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Dawood Leasing Company Limited
Annual Report 2000
CONTENTS
Corporate Information
Notice of Meeting
Financial Highlights
Directors' Report
Auditors' Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Financial Statements
Statement & Report Under Section 237
of the Companies Ordinance, 1984
Pattern of Share Holding
Consolidated Accounts of Dawood Leasing Company Ltd. and its Subsidiaries
Auditors' Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Financial Statements
CORPORATE INFORMATION
Board of Directors		Mr. Rafique Dawood		Chairman & Chief Executive
		Mr. Rasheed Y. Chinoy
		Mr. Ayaz Dawood
		Mr. Asadullah Khawaja
		Mr. Muhammad Latif		(Nominee of SLIC)
		Mr. Abdul Latif Uqaili		(Nominee of ICP)
		Mr. Ahmed Kamran		(Nominee of AI-Faysal Inv. Bank)
Company Secretary		Syed Jamal Macdi
Auditors		M. Yousuf Adil Saleem & Co.
		Chartered Accountants.
Legal Advisors		Mohsin Tayebaly & Co.
Bankers		American Express Bank Ltd.
		Bank Al-Habib Ltd.
		Bank of Khyber
		Bank of Punjab
		Faysal Bank Ltd.
		Gulf Commercial Bank Ltd.
		Habib Bank Ltd.
		Metropolitan Bank Ltd.
		Muslim Commercial Bank Ltd.
		Oman International Bank S.A.O.G.
		Prime Commercial Bank Ltd.
		Societe Generale, The French & International Bank
		Soneri Bank Ltd.
		United Bank Ltd.
		Union Bank Ltd.
Registered Office,		5-B, Lakson Square Building # 1,
Head Office and		Sarwar Shaheed Road, Karachi-74200
Share Registrars		Tel.	: (021) 568 7778
		Fax	: (021) 568 5830
		E-mail : dlc@khi.compol.com
Branch Offices		Office No. 20 & 21, Beverly Centre, 1 st Floor,
		56-G, Jinnah Avenue, Islamabad-44000
		Tel. : (051) 276 367 & 274 194-5
		E-mail: moeen@comsats.net.pk
		327/2, C-1I, Township, Lahore
		Tel. : (042) 511 8141
		E-mail: ennpak@netscape.net
NOTICE OF SIXTH ANNUAL GENERAL MEETING
Notice is hereby given that the Sixth Annual General Meeting of DAWOOD LEASING COMPANY
LIMITED will be held at the Registered Office, 5-B, Lakson Square Building # 1. Sarwar Shaheed
Road, Karachi on Tuesday December 26, 2000 at 8:00 a.m. to transact the following business:
1. 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.
2. To approve payment of Cash Dividend @ Rs. 1.00 per share to the shareholders for the year ended
June 30, 2000.
3. To appoint Auditors and to fix their remuneration.
					By the Order of the Board
November 24, 2000					Syed Jamal Macdi
Karachi.					Company Secretary
Notes:
1.  The share transfer books of the Company will remain closed from December 15, 2000 to December
26, 2000 (both days inclusive).
2. A member entitled to attend and vote at a General Meeting is entitled to appoint a Proxy to attend
and vote on his behalf. No person other than a member shall act as a Proxy.
3. Duly completed forms of Proxy must be deposited with the Company Secretary at the Registered
Office of the Company not later than 48 hours before the time appointed for the meeting.
4. Account holders and sub-account holders' holding book entry securities of the Company in Central
Depository System of Central Depository Company of Pakistan Limited who wish to attend the
Annual General Meeting are requested to please bring original I.D. Card with copy thereof duly
attested by their Bankers for identification purpose.
FINANCIAL HIGHLIGHTS
		2000	1999	1998	1997	1996	1995
				Rupees in Million
Authorized Capital		500.00	500.00	500.00	300.00	300.00	300.00
Paid-up Capital		250.00	250.00	250.00	250.00	250.00	250.00
Shareholders' Equity		306.72	300.62	305.59	295.52	281.60	267.92
Total Assets		1529.65	1520.99	926.58	680.10	539.45	340.45
Net Investment in Leases		1117.79	1036.38	791.63	620.50	510.57	253.37
Provision for Lease Losses		49.00	34.00	26.50	16.50	5.00	--
Revenue		214.41	163.21	141.34	121.96	89.12	28.00
Income from Leasing Operations		171.04	154.05	133.36	121.29	84.66	21.19
Profit before Taxation		41.65	35.29	28.06	46.41	46.21	18.09
Taxation		10.55	15.35	17.89	1.24	1.27	0.17
Profit after Taxation		31.10	19.94	10.17	45.16	44.94	17.92
Current Ratios		1:1.04	1:1.32	1:1.26	1:1.53	1:0.91	1:6.74
Book Value Per Share		12.27	12.02	12.22	11.82	11.26	10.71
Earning Per Share - After Tax		1.24	0.80	0.40	1.81	1.79	0.71
Return on Equity - Pre-Tax		13.86%	11.50%	9.50%	16.48%	17.25%	6.75%
Dividend Per Share (Rs.)		1.00	1.00	--	1.25	1.25	--
* 6 months of operations.
DIRECTORS' REPORT
We are pleased to present your company's Sixth Annual Report for the year ended June 30, 2000
Operating Results
				2000	1999
				Rupees	Rupees
Lease Income				171,044,261	154,046,674
Other Income				43,371,017	9,160,518
				214,415,278	163,207,192
Profit Before Tax				41,658,305	35,291,304
Provision for Tax				10,554,455	15,352,971
				31,103,850	19,938,333
Unappropriated Profit Brought Forward				499,823	9,549,157
Profit Available for Appropriation				31,603,673	29,487,490
Appropriations
Transfer to Statutory Reserve				6,220,770	3,987,667
Proposed Cash Dividend				25,000,000	25,000,000
Un-appropriated Profit Carried Forward				382,903	499,823
Review of Operations
.During. the year under review 1999-2000, lease disbursements of Rs. 461 million were made resulting
m net investment in leases of Rs. 1.1 billion, which surpassed targets. Conservative targets had been
set keeping in view the downturn in the economy and the low availability of good leasing prospects.
The asset mix of the portfolio has not changed significantly since last year. The sector wise portfolio
was changed to accommodate investments in growing businesses like the communications and information
technology sectors.
Following our conservative provisioning policies a further provision for lease losses amounting to Rs.
15 million has been done. The total provisioning now stands at Rs. 49 million which is about 4.22%
of net investment in lease finance. Hence the sum of all reserves, allowances and provisions is 60%
(49% in 1999) of the paid-up capital of your Company.
Having surplus funds, due to good treasury management, the Company was able to make noteworthy
returns. Deposits and investments income increased more than 3.7 times from Rs. 8.7 million to
Rs. 33 million.
The Company was also able to earn a substantial return on its stock market portfolio. We remain
conservative in our stock market operations understanding that our stock market has yet not developed
and does not offer adequate hedging instruments.
Credit Rating
Your Company is pleased to inform you that we have been successfully upgraded to a credit rating of
A minus for long term and A2 for short term from PACRA. This denotes rating of High Credit Quality"
from the previously held "Good Credit Quality."
Underwriting and Pre-lnitial Public Offerings
Your Company successfully participated in the Pre-IPO of every Term Finance Certificates (TFCs) issue
during the year. We also underwrote the equity issues of Dewan Farooque Motors Limited, World Call
Pay Phones Limited and the TFCs issues of Paramount Leasing Limited and Pakistan Industrial Leasing
Corporation. All these issues were oversubscribed. This made your company one of the leading players
in the nascent TFC market as well as the equity market.
Resource Mobilization
Your Company is the proud recipient of US$ 6.66 million (Rs. 355 million) 15 years credit facility from
the Asian Development Bank, under the Financial Sector Intermediation Loan Facility. The total amount
has been disbursed in leasing but unfortunately due to difficulties and financial sector technicalities,
the authorized Development Financial Institutions have not issued the requisite guarantees so that all
the funds may be brought into the country.
Future Prospects
The leasing sector has lost much of the steep growth experienced during the past years due mainly to
improper tax incentives and unavailability of low interest credit lines. A major threat to the leasing
industry is the permission granted to commercial banks to acquire a leasing license. In essence this will
be the death-knell for this industry. The banks, with their large financial base and huge credit generating
facilities, are competition that the leasing sector and its medium size companies with low credit generating
capacities cannot compete with.
Acquisitions
The consolidation process of Guardian Modaraba Management (Pvt.) Limited and General Modaraba
Services (Pvt.) Limited and Pakistan Venture Capital Limited has been successfully completed.
Auditors
The present auditors, M. Yousuf Adil Saleem & Co. retire and being eligible offer themselves for
reappointment.
Acknowledgments
We would like to thank our valuable customers and stakeholders for their confidence in the management.
