| InterAsia Leasing |
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|
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|
|
| Annual
Report 1997 |
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| CONTENTS |
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| Corporate
Information |
|
| Financial
Highlight |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
|
| Pattern
of Share Holding |
|
| Notice
of Meeting |
|
|
|
| CORPORATE
INFORMATION |
|
|
| Board
of Directors |
|
|
| Mr.
Inam-ul Haq |
Chairman |
|
| Mr.
Haroon Sharif |
Chief Executive Officer |
|
| Mr.
Rauf Baksh Kadri |
|
| Mr.
Naveed A. Khan |
|
| Dr.
Najeeb Samie |
|
| Mr.
Ashfaq Yousaf Tola |
|
| Mr.
Rashid Zahir |
Nominee of Saudi Pak
Industrial & |
|
|
Agricultural Investment
Co. (Pvt) lad. |
|
|
| Company
Secretary |
|
| Syed
Fazal Ahmed, (ACMA) |
|
|
| LTV
Group Companies |
|
| Bankers
Equity Limited |
|
| Long
Term Venture Capital Modaraba |
|
| InterAsia
Leasing Company Limited |
|
| First
Interfund Modaraba |
|
| LTV
Housing Finance Limited |
|
|
| Bankers |
|
| Schon
Bank Ltd. |
|
| Crescent
Investment Bank Ltd. |
|
| Union
Bank Ltd. |
|
| Deutsche
Bank AG |
|
| Bank
of Khyber |
|
| First
Women Bank Ltd. |
|
|
| Legal
Advisors |
|
| Cornelius
Lane & Mufti |
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| Advocates
& Solicitors |
|
|
| Auditors |
|
| Khalid
Majid Husain Rahman, Chartered Accountants |
|
|
| Registrar
anti Share Transfer Office |
|
| Universal
Management Services (Pvt) Ltd. |
|
| Room
No. 205, Central Hotel |
|
| Abdullah
Haroon Road, Karachi, Pakistan |
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| Phone:
(92-21) 5688094 |
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|
| Head
Office/Registered Office |
|
| 107-West,
Fazle Haq Road, Blue Area |
|
| lslamabad
- 44000, Pakistan |
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| Phone: |
(92 51)275591-94 |
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| Fax: |
(92 51) 275599 |
|
| Email: |
IIcl@ilclisb.sdnpk.undp.org |
|
|
| Contact:
Tariq Rashid. Manager |
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|
| Liaison
Offices |
|
|
| Lahore |
|
| State
Life Building |
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| 1st
Floor. Sir Agha Khan Road |
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| Lahore,
Pakistan |
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| Phone: |
(92 42) 6303059,6303069 |
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| Fax: |
(92 42) 6303069 |
|
| Contact:
Zargham Khan Durrani. Vice President |
|
|
|
| Karachi |
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| Finance
& Trade Centre |
|
| I
st. Floor, Shahrah-e-Faisal |
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| Karachi,
Pakistan |
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| Phone:
(92 21) 5675381-4 |
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| Fax: (92 21) 5676289 |
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| Contact:
Dabeer Ahmed, Assistant Vice President |
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| FINANCIAL
HIGHLIGHT |
|
(Rs. in millions) |
|
|
1997 |
1996 |
1995 |
|
|
(six months) |
|
|
| Financial
Position |
|
| Total
Assets |
|
403.04 |
302.38 |
228.32 |
|
| Leased
Assets |
|
313.76 |
231.36 |
186.20 |
|
| Current
Liabilities |
|
141.24 |
144.98 |
81.25 |
|
| Long
Term Debts |
|
132.23 |
29.62 |
29.49 |
|
| Shareholder's
Equity |
|
129.58 |
127.79 |
117.58 |
|
|
|
|
| Earning
Information |
|
| Operating
Revenues |
|
60.70 |
38.38 |
16.85 |
|
| Net
Income after tax |
|
14.29 |
10.21 |
5.13 |
|
| - Return on Equity |
|
11.18% |
8.68% |
9.12% |
|
| a) Return on Assets |
|
4.05% |
3.85% |
4.84% |
|
|
|
| DIRECTORS'
REPORT AND REVIEW BY THE CHAIRMAN |
|
|
| The
directors of InterAsia Leasing Company Limited are pleased to present the
fifth |
|
| Annual
Report and Audited Accounts of the company for the year ended June 30, 1997. |
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| During
this period, your company has shown consistent growth in all areas of its |
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| operations.
