PAK GULF LEASING COMPANY LIMITED
ANNUAL REPORT 2004
Board of Directors				Auditors
Mr. Sohail Inam Ellahi                     Chairman				M/s. Taseer Hadi Khalid & Company
Mr. Fawad S. Malik                        Vice Chairman				Chartered Accountants
Mr. Inam Ellahi Shaikh                    Director				Sheikh Sultan Trust Building No. 2,
Mr. Shaheed H. Gaylani                   Director				Beaumont Road,
Mr. Shaikh Aftab Ahmed                  Director				Karachi.
Mr. Sheikh Mohammad Jawed          Director				Tel # : 5671761-3, 5685847
Mr. Yousuf Jan Mohammad              Director				Fax # : 5685095
Mr. S. Azfar Ali Baqvi                     Chief Executive
Company Secretary				Legal Advisor
Mr. S. Azfar Ali Baqvi				M/s. Mohsin Tayebaly & Company
				2nd Floor, Dime Centre,
				BC-4, Block # 9, Kehkashan, Clifton,
Audit Committee				Karachi.
				Tel #: 538077, 571653, 5872690
Mr. Sohail Inam Ellahi                     Chairman				Fax #: 5870240, 5870468
Mr. Fawad S. Malik                        Member & Secretary
Mr. Shaikh Aftab Ahmed                  Member
Mr. Sheikh Mohammad Jawed          Member
				Bankers
Senior Management				Askari Commercial Bank
				Bank AI-Falah Ltd.
Mr. S. Azfar Ali Baqvi				Muslim Commercial Bank Ltd.
Chief Executive				National Bank of Pakistan.
				PICIC Commercial Bank Ltd.
Mr. Sheikh M. Asghar				Standard Chartered Grindlays Bank pic
Chief Manager Marketing				Union Bank
Mr. Muhammad Aamir Imtiaz Khan
Chief Financial Officer
				Registered / Share Transfer Office
Mr. Tehseen Ahmad
Internal Auditor				Pak-Gulf Leasing Company Limited
				THE FORUM:
Mr. Abdul Sattar Dakhan				Room # 125-127, First Floor,
Manager Administration				G-20, Block # 9, P. 0. Box # 12215,
& Legal Affairs				Main Khayaban-e-Jami, Clifton,
				Karachi-75600.
Credit Rating Agency				Tel #: 5820301,  5375985-87, 5824401
JCR-VIS Credit Rating Co. Ltd.				Fax #: 5820302
				E-mail: pgl@cyber.net.pk
To comply with the requirement of the 'Code', requiring that the existing auditors cannot be appointed
for more than five continuous years, the Audit committee have recommended to the Board the appointment
of M/s. A.F. Ferguson & Co., Chartered Accountants, as auditor of the company for the year 2004 -
2005. This proposal was approved by the Board for presentation in the AGM for final approval by the
shareholders.
The Board appreciates the services of the retiring auditor on reporting to the shareholders of the Company
on its financial statements.
Acknowledgments
The Board would like to place on record its appreciation for the management team of the Company and
each and every member of its staff for the hard work and dedication in turning out a good performance
in a difficult year. We, the Members of the Board, as representatives of shareholders, assure the management
and staff of the Company of our continued support in strengthening the Company. We are sure that the
management and the staff will continue to serve the customers of the Company with the same zeal as
demonstrate last year and will be able to improve the reputation of the Company in financial services sector.
Last but not the least, we would like to thank our valued shareholders, customers, bankers, and financiers
and other stakeholders for their valuable support and look forward to reinforce and build further an
excellent relationship with you in coming years.
Statement in compliance with the Code of Corporate Governance
To the best of our knowledge and belief, we confirm correctness of the following information in compliance
with Code No. XIX of the Code of Corporate Governance of the SECP:
Financial statements prepared by the management of the Pak Gulf Leasing Company Limited, present
fairly its state of affairs, the result of its operations, cash flows and changes in equity.
Proper books of account of the listed company have been maintained.
Appropriate accounting policies have been consistently applied in preparation of financial statements
and the accounting estimates presented in the report are based on reasonable and prudent judgment.
International Accounting Standards (IAS), as applicable in Pakistan, have been followed in preparation
of the financial statements, and any departure there from has been adequately disclosed.
