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SAUDIPAK LEASING COMPANY LIMITED
Annual Reports 2002
Contents
Corporate Mission
Corporate Objective
Corporate Information
Financial Highlights
Notice of Meeting
Chairman's Review
Directors' Report
Statement of Compliance with
Code of Corporate Governance
Auditors' Review Report on
Code of Corporate Governance
Auditors' Report
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
Pattern of Shareholding
Financial Highlights
		2002	2001	2000	1999	1998	1997
Authorised Capital		400	400	400	400	400	400
Paid up Capital		220	220	220	220	220	200
Total Reserves		73	140	133	124	117	129
Net Investment in Leases		1,775	2,112	1,824	1,870	1,702	1,516
Income from Leasing
Operations		282	299	325	320	280	292
Profit before taxation		18	39	47	44	49	74
Taxation		4	5	11	9	8	19
Profit after taxation		14	34	36	35	41	55
Dividends		—	12.50%	12.50%	12.50%	15%	15%, 10%
Total Assets		2,807	2,981	2,444	2,342	2,076	1,816
Current Ratio		1.33	1.48	1.58	1.08	0.96	1.21
Return on average Equity		4.20%	9.63%	10.41%	10.28%	12.17%	17.35%
Book Value of Share		13.3	16.36	16.05	15.65	15.31	16.46
(Rupees per Share)
Corporate Objectives
• Extend lease finance to businesses
which are expected to contribute
positively to economic
development;
• Support enterprises that create
value; and
• Provide lease finance in areas that
offer compatible risk and returns.
Chairman's Review
It gives me great pleasure to present before you the 12th Annual Report together with the
audited accounts of Saudi Pak Leasing Company Limited for the year ended June 30,
2002
Leasing companies witnessed intense interest of commercial banks and DFIs in lease
financing. Gradually the competition has come full circle with the banks and DFIs having made
inroads even in consumer items, let alone the corporate sector. This has severely affected
the business of leasing companies. Your company made lease disbursements of
Rs. 615 million in the year 2001-02, as compared to Rs. 1,033 million in the previous
year. Total revenues amounted to Rs. 390.53 million for the year ended June 30, 2002, as
against Rs. 385.38 million, in the previous year. There has been an increase in income on
investments, as the surplus funds were utilized in an effective manner in business avenues,
permissible under the regulations, so as to make an optimum utilization of the resources.
Registered Office
6th floor, Lakson Square,
Building # 1, Sarwar Shaheed Road,
Saddar, Karachi.
Tel : 5655181-85, 5655215-19
Fax:5210607-9
Branches
Lahore
131-A-E/1, Main Boulevard,
Gulberg-lll, Lahore.
Tel : 5762644-47, 5762634
Fax : 5762633
Islamabad
2nd Floor, High-Rise Block, Saudi Pak Tower
61-A, Jinnah Avenue, Blue Area, Islamabad.
Tel : 2272652 Fax : 2272657
Faisalabad
Standard Chartered Bank Building Railway Road, Faisalabad
Tel: 619056, 618056,642013 Fax: 642012
Universal Access Number : 111-888-999
Karachi, Lahore and Islamabad
Registrars and Share Transfer Office
THK Associates (Pvt.) Ltd.
Ground Floor, Shiekh Sultan Trust
Building # 2, Beaumont Road, Karachi.
Tel : 5689021,5686658
During the year under review, the highest disbursements were made to textile sector,
followed by transport and communication. Net Investment in Lease Finance stood at Rs. 1,775
million as on June 30, 2002, compared to Rs. 2,112 million on the same date in the last year.
Total assets amounted to Rs. 2,807 million as on June 30, 2002. The decline in Net
Investment in Lease Finance was the outcome of relatively lower disbursements during theyear.
The company enjoys the confidence of the lenders and depositors. As reported in the last
annual report the new issue ofTFCs, was made in June 2002, for Rs. 400 million. It was
oversubscribed, and green shoe option to the extent of Rs. 30 million was exercised. The
resource position of your company is strong and the matching of the asset and liabilities is
adequately ensured.
The company does not foresee any unusual risk factor that may impact its performance
significantly. JCR - VIS Credit Rating Company has assigned medium to long-term entity rating
ofA+ (Single A plus) and short-term rating A-1 (A-one) to the Company. The outlook of these
ratings is stable. The company has the resources to continue its business in the normal
way and avail emerging business opportunities.
Notice of Annual General Meeting
Notice is hereby given that the 12th Annual General meeting of the members of
Saudi Pak Leasing Company Limited will be held at Dinshaw Mahal, Avari Tower
Hotel, 87 Shahrah-e-Quaid-e-Azam, Lahore, on October 23, 2002 at 10:30 a.m.
to transact the following business:
ORDINARY BUSINESS:
1. To confirm the minutes of the 11th Annual General Meeting of the company held
on December 24, 2001.
