| CRESCENT LEASING CORPORATION LIMITED |
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| Annual Reports 2002 |
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| Contents |
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| Company
Information |
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| Shareholders Information |
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| Trend of key financial data |
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| Notice of Annual General
Meeting |
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| Directors' Report |
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| Statement of Compliance with
best |
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| practices
of code of corporate governance |
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| Auditors' Report to the
Members |
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| Balance
Sheet |
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| Profit & Loss Account |
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| Cash
Flow Statement |
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| Statement of Changes in equity |
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| Notes to the Financial
Statements |
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| Pattern of Shareholding |
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| Company Information |
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| Board of Directors |
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| Mr. Aftab Ahmad Khan |
5* |
Chairman |
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| Mr. Javed A. Callea |
5* |
Chief Executive |
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| Mr. Feroz-ud-din A. Cassim |
4* |
Director |
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| Mr. Mahmood Ahmed |
2* |
Director |
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| Mr. Nessar Ahmed |
1* |
Director |
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| Mr. Raza Mirza |
3* |
Director |
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| Mr. Rashid Ahmed |
5* |
Director |
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| Mr. Saeed Jamal Tariq |
3* |
Director |
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| Audit Committee |
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| Mr. Feroz-ud-din A. Cassim |
Chairman |
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| Mr. Raza Mirza |
Member |
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| Mr. Saeed Jamal Tariq |
Member |
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| Corporate
Secretary |
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| Mr. Asif Haider Mirza |
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| Auditors |
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| Husain Rahman |
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| Chartered Accountants |
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| Legal
Advisor |
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| Cornelius Lane & Mufti |
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Advocates & Solicitors |
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| Credit Rating Agency |
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Long Term |
Short Term |
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| JCR - VIS |
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A+ |
A1 |
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| PACRA |
\ |
A |
A1 |
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| Banks
& Lending Institutions |
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| Askari
Commercial Bank Ltd. |
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| Bank of Khyber |
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| CDC Group PLC, UK |
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| Habib Bank Ltd. |
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| Muslim
Commercial Bank |
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| National
Discounting Services Ltd. |
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| Pak-Kuwait
Investment Co. (Pvt.) Ltd. |
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| Saudi
Pak Industrial & Agricultural Investment Co. (Pvt.) Ltd. |
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| Swiss
Development Agency |
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| Small
Business Finance Corporation |
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| Union Bank Ltd. |
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| United Bank Ltd. |
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| Head Office |
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| B-801
& 802, 8th Floor, Lakson Square Bidg. # 3, |
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| Sarwar
Shaheed Road, Karachi. |
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| Tel:
021-5661938, 48,58 Fax: 021-5661988 |
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| UAN: 111-667788 |
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| E-mail:
crescent@super.net.pk |
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| cresleas@cyber. net. pk |
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| Website:
www.creslease.com |
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| Branch
Offices |
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| Lahore Suit No. F-7 (B) 1st Floor, Rehman
Business Suites, 32-B-III, Gulberg-lll, Lahore. |
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| Tel:
042-5717415-6 Fax: 042-5717417 Mobile: 0300-8455710, E-mail:
cresleas@nexlinx.net.pk |
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| Islamabad Mezzanine Floor, 52-E, Dodhy Plaza, Jinnah
Avenue, Blue Area, Islamabad |
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| Tel:
051-2824866 Fax: 051-2271157, Mobile: 0303-7758022, E-mail:
cresleas@isb.paknet.com.pk |
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| Registered
and share transfer office |
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| 2nd
Floor, 131-A, E/1, Main Boulevard Gulberg-lll, Lahore |
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| Tel:
042-5712036, 5710759 Fax: 042-5712446, E-mail: tariqaleem@hotmail.com |
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| *
Number of board meeting attended during the year |
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| •
For a copy of this report write to our Head Office/Registered Office |
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| Trend
of key financial data |
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2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
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RUPEES IN MILLIONS |
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| Balance Sheet |
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| Stock Holders Equity |
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413 |
381 |
338 |
308 |
295 |
255 |
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| Current Liability |
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763 |
490 |
383 |
384 |
230 |
153 |
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| Current Assets |
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817 |
546 |
491 |
530 |
387 |
320 |
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| Total Assets |
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1,678 |
1,138 |
975 |
1,008 |
827 |
711 |
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| Income Statement |
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| Lease Income |
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172 |
133 |
116 |
119 |
106 |
89 |
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| Total Revenue |
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261 |
194 |
174 |
172 |
155 |
97 |
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| Financial Expenses |
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134 |
115 |
109 |
115 |
92 |
48 |
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| Total Provisioning |
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42 |
11 |
10 |
9 |
8 |
- |
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| Profit Before Taxation |
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56 |
46 |
34 |
31 |
41 |
37 |