The system of internal control is sound in design, and has been effectively implemented and monitored.
There is no significant doubt upon the company's ability to continue as a going concern.
There was no trade in shares of the company, carried out by its directors, CEO, CFO, Company Secretary
and their spouses and minor children, other than mentioned below.
There has been no material departure from best practices of corporate governance, as detailed in the
listing regulations.
Pattern of shareholding (name-wise as per the categories specified in the code of Corporate Governance)
as on 30th June 2004 is attached at the end of this Report.
Significant deviations from last year in operating results have been highlighted in the Directors' Report
to the Shareholders along with the reasons thereof.
				2004	2003
Revenue				45.598	38.626
Expenditure				24.452	20.527
Provision for possible lease losses				1.007	0.536
Profit before taxation				20.139	17.563
Provision for taxation				3.352	2.035
Profit after taxation				16.787	15.528
Un-appropriated profit brought forward				0.199	0.527
Profit available for appropriation				16.986	16.055
Appropriations:
Transfer to statutory reserves				3.357	3.106
Proposed cash dividend				-	12.75
Total appropriations				3.357	15.856
Un-appropriated profit carried forward				13.629	0.199
Appropriations:
Transfer to statutory reserves				3.357	3.106
Proposed cash dividend				-	12.75
Total appropriations				3.357	15.856
Un-appropriated profit carried forward				13.629	0.199
Auditors' Report to the Members
We have audited the annexed balance sheet of Pak-Gulf Leasing Company Limited as at
30 June 2004 and the related profit and loss account, cash flow statement and statement of
changes in equity together with the notes forming part thereof, for the year then ended and we
state that we have obtained all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purposes of our audit.
It is the responsibility of the company's management to establish and maintain a system of
internal control, and prepare and present the above said statements in conformity with the
approved accounting standards and the requirements of the Companies Ordinance, 1984. Our
responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan.
These standards require that we plan and perform the audit to obtain reasonable assurance about
whether the above said statements are free of any material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the above said
statements. An audit also includes assessing the accounting policies and significant estimates
made by management, as well as, evaluating the overall presentation of the above said
statements. We believe that our audit provides a reasonable basis for our opinion and, after due
verification, we report that:
a)      in our opinion, proper books of account have been kept by the company as required by the
Companies Ordinance, 1984;
b)      in our opinion:
i)       the balance sheet and profit and loss account together with the notes thereon have
been drawn up in conformity with the Companies Ordinance, 1984, and are in
agreement with the books of account and are further in accordance with accounting
policies consistently applied;
ii)      the expenditure incurred during the year was for the purpose of the company's
business; and
iii)     the business conducted, investments made and the expenditure incurred during the
year were in accordance with the objects of the company;
Board Of Directors
In July 2004, Mr.A.B. Shahid resigned from the position of Chief Executive Officer of the Company, and
in September 2004 as a Director of the Company.
The Board appointed Syed Azfar Ali Baqvi as the Chief Executive of the Company. The incoming CEO
has been associated with the Company for more than 7 years in a key managerial position. The Board
of Directors, on behalf of shareholders, welcome the incoming CEO and express absolute confidence
in his capabilities to take the Company to new heights.
Mr. Syed Masood Hatif (Retd. Air Marshal) have joined the board in place of Mr. Shahid for the remaining
term. The board welcomed Mr. Hatif and hopes that the Board and the Management team will continue
to benefit from his contributions.
Corporate Governance
The company has implemented the "The Code of Corporate Governance" (the 'Code') in it's letter & spirit.
The review report of the external auditor to the members on statement of compliance with best practices
of code of corporate governance is enclosed in this report.
Social Responsibility
Your company is conscious of being a part of the society it operates in. This is reflected in its policy of
sharing the benefits of changing market and regulatory scenario with its stakeholders. This year, as a
part of the policy, it offered few scholarships to the Karachi and NED university students who achieved
good academic results in the first year of their Master's Degree course but are financially hard put to
continue their education.