The financial results of 1997 clearly reflect management's vision, |
|
| commitment
and efforts towards developing a productive investment portfolio for the |
|
| company. |
|
|
| Financial
Results |
|
| Lease
Investments |
Rs. |
313,765,045 |
|
| Expenditure |
Rs. |
44,076,571 |
|
| Profit
for the year |
Rs. |
14,289,499 |
|
| Net worth |
|
Rs. |
129,577,957 |
|
|
| Dividend |
|
| The
board of directors has recommended a cash dividend @ 12.5% for the year ended |
|
| June
30, 1997. |
|
|
| Performance
Review |
|
| While
carefully analyzing the prevailing economic conditions in Pakistan, the |
|
| management
of InterAsia Leasing has decided to make lease investments only in running |
|
| projects
with good track record. During 1996-97, company's net investment in leases |
|
| grew
35.9%, from Rs. 231.0 million in 1996 to Rs. 314.0 million in 1997 while its
total |
|
| asset
size grew by 33.3%. The growth in performing lease investments reflects in
the |
|
| profitability
as the net profit of the company rose to Rs. 14.3 million as compared to Rs. |
|
| 10.2
million in the preceding year. Your company exercised maximum prudence in the |
|
| credit
evaluation process as only recession insensitive companies were identified
and |
|
| vigorously
scrutinized for advancing lease financing. The lease size was kept smaller in |
|
| order
to diversify exposure risk as a result of which average lease investment has
gone |
|
| down
to Rs. 1.6 million per client in 1997 from Rs. 3.5 million in 1995. The
company |
|
| believes
in sustainable continuous growth in both assets and profitability. |
|
|
| Lease
portfolio of InterAsia Leasing is evenly spread among various sectors and
reaffirms |
|
| management's
policy of risk diversification. The company has managed to reduce its |
|
| exposures
in textile and cement sectors. It may also be pointed out that investment in |
|
| small
and medium size companies is made keeping in view their sectoral dispersion
and |
|
| competitive
edge. |
|
|
| lnterAsia's
focus on the productive |
|
| industrial
sectors of the country is also |
|
| reflected
by the fact that over 75% of its |
|
| asset
portfolio comprises of plant and |
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| machinery,
while the care has been |
|
| taken
to ensure that other assets of its |
|
| portfolio
are also used in productive |
|
| activities
of industrial and non-industrial |
|
| users. |
|
|
| Resource
Mobilization |
|
| The
slow down in economy, |
|
| unprecedented
rise in number of |
|
| financial
institutions and market |
|
| crowding
out by the government has |
|
| made
resource mobilization quite an |
|
| uphill
task for leasing companies. |
|
| Despite
this extremely competitive |
|
| situation,
InterAsia Leasing |
|
| successfully
managed to raise |
|
| adequate
additional funds during |
|
| 1996-97.
The major growth was |
|
| seen
in certificates of investment |
|
| (COl)
where your company managed |
|
| to
double the amount of COl from |
|
| the
last year. To reduce the |
|
| mismatch
of funds, long term credit |
|
| lines
of Rs. 26 million were also |
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| obtained.
