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English Leasing Limited
Annual Report 2000
CONTENTS
Company Information
Notice of Annual General Meeting
Directors' Report
Auditors' Report to the members
Balance Sheet
Profit and Loss Account
Statement of Changes in Equity
Cash Flow Statement
Notes to the Accounts
Pattern of Holding of Shares
COMPANY INFORMATION
BOARD OF DIRECTORS
SHEIKH JAVAID MAHMOOD CHAIRMAN
SHEIKH MANZOOR ELAHI CHIEF EXECUTIVE
SHEIKH IRSHAD AHMAD DIRECTOR MARKETING
MRS. FARZANA MUNAFF NOMINEE OF NIT
MR. SHAHID MAHMOOD NOMINEE OF ICP
MR. M. SAAD MANIAR DIRECTOR
MRS. TASKEEN JAVAID DIRECTOR
BANKERS
ALLIED BANK OF PAKISTAN LIMITED
FAYSAL BANK LIMITED
MUSLIM COMMERCIAL BANK LIMITED
PRUDENTIAL COMMERCIAL BANK LIMITED
COMPANY SECRETARY
MR. AZHAR HUSSAIN
AUDITORS
RAHIM IQBAL RAFIQ & CO.
CHARTERED ACCOUNTANTS, KARACHI.
LEGAL ADVISORS
MR. HAQ NAWAZ CHATTA
INTERNATIONAL LEGAL SERVICES
REGISTERED & SHARE TRANSFER OFFICE
C & K MANAGEMENT ASSOCIATES (PVT.) LIMITED
404, TRADE TOWER, ABDULLAH HAROON ROAD,
NEAR METROPOLE HOTEL, KARACHI
REGISTERED OFFICE
801, 8TH FLOOR, FORTUNE CENTRE
45-A, BLOCK-6, P.E.C.H.S.,
SHAHRAH-E-FAISAL, KARACHI.
TEL: 92 21 4529061-64 (4 LINES)
FAX: 92 21 4529065
PRINCIPLE OFFICE
M.K. ARCADE
32- DAVIS ROAD, LAHORE.
TEL: 6303855- 58
FAX: 92 42 6304251
email: englease@hotmail.com
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that Ninth Annual General Meeting of the shareholders of English
Leasing Limited will be held at its Registered Office 801,8th Floor Fortune Centre, Shahrah-e-Faisal,
Karachi on Saturday, December 30, 2000 at 10.30 a.m. to transact the following business.
1. To Confirm the minutes of 8th Annual General Meeting held on December 21, 1999.
2. To receive, consider & adopt the Audited Accounts of the Company for the year ended
June 30, 2000 together with the Director's and Auditor's Report thereon.
3. To approve Cash dividend of Rs. 1.25 per share (12.5%) for the year ended June 30.
2000 as recommended by the Board of Directors.
4. To appoint Auditors for the year 2000-2001 and fix their remuneration. The present
Auditors M/s. Rahim Iqbal Rafiq & Co. Charted Accountants, retire and being eligible,
offer themselves for re-appointment.
5. To transact any other business which may be placed before the meeting with the
permission of the Chair.
By Order of the Board
(Azhar Hussain)
Karachi: November 30, 2000 Company Secretary
Notes:
1. The Share Transfer Books of the Company will remain closed from December 23, 2000
to December 30, 2000 (both days inclusive).
2. A member entitled to attend and vote at this meeting is entitled to appoint another member
as his/her proxy, in order to be effective, must be received at the Registered Office of
the Company not less than 48 hours before the time for holding the meeting.
3. Filling of Declaration For Exemption of Zakat, members are requested to file their
declaration under the Zakat & Ushr Ordinance, 1980 on Non Judicial Stam Paper of
Rs. 50/- for exemption of Zakat to the Registrar, C & K Management Associates (Pvt.)
Limited, 4th Floor Trade Tower, Abdullah Haroon Road, Near Metropole Hotel, Karachi.
4. Members are required to notify the change of address, if any immediately.
5. As per Rules no gift to be given to the shareholders.
DIRECTORS' REPORT
Availing this opportunity, on behalf of the board, I feel pleased to place before you Annual Accounts of the
Company for the period ended June 30, 2000.
FINANCIAL RESULTS:
The financial results of the Company for the year ended June 30, 2000 are as follows:
(Rupees)
Profit Before Taxation 17,041,251
TAXATION
Current Year (771,215)
Previous Year (106,413)
Net profit after Taxation 16,163,623
Unappropriated profit brought forward 1,681,783
Profit available for appropriation 17,845,406
APPROPRIATIONS:
Transferred to Statutory Reserve (3,232,725)
Transferred to Contingencies Reserve (809,119)
Transferred to Capital Reserve for deferred taxation (1,428,994)
Proposed Cash Dividend (12.5%) (10,000,000)
Unappropriated Profit carried forward 2,374,568
Earning per share 2.02
OPERATIONAL ACTIVITIES:
Despite tall claims of improvement in country's economy and achievements in collection of highest ever
revenue through Tax Amnesty Scheme and successful launching of campaign for documentation of economy,
overall activity in the business as well as industrial sectors remained slow and both the sectors could not
perform as envisaged. Although important sectors like Textile and Agriculture did exceptionally well, yet
private sector investment continued to be shy and foreign exchange reserves have dwindled precariously
with no respite inspite of significant devaluation of the currency, inflation rate has escalated and unemployment
surged further adding to the frustration of the common man, business and industrial circles alike making
the environment all the more gloomy and difficult for the leasing industry, already confronted with funding
and investment constraints in atmosphere of tough competition with shrinking spreads and mounting over
dues effecting profitability of the companies.
