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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
Administrative and operating expenses			25	42,405,537	44,155,105
Direct cost of operating lease			26	3,501,436	4,131,619
				372,898,700	356,498,299
Operating profit before provisions				17,627,915	28,877,847
Provision for potential lease losses				(2,101,417)	11,000,000
Unrealized gain / (loss) in the market value of
investments held for trading - net				1,916,639	(520,416)
PROFIT BEFORE TAXATION				17,443,137	39,357,431
Taxation - Current				73,518,064	5,000,000
- Deferred				(69,770,939)	-
				3,747,125	5,000,000
PROFIT AFTER TAXATION				13,696,012	34,357,431
Unappropriated profit brought forward				21,878	11,033
Transferred from general reserves				4,870,000	24,100,000
PROFIT AVAILABLE FOR APPROPRIATION				18,587,890	58,468,464
APPROPRIATIONS:
Transfer to:
Statutory reserve				2,739,202	6,871,486
Reserve for deferred taxation				15,744,623	24,075,100
Proposed dividend @ Nil (2001:12.5%)				-	27,500,000
				18,483,825	58,446,586
UNAPPROPRIATED PROFIT CARRIED FORWARD				104,065	21,878
EARNINGS PER SHARE			30	0.62	1.56
Auditors9 Report to the Members
We have audited the annexed balance sheet of Saudi Pak Leasing Company Limited as at June
30, 2002 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 except for the change as stated in note 2.10 with which we concur;
(ii)   the expenditure incurred during the year was for the purpose of the company's business:
and
(iu) 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, 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, 2002 and of the profit, its cash flows
and changes in equity for the year then ended; and
(d)   in our opinion, zakat deductible at source under the Zakat and Ushr Ordinance, 1980, (XVIII
of 1980) was deducted by the company and deposited in the Central Zakat Fund established
under section 7 of that Ordinance.
Karachi
Dated: September 25, 2002
A. F. FERGUSON & CO.
Chartered Accountants
STATEMENT OF CHANGES IN EQUITY
for the year ended June 30, 2002
			CAPITAL				REVENUE
		Issued,	Contmgency	Statuatory	Deferred	Surplus/	General	Unappropriated	Total
		subscribed and	reserve	reserve	Taxation	(deficit) on		profit
		paid-up capital				revaluation of
						investments
						classified as
						available for
						sale
		Rupees
Balance as at June 30,2000		220,000,000	2,600,000	55,671,000	45,786,000	-	28,970,000	11,033	353,038,033
Profit after taxation for the year
ended June 30, 2001		-	-	-	-	-	-	34,357,431	34,357,431
Transfer from / (to) profit
and loss account		-	-	6,871,486	24,075,100	-	(24,100,000)	(6,846,586)	-
Dividends		-	-	-	-		-	(27,500,000)	(27,500,000)
Balance as at June 30, 2001		220,000,000	2,600,000	62,542,486	69,861,100	-	4,870,000	21,878	359,895,464
Effect on equity arising due to
change in accounting policy as
a result of adoption of IAS 39		-	-	-	-	(9,130,930)	-	-	(9,130,930)
		220,000,000	2,600,000	62,542,486	69,861,100	(9,130,930)	4,870,000	21,878	350,764,534
Profit after taxation for the year
ended June 30, 2002		-	-	-	-	-	-	13,696,012	13,696,012
Transfer from/(to) profit
and loss account		-	-	2,739,202	(54,026,316)	-	(4,870,000)	(13,613,825)	(69,770,939)
Unrealized loss in market value
of investments classified as
available for sale			-		-	(2,123,468)	-	-	(2,123,468)
As at June 30, 2002		220,000,000	2,600,000	65,281,688	15,834,784	(11,254,398)	-	104,065	292,566,139
The annexed notes form an integral part of these accounts.
BALANCE SHEET AS AT JUNE 30, 2002
			Note	2002	2001
				Rupees	Rupees
FIXED ASSETS			13	46,382,841	53,372,497
CAPITAL WORK-IN-PROGRESS			14	-	144,063
NET INVESTMENT IN LEASES			15
Minimum lease payments receivable				1,805,665,379	2,271,646,511
Add: Residual value of leased assets				317,182,498	317,704,087
Lease contracts receivable				2,122,847,877	2,589,350,598
Less: Unearned lease income				315,715,467	447,381,883
Provision for potential lease losses				32,101,417	30,000,000
				347,816,884	477,381,883
Net investment in leases				1,775,030,993	2,111,968,715
Less: Current portion of net investment in leases				805,943,912	914,343,361
				969,087,081	1,197,625,354
INVESTMENTS			16	653,293,065	550,019,040
LONG-TERM LOANS			17	227,288	1,160,883
CURRENT ASSETS
Current portion of net investment in leases				805,943,912	914,343,361
Current portion of long-term loans			17	938,022	1,025,148
Short-term loans			18	44,549,268	50,180,077
Advances, deposits, prepayments
and other receivables			19	63,547,148	37,624,758
Taxation recoverable				-	65,082,963
Cash and bank balances			20	223,153,749	92,552,106
				1,138,132,099	1,160,808,413
				2,807,122,374	2,963,130,250
2.4 Other payables
Short-term liabilities are carried at amortised cost.
2.5 Provision for potential lease losses
The provision for potential lease losses is based on the higher of the requirements laid down
in the Leasing Rules 2000 and the management's estimate of potential lease losses.
