20000331

Brief

recordings

- BY SCANNER -

Leasing

English Leasing Limited

Year Ended June 30, 1999

Overview.........

The core business of this leasing company is leasing. During the year the company made gross disbursements of Rs 102.8 million which increased by 18%. Net investment in lease finance increased to Rs 272.70 million by 13%. The investment in leases were balanced and diversified as maximum exposure in any sector was 15% and that was in textile processing, weaving and spinning sector. Asset-wise the lease investment was concentrated mostly in the machinery to the extent of 86. Chairman Sheikh Javaid Mahmood stated about recoveries, "- in spite of all measures the recovery rate dropped due to unfavourable economic conditions and slowing down of industrial activity." The balance sheet has long term investment portfolio of Rs 19.31 million. About this portfolio he informed that market value improved to Rs 5.60 million from previous year's Rs 3.3 million. The company generated earning per share at Rs 1.82 and announced cash dividend at Rs 1.25 per share.

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English Leasing Ltd. has relatively small capital base in the sum of Rs 80 million but shareholders equity amounting to Rs 130.50 million which works out to 163% of the paid-up capital on account of revenue reserves at Rs 13.87 million, capital reserves amounting to Rs 34.95 million and retained earnings at Rs 1.68 million. Therefore the book value of the share in this leasing company carries nearly 63% premium over its par value of Rs 10. Book value increased to Rs 16.31 million per share from Rs 15.73 in the preceding year's.

Capital reserve of Rs 34.95 million constitutes of two main items, statutory reserves and capital reserve for deferred tax. Statutory reserve increased to Rs 20.95 million from Rs 18.03 million in the preceding by the appropriation of profit.

Statutory reserve has been created in pursuance of NBFI's regulations, whereby every NBFI is required to create reserve fund with an amount not less than 20% of its after tax profit till such time the reserve equals the amount of paid-up capital thereafter 5% of profit after tax will be credited to this reserveThis reserve is not considered free reserve for distribution of dividend.

Capital reserve for deferred taxation, the relative notes annexed to the account stated, "arising due to timing differences between book and income tax revenue or charges, is estimated at Rs 34.2 million (1998: Rs 25.02 million) as at June 30, 1999, to meet the requirement of International Accounting Standard IAS-12 and comply with SECP's requirement vide Circular No. 16 of 1999 dated 19th September 1999.

The company has transferred Rs 4.16 million (Rs 9.15 million for the current year and Rs 5.01 million being one fifth of the total deferred tax liability for previous years) and un-provided deferred tax amounting to Rs 20.05 million shall be apportioned to capital reserve in equal annual instalments by June 30, 2003.

Revenue reserve, in the sum of Rs 13.87 million comprised general reserve for Rs 8.50 million and contingency reserve in the sum of Rs 5.37 million. Last year's general revenue reserve in the sum of Rs 22.5 million was reduced to Rs 8.5 as Rs 14.0 million was transferred to profit and loss account for further transfer to deferred taxation capital reserve.

The contingency reserve has been created to meet any potential lease losses on lease portfolio that can be reasonably anticipated.

Apart from shareholders equity, there are other source of finance such as long term loans, obligation under finance lease, long term security deposits, certificates of investment, short term finances.

Long term loans at Rs 84.8 million comprised Rs 40.17 million loan in foreign currency equivalent to Rs 40.17 million and local currency loan from various local financial institutions and commercial banks aggregated to Rs 44.6 million. Local currency loan providers were MCB, SAPICO, ABL Prudential Commercial bank and Pak-Libya.

Certificate of Investments were categorised into Rapid Growth, Preference Investment, Shashmahi Amdan and Mahana Amdan. These represent Registered Certificates of Investments issued according to the permission granted by the Government of Pakistan for raising funds directly from the local resources. These COI's have been issued for maturity period ranging from three months to five year's. The return on COI's is payable on uniform basis ranging from 15% to 19.5% per annum.

The core business of this leasing company remains leasing operation. During the year the company generated income from leasing operations at Rs 47.17 million which constituted 92.2% of the gross revenue.

Net investment in leases amounted to Rs 272.7 million and this financial asset of the company comprised 81.3% of total assets.

This was followed by sheet term finances in the sum of Rs 31 million.

The investment portfolio stood at approximately Rs 20 million.

The company posted net profit at Rs 14.59 million and declared cash dividend at 12.5%.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & Liabilities.........

Paid-up Capital: 80.00 80.00

Reserves & Profit: 50.50 45.91

Shareholders' Equity: 130.50 125.91

L.T. Debts: 61.03 44.82

L.T. Cert/Investment: 10.05 12.28

Security Deposits on Leases: 34.09 24.91

Other Non Current Liabilities: 0.43 0.26

Current Liabilities: 98.24 75.29

Assets.........

Fixed Assets - Tangible: 8.40 8.67

Net Investment in Finance Lease: 133.57 152.35

L.T. Investments: 19.31 18.31

Other Non Current Assets: 0.82 0.58

Current Assets: 172.24 103.56

Total Assets: 334.34 283.47

Revenue, Profit & Payout.........

Lease Income: 47.17 48.61

Gain on Sale of Securities: 0.56 1.09

Other Income: 3.44 2.07

Gross Revenue: 51.17 51.77

Total Expenditure: 35.10 29.44

Profit Before Taxation: 16.07 22.33

Profit After Taxation: 14.59 20.79

Dividend Cash12.5% (1998: 20%): 10.00 16.00

Financial Ratios.........

Share Price (Rs) 15/3/2000: 6.25 -

Book Value Per Share (Rs): 16.31 15.73

Price/Book Value Ratio: 0.38 -

Debt/Equity Ratio: 32:68 26:74

Current Ratio: 1.75 1.38

Leasing Income/Total Income (%): 92.18 93.89

Net Profit/Total Income (%): 28.51 40.16

Net EPS (Rs): 1.82 2.60

Price/Earning Ratio: 3.41 -

R.O.E. (%): 11.18 16.50

R.O.A. (%): 4.36 7.33

R.O.C.E. (%): 6.18 208.18

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Company information: Chairman & Managing Director: Sheikh Javaid Mahmood. Chief Executive: Sheikh Manzoor Elahi. Directors: Sheikh Irshad Ahmad/Mohammad Rashid Zahir (SAPICO)/Farzana Munaf (NIT)/Shahid Mahmood (ICP)/Ms. Taskeen Javaid. Company Secretary: Azhar Hussain. Registered Office: Fortune Centre, Shahrah-e-Faisal, Karachi. Phone: 452-9061-64. Fax: 452-9061. E-mail: NA. Website: NA. Principal Office: M.K. Arcade 32-Davis Road, Lahore. Phone: 6303855-58. Fax: 6303855-58. E-mail: ell@pol.com.pk