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Ibrahim Leasing Limited
Annual Report 2001
Contents
Company Information
Notice of Meeting
Directors' Report to the Shareholders
Auditors' Report to the Members
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
Abdul Aziz Khan
(Chief Executive)
Mohammad Naeem Mukhtar
Asim Yaseen
Anwarul Haque
3alees Jalees
Masood Arshad
Mohammad Afzal
Secretary
Anwarul Haque
B.Com., FCA
Auditors
M. Yousuf Adil Saleem & Co.,
Chartered Accountants,
Lahore, Pakistan.
Tax Consultants
F. R. Merchant & Co.,
Chartered Accountants,
Karachi, Pakistan.
Information Technology Consultants
KPMG Peat Marwick
Associates (Pvt) Limited
Karachi, Pakistan.
Bankers
Al-Faysal Investment Bank Limited
Al-Baraka Islamic Bank
Askari Commercial Bank Limited
Faysal Bank Limited
Muslim Commercial Bank Limited
The Bank of Punjab
Registered Office/Share Department
Ibrahim Centre,
GK-7/59, Bagh-e-Zehra Street
Kharadar
Karachi, Pakistan.
Head Office
Ibrahim Centre,
l-A, Jalees Block,
New Garden Town,
Lahore, Pakistan.
Notice of Meeting
Notice is hereby given that the 8th Annual General Meeting of the shareholders of the company will be held
on December 27, 2001 at 11:30 a.m. at F-352, S.I.T.E., Karachi to transact the following business:-
Ordinary Business
1. To confirm the minutes of the preceding meeting of the shareholders of the company.
2. To consider and approve the Annual Audited Accounts of the company for the year ended
June 30, 2001.
3. To appoint Auditors for the year 2001-2002 and to fix their remuneration. The present auditors
M/s. M. Yousuf Adil Saleem & Co., Chartered Accountants, being eligible for appointment, offer themselves
for re-appointment.
Special Business
4. To consider and, if thought fit, pass with or without modification, the following resolution as Special
Resolutions to amend Clause-II of the Memorandum of Association of the Company for the shifting of
Registered Office from the Province of Sindh to the Province of Punjab with the approval of shareholders
and the Securities and Exchange Commission of Pakistan, Islamabad.
Special Resolutions
"Resolved that the Registered Office of the Company be and is hereby shifted from the Province of Sindh to the Province of
Punjab."
"Further resolved that the Clause-II under the heading of "Registered Office" of the Memorandum of Association of the Company
be and is hereby substituted with the following:
"The Registered Office of the Company will be situated in the Province of Punjab."
"Further resolved that the Company Secretary be and is hereby authorised to do all acts to effect the special Resolution and
comply with all the necessary requirements under the Companies Ordinance, 1984 in this behalf."
STATEMENT UNDER SECTION 160(1) (b) OF THE COMPANIES ORDINANCE, 1984
i. The statement sets out the material facts concerning the Special Business to be transacted at the 8th
Annual General Meeting of the Company to be held on December 27, 2001.
ii. The Board of Directors of the Company had decided in their meeting that with the approval of the
shareholders and the Securities and Exchange Commission of Pakistan, Islamabad the registered office
of the company be shifted from the Province of Sindh to the Province of Punjab in order to facilitate the
company to carry out its related operational activities more effectively as the principal office of the
leasing business is functioning at Lahore in the Province of Punjab since the start of the leasing
business. The management considers that it is practically and economically expedient to shift the
registered office of the Company to Lahore.
iii. The Directors of the Company have no interest in the special business and/or the Special Resolution
except to the extent to their shareholdings and remuneration in the Company. The said alteration will
not affect anyone's interest unfavourably in the Company.
5. To transact any other ordinary business of the Company with the permission of the Chair.
By order of the Board
Karachi. Anwarul Haque
November 10, 2001 Company Secretary
Notes:
1. Share Transfer Books of the Company will remain closed from 18-12-2001 to 27-12-2001 (both days inclusive).
2. All Members are entitled to attend and vote at the Meeting.
3. A Member entitled to attend and vote at the meeting is entitled to appoint any other Member as proxy to attend, speak and vote
for him/her.
4. An instrument of proxy applicable for the meeting (in which you can direct the proxy how you wish him/her to vote) is being
provided with the notice sent to the Members. Further copies of the instrument of proxy may be obtained from the Registered
Office of the Company during normal office hours.
5. An instrument of proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified
copy of such power of attorney, must be valid and deposited at the Registered Office of the Company not less than 48 hours before
the time of the Meeting.
6. In case of Proxy for an individual Beneficial Owner of CDC, attested copies of beneficial owner's NIC or passport. Account and
Participant's I.D. numbers must be deposited alongwith the Form of Proxy. In case of proxy representative of corporate members
should bring the usual documents required for such purpose.
