| Atlas Lease Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 2000 |
|
|
|
| MISSION
STATEMENT |
|
|
| Lead
the industry by providing quality |
|
| service
to customers, ensure continuous |
|
| growth
in the shareholders' value and |
|
| contribute
towards the economic |
|
| development
of the country through a |
|
| youthful
goal oriented, well rewarded team. |
|
|
|
| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Ten
Years at a Glance |
|
| Directors'
Report |
|
| Chairman's
Review |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
|
|
BOARD OF DIRECTORS |
|
| Chairman |
|
Yusuf H. Shirazi |
|
| Chief
Executive |
|
Khaleeq-ur-Rahman Khan |
|
| Directors |
|
Dr. Amjad Waheed |
|
|
Katsuaki Endo |
|
|
Muhammad Shaft |
|
|
Sanaullah Qureshi |
|
|
Saquib H. Shirazi |
|
|
Sherali Mundrawala |
|
|
Talat Mahmood |
|
| Company
Secretary |
|
Farooq Saleem |
|
|
|
GROUP EXECUTIVE COMMITTEE |
|
| Chairman |
|
Yusuf H. Shirazi |
|
| Members |
|
Jawaid Iqbal Ahmed |
|
|
Frahim Ali Khan |
|
|
Iftikhar H. Shirazi |
|
|
Aamir H. Shirazi |
|
|
Saquib H. Shirazi |
|
| Secretary |
|
Amjad Hussain |
|
|
|
GROUP PERSONNEL COMMITTEE |
|
| Chairman |
|
Yusuf H. Shirazi |
|
|
|
GROUP AUDIT COMMITTEE |
|
| Chairman |
|
Sanaullah Qureshi |
|
|
|
MANAGEMENT COMMITTEE |
|
| Chairman |
|
Khaleeq-ur-Rahman Khan |
|
|
|
EXECUTIVE CREDIT
COMMITTEE |
|
| Chairman |
|
Frahim Ali Khan |
|
|
| Auditors |
|
Ford, Rhodes, Robson,
Morrow. |
|
|
Chartered Accountants |
|
|
| Legal
Advisors |
|
Mohsin Tayebaly & Co. |
|
|
| Bankers |
|
ABN AMRO Bank |
|
|
Allied Bank of Pakistan
Limited |
|
|
Askari Commercial Bank
Limited |
|
|
Faysal Bank Limited |
|
|
Habib Bank AG Zurich |
|
|
Habib Bank Limited |
|
|
Muslim Commercial Bank
Limited |
|
|
The Bank of
Tokyo-Mitsubishi, Limited |
|
|
The Hongkong and Shanghai |
|
|
Banking Corporation
Limited |
|
|
| Lending
Institutions |
|
Asian Development Bank
(ADB) |
|
|
Commonwealth Development
Corporation (CDC) |
|
|
German Investment and
Development Co. (DEG) |
|
|
International Finance
Corporation (IFC) |
|
|
Netherlands Development
Finance Co. (FMO) |
|
|
Pakistan Kuwait
Investment Co., (Pvt.) Limited |
|
|
| Registered
Office & Head Office |
Federation House, Sharae
Firdousi, |
|
|
Clifton, Karachi - 75600 |
|
|
Tel: (92-21) 5866817 -
20, 5866919 - 20 |
|
|
Fax: (92-21) 5870543 |
|
|
E-mail:
allkhi@allkhi.atlasgrouppk.com |
|
|
Web Site: www.
atlasgrouppk.com/all |
|
|
| Branch
Offices |
|
Lahore Office: |
|
|
3rd Floor, Ajmal House, |
|
|
27-Egerton Road, Lahore. |
|
|
Tel: (92-42) 6366170 -74,
6364941, 6305439, 6305449 |
|
|
Fax: (92-42) 6365058 |
|
|
E-mail: alllhr@alllhr.
atlasgrouppk.com |
|
|
|
Islamabad Office: |
|
|
30, Mezzanine Floor,
Beverly Centre, |
|
|
Blue Area, Islamabad. |
|
|
Tel: (92-51) 2824906,
824909 |
|
|
Fax: (92-51) 2821377 |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the Thirteenth Annual General Meeting of the members of
ATLAS LEASE LIMITED will |
|
| be
held at 11.00 a.m. on Tuesday, December 26, 2000 at Registered Office of the
Company at Federation House, |
|
| Sharae
Firdousi, Clifton, Karachi to transact the following business: |
|
|
| ORDINARY
BUSINESS: |
|
| 1.
To confirm the Minutes of the Twelfth Annual General Meeting held on December
22, 1999. |
|
|
| 2.
To elect eight (8) Directors on the Board of the Company under section 178
read with section 180 of the |
|
| Companies
Ordinance, 1984 for a period of three years commencing from December 29, 2000
in place of |
|
| the
eight (8) retiring Directors, namely: |
|
|
| 1.
Mr. Yusuf H. Shirazi |
|
5. Mr. Sanaullah Qureshi |
|
| 2.
Dr. Amjad Waheed |
|
6. Mr. Saquib H. Shirazi |
|
| 3.
Mr. Katsuaki Endo |
|
7. Mr. Sherali Mundrawala |
|
| 4.
Mr. Mohammad Shaft |
|
8. Mr. Talat Mahmood |
|
|
| The
Board of Directors has 'fixed number of Directors to be elected at the
ensuing Annual General Meeting |
|
| as
eight. All retiring directors are eligible to offer themselves for
re-election. |
|
|
| 3.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended June 30, 2000 |
|
| together
with the Directors' and Auditors' Report thereon. |
|
|
| 4.
To appoint Auditors and fix their remuneration for the year ending June 30,
2001. The present Auditors M/s. Ford, |
|
| Rhodes,
Robson, Morrow, Chartered Accountants, retire and being eligible, offer
themselves for reappointment. |
|
|
| SPECIAL
BUSINESS: |
|
| 5.
To approve the issue of Bonus Shares ~ 16% for the year ended June 30, 2000
as recommended by the Board |
|
| of Directors. |
|
|
| 6.
To approve increase in Authorized Capital of the Company from Rs.200 million
to Rs.300 million. |
|
|
| 7.
To approve the remuneration of the Chief Executive of the Company as
recommended by the Board of Directors. |
|
|
| OTHER
BUSINESS: |
|
| 8.
To transact any other business as may be placed before the meeting with the
permission of the Chair. |
|
|
| A
statement under section 160 (1) (b) of the Companies Ordinance, 1984
pertaining to the Special Business |
|
| referred
to above is annexed to this Notice of Meeting. |
|
|
|
By Order of the Board |
|
| Karachi:
November 24, 2000 |
|
FAROOQ SALEEM |
|
|
Company Secretary |
|
| NOTES: |
|
| i)
The Register of Members of the Company will remain closed from 19/12/2000 to
26/12/2000 (both days |
|
| inclusive).
Transfers received in order at the Registered Office of the Company at the
close of business on |
|
| December
18, 2000 will be treated in time for the purpose of entitlement of Bonus
Shares. |
|
|
| ii)
A member entitled to attend and vote at this meeting may appoint another
member as his / her proxy to |
|
| attend
& vote on his / her behalf. The instrument appointing a Proxy and the
power of attorney or other authority |
|
| under
which it is signed or a notarially certified copy of the power of attorney
must be received at the |
|
| Registered
Office of the Company duly stamped, signed and witnessed not later than 48
hours before the meeting. |
|
|
| iii)
Nomination from members for the office of director must be received at least
14 days before the time of the |
|
| meeting
at the Registered Office of the Company. |
|
|
| iv)
Shareholders whose shares are deposited with Central Depository System (CDS)
are requested to bring their |
|
| National
Identity Card (NIC) alongwith their Account Number in CDS for verification.
In case of corporate |
|
| entity,
the Board of Director's resolution/power of attorney with specimen signatures
of the nominee shall |
|
| be
produced (unless it has be provided earlier) at the time of meeting. |
|
|
| v)
Members are requested to notify any change in their addresses immediately. |
|
|
| STATEMENT
UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984 |
|
| This
statement sets out the material facts concerning the Special Business to be
transacted at the Thirteenth Annual |
|
| General
Meeting of Atlas Lease Limited to be held on December 26, 2000. |
|
|
| 1.
The Directors are of the view that the Company's financial position justifies
the capitalization of |
|
| Rs.
27,770,320 from reserves of the Company to enable a Bonus issue in proportion
of four (4) shares |
|
| for
every twenty five (25) shares held. For this purpose, following resolution is
proposed to be passed as an |
|
| Ordinary
Resolution, namely: |
|
| |
|
| RESOLVED |
|
| "that
a sum of Rs. 27,770,320 (Rupees Twenty Seven Million Seven Hundred Seventy
Thousand Three Hundred |
|
| Twenty
Only) out of the free reserves of the Company be capitalized and applied to
the issue of 2,777,032 fully |
|
| paid
ordinary shares of Rs. 10/- each as Bonus Shares in the proportion of four
(4) new shares for every twenty |
|
| five
(25) existing shares held to those members whose names appear in the register
of members as at the close |
|
| of
business on December 18, 2000 and that the shares so issued shall be treated
for all purposes as an increase |
|
| in
the paid-up capital of the Company." |
|
|
| FURTHER
RESOLVED |
|
| "that
the Bonus Shares so issued shall rank pari-passu in all respects with the
existing ordinary shares of the |
|
| Company" |
|
|
| FURTHER
RESOLVED |
|
| "that
members entitled to a fraction of a share shall be given the sale proceeds of
their respective fractional |
|
| entitlement,
for which purpose the Directors be and are hereby authorized to consolidate
the fractions into whole |
|
| shares
and sell the shares in the stock market." |
|
|
| FURTHER
RESOLVED |
|
| "that
the Directors be and are hereby authorized and empowered to give effect to
this resolution and to do or |
|
| cause
to be done all acts, deeds and things that may be necessary or required for
the issue, allotment and distribution |
|
| of
2,777,032 shares." |
|
|
| 2.
The Authorized Capital of the Company is being proposed to be increased from
Rs. 200,000,000/- |
|
| (Rupees
Two Hundred Million) to Rs. 300,000,000/- (Rupees Three Hundred Million) in
order to enable |
|
| the
Directors to issue further share capital when deemed necessary. For this
purpose, following resolution is |
|
| proposed
to be passed as a Special Resolution: |
|
|
| RESOLVED |
|
| "that
Authorized Capital of the Company be and is hereby increased from Rs.
200,000,000/- (Rupees Two Hundred |
|
| Million)
divided into 20,000,000 (Twenty Million) ordinary shares of Rs. 10/- each to
Rs. 300,000,000/- (Rupees |
|
| Three
Hundred Million) divided into 30,000,000 (Thirty Million) ordinary shares of
Rs. 10/- each." |
|
|
| FURTHER
RESOLVED |
|
| "that
Clause V of the Memorandum of Association and Article 5 of the Articles of
Association of the Company |
|
| be
and are hereby amended to the extent of reflecting therein the increase in
Authorized Capital as aforesaid." |
|
|
| 3.
