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National Development Leasing Corporation Limited
Annual Report 2000
Contents
Company Information
Notice of Meeting
Ten Years at a Glance
Directors' Report
Auditors' Report
Balance Sheet
Profit and Loss Account
Statement of Changes in Financial Position
Statement of Changes in Equity
Notes to the Accounts
Pattern of Shareholding
Company Information
Board of Directors Mr. Mohammad Salim Chairman
Mr. Mohammad Naseem Director
Mr. S. M. Saleem Director
Mr. Mohammad Sharif Director
Mr. Zahid Haleem Sheikh Director
Mr. Farrukh Hussain Sheikh Director
Mr. Etrat H. Rizvi Director
Mr. Mubashir A. Akhtar Chief Executive
Company Secretary Mr. Waheed-ur-Rehman
Auditors Ford, Rhodes, Robson, Morrow
Chartered Accountants
Legal Advisors Habib-ur-Rehman & Co.,
Barristers-At-Law & Advocates
Mohsin Tayebali & Co.,
Advocates & Legal Consultants
Sajjad Law Associates
Consultants M. Yousuf Adil Saleem & Co.
Chartered Accountants
Share Registrar THK Associates (Pvt) Limited
Ground Floor, Sheikh Sultan Trust Building No. 2,
Beaumont Road,
Karachi - 75530
Bankers Allied Bank of Pakistan Limited
American Express Bank Limited
Askari Commercial Bank Limited
Bank of Punjab
Citibank, N.A.
Deutsche Bank A.G.
Faysal Bank Limited
First International Investment Bank Limited
Gull' Commercial Bank Limited
Habib Bank Limited
Mashreq Bank psc.
Muslim Commercial Bank Limited
National Bank of Pakistan
National Development Finance Corporation
Platinum Commercial Bank Limited
Prime Commercial Bank Limited
Standard Chartered Bank
Correspondent Chase Manhattan Bank
Banks Deutsch Bank A.G.
Head Office and
Registered Office
Karachi NIC Building, 10th Floor
Abbasi Shaheed Road
Tel: 5660671-78 Fax: 5219405
E-mail: karachi@ndlc.com.pk
URL: www.ndlc.com.pk
Branches
KARACHI CLIFTON BC- 1, B lock-5,
Kehkashan Scheme # 5, Main Clifton Road
Tel: 5875666-777 Fax: 5875888
E-mail: karachi@ndlc.com.pk
Contact: Mr. Ahmed Noor
LAHORE 7/4, E-3, Main Boulevard,
Gulberg III
Tel: 5754111,5754122 Fax: 5754166
E-mail: lahore@ndlc.com.pk
Contact: Mr. Salim-ul-Haque
FAISALABAD The Mall Regency Shopping Arcade,
Ground Floor
Tel: 617946-47 Fax: 612890
Contact: Mr. Tahir Rizwan
ISLAMABAD State Life Building, Ground Floor
Jinnah Avenue, Phase II,
Blue Area
Tel: 2277362-64 Fax: 2277365
E-mail: ndlcisb@isb.pak.net.com.pk
Contact: Mr. Fuad Rasul
Notice of Annual General Meeting
Notice is hereby given that the Sixteenth Annual General Meeting of National Development Leasing Corporation
Limited will be held at Hotel Regent Plaza, Main Shahra-e-Faisal, Karachi on Saturday, December
30, 2000 at 9:00 a.m. to transact the following business:
1. To confirm the Minutes of Extra Ordinary General Meeting held on August 5, 2000.
2. To receive, consider and adopt the Audited Accounts of the Corporation for the year ended June 30,
2000 together with Directors' and Auditors' Report thereon.
3. To approve 17.50% cash dividend as recommended by the Directors.
4. To appoint Auditors and fix their remuneration. The present Auditors, Messrs. Ford, Rhodes, Robson,
Morrow, Chartered Accountants, retire and being eligible, offer themselves for re-appointment.
5. To transact any other business with the permission of the Chair.
By Order of the Board
Waheed ur Rehman
Karachi: November 23, 2000 Company Secretary
Notes:
a. The Share Transfer Books of the Corporation will remain closed from December 14, 2000
to December 23, 2000 (both days inclusive). Transfers received in order at the office of
Share Registrar of the Corporation i.e. THK Associates (Pvt) Ltd., Ground Floor, Sheikh
Sultan Trust Building No.2, Beaumont Road, Karachi by December 13, 2000 will be treated
in time for the purpose of entitlement of cash dividend in respect of the year ended June
30, 2000.
b. An instrument of proxy duly stamped, signed and witnessed and the power of attorney or
other authority (if any) under which it is signed or a notarially certified copy of such
power or authority, in order to be valid, must be deposited at the registered office of the
Corporation at least 48 hours before the time of the meeting.
c. Any individual Beneficial Owner of CDC, entitled to attend and vote at this meeting, must
bring his/her original NIC or Passport, Account and participant's I.D. numbers, to prove
his/her identity, and in case of Proxy must enclose an attested copy of his/her NIC or
Passport. Representative of corporate members should bring the usual documents required
for such purpose.
d. Members are requested to immediately inform of any change in their addresses.
Ten Years at as Glance
Rupees in Million
Year 18 months
Ended June 30 June 30 June 30 June 30 June 30 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
2000 1999 1998 1997 1996 1994 1993 1992 1991 1990
FINANCIAL POSITION
Authorised Capital 500 500 500 500 500 500 500 500 500 100
Paid-up Capital 377 377 377 359 359 259 207 159 88 68
Reserves 863 856 823 828 780 687 620 595 479 378
Shareholders' Equity 1,240 1,233 1,200 1,187 1,139 946 827 754 567 446
Long Term Loans - Foreign 616 791 802 910 690 821 569 651 469 506
 - Local 552 723 502 367 304 154 220 247 223 507
Certificates of Investment 634 715 1,090 1,576 1,755 881 671 964 1,008 2,977
Net Investment in Lease Finance 3,744 3,782 3,650 3,767 3,971 2,739 2,344 2,044 1,789 1,709
Total Assets 4,618 4,808 4,924 5,312 5,272 3,644 2,878 3,071 2,666 5,061
OPERATING POSITION 540 572 614 625 807 398 299 255 243 193
Lease Income 633 698 739 785 1,115 540 425 393 507 571
Total Revenue 498 534 543 599 755 317 250 237 361 395
Total Expenditure 135 164 196 186 360 223 175 156 146 176
Operating Profit 95 120 78 130 266 187 165 149 146 176
Profit Before Taxation 73 90 50 102 211 157 125 111 146 234
Profit After Taxation
DISTRIBUTION
Cash Dividend 17.50% 15.00% 10.00% 15.00% 30.00% 15.00% 25.00% 20.00% 20.00% 20.00%
Stock Dividend -- -- -- -- -- 25.00% -- 30.00% -- 30.00%
RIGHT ISSUE -- -- -- -- -- 10.00% -- -- 30.00% 50.00%
RATIOS
Current Ratio 1.31 1.08 1.01 1.00 0.81 1.17 1.25 1.52 1.19 0.97
Debt/Equity 1.41 1.27 1.28 1.38 1.25 1.42 1.34 1.76 1.69 4.00
Book Value Per Share (in Rupees) 16.43 16.34 15.90 16.52 15.85 18.29 20.00 23.71 32.12 24.06
Note: Prior years' figures have been rearranged, wherever necessary, for the purpose of comparison.
Directors' Report to the Shareholders
The Directors are pleased to present the financial results of the Corporation for the year ended June 30,
2000.
Board of Directors
The composition of the Board of Directors has changed since the last Annual General Meeting, due to the
resignation of Ms. Naheed Hyder, Nominee Director of National Development Finance Corporation. The
Directors place on record their appreciation for the services rendered by the outgoing Director. Mr. Etrat H. Rizvi
filled the casual vacancy. The Directors welcome Mr. Etrat H. Rizvi as Director of the Corporation and look
forward to his valuable contributions. Subsequently, in terms of Section 178 (1) of the Companies Ordinance,
1984, the present Directors were reelected to the Board in the Extra Ordinary General Meeting held on
August 05, 2000.