7. Shareholders are requested to notify immediately changes, if any, in their registered address.
Directors' Report to the Shareholders
The Board of Directors of your company is pleased to present before you the 8th Annual Report together with
the Audited Financial Statements of the company for the year ended June 30, 2001.
Financial Results
Financial results of your company for the year ended June 30, 2001 are summarized as under:
Rupees
Gross revenue 73,243,249
Expenditure 36,127,514
Provision for potential lease losses 10,000,000
Profit before taxation 27,115,735
Provision for taxation 605,000
Profit after taxation 26,510,735
Un-appropriated profit brought forward 5,810,992
Profit available for appropriation 32,321,727
Appropriations:
Special reserve 5,302,147
Capital reserve 14,000,000
------------------
Un-appropriated profit carried forward 13,019,580
==========
Earning per share 1.16
==========
During the year under review, the merger of First Ibrahim Modaraba with your company has been completed
as per Scheme of Arrangement approved by the Honourable High Court of Sindh at Karachi on May 16, 2001.
This merger has enabled the company to increase the paid up capital to Rs.228.500 million and hence complied
with the statutory requirements of raising the minimum paid up capital to Rs.200.00 million by the end of
3une 30, 2001. The financial results presented before you are reflective of the combined position after merger
of First Ibrahim Modaraba with your company. Your company will be better off after the enhancement in the
capital base and the notable changes in financial results will be reflected in the next year.
The company has generated revenue of Rs.73.24 million during the year. Profit after taxation for the year is
Rs.26.51 million. To maintain the financial health of the company, the management considered it appropriate
to transfer Rs.10.00 million towards allowance for potential lease losses from current year's profit.
Net investments in leases has increased to Rs.379.60 million as on 3une 30, 2001 when compared to Rs.307.87
million of previous year. As the management continued its policy to write leases to selective clients only, the
company has maintained a well-diversified lease portfolio with low risk profile. Sector-wise and asset-wise
lease portfolio is annexed in graphical presentation.
Your company has been able to arrange long/short term funds successfully from different banks and DFIs to
finance its leasing business, as and when required. This is the result of a satisfactory track record of financial
dealings with the lenders during the last seven years. We hope to continue this relationship on a long term
basis.
Adequate commitments are also in hand to raise funds for future business requirements of the company.
Future Prospects
The Government is emphasizing on promotion of small and medium size enterprises, value addition, oil & gas
development and communication & information technology. This will generate investment activities and put
the economy back on track. Your company will also play its role by accelerating the investment in selective
portfolio, maintaining adequate liquidity and controlling the expenses to support its top priority commitments
of prospective development.
Auditors
The present auditors M/s M. Yousuf Adil Saleem & Co., Chartered Accountants, being due for retirement, have
offered themselves for re-appointment for the year ending June 30, 2002.
Pattern of shareholding
Pattern of share holding as on June 30, 2001 is annexed.
Acknowledgment
We wish to place on record gratitude to our valued clients, regulatory authorities, banks & financial institutions
and also to shareholders for their continued support to the company. We also appreciate the efforts and
dedication shown by the staff of the company for managing the company's affairs successfully.
On behalf of the Board
Karachi Abdul Aziz Khan
November 10, 2001 Chief Executive
Auditors' Report to the Members
We have audited the annexed balance sheet of IBRAHIM LEASING LIMITED as at June 30, 2001 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 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 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;
(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,
2001 and of the Profit, its cash flows and changes in equity for the year then ended; and
(d) in our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980
(XVIII of 1980).
Lahore. M. Yousuf Adil Saleem & Co.
November 10, 2001 Chartered Accountants
Balance Sheet as at June 30, 2001
2001 2000
Note Rupees Rupees
Capital and reserves
Authorised capital
30,000,000 ordinary shares of Rs.10/- each 300,000,000 100,000,000
========== ==========
Issued, subscribed and paid-up capital
22,850,000 ordinary shares of Rs.10/- each
fully paid 3 228,500,000 100,000,000
Special reserve 4 48,125,071 18,372,120
Capital reserve 5 24,300,000 10,300,000
Reserve for issue of bonus shares -- 12,500,000
Un-appropriated profit 13,019,580 688,481
------------------ ------------------
313,944,651 141,860,601
Long term loans 6 13,416,669 23,983,335
Long term security deposits 7 41,614,262 33,764,218
Deferred liabilities
Gratuity 2,402,900 1,650,748
Current liabilities
Short term borrowings - secured 8 15,012,762 73,223,598
Current portion of long term liabilities 9 42,229,772 36,225,733
Creditors, accrued and other liabilities 10 2,503,228 2,977,941
Unclaimed dividend 2,750,316 1,614,911
Provision for taxation 1,491,000 886,000
------------------ ------------------
63,987,078 114,928,183
------------------ ------------------
435,365,560 316,187,085
========== ==========
Operating fixed assets 11 2,562,926 2,042,107
Net investment in lease finance 12 237,852,912 189,292,003
Long term investments in securities 13 2,856,076 650,000
Long term deposits and deferred costs 14 2,483,566 489,733
Current assets
Current portion of net investment
in lease finance 12 124,246,634 111,079,366
Morabaha Financing 22,580,000 --
Advances, deposits, prepayments and
other receivables 15 4,341,797 12,068,982
Cash and bank balances 16 38,441,649 564,894
------------------ ------------------
189,610,080 123,713,242
------------------ ------------------
435,365,560 316,187,085
========== ==========
The annexed notes from 1 to 27 form an integral part of these accounts.
