prior to deletion. Maintenance and normal repairs are charged to income as and when incurred,
major improvements are capitalized. Gain/(loss) on disposal is taken to income currently.
Leased
Leased assets held under finance lease are stated at cost less accumulated depreciation at the rates
and basis applicable to company owned assets.The outstanding obligation under the lease less
finance charges allocated to future periods are shown as liability.The finance charges are calculated
at the interest rate implicit in the lease and are charged to income currently.
2.4      Investment Property
Property not held for own use or for sale in ordinary course of business is classified as investment
property. Investment property comprising of land and building is not occupied by the company. The
investment property is initially recognised at cost along with other directly attributable expenses.
Subsequent to the initial recognition the property will be carried at fair value represented by open
market value as determined by external valuers. Subseqent adjustments to fair values will be included
in the income of relevant year.
2.5      Net investment in lease finance
These are stated at present value of minimum lease payments under lease agreements. Impairment
losses are recognized at higher of provision required in accordance with Prudential Regulations for
Non banking Finance Copmanies undertaking the business of leasing and the difference between
carrying amount of receivable and present value of expected cash flow discounted at the rate implicit
in the lease agreement.
2.6      Investments
All investments are initially recognized at cost being the fair value of consideration given.
Available for sale
Investments available for sale represents investments, which are not held for trading and held to
maturity. Subsequent to initial recognition, these investments are remeasured at fair value. The
investments for which a fair value is not available, are measured at cost as it is not possible to apply
any other valuation methodology, subject to review for impairment at each balance sheet date.
Any gain or loss from a change in the fair value of investments available for sale is recognized as
a component of equity untill the investment is sold, or otherwise disposed off, or until! investment
is determined to be impaired, at which time the cumulative gain/loss previously reported in equity
is included in the profit and loss account.
_______HplH to maturity
Investments with fixed maturity, where the management has both the positive intent and ability to
hold uptill maturity, are classified as held to maturity. Such investments are subsequently measured
at amortized cost. Amortized cost is calculated by taking into account any discount or premium on
acquisition over the period of maturity.
Fair value
For investments traded in organized financial market, fair value is determined by reference to Stock
Exchange quoted market bid prices at the close of business on the balance sheet date.
2.7      Revenue recognition
The company follows the " Financial Method " to recognize the income on finance leases. The
unearned finance income i.e., the excess of aggregate lease rentals and the residual value over the
cost of the leased asset is amortized to income over the lease term by applying the annuity method
to produce a constant rate of return on the net investment in the lease. Whereby expectation of
ultimate recovery is uncertain, the revenue recognition to that extent is postponed till the actual
collection thereof.
Dividend income from quoted entities is recognized when right to receive is established.
Income from short term finance is recognized on a time proportion basis.
Project examination, consultancy, commitment and other charges are taken to income when realized.
2.8      Taxation
Current
Income for the purpose of computing current taxation is determined under the provisions of the
income tax law whereby lease income received or receivable for the year are deemed to be income.
Provision for taxation is thus based on income determined in accordance with the requirements of
the income tax law.
Deferred
Deferred tax is provided using balance sheet liability method providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
2.9      Retirement benefit-defined benefit
The company operates unfunded gratuity scheme for all permanent employees. Annual provision
is made to cover the liability under the scheme. However, the management has not carried out the
acturial valuation as required by IAS 19 " Employees Benefits", as it considerd that full liability
as on balance sheet date has been provided for.
2.10    Provision for doubtful receivable
---------A provision is recognised in the balance sheef when the company has a legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits will
be required to settle the obligation.
2.11    Foreign Currencies
Transaction in foreign currency are accounted for in rupees at the rate prevailing on the date of the
transaction. Assets and Liabilities in foreign currencies are translated into rupees at the rate of
exchange prevailing at the balance sheet date. Exchange difference, if any, arising from translation
at year end is taken to profit and loss account.
2.12    Financial Instruments
Financial assets
Financial assets of the company comprise of net investment in lease finance, long term investments,
long term loans, advances, deposits, short term finance and cash and bank balances. Net investment
in leases is shown at their nominal values as reduced by its provision while all other financial assets
are stated at fair value or amortized cost.
Financial liabilities
Financial liabilities are classified according to the substance of contractual agreement entered into.
Significant financial liabilities are redeemable capital, long term loans and long term deposits on
lease arrangements. Long term loans and long term deposits are shown at book value.
