| Telecard Limited |
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|
(Annual Report 1996) |
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| CONTENTS |
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| COMPANY INFORMATION |
|
3 |
|
|
| NOTICE OF ANNUAL GENERAL
MEETING |
4 |
|
|
| DIRECTORS'
REPORT |
|
5 |
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| CHAIRMAN'S
REVIEW |
|
6 |
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| PATTERN OF SHARE HOLDING |
|
8 |
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| AUDITORS'
REPORT TO THE MEMBERS |
9 |
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| BALANCE SHEET |
|
10 |
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| PROFIT
& LOSS ACCOUNT |
|
12 |
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| CASH
FLOW STATEMENT |
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13 |
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| NOTES TO THE ACCOUNTS |
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15 |
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COMPANY INFORMATION |
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| BOARD
OF DIRECTORS |
|
| Rear
Admiral (Retd.) A. W. Bhombal |
(Chairman) |
|
| Mr.
Sultan-ul-Arfeen |
|
| Mr.
Khalid Firoz |
|
| Mr.
Javaid Firoz |
|
| Mr.
Asghar Mehdi Abidi |
|
| Mr.
Khan Ajmal Khan |
|
| Dr.
Dudley B. Christie. |
|
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| CHIEF
EXECUTIVE |
|
|
| Mr.
Khalid Amin |
|
|
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|
|
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| GENERAL
MANAGERS |
|
|
| Mr.
Aziz-ul-Haq |
|
| Mr.
Farrukh Hayat |
|
|
| Mr.
Muzaffar Ahmed |
|
| Mr.
Ahsan Mukhtar |
|
|
| Mr.
Tahir Imtiaz Ali |
|
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| COMPANY
SECRETARY |
|
| Mr.
Aziz-ul-Haq |
|
|
|
|
| BANKERS |
|
|
|
| Bank
of America |
|
| Al-Faysal
Investment Bank Ltd. |
|
| Faysal
Bank Ltd. |
|
| Muslim
Commercial Bank Ltd. |
|
| Habib
Bank Ltd. |
|
| National
Bank Ltd. |
|
|
| United
Bank Ltd. |
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| Allied
Bank Ltd. |
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| AUDITORS |
|
|
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| M/s
Ford, Rhodes, Robson, Morrow |
|
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|
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| REGISTERED
OFFICE |
|
| 75,
East Blue Area, Fazal-ul-Haq Road, |
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| lslamabad,
Pakistan. |
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|
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| SHARES
DEPARTMENT |
|
|
| World
Trade Center, FL/10, |
|
| Khayaban-e-Roomi,
Clifton, |
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| Karachi
- Pakistan. |
|
|
|
|
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|
Notice of Annual General
Meeting |
|
| Notice
is hereby given that the 3rd Annual General Meeting of the Shareholders of
the |
|
| Company
will be held on Sunday, December 29, 1996 at 11.00 a.m., at Hotel Holiday
Inn, |
|
| Civic
Centre, lslamabad to transact the following business:- |
|
|
|
| 1.
To confirm the minutes of the last Annual General Meeting, held on April 1,
1995. |
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|
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| 2.
To receive, consider and adopt the Audited Accounts of the Company for
eighteen |
|
| months
covering period from January 1, 1995 to June 30, 1996 together with the |
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| Directors'
and Auditors' report thereon. |
|
|
| 3.
To appoint Auditors of the Company and fix their remuneration. Present
Auditors M/s |
|
| Ford,
Rhodes, Robson, Morrow, Chartered Accountants, retire and being eligible
offer |
|
| themselves
for re-appointment. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
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|
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|
By order of the Board |
|
|
AZIZ-UL-HAQ |
|
|
|
Company Secretary |
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| Dated:
December 5, 1996. |
|
Islamabad |
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| NOTES: |
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| 1.
The share transfer books of the Company shall remain closed from December 22,
1996 |
|
| to
December 29, 1996 (both days inclusive). |
|
|
| 2.
A member of the Company entitled to attend and vote may appoint another
member as |
|
| his/her
proxy to attend and vote instead of him/her. Proxy in-order must be received
at |
|
| the
Registered Office of the Company not less than 48 hours before the time of
holding |
|
| Annual
General Meeting. |
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|
|
| 3.
The members are requested to communicate with Company of any change in their |
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| address. |
|
|
| 4.
Corporate Law Authority, Government of Pakistan has instructed all Companies
not to |
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| distribute
gifts at AGMs. |
|
|
| 5.