We remain grateful to the Ministry of Finance, the State Bank of Pakistan and the SECP for their
encouragement and continuing support, not to forget fortitude in listening to our financial proposals.
We praise our staff and executive team for their hard work and dedication to the Company.
				On behalf of the Board,
				Rafique Dawood
November 14, 2000				Chairman & CEO
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of  DAWOOD LEASING COMPANY 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 free of any material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the above said statements. An audit also
includes assessing the accounting policies and significant estimates made by management, as well as,
evaluating the overall presentation of the above said statements. We believe that our audit provides a
reasonable basis for our opinion and, after due verification, we report that:
a) in our opinion, proper books of account have been kept by the Company as required by the
Companies Ordinance, 1984;
b) in our opinion:
(i) the balance sheet and profit and loss account together with the notes thereon
have been drawn up in conformity with the Companies Ordinance, 1984, and are
in agreement with the books of account and are further in accordance with
accounting policies consistently applied;
(ii) the expenditure incurred during the year was for the purpose of the Company's
business; and
(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, zakat deductible at source under the Zakat and Ushr Ordinance,
1980 (XVIII of 1980), was deducted by the Company and deposited in the Central
Zakat Fund established under Section 7 of that Ordinance.
Dated: November 14, 2000				M. Yousuf Adil Saleem & Co
Karachi.				Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 2000
					2000	1999
				Note	Rupees	Rupees
SHARE CAPITAL AND RESERVES
Authorized
50,000,000 Ordinary Shares
of Rs. 10/- each					500,000,000	500,000,000
					==========	==========
Issued, Subscribed and Paid-up
25,000,000 Ordinary Shares of
Rs. 10/- each. Fully Paid in Cash					250,000,000	250,000,000
Statutory Reserve					33,845,727	27,624,957
General Reserve					22,500,000	22,500,000
Unappropriated Profit					382,903	499,823
					-----------	-----------
					306,728,630	300,624,780
LONG TERM LIABILITIES
Redeemable Capital				3	5,218,349	14,274,989
Long Term Loans				4	297,859,954	405,057,869
Liabilities against Assets
subject to Finance Lease				5
Lease Deposits				6	112,511,804	99,152,824
Certificates of Investment				7	36,100,000	11,400,000
					-----------	-----------
					451,690,107	529,885,682
DEFERRED LIABILITIES
Taxation					37,200,000	29,000,000
Staff Gratuity					1,392,973	858,033
					-----------	-----------
					38,592,973	29,858,033
CURRENT LIABILITIES
Short Term Borrowings				8	496,539,425	433,548,078
Certificates of Investment				7	66,000,000	50,500,000
Current Portion of Long Term Liabilities				9	95,293,682	108,339,332
Accrued and Other Liabilities				10	47,213,529	391,355,848
Taxation					2,600,000	4,100,000
Proposed Dividend					25,000,000	25,000,000
					-----------	-----------
					732,646,636	660,622,994
COMMITMENTS				11
					-----------	-----------
					1,529,658,346	1,520,991,489
					==========	==========
TANGIBLE FIXED ASSETS				12	26,402,077	23,798,900
NET INVESTMENT IN LEASE FINANCE				13
Minimum Lease Payment Receivables					1,338,939,163	1,204,287,306
Residual Value of Leased Assets					159,531,402	148,456,873
					-----------	-----------
					1,498,470,565	1,352,744,179
Unearned Finance Income					(380,678,513)	(316,364,297)
					-----------	-----------
Net Investment in Lease Finance					1,117,792,052	1,036,379,882
Provision for Lease Losses					(27,050,000)	(34,000,000)
					-----------	-----------
					1,090,742,052	1,002,379,882
Current Portion of Net Investment in Lease Finance					(429,288,511)	(426,289,808)
					-----------	-----------
					661,453,541	576,090,074
INVESTMENT IN SUBSIDIARIES
AND ASSOCIATE				14	51,530,850	45,793,350
LONG TERM RECEIVABLE				15	21,950,000	--
LONG TERM DEPOSIT					300,000	300,000
LONG TERM LOANS				16	2,899,224	1,719,112
CURRENT ASSETS
Current Portion of Net Investment in Lease Finance					429,288,511	426,289,808
Short Term Investments				17	297,765,560	189,799,680
Short Term Morabaha Finance				18	7,000,000	103,051,816
Advances Against Lease Commitments					2,850,000	9,700,000
Advances, Deposits and Prepayments				19	4,507,617	6,162,379
Other Receivables				20	15,109,408	27,249,820
Cash and Bank Balances				21	8,601,558	111,036,550
					-----------	-----------
					765,122,654	873,290,053
					-----------	-----------
					1,529,658,346	1,520,991,489
					==========	==========
The annexed notes form an integral part of these financial statements.
	Rafique Dawood				Ahmed Kamran
	Chairman & Chief Executive				Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2000
					2000	1999
				Note	Rupees	Rupees
Income
Lease Income					171,044,261	154,046,674
Return on Deposits and Investments				22	33,351,769	8,746,096
Gain on Sale of Securities					9,294,278	136,734
Other Income					724,970	277,688
					------------	------------
					214,415,278	163,207,192
Expenditure
Administration and Operating Expenses				23	26,585,556	23,565,327
Financial Charges				24	132,925,298	99,883,895
Provision for Lease Losses					15;000,0001	7,500,000
Reversal of Diminution in Value of Investments					(1,753,881)	(3,033,334)J
					172,756,973	127,915,888
					------------	------------
Profit Before Taxation					41,658,305	35,291,304
Provision for taxation				25
Current					2,600,000	2,100,000
Prior					(245,545)	142,971
Deferred					8,200,000	13,110,000
					------------	------------
					10,554,455	15,352,971
					------------	------------
Profit After Taxation					31,103,850	19,938,333
Unappropriated Profit Brought Forward					499,823	9,549,157
					------------	------------
Profit Available for Appropriation					31,603,673	29,487,490
Appropriations
Transferred to Statutory Reserve					6,220,770	3,987,667
Proposed Cash Dividend Rs. 1/- (1999-Rs. 1/-) Per Share					25,000,000	25,000,000
					------------	------------
					31,220,770	28,987,667
					------------	------------
Unappropriated Profit Carried Forward					382,903	499,823
					==========	==========
Earning per share - Basic and Diluted				27
Pre-Tax					1.67	1.41
Post-Tax					1.24	0.80
The annexed notes form an integral part of these financial statements
	Rafique Dawood				Ahmed Kamran
	Chairman & Chief Executive				Director
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2000
					2000	1999
					Rupees	Rupees
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit After Taxation					31,103,850	19,938,333
Adjustments:
Depreciation					5,053,056	5,505,186
(Gain) on Sale of Investments					(9,294,278)	(136,734)
Financial Charges					132,925,298	99,883,895
(Gain) on Sale of Assets					(89,400)	(16,374)
Provision for Gratuity					747,632	376,447
Provision for Lease Losses					15,000,000	7,500,000
(Reversal) for Diminution in Value of Investments					( 1,753,881 )	(3,033,334)
Provision for Deferred Taxation					8,200,000	13,110,000
Provision for Taxation					2,354,455	2,242,971
					-----------	-----------
					153,142,882	125,432,057
					------------	------------
					184,246,732	145,370,390
Changes in operating assets and liabilities
Decrease/(Increase) in operating assets
Advances, Deposits and Prepayments					263,791	(7,050)
Other Receivables					12,140,412	(25,249,942)
Net Investment in Lease Finance/Receivables					(125,312,170)	244,746,015)
Long Term Loans					(1,207,982)	204,960
Advance against Lease Commitments					6,850,000	26,617,586
Short Term Morabaha Finances					96,051,816	103,051,816)
					------------	------------
					(11,214,133)	346,232,277)
					------------	------------
					173,032,599	(200,861,887)
Increase/(Decrease) in Operating Liabilities
Accrued and Other Liabilities					(9,034,413)	(651,595)
Lease Deposits					13,587,372	28,137,135
					------------	------------
					177,585,558	(173,376,347)
Financial Charges Paid					(116,148,272)	(89,829,248)
Gratuity Paid					(212,691)	(152,755)
Tax Paid					(2,435,617)	(1,263,161)
					------------	------------
Net cash from / (used in) operating activities					58,788,978	(264,621,511)
					------------	------------
B. CASH FLOW FROM FINANCING ACTIVITIES
Redeemable Capital Obtained					--	25,000,000
Redemption of Redeemable Capital					(21,665,065)	(69,089,644)
Long Term Loans					(107,731,287)	383,286,406
Repayment of Lease Liability					(132,245)	(151,735)
Short Term Borrowings					62,991,347	239,677,554
Certificates of Investment					40,200,000	(36,588,812)
Dividend Paid					(24,664,668)	--
					------------	------------
Net cash (used in) / from financing activities					(51,001,918)	542,133,769
					------------	------------
C. CASH FLOW USED IN INVESTING ACTIVITIES
Long Term Deposit					--	(300,000)
Capital Expenditure					(9,137,403)	(12,899,754)
Proceeds From Sale of Fixed Assets					1,570,570	1,250,699
Purchase of Long Term Investments					(5,737,500)	(45,793,350)
Purchase of Short Term Investments					(2,242,973,134)	(153,145,146)
Sale proceeds of Short Term Investments					2,146,055,413	42,026,740
					------------	------------
Net Cash Used in Investing Activities					(110,222,054)	(168,860,811)
					------------	------------
Net (decrease) / increase in Cash and Bank Balances					(102,434,992)	108,651,447
Cash and Bank Balances at the Beginning of the Year					111,036,550	2,385,103
					------------	------------
Cash and Bank Balances at the End of the Year					8,601,558	111,036,550
					==========	==========
	Rafique Dawood				Ahmed Kamran
	Chairman & Chief Executive				Director
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2000
		Issued
		subscribed	Statutory	General	Unappropriated
		and Paid-up	Reserve *	Reserve	Profit	Total
		Capital
				---------------------------------------Rupees-----------------------------------------
Balance at June 30, 1998		250,000,000	23,637,290	22,500,000	9,549,157	305,686,447
Profit for the year		--	--	--	19,938,333	19,938,333
Appropriations
Transfer to Statutory Reserve		--	3,987,667	--	(3,987,667)	--
Dividend: Rs. 1/- per share		--	--	--	(25,000,000)	(25,000,000)
		------------	------------	------------	------------	------------
Balance at June 30, 1999		250,000,000	27,624,957	22,500,000	499,823	300,624,780
Profit for the year		--	--	--	31,103,850	31,103,850
Appropriations
Transfer to Statutory Reserve		--	6,220,770	--	(6,220,770)	--
Dividend: Rs. 1/- per share		--	--	--	(25,000,000)	(25,000,000)
		------------	------------	------------	------------	------------
Balance at June 30, 2000		250,000,000	33,845,727	22,500,000	382,903	306,728,630
		==========	==========	==========	==========	==========
*The statutory reserve is created by transferring not less than 20% after tax profit for the year which
is required under Rule-3 of the State Bank of Pakistan's Prudential Regulations for Non-Banking
Financial Institution.