The company is |
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| continuously
trying to raise long |
|
| term
matching funds from |
|
| international
financial institutions. |
|
| For
this, active negotiations are |
|
| underway
and management hopes to |
|
| materialize
sizable resources during |
|
| next
financial year. |
|
|
| Focus
On Small And Medium Enterprises (SMEs) |
|
| During
1996-1997, the small scale-manufacturing sector of the country as a whole has |
|
| grown
by 8.4% as compared to large scale manufacturing which has registered a
decline |
|
| of
1.4%. The cement sector which is part of large scale manufacturing sector has
shown |
|
| a
negative growth of 0.3%. The cotton ginning, yarn and cloth have registered a
negative |
|
| growth
rate of 11.5%, 2.2% and 4.8% respectively. (Source: Economic Survey 1996-97) |
|
|
| During
the past two years, InterAsia Leasing has shifted its marketing focus towards |
|
| Small
and Medium Enterprises (SMEs) in Pakistan. Small and Medium Enterprises |
|
| include
business houses in Pakistan belonging to relatively unorganized sector with
an |
|
| average
capital base of less than Rs. 5.0 million. Based on comprehensive research
and |
|
| in-depth
analysis, the management believes that SMEs with reasonable business history |
|
| are
better credit risk than providing lease financing to greenfield projects or
other larger |
|
| sectors
of industry. On the other hand, by supporting expansion plans of SMEs, your |
|
| company
makes a positive contribution in development of a broad based industrial |
|
| environment
in Pakistan. Presently, major portion of company's lease portfolio is |
|
| invested
in Small and Medium Enterprises |
|
|
| The
LTV Group Support |
|
| At
this point, it is pertinent to point out the support company enjoys as being
part of the |
|
| LTV
Group. The group has established itself among the major financial houses in |
|
| Pakistan
with total assets of Rs. 18.0 billion. After acquiring controlling shares of |
|
| Bankers
Equity Limited, a leading development financing institution (DFI), LTV Group |
|
| managed
to turn it around in one years time. Being part of LTV Group, InterAsia
Leasing |
|
| is
well positioned to take advantage of business opportunities by using group
image and |
|
| support
where ever required. |
|
|
| Economic
Environment |
|
| The
last 10 years have seen Pakistan position itself as a democratic country,
promoting |
|
| the
free enterprise system and encouraging the private sector and direct foreign |
|
| investment.
Even without the satisfaction of having "good governance,"
Pakistan's GDP |
|
| growth
performance has been quite impressive. From 1980-92 GDP grew at an average |
|
| of
6.5% from 1992-95 at 4.3%, and in 1996 at 5.6%. Industrial output has
generally |
|
| grown
faster than GDP growth. In addition to having its own domestic market of 130 |
|
| million
people, Pakistan is strategically located at a gateway to the newly
independent |
|
| Central
Asian Republics. This location gives it access to another 200 million people. |
|
| Pakistan's
trade deficit has been consistently between $2.5-$3.5 billion annually. This |
|
| has
put pressure on the country to introduce economic reforms by promoting the
private |
|
| sector
through privatization and deregulation making the currency more convertible
and |
|
| opening
its doors to foreign investment. The next year, 1998, should see the budget |
|
| deficit
being brought down from 8% to 6% of GDP, inflation being brought down from |
|
| 12%
to 9% and foreign exchange reserves climb up from $600 million to $1.5
billion. |
|
|
| The
existing leadership is regarded as pro-business and is taking positive and
forward |
|
| looking
measures. These reforms have also been welcomed internationally as Euromoney |
|
| comments
in its August 1997 issue "Pakistan is back in the fold of financially
respectable |
|
| nations.
The turnaround has been accomplished by a government committed to |
|
| stimulating
business and the private sector at the expense of state-owned entities. |
|
| Reserves
have improved, morale in the private sector is higher and IMF appears to |
|
| extend
its support". We hope that overall conditions remain favorable for a
positive |
|
| economic
outlook. |
|
|
| Leasing
Industry in Pakistan |
|
| According
to available information, over Rs. 46.0 billion of leasing transactions have |
|
| been
recorded so far in Pakistan. The outstanding combined lease portfolio size is |
|
| estimated
to be above Rs. 20.0 billion with growth rate of 10 to 15 percent per annum. |
|
|
| The
current size of the leasing market in Pakistan may not be very huge, but as a
matter of |
|
| fact,
in the last few years, leasing companies and leasing modarabas have been the
major |
|
| source
of fixed asset financing to other-wise capital starved manufacturing sector.