The election of Directors will be held in April 1997 when their tenure of
three years |
|
| expires. |
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|
|
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|
Directors' Report |
|
|
| The
Directors submit their Report and Audited Accounts for the period ended June
30, 1996. |
|
| The
loss for the period after taxation amounts to Rs. 38.19 Million. As these are
first accounts |
|
| prepared
after commencement of commercial operations, the comparative figures are not |
|
| available. |
|
|
| The
three year term of office of the six Directors expires in April 1997. Mr.
Sultan-ul-Arfeen, |
|
| Mr.
Javaid Firoz, Mr. Khalid Firoz, Admiral (Retd.) Abdul Waheed Bhombal, Mr.
Asghar Mehdi |
|
| Abidi,
and Mr. Khan Ajmal Khan, being the present elected Directors of the Company
shall |
|
| retire
in accordance with the provisions of Section 180 of the Companies Ordinance
1984 |
|
| and
would be eligible for re-election at the expiry of their term. |
|
|
| The
chairman's review on pages included in the Annual Report covers Company's
operating |
|
| performance
and future outlook. |
|
|
| The
present auditors M/s Ford, Rhodes, Robson Morrow offer themselves for
re-appointment. |
|
|
|
|
|
On Behalf of the Board. |
|
|
|
Khalid Amin |
|
| Karachi:
December 5, 1996 |
|
Chief Executive |
|
|
|
|
|
Chairman's Review |
|
| 1.
INTRODUCTION: |
|
| It
is with mixed feelings of satisfaction, frustration and hope that I present
you the First |
|
| Annual
Report of Telecard Ltd. For the financial period January 1, 1995 to June 30, |
|
| 1996.
I feel satisfaction over the fact that your Company in a short period
established |
|
| itself
as a market leader with the highest sales, largest network and the most
advanced |
|
| technology
in the field of Payphone Service in the Country. However, it is a frustrating |
|
| reality
that your Company was unable to realise its planned potential due to sudden
and |
|
| continuous
closure of Payphone Service in Karachi by the Federal Government since July |
|
| 1995.
Suspension of Telecard's Service in Karachi which represented bulk of the
Company's |
|
| business
had devastating repercussions on the Company's profitability and operations. |
|
| Fixed
operating assets worth over 70 percent of already installed and in the
pipeline |
|
| were
rendered unproductive. The company has had to absorb huge financial and |
|
| operating
charges on these idle assets without any commensurate revenue. To ban |
|
| telecom
service in today's telecommunication based era on the pretext of "Public
Safety" |
|
| is
bizarre and naive. Nevertheless, the ban on Telecard's service has not been
lifted |
|
| todate,
inspite of every appeal and representation made to all appropriate
authorities in |
|
| Islamabad. |
|
|
| 2.
PUBLIC FLOATATION OF SHARES: |
|
| Telecard
Ltd. offered shares of Rs. 56.25 million to the public in June 1995, thereby |
|
| becoming
the Country's first public listed company in the Telecommunication field in
the |
|
| private
sector. By the Grace of Allah the Company's public offer of shares was over |
|
| subscribed
21 times, reflecting on public confidence in our business. |
|
|
| 3.
OPERATING RESULTS: |
|
| During
the period under review, the Company generated sales of Rs. 197.48 million, |
|
| despite
no revenue one full year from its main business centre, Karachi. This sales
level |
|
| shows
a healthy growth against the sales of Rs. 82.51 million for .the year ending
31 |
|
| December,
1994. During the period, the Company incurred a gross loss of Rs. 4.8 |
|
| million.
However due to ban on the Company's service in Karachi resulting in
unabsorbed |
|
| overhead
and idle operating assets, the Company was forced to incur a net loss of |
|
| Rs.
38.19 million. |
|
|
| Telecard's
ambitious program of rapid and extensive expansion of its network, particu- |
|
| larly
in the rural areas, suffered a severe setback due to suspension of its
service in |
|
| Karachi.
The ban, besides rendering a major part of the Company's operating assets
idle, |
|
| drained
its capacity to deploy financial resources for planned system build-out and |
|
| expansion.