Abdul Aziz Khan Mohammad Naeem Mukhtar
Chief Executive Director
Profit and Loss Account
for the year ended June 30, 2001
2001 2000
Note Rupees Rupees
Revenue
Income from tease operations 17 48,455,049 42,349,849
Morabaha Income 4,715,077 --
Musharaka Income 19,316,690 --
Profit on bank deposits 722,753 139,451
Dividend income 33,680 1,242,600
Other income 18 -- 2,078,247
------------------ ------------------
73,243,249 45,810,147
Expenditure
Financial charges 19 25,880,137 20,345,200
Administrative and operating expenses 20 10,145,723 7,085,620
Deferred cost amortized 14.1 92,099 207,713
Provision for potential tease tosses 10,000,000 2,500,000
Other Charges 21 9,555 --
------------------ ------------------
46,127,514 30,138,533
------------------ ------------------
Profit before taxation 27,115,735 15,671,614
Provision for taxation
For the year 22 605,000 461,000
------------------ ------------------
605,000 461,000
------------------ ------------------
Net profit after taxation 26,510,735 15,210,614
Un-appropriated profit brought forward 5,810,992 6,319,990
Profit available for appropriation 32,321,727 21,530,604
Appropriations
Transferred to special reserve 5,302,147 3,042,123
Transferred to capital reserve 5 14,000,000 5,300,000
Proposed bonus shares (2000 @ 12.5%) -- 12,500,000
------------------ ------------------
19,302,147 20,842,123
------------------ ------------------
Un-appropriated profit carried forward 13,019,580 688,481
========== ==========
Earning per share 24 1.16 1.35
========== ==========
The annexed notes from 1 to 27 form an integral part of these accounts.
Abdul Aziz Khan Mohammad Naeem Mukhtar
Chief Executive Director
Statement of Changes in Financial Position
(Cash Flow Statement) for the year ended June 30, 2001
2001 2000
Rupees Rupees
A. Cash flow from operating activities
Profit before taxation 27,115,735 15,671,614
Adjustments to reconcile profit to net cash
provided by operating activities
Provision for gratuity 752,152 644,953
Provision for potential lease losses 10,000,000 2,500,000
Loss/(Gain) on disposal of fixed assets 9,555 (114,021)
Gain on sale of listed securities -- (1,964,226)
Profit on bank deposits (722,753) (139,451)
Dividend income (33,680) (1,242,600)
Amortization of deferred costs 92,099 207,713
Financial charges 25,880,137 20,345,200
Depreciation 446,406 418,158
------------------ ------------------
36,423,916 20,655,726
------------------ ------------------
Operating profit before working capital changes 63,539,651 36,327,340
Changes in working capital
(Increase)/decrease in current assets
Advances, deposits, prepayments & other receivables 11,238,504 (10,633,875)
Increase/(decrease) in current liabilities
Creditors, accrued and other liabilities (791,067) (10,911,601)
------------------ ------------------
Net (Increase)/decrease in working capital 10,447,437 (21,545,476)
Profit on bank deposits 722,753 139,451
Management fee payable (3,966,145) --
Gratuity paid -- (26,827)
Financial charges paid (26,361,983) (22,646,222)
Income tax paid -- (296,995)
------------------ ------------------
Net cash from operating activities 44,381,713 (8,048,729)
------------------ ------------------
B. Cash flow from investing activities
Increase in long term deposits (10,000) (199,550)
Investment in lease finance - Net (71,728,177) (6,381,628)
Morabaha financing 18,718,000 --
Musharika receivable 127,000,000 --
Sale proceeds of listed securities (2,000,000) 22,518,426
Dividend received 33,680 1,242,600
Sale proceeds of fixed assets 3,000 782,773
Addition in fixed assets (269,200) (1,031,488)
------------------ ------------------
Net cash used in investing activities 71,747,303 16,931,133
------------------ ------------------
C. Cash flow from financing activities
Long term security deposits 7,812,416 165,194
Long term loans 30,000,000 50,000,000
Repayment of long term loans (34,524,999) (23,783,333)
Short term bank borrowings (73,210,836) (26,704,298)
Deferred cost (1,691,932) --
Dividend paid 28,746,876 (9,725,839)
------------------ ------------------
Net cash from financing activities 100,362,227 (10,048,276)
Net increase/ (decrease) in
cash & bank balances (A+B+C) 15,766,789 (1,165,872)
Cash and bank balances
at the beginning of the year 564,894 1,730,766
Cash and bank balances transferred from
First Ibrahim Modaraba 22,109,966 --