	Rafique Dawood				Ahmed Kamran
	Chairman & Chief Executive				Director
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2000
1. THE COMPANY AND ITS OPERATIONS
The Company was incorporated on June 22, 1994 as a public limited Company under the Company
Ordinance, 1984 and is listed on the Karachi and Islamabad Stock Exchanges. The main business
activity of the Company is leasing of assets.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting Convention
These financial statements have been prepared under the "historical cost convention."
2.2. Basis of Preparation
These accounts have been prepared in accordance with International Accounting Standards
as applicable in Pakistan.
2.3 Revenue Recognition
The company follows the Finance Method in recognizing income on lease contracts. Under
this method the unearned income i.e., the excess of aggregate lease rentals and the estimated
residual value over the cost of the leased asset is deferred and then amortized over the terms
of the lease applying the annuity method, so as to produce a constant rate of return on net
investment in the leases.
Front end fee, commitment fee and other commissions are taken to income when realized.
The transaction of purchase and resale obligation of Government Securities at contracted
rates for specified period of time are recorded at the contracted purchase price and the
differential of the contracted purchase and resale prices is taken to income.
Profit on Morabaha finance and other financing are accrued based on time proportion basis.
Return on securities is recognized on accrual basis.
Dividend income is recognized at the time of closure of the shares transfer book of the
company declaring the dividend.
Lease income and profit on Morabaha financing which are classified under Prudential
Regulations for NBFI's issued by State Bank of Pakistan, are not taken to income.
2.4 Staff Retirement Benefits
The Company operates a funded contributory Provident Fund Scheme for its employees.
Employees are also entitled to gratuity after completion of 3 years continuous service in
accordance with the service rules of the Company.
2.5 Provision for Lease Losses
Besides making a provision as per the requirements of Prudential Regulations for Non-
Banking Financial Institutions (NBFIs) issued by State Bank of Pakistan, the Company,
exercising prudence, also makes a general provision at a reasonable level, which in the
judgment of management is adequate to provide for potential losses on lease portfolio and
other finances that can be reasonably anticipated.
2.6 Taxation
The Charge for current taxation is based on taxable income at the current rates of taxation.
On lease income, it is computed as if all leases are operating leases, after taking into account
allowances available for depreciation in respect of fixed assets under lease.
The tax effect for deferred taxation is calculated using the liability method on all major
timing differences which are expected to reverse in the foreseeable future. As a matter of
prudence, deferred tax debits are not accounted for.
2.7 Tangible Fixed Assets and Depreciation
These are stated at cost less accumulated depreciation. Depreciation is charged to income,
applying the straight line method whereby cost of an asset is written off over its estimated
useful life. A full year's depreciation is charged on all assets acquired during the year while
no depreciation is charged on assets disposed off during the year.
Normal repairs and maintenance are charged to income as and when incurred. Gains and
losses on disposal, if any, are taken to profit and loss account.
2.8 Investments
2.8.1 Subsidiary / Associate
The Company follows "Cost Method" of accounting in recognizing the investments
in subsidiary / associate.
2.8.2 Long Term
These are stated at cost and are reduced to recognize a decline other than temporary
in values, if any.
2.8.3 Short Term
These are stated at lower of moving average cost and market / break-up value on
aggregate portfolio basis.
2.9 Foreign Currencies Transaction
These are accounted for in Rupees at the exchange rate on the date of transaction. Assets
and liabilities in foreign currencies are converted into Rupees at the rate of exchange on
the balance sheet date. In cases, where exchange risk cover has been obtained from State
Bank of Pakistan, the foreign currency amounts are translated into rupees at the exchange
rate prevailing on the date of disbursement or renewal.
Exchange risk fee and differences arising due to hedging mechanism are accounted for as
deferred revenue or costs as the case may be, and are credited to income or amortized
respectively over the term of the transaction.
2.10 Offsetting
A financial asset and financial liability is off-set and the net amount reported in the balance
sheet if the Company has a legal enforceable right to set-off the transaction and also intends
either to settle on a net basis or to realize the asset and settle the liability simultaneously.
Corresponding income on the asset and charge on the liability is also offsetted.
3. REDEEMABLE CAPITAL - SECURED
(NON-PARTICIPATORY)
				Finance Under
		Term Finance	Certificates	Mark-up	2000	1999
		Ill	IV	Arrangement	Rupees	Rupees
Opening Balance		9,962,305	21,759,815	4,217,934	35,940,054	80,029,698
Obtained during the year		--	--	--	-	25,000,000
		-----------	-----------	-----------	-----------	-----------
		9,962,305	21,759,815	4,217,934	35,940,054	105,029,698
Paid during the year		(9,962,305)	(7,484,826)	(4.217,934)	(21,665,065)	(69,089,644)
		-----------	-----------	-----------	-----------	-----------
		--	14,274,989	--	14,274,989	35,940,054
Payable within one year
shown under current liabilities		--	(9,056,640)	--	(9,056,640)	(21,665,065)
		-----------	-----------	-----------	-----------	-----------
		--	5,218,349	--	5,218,349	14,274,989
		==========	==========	==========	==========	==========
Repayment period			Sept. 01, 1998
			Sept. 01,2001
Sale Price			25,000,000
Purchase Price			35,712,210
Prompt Payment Bonus			1,271,106
The redeemable capital is secured by way of a pari-passu charge on all assets and book debts of
the Company through hypothecation. Similar arrangements unless specified have been made to
secure the long term loans (Refer Note No. 4) and short term borrowings (Refer Note No. 8).
4. LONG TERM LOANS - SECURED
Foreign Currency
Asian Development Bank		(4.1)			159,853,286	124,356,036
Local Currency
Commercial Banks		(4.2)			60,000,000	215,000,004
Investment Banks		(4.3)			140,701,833	128,930,366
					------------	------------
					360,555,119	468,286,406
Payable Within One Year Shown under Current Liabilities					(62,695,165)	(63,228,537)
					------------	------------
					297,859,954	405,057,869
					==========	==========
4.1 This represents a 15 year term loan facility, with a grace period of three years, obtained
in tranches under Financial Sector Intermediation Loan # 1371-PAK. The loan is subject
to interest @ 0.25% over variable Ordinary Capital Resource (OCR) rate of Asian Development
Bank. The loan repayments are semi-annual and secured by guarantee of a development
financial institution. The guarantee is secured against hypothecation of assets including
book debts of the Company ranking pari-passu with charges created to secure redeemable
capital (Refer Note No. 3) and short term borrowings (Refer Note No. 8). The Company
has obtained exchange risk cover from the State Bank of Pakistan.