Gain or loss, if any, on recognition and settlement of financial assets and liabilities is included in
net profit or loss in the period in which it arises.
2.13    Offsetting of financial assets and financial liabilities
A financial asset and a financial liability is offset and the net amount reported in the balance sheet,
if the company has the legal enforceable right to set off the transaction and also intends either to
settle on a net basis or to realize the asset and settle the liability simultaneously.
2.14    Cash and cash equivalents
Cflsri and and cash equivalents comprise of cash in hand and balances with banks on current and
deposit accounts.
Note 2003 2002
Rupees Rupees
3        CASH AND BANK BALANCES
Cash in hand 686 13,227
Cash at bank
-Current accounts 18,751 48,128
-PLS accounts 10,402,277 16,862
-Foreign currency - 18,461
10,421,028 83,451
10,421,714 96,678
4        ADVANCES, PREPAYMENTS AND OTHER RECEIVABLES
Current maturity of long term advances to employees 4.1 16,668 52,930
Due from ex-chief executive - 6,500,000
Prepayments 54,569 177,067
Lease rentals receivables 4.2 25,688,850 19,225,609
Accrued income 4.3 - 1,338,872
Advance tax - 24,021
' Advance rent 256,000 395,750
Other receivables 5,822,455 5,883,363
31,838,542.00 33,597,612
4.1     Due from ex-chief executive
Total receivable 20,456,836 20,456,836
Provision against receivable - -13,956,836
Doubtful considrered bad and written off -13,956,836 -
-13,956,836 -13,956,836
6,500,000 6,500,000
Amount recovered by repossession of
ex-chief executive's house 6,500,000 -
- 6,500,000
4.1.1  During the year the company recovered Rs 6.5 milion through repossession of ex-chief executives's
house as referred in note 10.
4.2     Lease rentals receivable
Lease rentals receivable 47,945,909 48,362,860
Suspended Income -11,149,770 -17,758,905
Provision for doubtful receivable -11,107,289 -11,378,346
25,688,850 19,225,609
4.3     This represents the mark up receivable on loan as disclosed in note 4. 1 . This income is no more recoverable
and hence written off as the loan has been settled during the ye ar.
Note 2003 2002
5        SHORT TERM FINANCE Rupees Rupees
Short term finance 4,000,000 4,000,000
5.1 This represents short term finance facility provided to Long Term Venture Capital Modarba. The
Modarba has agreed to settle its liability by transferring its TFC's (Series A) of Pakland Cement in
the name of the company.
6        LONG TERM DEPOSITS
Deposit against asset subject to finance lease 276,050 528,650
Security deposits 250,000 360,000
526,050 888,650
7        LONG TERM LOANS AND ADVANCES - CONSIDERED GOO1 9
Loan 7.1 _ 7,438,175
Advances
Executives - 35,418
Other employees 7.2 41,666 17,512
41,666 52,930
Current portion of long term loans and advances -16,668 -52,930
24,998 7,438,175
7.1      This represents outstanding amount of accrued interest on lease facilities provided to Pakland Cement.
During the current year Pakland Cement agreed to issue Term Finance Certificates series B amounting
to Rs.5,846,000 as referred in note 8.4.2 whereas balance of Rs.1,592,175 has been written off.
However the said TFC's has not been received till June 30, 2003.
7.2      This represents secured interest free loans given to company employees in accordance with the
"Emloyee Service Rules" and repayable in 2 to 5 years and are outstanding for a period not exceeding
3 years.
The maximum amount due at the end of any month during the year from executives and other employees
were Rs.35,418 (2002:146,746).