2.6 Other provisions
Provisions are recognised when the company has a legal or constructive obligation as a result
of past events, it is probable that an outflow of resources will be required to settle the obligation
and a reliable estimate of the amount can be made.
2.7 Taxation
- Current
Income for the purpose of computing current taxation is determined under the provisions of the
tax law whereby lease rentals received or receivable are deemed to be income. Provision for
taxation is thus based on taxable income determined in accordance with the requirements of
the law.
- Deferred
The company accounts for deferred taxation using the liability method on timing differences
arising from using the different method in the recognition of lease income for tax purposes and
accounting purposes, as well as for all other significant timing differences. The deferred tax is
currently being recognised in accordance with the requirements of the Circular No. 16 issued
by the Securities and Exchange Commission of Pakistan.
2.8 Revenue recognition
The company follows the finance method in accounting for recognition of lease income.
Under this method the unearned income i.e. the excess of aggregate lease rentals and
the estimated residual value over the cost of leased assets is taken to income over the
term of the lease, so as to produce a systematic return on the net investment in the lease.
The company recognises dividend income when the right to receive the dividend is
established.
Rental income from assets given on operating lease is recognised on accrual basis.
Front-end fee, commitment fee and other commissions are taken to income when realised.
2.9 Fixed assets and depreciation
Fixed assets (including assets given under operating tease arrangements) are stated at cost
less accumulated depreciation. Depreciation is charged to income applying the straight-line
method whereby the cost of an asset is written off over its estimated useful life. In respect of
additions and deletions of assets during the year, depreciation is charged proportionately from
the quarter of acquisition and up to deletion respectively.
CASH FLOW STATEMENT
for the year ended June 30, 2002
			Note	2002	2001
				Rupees	Rupees
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations			31	87,823,467	165,994,817
Mark-up paid				(92,474,996)	(105,786,183)
Deposits received				8,859,663	80,738,387
Taxes paid				(5,114,279)	(5,345,548)
Refund of amount paid as deferred cost				-	351,991
Net investment in leases				334,836,305	(252,044,731)
Decrease in loans to employees				1,020,721	2,053,663
Decrease in long-term prepayments				-	18,650
				247,127,414	(280,013,771)
Net cash generated from / (used in) operating activities				334,950,881	(114,018,954)
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure				(5,163,956)	(18,760,138)
Proceeds from sale of fixed assets				3,752,966	1,385,000
Increase in investments				(112,611,784)	(191,360,327)
Dividend received				7,484,893	3,880,995
Net cash used in investing activities				(106,537,881)	(204,854,470)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds of redeemable capital less repayments
and transaction costs				269,580,645	36,341,899
Increase in certificates of investment less repayments				(250,894,544)	374,037,821
Borrowings from financial institutions				40,000,000	-
Dividend paid				(27,312,137)	(27,386,059)
Net cash generated from financing activities				31,373,964	382,993,661
Net increase in cash and cash equivalents				259,786,964	64,120,237
Cash and cash equivalents at July 1				(111,633,215)	(175,753,452)
Cash and cash equivalents at June 30			32	148,153,749	(111,633,215)
2.11 Re- purchase and Re-sale transactions
The company enters into transactions of re-purchase (repo) and re-sale (reverse repo) of
securities at contracted rates for a specified period of time. Consequent to the adoption of IAS
39, these transactions are recorded as follows:
a)   in case of sale under re-purchase obligations, the securities remain on the balance sheet
and a liability is recorded in respect of the consideration received as 'Borrowings from
financial institutions'. Charges arising from the differential in sale and re-purchase values
are accrued on a prorata basis ; and
b)   in case of purchases under re-sale obligations, the securities are not recognised on the
balance sheet and the consideration paid is recorded as 'Lendings to financial institutions'
and the differential of the purchase price and contracted re-sale price is recognised over
the period of the contract.
2.12 Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost.
2.13 Foreign currencies
Transactions in foreign currencies are accounted for in rupees at the rate prevailing on the date
of the transaction. Assets and liabilities in foreign currencies are translated into rupees at the
rate of exchange prevailing at the balance sheet date.
2.14 Financial assets and financial liabilities
Financial assets carried on the balance sheet include net investment in leases, operating lease
rental receivables, investments in securities, loans to employees, cash and bank balances and
certain other receivables. Financial liabilities carried on the balance sheet include redeemable
capital , security deposits, certificates of investment, and certain other liabilities.
At the time of initial recognition, all financial assets and financial liabilities are measured at cost,
which is the fair value of the consideration given or received for it. Transaction costs are included
in the initial measurement of all financial assets and liabilities. The particular recognition method
adopted for measurement of financial assets and financial liabilities subsequent to initial
recognition are disclosed in the policy statements associated with each item.
2.15 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount reported in the balance
sheet when there is a legally enforceable right to set off the recognised amounts and there is
an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
NOTES TO THE ACCOUNTS
for the year ended June 30, 2002
1. THE COMPANY AND ITS OPERATIONS
The company is incorporated in Pakistan and is listed on all the Stock Exchanges in Pakistan.
The address of its registered office is 6th floor, Lakson square building #1, Sarwar Shaheed
Road, Saddar-Karachi. The main business activity of the company is leasing of assets.