Approval of the shareholders will be sought for the remuneration payable to
the Chief Executive of |
|
| the
Company in accordance with the terms and conditions of his service, as
recommended by the Board |
|
| of
Directors of the Company. For this purpose, it is intended to propose the
following Resolution to |
|
| be
passed as an Ordinary Resolution: |
|
|
| RESOLVED |
|
| "that
the Company hereby authorizes the holding of office of profit and payment of
remuneration (inclusive of |
|
| allowances)
to Mr. Khaleeq-ur-Rahman Khan, Chief Executive, not exceeding in the
aggregate Rs 3.20 million |
|
| per
annum for the year ending June 30, 2001 in addition to perquisites and other
benefits to which he is entitled |
|
| as
per Company policy." |
|
|
| The
Chief Executive is interested in the business to the extent of his
remuneration. |
|
|
|
|
|
| TEN
YEARS AT A GLANCE |
|
|
|
(Rupees in million) |
|
2000 |
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
| Paid-up
Capital |
173.56 |
105.19 |
105.19 |
105.19 |
105.19 |
66.55 |
60.50 |
55.00 |
50.00 |
50.00 |
| Reserves
& Surplus |
143.31 |
137.83 |
112.51 |
108.58 |
90.86 |
59.08 |
39.58 |
26.90 |
19.20 |
9.82 |
| Shareholders'
Equity |
316.87 |
243.02 |
217.70 |
213.77 |
196.05 |
125.63 |
100.08 |
81.90 |
69.20 |
59.82 |
| Profit
Before Taxation |
28.66 |
23.74 |
34.36 |
24.63 |
43.18 |
33.38 |
26.34 |
20.78 |
14.39 |
8.58 |
| Profit
After Taxation |
21.27 |
25.31 |
19.71 |
17.72 |
41.73 |
32.21 |
24.23 |
18.20 |
14.39 |
8.58 |
| Cash
Dividend |
|
15.00% |
|
15.00% |
10.00% |
10.00% |
10.00% |
10.00% |
|
| Stock
Dividend |
16.00% |
15.00% |
|
10.00% |
10.00% |
10.00% |
|
| Right Issue |
|
50.00% |
|
50.00% |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors have pleasure in submitting Annual Report of the Company together
with the Audited Accounts and |
|
| the
Auditors' Report thereon for the year ended June 30, 2000. |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| Financial
Results: |
|
| Profit
for the year before taxation |
|
28,661,582 |
23,735,666 |
|
| Taxation: |
|
|
|
| Current |
|
6,027,984 |
3,924,436 |
|
| Prior |
|
1,366,072 |
-- |
|
| Deferred |
|
-- |
(5,500,000) |
|
|
------------ |
------------ |
|
|
7,394,056 |
(1,575,564) |
|
|
------------ |
------------ |
|
| Net
profit for the year after taxation |
|
21,267,526 |
25,311,230 |
|
| Previous
profit brought forward |
|
797,761 |
205,691 |
|
|
------------ |
------------ |
|
| Profit
available for appropriation |
|
22,065,287 |
25,516,921 |
|
|
| Appropriations: |
|
| Transfer
to statutory reserve |
|
4,253,505 |
5,062,246 |
|
| Transfer
from general reserve |
|
(42,510,320) |
(14,740,000) |
|
| Transfer
to capital reserve for deferred taxation |
|
32,500,000 |
24,440,000 |
|
| Transfer
to reserve for issue of bonus shares |
|
27,770,320 |
9,956,914 |
|
|
------------ |
------------ |
|
|
22,013,505 |
24,719,160 |
|
|
------------ |
------------ |
|
| Un-appropriated
profit carried forward. |
|
51,782 |
797,761 |
|
|
------------ |
------------ |
|
|
|
|
| Dividend: |
|
| The
directors are pleased to recommend a stock dividend/issuance of bonus shares
in proportion of four (4) shares |
|
| for
every twenty five (25) shares held, i.e. 16% out of the general reserve of
the Company. |
|
|
| Chairman's
Review: |
|
| The
accompanying Chairman's Review deals with the performance of the Company
during the year and future outlook. |
|
| The
Directors of the Company endorse the contents of the review. |
|
|
| Pattern
of Shareholding: |
|
| The
pattern of shareholding of the Company is annexed. |
|
|
| Auditors: |
|
| The
present Auditors Messrs. Ford, Rhodes, Robson, Morrow, Chartered Accountants
retire and being eligible offer |
|
| themselves
for reappointment. |
|
|
|
for and on behalf of |
|
|
BOARD OF DIRECTORS |
|
|
|
SANAULLAH QURESHI |
|
KHALEEQ-UR-RAHMAN KHAN |
|
YUSUF H. SHIRAZI |
|
|
|
Director |
|
Chief Executive |
|
Chairman |
|
|
| Karachi:
November 24, 2000 |
|
|
|
| CHAIRMAN'S
REVIEW |
|
|
| I
am pleased to present the Thirteenth Annual Report of your Company for the
year ended June 30, 2000. |
|
|
| THE
ECONOMY |
|
| The
year ending June 30, 2000 remained under the shadow of the international and
domestic political and economic |
|
| situation
prevailing in the year 1999. Nuclear detonation, Kargil issue and ultimately
army take over have had its |
|
| impact
on the political, economic and social fabric of the country. Good cotton,
rice and wheat crops, however |
|
| did
help in raising the GDP growth but inept pricing and other policy measures
could not yield the desired socio- |
|
| economic
benefits at the grass roots so as to uplift the economy on the whole. It was
against this background |
|
| that
the National Budget for the year 2000-2001 was presented as a part of 3 years
Perspective Plan aimed at |
|
| achieving
a 6% GDP growth and budgetary deficit below 5% by the year ending 2003. |
|
|
| The
GDP growth for the year 1999-2000 was 4.8%, agriculture being highest at
7.2%, manufacturing the |
|
| lowest
at 1.1% and service sector at 4.5%. Inflation was claimed to be 3.6% which
was the lowest in the past |
|
| decade.
The GDP growth target set for the year 2000-2001 vis-a-vis 1999-2000 is at
5%, up 0.2% from the |
|
| previous
year. Agriculture growth is projected at 3.9%, services at 5.2% and the
manufacturing at 5.9%. The |
|
| target
growth rates are an encouraging sign. The inflation for the year 2000-2001 is
estimated at 4.5%, 0.9% higher |
|
| than
last year. Despite government's emphasis on agriculture sector, a projection
of lower growth as |
|
| compared
to last year seems reasonably cautious keeping in view the current water
shortage and vagaries of the |
|
| weather.
In the present circumstances, the growth in manufacturing at 5.9% seems to be
optimistic but |
|
| achievable!
Similarly, the budgetary deficit target set at 4.6% of GDP vis-a-vis 6.5% of
last year and 6.6% average |
|
| of
the last 4 years seems to be somewhat realistic though with a lot of focus on
the rough edges of the economy. |
|
| The
revenue target hinges on collection of an extra Rs. 100 billion. It is
essential that all these targets are met in the |
|
| wake
of prevailing economic situation particularly the IMF conditionalities &
the overall external pressures, which are |
|
| becoming
increasingly arduous for the borrowing nations with Pakistan the most hard
hit at the present time. |
|
|
| On
the other hand, in July 2000 the State Bank of Pakistan chose to remove the
restrictions on the inter bank market |
|
| and
freed the rupee-dollar parity which caused the rupee to fall from Rs.52.36 to
Rs.59.30 a dollar in early October |
|
| 2000,
13.3% devaluation within a period of 10 weeks. In the kerb market, the rupee
went as low as Rs.63 to a |
|
| dollar
- resulting in cost-push pressures in the long run. This was stated to meet
one of the IMF conditionalities |
|
| -
before any settlement with them in sight. There is thus no alternative but to
come out of the vicious circle of |
|
| ever
rising debts, falling rupee, debt servicing and costlier imports,
consequently rendering exports incompetitive |
|
| due
to rising internal costs. This can only be done by a better business
environment, which promotes greater |
|
| investment
and savings. The devaluation has indeed made everything costlier without a
corresponding increase |
|
| in
investment and production productivity, value addition and volume growth.
Full utilization of capacity needs to |
|
| be
the focus, which alone will bring the cost down and result in export
competitiveness. |
|
|
| In
order to revive the economy, the world financing agencies prescription may be
just marginal. It has hardly |
|
| helped
any developing country so far. A recommendation in this connection to phase
out seven main industries in |
|
| Pakistan
- steel, fertilizer, sugar, oil refineries, chemicals, pharmaceuticals and
automobile, constituting over 50% |
|
| of
the economy, being not competitive by world standards, will further damage
the economy as a whole. What will |
|
| then
remain for achieving self-reliance, a view the Government does espouse.
Unemployment is becoming |
|
| a
bigger concern and challenge day by day. Similarly, a report that
localization programmes will be done away |
|
| will
only discourage investment. Equally important is the competitive advantage of
the local industry being |
|
| eroded
without which localization is effected. Imagine the rate of custom duty is
being reduced from 35% to |
|
| 25%,
without a corresponding reduction in raw material duty which remains at 10%.
Since the automobile |
|
| engineering
industry clearly does not come under the world financing institutions and
other regulatory agencies |
|
| -
WTO - there is no reason to succumb to any pressure from any other
international agency. Otherwise such |
|
| policies
will suspend investment with its repercussion on all financial institutions
and particularly leasing, |
|
| production
and export - and above all, any entrepreneurial initiatives in these
industries, to say the least, unless the |
|
| situation
is rectified or clarified in bold letters: |
|
|
| (The
state secrets are the preservatives of the statesmen) |
|
|
| MONETARY
DEVELOPMENTS |
|
| During
the period under review, the money market generally remained liquid. Lack of
economic activity can |
|
| be
termed as one of the major reasons of the excessive liquidity. The government
in a bid to boost economy, |
|
| asked
financial institutions to cut down the lending rates. To facilitate this
reduction, profits on national saving |
|
| schemes
were cut down by 2%. The State Bank of Pakistan also reduced the discount
rate from 13% to 11%. The |
|
| leading
commercial banks followed suit and reduced markup rates upto 2% in the second
half of the financial |
|
| year
under review. However, despite excess liquidity in the market and reduced
lending rates the economic activity |
|
| failed
to pick up, indicating lack of investors response. Removal of trading band in
the inter bank market put |
|
| rupee
under immense pressure against dollar. In order to stabilize the declining
rupee, the State Bank of Pakistan |
|
| carried
out a major operation in October 2000 and sucked liquidity from the market to
put dollarization to a hold. |
|
|
| In
a span of 2-3 weeks, the State Bank of Pakistan increased discount rate by 2%
i.e. from 11% to 13%. |
|
| Cut-off
rates on T-bills were also increased by more than 3%. Reserves requirement of
the commercial banks was |
|
| increased
from 5% to 7%. All these measures sucked liquidity from the market and
controlled further decline |
|
| of
rupee against dollar with rupee-dollar parity improving to Rs. 56.15 per
dollar and Rs. 61.05 per dollar in the |
|
| inter-bank
and curb market respectively in the second week of November 2000. To control
imports, commercial |
|
| banks
also imposed 30% margin requirement against letter of credit, subsequently
reduced to 15% and |
|
| eventually
removed as the market eased out and rupee gained strength. The subject
measures did manage to |
|
| stabilize
the rupee but at the cost of increased lending |
|
| rates
in the money market by 3% to 4%. |
|
|
| Expectation
of the deregulation of energy sector, excess liquidity in the money market
and reduction in profit |
|
| rates
of the national saving schemes led the KSE-100 index to reach the 28-month
high of 2,054 points on |
|
| March
22, 2000. However, the 4th quarter of the fiscal 2000 witnessed a sharp
reversal in the stock market, as |
|
| certain
speculative operators in the LSE could not fulfill their settlement
obligations. As a result of these defaults |
|
| trading
at all the three stock exchanges remained suspended on May 30, 2000, first
time in the history of |
|
| Pakistan.
These events led to a sharp decline in the stock prices taking the index down
to 1,520.74 on June 30, |
|
| 2000
and to 1,386.31 points on November 20, 2000 since the much awaited settlement
between GOP, WAPDA and |
|
| a
private IPP is still pending affecting fresh dozes of investment -
particularly foreign! |
|
|
| THE
LEASING INDUSTRY |
|
| The
leasing industry started developing in Pakistan in mid eighties with the
establishment of first leasing |
|
| company
in 1984 with paid-up capital of Rs. 20 million. Since then the number of
leasing companies has increased |
|
| to
32 and the equity to Rs.7,871 million till 1999. In addition there are 8
modaraba companies doing leasing |
|
| business
with an equity of Rs.3,009 million. |
|
|
| The
performance of leasing companies in the last five years show a mixed trend.
The equity grew from Rs.4,670 |
|
| million
in 1995 to Rs.7,871 million in 1999. The net investment in lease finance
increased by more than three |
|
| times,
i.e. from Rs.9,404 million in 1995 to Rs.29,039 million in 1999. |
|
|
| The
revenues also doubled from Rs. 2,522 million to Rs.5,528 million during the
same period, but the net profit |
|
| could
not keep pace with the growth. After reaching the peak at Rs. 922 million in
1996, it declined to Rs. 451 |
|
| million
in 1999, as against Rs. 517 million in 1995. This shows the last few years
not having been vibrant for the |
|
| industry
- primarily due to low level of investment activity, higher financial cost
and operating expenses, which on |
|
| cumulative
basis increased from Rs. 1,448 million in 1995 to Rs. 4,928 million in 1999. |
|
|
| During
the period under review, excess liquidity in the market coupled with limited
investment opportunity |
|
| created
an environment of severe competitions in the market bringing down the mark-up
rates and squeezing |
|
| the
spreads to bare minimum. |
|
|
|
|
| In
the Finance Ordinance 2000-2001, availability of initial depreciation
allowance, which was expiring on |
|
| June
30, 2000, was not renewed. On the other hand, industrial sector has been
given the incentive of Tax |
|
| Credit
in addition to the First Year Allowance. Leasing companies are however,
excluded from these allowances |
|
| despite
being acquirer and owners of industrial machinery. This sudden removal of
initial depreciation allowance |
|
| will
seriously hamper the growth of the entire leasing industry. This is a matter
of serious concern for the leasing |
|
| industry.
Accordingly, LAP has taken up this issue with the Ministry of Finance and
Central Board of Revenue |
|
| requesting
that either initial depreciation allowance be renewed for a further period of
five years or leasing |
|
| companies
be also allowed to avail First Year Allowance and Tax Credit. |
|
|
| Positive
development in the Finance Ordinance 2000-2001 was with respect to exclusion
of finance lease from |
|
| the
definition of Supply under the Sales Tax Act. With this amendment the sale
and lease back transaction will |
|
| not
be subject to imposition of sales tax, indeed a right approach in avoiding
duplication of taxes. Furthermore, |
|
| CBR
has also issued a clarification with respect to lease key money, which was
being taxed in some cases. This |
|
| will
no longer be treated as part of lease income and as such will not be
subjected to tax. |
|
|
| The
new Leasing Companies Rules 2000 were finally implemented with effect from
September 25, 2000. Time |
|
| limit
for raising paid-up capital to Rs. 200 million has been extended to June 30,
2001. Current stock market |
|
| conditions
make the subject deadline highly unrealistic. Leasing Association of Pakistan
(LAP) has taken up the |
|
| matter
with the SECP to review the deadline. |
|
|
| For
financing of BMR requirements, small and medium size enterprises will be the
main targets for the leasing |
|
| industry.