Cash & bank balances at the ------------------ ------------------
end of the year 38,441,649 564,894
========== ==========
Abdul Aziz Khan Mohammad Naeem Mukhtar
Chief Executive Director
Statement of Changes in Equity
for the year ended June 30, 2001
Reserve for Profit for the
Share Special Capital Issue of Year and
Capital Reserve Reserve Bonus Shares Appropriations Total
(Rupees) (Rupees) (Rupees) (Rupees (Rupees) (Rupees)
Balances as at July 01, 1999 100,000,000 15,329,997 5,000,000 -- 6,319,990 126,649,987
Net profit for the year -- -- -- -- 15,210,614 15,210,614
Appropriations:
Special reserve -- 3,042,123 -- -- (3,042,123) --
Capital reserve -- -- 5,300,000 (5,300,000) --
Proposed issue of bonus shares -- -- -- 12,500,000 (12,500,000) --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balance as at June 30, 2000 100,000,000 18,372,120 10,300,000 12,500,000 688,481 141,860,601
Issue of ordinary shares 116,000,000 -- -- -- -- 116,000,000
Issue of bonus shares 12,500,000 -- -- (12,500,000) -- --
Net profit transferred from FIM -- -- -- -- 5,122,511 5,122,511
Special Reserve transferred from FIM -- 24,450,804 -- -- -- 24,450,804
Net profit for the year -- -- -- -- 26,510,735 26,510,735
Appropriations:
Special reserve -- 5,302,147 -- -- (5,302,147) --
Capital reserve -- -- 14,000,000 -- (14,000,000) --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balance as at June 30, 2001 228,500,000 48,125,071 24,300,000 -- 13,019,580 313,944,651
========== ========== ========== ========== ========== ==========
Abdul Aziz Khan Mohammad Naeem Mukhtar
Chief Executive Director
Notes to the Accounts
for the year ended June 30, 2001
1. Status and activities
1.1 The company was incorporated as a public limited company on July 26, 1993 and is listed on all
the Stock Exchanges in Pakistan.
The company is classified as a non-banking financial institution by the State Bank of Pakistan
under the Banking Companies Ordinance, 1962 and is mainly engaged in the business of leasing,
morabaha and musharaka financing.
1.2 The Sindh High court in its decision dated May 16, 2001 approved the scheme of Amalgamation
of FIRST IBRAHIM MODARABA into IBRAHIM LEASING LTD. The merger has been accounted
for using the pooling of interest basis in accordance with the International Accounting Standard
- 22 "Accounting for Business Combinations". Accordingly, these accounts reflect the combined
results of the amalgamated company for the year ended June 30, 2001. The comparative figures
in these accounts are in respect of IBRAHIM LEASING LTD only.
2. Significant accounting policies
2.1 Accounting convention
These accounts have been prepared on the basis of "Historical Cost Convention" and are in
accordance with all applicable International Accounting Standards.
2.2 Staff retirement benefits
The company operates an unfunded gratuity scheme covering all its permanent employees.
Provision is made annually to cover the liability under the scheme.
2.3 Operating fixed assets
Operating fixed assets are stated at cost less accumulated depreciation. Depreciation is charged
to income applying the reducing balance method at the rates specified in operating assets note.
Depreciation on additions during the year is charged on the basis of whole year while no
depreciation is charged on deletions during the year.
2.4 Deferred cost
This is amortized over a period of five years from the year of deferment.
2.5 Lease accounting
All lease agreements are accounted for in accordance with the International Accounting Standard
17 "Leases (Revised)".
2.6 Long term investment
Investment in securities are stated at cost / book value on overall portfolio basis. Only permanent
diminution in value of investments is recognized.
2.7 Taxation
The charge for current taxation is based on taxable income at the current tax rate after taking
into account tax credit and tax 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 foreseeable future. In pursuance of Securities 8,
Exchange Commission of Pakistan Circular No. 110/C/SEC/99 dated September 09, 1999 deferred
tax liability pertaining to the periods prior to 3une 30, 1998 and liability for the year has been
transferred to Capital Reserve.
2.8 Revenue recognition
Lease Revenue
The company follows the financing method in accounting for and recognition of lease income.