The expansion program will be undertaken as soon as the Government |
|
| restores
Telecard's Payphone Service in Karachi. |
|
|
| 4. OUTLOOK: |
|
| Our
efforts with the Government to get the Karachi ban lifted continues
relentlessly. In |
|
| the
mean time the company has lodged a claim on the Government for Rs. 2.26
Billion |
|
| towards
compensation of losses incurred due to the Federal Government's decision to |
|
| suspend
business in Karachi. The claim is being vigorously persued and the company |
|
| hopes
to receive a just settlement. We can best hope that our unabated effort bears
fruit |
|
| and
the Government soon restores payphone service in Karachi. |
|
|
| Once
this decision is taken, Telecard is fully geared to immediately restart its
operations |
|
| in
the City. Program for expanding Telecard's network intensively and
extensively through- |
|
| out
the Country shall also be aggressively undertaken. |
|
| It
is well established by now that TCL is in the right business with a very good
potential |
|
| for
future growth. After completing its initial project phase, TCL has now been
reorganised |
|
| to
attain and sustain leadership in operations. Organisation structure,
management and |
|
| operating
systems are being reorganised. These positive changes are expected to bring |
|
| about
significant improvement in the key performance areas of the company. |
|
|
| 1
wish to express my appreciation for the valuable support and cooperation of
all share |
|
| holders
of Telecard. 1 would also like to acknowledge the very good work put in by
the |
|
| staff
throughout the period under review. |
|
|
|
|
Rear Admiral (Retd.) A.
W. Bhombal |
|
| December
5, 1996 |
|
(Chairman) |
|
|
|
|
|
|
PATTERN OF SHAREHOLDING |
|
|
AS AT JUNE 30. 1996 |
|
|
| No. of |
Share Holding |
Total Shares |
|
| Shareholders |
From |
To |
Held |
|
|
|
|
|
| 8 |
1 |
100 |
800 |
|
| 9,227 |
101 |
500 |
4,606,300 |
|
| 293 |
501 |
1000 |
293,000 |
|
| 1 |
5001 |
10000 |
10,000 |
|
| 1 |
25001 |
30000 |
29,400 |
|
| 1 |
35001 |
40000 |
35,950 |
|
| 4 |
45001 |
50000 |
200,000 |
|
| 1 |
65001 |
70000 |
70,000 |
|
| 1 |
105001 |
110000 |
110,000 |
|
| 1 |
115001 |
120000 |
120,000 |
|
| 1 |
125001 |
130000 |
130,000 |
|
| 3 |
135001 |
140000 |
418,000 |
|
| 1 |
295001 |
300000 |
300,000 |
|
| 1 |
1285001 |
1290000 |
1,289,050 |
|
| 1 |
1495001 |
1500000 |
1,500,000 |
|
| 1 |
3045001 |
3050000 |
3,050,000 |
|
| 1 |
6085001 |
6090000 |
6,090,000 |
|
| 1 |
6155001 |
6160000 |
6,160,000 |
|
| --------- |
|
--------- |
|
| 9,549 |
|
|
24,975,000 |
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
| AS
AT JUNE 30, 1996 |
|
|
| Categories
of Shareholders |
Number |
Shares Held |
Percentage |
|
|
| JOINT
STOCK COMPANIES |
|
8 |
18,951,650 |
75.88 |
|
| FINANCIAL
INSTITUTIONS |
|
1 |
110,000 |
0.44 |
|
| LEASING/MODARABA
COMPANIES |
0 |
0 |
0.00 |
|
| MODARABA
COMPANIES |
|
0 |
0 |
0.00 |
|
| INSURANCE
COMPANIES |
|
0 |
0 |
0.00 |
|
| INVESTMENT
COMPANIES |
|
1 |
29,400 |
0.12 |
|
| INDIVIDUALS |
|
|
9,539 |
5,883,950 |
23.56 |
|
| ASSOCIATED
COMPANIES |
|
0 |
0 |
0.00 |
|
| FOREIGN
INVESTORS |
|
0 |
0 |
0.00 |
|
| OTHERS |
|
|
0 |
0 |
0.00 |
|
|
|
|
--------- |
--------- |
--------- |
|
|
|
|
9,549 |
24,975,000 |
100.00 |
|
|
|
|
|
Auditors' Report to the
Members |
|
|
| We
have audited the annexed balance sheet of Telecard Limited as at June 30,
1996 and |
|
| the
related profit and loss account and statement of changes in financial
position together |
|
| with
the notes forming part thereof, for the period then ended and 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 and after due verification thereof, 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
as stated in note 2; |
|
|
| ii)
the expenditure incurred during the period was for the purpose of the
Company's |
|
| business;
and |
|
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the |
|
| period
were in accordance with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given |
|
| to
us, the balance sheet, profit and loss account and the statement of changes
in financial |
|
| position,
together with the notes forming part thereof, 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, 1996; and of
loss and |
|
| changes
in financial position for the period then ended; and |
|
|
| (d)
in our opinion no zakat was deductible at source under the Zakat and Ushr
ordinance, |
|
| 1980; |
|
|
| (e)
without qualifying our opinion we draw attention to note 18.3 and 18.4 and
pending the |
|
| outcome
of the efforts the company is making in this regard, no provision for
receivable |
|
| of
Rs. 1.48 million has been made in these accounts. |
|
|
|
|
|
| Karachi |
|
FORD. RHODES, ROBSON.