Despite the current economic scenario, the leasing business has the potential
for substantial growth, |
|
| which
will unleash in the years to come with the economic and political stability
in the country. |
|
|
|
| THE
COMPANY'S RESULTS |
|
| During
the period under review, lease disbursement of Rs. 738.03 million was made,
up 19.74% from last year. |
|
|
| Net
Investment in Lease Finance as on June 30, 2000 amounted to Rs.1,873,30
million compared to Rs. |
|
| 1,910.08
million last year. |
|
|
|
|
| The
lease portfolio comprised of 65.61% in machinery, 29.91% in vehicles and
4.48% in office equipment. |
|
|
| The
sectoral exposure as on June 30, 2000, was fairly diversified and comprised
of 12.09% in Cement followed |
|
| by
11.67% in Textile Spinning, 11.09% in Services, 8.93% in Chemicals,
Fertilizers & Pharmaceuticals, 8.02% |
|
| in
Steel, Engineering & Automobiles, 8.01% in Food, Tobacco & Beverages,
7.88% in Consumer, 5.77% in |
|
| Transport
& Communications, 5.32% in Electrical & Electronic Goods. |
|
|
| Gross
revenue during the year amounted to Rs. 365.36 million, compared to Rs.
341.09 million of the previous |
|
| year,
up 7.12%. Financial charges amounted to Rs. 261.85 million as compared with
Rs. 255.53 million of the |
|
| previous
year, higher by 2.47%. Administrative expenses rose by 24.47% to Rs. 48.37
million from Rs. 38.86 |
|
| million.
Major increase in expenses was under the heading of legal & professional,
which were deemed necessary |
|
| in
view of the market conditions. Provision for doubtful debts amounted to Rs.
22.14 million compared to Rs. |
|
| 15.44
million last year. Cumulative provision for doubtful debts amounted to Rs.
78.68 million, which is 4.20% of |
|
| net
investment in lease finance compared to 2.96% of last year. |
|
|
| The
operating profit rose to Rs. 50.80 million from Rs. 39.17 million last year.
The profit before tax for the year |
|
| amounted
to Rs. 28.66 million compared to Rs. 23.74 million last year. After providing
for provision for current |
|
| and
prior year tax liability of Rs. 7.39 million, the profit after tax for the
year amounted to Rs. 21.27 million as |
|
| compared
to Rs. 25.31 million of the previous year. On account of deferred tax
liability an amount of Rs. 32.50 |
|
| million
was appropriated in the year under review, which comprised of Rs. 14.74
million being one-fifth of the |
|
| deferred
tax liability of Rs. 73.72 million of the previous years and Rs 17.76 million
for current year as per |
|
| requirement
of SECP. The remaining provision with respect to previous years will be made
in the next three |
|
| years
as required. |
|
|
| Due
to 15% bonus and 50% right issue fully subscribed during the year, the
paid-up capital was increased to Rs. |
|
| 173.56
million from Rs. 105.19 million of last year. The Return on Equity worked out
to 6.71% as compared with |
|
| 10.41%
in the previous year. Earning per Share (EPS), worked out to Rs. 1.38 as
compared with Rs. 1.75 last |
|
| year.
The Gearing Ratio, however, improved to 5.72 times from 8.06 times in the
previous year, which is now |
|
| comparable
with the industry average. |
|
|
| A
sum of Rs. 13.74 million was paid to exchequer during the period under review
by way of tax deducted at source |
|
| and
turnover tax. On cumulative basis since 1989, a sum of Rs. 153.51 million has
been paid to the exchequer on |
|
| these
two accounts. |
|
|
| Total
salaries, allowances and benefits paid to your company's staff during the
period under review amounted |
|
| to
Rs. 22.10 million as compared to Rs. 18.10 million last year. |
|
|
| PAYOUT |
|
| Your
Board has recommended issue of Bonus shares
@16%. This will increase the paid-up capital from |
|
| Rs.
173.56 million to Rs.201.33 million and will meet the requirement of
Securities & Exchange Commission of |
|
| Pakistan
for increasing the paid-up capital to Rs.200 million by June 30, 2001. |
|
|
| FUNDING |
|
| During
the period under review, the money market generally remained liquid. Funding
position of your |
|
| company
remained satisfactory, as the company was able to mobilize long-term funds of
Rs. 184 million during |
|
| the
period. Taking advantage of declining lending rates, your company was able to
successfully negotiate reduction |
|
| in
markup rates ranging between 1.50% to 2.00% against facilities availed from
local financial institutions. |
|
|
| SECP
has granted approval to your company for the Term Finance Certificate issue
of Rs. 300 million to be launched |
|
| in
two tranches. The first tranche of Rs. 200 million, at a coupon rate of 15%
for a period of 5 years, has been |
|
| successfully
issued and the funds have been received in September 2000. The public issue
of Rs. 50 million |
|
| received
an overwhelming response and was oversubscribed by more than three times. The
second |
|
| tranche
of Rs. 100 million will be launched in the later half of the current
financial year. |
|
|
| With
the increase in the State Bank of Pakistan discount rate and the cut-off
yields on T-bills in October 2000, |
|
| the
lending rates have already started rising. We however, do not foresee any
problem in raising the necessary funds |
|
| at
competitive rates. |
|
|
| CREDIT
RATING |
|
| Pakistan
Credit Rating Agency maintained rating of your company at "A2 "and
"A-" for short term and long term |
|
| respectively,
which denotes a low credit risk and strong capacity to pay financial
commitments timely. |
|
|
| HUMAN
RESOURCE |
|
| The
Group Personnel Committee headed by the Chairman is continuously working to
shape group personnel policies, |
|
| so
that the employees are motivated and rewarded according to their contribution
in meeting the company's |
|
| objectives.
Further, all benchmark job descriptions were written in accordance with the
Hay's format and then |
|
| evaluated.
Consequently, your company is being restructured to meet the challenges of
the millennium |
|
| and
to be competitive in the face of globalization. It is only through a world
class team that the company will |
|
| be
able to compete globally. |
|
|
| The
emphasis on human resource development is the hallmark of the Atlas Group of
which your company is |
|
| a
constituent member. This is based on strategic vision dovetailed with
operational efficiency, team work and |
|
| individual
performance. Individual compensation has been linked with individual
performance with executive |
|
| bonus
being on an agreed basis for the team as a whole. This year our emphasis is
more on the role of leadership, |
|
| management
practices and integrity in terms of executive profile, with a view to further
improve our performance. |
|
| In
order to implement the Hay's system, the company reviewed and restructured
the management salaries to |
|
| make
them competitive in the market. This will enable the company to recruit,
train and retain the right employees |
|
| and
a motivated team to face the fast approaching globalization. |
|
|
| Your
company started with a staff of 6 persons in 1989. |
|
|
| The
number has now increased to 55 persons by June 30, 2000 including a Chartered
Accountant, 19 MBAs, |
|
| 04
Postgraduates and 17 Graduates at three locations, at Karachi, Lahore and
Islamabad. |
|
|
| CHANGE
IN THE BOARD OF DIRECTORS |
|
| During
the year under review, Mr. Saquib H. Shirazi resigned from the Board and was
replaced by Mr. Sherali |
|
| Mundrawala.
Later on, Mr. T. Miyazaki and Mr. Masanori Okuda representing The Bank of
Tokyo Mitsubishi Ltd., |
|
| on
their transfer from Pakistan, resigned from the Board and were replaced by
Mr. Saquib H. Shirazi and Mr. |
|
| Katsuaki
Endo, respectively. The Board highly appreciates the contribution made by Mr.
Miyazaki and Mr. Okuda |
|
| and
welcome Mr. Sherali Mundrawala and Mr. Katsuaki Endo and look forward to
their support and guidance in |
|
| running
the affairs of your company. |
|
|
| YEAR
2000 COMPLIANCE |
|
| I
am pleased to inform that all the systems, software and hardware packages in
use of your company have smoothly |
|
| crossed
the Y2K timeline without encountering any problems. |
|
|
| FUTURE
OUTLOOK |
|
| Financial
sector integration is the key to national business integration. There are 42
local and foreign commercial |
|
| banks
with a paid-up capital of Rs.69.84 billion, 32 leasing companies whose
paid-up capital is Rs.4.84 billion |
|
| and
48 modaraba companies with a paid-up capital of Rs.8.14 billion. There are 15
investment banks with a |
|
| paid-up
capital of Rs.5.12 billion, 10 DFIs with a paid-up capital of Rs. 10 billion,
39 Mutual Funds with a paid- |
|
| up
capital of Rs.4.76 billion, 2 unit trusts with a paid-up capital of Rs. 14.0
billion, 2 venture capital companies |
|
| with
a paid-up capital of Rs.4.8 billion and 39 insurance companies with a paid-up
capital of Rs.2.93 billion. |
|
|
| This
never-ending list of financial institutions does not fit in with the economy
of scale in relation to the size of |
|
| this
economy. By international standards, hardly any sector would fit in and, as
such, there is a need to |
|
| rationalise
it with a new approach. In view of the economy of scale, consolidation and
mergers are taking place all |
|
| over
the world. We also need to reduce their number by mergers and consolidation.
The earlier we do it, the better |
|
| it
would be for effective utilisation of the available resources. Otherwise, it
would lead to deterioration, which |
|
| will
be difficult to control and thus will result in financial dis-equilibrium, to
say the least, affecting seriously |
|
| economic
integration, as a whole. |
|
|
| Economic
revival in the country is the key element towards the growth of the leasing
industry as well as |
|
| your
company. Government is emphasizing on promoting small and medium size
enterprises, value addition, oil & |
|
| gas
development and communication & information technology sectors. In
addition, focus on documentation |
|
| of
economy and widening of the tax base aims toward increasing revenue, a must,
to cut the soaring fiscal deficit. |
|
| This
will generate additional revenue for the much needed developmental
expenditure, giving investment activities |
|
| a
boost and putting the economy back on track. |
|
|
| Stability
in the economic policies and restoration of investors' confidence are the key
challenges and most |
|
| essential
in reviving the economy of the country. Our focus will remain on slow but
stable growth. Improving |
|
| quality
of portfolio, reduction in delinquency ratio, maintaining adequate liquidity
and controlling the expense |
|
| base will remain areas
of top most priority. |
|
|
| I
believe that the changes made on the economic front will yield positive
results in due course and will help |
|
| leasing
industry as well as the other sectors. |
|
|
| I
foresee a better future given the right entrepreneurial initiatives and
investment climate. |
|
|
| ACKNOWLEDGEMENT |
|
| I
thank your CEO Mr. Khaleeq-ur-Rahman Khan and his team for their commitment
and dedicated efforts. I thank |
|
| the
Board of Directors and Group Executive Committee members for their valuable
contribution, the valued |
|
| clients,
the financial institutions and place on record our gratitude to the State
Bank of Pakistan, Securities and |
|
| Exchange
Commission of Pakistan and the Central Board of Revenue for their support and
guidance. I am also |
|
| thankful
to the shareholders for the confidence reposed in your company. |
|
|
| YUSUF
H. SHIRAZI |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ATLAS LEASE LIMITED as at June 30,
2000 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 flee 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)
in our opinion, proper books of accounts 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 |
|
|
| (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 |
|
| 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, 2000 and of the profit, its cash flows 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) |
|
|
| Karachi - |
|
Ford, Rhodes, Robson, Morrow |
|
| November
24, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS ON JUNE 30, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| ASSETS |
|
| NON-CURRENT
ASSETS |
|
| Tangible
fixed assets |
|
| Operating
fixed assets |
|
3 |
20,490,810 |
17,008,727 |
|
| Net
investment in lease finance |
|
4 |
|
| Minimum