However, withstanding all the constraints, our company has been able to maintain its normal growth. During
the period, the company made gross disbursements of Rs.101.656 million touching almost the previous
year level of Rs.102.832 million raising total gross disbursement to Rs.780.253 million. Net investment in
leases increased to Rs. 313.158 million from Rs.272.703 million of 1999, showing a rise of 14.83%. Company
generated revenue of Rs.49.330 million which is marginally lower than the previous year figure of Rs.51.173
million, whereas on account of reduced financial and bank charges pre-tax profit of the company improved
from Rs.16.069 million to Rs.17.462 million reflecting increase of 8.6%. Our company mobilized
long term funds aggregating Rs.75.00 million, during the period. The company continued its
policy of accommodation to small and medium enterprises with good credibility and sound financial
health. The management has maintained well diversified lease portfolio with highest exposure
in machinery as follows:
Machinery 87%
Vehicle 9%
Equipment 4%
Sector-Wise Lease Portfolio reads:
Textile processing, weaving & spinning 33%, Knitting 10%, Dyeing & Printing 2%,
Engineering 1 6%, Sugar 7% Synthetic & Fibre 3%, Electronics 6%,
Services 2%, Pharmaceutical 7%, Food and Allied 2% others 12%.
Due to sluggish economic environment, uncertainty in the stock market still persists. However, market
value of our long term investment, which was Rs. 5.604 million in 1999 has improved to Rs. 7.864
million in the year under review. In view of the improvement and company's intention to hold
these investments on long term basis, no provision has been made for the diminution. Our company
has already provided Rs. 4.173 million against short term investment, market value of which is
0.700 million against book value of Rs. 0.386 million.
RECOVERIES:
In the present adverse operating environment, our company has been able to restrict the infected portfolio
with effective risk management, securing of collateral in every case and close monitoring. However, due
to low business activity and uncertainty in the industrial and business sectors, recovery ratio could not
improve form 70% of the year 1999. Different measures taken by the government and assurances to restore
confidence of the public shall bring fruits, cash flows as well as business activity will gain momentum and
bring improvement in the recoveries.
EARNING PER SHARE:
After tax earning per share for the FY 2000 improved to Rs. 2.02 against Rs. 1.82 in 1999.
DEFERRED TAXATION:
To meet the requirements of the SECP for creating capital reserve for deferred tax liability, sum of Rs. 1.429
million has been transferred to capital reserve for deferred tax raising the capital reserve for deferred tax
to Rs. 15.429 million against total estimated liability of Rs. 29.139 million. Unprovided deferred tax amounting
to Rs. 13.710 million shall be appropriated to capital reserve in annual installments by June 30, 2003.
CREDIT RATING:
DCR-VIS Credit Rating Co. (Pvt) Limited has maintained the previous long term credit rating of our company
as BBB- (Triple B minus) and short term rating of D-3 (D Three) for the year 2000.
FUTURE OUTLOOK:
Future planning, its implementation and outcome of the policies primarily depends upon the direction of the
economy Present environment and industrial activity in the country continue to be slow with no sign of early
turn around. According to State Bank annual review against industrial target of 5.8% of GDP actual
achievement remained at 1.1%. Investment climate with the revival of textile sector and encouraging reports
being received from the Agriculture Sector especially cotton and rice crops, overall economic conditions
in the country shall improve. creating better investment and business climate. With government determined
effort and various steps like documentation of economy. reduced lending rates, rescheduling of external
debts, increased exports and other facilities for the business community and the consumers, there may be
all round improvement in the economy. However, at the moment leasing sector is facing adverse conditions
and serious challenges. Our company is fully alive to the challenges and shall meet the situation.
ACKNOWLEDGMENT:
Finally. I express my gratitude to my colleagues for their cooperation in conducting affairs of the company.
I also acknowledge SECP, SBP, Banks and other Financial Institutions for their guidance and support. I
thank the customers and shareholders of the company for the confidence and trust reposed by them in us.
Last of all I place my appreciations on record for the commitment and hard work put in by the members of
the staff for the progress of the company.
For and on behalf of the Board
Karachi (SHEIKH JAVAID MAHMOOD)
Dated: 22nd November, 2000 Chairman
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed Balance Sheet of ENGLISH LEASING LIMITED as at June 30, 2000, and
the related profit & 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 purpose 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 standard
and 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 misstatements. An audit included 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 during the year was for the purpose of the company's business; and
(iii) the business conducted, investment made and the expenditure incurred during the
year were in accordance with the objects of the company;
(c) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980.
(XVII of 1980), was deducted by the company and deposited in the Central Zakat Fund
established under Section of the Ordinance.
Without qualifying our opinion, we draw attention to the note 15.2 whereby long term Investments
are valued at cost and no provision has been made for the decline by Rs. 11.447 million in the
market value of these investments.
Karachi: RAHIM IQBAL RAFIQ & COMPANY
Dated: 22nd November, 2000 Chartered Accountants.
