Network Leasing Corporation Limited
Annual Reports 2003
CONTENTS
Company Information
Vision / Mission Statement
Directors' Report
Key Financial and Operational Data
Statement of Compliance with the Code of Corporate Governance
Notice of the Annual General Meeting
Auditors' Report on compliance of the Code of Corporate Governance
Auditors' Report
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
Pattern of Shareholding
Disclosure to Pattern of Shareholding
Consolidated Account of Network Leasing Corporation Ltd. and its Subsidiary
Auditors' Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
COMPANY INFORMATION
Board of Directors
Mr. Mohammed Elias		Mr. Abdul Qayyum Bux
Ms. Musaret Siddiqi		Mr. Yusuf A. Sattar
Mr. Hanif A. Sattar		Mr. Asif Siddiqi
Mr. Mohammad All
Company Secretary
Mr. M. Nadeem Ahmed
Audit Committee
Mr. Hanif A. Sattar		Chairman
Mr. Mohammed Elias		Member
Mr. Abdul Qayyum Bux		Member
Registered & Head Office		301-302, Gul Tower,
		I.I. Chundrigar Road, Karachi-74000, Pakistan.
Telephone		(92-21) 242-4616, 242-4655
Telefax		(92-21) 242-5366, 244-3547
e-mail		mtcleas@nlcl.net
Web		http//www.nlcl.net
Lahore Office		67-A/2, Gulberg III, Lahore.
Telephone		(042) 575-0429, 575-9758
Telefax		(042)571-1919
Peshawar Office		2nd Floor, Fawad Plaza,
		University Road, Peshawar.
Telephone		(091)570-3470
Telefax		(091)570-3470
Lenders and Bankers		The World Bank
		The Asian Development Bank
		Swis agency for Development and cooperation
		United Bank Limited
		ABN-Amro Bank
		Muslim Commercial Bank
		Oman International Bank
		Habib Bank Limited
		Allied Bank of Pakistan Limited
		Pakistan Poverty Alleviation Fund
		Deutsche Bank Microcredit Development Fund
Auditors		Muniff Ziauddin & Co., Chartered Accountants
		Member LA. International
Legal Advisors		Mehrab Gul, Advocates
Share Transfer Office		C&K Management Associates (Pvt.) Ltd.
		404, Trade Tower, Abdullah Haroon Road, Karachi.
VISION / MISSION STATEMENT
OF NETWORK LEASING CORPORATION LIMITED
To endeavor to establish itself as an jnstitution that caters to the
financial and development needs of micro and small enterprise (MSB).
To endeavor to create an environment in the country's financial sector,
whereby MSEs are seen as an opportunity rather than an unacceptable
risk, thereby discharging its duty as a responsible corporate citizen.
To ensure that the interests of the shareholders and all other stakeholders
are safeguarded.
DIRECTORS' REPORT
Your directors have pleasure in presenting to the shareholders the results and the Annual Report
for the year ended June 30, 2003.
Financials
The operating profit for the year ended June 30, 2003 was Rs. 22,274,140 while the profit after
tax for the year was Rs.21,245,683. The after tax profit for the year ended June 30, 2002 was Rs.
11,482,500.00
With regard to the company's profitability, yours directors are confident that with the expected
stabilization of the economic conditions and decline in financial cost, the profitability of your company
will improve further during the financial year ending June,2004.
The profit is proposed to be appiopriated as under:
					June	June
					2003	2002
Operating profit					22,274,140	10,826,212
Taxation					-1,028,457	656,288
Profit after tax					21,245,683	11,482,500
Unappropriated profit brought forward					18,834,856	9,648,856
Profit available for appropriation					40,080,539	21,131,356
Appropriation:
Transfer to statutory reserve					4,249,137	2,296,500
Proposed dividend @ 10% per share (2002: Nil)					17,500,000	-
					-21,749,137	-2,296,500
unappropriated proilt carried rorwara					18,331,402	18,834,356
Earning per share - basic and diluted					1.21	1.14
Dividend
The Board of Directors have recommended a 10% cash dividend for the year ended 30th June
2003
Directors
Dr. Mahfooz AN and Mr. Abid Aziz retired in July 2003 and Mr. Mohammad AN was elected for a
period of 3 years from 1st August 2003. The Board welcomes Mr. Mohammad AN and wishes to
put on record the services rendered by Dr. Mahfooz AN and Mr. Abid Aziz.