Financials
Your Directors are pleased to report an after tax profit of Rs. 73.139 million for the year ended June 30, 2000
and propose that profit be appropriated as follows:
(Rupees in 000's)
June 30 June 30
2000 1999
Profit before taxation 95,139 120,048
Taxation 22,000 30,000
------------------ ------------------
Net Profit after taxation 73,139 90,048
Unappropriated profit brought forward 1,075 1,139
------------------ ------------------
Profit available for appropriation 74,214 91,187
APPROPRIATIONS
Proposed Dividend @ 17.50% (1999: @15%) 66,045 56,610
Transfer to General Reserve 4,000 29,000
Transfer to Special Reserve 3,657 4,502
Transfer from General Reserve for deferred taxation (50,842) (68,410)
Transfer to Capital Reserve for deferred taxation 50,842 68,410
------------------ ------------------
73,702 90,112
------------------ ------------------
Unappropriated profit carried forward 512 1,075
========== ==========
The Economy
For the last several years, the economy has been facing serious difficulties owing to persistent lapses in the
implementation of structural reforms and stabilization measures. The economy has now started to demonstrate
a sign of recovery. GDP has shown a growth by 4.5 % as against growth of 3.2 % last year. This recovery is
supported by 7.2% growth in the agricultural sector as against last year's 1.9%, witnessing an impressive
recovery on account of good cotton, wheat and rice crops. Similarly, the consumer price index during July
1999 to April 2000 declined to 3.6% as against 6.1% of the corresponding period last year. Exports during
the year grew by almost 10% as against a decline of 12% in the corresponding period last year. Likewise
imports grew by 10.9% as against a decline of last year's 9.4%. This resulted in decrease of 34% in the
current account deficit from US$ 1,812 million to US$ 1,195 million.
Fiscal deficit bas emerged as one of the major source of macro economic imbalance of our country. The
burden of interest payments is one of the most serious fiscal problems faced by us, because not only does it
consume 49% of the total revenue but it also lessens the Government's ability to spend on social and physical
infrastructure. Despite the fiscal deficit, the Government was able to raise its development expenditure by
20% for the year 2000-2001 to Rs. 120.4 billion, as against Rs. 100.6 billion of the previous fiscal year.
Although. the year under review registered an increase of 20.4% on industrial investment in the manufacturing
sector and an increase of 8.3 % in the net foreign private investment inflows, the ongoing dispute on tax
survey with the business community and continued increase in fuel prices, may hamper economic targets
for the year 2000-2001. At present, the economy is in the process of major structural adjustment and the
Government is keen to continue with the measures to promote a culture of tax compliance, levy of GST at
all stages and, privatization and liberalization of the economy. The Government's commitment towards an
increased role of the private sector, with continued emphasis on agriculture, small and medium sized industries.
is expected to result in setting a direction and pace for a balanced sectoral growth.
Leasing sector which experienced an extraordinary growth, in the past, is now facing challenges due to
competition and reducing spreads. Stiff competition from commercial and investment banks, who have the
resources and access to low cost funds, is yet another threat to the leasing sector. The economic conditions
have further forced leasing companies to turn their focus on the need for Balancing, Modernization and
Replacement requirements of industries, and consumer financing.
We are pleased to inform you that your Corporation is comfortably positioned to meet all these challenges
ahead, which will help in exploiting new opportunities from the industry. Your Corporation by the Grace of
Allah had generated quality business and improved its market share, during the year under review.
Overview of Operations
Operating profit before provisions, of your Corporation, were recorded at Rs. 135 million. Total revenues
for the year amounted to Rs. 633 million, of which Rs. 540 million were generated from lease income,
reflecting an 85% share of the total revenues. Financial charges and returns on certificate of investments,
being 75% of total costs, decreased to Rs.399 million from Rs.447 million last year, due to availability of
comparatively cheaper funds and efficient handling of short term borrowings. Administrative and operating
expenses were Rs.99 million, as against Rs.87 million in 1999, which mainly reflects the incidence of
inflation. Following a prudent policy, provisioning of Rs.57 million has been made against doubtful debts.
as compared to Rs.29 million in the previous year. Provision for diminution in value of investment witnessed
a reversal of Rs. 17 million as against increase of Rs. 16 million in 1999, due to appreciation in the market
value of the portfolio.
Fundings
Your Corporation was able to generate funds successfully through launch of Term Finance Certificates,
which was oversubscribed. This has demonstrated the Corporation's ability to arrange cost effective funds
locally. Banks and financial institutions have also reposed confidence by extending credit lines. The
Corporation continued to maintain a Cordial relationship with the multilateral agencies. However, the
Corporation decided not to avail undrawn loan amount of US$ 5 million, due to non-availability of forward
cover beyond one year as well as the high costs, associated with it.
Equity Investments
After touching lowest ebb in the preceding years, the leading market indicators displayed a modest recovery
at the beginning of the current financial year. The KSE index increased from 1055 points in June 1999 to
1252 points in July 1999 and by the end of March 2000 the index rose to 2000 points. Your Corporation was
to reap the benefit of the upsurge in share prices and recorded a gain of Rs. 12 million by selling part of it
equity portfolio. Besides, an amount of Rs. 17 million has been reversed from provision for diminution in
value of equity investments.
Regulatory Environment
Securities and Exchange Commission of Pakistan has updated the regulations governing the Leasing
Companies and promulgated Leasing Companies (Establishment and Regulation) Rules, 2000. These rules
are viewed as imperative for strength and growth of the leasing industry.
Achievements
During the year, the Management Association of Pakistan awarded the highly prestigious Corporate
Excellence Award for the year 1998, to your Corporation. This award is given to only two Companies every
year from the financial sector.
Future Outlook
Looking ahead, the Corporation recognizes the challenges of the future. Our focus will remain on steady
and sustainable growth. Our emphasis on innovation, creativity and quality service shall continue. Fresh
efforts are underway to attract new clients for consumer leasing. Diversification, lower risk and quality
lease portfolio will continue to be the guiding principles of our credit policy.
We shall continue to promote on environment where people are valued as assets who place all other assets
to work. We have and we shall continue to invest in developing motivated team players, through training
and professional growth.
Mission Statement
Being a premier leasing Company, we are committed to continuously creating value for our shareholders,
providing efficient and quality service to our clients and promoting sound business practices contributing to
the cause of the industry, in particular, and the economy, in general.
Auditors
The retiring auditors Messrs. Ford, Rhodes, Robson, Morrow, Chartered Accountants, being eligible, offer
themselves for re-appointment.
Acknowledgement
We are pleased to put on record our profound and sincere gratitude to our valued clients and bankers, whose
continuous support is a great source of strength to the Corporation.
We also sincerely appreciate the guidance provided to the Corporation by the State Bank of Pakistan, Securities
and Exchange Commission of Pakistan and Multilateral Agencies. We would also like to thank our
team members for their commitment, dedicated efforts and valuable contribution.
Shareholding Pattern
A statement reflecting the pattern of shareholding is attached to the Annual Report.
On behalf of the Board
Mubashir A. Akbar
Karachi: November 23, 2000. Chief Executive
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of NATIONAL DEVELOPMENT LEASING
CORPORATION 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 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 except for the change as stated in note 2.3(c) with
which we concur;
(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.
Karachi - Ford, Rhodes, Robson, Morrow
November 23, 2000. Chartered Accountants
Balance Sheet as at June 30, 2000
(Rupees in 000's)
June 30 June 30
2000 1999
ASSETS
NON-CURRENT ASSETS
Operating Fixed Assets 3 60,006 60,585
Net Investment in Lease Finance 4 2,127,365 2,183,442
Long Term Investments 5 10,307 14,381
Long Term Deposits 6 261,496 359,555
Long Term Advances, Prepayments and Deferred Costs 7 33,884 23,023
CURRENT ASSETS
Current Maturity of
Net Investment in Lease Finance 4 1,616,536 1,599,326
Long Term Deposits 6 104,598 102,730
Short Term Finances 8 53,901 21,014
Short Term Investments 9 134,259 125,915
Income accrued or due 20,999 31,480
Advances, Deposits, Prepayments & Other Receivables 10 97,188 178,348
Taxation 20.1 10,385 3,394
Cash and Bank Balances 11 86,806 104,436
------------------ ------------------
2,124,672 2,166,643
------------------ ------------------
4,617,730 4,807,629
========== ==========
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Authorised Capital
100,000,000 Ordinary Shares of Rs. 5 each 500,000 500,000
========== ==========
Issued, Subscribed and Paid-up Capital 12 377,400 377,400
Reserves 13 863,083 855,989
------------------ ------------------
Shareholders' equity 1,240,483 1,233,389
REDEEMABLE CAPITAL-NON PARTICIPATORY 14 499,920 --
DEFERRED LIABILITIES
Gratuity 7,486 5,319
LONG TERM FINANCES AND LIABILITIES
Long Term Finances 15 774,784 1,146,803
Certificates of Investment 16 180,337 174,918
Deposits on Lease Contracts 17 295,605 242,526
------------------ ------------------
1,250,726 1,564,247
CURRENT LIABILITIES
Short Term Finances 18 311,826 479,200
Current Maturity of
Redeemable Capital 14 200 --
Long Term Finances 15 392,624 366,779
Certificates of Investment 16 453,987 540,089
Deposits on Lease Contracts 17 243,875 293,308
Accrued Expenses and Other Liabilities 19 150,558 268,688
Proposed Dividend 66,045 56,610
------------------ ------------------
1,619,115 2,004,674
CONTINGENCIES AND COMMITMENTS 21 ------------------ ------------------
4,617,730 4,807,629
========== ==========
The annexed notes form an integral part of these accounts.