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
(a) These accounts have been prepared in accordance with the accounting standards issued by
the International Accounting Standards Committee ( IASC) and interpretations issued by the
Standards Interpretations Committee of the IASC, as applicable in Pakistan and the requirements
of the Companies Ordinance 1984 and the Leasing Rules 2000, along with the requirements
of the Securities and Exchange Commission of Pakistan (SECP). As explained in note 4.3 to
the accounts, the company has followed the requirements of Circular No. 16 issued by the
SECP in accounting for deferred taxation.
(b) The company provides for impairment in the carrying value of its net investment in finance lease
and operating lease receivable based on the higher of the requirements laid down in the Leasing
Rules 2000 and the management's estimate of impairment in the portfolio.
The requirements of International Accounting Standard 39, 'Financial Instruments: Recognition
and Measurement', relating to the assessment of impairment loss on these assets have not
been followed in the preparation of these financial statements based on a clarification received
from SECP specifying that the requirements of IAS 39 should only be followed by leasing
companies so far as it relates to investments made by them. The management is also of the
view that the provisioning made in accordance with the requirements of the Leasing Rules 2000
is adequate to meet the impairment loss arising on these assets.
2.2 Accounting convention
These accounts have been prepared under the historical cost convention except that certain
investments have been marked to market and are included at their market values.
2.3 Staff retirement benefits
The company operates:
(i)   an approved funded gratuity scheme for all employees. Annual contributions are made
to the scheme on the basis of actuarial recommendations. Unrecognised actuarial gains
and losses arising at each valuation date are amortized over the expected future service
life of employees. Gratuity is payable upon completion of prescribed qualifying period of
service; and
(ii)   recognised provident fund for all employees.
5.  REDEEMABLE CAPITAL - (NON-PARTICIPATORY)
Long-term finances utilised under mark-up arrangements
		Repayment	Sale	Purchase	Prompt	Principal	Outstanding
		Period	Price	Price	Payment rebate	2002	2001
						Rupees	Rupees
		Rupees in millions
Secured
Commercial Bank		Dec.1999-
		Dec.2002	6.958	8.683	-	1,385,888	3,866,285
Commercial Bank		Dec.1999-
		Dec.2003	24.492	32.719	-	10,926,315	16,965,180
Commercial Bank		Dec.1999-
		Dec.2002	50	73.75	-	50,000,000	50,000,000
Commercial Bank		June 2001-
		June 2004	100	*	*	66,666,666	100,000,000
Commercial Bank		June 2001-
		June 2004	75	*	*	50,000,004	75,000,000
Financial Institution		Dec. 1999-
		Dec.2002	30	44.053	3.904	10,000,000	20,000,000
Financial Institution		Dec.1999-
(an associated		Dec.2003	100	*	*	44,711,102	69,710,705
undertaking)
Commercial Bank		Dec.1998-
		Dec.2001	12.27	15.463	-	-	2,437,963
Commercial Bank		Dec.1998-
		Dec.2001	75	*	-	-	12,500,000
Commercial Bank		Nov. 1999-
		Nov. 2001	35	46.55	-	-	35,000,000
Unsecured
Others		May 2001-
		Aug.2002	40	47.512	-	40,000,000	40,000,000
		Nov. 2001-
		Dec.2002	60	68.766	-	60,000,000	-
Term Finance Certificates
Term Finance Certificates 1		Jan.1999-
-note 5.2 and 5.3		Jan.2003	250	352.658	-	61,797,417	123,092,995
Term Finance Certificates 11		June 2002-
-note 5.2 and 5.4		June 2007	430	^	^	423,972,954	-
						819,460,346	548,573,128
Less: Current maturity shown under current liabilities:
- Long-term finances utilised under mark-up arrangements						255,536,697	151,446,655
- Term Finance Certificates I						62,500,000	62,500,000
- Term Finance Certificates II						172,000	-
						501,251,649	334,626,473
						501,251,649	334,626,473
*The mark-up rates on these finances are based on the yield on treasury bills / SBP discount rates and are adjusted
on half-yearly basis.
rt The mark-up rates on these finances are based on the weighted average of the last three cut-off rates of the five
year Pakistan Investment Bonds (PIBs), and are adjusted on half-yearly basis.
Maintenance and normal repairs are charged to income as and when incurred. Major extensions,
renewals and improvements are capitalised.
Gains and losses on disposal of assets, if any, are included in income currently.
2.10 Investments
During the current year the Securities and Exchange Commission of Pakistan ( SECP) has
approved the adoption of International Accounting Standard 39 (IAS 39)" Financial Instruments;
Recognition and Measurement" and has made it applicable for the financial statements covering
periods beginning on or after July 1, 2001. Accordingly, this IAS has been adopted by the
company during the year and the investments of the company have been categorised according
to the requirements of the IAS as follows:
Held for trading
Held for trading financial assets are those that were acquired principally for the purpose of
generating a profit from short-term fluctuations in price or dealer's margin.
Held to maturity
Held to maturity investments are financial assets with fixed or determinable payments and fixed
maturity that the company has the positive intent and ability to hold to maturity.
Available for sale
Available for sale financial assets are those that are not (a) loans and receivables originated
by the company, (b) held-to-maturity investments, or (c) financial assets held for trading.
The company had previously bifurcated its investment portfolio into long-term and short-term.