lease payments receivable |
|
2,071,203,684 [ |
2,116,178,752 |
|
| Residual
value of leased assets |
|
314,930,472 |
302,585,622 |
|
|
------------ |
------------ |
|
| Gross
investment in lease finance |
|
2,386,134,156 |
2,418,764,374 |
|
| Unearned
finance income |
|
(512,835,394) |
(508,686,318) |
|
|
------------ |
------------ |
|
| Net
investment in lease finance |
|
1,873,298,762 |
1,910,078,056 |
|
| Current
portion of net investment in lease finance |
|
(905,831,610) |
(905,185,395) |
|
| Provision
for doubtful finance |
|
(78,678,548) |
(56,538,310) |
|
|
------------ |
------------ |
|
|
888,788,604 |
948,354,35l |
|
| Long
term investments |
|
5 |
33,500,000 |
33,500,000 |
|
| Long
term loans, deposits and deferred cost |
6 |
20,619,833 |
28,400,289 |
|
|
| CURRENT
ASSETS |
|
| Current
portion o£ net investment in lease finance |
|
905,831,610 |
905,185,395 |
|
| Short
term investments |
|
7 |
-- |
10,000,000 |
|
| Advances,
prepayments and other receivables |
8 |
82,769,815 |
60,928,641 |
|
| Cash
and bank balances |
|
9 |
178,814,005 |
199,564,948 |
|
|
------------ |
------------ |
|
|
1,167,415,430 |
1,175,678,984 |
|
|
------------ |
------------ |
|
|
2,130,814,677 |
2,202,942,351 |
|
|
========== |
========== |
|
| EQUITY
AND LIABILITIES |
|
| SHARE
CAPITAL AND RESERVES |
|
| Share capital |
|
| Authorised |
|
| 20,000,000
ordinary shares o£Rs.10 each |
|
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
10 |
173,564,490 |
105,190,600 |
|
| Reserves |
|
11 |
143,314,671 |
137,825,735 |
|
|
|
------------ |
------------ |
|
|
316,879,161 |
243,016,335 |
|
| NON-CURRENT
LIABILITIES |
|
| Long
term loans |
|
12 |
520,777,368 |
768,959,616 |
|
| Long
term deposits |
|
13 |
167,645,670 |
177,166,446 |
|
| Certificates
of investment |
|
14 |
45,299,391 |
21,995,000 |
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of long term loans |
|
309,222,446 |
321,284,672 |
|
| Current
maturity of long term deposits |
|
122,869,401 |
88,093,847 |
|
| Certificates
of investment |
|
14 |
384,760,000 |
297,504,026 |
|
| Short
term finances |
|
15 |
171,011,962 |
198,583,130 |
|
| Finance
under mark-up arrangements |
|
16 |
-- |
348,705 |
|
| Accrued
and other liabilities |
|
17 |
92,349,278 |
85,990,574 |
|
|
|
------------ |
------------ |
|
|
|
1,080,213,087 |
991,804,954 |
|
| COMMITMENTS |
|
18 |
|
|
|
|
------------ |
------------ |
|
|
2,130,814,677 |
2,202,942,351 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
|
SANAULLAH QURESHI |
|
KHALEEQ-UR-RAHMAN KHAN |
|
YUSUF H. SHIRAZI |
|
|
Director |
|
Chief Executive |
|
Chairman |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| REVENUE |
|
| Income
from leasing operations |
|
19 |
322,549,082 |
311,923,488 |
|
| Other
income |
|
20 |
42,806,455 |
29,167,179 |
|
|
------------ |
------------ |
|
|
365,355,537 |
341,090,667 |
|
| EXPENDITURE |
|
|
|
| Financial
charges |
|
21 |
261,848,203 |
255,527,808 |
|
| Administrative
and operating expenses |
|
22 |
48,367,319 |
38,855,132 |
|
| Amortization
of deferred costs |
|
4,338,195 |
7,534,531 |
|
|
------------ |
------------ |
|
|
314,553,717 |
301,917,471 |
|
|
------------ |
------------ |
|
| OPERATING
PROFIT |
|
50,801,820 |
39,173,196 |
|
| Provision
for doubtful finance |
|
22,140,238 |
15,437,530 |
|
|
------------ |
------------ |
|
| PROFIT
FOR THE YEAR BEFORE TAXATION |
|
28,661,582 |
23,735,666 |
|
|
|
|
| TAXATION |
|
|
|
| Current |
|
23 |
6,027,984 |
3,924,436 |
|
| Prior |
|
1,366,072 |
-- |
|
| Deferred |
|
-- |
5,500,000) |
|
|
------------ |
------------ |
|
|
7,394,056 |
(1,575,564) |
|
|
------------ |
------------ |
|
| PROFIT
AFTER TAXATION |
|
21,267,526 |
25,311,230 |
|
| Accumulated
profit brought forward |
|
797,761 |
205,691 |
|
|
------------ |
------------ |
|
| Profit
available for appropriation |
|
22,065,287 |
25,516,921 |
|
|
| APPROPRIATIONS: |
|
| Transfer
to statutory reserve |
|
4,253,505 |
5,062,246 |
|
| Transfer
from general reserve |
|
(42,510,320) |
(14,740,000) |
|
| Transfer
to capital reserve for deferred taxation |
|
32,500,000 |
24,440,000 |
|
| Transfer
to reserve for issue of bonus shares |
11.10 |
27,770,320 |
9,956,914 |
|
|
------------ |
------------ |
|
|
22,013,505 |
24,719,160 |
|
|
------------ |
------------ |
|
| Unappropriated
profit carried forward |
|
51,782 |
797,761 |
|
|
========== |
========== |
|
| Basic
earnings per share |
|
24 |
1.38 |
1.75 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
SANAULLAH QURESHI |
|
KHALEEQ-UR-RAHMAN KHAN |
|
YUSUF H. SHIRAZI |
|
|
Director |
|
Chief Executive |
|
Chairman |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit
for the year before taxation |
|
28,661,582 |
23,735,666 |
|
| Adjustments
for: |
|
| Depreciation
on fixed assets |
|
5,104,462 |
4,334,683 |
|
| Amortization
of deferred costs |
|
4,338,195 |
7,534,531 |
|
| Provision
for doubtful finance |
|
22,140,238 |
15,437,530 |
|
| Profit
on sale of shares |
|
(4,820,178) |
(675,195) |
|
| Loss
/ (profit) on sale of fixed assets |
|
167,753 |
(457,574) |
|
| Interest/mark-up
expense (net of interest income on |
|
|
|
| foreign
currency deposits) |
|
242,147,385 |
239,072,069 |
|
| Investment
income |
|
(35,256,077) |
(24,836,363) |
|
|
------------ |
------------ |
|
|
233,821,778 |
240,409,681 |
|
| Operating
profit before working capital changes |
|
262,483,360 |
264,145,347 |
|
| (Increase)/decrease
in current assets |
|
| Short
term investments - net |
|
14,820,178 |
-- |
|
| Advances,
prepayments and other receivables |
|
(24,531,208) |
(12,654,230) |
|
|
------------ |
------------ |
|
|
(9,711,030) |
'(12,654,230) |
|
| Increase/(decrease)
in current liabilities |
|
| Short
term finances |
|
(27,571,168) |
106,583,130 |
|
| Finance
under mark-up arrangements |
|
(348,705) |
(11,612,462) |
|
| Accrued
and other liabilities |
|
(2,523,499) |
(18,483,974) |
|
|
------------ |
------------ |
|
|
(30,443,372) |
76,486,694 |
|
|
------------ |
------------ |
|
| Cash
generated from operations |
|
222,328,958 |
327,977,811 |
|
| Income
taxes paid |
|
(3,327,255) |
(4,059,185) |
|
| Interest/mark-up
paid (net of receipt from interest on |
|
| foreign
currency deposits) |
|
(234,682,352) |
(232,926,095) |
|
| Long
term deposits paid |
|
(1,140,000) |
(10,000) |
|
| Investment
income received |
|
35,421,282 |
24,877,459 |
|
|
------------ |
------------ |
|
| Net
cash generated from operating activities |
|
18,600,633 |
115,859,990 |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Long
term investments |
|
-- |
8,050,811 |
|
| Capital
expenditure |
|
(12,708,580) |
(9,093,065) |
|
| Net
investment in lease finance (net of repayments) |
|
36,779,294 |
(31,831,206) |
|
| Sale
of fixed assets |
|
3,954,282 |
2,504,814 |
|
| Loans
to executives |
|
(1,532,856) |
(4,934,778) |
|
| Recoveries
of loans to executives |
|
1,354,851 |
654,665 |
|
|
------------ |
------------ |
|
| Net
cash used in investing activities |
|
27,846,991 |
(34,648,759) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Issue
of right shares |
|
52,595,300 |
-- |
|
| Issue
/ (repayments) of Certificates of investment - net |
|
110,560,365 |
44,493,397 |
|
| Long
term loans |
|
184,000,000 |
150,000,000 |
|
| Repayment
of long term loans |
|
(444,244,474) |
(227,991,529) |
|
| Deferred
costs |
|
4,635,464 |
( 1,452,562) |
|
| Dividends
paid |
|
-- |
(15,778,590) |
|
| Long
term advances and deposits |
|
25,254,778 |
35,200,479 |
|
|
------------ |
------------ |
|
| Net
cash used in financing activities |
|
(67,198,567) |
(15,528,805) |
|
| Net
increase/(decrease) in cash and bank balances |
|
(20,750,943) |
65,682,426 |
|
|
------------ |
------------ |
|
| Cash
and bank balances at the beginning of the year |
|
199,564,948 |
133,882,522 |
|
|
|
------------ |
------------ |
|
| Cash
and bank balances at the end of the year |
|
178,814,005 |
199,564,948 |
|
|
========== |
========== |
|
|
|
SANAULLAH QURESHI |
|
KHALEEQ-UR-RAHMAN KHAN |
|
YUSUF H. SHIRAZI |
|
|
Director |
|
Chief Executive |
|
Chairman |
|
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
Issued, |
Capital
Reserves |
Revenue
Reserves |
|
|
|
Subscribed |
|
Reserve for |
Reserve for |
Premium |
|
|
|
and Paid-up |
Statutory |
Issue of |
Deferred |
on |
General |
Unappropriated |
|
|
|
Capital |
Reserve |
Bonus Shares |
Taxation |
Shares |
Reserve |
Profit |
Total |
|
|
----------------------------------------------------------------------Rupees--------------------------------------------------------------------- |
|
| Balance
as on July 1, 1998 |
105,190,600 |
33,638,043 |
-- |
-- |
5,821,676 |
72,849,095 |
205,691 |
217,705,105 |
|
|
|
|
| Net
Profit for the year |
|
25,311,230 |
25,311,230 |
|
| Transferred
during the year |
-- |
5,062,246 |
15,778,590 |
24,440,000 |
(5,821,676) |
(14,740,000) |
(24,719,160) |
-- |
|
|
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
| Balance
as on June 30, 1999 |
105,190,600 |
38,700,289 |
15,778,590 |
24,440,000 |
|
58,109,095 |
797,761 |
243,016,335 |
|
| Net
Profit for the year |
|
21,267,526 |
21,267,526 |
|
| Issue
of Right Shares |
52,595,300 |
-- |
-- |
-- |
-- |
-- |
-- |
52,595,300 |
|
| Issue
of Bonus Shares |
15,778,590 |
-- |
(15,778,590) |
-- |
-- |
-- |
-- |
-- |
|
|
|
|
| Transferred
during the year |
-- |
4,253,505 |
|
27,770,320 32,500,000 |
-- |
(42,510,320) |
(22,013,505) |
-- |
|
|
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
| Balance
as on June 30, 2000 |
173,564,490 |
42,953,794 |
27,770,320 |
56,940,000 |
-- |
15,598,775 |
51,782 |
316,879,161 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
SANAULLAH QURESHI |
|
KHALEEQ-UR-RAHMAN KHAN |
|
YUSUF H. SHIRAZI |
|
|
Director |
|
Chief Executive |
|
Chairman |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
| The
company is incorporated in Pakistan and is listed on the Karachi, Lahore and
Islamabad stock exchanges. |
|
| It
essentially carries on the business of leasing. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Revenue recognition |
|
| The
company follows the "Finance Method" in accounting for recognition
of lease income. Under this |
|
| method
the unearned lease income i.e. the excess of aggregate lease rentals and the
residual value over the |
|
| cost
of leased asset is deferred and then amortized to income over the term of the
lease, applying the annuity |
|
| method
to produce a constant rate of return on the net investment in the lease. |
|
|
| Other
lease related income is recognised as and when realised. |
|
|
| Return
on government investments is recognised on an accrual basis on the assumption
that such investments |
|
| will
be held upto the next terminal date. |
|
|
| Dividends
from equity securities are recognised when the right to receive such
dividends becomes vested. |
|
|
| 2.3
Tangible fixed assets |
|
| These
are stated at cost less accumulated depreciation. Depreciation is charged to
income applying the |
|
| reducing
balance method at the rates specified in note 3 to the accounts. In respect
of additions during the |
|
| year,
depreciation is charged for the full year, however, no depreciation is
charged in the year of disposal. |
|
|
| Profit
or loss on disposal of assets is included in income currently. |
|
|
| 2.4
Deferred cost |
|
| Processing
charges in respect of long term loans, term finance certificates and other
deferred cost are |
|
| amortized
over a period of three to five years from the year of incurrence. |
|
|
| 2.5
Investments |
|
| Long
term investments |
|
| These
are stated at cost. Provision for diminution in value of investments is made,
if considered permanent. |
|
| Short
term investments |
|
| These
are stated at lower of cost and market value. |
|
|
| 2.6 Taxation |
|
|
| Current |
|
| The
charge for the current taxation for the year, if required, is based on
taxable income, which is computed |
|
| as
if all leases are operating leases. |
|
|
| Deferred |
|
| The
tax effect for deferred taxation is calculated using the liability method on
all major temporary differences |
|
| and
is being dealt with as stated in note 11.2 to the accounts. |
|
|
| 2.7
Foreign currency translations |
|
| Assets
and liabilities in foreign currencies are translated at the rates of exchange
which approximate those |
|
| prevailing
at the balance sheet date except for those that are covered under an exchange
risk coverage |
|
| scheme
which are translated at the rate prevailing on the date of disbursement.