Under this method the earned income i.e. the excess of aggregate lease rentals and estimated
residual value over the net investment (cost of leased assets) is deferred and then amortized to
income over the term of the lease, applying the annuity method to produce a constant rate of
return on the net investment in lease.
Morabaha income
Profit from morabaha transaction is recognised on pro-rata accrual basis, calculated on the number
of days funds were utilised.
Musharaka income
Profit on musharaka investments and finance is accounted for on the basis of projected rate of
profit. The effect of adjustments, if any, between actual rate and projected rate of profit is
accounted for at the time of determination of the actual rate.
Dividend income
Dividend income is recorded at the time of closure of share transfer books of the company
declaring dividend.
2001 2000
Rupees Rupees
3. Issued, subscribed and paid-up capital
Ordinary shares of Rs.10/- each fully paid in cash 100,000,000 100,000,000
Ordinary shares of Rs.10/- each issued as
fully paid bonus shares 12,500,000 --
Ordinary shares of Rs.10/- each issued fully paid to
Modaraba Certificate Holders (Note 3.1) 116,000,000 --
------------------ ------------------
228,500,000 100,000,000
========== ==========
3.1 In accordance with the scheme of amalgamation sanctioned by the Honourable High Court of
Sindh, Ibrahim Leasing Ltd. issued 11,600,000 ordinary shares of Rs.10/- each as fully paid to
the certificate holders of First Ibrahim Modaraba in exchange of Modaraba Certificates.
4. Special reserve
Opening balance 18,372,120 15,329,997
Transferred from First Ibrahim Modaraba 24,450,804 --
Transferred during the year (Note 4.1) 5,302,147 3,042,123
------------------ ------------------
48,125,071 18,372,120
========== ==========
4.1 This represents the amount set aside out of profit after tax in accordance with State Bank of
Pakistan NBFI Circular No. 1 dated December 05, 1991. Under this circular 20% of profits after
tax are to be transferred to a special reserve till such time that this reserve is equal to
paid up capital.
5. Capital reserve
Opening balance 10,300,000 5,000,000
Transferred during the year (Note 22.1) 14,000,000 5,300,000
------------------ ------------------
24,300,000 10,300,000
========== ==========
6. Long term loans
Balance at the beginning of the year 49,341,667 23,125,000
Received during the year 30,000,000 50,000,000
------------------ ------------------
79,341,667 73,125,000
Less: Paid during the year 34,524,999 23,783,333
------------------ ------------------
44,816,668 49,341,667
Less: Current portion shown under current liabilities 31,399,999 25,358,332
------------------ ------------------
13,416,669 23,983,335
========== ==========
All these morabaha finance facilities are secured by pari passu charge on all present and future leased
assets of the company and rental receivables, demand promissory notes and personal guarantees of
directors. These are repayable in eight to twelve quarterly installments from the date of commencement
and are subject to mark-up from 14.25% to 18.25% per annum.
7. Long term security deposits
Long term security deposits 52,444,035 44,631,619
Less: Current portion shown under current liabilities 10,829,773 10,867,401
------------------ ------------------
41,614,262 33,764,218
========== ==========
These represent interest free security deposits received from lessees under lease contracts and are
repayable / adjustable at the expiry of the respective lease periods.
8. Short term borrowings - Secured
Running finance (8.1) 12,762 8,219,880
Morabaha, Musharika and
other financing facilities (8.2) 15,000,000 65,003,718
------------------ ------------------
15,012,762 73,223,598
========== ==========
8.1 This facility has been obtained from a local commercial bank at the mark-up rate of 46 paisas
per thousand per day against charge on present and future leased assets of the company
ranking pari passu with other lenders and personal guarantees of the directors.
8.2 These facilities have been obtained from various financial institutions, majority of which are
secured against pari passu charge on present and future leased assets of the company, demand
promissory note and personal guarantees of the directors of the company. These are subject to
mark-up @ 15% per annum.
9. Current portion of long term liabilities
Long term loans 31,399,999 25,358,332
Long term security deposits 10,829,773 10,867,401
------------------ ------------------
42,229,772 36,225,733
========== ==========
10. Creditors, accrued and other liabilities
Accrued expenses 154,606 73,368
Advance lease rentals 323,617 581,722
Accrued financial charges 2,025,005 2,322,851
------------------ ------------------
2,503,228 2,977,941
========== ==========
11. Operating fixed assets
COST DEPRECIATION
W.D.V.