2. To receive, consider and adopt the audited accounts of the company for the
year ended June 30, 2002, together with the Directors' and Auditors' Report
thereon.
3. To appoint auditors for the year 2002-2003 and to fix their remuneration. The
present Auditors, Messrs A.F. Ferguson & Co., Chartered Accountants, retire
and being eligible, offer themselves for reappointment.
4. To consider any other business with the permission of the chair.
By Order of the Board
SHAKIL AKHTAR QURESHI
Karachi: September 30, 2002                Company Secretary
NOTES:
1. The Register of members of the Company will remain closed from October 15, 2002 to October 23, 2002
(both days inclusive).
2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote for
him/her. A proxy must be a member of the Company.
3. An instrument of Proxy and the power of attorney or other authority (if any) under which it is signed, or
notarially certified copy of such power of attorney, in order to be valid must be deposited at the registered
office of the Company not less than 48 hours before the time of the meeting.
4. Members are advised to lodge shares for transfer at the office of our Registrar, THK Associates (Pvt) Ltd.,
Ground Floor, Sheikh Sultan Trust Building # 2, Beaumont Road, Karachi.
5. CDC account holders will further have to follow the under mentioned guidelines as laid down in Circular
No. 1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan:
(i) In case of individuals, the account holder or sub-account holder and/or the person, whose securities
are in group account and their registration details are uploaded as per the Regulations, shall authenticate
his/her identity by showing his/her original National Identity Card (NIC) or original passport at the time
of attending the meeting. The shareholders registered on CDS are also requested to bring their
participants I.D. numbers and account numbers in CDS.
(ii) In case of a corporate entity, the Board of Directors' resolution/power of attorney with specimen
signature of the nominee shall be produced (unless it has been provided earlier) at the time of meeting.
Directors9 Report
The Directors have pleasure in presenting the Audited Accounts for the year ended
June 30, 2002.
Financial Results				Rupees
Net Profit for the year after charging all expenses
And provision for potential lease losses and diminution in
Value of investment				17,443,137
Provision for taxation - current				73,518,064
Provision for taxation - deferred				-69,770,939
				3,747,125
Profit after tax				13,696,012
Unappropriated profit brought forward				21,878
Transfer from general reserves				4,870,000
Profit available for appropriation				18,587,890
APPROPRIATIONS :
Transfer to
- statutory reserve				2,739,202
- reserve for deferred taxation				15,744,623
- proposed cash dividend				—
				18,483,825
Unappropriated profit carried forward				104,065
Earning per share				0.62
Operating profit dropped to Rs. 17.63 million from Rs. 28.88 million in the previous year.
The decline in operating profit is attributable to the non-performing accounts, depressed return
on equity investments and slow recoveries in the aftermath of September 11, 2001 events.
The rise in financial and other charges was owing mainly to increased borrowing.
Administrative and operating expenses remained under control.
During the period under review, the company made concerted efforts to reduce its cost of
funds. Important steps in this regard include issue of Term Finance Certificates at variable
rates and re-negotiation of the mark-up rates on term loans, in the wake of falling discount
rate. As a result, financial cost is expected to record decrease in the next year.
The company adheres to a well-defined strategy of sectoral exposure to ensure diversification
of risk. The maximum exposure to any sector as a percentage of Net Investment in Lease
Finance is below 25 percent. Exposure to Textile sector was 22 percent, followed by Energy, Oil
and Gas of 10 percent. Exposure to the Small and Medium Enterprises including consumer
finance was 33 percent of Net investment in Lease Finance. As to the type of asset the
maximum disbursements were accounted for by plant and machinery at 68 percent, followed
by motor vehicles 16 percent and commercial vehicles of 9 percent.
BOARD MEETINGS: During the period July 01, 2001 to June 30, 2002, five
meetings were held. Attendance was as follows:
			No. of meetings
			attended
Mr. Muhammad Rashid Zahir			5
Chairman
Mr. Ihsanul Haq Piracha			3
Vice Chairman
Mr. Parvez Abbasi			4
Mr. Abdul Jabbar Kasim			5
Chief Executive
Mr. Faridullah Khan			5
Mr. Haroon Ihsan			4
Mr. Muhammad Tariq Masud			5
Pattern of shareholding
The pattern of shareholding as on June 30, 2002 is annexed to this report.
Auditors
The present auditors, Messrs. A. F. Ferguson & Co., Chartered Accountants, retire
and being eligible offer themselves for reappointment.