Exchange differences arising |
|
| as
a result of obtaining cover under these schemes are being amortized over the
period of loan. Net exchange |
|
| differences
arising due to hedging mechanism are accounted for as deferred
revenue/deferred cost as the |
|
| case
may be and are credited/amortized to the income over the term of the
underlying transactions. |
|
|
| 2.8
Off-setting of financial assets and financial liabilities |
|
| A
financial asset and a financial liability is offset and the net amount is
reported in the balance |
|
| sheet
if the company has a legally 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. Income and |
|
| expenses
arising from such assets and liabilities are also accordingly offset. |
|
|
| 2.9
Employees' retirement benefits |
|
| The
company operates a contributory provident fund for all its permanent
employees and contributions |
|
| arc
made monthly in accordance with the fund rules. |
|
|
| 2.10
Provision for doubtful finance |
|
| Keeping
in view the nature of leasing business, the company, as a prudent policy,
makes this |
|
| provision
at a reasonable level, which as per management's anticipation is adequate for
potential |
|
| losses
on the lease portfolio. |
|
|
| 3.
OPERATING FIXED ASSETS |
|
|
COST |
DEPRECIATION |
Written |
Depreciation |
|
|
|
|
Accumulated |
|
Accumulated |
down value |
rate on |
|
As at |
|
|
As at |
as at |
Change for |
On |
as at |
as at |
Written down |
| Description |
|
July 1,1999 |
Additions |
Disposals |
June 30, 2000 |
July 1,1999 |
the year |
disposals |
June 30, 2000 |
June 30, 2000 |
Value |
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
% |
| Leasehold
improvements |
1,772,935 |
-- |
-- |
1,772,935 |
811,027 |
96,191 |
|
907,218 |
865,717 |
10 |
| Furniture
and fixtures |
1,417,121 |
94,895 |
7,600 |
1,504,416 |
635,724 |
87,244 |
3,747 |
719,221 |
785,195 |
10 |
| Office
equipment |
1,347,454 |
540,000 |
270,300 |
1,617,154 |
538,490 |
121,771 |
139,049 |
521,212 |
1,095,942 |
10 |
| Computer
equipment |
13,634,742 |
1,713,312 |
1,344,420 |
14,003,634 |
7,276,490 |
1,898,827 |
868,163 |
8,307,154 |
5,696,480 |
25 |
| Electrical
equipment |
1,246,122 |
263,473 |
116,500 |
1,393,095 |
577,448 |
89,153 |
75,878 |
590,723 |
802,372 |
10 |
| Motor
vehicles |
12,268,718 |
10,096,900 |
5,938,381 |
16,427,237 |
4,839,186 |
2,811,276 |
2,468,329 |
5,182,133 |
11,245,104 |
20 |
|
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
31,687,092 |
12,708,580 |
7,677,201 |
36,718,471 |
14,678,365 |
5,104,462 |
3,555,166 |
16,227,661 |
20,490,810 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
| 1999 |
|
26,342,235 |
9,093,065 |
3,748,208 |
31,687,092 |
12,944,650 |
4,334,683 |
1,700,968 |
14,678,365 |
17,008,727 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
| 3.1
Disposal of assets |
|
|
|
Accumulated |
Written down |
Sale |
Mode of |
|
|
| Description |
|
Cost |
depreciation |
value |
proceeds |
disposal |
Sold to |
|
|
Rupees |
Rupees |
Rupees |
Rupees |
|
|
|
|
|
| Furniture
and fixture |
3,500 |
1,826 |
1,674 |
375 |
Tender |
Mr. Zain-ul-Abbidin |
|
|
|
A-393, Sector 1 l-A, |
|
|
|
North Karachi, Karachi. |
|
| Furniture
and fixture |
4,100 |
1,921 |
2,179 |
460 |
Tender |
Mr. Arsalan Tanzeem |
|
|
|
487, Naseerabad, F.B
Area, |
|
|
|
Karachi. |
|
| Office
equipment |
265,300 |
137,329 |
127,971 |
50,000 |
Trade In |
Shirazi Trading Co. (Pvt)
Ltd. |
|
|
|
An associated
undertaking, |
|
|
|
3rd floor, Ebrahim state, |
|
|
|
Sharae Faisal, Karachi. |
|
| Office
equipment |
5,000 |
1,720 |
3,280 |
5,188 |
Negotiation |
Mr. Junaid Wahab Zuberi |
|
|
|
Ex-employee |
|
| Computer
equipment |
252,800 |
176,754 |
76,046 |
18,500 |
Trade In |
M/s General Systems |
|
|
|
36-Cavalry Grounds,
Lahore. |
|
| Computer
equipment |
518,100 |
328,704 |
189,396 |
20,600 |
Trade In |
M/s Reckon Technologies |
|
|
|
B-210, Anum Classic, |
|
|
|
DACHS, Karachi. |
|
| Computer
equipment |
128,950 |
82,594 |
46,356 |
9,500 |
Negotiation |
Zain Anwar Lari |
|
|
|
89-N-2, PECHS, Karachi. |
|
| Computer
equipment |
39,960 |
27,671 |
12,289 |
5,500 |
Negotiation |
Mr. Tanzeemur Rasheed |
|
|
|
H.No.487/14 Naseerabad, |
|
|
|
F.B.Area, Karachi. |
|
| Computer
equipment |
50,960 |
34,494 |
16,466 |
5,000 |
Negotiation |
Mr. Imran Arif |
|
|
|
Falak Numa Manzil, |
|
|
|
Ranchore Line, Karachi. |
|
| Computer
equipment |
43,000 |
28,307 |
14,693 |
4,500 |
Negotiation |
Mr. Monis Ahmed |
|
|
|
R-300/17, F.B. Area,
Karachi. |
|
| Computer
equipment |
72,250 |
46,725 |
25,525 |
5,500 |
Negotiation |
Mr. Mansoor Ahmed |
|
|
|
R-14, Block 16, F.B.
Area, |
|
|
|
Karachi. |
|
| Computer
equipment |
78,950 |
48,473 |
30,477 |
4,500 |
Negotiation |
Mr. Imran Arif |
|
|
|
Falak Numa Manzil, |
|
|
|
Ranchore Line, Karachi. |
|
| Computer
equipment |
91,950 |
52,569 |
39,381 |
4,500 |
Negotiation |
Mr. Imran Ahmed |
|
|
|
Okhai Mansion, Hardas |
|
|
|
Street, Ranchore Line, |
|
|
|
Karachi. |
|
| Computer
equipment |
67,500 |
41,872 |
25,628 |
4,000 |
Negotiation |
Mr. Abdul Qadir |
|
|
|
R-46/19, F.B. Area,
Karachi. |
|
| Electrical
equipment |
12,500 |
8,140 |
4,360 |
1,500 |
Negotiation |
Mr. Zeeshan Qureshi |
|
|
|
R-146, 14-B, North
Karachi. |
|
|
|
Karachi. |
|
| Electrical
equipment |
52,000 |
33,869 |
18,131 |
7,000 |
Negotiation |
M/s. Gulf Electronics |
|
|
|
2, Gizri Bagh Colony, |
|
|
|
DHS, Karachi. |
|
| Electrical
equipment |
52,000 |
33,869 |
18,131 |
7,000 |
Negotiation |
M/s. General Air- |
|
|
|
Conditioning |
|
|
|
B-44, Panorama Centre, |
|
|
|
Saddar, Karachi. |
|
| Motor
vehicle |
132,949 |
26,590 |
106,359 |
106,359 |
Company |
Mrs. T. Dias |
|
|
Policy |
Employee |
|
| Motor
vehicle |
668,635 |
394,762 |
273,873 |
273,873 |
Company |
Mr. Aqdas Ahmed |
|
|
Policy |
Employee |
|
| Motor
vehicle |
317,000 |
154,696 |
162,304 |
172,296 |
Tender |
M/s Car Sales |
|
|
16, Shara-e-Fatima,
Lahore. |
|
|
| Motor
vehicle |
280,000 |
56,000 |
224,000 |
226,000 |
Tender |
Mr. Khalid M. Junejo |
|
|
|
B-409, Erum Square, |
|
|
|
Gulshan-e-Iqbal, Karachi. |
|
| Motor
vehicle |
579,000 |
208,440 |
370,560 |
500,000 |
Insurance |
Muslim Insurance Co Ltd. |
|
|
claim |
An associated
undertaking, |
|
|
|
2nd floor, Ameejee
Chamber, |
|
|
|
Karachi. |
|
| Motor
vehicle |
469,600 |
93,920 |
375,680 |
375,680 |
Company |
Mr. Farooq Saleem |
|
|
Policy |
Employee |
|
| Motor
vehicle |
161,806 |
32,361 |
129,445 |
134,838 |
Insurance |
Muslim Insurance Co Ltd. |
|
|
claim |
An associated
undertaking, |
|
|
2nd floor, Ameejee
Chamber, |
|
|
Karachi. |
|
| Motor
vehicle |
280,000 |
56,000 |
224,000 |
226,907 |
Tender |
Mr. Irfan Ahmed Sheikh |
|
|
|
2-A, Yaqoob Terrace, |
|
|
|
Jahangir Road, Karachi. |
|
| Motor
vehicle |
290,000 |
104,400 |
185,600 |
199,466 |
Tender |
Mr. Adeel Badar |
|
|
|
A-548, Block D, |
|
|
|
North Nazimabad, Karachi. |
|
| Motor
vehicle |
368,000 |
132,480 |
235,520 |
338,000 |
Tender |
Mr. Rizwan Ahmed Sheikh |
|
|
|
2-A, Yaqoob Terrace, |
|
|
|
Jahangir Road, Karachi. |
|
| Motor
vehicle |
581,347 |
283,697 |
297,650 |
302,206 |
Tender |
M/s Car Sales |
|
|
|
16, Shara-e-Fatima,
Lahore. |
|
| Motor
vehicle |
668,635 |
394,762 |
273,873 |
273,873 |
Company |
Mr. Mohammad Rafique Umer |
|
|
Policy |
Employee |
|
| Motor
vehicle |
368,000 |
73,600 |
294,400 |
334,053 |
Tender |
M/s Ford, Rhodes, Robson,
Morrow |
|
|
|
Finlay House, I.I.
Chundrigar Road |
|
|
|
Karachi. |
|
| Motor
vehicle |
52,931 |
31,251 |
21,680 |
42,000 |
Tender |
Mr. Rehan Ali Shamsi |
|
|
|
E-79, Yousuf Plaza, Block
16, |
|
|
|
Karachi. |
|
| Motor
vehicle |
720,478 |
425,370 |
295,108 |
295,108 |
Company |
Mr. Khaleeq-ur-Rahman
Khan |
|
|
Policy |
Employee |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
7,677,201 |
3,555,166 |
4,122,035 |
3,954,282 |
|
|
========== |
========== |
========== |
========== |
|
|
| 4.
NET INVESTMENT IN LEASE FINANCE |
|
| The
expected maturities of gross investment in lease |
|
| finance
are as follows: |
|
|
| Not
later than one year |
|
1,211,154,447 |
1,256,126,778 |
|
| Later
than one year and not later than five years |
|
1,174,979,709 |
1,162,637,596 |
|
|
------------ |
------------ |
|
|
2,386,134,156 |
2,418,764,374 |
|
|
========== |
========== |
|
| The
expected maturities of net investment in lease |
|
| finance
are as follows: |
|
| Not
later than one year |
|
905,831,610 |
905,185,395 |
|
| Later
than one year and not later than five years |
|
967,467,152 |
1,004,892,661 |
|
|
------------ |
------------ |
|
|
1,873,298,762 |
1,910,078,056 |
|
|
========== |
========== |
|
| Includes
Rs.12,485,700 (1999: Rs.26,277,161) in respect of associated companies.
Maximum amount |
|
| due
at the end of any month during the year was Rs.30,312,990 (1999:
Rs.31,903,068). |
|
|
| The
leases made by the company are subject to a term of 3 - 5 years and a
security deposit is obtained |
|
| generally
upto 10% at the time of disbursement. The company requires the lessees to
insure the leased |
|
| assets
in the favour of the company and to maintain certain financial ratios.
Additional lease rentals |
|
| are
chargeable on delayed payments. The rate of return implicit in the lease
ranges from 17.25% to |
|
| 25.75%
(1999: 18.25% to 27.00%). |
|
|
| 5.
LONG TERM INVESTMENTS |
|
|
|
No. of |
No. of |
|
|
|
|
ordinary |
ordinary |
Break up |
Average |
|
|
|
|
shares |
shares |
value |
cost |
2000 |
1999 |
|
|
Note |
2000 |
1999 |
2000 |
per share |
Cost |
Cost |
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
| Shares
in company: |
|
| Unquoted: |
|
| Arabian
Sea Country Club |
|
| (Chief
Operating Officer: |
|
| Mr.
Aslam Mohsin All) |
5.1 |
100,000 |
100,000 |
295,000 |
10.00 |
1,000,000 |
1,000,000 |
|
|
|
|
------------ |
------------ |
|
|
|
|
1,000,000 |
1,000,000 |
|
| Government
Securities: |
|
|
| Federal
investment bonds |
5.2 |
|
32,500,000 |
32,500,000 |
|
|
|
|
------------ |
------------ |
|
|
33,500,000 |
33,500,000 |
|
|
========== |
========== |
|
| 5.1
The break-up value of these shares is as per June 30, 1999 audited financial
statements. |
|
|
| 5.2
These investments have been made in compliance with regulations for
Non-Banking Financial |
|
| Institutions
to maintain the liquidity requirement against certain liabilities. These
investments carry |
|
| a
rate of return of 15% per annum and have terms of 10 years maturing upto
November 22, 2004. |
|
|
| 6.