As per the previous accounting policy of the company long-term investments were carried at
cost less provision for any permanent diminution in value. Subsequent to the adoption of IAS
39, the company has changed the accounting policy for these investments which are now
classified as available for sale and are stated at market value. Any surplus / deficit arising on
revaluation of these investments is taken to equity. As per the requirements of IAS 39 the
change in accounting policy has been made by adjusting the opening balance of shareholders'
equity and the comparative information has not been restated. This change of policy did not
have any effect on the profit for the year.
The company has also changed its accounting policy in respect of short-term investments which
are now classified as held for trading and are stated at market value. These investments were
previously recorded at the lower of cost and market value. Any surplus or deficit on their
revaluation is taken to the profit and loss account. Had the accounting policy not been changed
the profit for the year would have been lower by Rs 0.207 million.
Investments in delisted / unquoted investments are carried at cost less impairment in value, if
any.
3.  ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
Ordinary shares of Rs. 10 each
2002	2001			2002	2001
				Rupees	Rupees
10,000,000	10,000,000		Shares fully paid
			in cash	100,000,000	100,000,000
12,000,000	12,000,000		Shares issued as fully
			paid bonus shares	120,000,000	120,000,000
22,000,000	22,000,000			220,000,000	220,000,000
		CAPITAL			REVENUE	TOTAL
				Rupees
		Contingency	Statutory	Deferred	General	2002	2001
		reserve	reserve	Taxation
At the beginning of'the year		2,600,000	62,542,486	69,861,100	4,870,000	139,873,586	133,027,000
Movement during the year
- Transfer to profit		-	-	(69,770,939)	(4,870,000)	(74,640,939)	-
and loss account
- Appropriated from profit		-	2,739,202	15,744,623	-	18,483,825	6,846,586
and loss account
		2,600,000	65,281,688	15,834,784	-	83,716,472	139,873,586
4.1 The contingency reserve has been created in respect of the demand raised by the Wealth Tax
Officer for Corporate Asset Tax of Rs 2,000,000 along with the additional tax of Rs 557,589-The
company has filed a writ petition in the High Court of Sindh against this demand.
4.2 Statutory reserve represents profits set aside to comply with the Leasing Rules 2000.
4.3 The reserve for deferred taxation has been created as per the requirements of the Circular
No. 16 issued by the Securities and Exchange Commission of Pakistan on September 9, 1999.
The unrecognised liability of the company for deferred taxation as at June 30, 2002 amounts
to Rs 16.284 million (2001: Rs 32.568 million).
				2002	2001
8. FINANCES UNDER MARK-UP ARRANGEMENTS				Rupees	Rupees
Short-term running finance (secured)				-	5,185,321
Short-term finance (unsecured) - note 8.1				75,000,000	199,000,000
				75,000,000	204,185,321
8.1 The facilities available for short-term finance amounted to Rs 75 million (2001:
Rs 199 million) and carry mark-up ranging from Re 0.2466 to Re 0.2644 per Rs 1,000 per day.
These facilities are repayable on various dates by August 27, 2002.
9.  BORROWING FROM FINANCIAL INSTITUTION
The borrowing carries mark-up @ 6.5% per annum and is repayable by July 8, 2002.
				2002	2001
				Rupees	Rupees
10. CREDITORS, ACCRUED AND OTHER LIABILITIES
Creditors				377,142	256,142
Accrued liabilities				3,280,781	1,609,461
Mark-up on:
- redeemable capital				20,774,968	11,035,619
- running finance				419	809,859
• - short-term finances				2,020,054	3,538,006
Accrued return on certificates
of investment				24,292,834	23,595,140
Rentals received in advance				4,655,140	4,383,222
Tax deducted at source				1,042,406	1,342,568
Contractors' retention money				5,000	22,706
Others				13,414,541	27,624,814
				69,863,285	74,217,537
10.1 Amount due to Saudi Pak Industrial and Agricultural Investment Company (Private) Limited, an
associated undertaking, at the year end amounted to Rs 514,783 (2001: Rs 1,017,366).
				2002	2001
11. DIVIDEND				Rupees	Rupees
Proposed dividend				-	27,500,000
Unclaimed dividend				1,183,454	995,591
				1,183,454	28,495,591
12. COMMITMENTS
Commitments for lease disbursements				50,594,000	45,000,000
5.1 The facilities are secured by hypothecation of specific leased assets and related lease rentals.
The facilities were utilised for disbursement against leasing contracts executed by the company.
		TFCI	TFCII	2002	2001
		Rupees
5.2 Liability in respect of term finance
certificates issued by the company		62,500,000	430,000,000	492,500,000	125,000,000
Less: unamortised portion of the
transaction cost incurred on
the issue of above TFCs		(702,583)	(6,027,046)	(6,729,629)	(1,907,005)
		61,797,417	423,972,954	485,770,371	123,092,995
Transaction cost incurred on issue of Term Finance Certificates II has been adjusted from the
related liability in accordance with the criteria for initial recognition of financial liabilities specified
in International Accounting Standard 39, 'Financial Instruments: Recognition and Measurement'.
The cost incurred on issue of Term Finance Certificates I which was previously being shown
as deferred cost and amortised over the period of issue of these certificates has also been
reclassified and adjusted from the remaining liability of the TFCs in order to facilitate comparision.
5.3 Term Finance Certificates I are secured by a charge on specific leased assets and related lease
rentals.
5.4 Term Finance Certificates II are secured by a first and exclusive charge over specific present
and future leased assets and their associated receivables.