BALANCE SHEET AS AT JUNE 30, 2000
2000 1999
NOTE RUPEES RUPEES
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorised Share Capital
50,000,000 Ordinary shares of Rs.10 each 500,000,000 500,000,000
========== ==========
Issued, Subscribed and Paid-up Share Capital
8,000,000 Ordinary
shares of Rs.10 each fully paid in cash 80,000,000 80,000,000
Reserves
Capital reserves 3 39,608,744 34,947,025
Revenue reserves 4 14,683,737 13,874,618
Unappropriated profit 2,374,568 1,681,783
------------------ ------------------
56,667,049 50,503,426
------------------ ------------------
136,667,049 130,503,426
NON-CURRENT LIABILITIES
Long Term Loans 5 96,464,661 58,856,013
Obligations under Finance Lease 6 2,562,630 2,171,243
Long Term Deposits 7 39,007,484 34,087,151
Long Term Certificates of Investment 8 8,790,680 10,055,447
DEFERRED LIABILITIES
Gratuity 615,472 435,784
------------------ ------------------
147,440,927 105,605,638
CURRENT LIABILITIES
Current portion of obligations
under finance lease 1,480,224 719,660
Current maturity of long term loans 42,752,851 32,926,496
Shod term finances 9 45,000,000 42,499,707
Shod Term Certificates of Investment 2,280,700 5,100,000
Accrued and other liabilities 10 13,978,410 6,485,393
Taxation -- --
Dividend payable 11 10,479,275 10,504,088
------------------ ------------------
115,971,460 98,235,344
CONTINGENCIES AND COMMITMENTS 12 -- --
------------------ ------------------
400,079,436 334,344,408
========== ==========
The annexed notes form an integral pad of these accounts.
Chief Executive Chairman
ASSETS
NON-CURRENT ASSETS
Tangible Fixed Assets 13 9,016,484 8,398,526
Net Investment In Finance Leases 14 229,567,686 133,566,358
Long Term Investments 15 19,310,875 19,310,875
Long Term Deposits 16 751,083 822,155
------------------ ------------------
258,646,128 162,097,914
CURRENT ASSETS
Current Portion of Net Investment in Leases 79,619,095 135,164,555
Shod Term Investments 17 386,285 386,285
Shod Term Finances 18 43,000,000 31,000,000
Advances, Prepayments and other receivables 19 7,756,807 2,898,506
Cash and Bank balances 20 10,671,121 2,797,148
------------------ ------------------
141,433,308 172,246,494
------------------ ------------------
400,079,436 334,344,408
========== ==========
Chief Executive Chairman
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE, 30 2000
NOTE 2000 1999
Rupees Rupees
REVENUE
Income from lease operations 21 47,000,765 47,167,456
Gain on sale of securities -- 567,106
Other income 22 2,329,278 3,438,657
------------------ ------------------
49,330,043 51,173,219
EXPENDITURE
Financial and bank charges 23 18,402,566 23,328,566
Administrative and operating expenses 24 13,886,226 11,775,904
------------------ ------------------
32,288,792 35,104,470
PROFIT BEFORE TAXATION
TAXATION 17,041,251 16,068,749
------------------ ------------------
Current 25 771,215 578,667
Prior 106,413 901,340
------------------ ------------------
877,628 1,480,007
------------------ ------------------
PROFIT AFTER TAXATION 16,163,623 14,588,742
UNAPPROPRIATED PROFIT BROUGHT FORWARD 1,681,783 905,147
------------------ ------------------
PROFIT AVAILABLE FOR APPROPRIATION 17,845,406 15,493,889
APPROPRIATIONS
Transfer from general reserve -- 14,000,000
Transfer to statutory reserve (3,232,725) (2,917,748)
Transfer to contingencies reserve (809,119) (894,358)
Transfer to capital reserve-reserve for deferred tax (1,428,994) (14,000,000)
Proposed dividend (10,000,000) (10,000,000)
------------------ ------------------
15,470,838 (13,812,106)
------------------ ------------------
UNAPPROPRIATED PROFIT CARRIED FORWARD 2,374,568 1,681,783
========== ==========
Earning per share 2.02 1.82
========== ==========
The annexed notes form an integral part of these accounts.
Chief Executive Chairman
STATEMENT OF CHANGES IN EQUITY AND RESERVES
FOR THE YEAR ENDED JUNE 30, 2000
Issued, Statutory General Contingency Reserve
subscribed & Reserves Reserves Reserves for deferred Unappropriated Total Total
paid up capital tax liability profit 2000 1999
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
Balance as at July 01 80,000,000 20,947,025 8,500,000 5,374,618 14,000,000 1,681,783 130,503,426 125,914,684
Movement during the year
Net Profit for the year 16,163,623 16,163,623 14,588,742
Add: Transfer from P & L a/c to
Statutory reserves 3,232,725 3,232,725 2,917,748
General reserve
Contingency reserve 809,119 809,119 894,358
------------------ ------------------
20,205,467 18,400,848
Less: Transfer to
Statutory reserves (3,232,725) (3,232,725) (2,917,748)
General reserve
Contingency reserve (809,119) (809,119) (894,358)
Reserve for deferred tax liability 1,428,994 (1,428,994) -- --
Proposed Dividends (10,000,000) (10,000,000) (10,000,000)
------------------ ------------------
(14,041,844) (13,812,106)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balance as at June 30 80,000,000 24,179,750 8,500,000 6,183,737 15,428,994 2,374,568 136,667,049 130,503,426
========== ========== ========== ========== ========== ========== ========== ==========
Chief Executive Chairman
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE, 2000
2000 1999
Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 17,041,251 16,068,749
Add: Adjustment to reconcile profit to net cash
provided by operating activities
Depreciation 1,534,179 1,380,436
Provision for gratuity 179,688 175,793
------------------ ------------------
1,713,867 1,556,229
------------------ ------------------
Operating profit before working capital changes 18,755,118 17,624,978
Decrease/(Increase) in current assets (16,858,301) (28,907,245)
(Decrease)/Increase in current liabilities 7,174,010 37,839,642
------------------ ------------------
(9,684,291) 8,932,397
------------------ ------------------
Net cash from operating activities before income tax 9,070,827 26,557,375
Income tax paid (877,628) (1,588,262)
------------------ ------------------