The total approved facility amounts to US$ 6.662 million out of which US$ 3.102 million
have been received upto the balance sheet date. The balance amount of US$ 3.560 is expected
during the fiscal year 2000-2001.
4.2 These are secured against hypothecation of assets including book debts of the Company
ranking pari passu, with the charge created in favour of other lenders to secure redeemable
capital (Refer Note No. 3) and short term borrowings (Refer Note No. 8) Demand finance
facility of Rs.40 million from a commercial bank is not utilized on the balance sheet date.
These facilities are repayable on various dates by August 2002.
These are subject to mark-up rate ranging from Rs. 0.4109 to Rs. 0.5205 per Rs. 1,000/-per
day.
4.3 These include Rs. 100.70 million which is secured by pledge of US dollar bonds. The
balance amount is secured against hypothecation of assets including book debts of the
Company ranking pari-passu with the charges created in favour of other lenders to secure
redeemable capital (Refer Note No. 3) and short term borrowings (Refer Note No. 8). These
facilities are repayable on various dates by June 2003.
These are subject to markup ranging from Rs. 0.3940 to Rs. 0.5479 per Rs. 1,000/- per day.
5. LIABILITIES AGAINST ASSETS SUBJECT					2000	1999
TO FINANCE LEASE					Rupees	Rupees
Opening Balance					205,845	357,580
Paid During the Year					(132,245)	(151,735)
					------------	------------
					73,600	205,845
Security Deposit					(73,600)	(73,600)
					------------	------------
					--	132,245
Payable within One Year Shown
under Current Liabilities					--	(132,245)
					------------	------------
					--	--
					==========	==========
6. LEASE DEPOSITS
These represent interest free security deposits (lease key money) received against lease contracts
and are refundable / adjustable at the expiry / termination of the respective lease.
7. CERTIFICATES OF INVESTMENT
These represent the mobilization of fund under the scheme of certificates of investment issued
with the permission of Securities and Exchange Commission of Pakistan. The scheme is based
on profit and loss sharing basis. The certificates are for the terms ranging from three months to
five years. The expected rate of profit ranges from 13% to 19% per annum.
					2000	1999
					Rupees	Rupees
8. SHORT TERM BORROWINGS
Secured - under mark-up arrangement (8.1)
From Commercial. Banks
Term Loan					8,300,000	--
Running Finance					78,239,425	34,548,078
From Non-Banking Financial Institutions					75,000,000	35,000,000
Unsecured (8.2)
From Commercial Banks					145,000,000	45,000,000
Non Banking Financial Institutions					190,000,000	319,000,000
					-----------	-----------
					496,539,425	433,548,078
					==========	==========
8.1 These facilities are secured against hypothecation of assets including book debts of the
Company ranking pari passu with the charges created to secure redeemable capital (Refer
Note No. 3) and long term loans (Refer Note No. 4). These includes Rs. 50 million which
is secured by pledge of Term Finance Certificates and Rs. 8.3 million by pledge of US
dollar bonds.
The sanctioned running finance facilities of Rs. 110 million from commercial banks are
renewable yearly. The letter of credit acceptance facilities of Rs.45 million from commercial
banks are not utilized on the balance sheet date.
The rate of mark-up ranges from Rs.0.3082 to Rs.0.4548 per Rs.l,000/- per day.
8.2 There are subject to mark-up ranging from 11% to 17% per annum.
9. CURRENT PORTION OF LONG TERM LIABILITIES
Redeemable Capital					9,056,640	21,665,065
Long Term Loans					62,695,165	63,228,537
Lease Liabilities					--	132,245
Lease Deposits					23,541,877	23,313,485
					-----------	-----------
					95,293,682	108,339,332
					==========	==========
10. ACCURED AND OTHER LIABILITIES
Mark-up on Secured
Redeemable Capital					951,666	2,061,188
Long Term Loans					19,974,427	4,161,391
Short Term Borrowings					2,497,058	4,611,024
Mark-up / Return on Unsecured
Short Term Borrowings					10,236,920	9,747,247
Certificates of Investment					6,181,420	2,483,615
Advance from clients					3,083,782	14,177,893
Withholding Tax					--	69,360
Accrued Expenses					1,287,600	1,155,497
Unclaimed Dividend					830,299	494,967
Others					2,170,357	173,402
					------------	------------
					47,213,529	39,135,584
					==========	==========
11. COMMITMENTS
Lease financing contracts committed but not executed at the balance sheet date amounted to
Rs. 147 million (1999 - Rs. 42 million) and underwriting commitments of TFCs amounted to
Rs. 35 million (1999 - Nil).
12. TANGIBLE FIXED ASSETS
		Cost at	Additions/	Cost at	Accumulated	Depreciation/	Accumulated	Book Value
Particulars		July 01,	Transfer/	June 30,	Depreciation	Transfer/	Depreciation	at June	Rate
		1999	(Deletions)	2000	at July 01,	(Deletions)	at June 30,	30, 2000	%
					1999	for the year	2000
Company owned
Office Premises		11,581,999	4,447,957	16,029,956	2,679,837	1,602,996	4,282,833	11,747,123	10
Leasehold Improvements		7,885,186	707,500	8,592,686	1,468,966	859,269	2,328,235	6,264,451	10
Furniture and Fixtures		3,527,177	1,240,000	4,767,177	1,528,776	476,718	2,005,494	2,761,683	10
Equipment and Appliances		5,337,892	190,946	5,365,838	2,805,463	844,664	3,556,727	1,809,111	20
			(163,000)			(93,400)
Vehicles		8,554,082	2,551,000	7,809,714	4,759,194	1,269,409	3,990,005	3,819,709	20
			387,000			232,200
			(3,682,368)			(2,270,798)
		-----------	-----------	-----------	-----------	-----------	-----------	-----------	-----------
		36,886,336	9,137,403	42,565,371	13,242,236	5,053,056	16,163,294	26,402,077
			387,000			232,200
			(3,845,368)			(2,364,198)	--	--
Under Lease
Vehicle		387,000	(387,000)	--	232,200	(232,200)	--	--	20
		-----------	-----------	-----------	-----------	-----------	-----------	-----------	-----------
Rupees		37,273,336	9,137,403	42,565,371	13,474,436	5,053,056	16,163,294	26,402,077
			--			--
			(3,845,368)			(2,364,198)
		==========	==========	==========	==========	==========	==========	==========
1999 Rupees		19,038,228	21,026,661	37,273,336	9,177,480	5,505,186	13,474,436	23,798,900
			(2,791,553)
		==========	==========	==========	==========	==========	==========	==========
12.1 Disposal Of Assets
Particulars		Mode of	Sold to	Cost	Accumulated	Book	Sale
		disposal			Depreciation	Value	Proceed
Vehicle	Negotiation	Arif Maqsood Hamidi		780,289	780,289	--	--
		28/6, Clifton, Karachi.
Vehicle	Negotiation	Salman Rasheed		764,904	764,904		75,000
		Ex-Employee
		Aamra Villas, CL-9-7/2,
		Civil Lines, Karachi.
Vehicle	Negotiation	Mr. Munawar Rehman		588,675	353,205	235,470	235,470
		7/223, M.A.Hashim Road,
		D.M.C.H.S., Karachi.
Vehicle	Negotiation	Mr. Sheikh Mohammad Sardar		44,500	17,800	26,700	12,100
		10-330, Liaquatabad, Karachi
Vehicle	Negotiation	Allibhai Motors		377,000	75,400	301,600	310,000
		233-A, Block-2,
		P.E.C.H.S., Karachi.
Vehicle	Negotiation	Syed Taqueem Hassan		349,000	279,200	69,800	69,800
		40F, Ashraf Market,
		Wahadat Road, Lahore.
Vehicle	Insurance	Royal Guardian Assurance		466,000	--	466,000	466,000
	Claim	P & O Plaza,
		I.I.Chundrigar Road,
		Karachi.
Vehicle	Insurance	Orient Insurance Co. Ltd.		312,000	--	312,000	311,000
	Claim	Dean Arcade, Block-8,
		Kahkashan Clifton, Karachi.
Eqpt. &	Theft	--		11,000	2,200	8,800	--
Appliances
Eqpt. &
Appliances	Negotiation	Mr. Salman Rasheed		152,000	91,200	60,800	91,200
		Ex-Employee
		Aamra Villas, CL-9-7/2,
		Civil Lines, Karachi.