Mohammad Salim Mubashir A. Akhtar
Chairman Chief Executive
Profit and Loss Account for the year ended June 30, 2000
(Rupees in 000's)
Note June 30 June 30
2000 1999
INCOME
Lease Income 539,506 571,802
Income from Investments/Finances 22 58,520 100,138
Capital Gain 11,629 --
Other Income 23 22,863 26,055
------------------ ------------------
632,518 697,995
EXPENDITURE
Financial charges 24 297,563 302,064
Return on Certificates of Investment 101,035 144,566
Administrative and Operating Expenses 25 99,321 86,949
------------------ ------------------
497,919 533,579
------------------ ------------------
OPERATING PROFIT BEFORE PROVISIONS 134,599 164,416
------------------ ------------------
PROVISIONS - Doubtful Debts 56,829 28,640
                         - Investments (17,369) 15,728
------------------ ------------------
39,460 44,368
------------------ ------------------
PROFIT BEFORE TAXATION 95,139 120,048
PROVISION FOR TAXATION 20 22,000 30,000
------------------ ------------------
NET PROFIT AFTER TAXATION 73,139 90,048
UNAPPROPRIATED PROFIT BROUGHT FORWARD 1,075 1,139
------------------ ------------------
PROFIT AVAILABLE FOR APPROPRIATIONS 74,214 91,187
APPROPRIATIONS
Proposed Dividend @ 17.50% (1999: @ 15%) 66,045 56,610
Transfer to General Reserve 4,000 29,000
Transfer to Special Reserve 3,657 4,502
Transfer from General Reserve for deferred taxation (50,842) (68,410)
Transfer to Capital Reserve for deferred taxation 50,842 68,410
------------------ ------------------
73,702 90,112
------------------ ------------------
UNAPPROPRIATED PROFIT CARRIED FORWARD 512 1,075
========== ==========
Basic earning per share of Rs. 5 each 31 0.97 1.19
========== ==========
The annexed notes form an integral part of these accounts.
Mohammad Salim Mubashir A. Akhtar
Chairman Chief Executive
Statement of Changes in Financial Position (Cash flow statement)
(Rupees in 000's)
Note June 30 June 30
2000 1999
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations 30 432,765 838,489
Financial Charges / return on Certificates of Investment paid (522,190) (459,995)
Income tax paid (28,991) (38,113)
Gratuity paid (208) (1,110)
------------------ ------------------
Net cash (utilized) / generated from operating activities (118,624) 339,271
CASH FLOW FROM INVESTING ACTIVITIES
Long term deposits 96,191 73,615
Long term investments 13,155 4,996
Fixed capital expenditure (9,805) (11,778)
Sales proceeds of fixed assets 1,682 1,864
Investment income received 9,713 4,701
Not investment in lease finance (net) (17,108) (159,705)
Long term advances (net) (8,280) 1,835
------------------ ------------------
Net cash generated / (utilized) in investing activities 85,548 (84,472)
CASH FLOW FROM FINANCING ACTIVITIES
Issue of redeemable capital - net of repayment 500,120 --
(Repayments) / proceeds from long term finances (346,174) 209,049
Certificates of investment (80,683) (375,369)
Deposits from lessees 3,646 (19,769)
Obligation under finance leas -- (1,551)
Prepayments and deferred cost (5,045) 1,628
Dividend paid (56,418) (37,624)
------------------ ------------------
Net cash generated / (utilized) in financing activities 15,446 (223,636)
------------------ ------------------
Net (decrease) / increase in cash (17,630) 31,163
Cash and Bank Balances at the beginning
of the year 104,436 73,273
------------------ ------------------
Cash and Bank Balances at the end of the year 86,806 104,436
========== ==========
The annexed notes form an integral part of these accounts.
Mohammad Salim Mubashir A. Akhtar
Chairman Chief Executive
Statement of Changes in Equity for the year ended June 30, 2000
Share
capital Capital Reserves Revenue Reserves
Issued, Reserve Premium on
subscribed for Special issue of Deferred General Unappropriated
and paid-Up contingencies reserve shares taxation reserve profit
(Rupees in 000's)
Balance as at July 01, 1998 377,400 44,241 37,837 90,334 -- 649,000 1,139
Net profit for the year -- -- -- -- -- -- 90,048
Proposed dividend @ 15% -- -- -- -- -- -- (56,610)
Transfer to general reserve -- -- -- -- -- 29,000 (29,000)
Transfer to special reserve -- -- 4,502 -- -- -- (4,502)
Transfer to deferred taxation -- -- -- -- 68,410 (68,410) --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balance as at June 30, 1999 377,400 44,241 42,339 90,334 68,410 609,590 1,075
Net profit for the year -- -- -- -- -- -- 73,139
Proposed dividend @ 17.50% -- -- -- -- -- -- (66,045)
Transfer to general reserve -- -- -- -- -- 4,000 (4 000)
Transfer to special reserve -- -- 3,657 -- -- -- (3,657)
Transfer to deferred taxation -- -- -- -- 50,842 (50,842) --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balance as at June 30, 2000 377,400 44,421 45,996 90,334 119,252 562,748 512
========== ========== ========== ========== ========== ========== ==========
Mohammad Salim Mubashir A. Akhtar
Chairman Chief Executive
Notes to the Accounts for the year ended June 30, 2000
1. THE CORPORATION AND ITS ACTIVITIES
National Development Leasing Corporation Limited is a public limited company incorporated in
Pakistan and is listed on all of the three stock exchanges of the country. The principal business
activity of the Corporation is to provide lease financing and related services, which is conducted
through branches in all the major cities of Pakistan. It has also been declared a Development
Finance Institution (DFI) by the Government of Pakistan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting convention
These financial statements have been prepared under the historical cost convention.
2.2 Taxation
The charge for current taxation for the year, is based on taxable income at the current rates of
taxation which is computed as if all leases arc operating leases, after taking into account allowances
for the year available for depreciation in respect of fixed assets under lease finance.
The tax effect for deferred taxation is calculated by using the liability method on all major timing
differences and is being dealt with as stated in note 20.2 to the accounts.
2.3 Staff retirement benefits
(a) Gratuity
The Corporation operates an unfunded gratuity scheme which cover all employees with a
qualifying service period of three years. However, obligations under the scheme are
provided annually.
(b) Provident fund
In addition, the Corporation operates recognized provident fund scheme for all its permanent
employees, for which equal monthly contributions are made both by the Corporation and by the
employees to the fund @ 10% of basic pay.
(c) Employee's compensated absences
During the year, the revised International Accounting Standard 19 relating to Employee Benefits
became applicable on the Corporation. The standard requires that an enterprise should provide
for absences accumulated by its employees. The Corporation's previous accounting policy
was to account for the absences on payment basis for employees who had accumulated
unavailed leave and were leaving the Corporation. Accordingly, the management has
decided to make provision in respect of these absences. The liability of the Corporation
inrespect of these absences as at June 30, 2000 amounted to Rs. 3.369 million which
has been fully provided in the current year. Had the above policy not been adopted, the
profit before taxation for the year would have been higher by Rs. 3.369 million.
2.4 Operating fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation.
Depreciation is charged to income applying the straight line method over the estimated useful lives
at the rates given in note 3 to the accounts. In respect of additions and deletions of assets during the
year, depreciation is charged from the month of acquisition and upto the month proceeding the
deletion and/or upto the month of deletion if sold after 15th day of the month respectively.
Gains and losses on disposal of fixed assets, if any, are included in income currently.
Normal repairs and maintenance are charged to income as and when incurred.