LONG TERM INVESTMENTS
Available for Sale
Quoted securities-at market value 8.1 4,440,745 8,335,197
Held to Maturity
Unquoted term finance certificates 8.4 85,063,603 79,217,603
89,504,348 87,552,800
8.1     Available for Sale-quoted Securities
No. of Amount No. of Amount
Shares Rupees Shares Rupees
2003 2002
Name of Company
Quoted-shares / Modarba Cerificates
Mutual Fund
Growth Mutual Fund Limited - - 77,000 146,300
ICP S.E.M.F 300 13,665 28,300 533,455
Tristar Mutual Fund Limited - - 10,000 3,500
Modarbas
ISt Tristar Modarba - - 25,500 8,925
First Islamic Modarba - - 50,000 85,000
Long Term Venture Capital Modarba* - - 70,000 38,500
Leasing Companies
Askari Leasing Limited 100 1,805 2,100 16,485
National Development Leasing Corp. Limited* 334 3,524 30,334 128,920
National Asset Leasing Corporation Limited 100 180 89,600 112,000
Paramount Leasing Limited - - 4,000 10,800
Pakistan Industrial Leasing Corp.Limited 100 715 13,080 65,400
Saudi Pak Leasing Company Limited - - 17,416 106;238
Union Leasing Limited - - 29,330 164,248
Investment Companies & Banks
First Capital Securities Corporation Limited 305 4,285 43,805 284,733
First International Investment Bank Limited - - 400 3,800
1st Standard Investment Bank - - 14,000 28,000
Askari Commercial Bank Ltd. 21,593 613,241 26,565 508,720
Soneri Bank Limited 14,548 251,680 44,111 672,693
Bank Al Habib Limited 316 8,532 253 4,352
Cresent Investment Bank Ltd. 148 2,738 5,148 41,184
Int'l Investment & Financial Services Limited - - 11,500 36,800
PICIC Commercial Bank 15,275 296,335 38,750 470,813
Union Bank Limited - - 33,475 234,325
Textile Spinning
Ummer Fabrics Limited 116 4,756 23,616 317,635
Taj Textile Mills Limited 50,175 280,980 77,175 173,644
Nagina (RCPREF) 40,000 420,000 50,000 275,000
Textile Composite
Nishat Mills Limited 327 11,461 12,116 188,404
Textile Weaving
Mohib Exports Limited 18,500 2,775 18,500 2,775
Sugar
Haseeb Waqas Sugar Mills Ltd. 15,500 139,500 50,500 194,425
Cement
Maple Leaf Cement Factory Ltd. 60,762 993,459 117,762 783,117
Cables And Electric Goods
Pak Electron Limited 375 9,863 11,875 116,372
Transport And Communication
PTCL (A) 27,000 768,150 - -
Chemicals And Pharmaceuticals
ICI Pakistan Limited 50 2,685 9,850 395,970
Nimir Industrial Chemical Limited 142,652 413,691 388,152 737,489
FFC Jordan - - 195,000 1,228,500
Pakistan PTA 21,500 196,725 40,500 216,675
430,076 4,440,745 1,659,713 8,335,197
8.2      The company's holding does not exceed 10% of the equity of any investee company.
8.3      All the shares/certificates have a face value of Rs.lO/-each except those marked with { * ).
Note 2003 2002
Rupees Rupees
8.4     Held To Maturity - Unquoted Term Finance Certificates
Name of company
Pakland cement limited (Series A) 8.4.1 75,622,603 60,036,000
Profit Capitalised 6,047,840 15,586,603
81,670,443 75,622,603
Mark up Suspense account -6,047,840 -
75,622,603 75,622,603
Parkland cement limited (Series B) 8.4.2 9,441,000 3,595,000
85,063,603 79,217,603
8.4.1  Series A TFC's
During the year 2001-2002 a "Scheme of Arrangement" was agreed between Pakland Cemeni
Limited (PCL) and its creditors. The scheme of arrangement was approved by the Sindh Higt
Court on December 24, 2001 and me Term Finance Certificates have been issued by PCL anc
delivered to the company against its restructured liabilities during the year 2003. Under the
term of arrangement between lenders and Pakland Cement the original TFC's issued carriec
interest @ 16% p.a cummulative, which was to be capitalized upto December 31, 2002. The
total profit to be cpitalized amounted to Rs 21.634 million, the total sum then due to the comapnj
would have amounted to Rs 81.6 million which would have been the carrying value of TFC's
These TFC's are redeemable in 13 half yearly unequal instalments commencing from June
2003
Thereafter half yearly profit @ 16% was to be accrued under the repayment schedule. At the
balance sheet date the profit amounting to Rs 6.531 million was also not received by the
company.
The company has provided for profit capitalization of Rs 6.047 million of TFC's and has
transferred it to Mark up suspense account-and has also not accrued profit due upto the balance
sheet date amounting to Rs 6.531 million. In the likelihood of default by Pak Land Cemen'
TFC amounts are unlikely to be realized however in the absence of a final settlement agreemen
and the calculation of the company's share in the liquidation proceeds an accurate provisior
has not been made.