Net cash inflow/(outflow) from operating activities 8,193,199 24,969,113
CASH FLOW FROM INVESTING ACTIVITIES
Investment in leases - net (40,455,868) (30,848,353)
Long term investment -- (1,000,000)
Capital Expenditure (2,152,137) (1,109,289)
------------------ ------------------
Net cash from investing activities (42,608,005) (32,957,642)
CASH FLOW FROM FINANCING ACTIVITIES
Long term loans 43,952,627 7,473,891
Proceeds from lease obligations 1,151,951 (600,655)
Certificates of Investment (1,264,767) (2,226,897)
Deposits from lessees 8,402,709 9,486,575
Long term deposits and deferred cost 71,072 (245,000)
Payment of dividend (10,024,813) (15,751,425)
------------------ ------------------
Net cash (used)/generated from financing activities 42,288,779 (1,863,511)
Net increase / (decrease) in cash 7,873,973 (9,852,040)
Cash and bank balances at beginning of the year 2,797,148 12,649,188
------------------ ------------------
Cash and bank balances at the end of the year 10,671,121 2,797,148
========== ==========
NOTES TO THE ACCOUNTS
for the year ended June 30, 2000
1. THE COMPANY AND IT'S ACTIVITIES
English Leasing Limited is a Public Limited Company incorporated in Pakistan and its shares are
quoted on the Stock Exchanges of Pakistan. The Company is mainly engaged in business of
Leasing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
2.1 Accounting convention
These accounts have been prepared under the historical cost convention.
2.2 Employees' provident fund & gratuity
The Company is maintaining recognized provident fund covering all its permanent employees
and working directors. Equal monthly contributions are made both by the company and
employees @ 10% of the basic salaries to the fund.
The company operates an unfunded gratuity covering all its employees. Provision is made
annually to cover the liability under the scheme.
2.3 Tangible operating fixed assets and depreciation
Owned
Tangible operating fixed assets are stated at cost less accumulated depreciation. Cost of
these assets consists of historical cost and directly attributable cost of bringing the assets
to working conditions.
Depreciation is charged to income applying the reducing balance method to write off the cost
over their expected remaining useful life.
Full year's depreciation is charged on addition, while no depreciation is charged on deletion
during the year.
Repairs and maintenance costs are expensed out as and when incurred, however, major
betterment's are capitalized.
Gains and losses on disposal of assets, if any, are included in income currently.
Leased
These are stated at lower of present value of minimum lease payments under the lease
agreements and fair value of assets acquired on lease. The related obligation under the
lease agreements are accounted for as liabilities. Depreciation is charged on basis and rates
similar to those applied for owned assets.
2.4 Investments
Long term investments are stated at cost, provision for diminution in value of investment is
made, if considered permanent.
Short term investments are stated at lower of cost and market value.
2.5 Taxation
The charge for the current taxation is based on taxable income at the current tax rates after
taking into account the tax credits and rebates available, if any. Deferred tax is accounted
for by using the liability method on all major timing differences excluding tax effects on those'
timing differences which are not likely to reverse in the foreseeable future.
As a matter of prudence, deferred tax debits are not accounted for.
2.6 Revenue Recognition
The company follows the "Finance Method" to recognize the income on lease i.e., the excess
of aggregate lease rentals and the residual value over the cost of leased assets is deferred
and the amortized to income over the lease term by applying the annuity method to produce
a constant rate of return on the net investment in the lease.
income on bank accounts, loans and advances is recognized on a time proportion basis
taking into account the principal/net investment outstanding and applicable rate of mark/up/profit
thereon.
Income from fees, commission, commitment charges, term deposits and investment etc.:
is recognized as and when received.
2.7 Provision for Doubtful Debts
Provision for doubtful debts is made/adjusted at the year end after review of out standing
lease and advances portfolio on the basis of State Bank of Pakistan prudential regulations
as applies to leasing companies.
2.8 Foreign currency transactions
Transactions in foreign currencies are accounted for in Rupees at the rates of exchange
ruling on the date of the transaction. Monetary assets and liabilities in foreign currencies are
translated into Rupees at the rate of exchange ruling at the balance sheet date except where
exchange risk cover has been obtained.
Foreign currency loans registered under the exchange risk coverage scheme of The State
Bank of Pakistan are translated into Pak Rupees at the rate prevailing on the dates of
disbursements. Exchange risk fee, exchange gains and losses are charged to the year's
income.
Note 2000 1999
Rupees Rupees
3. CAPITAL RESERVES
Statutory reserve
Opening balance 20,947,025 18,029,277
Add Appropriated from profit 3,232,725 2,917,748
------------------ ------------------
24,179,750 20,947,025
Reserve for deferred tax liability
Opening balance 14,000,000 --
Add for the year 1,428,994 14,000,000
------------------ ------------------
25 15,428,994 14,000,000
========== ==========
39,608,744 34,947,025
========== ==========
3.1 Statutory reserve has been created in pursuance of NBFI's regulations, whereby every NBFI
is required to create reserve fund with an amount not less than 20% of its after tax profit till
such time the reserve equals the amount of paid up capital, thereafter, 5% of Profit after Tax
will be credited to this reserve. This reserve is not considered as free reserve for distribution
of dividend.