2.5 Foreign currency translation
Assets and liabilities in foreign currencies are recorded at the exchange rates applicable on the
transaction date (except where forward exchange contracts have been entered into, such amounts
are stated at the contracted rates) and are translated into rupees at the exchange rates prevailing on
the balance sheet date.
Gains and losses on translation are taken to income currently.
2.6 Off-Setting
A Financial asset and a financial liability is set-off and the net amount is reported in the
balance sheet if the company has a legal right to set-off the transactions and also intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
2.7 Government securities - repurchase / resale transactions
The Corporation also enters into transactions of repurchase or resale of registered Government
Securities at contracted rates for specified time periods. These are recorded as follows:
(a) In case of sale under repurchase obligations, the securities are deleted from the books at cost
and the charges arising from the differential in sale and repurchase values are accrued on a
pro-rata basis and recorded under Income from Government Securities. Upon
repurchase, the securities are reinstated at their respective original cost;
(b) in case of purchase under resale obligations, the securities are booked at the contracted purchase
price and the differential of the contracted purchase and resale prices is amortised over the
period of the contract and recorded under Income from Government Securities.
2.8 Deferred cost
(a) Redeemable capital
Cost incurred on issue of Term Finance Certificates are written off within a period of five years
from the date of occurrence.
(b) Loans
Long term prepayments and front end fee are amortized over the period during which the benefits
accrue in the underlying transactions.
2.9 Investments
Long Term
These are stated at cost. However, cost is reduced to recognize any decline thereof, other than
temporary.
Short Term
These are stated at lower of cost and market value on a portfolio basis.
2.10 Revenue recognition
The financing method is used in accounting for income on finance leases. Under this method the
unearned income - i.e. the excess of aggregate lease rentals and the estimated residual value over
the net investment (cost of leased assets) - is deferred and then amortised to income over the term
of lease on a pattern reflecting a constant periodic rate of return on the net investment in lease.
Return earned on term finance certificates and finance on mark-up/buy-back agreement basis is
recognized on a time proportion basis taking account of, where applicable, the relevant buy-back
dates and prices, or where a specific schedule of recoveries is prescribed in the agreement, the
respective dates when return is required to be paid to the Corporation.
Income on Government Securities is recognised by pro-rata accruals of the differential in cost and
maturity values and/or the coupon rate applicable.
Fees for project examination, commitment fee and other commission, etc., are recognised as income
when realised.
Dividend income is recognised on receipt basis.
2.11 Provision for doubtful debts
The Corporation maintains provision for doubtful debts at a level that can be reasonably anticipated
keeping in view the nature of its overall business activities and considers this to be adequate to
meet potential losses.
3. OPERATING FIXED ASSETS
Rupees in 000's
COST DEPRECIATION Book
At the At the value
beginning of Additions/ end of the Rate per At the end For the On at the end
the year (disposals) Adjustments* year annum of the year year disposals Adjustments* of the year
%
Land and buildings 3.1 48,366 -- -- 48,366 10 10,706 1,716 -- -- 37,660
--
Equipments 22,227 1,974 (2,141) 21,263 20 14,608 2,567 613 (2,141) 6,655
(797)
Furniture and Fixtures 7,367 455 -- 7,773 10 5,005 580 49 -- 2,768
(49)
Vehicles 21,488 7,376 (120) 24,884 25 11,961 5,012 3,535 (120) 12,923
(3,860)
Leasehold improvements 2,198 -- -- 2,198 33 2,198 -- -- -- --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
June 2000 101,646 9,805 (2,261) 104,484 44,478 9,875 4,197 (2,261) 60,006
(4,706)
========== ========== ========== ========== ========== ========== ========== ========== ==========
June 1999 100,059 11,778 1,382 101,646 41,061 9,613 7,464 (2,072) 60,585
(8,119) (3,454)
========== ========== ========== ========== ========== ========== ========== ========== ==========
3.1 The land and buildings include (at cost) an amount of Rs. 30.3 million (1999: Rs.30.3 million)
for which mutation has not yet been arranged. Efforts are in progress to obtain mutation in
favour of the Corporation.
*These relates to fully depreciated assets scraped during the year.
3.2 Disposal of operating fixed assets
(Rupees in 000's)
Accumulated Book Sale Profit / Mode of
Particulars Cost depreciation value proceeds (loss) Disposal Sold to/transferred to/claim from
Vehicle 146 146 -- 100 100 Tender Mr. Noor Khan
Vehicle 2 2 -- 1 1 Tender Mr. Noor Khan
Vehicle 32 32 -- 35 35 Insurance claim Adamjee Insurance Co. Limited
Vehicle 179 179 -- 160 160 Insurance claim Adamjee Insurance Co. Limited
Vehicle 377 377 -- 150 150 Final Settlement Ms. Nigar Fatima Jafri, Employee
Vehicle 554 554 -- 115 115 Service Rules Mr. Fuad Rasool, Employee
Vehicle 586 586 -- 107 107 Service Rules Mr. Saleem-ul-Haq, Employee
Vehicle 424 424 -- 90 90 Service Rules Mr. Mohammad Ameen, Employee
Vehicle 265 265 -- 51 51 Service Rules Mr. Ather Naqvi, Employee
Vehicle 611 611 -- 117 117 Service Rules Mr. Tahir Rizwan, Employee
Vehicle 297 254 43 72 29 Service Rules Mr. Pervez Alam Baig. Employee
Vehicle 387 105 282 375 93 Insurance claim Adamjee Insurance Co. Limited
------------------ ------------------ ------------------ ------------------ ------------------
3,860 3,535 325 1,373 1,048
------------------ ------------------ ------------------ ------------------ ------------------
Equipment 17 17 -- 2 2 Tender M/s. Carpet Caleeno
Equipment 32 32 -- 1 1 Tender M/s. Carpet Caleeno
Equipment 2 2 -- -- -- Negotiation Mr. Sohail Akhter
Equipment 1 1 -- 1 1 Tender M/s. Carpet Caleeno
Equipment 8 8 -- 2 2 Tender Mr. I1yas Ahmed
Equipment 36 36 -- 1 1 Tender M/s. Carpet Caleeno
Equipment 158 158 -- 25 25 Tender M/s Din Leather Limited
Equipment 109 109 -- 50 50 Trade In International Business Corp. Limited
Equipment 10 10 -- -- -- Negotiation Mr. Sohail Akhter
Equipment 18 14 4 10 6 Insurance Claim Adamjee Insurance Co. Limited
Equipment 145 114 31 67 36 Negotiation Mr. Ghulam Sarwar, Mr. Tahir Rizwan
& Mr. Muzzmil Ali
Equipment 38 13 25 25 -- Final Settlement Mr. Khalid Tirmizi, Employee
Equipment 13 4 9 8 (1) Final Settlement Mr. Khalid Tirmizi. Employee
Equipment 28 15 13 9 (4) Final Settlement Ms. Saima Shah, Employee
Equipment 11 6 5 9 4 Final Settlement Ms. Saima Shah, Employee
Equipment 21 11 10 10 -- Final Settlement Ms. Saima Shah, Employee
Equipment 75 43 32 28 (4) Final Settlement Ms. Nigar Fatima Jafri, Employee
Equipment 45 12 33 31 (2) Final Settlement Mr. Wamiq Rizvi, Employee
Equipment 30 8 22 22 -- Final Settlement Mr. Wamiq Rizvi, Employee
------------------ ------------------ ------------------ ------------------ ------------------
797 613 184 301 117
------------------ ------------------ ------------------ ------------------ ------------------
Furniture 4 4 -- 1 1 Negotiation Mr. I1yas Ahmed
Furniture 8 8 -- 1 1 Negotiation Mr. Ghulam Moiuddin
Furniture 37 37 -- 6 6 Negotiation Mr. Shahzad Aftab Alam
------------------ ------------------ ------------------ ------------------ ------------------
49 49 -- 8 8
------------------ ------------------ ------------------ ------------------ ------------------
June 2000 4,706 4,197 509 1,682 1,173
========== ========== ========== ========== ==========
June 1999 8,119 7,464 655 1,864 1,209
========== ========== ========== ========== ==========
(Rupees in 000's)
Note June 30 June 30
2000 1999
4. NET INVESTMENT IN LEASE FINANCE
Minimum lease rentals receivables 4,597,622 4,735,860
Add: Residual value of leased assets 591,481 627,203
------------------ ------------------
Gross investment in leases 4.3 5,189,103 5,363,063
------------------ ------------------
Less: Unearned finance income 4.3 1,175,641 1,362,298
Provision for potential lease losses 269,561 217,997
------------------ ------------------
1,445,202 1,580,295
------------------ ------------------
Net investment in leases 3,743,901 3,782,768
Less: Current maturity 1,616,536 1,599,326
------------------ ------------------
Long term portion of net investment 2,127,365 2,183,442
========== ==========
4.1 Minimum lease rentals receivables over the next twelve months amount to Rs. 1,335.482 million
(1999: Rs. 1,270.401 million).