LONG TERM LOANS, DEPOSITS |
|
| AND
DEFERRED COST |
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| Loans
to executives - secured, considered good |
6.10 |
7,734,502 |
7,556,497 |
|
| Less:
Current portion |
|
|
386,607 |
261,805 |
|
|
|
------------ |
------------ |
|
|
6.1.1 |
7,347,895 |
7,294,692 |
|
| Deposits |
|
|
1,874,486 |
734,486 |
|
| Deferred
cost |
|
6.2 |
11,397,452 |
20,371,111 |
|
|
------------ |
------------ |
|
|
20,619,833 |
28,400,289 |
|
|
========== |
========== |
|
|
|
|
| 6.1
This represents house loans to the Chief Executive Officer and 4 executives
which are repayable |
|
| in
144 (in case of Chief Executive) and 180 (in case of executives) monthly
instalments respectively |
|
| and
carry mark-up at the rate of 10% per annum. The loans are secured by
registered mortgage |
|
| of
the property and assignment of life insurance policies. |
|
|
| Maximum
amount outstanding at the end of any month during the year against loan to
Chief |
|
| Executive
Officer Rs. 1,588,530 (1999: Rs.1,692,077) and Executives was Rs.6,701,545
(1999: |
|
| Rs.5,864,420). |
|
|
| 6.1.1
Recoverable after three years |
|
6,285,857 |
6,532,806 |
|
| Other |
|
1,062,038 |
761,886 |
|
|
------------ |
------------ |
|
|
7,347,895 |
7,294,692 |
|
|
========== |
========== |
|
|
|
|
| 6.2
Deferred cost |
|
| Preliminary
expenses for issue of Term |
|
| Finance
Certificates |
|
500,000 |
-- |
|
| Net
exchange difference arising due to |
|
| hedging
mechanism |
|
6.2.1 |
10,897,452 |
20,371,111 |
|
|
------------ |
------------ |
|
|
11,397,452 |
20,371,111 |
|
|
========== |
========== |
|
|
|
|
| 6.2.1
Net exchange difference arising due to |
|
| hedging
mechanism |
|
|
| Opening
balance |
|
35,111,744 |
33,659,182 |
|
| (Credit)
/ debit during the year |
|
(5,135,464) |
1,452,562 |
|
|
------------ |
------------ |
|
|
29,976,280 |
35,111,744 |
|
| Amortized
to-date |
|
(19,078,828) |
(14,740,633) |
|
|
------------ |
------------ |
|
|
10,897,452 |
20,371,111 |
|
|
========== |
========== |
|
| The
above is being carried forward as it confers benefit to future years. |
|
|
|
|
| 7.
SHORT TERM INVESTMENTS |
|
| Federal
investment bond |
|
-- |
10,000,000 |
|
|
========== |
========== |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| 8.
ADVANCES, PREPAYMENTS AND |
|
| OTHER
RECEIVABLES |
|
| Advances
- considered good |
|
| against
assets to be leased out |
|
10,973,647 |
7,441,079 |
|
| for expenses |
|
14,206 |
78,669 |
|
| to
employees |
|
337,492 |
387,141 |
|
| to
customers against COIs |
|
260,000 |
860,000 |
|
|
------------- |
------------- |
|
|
11,585,345 |
8,766,889 |
|
|
| Current
portion of loan to executives |
|
386,607 |
261,805 |
|
| Prepayments |
|
2,145,320 |
979,983 |
|
| Exchange
difference refundable from SBP |
|
| [net
of exchange risk fee and other charges payable |
|
| Rs.97,593,276
(1999: Rs.84,487,924)] |
|
21,065,155 |
(286,385) |
|
| Accrued
lease income |
|
17,903,760 |
23,595,967 |
|
| Accrued
profit on long term investments |
|
2,085,616 |
2,073,287 |
|
| Accrued
profit on short term investments |
|
-- |
177,534 |
|
| Advance
Income Tax |
|
-- |
2,649,631 |
|
| Other
charges recoverable from lessees |
|
8.1 |
15,679,251 |
13,842,295 |
|
| Repossessed
assets held for sale |
|
11,603,782 |
7,277,967 |
|
| Other
receivables |
|
314,979 |
1,589,668 |
|
|
------------- |
------------- |
|
|
82,769,815 |
60,928,641 |
|
|
========== |
========== |
|
|
|
|
|
| 8.1
Other charges recoverable from lessees |
|
| Considered
good |
|
15,679,251 |
13,842,295 |
|
| Considered
doubtful |
|
1,066,371 |
1,066,371 |
|
|
------------- |
------------- |
|
|
16,745,622 |
14,908,666 |
|
| Less:
Provision for doubtful receivables |
|
1,066,371 |
1,066,371 |
|
|
------------- |
------------- |
|
|
15,679,251 |
13,842,295 |
|
|
========== |
========== |
|
|
|
|
| 9.
CASH AND BANK BALANCES |
|
| Cash in hand |
|
39,077 |
39,238 |
|
| Stamps
in hand |
|
49,513 |
31,860 |
|
| Cheques
in hand |
|
4,049,106 |
8,404,137 |
|
| With
banks on |
|
| current
accounts |
|
39,863,580 |
12,380,243 |
|
| local
currency deposit account |
|
95,288,566 |
7,956,526 |
|
| foreign
currency deposit account |
|
124,279 |
122,059 |
|
| foreign
currency deposit accounts |
|
9.1 |
36,999,884 |
169,130,885 |
|
| special
account with SBP |
|
9.2 |
2,400,000 |
1,500,000 |
|
|
------------- |
------------- |
|
|
178,814,005 |
199,564,948 |
|
|
========== |
========== |
|
|
|
|
| 9.1
Foreign currency deposits |
|
9.1.1 |
502,718,581 |
656,367,447 |
|
| Less:
Credit facilities availed |
|
465,718,697 |
487,236,562 |
|
|
------------- |
------------- |
|
|
36,999,884 |
169,130,885 |
|
|
========== |
========== |
|
|
| 9.1.1
The foreign currency deposits are under lien with respect to credit
facilities availed on a |
|
| matching
facility basis and have been offset in accordance with note 2.8. The rate of
interest |
|
| on
the deposits ranges from 7.06% to 7.91% per annum. The rate of mark-up on the
credit |
|
| facility
availed ranges from 14.35% to 16.50% per annum. The maturity of credit
facilities |
|
| and
foreign currency deposits are upto September 15, 2003. |
|
|
| 9.2
This represents the amount kept with State Bank of Pakistan to comply with
the regulations for |
|
| Non-Banking
Financial Institutions to maintain the liquidity requirement against certain
liabilities. |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| 10.
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL |
|
| 14,123,590 |
ordinary shares of Rs.10
each |
|
|
issued as fully paid in
cash |
|
10.1 |
141,235,900 |
88,640,600 |
|
| 3,232,859 |
ordinary shares of Rs.10
each |
|
|
issued as fully paid
bonus shares |
|
32,328,590 |
16,550,000 |
|
| ------------- |
|
------------- |
------------- |
|
| 17,356,449 |
|
173,564,490 |
105,190,600 |
|
| ========== |
|
========== |
========== |
|
|
|
|
|
| 10.1
Includes 536,560 ordinary shares of Rs.10 each issued to International
Finance Corporation upon |
|
| exercise
of their option to convert a portion of its loan into equity based on
financial statements |
|
| as
at June 30, 1995 as per the loan agreement (refer to note 12.7). |
|
|
| 11.
RESERVES |
|
| Capital
reserves |
|
| Reserve
for issue of bonus shares |
|
11.1 |
27,770,320 |
15,778,590 |
|
| Statutory
reserve |
|
11.2 |
42,953,794 |
38,700,289 |
|
| Reserve
for deferred taxation |
|
11.3 |
56,940,000 |
24,440,000 |
|
|
|
------------- |
------------- |
|
|
127,664,114 |
78,918,879 |
|
|
| Revenue
reserves |
|
| General
reserve |
|
11.4 |
15,598,775 |
58,109,095 |
|
| Unappropriated
profit |
|
51,782 |
797,761 |
|
|
------------- |
------------- |
|
|
15,650,557 |
58,906,856 |
|
|
------------- |
------------- |
|
|
143,314,671 |
137,825,735 |
|
|
========== |
========== |
|
|
| 11.1
Reserve for issue of bonus shares |
|
| Balance
at the beginning of the year |
|
15,778,590 |
-- |
|
| Less:
bonus shares issued during the year |
|
(15,778,590) |
-- |
|
|
------------- |
------------- |
|
|
-- |
-- |
|
| Transfer
from profit and loss appropriation account |
|
27,770,320 |
9,956,914 |
|
| Transfer
from premium on shares account |
|
-- |
5,821,676 |
|
|
------------- |
------------- |
|
|
27,770,320 |
15,778,590 |
|
|
========== |
========== |
|
| Proposed
issue of bonus shares is in the ratio of 4:25 (1999: 3:20). |
|
|
|
| 11.2
This represents 20% of after tax profit as required under the relevant
provision of the Leasing |
|
| Companies
(Establishment and Regulation ) Rules 2000. |
|
|
| 11.3
Deferred taxation arising due to timing differences computed under the
liability method is estimated |
|
| at
Rs.101.18 million of which Rs.17.76 million is in respect of the current year
(1999:Rs.83.42 |
|
| million,
for the year Rs.9.7 million). The company has appropriated Rs.32.5 million
(1999:Rs.24.44 |
|
| million)
in the current financial year [being one-fifth of the opening balance of
deferred tax liability |
|
| plus
a further sum of Rs. 17.76 million (1999: Rs. 9.7 million) for current year]
to achieve compliance |
|
| with
Circular 16 of 1999 issued by Securities and Exchange Commission of Pakistan.
Deferred |
|
| tax
liability due to timing differences amounting to Rs.44.24 million, therefore
remains to be |
|
| appropriated
over the next three years. |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| 11.4
General reserve |
|
| Balance
at the beginning of the year |
|
58,109,095 |
72,849,095 |
|
| Transfer
to profit and loss appropriation account |
|
(42,510,320) |
(14,740,000) |
|
|
------------- |
------------- |
|
|
15,598,775 |
58,109,095 |
|
|
========== |
========== |
|
|
|
|
| 12.
LONG TERM LOANS - Secured |
|
| Foreign
currency loans |
|
| Commonwealth
Development Corporation II |
|
-- |
11,110,604 |
|
| Asian
Development Bank II |
|
12.2 |
366,100,000 |
467,100,000 |
|
| Netherlands
Development Finance Company I |
12.3 |
12,374,654 |
37,042,965 |
|
| Netherlands
Development Finance Company II |
12.4 |
136,555,300 |
195,943,260 |
|
| German
Investment and Development Company I |
12.5 |
5,655,150 |
16,818,114 |
|
| German
Investment and Development Company II |
12.6 |
17,779,594 |
29,590,549 |
|
| International
Finance Corporation (Loan A) |
12.7 |
130,432,899 |
167,697,076 |
|
|
------------- |
------------- |
|
|
668,897,597 |
925,302,568 |
|
| Less:
Exchange differences not yet due |
|
977,016 |
1,510,746 |
|
|
------------- |
------------- |
|
|
667,920,581 |
923,791,822 |
|
| Local
currency loans from |
|
|
|
| investment
bank - loan 1 |
|
-- |
7,500,000 |
|
| banking
company - loan 2 |
|
12.8 |
33,333,332 |
50,000,000 |
|
| banking
company - loan 3 |
|
12.9 |
3,745,901 |
8,952,466 |
|
| banking
company - loan 4 |
|
12.1 |
66,666,666 |
100,000,000 |
|
| banking
company - loan 5 |
|
12.1 |
58,333,334 |
-- |
|
|
------------- |
------------- |
|
|
162,079,233 |
166,452,466 |
|
|
------------- |
------------- |
|
|
829,999,814 |
1,090,244,288 |
|
| Less:
Current maturity |
|
309,222,446 |
321,284,672 |
|
|
------------- |
------------- |
|
|
520,777,368 |
768,959,616 |
|
|
========== |
========== |
|
|
|
| 12.1
All the loans stated in note 12.2 to 12.11 above are secured by pari-passu
floating charges on the |
|
| present
and future leased assets, hypothecation of movable assets and receivables of
the company |
|
| and
demand promissory notes. The foreign currency loans are registered with the
State Bank of |
|
| Pakistan. |
|
|
| 12.2
This represents balance of a second loan facility of US$ 10,000,000 obtained
from Asian |
|
| Development
Bank (ADB) for financing lease operations. The loan is repayable in 10 equal
semi- |
|
| annual
instalments which commenced from March 15, 1999. This has been hedged using
the |
|
| mechanism
described in Note 28. |
|
|
| The
interest rate is LIBOR plus 2.25% per annum payable half-yearly. In case the
company fails |
|
| to
pay any amount on the due date, it shall be liable to pay liquidated damages
at the rate of 1% |
|
| per
annum over and above the interest rate. |
|
|
| 12.3
This represents balance of a loan facility of Netherland Guilders (NLG)
10,000,000 comprising |
|
| of
two equal tranches of NLG 5,000,000 each and was obtained from Netherlands
Development |
|
| Finance
Company (FMO) for financing lease operations. The loan is repayable in 14
equal semi- |
|
| annual
instalments which commenced from November 1, 1994 for the first tranche and
November |
|
| 1,
1995 for the second tranche. |
|
|
| The
liability of this loan has been fixed in Pakistani Rupees under the exchange
risk cover scheme |
|
| of
State Bank of Pakistan. The rate of interest and exchange risk cover fee is
10.7% and 5% per |
|
| annum
respectively, payable half-yearly. In case the company fails to pay any
amount on the due |
|
| date,
it shall be liable to pay liquidated damages at the rate of 2% per annum over
and above the |
|
| interest rate. |
|
|
| 12.4
This represents the balance of a second loan facility of US $ 5,821,618
equivalent to Netherland |
|
| Guilders
(NLG) 10,000,000 obtained from Netherlands Development Finance Company (FMO) |
|
| for
financing lease operations. The loan has been drawn in two tranches and is
repayable in 10 |
|
| equal
semi-annual instalments which commenced from November 1, 1997 and May 1, 1998 |
|
| respectively.