4. REVENUE RESERVES
General Reserve 4.1 8,500,000 8,500,000
Contingency Reserve 4.2 6,183,737 5,374,618
------------------ ------------------
14,683,737 13,874,618
========== ==========
4.1 General Reserve
Balance at the beginning of the year 8,500,000 22,500,000
Transfer to profit and loss account -- (14,000,000)
------------------ ------------------
8,500,000 8,500,000
========== ==========
4.2 Contingencies Reserve
Balance at the beginning of the year 5,374,618 4,480,260
Transfer from profit during the year 809,119 894,358
------------------ ------------------
6,183,737 5,374,618
========== ==========
4.3 Contingency reserve has been created to meet any potential lease losses on lease portfolio
that can be reasonably anticipated.
5. LONG TERM LOANS
In foreign currency
Asian Development Bank 5.2 40,169,730 40,169,730
In local currency
Muslim Commercial Bank Ltd 5.3 3,502,708 5,722,320
Al Faysal investment Bank Ltd 5.4 18,333,334 --
Pakistan Emerging Ventures Ltd 5.5 20,000,000 --
First Allied Bank Modaraba -- 15,000,000
Allied Bank of Pakistan Limited 5.6 5,454,544 12,727,272
Faysal Bank Limited 5.7 15,000,000 --
Pak Libya Holding Co. (Pvt) Ltd 5.8 26,324,305 11,212,672
------------------ ------------------
88,614,891 44,662,264
------------------ ------------------
128,784,621 84,831,994
Less: Current maturity (32,319,960) (25,975,981)
------------------ ------------------
96,464,661 58,856,013
========== ==========
5.1 All the local currency loans have been obtained for financing lease operations of the company
and are secured by pari passu floating charge on the present and future leased assets,
hypothecation of movable assets, demand promissory notes and personal guarantees of
the directors. Muslim Commercial Bank Limited loan is further secured by assignment of
lease agreements/rentals.
5.2 This represents loan facility of US $873,255 obtained from Asian Development Bank (ADB)
for financing lease operations. This loan is secured by way of floating and hypothecation
charges on all the company's assets (present and future) including assets leased by the
company. The loan is repayable in 15 years with three years grace period on annual installment
basis which will commence from October 1, 2000. 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 6.38% and 7% per annum respectively. Mark
up is repayable in semi annual installments commencing from March 15, 1999.
5.3 Muslim Commercial Bank Ltd. loan carries mark-up rate of 17.52% p.a. on reducing balances
and is repayable in eight equal half yearly installments commencing from September 1, 1997
while mark-up is payable quarterly.
5.4 Loan from Al-Faysal Investment Bank Ltd carries mark-up rate 17.50% p.a. on reducing
balance and is repayable in twelve equal quarterly installments commencing from June 27,
2000. Mark-up is repayable on quarterly basis.
5.5 Company has availed Rs. 30.000 million on 9 August, 1999 bearing mark-up rate of 18.50%
p.a. on reducing balance. Effective 27 April, 2000 this loan has been revised to Rs. 20.00
million bearing mark-up rate of 17.50%, after payment of Rs.10.00 million towards the principal
amount of loan and the mark up accrued thereon.
5.6 Loan from Allied Bank of Pakistan Ltd., carries mark-up @ 17% p.a. on reducing balance,
the principal and mark-up is repayable in fourteen installments commencing from September
30, 1998 on quarterly basis.
5.7 Faysal Bank limited loan of Rs.15.00 million carries mark-up rate of 16.50% p.a. on reducing
balance. This loan is repayable in eight quarterly equal principal plus mark-up installments
commencing from September 30, 2000.
5.8 These represent loan from Pak Libya Holding Co. (Pvt) Limited. It carries mark-up rate of
19.25% and 21% per annum on reducing balance and is repayable in eight equal quarterly
installments commencing from September 30, 2000 and thirty six equal monthly installments
commencing from January 08, 1999 respectively.
6. OBLIGATIONS SUBJECT TO FINANCE LEASE
Balance of obligations under finance lease 4,042,854 2,890,903
Less: Current portion (1,480,224) (719,660)
------------------ ------------------
2,562,630 2,171,243
========== ==========
The obligations under finance lease are reported at aggregate of minimum lease payments, implicitly
discounted by using the respective rates,
Annual Rental Obligations
Year ended June 30,
2000 -- 1,053,480
2001 1,480,224 883,044
2002 1,468,399 883,044
2003 1,326,564 547,038
2004 736,316 --
2005 398,120 --
------------------ ------------------
5,409,623 3,366,606
Less Interest applicable to the future period (1,366,769) (475,703)
------------------ ------------------
4,042,854 2,890,903
========== ==========
7. LONG TERM DEPOSITS
Security deposit on leases 49,440,375 41,037,666
Less: Current portion (10,432,891) (6,950,515)
------------------ ------------------
39,007,484 34,087,151
========== ==========
These represent interest free security deposits (Lease key money) received on lease contracts
and are repayable/adjustable at the expiry of respective lease periods.