Audit Committee
The Board of Directors in compliance with the Code of Corporate Governance has established an Audit
Committee consisting of the following directors: Audit committee comprises of the Following;
Mr.Sohail Inam Ellahi                 -    Chairman
Mr.Fawad S. Malik                      -    Vice Chairman
Mr.Shaikh Aftab Ahmed              -     Member
Mr.Sheikh Mohammad Jawed    -     Member
Credit Rating
On September 6, 2003 JCR-VIS had upgraded the entity rating to BBB+ for medium to long-term, and
A-2 for the short-term. The outlook of company was rated as stable.
Auditor
The appointment of auditors M/s. Taseer Hadi Khalid & Co., Chartered Accountants, was approved by
the shareholders in the last Annual General Meeting. The assignment being completed the auditors would
stand retire at the end of the coming AGM.
			NOTE	2004	2003
ASSETS				Rupees	Rupees
CURRENT ASSETS			3	1,565,787	1,216,748
Cash and bank balances			4	10,225,486	10,430,883
Advances, prepayments and other receivables			5	175,509,662	96,750,283
Net investment in lease finance - current portion				187,300,935	108,397,914
			6	1,451,165	982,774
LONG-TERM LOANS AND DEPOSITS			5	315,545,035	218,194,190
NET INVESTMENT IN LEASE FINANCE			7	6,996,669	5,580,773
INVESTMENTS			8	13,250,000	17,450,000
DEFERRED COST			9	13,548,390	15,161,706
TANGIBLE FIXED ASSETS				538,092,194	365,767,357
LIABILITIES
CURRENT LIABILITIES			10	7,533,298	4,806,627
Accrued expenses and other liabilities			11	41,412,156	1,041,886
Short-term finances under markup arrangements			12	28,333,335	20,000,000
Short-term loans			13	16,736,675	26,443,274
Certificates of investments				99,987	50,109
Dividend payable			14	805,697	555,442
Current portion of liabilities against assets subject to finance lease			15	32,105,272	3,333,336
Current portion of long term loan			16	15,661,436	11,243,844
Current portion of long term deposits					12,750,000
Proposed dividend				142,687,856	80,224,518
LIABILITIES AGAINST ASSETS SUBJECT TO
FINANCE LEASE			14	682,328	1,067,899
LONG-TERM LOAN			15	55,168,754	4,444,440
LONG-TERM DEPOSITS			16	110,017,885	69,352,246
DEFERRED TAXATION			17	9,441,817	7,371,819
				317,998,640	162,460,922
NET ASSETS				220,093,554	203,306,435
REPRESENTED BY
Share capital Statutory reserve Reserve for bonus shares Unappropriated profit	18 19			13,628,792	199,097
				220,093,554	203,306,435
Total Assets	2004	2003		2001	2000	1999
Inv. Leases	538,092,194	365,767,357	264,653,108	187,775,027	143,336,155	134,335,219
Pre-tax Inc.	491,054,697	314,944,473	208,478,228	161,979,589	121,495,070	113,867,736
Net Income	20,139,441	17,563,069	13,469,023	14,005,441	13,805,897	12,603,526
Total Equity	16,787,119	15,527,950	12,278,265	11,681,241	11,564,897	10,355,026
Cash Div.	220,093,554	203,306,435	170,528,485	119,241,475	107,560,234	104,995,337
Right Share	-	7.50%	-	-	9.00%	9.50%
	-	-	30%	40%	-	-
Board Meetings:
Eight Board Meetings were held during the year under review. Details of Board Meetings and attendance
by each Director is detailed below:
No.      Directors			Meetings attended
1         Mr. A. B. Shahid			7
2         Mr. Shaikh Aftab Ahmed			7
3         Mr. Sohail Inam Ellahi			8
4         Mr. Inam Ellahi Shaikh			6
5         Mr. Fawad S. Malik			7
6         Mr. Sheikh M. Jawed			5
7.        Mr. Shaheed H. Gaylani			5
8.        Mr. Yousuf Jan Muhammad			3
Review report to the members on statement of compliance with
best practices of code of corporate governance
THE COMPANY AND ITS OPERATIONS
Pak-Gulf Leasing Company Limited ("the Company") was incorporated in Pakistan on 27 December
1994 having its registered office in Karachi, Sindh and commenced its operations on 16 September
1996. The Company is principally engaged in the business of leasing and is listed on all three
Stock Exchanges of Pakistan.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1    Statement of compliance
These accounts have been prepared in accordance with approved accounting standards as
applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved
accounting standards comprise of such International Accounting Standards as notified under
the provisions of the Companies Ordinance, 1 984. Wherever the requirements of the Companies
Ordinance, 1 984 or directives issued by the Securities and Exchange Commission of Pakistan
differ with the requirements of these standards, the requirements of the Companies Ordinance,
1 984 or the requirements of the said directives take precedence.