For and on behalf of the
Board of Directors
Abdul Jabbar Kasim
Chief Executive
Muhammad Rashid Zahir
Chairman
Islamabad September 24, 2002
Review Report to the Members on Statement of
Compliance with Best Practices of Code
of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained
in the Code of Corproate Governance prepared by the Board of Directors of Saudi
Pak Leasing Company Limited to comply with the Listing Regulation No. 37 of the
Karachi Stock Exchange, Chapter XIII of the Lahore Stock Exchange and Chapter
XI of the Islamabad Stock Exchange where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that
of the Board of Directors of the Company. Our responsibility is to review, to the
extent where such compliance can be objectively verified, whether the Statement
of Compliance reflects the status of the Company's compliance with the provisions
of the Code of Corporate Governance and report if it does not. A review is limited
primarily to inquiries of the Company personnel and review of various documents
prepared by the Company to comply with the Code.
As part of our audit of the financial statements we are required to obtain an
understanding of the accounting and internal control systems sufficient to plan the
audit and develop an effective audit approach. We have not carried out any special
review of the internal control system to enable us to express an opinion as to
whether the Board's statement on internal control covers all controls and the
effectiveness of such internal controls.
Based on our review nothing has come to our attention, which causes us to believe
that the Statement of Compliance does not appropriately reflect the Company's
compliance, in all material respects, with the best practices contained in the Code
of Corporate Governance as applicable to the Company for the year ended
June 30, 2002.
A.F. Ferguson & Co.
Chartered Accountants
Karachi
Dated: September 25, 2002
Corporate Governance
Proper books of account have been maintained by the company, and the
financial statements, present fairly the state of affairs of the company,
the result of its operations, cash flows and changes in equity.
Appropriate accounting policies have been consistently applied in
preparation of financial statements and accounting estimates are based
on reasonable and prudent judgment except for change as stated in note
2.10 with which auditors have concurred.
•    International Accounting Standards, as applicable in Pakistan, have been
followed in preparation of financial statements and there is no departure.
•   The system of internal control is sound in design and has been effectively
implemented and monitored. There are no significant doubts upon the
company's ability to continue as a going concern.
•   There has been no material departure from the best practices of corporate
governance, and the company fully subscribes to the requirements.
Key operating and financial rate of last six years has been summarized on page 6 of
this annual report.
The value of investments in provident and gratuity funds are Rs. 2.868
million and Rs. 2.332 million respectively as per the last audited accounts
for provident fund and actuarial valuation report for gratuity fund. The
audit of gratuity fund is in process.
•   There was no trading in company shares by directors, chief executive,
chief financial officers and company secretary and their spouses and
minor children during the year.
BALANCE SHEET AS AT JUNE 30, 2002
			Note	2002	2001
				Rupees	Rupees
SHARE CAPITAL & RESERVES
Authorised capital
40,000,000 (2001: 40,000,000)
ordinary shares of Rs 10 each				400,000,000	400,000,000
Issued, subscribed and paid-up capital			3	220,000,000	220,000,000
Reserves			4	83,716,472	139,873,586
Deficit on revaluation of investments				(11,254,398)	-
Unappropriated profit				104,065	21,878
				292,566,139	359,895,464
REDEEMABLE CAPITAL			5	501,251,649	334,626,473
LONG-TERM DEPOSITS			6	207,078,116	234,719,590
LONG-TERM CERTIFICATES OF INVESTMENT			7	949,390,369	922,093,201
CURRENT LIABILITIES
Current maturity of redeemable capital			5	318,208,697	213,946,655
Current maturity of long term deposits			6	73,106,343	36,605,206
Short-term certificates of investment			7	276,153,500	554,345,212
Finances under mark-up arrangements			8	75,000,000	204,185,321
Borrowings from financial institutions			9	40,000,000	-
Taxation:				3,320,822	-
Creditors, accrued and other liabilities			10	69,863,285	74,217,537
Dividend			11	1,183,454	28,495,591
				856,836,101	1,111,795,522
COMMITMENTS			12
			2	807,122,374	2,963,130,250
The annexed notes form an integral part of these account	S.
Statement of Compliance with the Code
of Corporate Governance
The Company is in the process of implementing the requirements of the Code of
Corporate Governance issued by the Securities and Exchange Commission of
Pakistan and adopted by the Karachi Stock Exchange. The provisions of the Code,
relevant for the year ended June 30, 2002 have been duly complied with by the
company.
For and on behalf of the
Board of Directors
Muhammad Rashid Zahir
Chairman
Abdul Jabbar Kasim
Chief Executive
Islamabad September 24, 2002
PROFIT AND LOSS ACCOUNT
for the year ended June 30, 2002
			Note	2002	2001
REVENUES				Rupees	Rupees
Income from finance lease operations			21	276,618,304	292,903,905
Income from operating lease operations				5,002,862	5,567,040
Income on investments			22	103,716,145	77,510,184
Other income			23	5,189,304	9,395,017
				390,526,615	385,376,146
EXPENSES
Financial and other charges			24	326,991,727	308,211,575