8. CERTIFICATES OF INVESTMENTS
Rapid Growth 3,207,532 3,442,489
Preference Investment 4,073,148 4,102,958
Shashmahi Amdan 1,500,000 10,000
Mahana Amdan 10,000 2,500,000
------------------ ------------------
8,790,680 10,055,447
========== ==========
The company has a scheme of Registered Certificates of Investment (COI's) according to the
permission granted by the Securities and Exchange Commission of Pakistan, Government of
Pakistan for raising funds directly from the local resources. These certificates have been issued
for maturity period ranging from three months to five years. The return on COI's is payable on
uniform basis ranging from 15% to 19.50% per annum.
9. SHORT TERM FINANCES
Secured -- 7,499,707
Un-Secured 9.1 45,000,000 35,000,000
------------------ ------------------
45,000,000 42,499,707
========== ==========
9.1 These short term finances have been obtained from banking companies and financial
institutions. Rate of mark up ranges from 18% to 20.75%.
10. ACCRUED AND OTHER LIABILITIES
Accrued mark-up on loans 4,117,339 1,046,660
Profit payable on COI's 3,607,315 3,084,737
Advance lease rentals 36,760 36,760
Exchange risk cusion 5,152,204 --
Accrued expenses 594,305 1,250,784
Provident fund 93,493 74,485
Other liabilities 376,994 991,967
------------------ ------------------
13,978,410 6,485,393
========== ==========
11. DIVIDEND PAYABLE
Unclaimed dividend 479,275 504,088
Proposed dividend 10,000,000 10,000,000
------------------ ------------------
10,479,275 10,504,088
========== ==========
12. CONTINGENCIES AND COMMITMENTS
Contingencies -- --
Commitments 12.1 -- 10,303,320
------------------ ------------------
-- 10,303,320
========== ==========
12.1 Commitments for leases approved but not disbursed to clients.
13. TANGIBLE OPERATING FIXED ASSETS
Cost Depreciation
Book value
PARTICULARS As on As on As on Addition/ As at Depreciation as at
July 01, Additions/ June 30, July 01, (Deletion) June 30, Depreciable Rate for the June 30,
1999 (Deletions) 2000 1999 Adjustment 2000 Value % year 2000
Assets Owned
Building 2,794,681 -- 2,794,681 398,591 -- 398,591 2,396,090 5 119,805 2,276,285
Furniture & Fixture 1,050,831 27,500 1,078,331 546,636 -- 546,636 531,695 10 53,170 478,525
Vehicles 3,740,040 -- 2,381,715 1,924,331 -- 1,016,042 1,365,673 20 273,135 1,092,538
(1,358,325) (908,289)
Office Equipment 1,236,555 311,250 1,547,805 513,272 -- 513,272 1,034,533 10 103,453 931,080
Air Conditioners 685,160 -- 685,160 337,564 -- 337,564 347,596 10 34,760 312,836
Electric Installations 217,024 -- 217,024 102,600 -- 102,600 114,424 10 11,442 102,982
Lease hold
Improvements 603,184 -- 603,184 489,336 -- 489,336 113,848 20 22.77 91,078
Electrical Equipment 121,950 53,423 175,373 38,204 -- 38,204 137,169 10 13,717 123,452
10,449,425 (966,152) 9,483,273 4,350,534 (908,289) 3,442,245 6,041,028 632,252 5,408,776
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Leased Vehicles 3,839,725 2,210,000 6,049,725 1,540,090 -- 1,540,090 4,509,635 20 901,927 3,607,708
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Rupees - 2000 14,289,150 1,243,848 15,532,998 5,890,624 (908,289) 4,982,335 10,550,663 1,534,179 9,016,484
========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
Rupees- 1999 13,724,096 565,054 14,289,150 5,054,423 (544,235) 4,510,188 9,778,962 1,380,436 8,398,526
========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
13.1 Disposal of Vehicles
Cost Accumulated Book Value Sale Profit/(Loss) Mode of Sold
Description Rs. Depreciation Rs. Proceeds on Disposal Disposal To
Toyota Corolla 687,625 484,836 202,789 202,789 -- Company policy Company Employee
Honda Civic 670,700 423,453 247,247 247,247 -- Company policy Company Employee
------------------ ------------------ ------------------ ------------------ ------------------
Total - 2000 1,358,325 908,289 450,036 450,036 --
========== ========== ========== ========== ==========
Total - 1999 842,236 544,235 298,001 444,535 146,534
========== ========== ========== ========== ==========
Note 2000 1999
Rupees Rupee
14. NET INVESTMENT IN LEASES
Minimum lease payments receivables 327,819,543 298,137,440
Add: Residual value of leased assets 54,604,165 45,529,824
------------------ ------------------
Lease: contract receivables 382,423,708 343,667,264
Less: Unearned finance income 69,264,882 70,964,306
------------------ ------------------
Net investment in leases 313,158,826 272,702,958
------------------ ------------------
Less: - Current portion 79,619,095 135,164,555
           - Provision for doubtful debts 14.1 3,972,045 3,972,045
------------------ ------------------
83,591,140 139,136,600
------------------ ------------------
229,567,686 133,566,358
========== ==========
15. LONG TERM INVESTMENTS
Quoted:
Dewan Salman Fibers Ltd. (153,060
Ordinary shares of Rs. 10/-each) 8,845,000 8,845,000
Pakistan Synthetics Ltd. (125,000
Ordinary shares of Rs. 10/- each) 7,865,875 7,865,875
------------------ ------------------
16,710,875 16,710,875
Federal Investment Bonds 2,600,000 2,600,000
------------------ ------------------
19,310,875 19,310,875
========== ==========
Aggregate Market Value 7,863,997 5,603,970
========== ==========
15.1 The company's holding does not exceed 10 percent of equity of any investee company.
15.2 No provision has been made for diminution in value as it is considered temporary in the
context of the company's intentions to hold these investments on long term basis.