				2002	2001
6. LONG-TERM DEPOSITS				Rupees	Rupees
Security deposits on leases				280,184,459	271,324,796
Less: Current maturity shown under
current liabilities				73,106,343	36,605,206
				207,078,116	234,719,590
These represent security deposits received from lessees underlease contracts and are repayable
on expiry of the respective lease periods.
7.  CERTIFICATES OF INVESTMENT
The company has issued certificates of investment under the permission granted by the Federal
Government. These certificates of investment are for periods ranging from 3 months to 5 years
and return on these certificates ranges from 10.00 to 13.50 percent per annum. Current maturity
of long-term certificates of investment amounting to Rs. 88,163,000 (2001: Rs 231,378,000) is
included under current liabilities in short-term certificates of investment.
				2002	2001
				Rupees	Rupees
14. CAPITAL WORK-IN-PROGRESS
Advances for civil works				-	144,063
15. NET INVESTMENT IN LEASES
(i)   This includes lease contracts receivable of Rs. 89,000,000 (2001 :Rs. 158,472,705)
outstanding from Sui Southern Gas Company Limited.
(ii)  The internal rate of return on lease contracts receivable mainly range from 15.89% to 20%
per annum.
(iii) "The maximum aggregate amount of rental due from National General Insurance Company
Limited, an associated undertaking, at the end of any month during the year was Rs Nil
(2001: Rs 343,980) including unearned lease income ofRs Nil (2001: Rs 16,189).
16. INVESTMENTS				2002	2001
				Rupees	Rupees
Available for sale
Listed securities- note 16.1				48,047,369	60,641,256
Held for trading
Shares and certificates of listed companies and
modarabas - note 16.1				9,076,739	7,725,091
Held to Maturity
Investment in listed Term Finance Certificates				78,682,214	35,073,725
Investment in Federal Government Securities				157,486,743	121,578,968
Placements under certificates of investment/
deposit and musharika arrangements				360,000,000	325,000,000
				653,293,065	550,019,040
The return on these investments ranges from	% per annum
Federal Government Securities	12.5 to 15
Placements under certificates of investment
/deposits and musharika arrangements	11.25to17.25
Term Finance Certificates	12 to 18
13. FIXED ASSETS
The following is a statement of operating assets:
		Cost	Additions/	Cost	Accumulated	Depreciation	Accumulated	Written	Rate
		at July 1,	(deletions)	at June 30,	depreciation	charge for	depreciation	down value	%
		2001	during the	2002	at July 1,	the year/	at June 30,	at	per
			year		2001	(accumulated	2002	June 30,	annum
						depreciation		2002
						on deletions)
		Rupees
Assets • Own use
Building improvements		2,750,097	.	2,750,097	2,750,097		2,750,097		20
Office premises		24,415,134		24,415,134	1,353,734	1,220,758	2,574,492	21,840,642	5
Furniture, fixtures
& fittings		4,747,900	415,530	5,126,630	1,871,745	714,913	2,579,608	2,547,022	20
			(36,800)			(7,050)
Vehicles		10,455,088	3,618,524	12,036,701	6,758,963	1,666,349	7,092,591	4,944,110	20
			(2,036,911)			(1,332,721)
Office equipment
& appliances		18,008,620	1,273,965	18,392,415	10,783,620	2,104,241	12,328,471	6,063,944	20
			(890,170)			(559,390)
Operating lease assets
Plant and machinery		19,435,576	-	16,336,876	2,921,759	2,739,934	5,349,753	10,987,123	20
			(3,098,700)			(311,940)
2002		79,812,415	5,308,019	79,057,853	26,439,918	8,446,195	32,675,012	46,382,841
			(6,062,581)			(2,211,101)
2001		47,789,507	34,055,872	79,812,415	19,994,286	7,860,579	26,439,918	53,372,497
			(2,032,964)			(1,414,947)
13.1 The following assets were disposed off during the year:
Description		Cost	Accumulated	Written	Disposal	Mode of	Particulars of purchaser
			depreciation	Down	Proceeds	Disposal
				Value
		Rupees
Furniture, Fixture and fittings		35,000	5,250	29,750	35,000	Final Settlement	Mr.Abbas Ismail (ex-employee), Islamabad
		1,800	1,800	-	1,800	Negotiation	Raziuddin Zuberi ( employee), Karachi
		36,800	7,050	29,750	36,800
Vehicles		1,307,461	750,637	556,824	1,115,000	Negotiation	Ideal Cars, Karachi
		660,450	561,384	99,066	99,066	as per service rules	Shakil A Qureshi (executive), Karachi
		69,000	20,700	48,300	65,000	Insurance Claim	New Jubilee Insurance Company, Karachi
		2,036,911	1,332,721	704,190	1,279,066
Office Equipment &
Appliances		46,800	23,238	23,562	39,100	Insurance Claim	New Jubilee Insurance Company, Karachi
		400,000	399,999	1	60,000	Trade in	Jaffer Brothers, Karachi
		239,442	57,239	182,203	126,000	Negotiation	New Jubilee Insurance Company, Karachi
		44,300	40,375	3,925	3,000	Negotiation	Zahir Kazi (employee), Karachi
		159,628	38,539	121,089	84,000	Negotiation	New Jubilee Insurance Company Karachi
		890,170	559,390	330,780	312,100
Operating Lease Assets
Plant and machinery		1,559,700	311,940	1,247,760	925,000	Negotiation	Zenith Enterprises, Karachi
		769,500	-	769,500	600,000	Negotiation	Power tech (Pvt) Ltd., Karachi
		769,500		769,500	600,000	Negotiation	Power tech (Pvt) Ltd., Karachi
		3,098,700	311,940	2,786,760	2,125,000
		6,062,581	2,211,101	3,851,480	3,752,966
The maximum amount due from the chief executive and executives at the end of any month
during the year was Rs 1,728,200 (2001: Rs 2,592,200) and Rs 172,538 (2001: Rs 1,436,069)
respectively.