4.2 Net investment in lease finance includes Rs. 122.793 million (1999: Rs. 118.633 million) in respect
of associated companies.
Maximum amount outstanding during the period was Rs. 139.749 million (1999: Rs. 140.597 million).
Gross Investment Present value of minimum
in Leases Lease Payment
(Rupees in 000's) (Rupees in 000's)
June 30 June 30 June 30 June 30
2000 1999 2000 1999
4.3 Less than one year 2,136,904 2,153,807 1,616,536 1,599,326
More than one year and less than
five years 2,947,836 3,123,148 2,308,209 2,364,973
More than five years 104,363 86,108 88,717 36,466
------------------ ------------------ ------------------ ------------------
5,189,103 5,363,063 4,013,462 4,000,765
Less: Unearned finance income 1,175,641 1,362,298 -- --
------------------ ------------------ ------------------ ------------------
4,013,462 4,000,765 4,013,462 4,000,765
========== ========== ========== ==========
5. LONG TERM INVESTMENTS
Listed companies - at average cost 26.2 12,819 21,974
Unlisted company 26.3 6,000 10,000
------------------ ------------------
18,819 31,974
------------------ ------------------
Less: Provision for decline in market value 17,593 17,593
Adjustment during the year (9,081) --
------------------ ------------------
8,512 17,593
------------------ ------------------
10,307 14,381
========== ==========
The provision for decline in value of long term quoted investments has been made to the extent of lower
of cost and market value and in case of unlisted company at the lower of cost and break-up value based
on latest available financial statements in order to comply with the requirement of Technical Release 23
issued by the Institute of Chartered Accountants of Pakistan. However, the management believes that
market value of long term quoted investments may or may not indicate the likelihood of ultimate recovery
of the carrying amount of quoted investments in view of the current market conditions.
(Rupees in 000's)
Note June 30 June 30
2000 1999
6. LONG TERM DEPOSITS
Foreign currency deposits 15.2.1 366,094 462,285
Less: Current maturity 104,598 102,730
------------------ ------------------
261,496 359,555
========== ==========
6.1 Hedges of Long Term Foreign Currency Borrowings
In the absence of exchange risk cover by the State Bank of Pakistan, the Corporation has
adopted an alternative method to hedge foreign exchange risk associated with its foreign
currency borrowings. This involves purchasing foreign currency from the secondary market,
placing the foreign currency on deposit and obtaining credit facilities against these deposits
in local currency on matching basis.
Premium paid on purchases of foreign currency from the secondary market is deferred
and is written off over the loan period (note 7 to the accounts).
The details of hedge transactions are as follows:
Long term foreign currency borrowings hedged by long term deposits are as follows:
(Rupees in 000's)
"Fifth" loan of Asian Development Bank 365,890
(Repayment commenced from March 15, 1999) ==========
Long term deposits to hedge long term borrowings are as follows:
Deposits in foreign currency with
First International Investment Bank Limited 183,047
==========
Pak Kuwait Investment Company (Private) Limited 183,047
==========
(Rupees in 000's)
June 30 June 30
2000 1999
7. LONG TERM ADVANCES, PREPAYMENTS AND DEFERRED COSTS
Advances to employees - Considered good 7.1 27,613 19,333
Less: Installments recoverable within one year 4,131 3,192
------------------ ------------------
23,482 16,141
Prepayments 1,906 3,534
Deferred Cost
Front end fee 3,348 4,312
Lees: Amortized during the year (787) (964)
------------------ ------------------
2,561 3,348
------------------ ------------------
Initial expenses incurred on issuance of TFCs 7.2 6,673 --
Less: Amortized during the year (738) --
------------------ ------------------
5,935 --
------------------ ------------------
8,496 3,348
------------------ ------------------
33,884 23,023
========== ==========
7.1 Advances to employees
These comprise advances to:
Chief Executive 1,904 3,142
Director 7,273 --
Executives 15,156 14,231
Other employees 3,280 1,960
------------------ ------------------
27,613 19,333
Less: Installments recoverable within one year 4,131 3,192
------------------ ------------------
23,482 16,141
========== ==========
Outstanding for period:
- Exceeding three years 18,680 11,922
- Others 4,802 4,219
------------------ ------------------
23,482 16,141
========== ==========
Maximum aggregate amount outstanding during the year
in respect of chief executive, director and executives 25,091 19,817
========== ==========
Advances to executives represent house, personal, transport and computer loans granted in accordance
with the Employee's Service Rules. The loan to chief executive was disbursed in 1997 with prior
approval of Securities and Exchange Commission of Pakistan (SECP), formerly Corporate Law
Authority. Loan to director was disbursed prior to his becoming a director and has been duly notified
to SECP.
House loan is repayable within twenty five years of service period with the restriction of settling
loan atleast two years before retirement. Personal loan is repayable in twenty-four equal monthly
installments. Transport and computer loans are repayable in forty-eight equal monthly installments.
7.2 Initial expenses incurred on issue of TFC's have been amortised over five years from their date of
occurrence as benefit of this issue shall be spread over coming years.
8. SHORT TERM FINANCES - Secured
Considered good
Finance under mark-up agreements 5,377 5,377
Less: Provision (5,377) (5,377)
------------------ ------------------
-- --
------------------ ------------------
Less: Provision (12,657) (13,040)
2,175 3,292
------------------ ------------------
Against local currency COIs 569 15
Bridge finance 28,500 28,500
Less: Provision (12,030) (12,030)
------------------ ------------------
16,470 16,470
------------------ ------------------
Advance against letters of credit 1,248 1,248
Less: Provision (1,248) (11)
------------------ ------------------
-- 1,237
Advance against lease 34,687 --
------------------ ------------------
53,901 21,014
========== ==========
9. SHORT TERM INVESTMENTS
Government Securities 9.1 54,348 105,000
Shares in listed companies
- Trading portfolio 26.1 33,189 50,545
[market value Rs. 17.820 million
(1999: Rs. 20.915 million)]
Less: Provision for decline in market value 29,630 31,495
Adjustment during the year (14,261) (1,865)
------------------ ------------------
15,369 29,630
------------------ ------------------
17,820 20,915
KESC bonds - purchase under resale commitments
[aggregate face value Rs. 35 million (1999: Nil)] 35,000 --
Special US dollar bonds 9.2 27,091 --
------------------ ------------------
134,259 125,915
========== ==========
9.1 GOVERNMENT SECURITIES
Federal Investment Bonds - at cost 505,000 355,000
(including FIBs of Rs. 100 million
purchased on resale commitment)
[aggregate face value Rs. 505 million
(1999: Rs. 355 million)]
Sale under repurchase commitments
[aggregate face value Rs. 500 million (500,652) (250,000)
(1999: Rs. 250 million)]
------------------ ------------------
4,348 105,000
Wapda bearer bonds - purchase under resale commitments
[aggregate face value Rs. 50 million (1999: Nil)] 50,000 --
------------------ ------------------
54,348 105,000
========== ==========
The management of the Corporation does not intend to hold the portfolio until maturities.
9.2 Special US dollar bonds
These represents investment made in Special US dollar bonds issued by Government of Pakistan
upon conversion of the Corporation's foreign currency deposit account. These have a maturity
period of 3 years, and are tradeable at Stock Exchanges in Pakistan. These carry mark-up of LIBOR
plus 2% per annum receivable half yearly from the date of issue.
The management of the Corporation does not intend to hold the portfolio until maturities.
10. ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Current portion of advances to chief executive 1,263 1,238
Current portion of advances to director 689 --
Current portion of advances to executives 1,772 1,408
Current portion of advances to other employees
Deposits 407 546
Prepayments 882 831
Other receivables-net of provision for doubtful 6,771 4,686
receivables amounting to Rs. 7.662 million
(1999: Rs. 7.662 million) 10.1 85,404 169,639
------------------ ------------------
97,188 178,348
========== ==========
10.1 Other receivables include Rs. 64.040 million (1999: Rs. 149.685 million) in respect of amount
receivable from State of Pakistan/Ministry of Finance against exchange risk fee.