These are hedged using the mechanism described in Note 28. |
|
| The
interest rate for the first tranche is 10.50% per annum and for the second
tranche is 10.25% |
|
| per
annum payable half-yearly. In case the company fails to pay any amount on the
due date, it |
|
| shall
be liable to pay liquidated damages at the rate of 2% per annum over and
above the interest rate. |
|
|
| 12.5
This represents the balance of a loan facility of Deutsche Marks 5,000,000
obtained from German |
|
| Investment
and Development Company (DEG) for financing lease operations. The loan is
repayable |
|
| in
15 equal semi-annual instalments which commenced from October 30, 1993. |
|
|
| The
liability of this loan has been fixed in Pakistani Rupees under the exchange
risk cover scheme |
|
| of
State Bank of Pakistan. The rate of interest and exchange risk cover fee is
10.5% and 5% per |
|
| annum
respectively, payable half-yearly. In case the company fails to pay any
amount on the due |
|
| date,
it shall be liable to pay liquidated damages at the rate of 2% per annum over
and above the |
|
| interest rate. |
|
|
| 12.6
This represents the balance of a loan facility of Deutsche Marks 5,000,000
obtained from German |
|
| Investment
and Development Company (DEG) for financing lease operations. The loan is
repayable |
|
| in
15 equal semi-annual instalments which commenced from October 30, 1994. |
|
|
| The
liability of this loan has been fixed in Pakistani Rupees under the exchange
risk cover scheme |
|
| of
State Bank of Pakistan. The rate of interest and exchange risk cover fee is
10.6% and 5.77% |
|
| per
annum respectively, payable half-yearly. In case the company fails to pay any
amount on the |
|
| due
date, it shall be liable to pay liquidated damages at the rate of 2% per
annum over and above |
|
| the
interest rate. |
|
|
| 12.7
This represents the balance of a loan facility (A) of US $ 10,000,000
obtained from International |
|
| Finance
Corporation (IFC) for financing lease operations. The loan is repayable in 16
equal semi- |
|
| annual
instalments which commenced from June 15, 1996. |
|
|
| In
accordance with the loan agreement IFC has fully exercised its option of
converting part of the loan into |
|
| equity
(refer to note 10.1). |
|
|
| The
liability of this loan has been fixed in Pakistani Rupees under the exchange
risk cover scheme |
|
| of
State Bank of Pakistan. The rate of interest and exchange risk cover fee is
8.5% and 6.66% per |
|
| annum
respectively, payable half-yearly. In case the company fails to pay any
amount on the due |
|
| date,
it shall be liable to pay liquidated damages at the rate of 2% per annum over
and above the |
|
| interest rate. |
|
|
| 12.8
This represents the balance of a loan facility of Rs.50,000,000 obtained from
a banking company |
|
| for
financing the leasing operations of the company. The loan is repayable in 12
equal quarterly |
|
| instalments
which commenced from September 30, 1999 and carried mark-up at the rate of
43.84 |
|
| (1999:
46.58) paisas per thousand Rupees per day. |
|
|
| 12.9
This represents the balance of a loan facility of Rs.13,105,579 obtained from
a banking company |
|
| for
financing the leasing operations of the company. The loan is secured by
second charge on |
|
| leased
assets of the company. The loan is repayable in 12 quarterly instalments
which commenced |
|
| from
April 01, 1998 and carries mark-up at the rate of 50.68 paisas per thousand
Rupees per day. |
|
|
| 12.10
This represents the balance of a loan facility of Rs.100,000,000 obtained
from a banking company |
|
| for
financing the leasing operations of the company. The loan is repayable in 6
equal semi annual |
|
| instalments
which commenced from September 20, 1999 and carried mark-up at the rate of
41.10 |
|
| (1999:
48.63) paisas per thousand Rupees per day. |
|
|
| 12.11
This represents the balance of a loan facility of Rs.70,000,000 obtained from
a banking company |
|
| for
financing the leasing operations of the company. The loan is repayable in 12
equal quarterly |
|
| carries
mark-up at the rate of 46.58 |
instalments which
commenced from January 25, 2000 and |
|
| paisas
per thousand Rupees per day. |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| 13.
LONG TERM DEPOSITS |
|
| From lessees |
|
| Security
deposits on lease contracts |
|
13.1 |
290,028,551 |
264,325,200 |
|
| From
employees |
|
13.2 |
486,520 |
935,093 |
|
|
|
------------- |
------------- |
|
|
290,515,071 |
265,260,293 |
|
| Less:Current
maturity of security deposits on |
|
|
|
| lease
contracts |
|
122,869,401 |
88,093,847 |
|
|
------------- |
------------- |
|
|
167,645,670 |
177,166,446 |
|
|
========== |
========== |
|
|
|
|
| 13.1
These represent security deposits received against lease contracts and are
repayable/adjustable |
|
| at
the expiry of respective lease periods. |
|
|
| 13.2
These represent deposits from employees under the company's vehicle scheme. |
|
|
| 14.
CERTIFICATES OF INVESTMENT |
|
| The
company has a scheme of registered Certificates of Investment (COI) for
resource mobilization |
|
| as
per the permission from the Corporate Law Authority (now SECP), Government of
Pakistan. The |
|
| terms
of these Certificates of Investment range from three months to five years
with return on certificates |
|
| ranging
from 11.75% to 19.15%. |
|
|
| 15.
SHORT TERM FINANCES - Unsecured |
|
| From
financial institutions |
|
155,000,000 |
190,000,000 |
|
| From others |
|
16,011,962 |
8,583,130 |
|
|
------------- |
------------- |
|
|
171,011,962 |
198,583,130 |
|
|
========== |
========== |
|
| The
mark-up rate on the above ranges from 27.40 to 49.32 paisas per thousand
Rupees per day. |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| 16.
FINANCE UNDER MARK-UP ARRANGEMENTS |
|
| Running
finances from banks utilized |
|
| under
mark-up arrangements - secured |
|
-- |
348,705 |
|
|
========== |
========== |
|
| Total
facilities from commercial banks amount to Rs.56.5 million (1999:Rs.71.50
million). Mark-up |
|
| rates
range from 40.41 to 47.95 (1999:43.84 to 47.95) paisas per thousand Rupees
per day and are |
|
| payable
currently. The arrangements are secured by pari-passu floating charges on
present and future |
|
| leased
assets and hypothecation of rentals receivable. |
|
|
| 17.
ACCRUED AND OTHER LIABILITIES |
|
| Accrued
expenses |
|
1,333,113 |
894,229 |
|
| Mark-up
on secured |
|
|
|
| -
long term loans |
|
18,857,290 |
25,644,934 |
|
| -
credit facilities availed [net of accrued interest on |
|
|
|
| foreign
currency deposits Rs.21,709,869 |
|
|
|
| (1999:
Rs.27,881,487) - refer to note 9.1] |
|
13,191,445 |
12,425,879 |
|
| -
running finances |
|
93,290 |
298,399 |
|
| Mark-up
on unsecured short term finances |
|
2,362,597 |
3,934,014 |
|
| Guarantee
commission and other charges on |
|
|
|
| long
term loans |
|
611,779 |
1,186,997 |
|
| Profit
payable on Certificates of Investment |
|
35,795,819 |
20,532,182 |
|
| Provision
for taxation |
|
1,417,170 |
-- |
|
| Other
liabilities |
|
|
|
| Advance
from customers pending lease execution |
|
1,347,527 |
1,180,875 |
|
| Advance
lease rentals from lessees |
|
4,929,404 |
5,458,635 |
|
| Payments
from lessees received on account |
|
10,287,386 |
13,242,348 |
|
| Unclaimed
dividends |
|
25,530 |
11,113 |
|
| Others |
|
2,096,928 |
1,180,969 |
|
|
------------- |
------------- |
|
|
18,686,775 |
21,073,940 |
|
|
------------- |
------------- |
|
|
92,349,278 |
85,990,574 |
|
|
========== |
========== |
|
|
|
|
| 18.
COMMITMENTS |
|
| Commitments |
|
| Letters
of comfort against letters of credit |
|
22,404,280 |
5,000,000 |
|
| Lease
commitments |
|
12,854,000 |
4,915,950 |
|
|
------------- |
------------- |
|
|
35,258,280 |
9,915,950 |
|
|
========== |
========== |
|
|
|
|
| 19.
INCOME FROM LEASING OPERATIONS |
|
322,549,082 |
311,923,488 |
|
|
========== |
========== |
|
| The
above includes all income arising on account of leasing operations. |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| 20.
OTHER INCOME |
|
| Return
on long term investments: |
|
| Government
securities |
|
4,887,329 |
4,875,000 |
|
| Dividends
[1999:Rs.321,163 |
|
| from
associated undertakings] |
|
-- |
355,663 |
|
|
------------- |
------------- |
|
|
4,887,329 |
5,230,663 |
|
|
|
|
| Return
on deposit account |
|
6,426,179 |
7,163,009 |
|
| Return
on short term investments |
|
309,042 |
1,358,904 |
|
| Income
from short term placements |
|
23,633,527 |
11,439,450 |
|
| Mark-up
on short term finances |
|
307,280 |
83,333 |
|
| Exchange
gain |
|
1,621,393 |
1,879,138 |
|
| Mark-up
on loans to executives |
|
783,476 |
616,545 |
|
| (Loss)
/ Profit on sale of fixed assets |
|
(167,753) |
457,574 |
|
| Profit
on sale of shares |
|
4,820,178 |
675,195 |
|
| Guarantee
commission |
|
-- |
123,126 |
|
| Miscellaneous |
|
185,804 |
140,242 |
|
|
------------- |
------------- |
|
|
42,806,455 |
29,167,179 |
|
|
========== |
========== |
|
|
|
|
| 21.
FINANCIAL CHARGES |
|
|
|
| Mark-up
on secured |
|
|
|
| -
long term loans |
|
101,543,590 |
111,714,733 |
|
| -
credit facilities availed [net of interest on foreign |
|
|
|
| currency
deposits Rs.44,910,951 |
|
|
|
| (1999:
Rs.52,754,616) refer to note 9.1] |
|
33,306,081 |
27,770,955 |
|
| -
running finances |
|
471,511 |
722,579 |
|
| -
short term finances |
|
-- |
3,134,177 |
|
| Exchange
risk cover fee |
|
13,963,261 |
23,110,082 |
|
| Accrual
/ (refund) in respect of late payment of |
|
|
|
| exchange
risk cover fee - net |
|
3,221,805 |
(8,475,905) |
|
| Mark-up
on short term finance - unsecured |
|
31,073,906 |
39,189,247 |
|
| Profit
on Certificates of Investment |
|
75,752,297 |
56,540,378 |
|
| Brokerage
and commission |
|
1,652,380 |
267,577 |
|
| Guarantee
commission and other charges on |
|
|
|
| long
term loans |
|
612,237 |
1,225,124 |
|
| Bank
charges |
|
251,135 |
328,861 |
|
|
------------- |
------------- |
|
|
261,848,203 |
255,527,808 |
|
|
========== |
========== |
|
|
|
|
| 22.
ADMINISTRATIVE AND OPERATING EXPENSES |
|
|
|
| Salaries,
allowances and benefits |
|
22.1 |
22,101,169 |
18,096,615 |
|
| Rent,
rates and taxes |
|
3,138,766 |
2,988,433 |
|
| Gas,
electricity and utilities |
|
683,793 |
535,469 |
|
| Printing
and stationery |
|
959,556 |
1,111,913 |
|
| Insurance |
|
2,266,696 |
1,363,118 |
|
| Repairs
and maintenance |
|
2,001,703 |
1,492,098 |
|
| Travelling
and conveyance |
|
1,040,141 |
1,081,746 |
|
| Staff
training expenses |
|
280,000 |
216,900 |
|
| Membership
and subscription |
|
723,746 |
348,649 |
|
| Canteen
and entertainment expenses |
|
561,706 |
445,370 |
|
| Postage
expenses |
|
113,893 |
154,198 |
|
| Telephone
expenses |
|
2,069,089 |
1,980,814 |
|
| Legal
and professional charges |
|
3,305,988 |
1,914,605 |
|
| Vehicle
running expenses |
|
2,376,895 |
1,826,687 |
|
| Advertisement |
|
229,436 |
129,313 |
|
| Depreciation |
|
5,104,462 |
4,334,683 |
|
| Stamps
and fees |
|
904,240 |
306,244 |
|
| Freight
and packing |
|
400 |
-- |
|
| Auditors'
remuneration |
|
|
|
| Audit fee |
|
110,000 |
900,001 |
|
| Taxation
services |
|
108,930 |
106,934 |
|
| Special
audit fee |
|
-- |
90,000 |
|
| Other
certifications |
|
15,000 |
3,000 |
|
| Out-of-pocket
expenses |
|
46,710 |
19,731 |
|
|
------------- |
------------- |
|
|
280,640 |
309,665 |
|
| Professional
tax |
|
225,000 |
218,612 |
|
|
------------- |
------------- |
|
|
48,367,319 |
38,855,132 |
|
|
========== |
========== |
|
|
|
|
| 22.1
This includes an amount of Rs.1,115,470 (1999: Rs.829,851) in respect of
employees provident fund |
|
| contribution. |
|
|
| 23.