				2002	2001
18. SHORT-TERM LOANS				Rupees	Rupees
Loans to customers - considered good				44,549,268	50,180,077
- considered doubtful'				17,431,000	17,431,000
				61,980,268	67,611,077
Less: Impairment loss				17,431,000	17,431,000
				44,549,268	50,180,077
These represent loans to customers for a period of up to one year on mark-up basis under sale
and repurchase agreements. The rate of mark-up ranges from 13.5% to 23% per annum.
				2002	2001
19. ADVANCES, DEPOSITS, PREPAYMENTS				Rupees	Rupees
AND OTHER RECEIVABLES
Advances
- against assets to be leased out				14,250,000	525,000
- to chief executive- note 19.1				473,685	-
- to executives - note 19.1				30,918	56,196
- to employees				-	9,066
- to others				165,938	136,438
Trade deposits				1,572,915	1,458,620
Prepayments				866,154	1,090,042
Accrued income on operating leases				2,031,520	1,759,066
Accrued return on investments				17,325,446	10,730,135
Accrued mark-up on short-term loans and advances				5,180,162	1,941,405
Corporate asset tax recoverable				2,057,589	2,057,589
Residual value receivable				1,745,818	5,717,138
Cost of assets repossessed				2,481,381	3,339,741
Others				15,365,622	8,804,322
				63,547,148	37,624,758
TS.TThe maximum amount due from the chief executive and executives at the end of any month
during the year was Rs 623,685 (2001: Rs Nil) and Rs 229,232 (2001: Rs 150,264) respectively.
				2002	2001
20. CASH AND BANK BALANCES				Rupees	Rupees
With State Bank of Pakistan in current account				767,911	13,302,953
With banks:
- in current accounts - local currency				8,541,953	69,015,856
- foreign currency				29,723	29,723
- in savings accounts - note 20.1				213,727,951	5,224,552
Cash in transit					4,852,811
Cash in hand				86,211	126,211
				223,153,749	92,552,106
20.1 Return on these savings accounts is earned at rates ranging from 4.95% to 7%.
16.1 Details of investments in shares/certificates of listed companies / modarabas:
		June 30,	2002	June 30	,2001
		Number of	Fair value	Number of	Fair value
		modaraba	Rupees	modaraba	Rupees
		certificates/		certificates/
		ordinary		ordinary
		shares		shares
Available for sale
Pakistan State Oil Company Limited		126,000	17,640,000	133,000	21,632,450
PTCL		446,000	7,648,900	446,000	12,046,400
Al Meezan Investment Bank		826,920	9,550,926	826,920	9,509,580
Dandot Cement		3,144,653	13,207,543	3,144,653	17,452,826
			48,047,369		60,641,256
Held for Trading
NIT Units		40,000	496,000	40,000	390,000
First Grindlays Modaraba		128,482	3,096,416	128,482	2,447,582
Modaraba AI-Mali		159,207	939,321	159,207	798,300
Modaraba AI-Tijarah		149,806	262,161	149,806	134,825
Sajjad Textile Mills Limited		30,700	153,500	30,700	-
First Hajveri Modaraba		160	257	160	896
AI-Ata Leasing Modaraba		-	-	55,671	-
Dandot Cement		10,000	42,000	10,000	52,000
DG Khan Cement Limited		10,000	93,000	10,000	58,000
Fauji Fertilizer Limited		38,000	1,725,200	38,000	1,369,900
PTCL		50,000	857,500	-	-
Hub Power Limited		-	-	30,000	577,500
ICI Pakistan		8,800	353,760	80,000	732,000
ICP SEMF		20,000	377,000	30,000	402,000
Karachi Electric Supply Corporation Limited		50,000	260,000	50,000	260,000
Lucky Cement Limited		-	-	20,000	140,000
Sui Northern Gas Pipelines Limited		-	-	28,750	293,250
Sui Southern Gas Company Limited		5,750	69,000	5,750	60,088
Sunflow Citruss		25,000	-	25,000	8,750
Pakistan PTA Limited		24,000	128,400	-	-
First Crescent Modaraba		53,789	223,224	-	-
			9,076,739		7,725,091
17. LONG-TERM LOANS - considered good
				2002	2001
Secured				Rupees	Rupees
Due from - chief executive				936,200	1,800,200
- executives				162,498	281,230
-employees				66,612	104,601
				1,165,310	2,186,031
Less: Recoverable within one year shown as
current portion of long - term loans				938,022	1,025,148
				227,288	1,160,883
The above loans include an amount of Rs 936,200 (2001: Rs 1,800,200) outstanding for a period
of more than 3 years. These loans have been provided to employees for purchase of motor
vehicles and purchase of house and are repayable between three to ten years. Mark-up on these
loans is charged at rates ranging from 2 % to 10% per annum.