				-----------	-----------	-----------	-----------
		Rupees		3,845,368	2,364,198	1,481,170	1,570,570
				-----------	-----------	-----------	-----------
		1999 Rupees		2,442,553	1,208,228	1,234,325	1,250,699
				==========	==========	==========	==========
					2000	1999
13. NET INVESTMENT IN LEASE FINANCE					Rupees	Rupees
13.1 Minimum Lease Payment Receivables
Less than one year					593,660,855	501,114,893
More than one year and less than five years					745,278,308	703,172,413
					-----------	-----------
					1,338,939,163	1,204,287,306
					==========	==========
13.2 Net Investment in Lease Finance
Less than one year					429,288,511	426,289,808
More than one year and less than five years					688,503,541	610,090,074
					-----------	-----------
					1,117,792,052	1,036,379,882
					==========	==========
14. INVESTMENT IN SUBSIDIARIES AND ASSOCIATE
Subsidiaries
Guardian Modaraba Management (Pvt.) Limited
Percentage of holding 99.80% (1999: 99.80%)
2,495,000 Ordinary shares of Rs. 10/- each
					15,793,350	15,793,350
(1999: Rs. 20.21 million)
General Modaraba Services (Pvt.) Limited
Percentage of holding 51%, 1999: Nil
637,500 Ordinary shares of Rs. 10/- each
Net assets value as at June 30, 2000 Rs. 0.28 million					5,737,500	--
Associate
Pakistan Venture Capital Limited
Percentage of holding 30% 1999: 30%
3,000,000 Ordinary shares of Rs. 10/- each
Net assets value as at June 30, 2000:Rs 35.55 million
(1999: Rs. 34.77 million)
Market value Rs. 15 million (1999: Rs. 15 million)					30,000,000	30,000,000
					-----------	-----------
					51,530,850	45,793,350
					==========	==========
14.1 The above investments are carried at cost. Had these investments been accounted for using
the "Equity Method", the value of investments on the basis of latest available audited
accounts for the year ended June 30, 2000 of the Investees and their effects on the profit
and loss account would have been as follows:
					Value of
					investment under	Effect on
					equity method	profit
					Rupees	Rupees
Guardian Modaraba Management (Pvt.) Limited					19,297,779	3,504,429
General Modaraba Services (Pvt.) Limited					4,173,132	(1,564,368)
Pakistan Venture Capital Limited					34,634,243	4,634,243
					-----------	-----------
					58,105,154	6,574,304
					==========	==========
					2000	1999
					Rupees	Rupees
15. LONG TERM RECEIVABLE
Principal due					43,900,000	--
Provision made					(21,950,000)	--
					-----------	-----------
					21,950,000	--
					==========	==========
The Company had filed a suit against the lessee in the courts of law and decree of recovery for
Rs. 64.412 million was awarded by the Banking Court under the Banking Companies (Recovery
of Loans, Advances, Credits and Finance) Act, 1997. The Company also holds additional security
by way of equitable mortgage on factory land and building. As a matter of prudence, provision
has also been made.
16. LONG TERM LOANS
Considered good
Chief Executive					2,415,942	--
Executive					722,950	1,930,910
					-----------	-----------
					3,138,892	1,930,910
Less: Current Portion					(239,668)	(211,798)
					-----------	-----------
					2,899,224	1,719,112
					==========	==========
Due for payment:
- Within three years					784,759	646,229
- Exceeding three years					2,354,133	1,284,681
					-----------	-----------
					3,138,892	1,930,910
					==========	==========
The loans under the scheme have been provided to the Chief Executive and an executive of the
Company to facilitate construction or purchase of residential accommodation, which are repayable
over a period of 10 years with a service charge @ 5% to 10% per annum.
Maximum aggregate amount outstanding during the year in respect of Chief Executive and
executives is Rs.4,430,910/- (1999-Rs.2,135,870/-).
17. SHORT TERM INVESTMENTS
Shares & Securities				17.1	95,098,144	29,854,034
Federal Investments Bonds				17.2	4,000,000	4,000,000
US Dollar Bonds				17.3	115,911,357	115,911,357
Euro Bonds				17.4	6,093,470	--
Certificates of Investment				17.5	10,000,000	--
Placements and Deposits				17.6	66,662,589	40,034,289
					-----------	-----------
					297,765,560	189,799,680
					==========	==========
17.1 Marketable securities
					COST
			No. of Shares/Certificates		2000	1999
Quoted			2000	1999	Rupees	Rupees
Shares/Certificates
Adamjee Insurance Company Ltd.			252	36,252	15,520	2,578,500
Glaxo Wellcome Pakistan Ltd.			2,000	2,000	80,500	80,500
ICI Pakistan Ltd.			336,250	6,250	5,046,600	119,766
Hub Power Company Ltd.			115,000	5,000	1,699,530	67,984
KASB Premier Fund Ltd.			50,000	50,000	500,000	500,000
Pakistan State Oil Company Ltd.			5,122	4,269	894,441	1,123,182
Pakistan Telecommunication Co. Ltd.			5,000	5,000	164,259	155,750
Saadi Cement Ltd.			2,500,000	2,500,000	12,500,000	12,500,000
Engro Chemicals Ltd.			32,020	5,520	2,526,664	524,000
Sui Southern Gas Company Ltd.			155,939	5,285	2,541,251	133,230
Bank A1-Habib Ltd.			10,929	9,108	204,923	204,923
First lmrooz Modaraba			500	500	10,600	10,600
B.R.R. International Modaraba
(Formerly BRR 2nd Modaraba)			2,000	2,000	10,260	10,260
Dawood Hercules Ltd.			1200	1,200	92,500	92,500
25th I.C.P. SEMF Mutual Fund			7,500	7,500	105,576	191,325
Dewan Farooq Motors Ltd.			400,000	--	4,000,000	--
Ibrahim Fibres Ltd.			50,000	--	720,000	--
Dhan Fibre Ltd.			100,000	--	1,050,000	--
D.G.Khan Cement Ltd.			60,000	--	480,000	--
Fauji Fertilizers Ltd.			11,500	--	452,525	--
National Refinery Ltd.			28,000	--	1,195,600	--
					-----------	-----------
					34,290,749	18,292,520
Term Finance Certificates (TFCs)
Saudi Pak Leasing Company Ltd.			100	100	7,500,000	10,000,000
Dewan Salman Fibres Ltd.			55	55	9,996,000	10,000,000
National Development Leasing Corp.			100	--	9,998,000	--
Pakistan Ind. Leasing Corporation			100	--	9,998,000	--
Sigma Leasing Corp. Ltd.			100	--	10,000,000	--
Paramount Leasing Ltd.			100	--	10,000,000	--
					-----------	-----------
					91,782,749	38,292,520
Provision for diminution in value of investments
Opening balance					(9,038,486)	(12,071,820)
Reversal during the year					1,753,881	3,033,334
					-----------	-----------
					(7,284,605)	(9,038,486)
					-----------	-----------
Balance c/f					84,498,144	29,254,034
Balance b/f					84,498,144	29,254,034
Unquoted
Shares
Image Graphics Solution (Pvt) Ltd.
Chief Executive - Mr. Tariq Mian			60,000	60,000	600,000	600,000
Term Finance certificates
Dewan Salman Fibres Ltd.					10,000,000	--
					-----------	-----------
					95,098,144	29,854,034
					==========	==========
Market value of quoted shares/certificates is Rs. 27,006,114/- (1999 - Rs. 9,254,034/-) and breakup
value of unquoted shares is Rs. 10/- each (1999 - Rs. 10/- each). Face value of quoted shares/certificates
are Rs. 10/- each.
The amount of TFCs represent redeemed value till year end, these TFCs are redeemed semi-
annually and earn expected profit ranging from Rs.0.4384 to Rs.0.5205 per Rs. 1,000 per day.
Market value of quoted TFCs is Rs. 61,566,118/- (1999: Rs. 20,000,000/-). The TFCs of Sigma
Leasing Corporation Limited and Paramount Leasing Limited were in the process of listing at
June 30, 2000, their face value have been taken as market value.
17.2 Investment in Federal Investment Bond, has a maturity period of 10 years. The interest rate
is 15%.
17.3 Investment in Special US Dollar Bonds of US$ 2,190,300 have a maturity period of 3 and
7 years. The interest rates are 2% and 4% over LIBOR respectively.
17.4 Investment in Euro Bonds at discounted price of US$ 118,350 (face value US$ 165,000)
has a maturity of 5 years. The interest rates is 10% per annum.
17.5 This represents investment in COI with an investment bank at expected profit rate of
Rs.0.3836 per Rs. 1000 per day.
17.6 Short term placements and deposits of funds to financial institutions are made in the normal
course of business at profit rates ranging from Rs.0.3904 to Rs.0.6849 per Rs. 1,000/-per day.
18. SHORT TERM MORABAHA FINANCES- SECURED
These represent funds provided under morahaba arrangement on mark-up / profit basis. These
are secured by hypothecation of all present and future goods, merchandise, work-in-progress,
finished and unfinished goods. The mark-up / profit rate is Rs.0.5548 per Rs. 1,000/- per day.