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| Profit After Taxation |
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52 |
42 |
31 |
30 |
40 |
36 |
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| Financial Indicators |
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| Profit after tax ratio |
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20.00% |
21.80% |
17.70% |
17.20% |
26.00% |
37.40% |
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| Price earning ratio |
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2.71 |
3.27 |
3.63 |
3.8 |
3.3 |
3.52 |
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| Return
on capital employed |
23.60% |
21.00% |
17.80% |
17.10% |
26.80% |
24.30% |
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| Market
value per share (Average price) |
6.4 |
6.25 |
5.05 |
5.07 |
6 |
5.79 |
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| Debt Equity Ratio |
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75:25 |
67:33 |
65:35 |
69:31 |
64:36 |
64:36 |
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| Current Ratio |
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1.07 |
1.11 |
1.28 |
1.38 |
1.68 |
2.09 |
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| Times
Interest Coverage ratio |
1.42 |
1.4 |
1.31 |
1.27 |
1.45 |
1.78 |
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| Earning per share |
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2.36 |
1.91 |
1.39 |
1.33 |
1.82 |
1.64 |
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| Return on Equity |
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12.68% |
11.10% |
9.09% |
9.60% |
13.61% |
14.27 |
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| Book value per share |
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18.65 |
18.92 |
19.62 |
17.84 |
19.69 |
17.01 |
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| Gross
Lease Disbursements |
747 |
508 |
333 |
332 |
276 |
244 |
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| Statement of Value
added and how distributed |
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| Value
Addition (RS. in million) |
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2002 |
2001 |
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| TOTAL |
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68 |
54 |
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| •
Employees as remuneration |
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16 |
12 |
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| • Government as taxes |
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4 |
3 |
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Shareholders as dividends |
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33 |
15 |
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| •
Retained within the Business |
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15 |
24 |
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| Notice of Fifteenth
Annual General Meeting |
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| Notice
is hereby given that the 15th Annual General Meeting of the company will be
held at 2nd Floor, |
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| 131
A-E/1, Main boulevard, Gulberg-lll, Lahore on Monday, October 28, 2002 at
12:00 Noon to transact |
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| the following business: |
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| ORDINARY BUSINESS |
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| 1.
To receive, consider and adopt the audited accounts of the company for the
year ended June 30, |
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| 2002
together with Directors' and Auditors' Reports thereon. |
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| 2.
To approve the payment of Cash Dividend to the shareholders at the rate of
Re.1 per share of |
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| Rs.
10/- each and the issue of Bonus Shares in proportion of one share for every
twenty shares held |
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| i.e.
5% for the year ended June 30, 2002. |
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| 3. To appoint
auditors and fix their remuneration. |
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| SPECIAL BUSINESS |
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| 4.
To consider and if deemed appropriate, approve alteration in the relevant
clause of Articles of |
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| Association
of the company to incorporate the change in the fee of Directors for
attending the Board |
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| Meeting. |
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| A
statement under section 160(1) (b) of the Companies Ordinance, 1984 and the
draft of the resolution |
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| proposed
to be considered by the shareholders at the Annual General Meeting of the
company as |
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| required
by section 164(1) of the Companies Ordinance, 1984 are enclosed. |
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| By Order of the Board |
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| Karachi |
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| August 12th, 2002 |
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| Asif
Haider Mirza |
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| Corporate Secretary |
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| Statement
under section 160(1 )(b) of the Companies Ordinance, 1984 in respect of
Special Business |
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| and draft resolution. |
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| Item
No. 4 of Agenda- Alteration in Articles of Association (Revision in fee of
Directors for attending |
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| the board meeting.) |
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| Material
facts concerning the special business to be transacted at Annual General
meeting and the |
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| proposed
special resolution related thereto are given below. |
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| Material Facts |
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| Approval
of shareholders is required for amendment in the clause 109 of the Articles
of Association |
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| which
relates to the " Remuneration of Directors" in order to incorporate
the revision in fee paid to |
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| Directors
for attending the Board Meeting as recommended by the Board of Directors of
the company. |
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| For
this purpose, it is intended to propose the following resolution to be passed
as special resolution: |
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| Draft of the resolution. |
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| "Resolved
that, the following amendment in Articles of Association be and is hereby
approved: |
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| In
Article 109 under the heading " Remuneration of Directors" after
the word "exceed" at the end of |
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| the
first line of the paragraph the words " Rs 500 and a " be replaced
by the words " Rs 2,500 or any |
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| amount
approved by the shareholders in their meeting from time to time." |
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| Further
resolved that the Company Secretary and the Chief Executive be authorized,
either singly |
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| or
jointly to do all acts, deeds, sign and execute all documents necessary in
this regard. |
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| The
Directors are interested to the extent of the fee payable to them
individually. |
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| Notes: |
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| 1. Closure of share transfer books |
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| The
Members register will remain closed from 22nd October, 2002 to 28th October
2002 (both days inclusive). Transfers received |