Operational Review
Overview
On 30th June 2003, the company completed its 8th year of full operations. Despite competition
from other financial institutions, with everyone's suppprt and understanding, the company has
managed to make steady progress. The business during the period under review was better than
previous year. We hope to expand outreach further during the current year.
Leasing Operations
Jn accordance with our mission, teasing to small and micro enterprises has been progressing
reasonably well on a nationwide basis.
Health and education have been the two key areas which not only effect the present but coming
generations as well. Consequently, considerable efforts are directed towards these sectors in all
Jow income areas. Women and children are the main beneficiaries in these sectors. Our endeavor
during the period has been to reach the women at the grass root level. We have succeeded to a
certain extent by extending our outreach to the main cities and surrounding villages, but this process
will take time since we accord high priority to the clients' income generating capabilities in order
to maintain our recovery rate.
Geographical Coverage
During the period under review, regular visits were made by our senior executives as well as the
program officers to the villages and semi-urban areas in Sindh, Punjab and NWFP.
Support and Training to MSEs
Assisting the client in preparing the financial statements remain standardized.
Our staff prepare the client's financial statements for the last 3 years, with the help of the information
and figures provided by the clients. This procedure is followed in each and every case where the
clients cannot prepare the statements themselves. In case where the clients have a little knowledge
but have not prepared the accounts, our staff help them to prepare the statements.
Recoveries
The rental recovery continues to be satisfactory. The overdue rental position was 4.35% of the total
portfolio.
Most of the over dues are with prior arrangement, and are recoverable eventually. There were
some willful default cases. These lessees have been taken to the banking court. We are reasonably
hopeful that in the end the amounts will be recovered. In other cases the assets were repossessed.
Resource Mobilization
During the year we mobilized Rs. 340 million from various financial institutions.
Other Developments
The second issue of TFC's of Rs. 300 million is under process. Due to decline in the mark-up rates,
the advisors and arrangers are revising the rates downwards and are finalizing the arrangements
with the investors. The issue is likely to be completed by end October 2003.
Through the Microfinance Institutions Ordinance 2001, the government has allowed the private
sector to establish Microfinance Banks. In view of your company's pioneering the role in the
development of microfinance in country, the company has applied to the State Bank of Pakistan
for a licence to establish Network Microfinance Bank.
The acquisition of Technology Ventures (Private) Limited, the management company of First Mehran
Modaraba was completed in December 2002.
Corporate Governance
As required under the Code of Corporate Governance, the Board of Director states that:
The Financial Statements prepared by the management of the Company present fairly the state
of affairs of the company, the results of its operations, cash flow statement and statement of changes
in equity.
Proper books of accounts of the company havefceen maintained.
Accounting policies as stated in the notes to the accounts have been consistently applied in
preparation of financial statements and accounting estimates are based on reasonable & prudent
Judgement.
International Accounting Standards, as applicable in Pakistan have been followed in preparation
of the financial statements.
The system of Internal Control is sound in design and has been effectively implemented and
monitored.
There is no doubt about the Company's ability to continue as a going concern.
There have not been any material departure from the best practices, as detailed in the listing
regulations.
The value of investment of the Employee's Provident Fund as on 31 December 2002 was
Rs. 3,088,400.
No payment has remained outstanding on account of any taxes, duties, levies and charges.
A statement showing Company's shares bought and sold by its Directors, Chief Executive Officer, Chief
Financial Officer, Company Secretary and minor family members is annexed as Annexure I (Page 8);
a statement showing attendance of Board meetings is annexed as Annexure II (Page 8) and Pattern
of Shareholding as required by the Companies Ordinance, 1984 is annexed as Annexure III (Page 39).
The key operating and financial data has been given in a summarized form on Page 9.
Maintenance of Website
As per SECP circular number 13 dated May 13, 2003, the company already maintains its website
disclosed in company information.
Report on Implementation of transfer pricing policy
The Company has:
(i) recorded all transactions with related parties undertaken during the financial year on arm's