				2002	2001
25. ADMINISTRATIVE AND OPERATING EXPENSES				Rupees	Rupees
Salaries, allowances and benefits - note 25.1				22,501,940	22,471,909
Rent				1,008,700	1,555,459
Repairs and maintenance				1,180,137	991,175
Electricity, gas and water				1,412,070	1,172,065
Depreciation				5,706,261	5,165,388
Insurance				1,088,090	1,021,750
Vehicle running expenses				1,634,657	1,416,557
Printing and stationery				1,374,428	1,643,970
Telephone and postage expenses				1,487,819	1,634,594
Travelling, conveyance and entertainment				763,115	821,508
Fees and subscriptions				923,069	646,890
Legal and professional charges				1,964,197	4,169,267
Training and development				68,500	35,064
Advertising expenses				207,967	264,309
Auditors' remuneration:
Audit fee				180,000	180,000
Special certifications				50,003	-
Out of pocket expenses				63,879	28,335
				293,882	208,335
Zakat				1,869	32,963
Sundry expenses				788,836	903,902
				42,405,537	44,155,105
25.1 Salaries, allowances and benefits include Rs. 1,230,807 (2001: Rs 1,269,962) in respect of staff
retirement benefits.
				2002	2001
26. DIRECT COST OF OPERATING LEASE				Rupees	Rupees
Management Fee				141,421	405,112
Depreciation				2,739,934	2,695,191
Business Promotion				-	24,350
Insurance				79,289	51,529
Others				540,792	955,437
				3,501,436	4,131,619
				2002	2001
21. INCOME FROM FINANCE LEASE OPERATIONS				Rupees	Rupees
Income on finance lease contracts				280,238,806	292,865,948
Gain / (loss) on cancellation of lease contracts				(3,620,502)	37,957
				276,618,304	292,903,905
22. INCOME ON INVESTMENTS
Mark-up on:
- Federal Government Securities				19,016,290	22,474,007
- Short-term loans				10,259,739	14,274,887
Income on Term Finance Certificates				7,033,563	1,263,207
Return on certificates of investment / deposits
and musharika placements				58,135,695	33,336,180
Income from savings accounts				3,046,606	858,442
Dividend income				6,313,752	4,824,136
Gain / (loss) on sale of investments				(89,500)	479,325
				103,716,145	77,510,184
23. OTHER INCOME
Mark-up, commission and fee income				3,818,082	7,347,497
Gain on disposal of fixed assets				-	766,983
Exchange gain				-	1,280,537
Liabilities no longer payable written back				1,371,222	-
				5,189,304	9,395,017
24. FINANCIAL AND OTHER CHARGES
Mark-up on:
- redeemable capita!				60,134,856	73,142,212
- running finance				539,459	3,969,883
- term finance certificates				19,468,247	-
- short-term finance				21,050,964	23,338,070
Loss on disposal of fixed assets				98,514	-
Return on certificates of investment				223,908,269	206,388,356
Arrangement fee				252,969	401,388
Others				1,538,449	971,666
				326,991,727	308,211,575
				2002	2001
				Rupees	Rupees
25. ADMINISTRATIVE AND OPERATING EXPENSES
Salaries, allowances and benefits - note 25.1				22,501,940	22,471,909
Rent				1,008,700	1,555,459
Repairs and maintenance				1,180,137	991,175
Electricity, gas and water				1,412,070	1,172,065
Depreciation				5,706,261	5,165,388
Insurance				1,088,090	1,021,750
Vehicle running expenses				1,634,657	1,416,557
Printing and stationery				1,374,428	1,643,970
Telephone and postage expenses				1,487,819	1,634,594
Travelling, conveyance and entertainment				763,115	821,508
Fees and subscriptions				923,069	646,890
Legal and professional charges				1,964,197	4,169,267
Training and development				68,500	35,064
Advertising expenses				207,967	264,309
Auditors' remuneration:
Audit fee				180,000	180,000
Special certifications				50,003	-
Out of pocket expenses				63,879	28,335
				293,882	208,335
Zakat				1,869	32,963
Sundry expenses				788,836	903,902
				42,405,537	44,155,105
25.1 Salaries, allowances and benefits include Rs. 1,230,807 (2001: Rs 1,269,962) in respect of staff
retirement benefits.