11. CASH AND BANK BALANCES
In hand:
- Cash 142 79
- Cheques 1,102 49,856
With banks:
- Current account 22,695 35,636
- Profit and loss sharing accounts
* Financial institutions 1,051 1,519
* Scheduled banks 61,816 17,346
------------------ ------------------
62,867 18,865
------------------ ------------------
86,806 104,436
========== ==========
12. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
33,395,943 (1999: 33,395,943) ordinary shares
of Rs. 5 each fully paid in cash 166,979 166,979
42,084,057 (1999: 42,084,057)ordinary shares
of Rs. 5 each issued as bonus shares 210,421 210,421
------------------ ------------------ ------------------
75,480,000 377,400 377,400
========== ========== ==========
13. RESERVES
Capital Reserves
- Reserve for contingencies 13.1 44,241 44,241
- Special reserves (Reserve Fund) 13.2
Balance at the beginning of the year 42,339 37,837
Transfer from Profit and loss account 3,657 4,502
------------------ ------------------
Balance at the end of the year 45,996 42,339
- Premium on issue of shares 90,334 90,334
- Deferred taxation 13.3
Balance at the beginning of the year 68,410 --
Transfer from Profit and loss account 50.84 68,410
------------------ ------------------
Balance at the end of the year 119,252 68,410
------------------ ------------------
299,823 245,324
Revenue Reserves
General Reserves
Balance at the beginning of the year 609,590 649,000
Transfer from profit and loss account 4,000 29,000
Transfer to profit and loss account for deferred taxation (50,842) (68,410)
Balance at the end of the year 562,748 609,590
Unappropriated profit 512 1,075
------------------ ------------------
863,083 855,989
========== ==========
13.1 The reserve for contingencies is a specific purpose reserve created to provide for possible
losses on lease receivables which the directors consider, at present, not available for dividend
distribution.
13.2 The special reserve represents profit set aside as required under the Prudential regulations
Non Banking Financial Institutions.
13.3 The deferred taxation reserve has been created in compliance of Circular 16 of 1999 of the Securities
and Exchange Commission of Pakistan issued on September 09, 1999.
14. REDEEMABLE CAPITAL - non participatory
Term Finance Certificates-secured 500,120 --
Less: Current portion 200 --
------------------ ------------------
499,920 --
========== ==========
The Corporation issued five years Term Finance Certificates (TFCs) amounting to Rs. 500,220,000
during the year at an expected rate of 17% per annum, redeemable in ten semi annual installments.
These arc secured by first hypothecation charge over all present and future leased assets and corresponding
rentals receivable, excluding those specific leased assets and receivables that have been charged/
hypothecated in favour of the existing creditors. TFCs issued to institutional investors are in sets of 10
TFCs with each set having an aggregate face value of Rs. 100,000. TFCs issued to general public are in
sets of 10 TFCs with each set having an aggregate face value of Rs. 5,000.
15. LONG TERM FINANCES
15.1 Refinance Credits from State Bank of
Pakistan - unsecured
* Fourth PLS finance of Rs. 150 million -- 3.46
* Seventh PLS finance of Rs. 68.666 million -- 2,297
------------------ ------------------
-- 5,753
Less: Current maturities -- 5,753
------------------ ------------------
-- --
========== ==========
15.2 Loans from Asian Development Bank
- secured 15.2.1
* Fourth loan of Rs. 251.516 million -- 20,960
* Fifth loan of Rs. 407.028 million 365,890 467,100
------------------ ------------------
365,890 488,060
Less: Current maturities 104,540 124,760
------------------ ------------------
261,350 363,300
========== ==========
15.3 Loan from the Export - Import Bank
of Korea - secured 15.3.1
* Credit facility of Rs. 119.122 million 99,268 109,195
Less: Current maturity 9,927 9,927
------------------ ------------------
89,341 99,268
========== ==========
15.4 Loan from International Finance
Corporation - secured 15.4.1
Loan 'A' of Rs 382.242 million 150,508 193,510
Less: Current maturity 43,002 43,002
------------------ ------------------
107,506 150,508
========== ==========
15.5 Loans from Muslim Commercial
Bank Limited - secured 15.5.1
* Credit facility of Rs. 24.803 million 18,463 22,323
* Credit line of Rs. 29.364 25,360 29,364
------------------ ------------------
43,823 51,687
Less: Current maturities 9,378 7,864
------------------ ------------------
34,445 43,823
========== ==========
15.6 Loan from First International Investment
Bank Limited - secured 15.6.1
Credit facility of Rs. 200.6 million 140,420 180,540
Less: Current maturity 40,120 40,120
------------------ ------------------
100,300 140,420
========== ==========
15.7 Loans from Askari Commercial Bank
Limited - secured 15.7.1
* Credit facility of Rs. 15.072 million 5,205 10,088
* Credit facility of Rs. 20 million -- 8,333
------------------ ------------------
5,205 18,421
Less: Current maturities 5,205 13,216
------------------ ------------------
-- 5,205
========== ==========
15.8 Loans from Pakistan Kuwait Investment
Company (Private) Limited - secured 15.8.1
* Credit facility of Rs. 191.648 million 134,140 172,475
* Credit facility of Rs. 40 million 35,435 --
------------------ ------------------
169,575 172,475
Less: Current maturities 48,450 38,336
------------------ ------------------
121,125 134,139
========== ==========
15.9 Loans from Habib Bank Limited -secured 15.9.1
* Credit facility of Rs. 75 million 37,500 62,500
* Credit facility of Rs. 131.258 million -- 122,677
------------------ ------------------
37,500 185,177
Less: Current maturities 25,000 63,259
------------------ ------------------
12,500 121,918
========== ==========
15.10 Loans from Prime Commercial Bank
Limited - secured 15.10.1
* Credit facility of Rs. 24.386 million -- 24,386
* Credit facility of Rs. 35.614 million 20,754 34,378
------------------ ------------------
20,754 58,764
Less: Current maturities 11,772 20,542
------------------ ------------------
8,982 38,222
========== ==========
15.11 Loans from Gulf Commercial Bank
Limited 15.11.1
* Credit facility of Rs. 50 million - unsecured 50,000 50,000
* Credit facility of Rs 113.765 million - secured 84,465 --
------------------ ------------------
134,465 50,000
Less: Current maturities 95,230 --
------------------ ------------------
39,235 50,000
========== ==========
Long term portion 774,784 1,146,803
========== ==========
Current maturities 392,624 366,779
========== ==========
15.2.1 Loan from Asian Development Bank (ADB) - secured
- Fourth loan - US$ 10 million equivalent to Pak Rupees 407.028 million
Interest on this loan is payable at six months LIBOR plus margin of 2.25% per annum.
The loan is secured by hypothecation of specific leased assets and related receivables. The loan
is repayable in ten semi-annual installments which commenced from March 15, 1999.
15.3.1 Loan from The Export - Import Bank of Korea - secured
- Loan of KW 3, 459.180 million equivalent to Pak Rupees 119.122 million
The Corporation has entered into a subsidiary loan agreement with Government of Pakistan to
participate into the Economic Development Corporation Fund of the Export - Import Bank of
Korea for Industrial Equipment Leasing. The loan is carrying return at the rate of 11% per
annum.
The loan is repayable in twenty-four equal half-yearly installments commenced from
November 20, 1998.
15.4.1 Loan from International Finance Corporation (IFC) - secured
- Loan 'A' US$ 12.5 million equivalent to Pak Rupees 382.242 million
This represents borrowing for the structuring of lease financing, mainly for industrial plant and
equipment. The return on these funds is payable at 8.5% per annum directly to IFC. In addition,
an exchange risk fee at 6.66% per annum based on Pak Rupee equivalent of the amount
withdrawn and outstanding is payable to the Government of Pakistan.
The loan is secured by hypothecation of specific leased assets and related receivables. The loan
is repayable in sixteen semi-annual equal installments which commenced from June 15, 1996.
15.5.1 Loans from Muslim Commercial Bank Limited-secured
- Credit line of Rs. 24.803 million
This facility is repayable in twenty quarterly installments commenced from November 05,
1998 and carrying mark-up at the rate of 18% per annum payable on quarterly basis. The
facility is secured by first charge over leased assets and related receivables.