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| in
order at the Registered Office by the close of business hours on 21st
October, 2002 will be treated in time for the entitlement |
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| of
Bonus Shares and Cash Dividend. |
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| 2. Participation in general meeting |
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| A
member eligible to attend and vote at this meeting may appoint another member
as proxy to attend and vote in the meeting. |
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| Proxies
in order to be effective must be received by the company at the registered
office not later than 48 hours before the time |
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| of holding the meeting. |
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| 3. Change in address |
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| Shareholders
are requested to notify the change of their addresses, if any, at our
registered office. |
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| 1. CDC account holders will further have to
follow the under mentioned guidelines as laid down in circular No. 1 dated
26th January, |
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| 2000
of the Securities and Exchange Commission of Pakistan for attending the
meeting: |
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| |
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| i) In case of individuals, the account holder
or sub-account holder and /or the person whose securities are in group
account; and |
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| their
registration details are uploaded as per the regulations, shall authenticate
his/her identity by showing his original National |
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| Identity
Card (NIC) or original passport at the time of attending the meeting. The
shareholders registered on CDS are also required |
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| to
bring their Participants I.D. Numbers and account numbers in CDS. |
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| |
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| ii) In case of corporate entity, the Board of
Directors resolution /power of attorney with specimen signature of the
nominee shall |
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| be
produced (unless it has been provided earlier) of the meeting. |
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| Annual General Meeting |
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| Your
Directors have pleasure In presenting the Audited Accounts for the year ended
June 30, 2002. |
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| The
financial results of the company for the period under review are summarized
as follows: |
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| Financial Results |
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2002 |
2001 |
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| Revenue |
|
261,399 |
193,633 |
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| Expenditure |
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163,106 |
137,484 |
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| Operating
Profit before provisions |
|
98,293 |
56,149 |
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| Provisions |
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42,169 |
10,538 |
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| Profit before taxation |
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56,124 |
45,611 |
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| Taxation |
|
3,770 |
3,350 |
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| Profit after taxation |
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52,350 |
42,261 |
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| Un-appropriated
Profit brought forward |
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5,879 |
6,259 |
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| Profit
available for appropriation |
|
58,229 |
48,521 |
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| Appropriations: |
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| Transfer to: |
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| -
reserve under NBFI regulation |
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10,470 |
8,452 |
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| -
reserves for deferred taxation |
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- |
19,058 |
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| -
reserves for issue of bonus shares |
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11,069 |
15,131 |
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| -
proposed cash dividend @ 10% (2001: Nil) |
|
22,138 |
- |
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| |
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| Net
profit for the year after charging all expenses, including allowance for
potential lease losses and |
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| provisions
amounted to Rs 52.350 million. This is higher by 19.27 percent than previous
year profit |
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| of Rs 42.261 million. |
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| |
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| DIVIDEND |
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| The
Board of Directors have recommended to declare a 10% cash dividend & 5%
bonus shares for the |
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| year
ended 30th June, 2002. |
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| |
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| ECONOMIC
SCENARIO |
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| The
occurrence of the September 11 and subsequent events along with the tension
on our eastern |
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| borders
overshadowed the year under review. The business climate thus remained
subdued. The |
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| external
sector, however, gained strength on account of higher remittances, favourable
debt reprofiling |
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| and
increased foreign inflows. The foreign exchange reserves thus exceeded six
billion dollars for |
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| the
first time. Weak investment demand on the other hand promoted a highly liquid
market and |
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| declining
interest rate regime. During the period under review, the leasing industry
experienced |
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| |
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| the
start of consolidation phase largely driven by the regulatory requirement of
enhanced capital |
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| base.
The commercial banks, on the other hand aggressively, entered the leasing
business, given the |
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| magnitude
of their financial resource and the lack of leasing regulatory framework on
them, this has |
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| created
a un-level playing field in the leasing sector. |
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| |
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| OPERATING RESULTS |
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| Your
company continued with its strategy of positioning itself in the emerging
scenario of consolidations |
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| in
the leasing industry. The marketing focus continued to be on entities and
sectors with low risk |
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| profile,
with emphasis on auto leasing and consumer leasing. New leases written during
the period |
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| increased
by 47 percent and were placed at Rs 747 million in comparison to Rs 508
million written |
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| in
the previous period. The net investment in leases thus stood at Rs 1,290
million as on June 30, |
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| 2002
an increase of 34.6 percent over the previous year figure of Rs 958 million.