MORROW |
|
| December
5, 1996. |
|
Chartered Accountants. |
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
June 30 |
December 31 |
|
|
|
|
|
1996 |
1994 |
|
|
Note |
Rupees |
Rupees |
|
| SHARE
CAPITAL |
|
|
|
| Authorised |
|
|
|
| 25,000,000
Ordinary shares of Rs. 10 each |
|
250,000,000 |
250,000,000 |
|
|
|
========= |
========= |
|
| Issued,
Subscribed and paid-up |
|
|
|
| 24,975,000
(1994: 19,375,000) ordinary |
|
| Shares of Rs. 10 each fully paid in cash |
3 |
249,750,000 |
193,750,000 |
|
| Revenue
Reserves |
|
|
|
| Profit
& Loss account - adverse balance |
|
(38,189,165) |
- |
|
|
--------- |
--------- |
|
|
|
211,560,835 |
193,750,000 |
|
|
| DEFERRED
INCOME |
|
4 |
1,555,286 |
- |
|
| DEFERRED
LIABILITIES |
|
5 |
35,907,465 |
21,092,383 |
|
| OBLIGATIONS
UNDER-FINANCE LEASE |
|
6 |
32,106,609 |
27,642,872 |
|
|
|
| CURRENT
LIABILITIES |
|
| Short
term finances |
|
7 |
49,870,144 |
- |
|
| Supplier's
Credit |
|
8 |
58,573,586 |
35,952,387 |
|
| Current
portion of obligations under |
|
|
|
|
| finance lease |
|
|
30,093,145 |
12,686,427 |
|
| Current
portion of custom duty debentures |
|
1,562,129 |
- |
|
| Creditors,
accrued and other liabilities |
9 |
95,313,861 |
25,069,101 |
|
|
|
|
--------- |
--------- |
|
|
|
235,412,865 |
73,707,915 |
|
|
|
|
--------- |
--------- |
|
| Contingencies
and commitments |
|
10 |
516,543,060 |
316,193,170 |
|
|
|
========= |
========= |
|
|
|
AS AT JUNE 30, 1996 |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
fixed assets |
|
11 |
254,852,148 |
150,123,713 |
|
| Capital
work-in-progress |
|
12 |
114,889,286 |
7,622,278 |
|
|
--------- |
--------- |
|
|
|
369,741,434 |
157,745,991 |
|
|
| DEFERRED
ADVERTISEMENT EXPENDITURE |
|
13 |
4,680,000 |
3,900,000 |
|
| DEFERRED
COST |
|
14 |
2,757,044 |
- |
|
| LONG
TERM DEPOSITS |
|
15 |
16,477,597 |
6,575,896 |
|
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and tools |
|
95,214 |
400,462 |
|
| Stock-in-trade |
|
16 |
2,206,609 |
5,373,264 |
|
| Trade debts |
|
17 |
2,299,631 |
1,642,817 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
18 |
12,767,151 |
10,605,580 |
|
| Cash
and bank balances |
|
19 |
105,518,380 |
129,949,160 |
|
|
|
--------- |
--------- |
|
|
122,886,985 |
147,971,283 |
|
|
|
|
--------- |
--------- |
|
|
|
516,543,060 |
316,193,170 |
|
|
|
========= |
========= |
|
| Auditors'
report is annexed hereto. |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
PROFIT & L0SS ACCOUNT
FOR THE PERIOD |
|
|
FROM JANUARY 1, 1995 TO
JUNE 30,1996 |
|
|
June 30, |
|
|
|
Note |
1996 |
|
|
Rupees |
|
|
|
| Gross Sales |
|
197,475,046 |
|
| Less
: Commission |
|
8,789,376 |
|
|
--------- |
|
| Net Sales |
|
88,685,670 |
|
|
|
| Cost
of sales |
|
20 |
193,444,883 |
|
|
|
--------- |
|
| GROSS LOSS |
|
(4,759,213) |
|
|
| Administrative
and selling expenses |
|
21 |
37,358,949 |
|
|
--------- |
|
|
|
(42,118,162) |
|
| Other Income |
|
22 |
22,279,648 |
|
|
|
--------- |
|
|
(19,838,514) |
|
| Financial
expenses |
|
23 |
17,407,203 |
|
| Net
loss for the period |
|
--------- |
|
|
|
(37,245,717) |
|
| Taxation |
|
24 |
(943,448) |
|
|
|
|
--------- |
|
| Loss