2.2   Accounting convention
These financial statements have been prepared under the historical cost convention, except
for revaluation of available for sale securities.
2.3   Revenue recognition
The Company follows the finance method in accounting for recognition of lease income. Under
this method the unearned lease income i.e., the excess of aggregate lease rentals and the
estimated residual value over the cost of leased assets is deferred and taken to income over
the term of the lease, so as to produce a constant periodic rate of return on net investment
in leases.
Unrealised income is suspended where necessary in accordance with the requirements of
the Prudential Regulations for Non-Banking Finance Companies undertaking the business of
leasing.
Front-end fee is taken to income on receipt basis.
Profit on investments are accounted for on accrual basis at rate of return implicit in the instrument.
Dividend income is recognized when the right to receive is established.
2.4   Investments
Investments held by the Company are classified as held to maturity and available for sale.
Held to maturity investments are securities with fixed payments that the Company has positive
intent and ability to hold to maturity and are stated at amortized cost less provision for impairment
in value, if any.
Investments that could not be classified as held for trading or held to maturity are classified
as available for sale and are stated at fair value, with any resultant gain or loss being recognized
directly in the profit and loss account. Fair value is determined on the basis of year-end
quoted prices.
Investments classified as either held to maturity or available for sale are initially recognized
at cost.
A deferred tax asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the asset can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
Financial instruments
At the time of initial recognition, all financial assets and liabilities are measured at cost, which
is the fair value of the consideration given or received for it. Subsequent to initial recognition
financial assets which are tradable in open market are revalued at the market prices prevailing
on the balance sheet date. Gains or losses on derecognition are taken to profit and loss
account.
Offsetting of financial assets and financial liabilities
A financial asset and a financial liability is offset and the net amount reported in the balance
sheet, if the Company has the enforceable legal right to set off the transaction and also
intends either to settle on net basis or to realize the asset and settle the liability simultaneously.
Provisions
A provision is recognised in the balance sheet when the Company has a legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation.
Impairment
The carrying amount of the company's assets are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If such indication exists the assets'
recoverable amount is estimated. An impairment loss is recognized wherever the carrying
amount of the asset exceeds its recoverable amount. Impairment loss is recognized in profit
and loss account.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and bank deposits. Bank borrowings
that are repayable on demand and form an integral part of the Company's cash management
are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
			NOTE	2004	2003
CASH AND BANK BALANCES				Rupees	Rupees
Cash in hand Cash at bank - deposit account			3.1	1,555,787	1,212,061
				1,565,787	1,216,748
			NOTE	2004	2003
INCOME				Rupees	Rupees
Income from leasing operations			21	44,080,033	36,356,568
Mark-up on placements / deposits and return on investments			22	1,028,385	737,865
Other income			23	490,109	1,531,215
				45,598,527	38,625,648
EXPENSES
Administrative and operating expenses			24	-15,941,652	-14,720,593
Financial charges			25	-8,510,439	-5,806,356
Provision for potential lease losses				-1,006,995	-535,630
PROFIT BEFORE TAXATION				20,139,441	17,563,069
Taxation			26
- Current - Prior years - Deferred				-2,069,998	1,115,439
				83,807,411	74,867,225
NET PROFIT FOR THE YEAR AFTER TAXATION
EARNINGS PER SHARE
			NOTE	2004	2003
				Rupees	Rupees
5.1    Provision for potential lease losses				884,961	535,630
Balance as at 01 July Provision made during the year				2,467,611	1,582,650
Balance as of 30 June
LONG TERM LOANS AND DEPOSITS				851,965	444,874
Deposits Loans to employees - considered good				1,451,165	982,774
INVESTMENTS				5,204,769	5,258,308
Held to maturity investments WAPDA Bonds				1,791,900	322,465
Available for sale National Investment Trust Units				6,996,669	5,580,773
				2004	2003
ADVANCES, PREPAYMENTS AND OTHER RECEIVABLES				Rupees	Rupees
Advance income tax (net of provision) Advance against lease Prepayments				725 201,952	87,514
Net receivable against terminated leases Provision			4.1	787,397	166,906
Other receivables Others				788,588	115,000
				10,225,486	10,430,883
4.1    Movement of provision against terminated leases
Opening balance Provision made during the year				122,034
Balance as of 30 June				122,034	-
SHORT-TERM FINANCES UNDER MARK-UP
ARRANGEMENTS - secured
This represents running finance facilities aggregating to Rs.55 million obtained from commercial
banks. The facilities are secured by first hypothecation charge on specific leased assets and related
lease rentals receivable. The facilities carry mark-up ranging from 6.0 percent to 6.5 percent (2003:
8.5 percent) per annum payable quarterly. The facilities are maturing on 31 October 2004 and 05
March 2005.