				2002	2001
26. DIRECT COST OF OPERATING LEASE				Rupees	Rupees
Management Fee				141,421	405,112
Depreciation				2,739,934	2,695,191
Business Promotion				-	24,350
Insurance				79,289	51,529
Others				540,792	955,437
				3,501,436	4,131,619
				2002	2001
21. INCOME FROM FINANCE LEASE OPERATIONS				Rupees	Rupees
Income on finance lease contracts				280,238,806	292,865,948
Gain / (loss) on cancellation of lease contracts				(3,620,502)	37,957
				276,618,304	292,903,905
22. INCOME ON INVESTMENTS
Mark-up on:
- Federal Government Securities				19,016,290	22,474,007
- Short-term loans				10,259,739	14,274,887
Income on Term Finance Certificates				7,033,563	1,263,207
Return on certificates of investment / deposits
and musharika placements				58,135,695	33,336,180
Income from savings accounts				3,046,606	858,442
Dividend income				6,313,752	4,824,136
Gain / (loss) on sale of investments				(89,500)	479,325
				103,716,145	77,510,184
23. OTHER INCOME
Mark-up, commission and fee income				3,818,082	7,347,497
Gain on disposal of fixed assets				•	766,983
Exchange gain				-	1,280,537
Liabilities no longer payable written back				1,371,222	-
				5,189,304	9,395,017
24. FINANCIAL AND OTHER CHARGES
Mark-up on:
- redeemable capital				60,134,856	73,142,212
- running finance				539,459	3,969,883
- term finance certificates				19,468,247	-
- short-term finance				21,050,964	23,338,070
Loss on disposal of fixed assets				98,514	-
Return on certificates of investment				223,908,269	206,388,356
Arrangement fee				252,969	401,388
Others				1,538,449	971,666
				326,991,727	308,211,575
				2002	2001
30. EARNINGS PER SHARE				Rupees	Rupees
Profit after taxation for the year				13,696,012	34,357,431
				Number  of shares
Average ordinary shares in issue during the year				22,000,000	22,000,000
				Rupees
Earnings per share				0.62	1.56
				2002	2001
31. CASH GENERATED FROM OPERATIONS				Rupees	Rupees
Profit for the year before taxation				17,443,137	39,357,431
Add/(less): Adjustment for non cash charges
and other items
Depreciation - owned assets				5,706,261	5,165,388
- assets under operating lease				2,739,934	2,695,191
Mark-up expenses				101,193,526	100,450,165
Provision for potential lease losses				2,101,417	(11,000,000)
Unrealised gain in the market value of
investments held for trading				(1,916,639)	520,416
Dividend income				(6,313,752)	(4,824,136)
Loss / (Gain) on disposal of fixed assets				98,514	(766,983)
				103,609,261	92,240,041
Operating profit before working capital changes				121,052,398	131,597,472
MOVEMENT IN WORKING CAPITAL
(lncrease)/decrease in current assets
Advances, deposits, prepayments and
other receivables				(27,093,531)	1,834,045
Short-term loans				5,630,809	11,331,978
				(21,462,722)	13,166,023
(Decrease)/increase in creditors, accrued and
other liabilities				(11,766,209)	21,231,322
				(33,228,931)	34,397,345
				87,823,767	165,994,817
32. CASH AND CASH EQUIVALENTS
Cash and bank balances				223,153,749	92,552,106
Finances under mark-up arrangements				(75,000,000)	(204,185,321)
				148,153,749	(111,633,215)
27. STAFF RETIREMENT GRATUITY
The latest actuarial valuation of the gratuity fund was carried out as at June 30, 2001. The fair
value of the fund's assets and liabilities at the latest valuation date were as follows:
Rupees in millions
Present value of defined benefit obligation				1.288
Less: fair value of plan assets				2.332
Surplus				1.044
Less: Unrecognised net actuarial gain				-1.033
Surplus				0.011
An amount of Rs. 0.196 million has been charged in the profit and loss account during the current
year in respect of staff gratuity.
Projected Unit Credit Method using the following significant assumptions was used for the
valuation of the Fund:
				% per annum
- Discount rate				14
- Expected long-term rate of increase in salary level				11.83
- Expected long-term rate of interest				14
				2002	2001
28. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS				Rupees	Rupees
Term Finance Certificates
- repaid during the year				6,250,000	6,250,000
- mark-up charged for the year				1,512,500	3,136,738
Long Term Finances
- repaid during the year				24,999,603	20,985,411
- mark-up charged for the year				8,705,937	13,560,752
29. REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES
The aggregate amount charged in these accounts for remuneration including all benefits, to the
Chisf FxftditivF! and Fxftnutivfis is as follows"
		Chief Executive		Executives		Total
		2002	2001	2002	2001	2002	2001
					Rupees
Managerial remuneration		3,118,415	2,665,450	6,210,073	5,411,640	9,328,488	8,077,090
House rent, utilities etc		1,078,350	914,825	2,864,725	2,629,933	3,943,075	3,544,758
Retirement benefits		59,703	291,321	136,808	676,702	196,511	968,023
Leave passage		-	1,127,650	245,720	224,000	245,720	1,351,650
		4,256,468	4,999,246	9,457,326	8,942,275	13,713,794	13,941,521
Number of persons		1	1	32	28	33	29
* The Chief Executive is paid leave passage once in two years.
The Chief Executive and certain executives are provided with free use of company maintained
cars.
37. NUMBER OF EMPLOYEES
Total number of employees as at the end of the year was 48 (2001: 79).
38. CORRESPONDING FIGURES
Corresponding figures have been rearranged and reclassified, wherever necessary, to facilitate
comparison.
39. DATE OF AUTHORISATION
These financial statements were authorised for issue on September 24, 2002 by the Board of
Directors of the company.
33. FINANCIAL ASSETS AND LIABILITIES
		intrest/Mark-up Bearing			Non-Intrest /Mark-up Bearing			Total
		Maturity	Maturity	Sub-total	Maturity	Maturity	Sub-total
		upto one year	after one year		upto one year	after one year
		Rupees
Financial Assets
Net investment in leases		805,943,912	969,087,081	1,775,030,993				1,775,030,993
Investments		596,168,957	-	596,168,957	9,076,739	48,047,369	57,124,108	653,293,065
Loans to employees		938,022	227,288	1,165,310	-	-	-	1,165,310
Short-term loans		44,549,268	-	44,549,268	-