Lease income during |
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| the
period amounted to Rs 171.60 million compared with Rs 132.915 million of
previous year showing |
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| an
increase of 29.1 percent. Income from other business activities was placed at
Rs 89.798 million |
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| significantly
better than comparable figure of Rs 60.718 million for the previous year
showing an |
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| increase
of 47.9 percent. The increase in other income is largely reflective of the
realization of the |
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| gain
on sale of securities and dividends accruing on investments. Your company was
thus able to post |
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| a
net profit after taxation and provisions of Rs 52.350 million surpassing the
previous year's figure |
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| by
Rs 10.09 million or 19.22 percent. |
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| |
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| The
post tax earning per share is placed at Rs 2.36. |
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| |
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| The
business policy of your company continued to focus on market penetration with
quality risks and |
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| better
client service for a broader client base. SMEs, vehicle leasing and consumer
finance continues |
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| to
be the focus area where increased market penetration is targeted. Eight
hundred and thirty five |
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| new
contracts were added in consumer finance during the period. |
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| |
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| The
risk profile of your company remained at prudent levels. The average lease
size (excluding |
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| consumer
finance) is placed at Rs 1.840 million as against Rs 1.731 of last year.
Exposure in a single |
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| industrial
sector (textile) does not exceed 19.7 percent compared with 19.1percent in
textile sector |
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| last
year. The remaining exposure is spread over twelve sectors of the economy. |
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| |
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| Plant
and machinery remained the major leased asset of the total portfolio at 69
percent followed |
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| by
vehicles at 27 percent and remaining being in office and other equipment.
Concerted efforts on |
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| follow-up
and recovery were undertaken during the period particularly in the backdrop
of weak |
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| business
environment. The recovery position was thus held at 95 percent. |
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| |
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| Your
company made its maiden issue of TFCs amounting to Rs. 250 million during the
period. The |
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| TFC
assigned A+ rating by PACRA was well received and was over subscribed by Rs.
11.78 million. |
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| |
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| In
respect of resources, the company attracted Rs. 91.5 million more in its COI
scheme than the |
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| previous
year figure of Rs.157.28 million. It also broad based its financial
relationship with premier |
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| financial
institutions and raised Rs. 70 million in long-term finance and Rs. 636
million in short-term |
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| finance
to expand its operations. |
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| |
|
| The
entity rating of your company is placed at A for long term and A1 for short
term by PACRA. The |
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| rating
assigned by JCR-VIS are A+ for long term and A1 for short term. These rating
denote a low |
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| risk
profile for the company. |
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| |
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| The
company recognizes the need for development of an efficient human resource
base. To achieve |
|
| this
the company places emphasis on the important aspects of an efficient human
resource base |
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| i.e.
business environment compatible training, merit based reward system and
interactive organizational |
|
| structure.
Out of 22 operational personnel 18 attended various training and seminars
during the |
|
| period.
Leasing proposals having an unfavourable impact on environment were generally
avoided |
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| during the period. |
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| |
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| FUTURE OUTLOOK |
|
| The
global fallout of the 9/11 event and the crisis in corporate America has hurt
the investment |
|
| sentiment
and consumer confidence the world over. In our region this has been further
hurt by the |
|
| border
tension resulting in weak business conditions for the current year. The year
also being an |
|
| election
year, could result in reduced economic activity in the pre and post election
period. Fiscal |
|
| 2003
thus poses acute challenges for the business environment in general and for
the financial sector |
|
| in
particular. The balance of payment position is likely to remain comfortable
in the current year. |
|
| The
weak economy may however impact the government revenues which in turn would
reduce |
|
| development
expenditure. The kick start of the economy is likely to remain doubtful,
Sectorally, |
|
| the
demand for plant and machinery for leasing is likely to remain flat. Emphasis
is likely to shift |
|
| towards
new products in consumer finance and on operating leases to benefit from
better risk profiling |
|
| available
in these products. Demand for vehicle leasing is expected to stabilise as a
sizeable base |
|
| has
been established and requisite employment growth in eligible consumers may
not be available |
|
| to
sustain higher levels. Demand for consumer durables is likely to sustain
given the trend of emerging |
|
| life
styles. Pricing of business risks would continue to be intensely competitive
given the increasing |
|
| competition
from commercial banks. This would not only affect the margins but the credit
risk as |
|
| well.
The windfall capital gains and dividend income is not likely to repeat itself
in the current year. |
|
| |
|
| Your
company intends to continue with its strategy of market penetration. This is
planned to be |
|
| achieved
through increased focus on quality financing in SME sector, auto leasing and
consumer |
|
| financing.
To achieve the above objective the market reach of the company would be
extended |
|
| through
opening of two more branches in Hyderabad and Gujranwala. The product of web
based |
|
| marketing
launched last year lacked attraction; this is targeted to be addressed this
year to make |
|
| it more attractive. |
|
| |
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| CORPORATE
GOVERNANCE |
|
| The
board of directors of the company held five meetings (attendance is on page #
2)during the year |
|
| to
review operations discuss and formul |