- Credit line of Rs. 29.364 million
This facility is repayable in twenty quarterly installments which commenced from September
30, 1999 and carrying mark-up at the rate of 18% per annum payable on quarterly basis. The
facility is secured by charge over leased assets and related receivables.
15.6.1 Loan from First International Investment Bank Limited - secured
- Credit line of Rs. 200.6 million
This represents loan against the security of long term U.S. dollar deposits. This loan is repayable
in ten equal installments. The first installment commenced from March 15, 1999. The remaining
installments are repayable on hall'-yearly basis which are linked to the maturity of long term
deposits. The return is payable at the rate ranging from 14.275% to 14.90% per annum on
quarterly basis.
15.7.1 Loan from Askari Commercial Bank Limited
- Credit line of Rs. 15.072 million
This facility is repayable in twelve quarterly installments which commenced from June 9, 1998
and carrying mark-up at the rate of 18.50% per annum payable on quarterly basis. This facility
is secured by first hypothecation charge over specific leased assets and related receivables.
15.8.1 Loans from Pakistan Kuwait Investment Company (Private) Limited - secured
- Credit line of Rs. 191.648 million - secured
This represents credit facility of Rs.191.648 million against the security of long term U.S.
dollar deposits. This loan is repayable in twenty four installments. The first installment
commenced from March 15, 1999. The remaining installments are repayable on half yearly
basis which are linked to the maturity of the long term deposits, while mark-up is payable at
the rate ranging from 13.79% to 15.07% per annum.
- Credit line of Rs. 40.0 million - secured
This represents credit facility of Rs. 40 million against the security of long term U.S. dollar
deposits. This loan is repayable in eight installments payable half yearly commenced from
March 15, 2000 and are linked to the maturity to the long term deposits, while mark-up is
payable on semi - annual basis at the rate of 16.50% per annum.
15.9.1 Loan from Habib Bank Limited
- Credit line of Rs. 75 million - secured
This facility is repayable in six bi-annual installments commenced from June 10, 1999 and
carrying mark-up at the rate of 17.50% per annum payable on bi-annual basis. The facility is
secured by first charge over specific leased assets and related receivables.
15.10.1 Loan from Prime Commercial Bank Limited - secured
- Credit line of Rs. 35.614 million - secured
This facility is repayable in thirty-six monthly installments commencing from June 12, 1999
and carrying mark-up at the rate of 17% per annum payable on monthly basis. The facility is
secured by first charge over specific leased assets and related receivables.
15.11.1 Loans from Gulf Commercial Bank Limited - unsecured
- Credit facility of Rs. 50.0 million - unsecured
This represents a Rs.50 million facility carrying mark-up at the rate of 16.50% per annum.
The facility is repayable on July 04, 2000 in lump sum together with the mark-up thereon.
- Credit line of Rs 113.765 million - secured
This facility is repayable in ten quarterly installments commenced from December 20, 1999
and carrying mark-up at the rate of 18.50% per annum payable on quarterly basis. This facility
is secured by first charge over specific leased assets and related receivables.
16. CERTIFICATES OF INVESTMENT
This represents Certificates of Investment issued by the Corporation in local and foreign currencies.
These are for terms of three months to five years and expected return is paid on a profit and loss sharing
basis.
Maturities falling within the next twelve months are included under current maturities.
17. DEPOSITS ON LEASE CONTRACTS
These represent security deposits received against lease contracts.
18. SHORT TERM FINANCES
(under mark-up arrangement)
Morabaha Finance - secured
Term Finance -- 50,000
Banks and other Financial institutions-secured
- From bank -- 25,000
- From other financial institution 18.1 26,825 --
------------------ ------------------
26,825 25,000
Banks and other financial institutions-unsecured
- From banks 18.2 250,000 104,000
- From other financial institutions -- 100,000
------------------ ------------------
250,000 204,000
Others-unsecured -- 169,000
------------------ ------------------
276,825 398,000
Running finance - secured 18.3 35,001 31,200
------------------ ------------------
311,826 479,200
========== ==========
18.1 This represents facility from an investment bank amounting to Rs.26.825 million. It is secured
by the pledge of Special US dollar bonds (note 9.2 to the accounts). Markup is payable on this
facility at the rate of return on rupee counter part plus 2.25% per annum.
18.2 These represent facilities from different banks. Mark-up is payable at rates ranging from
11.25% to 13.00% per annum.
18.3 This represent a facility from a scheduled bank amounting to Rs. 40 million (1999: Rs.65
million) carrying mark up at rate of 0.3836 paisas per rupees 1,000 per day on a daily product
basis. These arrangements are secured by charge over specific lease assets and related receivables.
19. ACCRUED EXPENSES AND OTHER LIABILITIES
These comprise:
Financial charges on redeemable capital 6,522 --
Financial charges on long term finances - secured 41,676 151,426
         - unsecured 8,883 642
Financial charges on short term finances - secured 1,332 7,721
         - unsecured 4,865 6,247
Return on certificates of investment 29,302 50,911
Advance rentals 11,343 738
Due to lessees 22,155 30,224
Accrued liabilities 5,255 4,228
Other liabilities [ includes unclaimed dividend 19,225 16,551
Rs. 0.972 million (1999: Rs 0.780 million)]
------------------ ------------------
150,558 268,688
========== ==========
20. TAXATION
20.1 Current
Income-tax assessments of the Corporation have been completed for and upto the assessment
year 1999-2000 (accounting year 1998-99). The Corporation has filed appeals in respect of
various assessment years at appropriate appellate forums against certain add-backs to income
and is of the opinion that these appeals will be successful.
20.2 Deferred
Accumulated deferred taxation arising out of timing differences between book and
income tax revenues or charges is estimated at Rs. 271.751 million (1999: Rs. 259.319
million). The Corporation has appropriated Rs.50.842 million in the current financial
year (year todate Rs. 119.252 million) to achieve compliance with Circular 16 of 1999
of Securities and Exchange Commission of Pakistan. Timing differences amounting to
Rs. 152.499 million, therefore remain unappropriated.
21. CONTINGENCIES AND COMMITMENTS
21.1 Contingencies
Guarantees issued -- 1,219
========== ==========
21.2 Commitments
(i) Letters of credit 12,239 12,239
(ii) Government securities repurchase commitments 500,652 250,000
========== ==========
22. INCOME FROM INVESTMENTS/FINANCES
Income from Government securities 17,970 24,383
Income from other investments 22.1 8,171 3,794
------------------ ------------------
26,141 28,177
------------------ ------------------
Income from long term finances 31,283 372,631
Income from short term finances 1,096 34,698
------------------ ------------------
32,379 71,961
------------------ ------------------
58,520 100,138
========== ==========
22.1 Income from other investments
Dividend income 583 1,129
Return on redeemable capital certificates/TFCs 7,588 2,665
------------------ ------------------
8,171 3,794
========== ==========
23. OTHER INCOME
Fee, commission and exchange gain 23.1 12,279 10,839
Income from bank deposits 4,846 10,309
Profit on disposal of fixed assets 1,173 1,209
Others 4,565 3,698
------------------ ------------------
22,863 26,055
========== ==========
23.1 Fee, commission and exchange gain - Fee 5,558 5,482
          - Commission 42 699
          - Exchange gain 6,679 4,658
------------------ ------------------
12,279 10,839
========== ==========
24. FINANCIAL CHARGES
Mark-up on redeemable capital 50,558 --
Long term finances - secured 179,180 191,033
- unsecured 8,317 2,903
Short term finances - secured 16,652 47,721
- unsecured 33,144 47,643
Bank charges 204 406
Commission and brokerage 571 1,182
Others 8,937 11,176
------------------ ------------------
297,563 302,064
========== ==========
25. ADMINISTRATIVE AND OPERATING EXPENSES
Directors' fee 25.1 -- 1
Salaries and benefits 25.3 51,160 45,697
Staff welfare and training 600 556
Employees' Benefits 3,369 --
Rent 6,129 5,523
Insurance 3,538 4,185
Utilities 4,400 3,902
Stationery and supplies 1,267 1,135
Vehicle running expenses 3,888 3,491
Travelling 1,946 1,244
Legal and professional charges 25.4 6,914 6,400
Depreciation 9,875 9,613
Donation 25.5 50 --
Advertisement 561 292
Repairs and maintenance 2,437 2,098
Other expenses 3,187 2,812
------------------ ------------------
99,321 86,949
========== ==========
25.1 Directors' fee
No fee was paid to the directors (1999: Rs. 1,000 was paid to one director) for attending
board meetings of the Corporation.