				2004	2003
				Rupees	Rupees
SHORT-TERM LOANS
Short-term loan 1 - unsecured				_	10,000,000
Short-term loan 2 - unsecured				-	5,000,000
Short-term loan 3 - unsecured				-	5,000,000
Short-term loan 4 - unsecured			12.1	20,000,000	-
Short-term loan 5 - secured			12.2	833,335	-
Short-term loan 6 - secured			12.3	7,500,000	—
				28,333,335	20,000,000
				2004	2003
ACCRUED EXPENSES AND OTHER LIABILITIES				Rupees	Rupees
Accrued expenses Advance rentals Accrued financial charges				4,473,342	2,841,128
				7,533,298	4,806,627
This represents long-term finance facility of Rs.10 million obtained from a commercial bank
for a period of 3 years. The facility is secured by bank's charge over specific leased assets
and receivables therefrom. The facility carries mark-up at six-months treasury bill cut off rate
plus 4.50 percent with a floor of 6.5 percent (30 June 2003: Nil) per annum. The loan is
repayable in 12 equal quarterly installments commencing from 26 March 2004.
This represents long-term finance facility of Rs.30 million obtained from a commercial bank
for a period of 3 years. The facility is secured by first registered charge over specific leased
assets and receivables therefrom. The facility carries mark-up at six-months treasury bill cut
off rate plus 4.00 percent with a floor of 6.0 percent and a cap of 9.5 percent (30 June 2003:
Nil) per annum. The loan is repayable in 6 equal bi-annual installments commencing from
20 July 2004.
This represents long-term finance facility of Rs.20 million obtained from a commercial bank
for a period of 3 years. The facility is secured by first hypothecation charge over specific
leased assets and receivables therefrom. The facility carries mark-up at six-months treasury
bill cut off rate plus 4.50 percent (30 June 2003: Nil) per annum. The loan is repayable in
36 equal monthly installments commencing from 31 October 2003.
This represents long-term finance facility of Rs.20 million obtained from a Non Banking
Finance Company for a period of 3 years. The facility is secured by first charge on specific
leased assets, receivables therefrom and undertaking from sponsoring directors. The facility
carries mark-up at six-months treasury bill cut off rate plus 4.00 percent with a floor of 6.25
percent (30 June 2003: Nil) per annum. The loan is repayable in 1 2 equal quarterly installments
commencing from 21 September 2004.