16. LONG TERM DEPOSITS
Security deposits for
Leased assets 312,900 383,972
Rented premises 172,500 172,500
Others 265,683 265,683
------------------ ------------------
751,083 822,155
========== ==========
17. SHORT TERM INVESTMENTS
Quoted:
Fidelity Investment Bank Ltd.
(57,500 Ordinary shares of Rs. 10/-each) 2,871,500 2,871,500
The Bank of Punjab (36,179)
Ordinary shares of Rs. 10/- each) 1,688,250 1,688,250
------------------ ------------------
4,559,750 4,559,750
Less: Diminution in value of investments
- Opening balance 4,173,465 4,173,465
- Provided during the year -- --
------------------ ------------------
4,173,465 4,173,465
------------------ ------------------
386,285 386,285
========== ==========
Aggregate Market Value 700,327 600,122
========== ==========
17.1 The company's holding does not exceeds 10 percent of equity of any investee company.
18. SHORT TERM FINANCE
Secured - considered good -- 1,000,000
Un secured - considered good 43,000,000 30,000,000
------------------ ------------------
43,000,000 31,000,000
========== ==========
18.1 These represents shod term finance facilities provided in the normal course of business.
Rate of mark-up ranges from 19.50% to 21.50%
19. ADVANCES, PREPAYMENTS AND OTHER RECEIVABLES
Advances:
Employees 303,658 113,400
Income tax 370,562 284,960
Telephone 1,333 4,734
Exchange risk fee 1,276,942 1,166,259
Prepayments 2,111,741 640,999
Profit on bank deposits -- 63,171
Mark up on short term finances 3,273,424 453,549
Other receivables 419,147 171,434
------------------ ------------------
7,756,807 2,898,506
========== ==========
20. CASH AND BANK BALANCES
Cash in hand 119,036 294,011
Stamps in hand 19,031 17,850
Cash with banks
- Current account 9,788,850 1,785,387
- Deposit account 20.1 744,204 699,900
------------------ ------------------
10,671,121 2,797,148
========== ==========
20.1 This includes an interest free deposit kept with State Bank of Pakistan as required under
prudential Regulations for Non-Banking Financial Institutions (NBFIs).
22. INCOME FROM LEASE OPERATIONS
Lease income 45,612,436 44,934,849
Front end Fees 1,016,581 1,479,816
Documentation & other fees 371,748 752,791
------------------ ------------------
47,000,765 47,167,456
========== ==========
22. OTHER INCOME
Income from bank deposits 322,501 773,753
Profit/Mark-up on short term finances 1,844,973 2,518,370
Dividend income 161,804 --
Miscellaneous income -- 146,534
------------------ ------------------
2,329,278 3,438,657
========== ==========
23. FINANCIAL AND BANK CHARGES
Mark-up on long/short term finance 15,930,105 19,772,676
Bank charges 110,043 51,463
Loan processing fee 481,648 46,027
Financial charges on lease liability 486,563 571,000
Mark-up on COIs 1,394,207 2,853,595
Mark-up on provident fund -- 33,805
------------------ ------------------
18,402,566 23,328,566
========== ==========
24. ADMINISTRATIVE & OPERATING EXPENSES
Directors' remuneration 3,285,351 2,583,232
Staff salaries and other benefits 24.1 3,400,915 2,829,358
Gratuity 196,996 175,793
Legal and professional 431,132 769,634
Registrar's services 203,000 189,812
Rent 720,399 698,000
Traveling and conveyance 242,162 267,264
Postage and Telephone 419,147 455,711
Electricity, Water & Gas 132,607 176,461
Stationery and other supplies 215,720 283,939
Vehicles running 792,390 669,684
Auditors' remuneration 24.2 105,000 105,000
News papers & periodicals 7,651 8,107
Insurance 491,911 548,540
Entertainment 69,117 58,101
Repairs & maintenance 646,334 299,991
Fees & subscriptions 303,437 215,408
Depreciation 1,534,179 1,380,436
Advertisement 19,350 61,433
Bad Debts Written off 669,428 --
------------------ ------------------
13,886,226 11,775,904
========== ==========
24.1 Number of Employees at the end of year 21 (1999:21)
24.2 Auditors' Remuneration
Audit fee 50,000 50,000
Tax consultancy 55,000 55,000
------------------ ------------------
105,000 105,000
========== ==========
25. TAXATION
25.1 Current year 771,215 578,667
========== ==========
This represents the minimum tax due under section 80 (d) of the Income Tax Ordinance, 1979.
25.2 Deferred
Deferred taxation arising due to timing differences between book and income tax revenue,
excluding overdue portion amounting to Rs. 47.876 million against net investment in lease,
or charges is estimated at Rs. 29.139 million (1999: Rs. 32.425 million).
As at June 30, 2000, the Company has transferred an amount of Rs. 15.429 million to comply
with the SECP's requirement for creating capital reserve for deferred tax. Unprovided
deferred tax amounting to Rs. 13.711 million shall be appropriated to capital reserve for
deferred tax in annual installments by June 30, 2003.