Particulars As at Additions/ As at As at For the As at As at Rate
01-07-2000 (Deletions) 30-06-2001 01-07-2000 year 30-06-2001 30-06-2001 %
Owned
Vehicles (Owned) 1,987,060 70,000 2,057,060 602,333 290,945 893,278 1,163,782 20
Office equipments 330,783 -- 315,283 136,329 18,190 151,574 163,709 10
(15,500) (2,945)
Furniture & fixture 1,226,531 -- 1,226,531 600,593 62,594 663,187 563,344 10
Computers 836,886 199,200 1,036,086 289,318 74,677 363,995 672,091 10
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
2001 - Rupees 4,381,260 269,200 4,634,960 1,628,573 446,406 2,072,034 2,562,926
(15,500) (2,945)
========== ========== ========== ========== ========== ========== ==========
2000 - Rupees 2,914,591 1,031,488 2,970,011 817,062 418,158 927,904 2,042,107
(976,068) (307,316)
========== ========== ========== ========== ========== ========== ==========
11.1 Detail of fixed assets disposed of during the rear
Description Cost Accumulated Book value Sale Profit/ Particular of purchaser
Depreciation proceed (Loss) & mode of transaction
Mobile Phone 15,500 2,945 12,555 3,000 (9,555) Sold Through Negotiation
to Mr. Amir Manzoor,
Johar Town, Lahore.
2001 2000
Rupees Rupees
12. Net investment in lease finance
Minimum lease payments receivable 424,286,072 348,614,377
Residual value of leased assets 52,442,025 42,990,608
Gross investment in lease finance 476,728,097 391,604,985
Less: Unearned finance income 97,128,551 83,733,616
------------------ ------------------
Net investment in lease finance (Note 12.1) 379,599,546 307,871,369
------------------ ------------------
Less: Current portion of net investment 124,246,634 111,079,366
Provision for potential lease losses 17,500,000 7,500,000
------------------ ------------------
141,746,634 118,579,366
------------------ ------------------
237,852,912 189,292,003
========== ==========
12.1 Gross investment in lease finance
Within 1 year 135,903,650 131,456,954
Between 1 to 5 years 340,824,447 260,148,031
------------------ ------------------
476,728,097 391,604,985
Less: unearned finance income 97,128,551 83,733,616
------------------ ------------------
Present value of minimum lease payments 379,599,546 307,871,369
========== ==========
Within 1 year 124,246,634 111,079,366
Between 1 to 5 years 255,352,912 196,792,003
------------------ ------------------
379,599,546 307,871,369
========== ==========
The lease finance provided to Pakland Cement Limited and Saadi Cement Limited is being proposed
to be converted into January w.e.f. January 01, 2001 as per Scheme of Arrangement agreed by all the
creditors. As such the pending decision from the Honourable Sind High Court, SECP vide its letter No.
SC/LES/ED/(SC)537/2001 dated 16th October, 2001 has relaxed certain provisions of Leasing Companies
(Establishment & Regulation) Rules 2000 and no further provision for the year has been made in
respect of these companies.
The provision of Rs. 17,500,000 made in the accounts is to cover future risks associated with Investment
in Lease Finance.
13. Long term investments in securities
Investments in NIT Units 206,076 --
Investment in Term Finance Certificates 20,000,000 --
Federal Investment Bonds (13.1) 650,000 650,000
------------------ ------------------
2,856,076 650,000
========== ==========
13.1 This represents the investment made in Federal Investment Bonds to comply with the SBP
rules of business for NBFI's. Mark-up rate is 15% p.a. receivable on half yearly basis.
14. Long term deposits and deferred costs
Security deposits 420,400 210,400
Deferred costs (14.1) 2,063,166 279,333
------------------ ------------------
2,483,566 489,733
========== ==========
14.1 Deferred costs
Preliminary expenses 380,126 380,126
Share issue expenses 2,030,285 2,030,285
Financial Expenses 529,000 345,000
Capital Enhancement Expenditure 1,691,932 --
Unallocated expenditure 629,589 629,589
------------------ ------------------
5,260,932 3,385,000
Less: Amortized to-date 3,197,766 3,105,667
------------------ ------------------
2,063,166 279,333
========== ==========
15. Advances, deposits, prepayments
and other receivables
Advance for assets to be teased -- 9,000,000
Advance to employees 338,132 141,049
Advance income tax 1,903,370 767,346
Profit / Mark-up receivable 48,750 11,250
Other receivables 470,536 2,149,337
Accrued Income:-
Morabaha 1,164,929 --
Musharaka 415,466 --
Prepayments 614 --
------------------ ------------------