Notes to the Financial Statements
For the year ended June 30, 2004
				2004	2003
				Rupees	Rupees
LONG TERM DEPOSITS
Long term deposits Maturity within one year			16.1	-15,661,436	-11,243,844
				110,017,885	69,352,246
				2004	2003
				Rupees	Rupees
LONG -TERM LOANS - secured
Long-term loan   1	15.1			4,444,440	7,777,776
Long-term loan  2	15.2			8,947,368	-
Long-term loan  3	15.3			8,326,666	-
Long-term loan  4	15.4			30,000,000	-
Long-term loan  5	15.5			15,555,552	-
Long-term loan  6	15.6			20,000,000	-
Current portion of long term loans				-32,105,272	-3,333,336
				55,168,754	4,444,440
				2004	2003
				Rupees	Rupees
ADMINISTRATIVE AND
OPERATING EXPENSES
Directors' fee				9,000	12,000
Salaries, allowances and benefits			24.2	5,685,244	4,846,800
[including Provident Fund contribution
Rs. 215,726 (2003: Rs.1 77,954)]
Amortization of deferred costs			8	4,200,000	3,150,000
Depreciation			9	1,751,954	1 ,694,958
Office rent and utilities				806,622	1 ,086,992
Professional charges				566,296	838,945
Subscriptions, printing and stationery				550,749	673,600
Vehicle running expenses				713,679	637,028
Repair and maintenance				36,553	209,913
Office maintenance				203,047	193,190
Auditors' remuneration	24.3			164,865	169,675
Insurance expenses				191,813	161,459
Advertisement expenses				145,214	105,045
Commission and brokerage				21,277	104,733
Computerization expenses				246,656	97,425
Bank charges				76,505	94,829
Cantonment taxes				-	86,291
Credit Information Bureau Report charges				35,174	78,625
Kitchen and canteen expenses				80,377	72,422
General meeting expenses				48,955	65,425
Postage and courier				68,848	64,073
Traveling and conveyance				75,952	60,680
Security guard fee				60,000	55,500
Legal charges				30,000	30,000
Charge registration fee				-	17,212
Entertainment expenses				18,672	14,726
Security vault fee				10,000	10,000
Internet expenses				18,300	2,250
Donation			24.4	101,000	-
Miscellaneous				24,900	86,797
				15,941,652	14,720,593
SHARE CAPITAL
		2004	2003	2004	2003
		Rupess	Rupess	Rupess	Rupess
		20,000,000	20,000,000	200,000,000	200,000,000
		17,000,000	17,000,000	170,000,000	170,000,000
STATUTORY RESERVE
In accordance with the Prudential Regulations For Non-Banking Finance Companies undertaking
the business of lease only, the Company is required to transfer twenty percent of its after tax profit
to statutory reserve until the reserve equals its paid-up capital. Thereafter, five percent of after tax
profit is required to be transferred to reserve.
COMMITMENTS
Leasing contracts committed but not executed at the balance sheet date amounted to Rs. 22 million
(2003: Rs. 4.02 million).
INCOME FROM LEASING OPERATIONS
Income on lease contracts Front end fee Documentation income				462,870	679,483
				44,080,033	36,356,568
MARK-UP ON PLACEMENTS / DEPOSITS AND RETURN ON INVESTMENTS
Profit on bank accounts Return on investments				1,001,941	387,271
				1,028,385	737,865
OTHER INCOME
(Loss) / gain on disposal of fixed assets Miscellaneous income				502,411	1,017,968
				490,109	1,531,215
TAXATION
Current
In view of taxable loss incurred for the year ended 30 June 2004, the Company is liable to pay
minimum tax required under section 113 of the Income Tax Ordinance, 2001 at the rate of one-half
of one percent of turnover. The following is a reconciliation of relationship between tax expense
and accounting profit.
				2004	2003
				Rupees	Rupees
Accounting profit for the current year				20,139,441	17,563,069
Income tax at statutory rate				7,048,804	6,147,074
Inadmissible income and expenses-net				66,810,857	35,222,775
Tax benefit of depreciation on assets on finance lease				-67,586,314	-34,929,360
Tax benefit of assessed losses				-6,277,653	-6,277,653
Loss/(Gain) on sale of fixed assets				4,306	-162,836
Charge/(Reversal) of deferred tax liability relating to origination				2,069,998	-1,115,439
Tax arising due to finalization of prior years assessments				482,324	2,550,558
Minimum tax				800,000	600,000
Charge for the year				3,352,322	2,035,119
Status of assessment
The income tax assessments of the Company have been finalized up to and including the assessment
year 2002-2003. However, income tax for the assessment year 2003-2004 has not been finalized
yet and has been selected for tax audit purposes. Further, various appeals have been filed by the
Company and the tax department in respect of certain disallowances for assessment years 1997-
98 to 1999-2000 which are pending before the appellate authorities.