carried forward |
|
(38,189,165) |
|
|
========= |
|
|
|
| -
Comparative figures have not been given as this is the first period of |
|
| the
company's commercial operations. |
|
|
| - The
annexed notes form an integral part of these accounts. |
|
|
|
STATEMENT OF CHANGES IN
FINANCIAL POSITION. |
|
|
(CASH FLOW STATEMENT) |
|
|
FOR THE PERIOD FROM
JANUARY 1, 1995 TO JUNE 30, 1996. |
|
|
|
June 30, |
December 31 |
|
|
1996 |
1994 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
| Net
loss before taxation |
|
(37,245,717) |
- |
|
|
|
|
|
| Adjustment
for |
|
|
|
| Depreciation |
|
38,094,074 |
- |
|
| Foreign
exchange gain |
|
(14,271,496 |
- |
|
| Gratuity |
|
1,278,234 |
464,416 |
|
| PTCJ
Deferred liability |
|
4,649,033 |
7,959,019 |
|
| Deferred
cost |
|
900,557 |
- |
|
| Deferred
Income |
|
(491,800 |
- |
|
| Deferred
advertisement expenditure |
|
450,000 |
- |
|
| Loss
on sale of fixed assets |
|
620,836 |
- |
|
|
--------- |
--------- |
|
|
31,229,438 |
8,423,435 |
|
|
--------- |
--------- |
|
| Operating
(loss/profit before working capital changes |
(6,016,279) |
8,423,435 |
|
| Working
Capital changes: |
|
|
|
| (Increase)
/ decrease in current assets |
|
|
|
|
|
|
|
| Stores,
Spares and stocks |
|
3,471,903 |
3,404,458 |
|
| Trade debts |
|
(656,814) |
22,123 |
|
| Advances,
deposits, prepayments and other |
|
|
|
| receivables |
|
(2,161,571) |
(3,782,302) |
|
|
--------- |
--------- |
|
|
653,518 |
(355,721) |
|
| Increase
in current liabilities, |
|
91,922,511 |
26,501,176 |
|
|
--------- |
--------- |
|
|
|
86,559,750 |
34,568,890 |
|
| Foreign
exchange gain |
|
14,271,496 |
- |
|
|
--------- |
--------- |
|
| Net
Cash from operating activities |
|
100,831,246 |
34,568,890 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES: |
|
|
|
|
| Capital expenditure |
|
(282,103,915) |
(82,510,982) |
|
| Deferred cost |
|
(3,657,601) |
- |
|
| Long
term deposits |
|
(9,901,701) |
(5,118, 134) |
|
| Proceeds
from sale of fixed assets |
|
33,440,648 |
- |
|
| Deferred
advertisement expenditure |
|
(1,230,000) |
- |
|
|
--------- |
--------- |
|
| Net
cash used in investing activities |
|
(263,452,569) |
(87,629,116) |
|
|
|
|
|
|
|
STATEMENT OF CHANGES IN
FINANCIAL POSITION. |
|
|
(CASH FLOW STATEMENT) |
|
|
FOR THE PERIOD FROM
JANUARY 1, 1995 TO JUNE 30, 1996. |
|
|
|
|
June 30, |
December 31, |
|
|
|
1996 |
1994 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Liabilities
Against Assets Subject |
|
|
|
| to
finance lease |
|
21,870,455 |
(2,379,952) |
|
| Issue
of share capital |
|
56,000,000 |
173,750,000 |
|
| Custom
duty debentures |
|
10,449,944 |
6,905,199 |
|
| Short
term finances |
|
49,870,144 |
- |
|
|
--------- |
--------- |
|
| Net
cash from financing activities |
|
138,190,543 |
178,275,247 |
|
|
--------- |
--------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
(24,430,780) |
125,215,021 |
|
| Cash
and cash equivalents at the beginning |
|
|
|
| of
the period |
|
129,949,160 |
4,734,139 |
|
| Cash
and cash equivalents at the end |
|
|
|
| of the period |
|
--------- |
--------- |
|
|
|
105,518,380 |
129,949,160 |
|
|
========= |
========= |
|