4,341,797 12,068,982
========== ==========
6. Cash and bank balances
Cash in hand 10,184 5,570
Cash with banks
In current account 38,431,465 405,113
In deposit account with SBP -- 154,211
------------------ ------------------
38,431,465 559,324
------------------ ------------------
38,441,649 564,894
========== ==========
17. Income from lease operations
Income on tease contracts 47,907,256 41,550,734
Front end fee 254,582 487,121
Documentation charges 169,850 125,650
Late payment charges 36,005 42,914
Commitment charges 50,875 76,124
Lease termination charges 36,081 66,306
Miscellaneous 400 1,000
------------------ ------------------
48,455,049 42,349,849
========== ==========
18. Other income
Gain on sate of listed securities -- 1,964,226
Gain on disposal of fixed assets -- 114,021
------------------ ------------------
-- 2,078,247
========== ==========
19. Financial charges
Mark-up on tong term loans 8,916,074 6,950,643
Mark-up on short term loans 16,823,451 13,282,211
Bank charges 140,612 112,346
------------------ ------------------
25,880,137 20,345,200
========== ==========
20. Administrative and operating expenses
Staff salaries and benefits (20.1) 5,249,176 4,427,707
Gratuity 752,152 652,200
Rent, rate & taxes 202,720 166,745
Fee & subscription 496,674 145,600
Printing and stationery 524,945 292,377
Travelling and conveyance 106,803 54,351
Vehicles running and maintenance 416,277 354,118
Telephone & postage 250,154 108,224
Advertisement 268,830 66,000
Repairs and maintenance 101,740 3,435
Legal and professional 639,455 189,170
Depreciation 446,406 418,158
Auditors' remuneration (20.2) 105,000 55,000
Books & periodicals 27,128 16,160
Insurance expense 86,768 95,896
Utility Expenses 321,390 --
Miscellaneous expenses 150,105 40,479
------------------ ------------------
10,145,723 7,085,620
========== ==========
20.1 Number of Employees
Total number of employees as at June 30, 2001 are 11 (2000: 11 employees).
20.2 Auditors Remuneration
Audit fee 75,000 30,000
special audit fee 30,000 25,000
------------------ ------------------
105,000 55,000
========== ==========
21. Other charges
Loss on Disposal of Fixed Assets 9,555 --
------------------ ------------------
9,555 --
========== ==========
22. Taxation
The provision for current year represents turnover tax under section 80-D of The Income Tax Ordinance,
1979. The company's income tax assessments upto the assessment year 2000-2001 have been completed
and the company has filed appeal against the assessment of Income Tax. Deferred tax is accounted
for according to company's policy as given in note 2.7.
22.1 Deferred tax liability
Deferred tax liability at the beginning of the year 12,000,000 16,100,000
Less: deferred tax liability to be provided
upto June 30, 2003 -- 12,000,000
------------------ ------------------
12,000,000 4,100,000
Add: provision for deferred tax for the year 2,000,000 1,200,000
------------------ ------------------
Amount transferred to capital reserve 14,000,000 5,300,000
========== ==========
23. Financial instruments and related disclosures
23.1 Credit risk
Credit risk arises from the possibility of one party to a financial instrument failing to meet its
obligations causes the other party to incur financial loss.
The company's credit risk exposure is not significantly different from that reflected in the
financial statements. The management monitors and limits company's exposure to credit risk
through monitoring of client's credit exposure, reviews and conservative estimates of provisions
for doubtful receivables, if any, and through the prudent use of collateral policy. The management
is of the view that it is not exposed to significant concentration of credit risk as its financial
assets are adequately diversified in organizations of sound financial standing covering various
industrial sectors and segments.
23.2 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.
23.3 Interest rate risk management
Interest rate risk is the risk that value of a financial instrument wilt fluctuate due to changes
in market interest rates. Changes in interest rates can adversely affect the rates charged on
interest bearing assets. This can result in an increase in interest expense relative to finance
income or vice versa. The company manages its risk by maintaining a fair balance between
interest rates, financial assets an financial liabilities.