TAXATION |
|
| Assessments
have been finalised upto assessment year 1999-2000. Provision for current
taxation has |
|
| been
made on the basis of minimum tax under section 80D of the Income Tax
Ordinance, 1979. |
|
|
| 24.
BASIC EARNINGS PER SHARE |
|
| Basic
earnings per share are calculated by dividing the net profit for the year by
the weighted average number of |
|
| shares
outstanding during the year as follows: |
|
|
| Profit
after tax for the year |
|
21,267,526 |
25,311,230 |
|
|
========== |
========== |
|
| Weighted
average number of shares outstanding |
|
| during
the year |
|
15,447,049 |
14,492,349 |
|
|
========== |
========== |
|
|
| Basic
earnings per share |
|
1.38 |
1.75 |
|
|
========== |
========== |
|
|
|
|
| 24.1
No figure for diluted earnings per share has been presented as the company
has not issued any |
|
| instruments
which would have an impact on earnings per share when exercised. |
|
|
| 24.2
Weighted average number of shares for the prior period has also been adjusted
for the effect of |
|
| bonus
issue and the right issue of shares during the current period. |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| 25.
TRANSACTIONS WITH ASSOCIATED |
|
| UNDERTAKINGS |
|
| Insurance
premium expense |
|
1,457,215 |
1,052,194 |
|
| Paid
towards software development |
|
-- |
1,105,000 |
|
| Services
provided by |
|
1,372,296 |
1,476,086 |
|
| Expenses
charged by |
|
216,143 |
25,184 |
|
| Lease
rentals received |
|
14,950,860 |
17,079,116 |
|
| Cost
of assets leased |
|
10,454,735 |
4,215,000 |
|
| Issue
of Certificates of Investment |
|
-- |
22,000,000 |
|
| Purchase
of operating assets |
|
6,743,052 |
1,655,555 |
|
| Sale
of operating assets |
|
50,000 |
-- |
|
| Short
term finance obtained |
|
165,000,000 |
250,000,000 |
|
| Short
term finance repaid |
|
165,000,000 |
250,000,000 |
|
| Mark-up
on short term finance obtained |
|
6,336,096 |
9,591,997 |
|
| Profit
on Certificates of Investment paid |
|
3,513,206 |
1,275,001 |
|
| Brokerage
paid against purchase of shares |
|
950,654 |
-- |
|
| Guarantee
commission |
|
-- |
123,126 |
|
| Mark-up
accrued on advance |
|
-- |
1,057,366 |
|
|
| Transactions
with associated undertakings are entered into in the normal course of
business at contracted |
|
| rates
and terms determined in accordance with market rates. |
|
|
| 26.
REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES |
|
| Remuneration
in respect of the above charged in these accounts is as follows: |
|
|
2000 |
1999 |
|
|
Chief |
|
Chief |
|
|
|
Executive |
Executives |
Total |
Executive |
Executives |
Total |
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
| Managerial |
|
| remuneration |
|
2,375,175 |
7,665,877 |
10,041,052 |
1,697,902 |
6,668,252 |
8,366,154 |
|
| Housing and |
|
| utilities |
|
724,491 |
3,070,202 |
3,794,693 |
737,431 |
2,917,783 |
3,655,214 |
|
| Medical |
|
12,722 |
358,971 |
371,693 |
11,337 |
308,591 |
319,928 |
|
| Provident
fund |
177,098 |
744,035 |
921,133 |
134,078 |
515,568 |
649,646 |
|
|
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
3,289,486 |
11,839,085 |
15,128,571 |
2,580,748 |
10,410,194 |
12,990,942 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
|
| Number of |
|
| persons |
|
1 |
25 |
|
1 |
22 |
|
|
========== |
========== |
|
========== |
========== |
|
|
|
|
|
|
| 26.1
The Chief Executive is provided with free use of company maintained car. |
|
|
| 26.2
Fees totaling Rs.8,500 (1999: Rs.8,000) were paid to five directors (1999:
five directors) for |
|
| attending
Board Meetings during the year. |
|
|
| 27.
CREDIT RISK AND CONCENTRATIONS OF CREDIT RISK |
|
| Credit
risk is the risk, which arises with the possibility that one party to a
financial instrument will fail |
|
| to
discharge an obligation and cause the other party to incur a financial loss.
The company attempts |
|
| to
control credit risk by monitoring credit exposures by undertaking
transactions with a large number |
|
| of
counterparties in various industries and by continually assessing the credit
worthiness of counterparties. |
|
|
| The
company follows a two pronged policy. Firstly, it has developed its own
prudent operating policies |
|
| duly
approved by the Board of Directors. Secondly, it follows the regulations
issued by the State Bank |
|
| of
Pakistan. The internal policy prescribes the maximum limits of fund and
non-fund based exposures |
|
| with
respect to a particular sector or a business group. Extra care is taken to
ensure that per party and |
|
| per
sector exposures remain within limits prescribed by the internal policy and
the State Bank of Pakistan |
|
| regulations. |
|
|
| Concentration
of credit risk arises when a number of counterparties have a similar type of
business |
|
| activities.
As a result, any change in economic, political or other conditions would
effect their ability |
|
| to
meet contractual obligations in a similar manner. |
|
|
| Details
of the industry sector analysis of lease portfolio is given below: |
|
|
|
2000 |
1999 |
|
| Industry Sector |
|
Rupees |
% |
Rupees |
% |
|
| Cement |
|
226,407,195 |
12.09 |
168,659,892 |
8.83 |
|
| Textile
Spinning |
|
218,664,807 |
11.67 |
259,388,600 |
13.58 |
|
| Services |
|
207,712,684 |
11.09 |
203,232,305 |
10.64 |
|
| Chemicals,
Fertilizers and Pharma |
167,303,126 |
8.93 |
169,996,947 |
8.90 |
|
| Steel,
Engineering and Automobile |
150,308,451 |
8.02 |
176,682,220 |
9.25 |
|
| Food,
Tobacco and Beverages |
150,119,622 |
8.01 |
127,211,199 |
6.66 |
|
| Consumer |
|
147,664,835 |
7.88 |
124,346,081 |
6.51 |
|
| Transport
and Communication |
108,010,596 |
5.77 |
84,043,434 |
4.40 |
|
| Electrical
and Electronic Goods |
99,702,088 |
5.32 |
120,716,933 |
6.32 |
|
| Printing
and Packaging |
|
90,071,773 |
4.81 |
70,099,865 |
3.67 |
|
| Educational
Institutions |
|
50,984,022 |
2.72 |
48,133,967 |
2.52 |
|
| Health Care |
|
44,374,983 |
2.37 |
45,268,850 |
2.37 |
|
| Glass
and Ceramics |
|
40,598,388 |
2.17 |
40,493,655 |
2.12 |
|
| Energy,
Oil and Gas |
|
26,813,819 |
1.43 |
45,459,858 |
2.38 |
|
| Financial
Institutions |
|
23,792,544 |
1.27 |
59,021,412 |
3.09 |
|
| Paper
and Board |
|
23,792,544 |
1.27 |
42,785,748 |
2.24 |
|
| Sugar
and Allied |
|
13,218,080 |
0.71 |
12,033,492 |
0.63 |
|
| Dairy
and Poultry |
|
11,518,612 |
0.61 |
13,752,562 |
0.72 |
|
| Construction |
|
10,574,464 |
0.56 |
11,078,453 |
0.58 |
|
| Leather
Footwear and Tanneries |
5,287,232 |
0.28 |
3,438,141 |
0.18 |
|
| Banaspati
and Allied Industries |
3,210,105 |
0.17 |
4,011,164 |
0.21 |
|
| Textile
Weaving and Knitting |
2,751,258 |
0.15 |
37,246,522 |
1.95 |
|
| Hotels |
|
1,321,808 |
0.07 |
1,719,070 |
0.09 |
|
| Miscellaneous |
|
49,095,726 |
2.63 |
41,257,686 |
2.16 |
|
|
------------- |
------------- |
------------- |
------------- |
|
|
1,873,298,762 |
100.00 |
1,910,078,056 |
100.00 |
|
|
========== |
========== |
========== |
========== |
|
|
| 28.
NET FOREIGN CURRENCY EXPOSURE |
|
| For
foreign currency loans not covered through the State Bank of Pakistan
exchange risk cover scheme, |
|
| the
company has adopted an alternative method to hedge foreign exchange risk
associated with its foreign currency |
|
| borrowing
which has also been recognized by the State Bank of Pakistan. This involves
purchasing foreign |
|
| currency
from the secondary market, placing the foreign currency on deposits and
obtaining credit facilities against |
|
| these
deposits in local currency on a matching basis. |
|
|
| The
details of hedge transactions are as follows: |
|
| Long
term foreign currency borrowings hedged by long term deposits are as follows: |
|
|
|
2000 |
1999 |
|
|
|
Rupees |
US$ |
Rupees |
US$ |
|
| FMO II |
|
136,555,300 |
2,611,000 |
195,943,260 |
3,775,400 |
|
| ADB II |
|
366,100,000 |
7,000,000 |
467,100,000 |
9,000,000 |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
502,655,300 |
9,611,000 |
663,043,260 |
12,775,400 |
|
|
| Long
term deposits to hedge long |
|
| term
borrowings are as follows: |
|
|
| Pak
Kuwait Inv. Co. ( FMO II ) |
136,624,181 |
2,612,357 |
194,082,447 |
3,778,496 |
|
| Pak
Kuwait Inv. Co. ( ADB II |
366,094,400 |
7,000,000 |
462,285,000 |
9,000,000 |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
502,718,581 |
9,612,357 |
656,367,447 |
12,778,496 |
|
|
------------ |
------------ |
------------ |
------------ |
|
|
(63,281) |
(1,357) |
6,675,813 |
(3,096) |
|
|
========== |
========== |
========== |
========== |
|
| For
foreign currency borrowings other than referred to above, appropriate forward
exchange cover has |
|
| been
obtained directly from State Bank of Pakistan to hedge against foreign
exchange fluctuation risks. |
|
|
| 29.
MARK-UP RATE RISK |
|
| Mark-up
rate risk (MRR) arises from the possibility that changes in MRR will affect
the value of |
|
| financial
instruments. A company is exposed to MRR as a result of mismatches or gaps in
the amounts |
|
| of
assets and liabilities and off balance sheet instruments that mature or
reprice in a given period. The |
|
| risk
is managed by matching the repricing of assets and liabilities. |
|
|
| The
company's MRR sensitivity position, based on the earlier of contractual
repricing or maturity date, |
|
| is as follows: |
|
|
2000 |
|
|
|
More than one |
|
|
|
Less than |
year and less |
More than |
Not exposed |
|
|
|
one year |
than five years |
five years |
to MRR |
Total |
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
| Assets |
|
| Fixed assets |
|
-- |
-- |
-- |
20,490,810 |
20,490,810 |
|
| Net
investment in lease finance (net |
|
| of
provision for doubtful finance) |
730,608,596 |
749,081,146 |
-- |
314,930,472 |
1,794,620,214 |
|
| Long
term investments |
|
-- |
32,500,000 |
-- |
1,000,000 |
33,500,000 |
|
| Long
term loans, deposits |
|
| and
deferred cost |
|
386,607 |
2,202,031 |
5,145,864 |
13,271,938 |
21,006,440 |
|
| Short
term investment |
|
-- |
-- |
-- |
-- |
-- |
|
| Income
accrued or due |
|
-- |
-- |
-- |
19,989,376 |
19,989,376 |
|
| Advances,
deposits, prepayments |
|
| and
other receivable (net of provision |
|
| for
doubtful debts) |
|
11,233,647 |
-- |
-- |
51,160,185 |
62,393,832 |
|
| Cash
and bank balances (net) |
107,597,426 |
24,815,303 |
-- |
46,401,276 |
178,814,005 |
|
|
------------- |
------------- |
------------- |
------------- |
------------- |
|
|
A |
849,826,276 |
808,598,480 |
5,145,864 |
467,244,057 |
2,130,814,677 |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
| Liabilities |
|
| Capital
and reserves |
|
-- |
-- |
-- |
316,879,161 |
316,879,161 |
|
| Long
term finances |
|
309,222,446 |
520,777,368 |
-- |
-- |
829,999,814 |
|
| Certificates
of Investment |
|
384,760,000 |
45,299,391 |
-- |
-- |
430,059,391 |
|
| Long
term deposits |
|
-- |
-- |
-- |
290,515,071 |
290,515,071 |
|