					2000	1999
					Rupees	Rupees
19. ADVANCES, DEPOSITS AND PREPAYMENTS
Current Portion of Long Term Loans					239,668	211,798
Advance Income Tax					2,526,573	3,945,414
Advance for Purchase of Shares					--	573,750
Deposits					41,000	41,000
Prepayments					1,550,376	827,480
Others					150,000	562,937
					-------------	-------------
					4,507,617	6,162,379
					==========	==========
20. OTHER RECEIVABLES
Considered good
Receivable Against Sale of Securities					182,260	19,180,330
Accrued Profit Return					10,379,954	5,609,068
Dividend					--	49,436
lncome Tax Refundable					990,293	899,333
Receivable Against Lease Termination					2,161,602
Others					1,395,299	1,511,653
					-------------	-------------
					15,109,408	27,249,820
					==========	==========
21. CASH AND BANK BALANCES
Cash in Hand
Local Currency					19,726	32,934
Foreign Currency					355,098	134,649
Cheque in Transit					--	107,027,788
Cash with Banks
In Deposit Accounts (21.1)					7,569,845	1,959,332
In Current Accounts					656,889	1,881,847
					-------------	-------------
					8,601,558	111,036,550
					==========	==========
21.1 Includes Rs.234,260/- (1999-Rs.250,000/-) deposited with State Bank of Pakistan as
required under Prudential Regulations of State Bank of Pakistan.
22. RETURN ON DEPOSITS AND INVESTMENTS
Return on Short Term Investments					30,125,915	8,405,723
Profit on PLS Account / Bank Deposit (Net of Zakat)					75,179	62,969
Dividend					3,150,675	277,404
					-------------	-------------
					33,351,769	8,746,096
					==========	==========
23. ADMINISTRATION AND OPERATING EXPENSES
Salaries and Benefits (23.1)					9,115,019	8,702,448
Directors' Meeting Fees					3,500	7,000
Rent, Rates and Taxes					520,571	512,202
Insurance					748,693	915,335
Legal, Professional and Consultancy					2,231,777	1,745,612
Travelling and Conveyance					2,108,171	1,008,116
Postage and Telephone					1,033,581	967,426
Utilities					450,884	278,301
Printing and Stationery					731,464	422,668
Vehicles Running and Maintenance					1,212,182	836,597
Computerization					208,157	130,460
Entertainment					477,606	472,266
Advertisement					66,640	141,604
Repairs and Maintenance					625,355	332,790
Auditors' Remuneration (23.2)					249,500	174,900
Share Department					250,000	342,180
Credit Rating					304,000	100,000
Depreciation					5,053,056	5,505,186
Fees and Subscription					605,987	446,180
Commission and Brokerage					357,286	383,537
Donation (23.3)					118,550	95,500
Others					113,577	45,019
					------------	------------
					26,585,556	23,565,327
					==========	==========
23.1 Salaries and benefits include Rs.1,142,485 (1999: Rs.667,819/-) in respect of retirement
benefits.
23.2 Auditors' Remuneration
Statutory Audit Fee					100,000	85,000
Tax and Other Consultancy					123,000	55,000
Special Audit Fee					20,000	20,000
Out of Pocket					6,500	14,900
					------------	------------
					249,500	174,900
					==========	==========
23.3 None of the directors or their spouse had any interest in the donees fund.
24. FINANCIAL CHARGES
Mark-up / Return on
Redeemable Capital					4,836,425	12,123,723
Long Term Loans					45,334,061	13,352,747
Long Term Certificates of Investment					2,841,970	931,523
Short Term Borrowings					52,320,463	56,664,222
Short Term Certificates of Investment					10,728,745	15,588,319
Financial Charges on Lease Liability					9,565	62,754
Forward Cover Fee					13,390,894	886,231
Exchange Loss					--	18,883
Documentation, Project Examination, Guarantee
Commission and Bank Charges					3,463,175	255,493
					------------	------------
					132,925,298	99,883,895
					==========	==========
25. TAXATION
The Company has provided for deferred taxation in compliance with circular No. 16 of Securities
and Exchange Commission of Pakistan to ensure that the liability arising on June 30, 2003 has
been fully provided upto that year. The deferred taxation, computed under the liability method
is estimated at Rs.49.493 million (1999 - Rs.40.79 million). Part Provision of Rs. 37.20 million
has been made as of these accounts. The liability for deferred tax is not likely to reverse in the
foreseeable future.
26. REMUNERATION TO DIRECTORS AND EXECUTIVES
		2000			1999
		Chief			Chief
		Executive	Director	Executive	Executive	Director	Executive
Managerial Remunerations		838,710	670,969	2,804,259	806,452	403,226	2,634,876
Housing and Utilities		461,291	369,033	1,225,143	443,548	246,774	1,449,182
Gratuity		171,603	187,073	388,956	42,422	21,211	125,080
Provident Fund		77,424	61,932	255,497	77,424	40,323	173,655
		-----------	-----------	-----------	-----------	-----------	-----------
	Rupees	1,549,028	1,289,007	4,673,855	1,369,846	711,534	4,382,793
Number of persons		1	1	14	1	1	10
		==========	==========	==========	==========	==========	==========
26.1 The Chief Executive, Director and Executives are also provided with free use of company
cars, medical insurance cover and travelling allowance. The monetary value of these are
Rs. 1,723,646/- (1999 - Rs. 1,444,523/-) approximately.
27. EARNING PER SHARE
There is no effect of dilution on the earnings per share of the Company which is based on:
					2000	1999
Profit Before Taxation				Rs.	41,658,305	35,291,304
Profit After Taxation				Rs.	31,103,850	19,938,333
Weighted Average Number of Ordinary shares					25,000,000	25,000,000
Earnings per share - pre tax				Rs.	1.67	1.41
Earnings per share - post tax				Rs.	1.24	0.80
28. TRANSACTION WITH ASSOCIATED COMPANIES
Share of common expenses					259,089	--
					------------	------------
					259,089	--
					==========	==========
29. CREDIT RISK AND CONCENTRATIONS OF SIGNIFICANT CREDIT RISK
Credit risk is the risk faced when one party to a financial instrument fails to discharge it obligation
and cause the other party to incur a financial loss.
The Company follows two sets of guidelines, an operating policy duly approved by the Board
of Directors' and the Prudential Regulations for NBFIs issued by the State Bank of Pakistan. The
operating policy defines the extent of exposure with reference to a particular sector or group of
lessees. The leases are classified on the basis of Prudential Regulations guidelines.
The Company believes in maintaining a balance between profitability and portfolio riskiness.
Diversification of lease portfolio is the focal point of Company's exposure policy. Extra care is
taken to ensure that per party and per sector exposures remain within limits prescribed
by the operating policy and Prudential Regulations.
Details of the industry / sector analysis of lease portfolio is given as follow:
Segment by class of business
					Rupees	%
Textile Composite					157,790,358	14.12
Steel, Engineering and Automobile					150,028,963	13.42
Cement					143,259,331	12.82
Transport and Communication					106,335,131	9.51
Energy, Oil and Gas					92,829,850	8.30
Chemicals, Fertilizers and Pharmaceuticals					76,825,889	6.87
Food, Tobacco and Beverages					74,076,623	6.63
Sugar and Allied					67,237,466	6.02
Health Care					53,617,819	4.80
Textile finishing					36,691,113	3.28
Power Generation					14,936,676	1.34
Electrical Goods					12,623,192	1.13
Miscellaneous					131,539,641	11.76
					-----------	-----------
					1,l 17,792,052	100.00
					==========	==========
30. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of all the financial instruments reflected in the financial statements
approximates to their fair values.
31. INTEREST RATE RISK MANAGEMENT
Interest rate risk arises from the possibility when changes in interest rates affect the value of assets
and liabilities. The Company is exposed to interest rate risk as a result of mismatches or gaps in
the amounts of assets and liabilities that mature or reprice in a given period. The Company manages
this risk by matching the repricing of assets and liabilities.