Mark-up Bearing Non Mark-up Bearing
Notes Within One year Within One year
one year to five years one year to five years Total
(Rupees) (Rupees) (Rupees (Rupees) (Rupees)
Financial assets
Net investment in lease finance 12 124,246,634 255,352,912 -- -- 379,599,546
Long term investments 13 -- 2,856,076 -- -- 2,856,076
Long term deposits 14 -- -- -- 420,400 420,400
Morabaha financing 22,580,000 -- -- -- 22,580,000
Advances, deposit & pre-payments 15 -- 2,438,427 -- 2,438,427
Cash and bank balances 16 36,878,424 -- 1,563,225 -- 38,441,649
------------------ ------------------ ------------------ ------------------ ------------------
183,705,058 258,208,988 4,001,652 420,400 446,336,098
------------------ ------------------ ------------------ ------------------ ------------------
Financial liabilities
Long term loans 6 31,399,999 13,416,669 -- -- 44,816,668
Long term security deposits 7 -- -- 10,829,773 41,614,262 52,444,035
Short term borrowings 8 15,012,762 -- -- -- 15,012,762
Creditors, accrued and
other liabilities 10 -- -- 2,503,228 -- 2,503,228
Unclaimed dividend -- -- 2,750,316 -- 2,750,316
------------------ ------------------ ------------------ ------------------ ------------------
46,412,761 13,416,669 16,083,317 41,614,262 117,527,009
------------------ ------------------ ------------------ ------------------ ------------------
Net financial assets/(liabilities) 137,292,297 244,792,319 (12,081,665) (41,193,862) 328,809,089
========== ========== ========== ========== ==========
23.4 Effective mark-up rate
The effective mark-up rates for the company's financial assets and Liabilities are as follows:
Financial assets
Investment in lease finance 16.76% - 24.66%
Long term investments 15%
Morabaha financing 16% - 20%
Financial liabilities
Long term loans 14.25% - 18.25%
Short term borrowings 15%
24. Earning per share
There is no dilutive effect on the basic earning per share of the company, which is calculated as
follows:
Profit after taxation (Rupees) 26,510,735 15,210,614
Weighted average number of ordinary shares 22,850,000 11,250,000
------------------ ------------------
Earning per share (Rupees) 1.16 1.35
========== ==========
25. Remuneration of chief executive and executives
Chief Executive Executives
2001 2000 2001 2000
Rupees Rupees Rupees Rupees
Managerial remuneration 1,386,204 1,108,968 1,110,204 834,456
House rent 623,796 499,032 499,584 375,504
Bonus 92,414 66,897 91,860 62,892
Utilities 140,665 128,704 111,012 87,048
Leave fare assistance 115,517 92,414 52,581 43,594
Residential telephone bills reimbursed 48,777 40,319 -- --
Medical expenses reimbursed 58,866 34,637 52,459 43,387
Club subscription 13,084 12,062 -- --
------------------ ------------------ ------------------ ------------------
2,479,323 1,983,033 1,917,700 1,446,881
========== ========== ========== ==========
No. of persons 1 1 4 3
========== ========== ========== ==========
26. Transactions with associated companies
There have been no transactions with the associated companies in the current year except for normal
routine expenses born by the associated companies on behalf of the company at other offices which
were subsequently repaid.
27. General
- Figures have been rounded off to the nearest rupee.
- Previous year's figures have been re-arranged wherever necessary for the purpose of
comparison.
Abdul Aziz Khan Mohammad Naeem Mukhtar
Chief Executive Director
Pattern of Shareholding as at June 30, 2001
No. of Having Shares Shares Percentage
Share Holders From To Held
967 1 100 64,026 0.2802
917 101 500 297,493 1.3019
2668 501 1000 1,596,581 6.9872
1089 1001 5000 2,285,729 10.0032
181 5001 10000 1,281,693 5.6092
81 10001 15000 984,408 4.3081
26 15001 20000 463,585 2.0288
23 20001 25000 514,691 2.2525
17 25001 30000 482,603 2.1120
9 30001 35000 296,497 1.2976
9 35001 40000 345,175 1.5106
3 40001 45000 123,862 0.5421
2 45001 50000 91,687 0.4013
2 50001 55000 106,000 0.4639
3 55001 60000 171,562 0.7508
3 60001 65000 183,200 0.8018
2 70001 75000 148,125 0.6482
2 85001 90000 177,000 0.7746
2 95001 100000 200,000 0.8753
4 100001 105000 406,050 1.7770
4 105001 110000 434,324 1.9008
1 110001 115000 112,500 0.4923
3 115001 120000 346,800 1.5177
2 120001 125000 244,600 1.0705
1 125001 130000 130,000 0.5689
2 155001 160000 310,800 1.3602
1 160001 165000 160,875 0.7040
1 190001 195000 194,500 0.8512
2 195001 200000 392,850 1.7193
2 235001 240000 476,949 2.0873
1 275001 280000 280,000 1.2254
1 280001 285000 281,250 1.2309
1 295001 300000 300,000 1.3129
1 300001 305000 301,500 1.3195
1 365001 370000 367,500 1.6083
1 375001 380000 378,562 1.6567
1 465001 470000 466,600 2.0420
1 495001 500000 498,937 2.1835
1 560001 565000 562,500 2.4617
1 585001 590000 585,800 2.5637
1 1701001 1705000 1,701,187 7.4450
1 1780001 1785000 1,781,999 7.7987
1 2315001 2320000 2,320,000 10.1532
------------------ ------------------ ------------------
6042 22,850,000 100.0000
========== ========== ==========
Categories of Shareholders
Number of
Particulars Shareholders Shareholding Percentage
Individuals 5946 13,399,145 58.6396
Financial Institutions 16 3,632,193 15.8958
Insurance Companies 3 97,750 0.4278
Investment Companies/Banks 7 669,387 2.9295
Joint Stock Companies 62 4,961,470 21.7132
Modarabas/Leasing Companies 5 56,805 0.2486
Others 3 33,250 0.1455
------------------ ------------------ ------------------
6042 22,850,000 100.000
========== ========== ==========
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