25.2 Remuneration of chief executive, director and other executives
Chief Executive Director Executives
(Rupees in 000's) (Rupees in 000's) (Rupees in 000's)
June 30 June 30 June 30 June 30 June 30 June 30
2000 1999 2000 1999 2000 1999
Managerial remuneration 1,969 1,750 1,440 -- 11,625 10,404
Housing and utilities 1,068 1,000 679 -- 6,668 5,762
Medical expenses 149 126 48 -- 969 867
Conveyance -- -- -- -- 280 --
Provident fund & gratuity 366 326 324 -- 2,131 1,763
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
3,552 3,202 2,491 -- 21,673 18,796
========== ========== ========== ========== ========== ==========
Number of persons 1 1 1 -- 50 46
========== ========== ========== ========== ========== ==========
The chief executive, director and certain executives are also entitled to free use of Corporation
maintained cars and certain items of household, furniture and fixtures in accordance with
their entitlement.
25.3 Salaries and Benefits
These include Rs 4,265,894 (1999: Rs. 3,735,539) for staff retirement benefits.
(Rupees in 000's)
June 30 June 30
2000 1999
25.4 Auditors' remuneration
Legal and professional charges include:
Annual audit fee   200 200
Other certifications 60 105
Out-of-pocket expenses 35 35
------------------ ------------------
295 340
========== ==========
25.5 Donation
The directors of the Corporation or their spouses had no interest in the donees to
whom donation was given.
26. INVESTMENT IN LISTED ! UNLISTED COMPANIES / MODARABAS
No. of Shares Investment in Listed Short term Long term
Certificates Companies/Modarabas investments investments
Held (Rupees in 000's)
June 2000 June 1999 June 2000 June 1999 June 2000 June 1999
-- 12,273 First Habib Bank Modaraba -- 165
5 5 Mohib Textile Mills Ltd. -- --
540 450 Sakrand Sugar Mills Ltd. 5 5
100 100 Yousaf Weaving Mills Ltd. 2 2
65,746 65,746 First Mehran Modaraba 1,043 1,043
112 80 Nishat (Chunian) Ltd. -- 1
87 87 Brother Textile Mills Ltd. 2 2
-- 40,595 First Prudential Modaraba -- 442
-- 3,500 L.T.V.C.M. (Face value Rs 5 per share) -- 27
902 902 Gulshan Spinning Mills Ltd. 33 33
-- 9,697 Third Prudential Modaraba -- 78
1 31,398 First Fidelity Leasing Modaraba -- 617
14,200 14,200 First Crescent Modaraba 267 267
39,000 39,000 Awan Textile Mills Ltd. 390 390
8,320 8,320 Pioneer Cables Ltd. 225 225
130,000 28,955 Sui Northern Gas Pipelines Ltd. 2,565 606
165,000 425 I.C.I. Pakistan Ltd. 2,748 10
13,550 13,834 Nishat Mills Ltd. 539 550
20,000 20,000 Allied Motors Ltd. 305 305
2,000 3,000 Capital Assets Leasing Ltd. 21 32
-- 8,065 Crescent Investment Bank Ltd. -- 517
-- 7,004 Crescent Steel Ltd. -- 500
-- 24,100 D.G. Khan Cement Ltd. -- 1,671
-- 13,000 Fecto Cement Ltd. -- 678
200,000 200,000 Glamour Textile Mills Ltd. 5,016 5,016
7,500 8,376 P.I.L. Corp. Ltd. 429 479
.... carried forward
.... brought forward
-- 20,775 Searle Pakistan Ltd. -- 1,305
-- 1,980 Soneri Bank Ltd. -- --
333 333 Tri Star Polyestar Ltd. 6 6
100 100 Trust Modaraba 1 1
200,000 -- FFC Jordan Fertilizer Co. Ltd. 2,883 --
8,000 8,000 Gulistan Spinning Mills Ltd. 279 279
50 50 Ansari Sugar Mills Ltd. -- --
10 500 Security Investment Bank Ltd. -- 17
1,037 984 Union Bank Ltd. 18 36
-- 11,200 Lucky Cement Ltd. -- 232
12,205 12,205 Asian Leasing Corporation Ltd. 417 417
6,000 6,000 Pakistan Telecommunication Company Ltd 290 290
-- 1,310 Karachi Electric Supply Corporation Ltd. -- 4
-- 6,750 Maple Leaf Cement Ltd. -- 464
9,500 9,975 K.A.S.B. & Co. Ltd. 557 585
906,788 906,788 K.A.S.B. Premier Fund Ltd. 9,068 9,068
-- 20,000 Dhan Fibres Ltd. -- 262
28,000 18,911 Sui Southern Gas Co. Ltd. 502 449
-- 7,001 General Tyres & Rubber Co. Ltd. -- 240
-- 100,000 D.G. Electric Ltd. -- 3,100
300 561,500 Ibrahim Fibres Ltd. 5 8,984
171,473 171,473 L.T.V.C.M. - RCC 5,573 11,145
(Face value Rs.65 per certificate)
------------------ ------------------
26.1 Sub Total 33,189 50,545
------------------ ------------------
Aggregate market value 17,820 20,915
------------------ ------------------
1,000,000 1,000,000 K.A.S.B. Premier Fund Ltd. (Pre IPO) 10,000 10,000
-- 648,487 Agriautos Industries Ltd. -- 4,864
-- 200,000 Elahi Electric Ltd. -- 4,291
10,000 10,000 Chakwal Cement Ltd. - GDR 2,819 2,819
(face value Rs 11.275 per share)
------------------ ------------------
26.2 Sub Total 12,819 21,974
------------------ ------------------
Aggregate market value 4,307 5,671
------------------ ------------------
Investment in Unlisted Company
600,000 1,000,000 Mac Pac Films Ltd. 6,000 10,000
(Mr. Maqbool Ellahi-Chief Executive)
------------------ ------------------
26.3 Sub Total 6,000 10,000
------------------ ------------------
Aggregate market value 6,728 8,710
------------------ ------------------
26.4 Total Short Term Investments 33,189 50,545
========== ==========
26.5 Total Long Term Investments 18,819 31,974
========== ==========
Unless otherwise stated holdings are in ordinary shares / certificates of Rs. 10 each.
Investment with a carrying value of Rs. 0.874 million (1999: Rs. 0.996 million) are not held in the name of
the Corporation but are covered by blank transfer deeds.
27. CREDIT RISK AND CONCENTRATION OF CREDIT RISKS
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and
cause the other party to incur a financial loss. The Corporation attempts to control credit risk by monitoring
credit exposures, limiting transactions with specific counterparties and continually assessing the credit
worthiness of counterparties.
Concentration of credit risk arise when number of counterparties are engaged in similar business activities,
or have similar economic feature that would cause their ability to meet contractual obligation to be
similarly affected by changes in economic, political or other conditions.
Maximum credit risk in respect of Net Investment in Lease Finance is to the extent of the amount
mentioned in note 4 to the financial statements.
Details of the sector analysis of leases portfolio is given below:
2000 1999
(Rupees in 000's) % (Rupees in 000's) %
Industry Sector
Auto & Allied  255,455 6.82 204,041 5.39
Cement 728,469 19.46 690,694 18.26
Chemical and Fertilizer 221,408 5.91 212,808 5.63
Electrical and Electronics 165,064 4.41 51,572 1.36
Energy, Oil and Gas 656,592 17.54 719,278 19.01
Entertainment and Advertisement 30,551 0.82 41,225 1.09
Financial Institutions 65,666 1.75 68,481 1.81
Food, Tobacco and Beverages 108,937 2.91 61,573 1.63
Glass and Ceramics 26,996 0.72 21,700 0.57
Health and Pharma 68,556 1.83 29,932 0.79
Hosiery and Ready-made 17,305 0.46 10,300 0.27
Hotels 47,318 1.26 6,452 0.17
Leather and Footwear 4,633 0.12 1,635 0.04
Paper and Boards 62,601 1.67 134,140 3.55
Retail 9,394 0.25 4,152 0.11
Services 51,392 1.37 18,642 0.49
Steel and Engineering 48,495 1.30 119,383 3.16
Sugar and Allied 239,916 6.41 405,871 10.73
Synthetic Polyester 34,105 0.91 71,589 1.89
Textile 555,432 14.84 662,798 17.53
Transport and Communication 63,742 1.70 65,778 1.74
Constru