The Company's exposure to interest rate risk on its assets and liabilities are summarized
as follows:
						Not exposed
			Less than	One month	Over	to interest
			one month	to one year	one year	rate risk	Total
ASSETS
Fixed Assets - Tangible			--	--	--	26,402,077	26,402,077
Net Investment in Lease Finance			54,560,888	374,727,623	552,449,860		136,053,681 1,117,792,052
Long Term Receivable			--	--	21,950,000		21,950,000
Long Term Loans			19,151	220,537	2,899,204		3,138,892
Long Term Deposit			--	--	--	300,000	300,000
Long Term Investments			--	--	--	51,530,850	51,530,850
ShortTerm lnvestments			30,276,875	267,488,685	--	--	297,765,560
Short Term Morabaha Finance			--	7,000,000	--	--	7,000,000
Advance against Lease Commitments			--	2,850,000	--	--	2,850,000
Advances, Deposits and Prepayments			--	--	--	5,398,949	5,398,949
Other Receivables			--	--	--	13,978,408	13,978,408
Cash and Bank Balances			8,226,734	--	--	374,824	8,601,558
			------------	------------	------------	------------	------------
			93,083,648	652,286,845	577,299,064		234,038,789 1,556,708,346
			==========	==========	==========	==========	==========
CAPITAL AND LIABILITIES
Capital and Reserves			--	--	--	306,728,630	306,728,630
Provision for Lease Losses			--	--	--	27,050,000	27,050,000
Deferred Liabilities			--	--	--	38,592,973	38,592,973
Redeemable Capital			--	9,056,640	5,218,349	--	14,274,989
Long Term Loans			11,680,544	51,014,621	297,859,954	--	360,555,119
Certificates of Investment			l 5,000,000	50,000,000	37,100,000	--	102,100,000
Lease Deposits			--	--	--	136,053,681	136,053,681
Short Term Borrowings			165,000,000	331,539,425			496.539,425
Accrued Expenses and Other Liabilities			--	--	--	47,213,529	47,213,529
Taxation			--	--	--	2,600,000	2,600,000
Proposed Dividend			--	25,000,000	--	--	25,000,000
			------------	------------	------------	------------	------------
		Rupees	191,680,544	466,610,686	340,178,303	558,238,813	1,556,708,346
			==========	==========	==========	==========	==========
On Balance Sheet Gap		Rupees	(98,596,896)	185,676,159	237,120,761	(324,200,324)	--
			==========	==========	==========	==========	==========
Total lnterest Rate Sensitivity Gap Rupees		Rupees	(98,596,896)	87,079,623	324,200,324	--	--
			==========	==========	==========	==========	==========
The effective average interest rate/mark-up for each of the monetary financial instrument
is as follows.
			2000
			Effective interest rate / mark-up %
Assets
Net Investment in lease finance			20.24%
Long Term Loans			5% - 10%
Short Term Investments			15.39%
Short Term Morabaha Finance			20.25%
Cash & Bank Balances			5.27%
Liabilities
Redeemable Capital			19.04%
Long Term Loans			15.49%
Certificates of Investment			14.08%
Short Term Borrowings			12.87%
32. NUMBER OF EMPLOYEES.
Total number of full time employees as at year end are 22 (I 999 - 22).
33. GENERAL
Figures have been rounded off nearest to Rupee.
Corresponding figures have been re-arranged wherever necessary for the purpose of comparison.
	Rafique Dawood			Ahmed Kamran
	Chairman & Chief Executive			Director
Statement and Report under Section 237 of
Companies Ordinance, 1984
				2000	2000	1999
				General	Guardian	Guardian
				Modaraba	Modaraba	Modaraba
				Services	Management	Management
				(Pvt.) Limited	(Pvt.) Limited	(Pvt.) Limited
STATEMENT UNDER SECTION (1) (E)
a. Extent of the interest of Dawood Leasing
Company Limited (the holding company) in the
equity of its subsidiaries as at the end of the last				51.00%	99.80%	99.80%
of the financial year of the subsidiaries.
b. The net aggregate amount of profits less losses
of the subsidiary companies so far as these
concern members of the holding company and
has not been dealt with in the accounts of the
holding company for the year ended June 30,
2000 are:
				(967,563)	3,176,711	1,440,496
i) for the financial year of the subsidiaries
ii) for the previous financial year of the
subsidiary since it became the Holding				(2,984,025)	(1,342,449)	(2,782,945)
Company's subsidiary.
c) The net aggregate amount of profit less losses of
the subsidiary companies so far as these concern
member of the holding company and have been
dealt with in the account of the holding company
for the year ended June, 30, 2000
i) for the financial year of he subsidiaries				N/A	N/A	N/A
ii) for the previous financial year of the
subsidiary since it became the Holding
Company's subsidiary.				N/A	N/A	N/A
STATEMENT UNDER SECTION (1) (f)				N/A	N/A	N/A
STATEMENT UNDER SECTION (1) (g)				N/A	N/A	N/A
	Rafique Dawood			Ahmed Kamran
	Chairman & Chief Executive			Director
PATTERN OF SHARE HOLDING AS AT JUNE 30, 2000
No. of		Share Holding		Shares
Shareholders	From		To	Held
15	1	--	100	1,500
1,629	101	--	500	810,700
125	501	--	1000	112,300
127	1001	--	5000	364,200
32	5001	--	10000	278,500
12	10001	--	15000	150,600
5	15001	--	20000	95,600
7	20001	--	25000	172,600
8	25001	--	30000	240,000
1	30001	--	35000	35,000
1	35001	--	40000	36,700
1	40001	--	45000	42,500
7	45001	--	50000	345,100
1	50001	--	55000	55,000
1	55001	--	65000	65,000
1	65001	--	75000	71,100
10	75001	--	100000	995,200
1	100001	--	105000	101,600
1	105001	--	125000	125,000
1	125001	--	130000	130,000
1	130001	--	145000	145,000
2	145001	--	250000	500,000
1	250001	--	260000	255,600
1	260001	--	305000	300,900
1	305001	--	390000	390,000
1	390001	--	405000	401,000
1	405001	--	500000	500,000
1	500001	--	505000	502,500
1	505001	--	545000	542,800
1	545001	--	955000	950,100
1	955001	--	985000	983,200
2	985001	--	1000000	2,000,000
1	1000001	--	1510000	1,506,000
1	1510001	--	4215000	4,212,500
1	4215001	--	7585000	7,582,200
-----------	-----------	-----------	-----------	-----------
2,003				25,000,000
==========	==========	==========	==========	==========
Categories of Shareholders
Particulars		Number of	Shares Held	Percentage
		Shareholders
Individuals		1,969	6,714,500	26.86%
Insurance Companies		3	4,343,500	17.37%
Joint-Stock Companies		15	8,561,600	34.25%
Financial Institutions		6	2,306,200	9.22%
Modarabas		3	472,300	1.88%
Foreign Investors		1	983,200	3.93%
Investment Companies		6	1,618,700	6.47%
		-----------	-----------	-----------
		2,003	25,000,000	100.00%
		==========	==========	==========
CONSOLIDATED ACCOUNTS OF DAWOOD LEASING COMPANY LIMITED AND ITS SUBSIDIARIES
AUDITORS' REPORT TO THE MEMBERS
We have examined the annexed consolidated financial statements comprising Consolidated Balance
Sheet of DAWOOD LEASING COMPANY LIMITED and its subsidiary companies as at June 30, 2000
and the related consolidated Profit and Loss Account and consolidated Cash Flow Statement and
consolidated Changes in Equity together with the notes forming part thereof, for the year ended June
30, 2000. We have also expressed separate opinion on the financial statements of DAWOOD LEASING
COMPANY LIMITED and its subsidiary Company, General Modaraba Services (Private) Limited.
Audit of its another subsidiary Company, Guardian Modaraba Management (Private) Limited, was done
by other firm of Chartered Accountants for the year ended June 30, 2000 whose reports have been
furnished to us and our opinion in so far as it relates to the amounts included for such company, is
based solely on the report of such other auditors. These financial statements are the responsibility of
the Holding Company's management. Our responsibility is to express an opinion on these financial
statements based on our examination.
Our examination was made in accordance with International Standards on Auditing and accordingly
included such tests of accounting records and such other auditing procedures as we considered necessary
in the circumstances.
In our opinion, the consolidated financial statements examined by us present fairly the financial position
of DAWOOD LEASING COMPANY LIMITED and its subsidiary companies as at June 30, 2000 and
the results of their operations for the year then ended.
Dated: November 14, 2000				M. Yousuf Adil Saleem & Co.