This |
|
| reason
alone is a major contributor towards the success and rapid growth of leasing |
|
| industry
in Pakistan. Among other factors, maturing of leasing companies and lessees' |
|
| greater
understanding of the leasing concept have also contributed significantly
towards |
|
| making
leasing a widely popular and accepted mode of alternate financing in the
country. |
|
|
| As
far as existence of sizable leasing market is concerned, experts believe that
in |
|
| developing
countries like Pakistan the potential leasing market is huge. As of June
1996, |
|
| lease
financing accounted for over 25% of the total sanctions and disbursen~ents in |
|
| Pakistan.
While in terms of market penetration Pakistan has still a long way to go, at
little |
|
| over
7% penetration means that 7% of the capital goods acquired in the country
were |
|
| through
leasing finance. Therefore, there is a lot of growth potential in the market
size |
|
| especially
InterAsia's target market i.e. the small scale manufacturing sector which has |
|
| over
the last few years grown faster than the overall manufacturing sector in
Pakistan. |
|
|
| Future
Vision |
|
| InterAsia
Leasing wishes to grow at the regional level by forming strategic alliances
with |
|
| international
financial institutions. The company also plans to develop specific purpose |
|
| lines
of credit for environment friendly projects. In general, company believes in |
|
| meaningful
contribution towards economic development of Pakistan and maximization of |
|
| our
shareholders wealth. The successful implementation of steps outlined above
will |
|
| allow
us to develop into even more productive and competitive enterprise. In this
regard, |
|
| we
look forward to grow along with you, our clients and the shareholders.
Finally, we are |
|
| committed
to having best team of professionals which is the most important factor in |
|
| being
successful in this age of severe competition. |
|
|
| Directors
would like to acknowledge dedication, commitment and hard work of the |
|
| employees
which contributed towards smooth operations of the company. We are also |
|
| grateful
to our shareholders for their confidence, the regulatory agencies for their
support. |
|
| and
to our clients for their trust in our services. |
|
|
For and on behalf of |
|
|
the Board of Directors |
|
|
|
-Sd- |
|
| Karachi |
|
Inam-ul Haq |
|
| November
17, 1997 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of InterAsia Leasing Company Limited
as at |
|
| June
30, 1997 and the related profit and loss account and cash flow statement
together |
|
| with
the notes forming part thereof, for the period 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 and. after due verification
thereof, we |
|
| report
that: |
|
|
| a)
in our opinion, proper books of accounts 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 and cash flow statement
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; |
|
|
| (ii)
the expenditure incurred during the period was for the purposes 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 had loss account and cash flow statement, |
|
| 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, 1997 and of
the |
|
| profit
and the cash flow statement for the period then ended and |
|
|
| d)
in our opinion Zakat deductible at source under Zakat and Ushr Ordinance,
1980 was |
|
| deducted
by the company and deposited in central zakat fund establishment under |
|
| section
7 of the ordinance. |
|
|
|
KHALID MAJID HUSAIN
RAHMAN |
|
| Islamabad |
|
Chartered A accountants |
|
| November
03, 1997 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
|
1997 |
1996 |
|
|
Note |
(Rupees) |
(Rupees) |
|
|
|
|
| CAPITAL
AND LIABILITIES |
|
|
|
|
|
|
| Authorized
Capital |
|
|
|
|
|
|
| 20,000,000
ordinary |
|
|
|
| shares
of Rs. 10/- each |
|
|
200,000,000 |
200,000,000 |
|
|
|
============ |
============ |
|
| lssued,
subscribed and paid up capital |
|
|
|
|
|
| 10,000,000
ordinary shares of |
|
|
|
| Rs.