In case of adverse decision in appeals described above, further tax liability amounting to Rs.1
million may arise, for which no provision has been made in these accounts as management expects
favorable outcome of such appeals.
24.2   Remuneration of Directors, Chief Executive and Executives
	Directors		Chief Executive		Executive		Total
	2004	2003	2004	2003	2004	2003	2004	2003
Managerial remuneration	-	-	769,443	619,356	1,254,748	944,352	2,024,191	1,563,708
Housing and utili	-	-	490,025	340,644	690,110	534,557	1,180,135	875,201
Provident Fund contribution	-	-	66,960	51,612	78,267	76,570	145,227	128,182
Meeting fee	9,000	12,000	-	-	-	-	9,000	12,000
Rupees	9,000	12,000	1,326,428	1,011,612	2,023,125	1,555,479	3,358,553	2,579,091
Number of persons	8	8	1	1	5	6	14	15
				2004	2003
Auditors' remuneration				Rupees	Rupees
Annual audit fee				100,000	75,000
Fee for special certification				25,000	50,000
Half yearly review fee				25,000	25,000
Out-of-pocket expenses				14,865	19,675
				164,865	169,675
MATURITIES OF ASSETS AND LIABILITIES
			Up to	3 months
			three	to one	1 year to	Over
		Total	month	year	5 years	5 years
ASSETS
Cash and bank balances		1,565,787	1,465,702	22,977	77,108	_
Advances, prepayments and
other receivables		10,225,486	4,444,801	1,845,676	3,935,009	-
Long-term loans and deposits		1,451,165	56,757	169,297	1,225,111	-
Net investment in lease finance		491,054,697	42,994,564	132,515,098	315,545,035	-
Investments		6,996,669	1,791,900	-	5,204,769	-
Deferred cost		13,250,000	1,050,000	3,150,000	9,050,000	_
Tangible fixed assets		13,548,390	437,989	1,313,965	7,007,816	4,788,620
		538,092,194	52,241,713	139,017,013	342,044,848	4,788,620
LIABILITIES
Accrued expenses and		7,533,298	6,670,226	863,072	-	-
other liabilities
Short-term finances under		41,412,156	-	41,412,156	-	-
mark-up arrangements		28,333,335	24,583,335	3,750,000	-	-
Short-term loan		99,987	99,987	-	-	-
Unclaimed dividend		-	-	-	-	-
Proposed dividend		16,736,675	3,000,000	13,736,675	-	-
Certificates of investments
Liabilities against assets		1,488,025	183,277	622,420	682,328	-
subject to finance lease		87,274,026	10,526,318	21,578,954	55,168,754	-
Long-term loans		125,679,321	2,111,784	13,549,652	110,017,885	-
Long-term deposits		9,441,817	-	-	9,441,817	-
Deferred taxation		317,998,640	47,174,927	95,512,929	175,310,784	-
NET ASSETS /		220,093,554	5,066,786	43,504,084	166,734,064	4,788,620
(LIABILITIES)    Rupees		170,000,000
Share capital		18,364,762
Statutory reserve		18,100,000
Reserve for bonus shares		13,628,792
Unappropriated profit		220,093,554
NET EQUITY         Rupees
				2004	2003
CASH AND CASH EQUIVALENTS				Rupees	Rupees
Short-term finances under mark-up arrangements				-41,412,156	-1,041,886
Cash and bank balances				1,565,787	1,216,748
				-39,846,369	174,862
CREDIT RISK AND CONCENTRATIONS OF CREDIT RISK
Credit risk represents the accounting loss that would be recognised at the reporting date if counter-
parties failed completely to perform as contracted. The Company attempts to control credit risk by
monitoring credit exposures, limiting transactions with specific counter parties, and continuously
assessing the credit worthiness of counter parties.
The Company follows two sets of guidelines. Internally, it has its own operating policy duly approved
by the Board of Directors whereas externally it adheres to the regulations issued by the Securities
and Exchange Commission of Pakistan. The operating policy defines the extent of fund and non-
fund based exposures with reference to a particular sector or group of leases. The Management
also classifies a particular lease on the basis of the Prudential Regulations for Non-Banking Finance
Companies Undertaking the Business of Leasing.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of financial instruments are not significantly different from their carrying
values.
TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS / RELATED PARTIES
The related parties comprise directors, entities over which the directors are able to exercise significant
influence, senior executives and employees fund. The Company has a policy whereby all transactions
with related parties are entered into at arms length prices using the uncontrolled price valuation
methods, except for transactions with employees and employees fund those are undertaken in
accordance with employment contracts and service rules of the company
Transactions with related parties comprise of the following:
				2004	2003
Lease transactions				Rupees	Rupees
Lease income received during the year				-	7,825
Certificate of investment
Unibro Textile Mills				-	5,000,000
Mr. Sohail Inam Ellahi, Director				5,175,475	10,043,274
Profit paid				892,435	_
Office rent Unibro House				_	409,056
Adjustments in fixed assets
Unibro House				-	49,100
Provident fund contribution
Employees				215,726	177,954
CATEGORIES OF SHAREHOLDERS
As at June 30, 2004
Categories of shareholders		Number	Shares held		Percentage %
Associated companies, Undertakings and		6		1,867,390	10.985
Related Parties
Unibro Industries Ltd.			658,490
Unibro Industries Ltd.			99,000
Unibro Industries Ltd.			247,500
Mid East Agencies (Pvt.) Ltd.			505,400
Mid East Agencies (Pvt.) Ltd.			255,000
Mid East Agencies (Pvt.) Ltd.			102,000
NIT and ICP		-	-		-
Directors, Chief Executive & their spouse and		11		4,573,537	26.903
minor Children
Mr. Sohail Inam Ellahi			1,210,775
Mr. Azfar Bin Shahid			11,424
Mr. Inam Ellahi Shaikh			1,932,286
Mrs. Rasila Begum Shaikh			86,149
Mr. Yousuf Jan Mohammad			106,623
Mr. Fawad S. Malik			903,731
Mrs. Ateeqa Fawad			28,050
Mr. Sheikh Mohammad Jawed			267,510
Mr. Shaheed H. Gaylani			12,274
Mr. Shaikh Aftab Ahmed			12,274
Mr. S. Azfar Ali Baqvi			2,441
Executive		-	-	-	-
Public Sector Companies and Corporations		-	-	-	-
Banks, Development Finance Institutions,		-	-	-	-
Non-Banking Finance Institutions,
Insurance Companies, Modaraba
and Mutual Funds
Foreign Companies		3		3,776,850	22.217
Kraftex Limited			3,292,450
Kraftex Limited			138,400
Kraftex Limited			346,000
Individuals		58	6,781,623	6,781,623	39.892
Others		2	600	600	0.003
Total		80	17,000,000	17,000,000	100
Holding 10% or above
Kraftex Limited				3,776,850	22.217
Pattern of Shareholding
As at June 30, 2004
No. of	Having shares
Share Holders	From	To	Shares Held	Percentage %
2	1	100	142	0.0008
14	101	500	7000	0.0412
6	501	1000	5700	0.0335
9	1001	5000	17791	0.1047
2	5001	10000	15785	0.0929
3	10001	15000	35972	0.2116
7	15001	20000	125275	0.7369
2	25001	30000	56100	0.33
1	35001	40000	35649	0.2097
1	40001	45000	43000	0.2529
4	45001	50000	199800	1.1753
1	50001	55000	50500	0.2971
2	95001	100000	194575	1.1446
2	100001	105000	204500	1 .2029
3	105001	110000	323823	1 .9048
1	110001	115000	114240	0.672
1	135001	140000	138400	0.8141
1	245001	250000	247500	1 .4559
1	250001	255000	255000	1 .5000
1	260001	265000	261725	1 .5396
2	270001	275000	543000	3.1941
1	345001	350000	346000	2.0353
2	505001	510000	1015056	5.9709
1	520001	525000	523631	3.0802
1	560001	565000	562997	3.3117
1	635001	640000	637245	3.7485
1	655001	660000	658490	3.8735
1	800001	805000	802231	4.719
1	860001	865000	864090	5.0829
1	1095001	1100000	1099000	6.4647
1	1200001	1205000	1200200	7.06
1	1210001	1215000	1210775	7.1222
1	1910001	1915000	1912358	11.2492
1	3290001	3295000	3292450	19.3673
80			17000000	100