Karachi.				Chartered Accountants
CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2000
					2000	1999
				Note	Rupees	Rupees
SHARE CAPITAL AND RESERVES
Authorized
50,000,000 Ordinary Share
of Rs. 10/- each					500,000,000	500,000,000
					==========	==========
Issued, Subscribed and Paid-up
25,000,000 Ordinary Shares of
Rs. 10/- each Fully Paid in Cash					250,000,000	250,000,000
Statutory Reserve					33,845,727	27,624,957
General Reserve					22,500,000	22,500,000
Unappropriated Profit					6,757,205	4,719,011
					------------	------------
					313,102,932	304,843,968
MINORITY INTEREST					1,750,804	28,961
LONG TERM LIABILITIES
Redeemable Capital					5,218,349	14,274,989
Long Term Loans					297,859,954	405,057,869
Liabilities Against Assets
subject to Finance Lease					--	--
Lease Deposits					112,511,804	99,152,824
Certificates of Investment					36,100,000	11,400,000
					------------	------------
					451,690,107	529,885,682
DEFERRED LIABILITIES
Taxation					37,200,000	29,000,000
Staff Gratuity					1,392,973	858,033
					------------	------------
					38,592,973	29,858,033
CURRENT LIABILITIES
Short Term Borrowings				3	497,966,052	433,548,078
Certificates of Investment					66,000,000	50,500,000
Current Portion of Long Term Liabilities					95,293,682	108,339,332
Accrued and Other Liabilities				4	48,368,053	39,324,426
Taxation					2,782,133	4,100,000
Proposed Dividend					25,000,000	25,000,000
					------------	------------
					735,409,920	660,811,836
COMMITMENTS					------------	------------
					1,540,546,736	1,525,428,480
					==========	==========
TANGIBLE FIXED ASSETS				5	27,073,857	23,798,900
GOODWILL ON CONSOLIDATION				6	4,056,985	2,226,356
NET INVESTMENT IN LEASE FINANCE
Minimum Lease Payments Receivables					1,338,939,163	1,204,287,306
Residual Value of Leased Assets					159,531,402	148,456,873
					-----------	-----------
					1,498,470,565	1,352,744,179
Unearned Income					(380,678,513)	(316,364,297)
					-----------	-----------
Net Investment In Lease Finance					1,117,792,052	1,036,379,882
Provision For Lease Losses					(27,050,000)	(34,000,000)
					-----------	-----------
					1,090,742,052	1,002,379,882
Current Portion of Net Investment in Lease Finance					(429,288,511)	(426,289,808)
					-----------	-----------
					661,453,541	576,090,074
INVESTMENT IN ASSOCIATES				7	55,477,605	47,601,176
LONG TERM RECEIVABLE					21,950,000	--
LONG TERM DEPOSIT					300,000	300,000
LONG TERM LOANS					2,899,224	1,719,112
CURRENT ASSETS
Current Portion of Net Investment in Lease Finance					429,288,511	426,289,808
Short Term Investments				8	298,201,611	189,896,924
Short Term Morabaha Finances					7,000,000	103,051,816
Advances Against Lease Commitments					2,850,000	9,700,000
Advances, Deposits and Prepayments				9	4,774,614	6,249,735
Other Receivables				10	16,372,770	27,298,027
Cash and Bank Balances				11	8,848,018	111,206,552
					------------	------------
					767,335,524	873,692,862
					1,540,546,736	1,525,428,480
					==========	==========
The annexed notes from 1 to 17 form an integral part of these financial statements.
	Rafique Dawood				Abdul Latif Uqaili
	Chairman & Chief Executive				Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2000
					2000	1999
				Note	Rupees	Rupees
Income
Lease Income					171,044,261	154,046,674
Return on Deposits and Investments				12	30,380,052	8,752,373
Management Fee					1,250,789	--
Gain on Sale of Securities					9,290,096	139,47l
Other Income					1,544,159	277,793
					-----------	-----------
					213,509,357	163,216,311
Expenditure
Administration and Operating Expenses				13	27,183,070	23,644,687
Financial Charges				14	133,160,014	99,883,895
					-----------	-----------
					( 160,343,084)	( 123,528,582)
					-----------	-----------
					53,166,273	39,687,729
Other Charges / Provisions
Negative Goodwill Recognized as Income from Associate					526,826	2,126,806
Amortization of Goodwill on Acquisitions					(1,153,394)	(556,589)
Provision for Lease Losses					(15,000,000)	(7,500,000)
Reversal for Diminution in Value of Investments					1,733,068	2,984,728
					-----------	-----------
					(13,893,500)	(2,945,055)
					-----------	-----------
					39,272,773	36,742,674
Share of Profit from Associates					3,642,103	2,770,705
					-----------	-----------
Profit Before Taxation					42,914,876	39,513,379
Provision For Taxation
Current					2,684,500	2,100,000
Prior year's					(304,934)	142,971
Deferred					8,200,000	13,110,000
					-----------	-----------
					(10,579,566)	(15,352,971 )
					-----------	-----------
Profit After Taxation					32,335,310	24,160,408
Minority lnterest					923,654	(2,887)
					-----------	-----------
					33,258,964	24,157,521
Unappropriated Profit Brought Forward					4,719,011	9,549,157
					-----------	-----------
Profit Available for Appropriation					37,977,975	33,706,678
Appropriations
Transferred to Statutory Reserve					6,220,770	3,987,667
Proposed Cash Dividend Rs. 1/- per Share (1999-Rs. 1/- per Share)					25,000,000	25,000,000
					-----------	-----------
					31,220,770	28,987,667
					-----------	-----------
Unappropriated Profit Carried Forward					6,757,205	4,719,011
					==========	==========
Earning per Share - Pre-Tax				15	1.72	1.58
Earning per Share - Post-Tax				15	1.29	0.97
The annexed notes from 1 to 17 form an integral part of these financial statements.
	Rafique Dawood				Abdul Latif Uqaili
	Chairman & Chief Executive				Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2000
					2000	1999
					Rupees	Rupees
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit After Taxation					32,335,310	24,160,408
Adjustments:
Depreciation					5,200,544	5,505,187
(Gain) on Sale of Investments					(9,290,093)	(136,734)
Negative Goodwill					(526,826)	(2,126,806)
Amortization of Goodwill on Acquisitions					1,153,394	556,589
Share of Profit from Associated Undertaking					(3,642,103)	(2,770,705)
Financial Charges					133,160,014	99,883,895
(Gain) on Sale of Assets					(89,400)	(16,374)
Provision for Gratuity					747,632	376,447
Provision for Lease Losses					15,000,000	7,500,000
(Reversal) for Diminution in Value of Investments					(1,733,068)	(2,984,728)
Provision for Deferred Taxation					8,200,000	13,110,000
Provision for Taxation					2,379,566	2,242,971
					------------	------------
					150,559,660	121,139,742
					------------	------------
					182,894,970	145,300,150
Changes in Operating Assets and Liabilities
(Increase)/Decrease in Operating Assets
Advances, Deposits and Prepayments					276,757	837,395
Other Receivables					10,889,623	(25,249,942)
Net Investment in Lease Finance/Receivables					( 125,312,170)	(244,746,015)
Long Term Loans					(1,207,982)	204,960
Advances Against Lease Commitments					6,850,000	26,617,586
Short Term Morabaha Finances					96,051,816	(103,051,816)
					------------	------------
					(12,451,956)	(345,387,832)
					------------	------------
					170,443,014	(200,087,682)
(Increase)/Decrease in Operating Liabilities
Accrued and Other Liabilities					(10,266,292)	(1,451,940)
Lease Deposits					13,587,372	28,137,135
					------------	------------
					173,764,094	(173,402,487)
Financial Charges Paid					(116,382,987)	(89,829,248)
Gratuity Paid					(212,691)	(152,755)
Tax Paid					(2,435,617)	(1,263,161 )
					------------	------------
Net Cash From / (Used in) Operating Activities					54,732,799	(264,647,651)
					------------	------------
B. CASH FLOW FROM FINANCING ACTIVITIES
Redeemable Capital Obtained					--	25,000,000
Redemption of Redeemable Capital					(107,731,287)	(69,089,644)
Long Term Loans					(21,665,065)	383,286,406
Repayment of Lease Liability					(132,245)	(151,735)
Short Term Borrowings					63,917,974	239,677,554
Certificates of Investment					40,200,000	(36,588,812)
Dividend Paid					(24,664,668	--
					------------	------------
Net Cash (Used in) / from Financing Activities					(50,075,291)	542,133,769
C. CASH FLOW USED IN INVESTING ACTIVITIES
Acquisition of Subsidiary Net of Cash Acquired (Note I)					(5,733,896)	(15,777,953)
Dividend Received					3,200,000	--
Long Term Deposits					--	(300,000)
Capital Expenditure					(9,137,403)	(12,899,754)
Proceeds From Sale of Fixed Assets					1,570,570	1,394,940
Purchase of Long Term Investments					--	(30,000,000)
Purchase of Short Term Investments					(2,244,651,989)	(153,145,146)
Sale Proceeds of Short Term Investments					2,147,736,676	42,063,244
					------------	------------
Net Cash Used in Investing Activities					( 107,016,042)	(168,664,669)
					------------	------------
Net (Decrease) / Increase in Cash and Bank Balance					(102,358,534)	108,821,449
Cash and Bank Balances at the Beginning of the Year					111,206,552	2,385,103
					------------	------------
Cash and Bank Balances at the End of the Year					8,848,018	111,206,552
					==========	==========
I. During the period the group acquired subsidiaries. The fair value of assets acquired and liabilities
assumed were as follows:
Operating Fixed Assets					417,827	143,953
Investment in Associated					3,522,825	12,678,258
Marketable Securities					186,769	181,989
Advance Deposit & Other Receivables					81,556	971,013
Cash and Bank Balances					1,838	15,366
Short Term Borrowing					(255,000)	--
Accrued Expenses and Other Liabilities					(1,120,757)	(980,174)
Taxation					(81,581 )	--
					------------	------------
Net Assets					2,753,477	13,010,405
Goodwill					2,984,023	2,782,945
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