Prior year 4,715,140 4,715,140
Current year (3,286,146) 9,284,860
------------------ ------------------
1,428,994 14,000,000
========== ==========
26. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
CHIEF EXECUTIVE DIRECTORS EXECUTIVES
2000 1999 2000 1999 2000 1999
Managerial remuneration 511,806 445,050 1,023,612 848,700 463,170 490,372
Bonus 91,252 79,350 182,504 108,000 83,492 70,898
House rent & utilities 345,798 280,286 731,882 632,452 208,426 212,718
Reimbursement of medical expenses    36,183 2,852 208,772 100,948 28,876 15,864
Provident fund 51,181 44,508 102,361 60,552 46,317 39,042
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
1,036,220 852,046 2,249,131 1,750,652 830,281 828,894
========== ========== ========== ========== ========== ==========
No. of person 1 1 2 2 3 3
========== ========== ========== ========== ========== ==========
In addition, the Chief Executive, two Directors and three Executives are provided with free use of
company maintained cars, while Chief Executive and Directors are also provided with reimbursement
of residential telephone bills.
Directors fee totaling Rs 2,500 (1999: Rs. 2,000/- to two director for attending two Board meetings)
was paid to three Directors for attending two Board meetings.
27. EARNING PER SHARE - BASIC
2000 1999
Numerator Denominator Numerator Denominator
Rupees Shares Rupees Shares
A B A B
Profit attributed to ordinary shareholders 16,163,623 -- 14,588,742 --
Ordinary shares -- 8,000,000 -- 8,000,000
------------------ ------------------ ------------------ ------------------
16,163,623 8,000,000 14,588,742 8,000,000
========== ========== ========== ==========
Earnings per share (A/B) 2.02 -- 1.82 --
========== ========== ========== ==========
28. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
28.1 Credit Risk & Concentration of Credit Risk
The Company attempts to control credit risk by monitoring credit exposures, limiting transactions
with specific counterparties, and continuously assessing the credit worthiness of counterparties.
English Leasing Limited (ELL) follows two sets of guidelines. Internally, it has its own
operating policy duly approved by the Board of Directors whereas externally it adheres to
the regulations issued by the State Bank of Pakistan and Securities and Exchange Commission
of Pakistan. The operating policy defines the extent of fund and non-fund based exposures
with reference to a particular sector or group of leases. The Management also classifies
a particular lease on the basis of Rules of business for Non-Banking Financial Institutions.
28.2 Fair Value of Financial Instruments
The estimated fair value of financial instruments are not significantly different from their book
values as shown in these financial statements except for long term investment (Note 15).
28.3 Exposure to Mark up Rate Risk
The Company's interest rate sensitivity position for interest bearing financial assets and
liabilities for the year are summarised as follows:-
Financial Less than Over one Effective Interest
Instruments one year year Mark-up rate %
Financial Assets
Net investment in lease finance 313,158,826 79,619,095 233,539,731 19.00 - 25.00
Short term finances 31,000,000 43,000,000 -- 16.50 - 19.50
------------------ ------------------ ------------------
344,158,826 122,619,095 233,539,731
========== ========== ==========
Financial Liabilities
Long term loans
Local Currency 88,614,891 32,319,960 56,294,931 17.00 - 22.00
Foreign Currency 40,169,730 -- 40,169,730 -      -    6.38
Long term certificates of investment 8,790,680 -- 8,790,680 15.00 - 19.50
Obligations under finance lease 4,042,854 1,480,224 3,929,399 20.00 - 22.00
Long term deposits (Lease key Money) 49,440,375 10,432,891 39,007,484
Short term finance 45,000,000 45,000,000 -- 18.00 - 20.00
Short term certificates of investment 2,280,700 2,280,700 -- 15.00 - 18.00
------------------ ------------------ ------------------
238,339,230 91,513,775 148,192,224
========== ========== ==========
29. GENERAL
29.1 Statement of changes in equity and reserves is annexed hereto.
29.2 Figures have been rearranged wherever necessary for comparison purposes.
29.3 Figures have been rounded off to the nearest rupee.
Chief Executive Chairman
PATTERN OF HOLDING OF SHARES AS AT JUNE 30, 2000
No. of Shareholding Total
Shareholders From To Shares held
59 1 100 5,900
615 101 500 291,700
171 501 1000 168,500
176 1001 5000 467,900
37 5001 10000 318,600
6 10001 15000 77,000
10 15001 20000 183,800
9 25001 30000 261,100
2 30001 35000 64,100
3 35001 40000 109,500
2 40001 45000 88,500
6 45001 50000 29,500
1 50001 55000 55,000
1 55001 60000 58,500
1 60001 65000 63,700
1 65001 70000 68,000
1 70001 75000 72,400
1 75001 80000 80,000
3 95001 10000 300,000
1 140001 145000 143,500
3 145001 150000 449,900
1 200001 205000 203,500
1 215001 220000 220,000
1 245001 250000 250,000
1 345001 350000 350,000
1 445001 450000 450,000
1 480001 485000 480,500
1 500001 505000 500,100
1 515001 520000 515,800
1 595001 600000 600,000
1 805001 810000 807,000
------------------ ------------------
1119 8,000,000
========== ==========
S. No. Categories of Shareholders Numbers Shares Held Percentage
of Shareholders
1 Individual 1083 5,020,000 62.75
2 Investment Companies 9 552,800 6.91
3 Insurance Companies 2 481,500 6.02
4 Joint Stock Companies 10 31,500 0.39
5 Financial Institutions 13 1,910,200 23.88
6 Modaraba Companies 1 1,000 0.01
7 Others 1 3,000 0.04
------------------ ------------------ ------------------
1119 8,000,000 100.00
========== ========== ==========
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