10/- each fully paid in cash |
|
|
100,000,000 |
100,000,000 |
|
|
|
|
| Revenue
reserves |
|
|
|
| Statutory |
|
|
10,915,591 |
8,136,692 |
|
| General |
|
|
10,000,000 |
10,000,000 |
|
| Contingencies |
|
3 |
3,137,650 |
2,313,600 |
|
| Un-appropriated
profit |
|
|
5,524,716 |
7,338,166 |
|
|
|
---------- |
---------- |
|
|
|
129,577,957 |
127,788,458 |
|
| Long
Term Deposits |
|
4 |
107,515,275 |
29,618,140 |
|
| Long
Term Finances |
|
5 |
24,708,401 |
- |
|
|
|
|
|
| Current
Liabilities |
|
|
|
|
|
|
| Current
portion of long term deposits |
|
23,127,548 |
34,289,121 |
|
| Current
maturity of long term finances |
|
9,240,000 |
- |
|
| Finances
under mark-up arrangements |
6 |
58,913,378 |
98,681,839 |
|
| Accrued
and other liabilities |
|
7 |
37,301,995 |
11,847,799 |
|
| Dividend
payable |
|
|
12,658,966 |
160,665 |
|
|
|
----------- |
----------- |
|
|
|
141,241,887 |
144,979,424 |
|
|
|
----------- |
----------- |
|
|
|
403,043,520 |
302,386,022 |
|
|
|
=========== |
=========== |
|
|
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
|
| ASSETS |
|
|
|
|
|
|
| Fixed Assets Tangible |
|
8 |
3,227,299 |
3,028,115 |
|
| Net
Investment In Leases |
|
|
|
| Minimum
lease payment receivables |
|
|
364,295,489 |
268,171,977 |
|
| Add:
Residual value of leased assets |
|
53,908,187 |
37,649,876 |
|
|
|
----------- |
----------- |
|
|
|
418,203,676 |
305,821,853 |
|
| Less:
the earned lease income |
|
|
(104,438,631) |
(74,461,849) |
|
|
|
----------- |
----------- |
|
| Net
investment in leases |
|
|
313,765,045 |
231,360,004 |
|
| Less:
Current portion of net |
|
|
|
| investment
in leases |
|
|
(81,077,932) |
(74,210,255) |
|
|
|
----------- |
----------- |
|
|
|
232,687,113 |
157,149,749 |
|
| Long
Term Investments |
|
9 |
42,503,528 |
41,351,768 |
|
| Long
Term Deposits |
|
|
188,070 |
16l,150 |
|
| Deferred
Costs |
|
10 |
3,619,044 |
,935,622 |
|
| Current
Assets |
|
|
|
|
|
|
| Current
portion of net investment in leases |
11 |
81,077,932 |
74,210,255 |
|
| Advances,
prepayments and other |
|
|
|
| receivables |
|
12 |
34,635,284 |
20,811,828 |
|
| Cash
and bank balances |
|
13 |
5,105,250 |
2,737,535 |
|
|
|
------------ |
------------ |
|
|
|
120,818,466 |
97,759,618 |
|
|
------------ |
------------ |
|
|
403,043,520 |
302,386,022 |
|
|
============= |
============= |
|
|
|
|
| -Sd- |
|
-Sd- |
|
| Inam
ul Haq |
|
Haroon Sharif |
|
| Chairman |
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
| PROFIT AND LOSS ACCOUNT FOR |
|
|
| THE
PERIOD ENDED JUNE 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
(Rupees) |
(Rupees) |
|
| Revenue |
|
|
|
| Income
from leasing operations |
|
14 |
55,280,694 |
37,888,362 |
|
| lncome/(loss)
from investments |
|
15 |
3,042,128 |
(220,920) |
|
| Other
Income/(charges) |
|
16 |
2,373,464 |
715,493 |
|
|
|
------------- |
------------- |
|
|
|
60,696,286 |
38,382,935 |
|
| Expenses |
|
|
|
|
|
| Administrative
and operating expenses |
17 |
12,004,606 |
9,901,668 |
|
| Financial
charges |
|
18 |
32,071,965 |
15,400,902 |
|
|
|
------------- |
------------- |
|
|
|
44,076,571 |
25,302,570 |
|
|
|
------------- |
------------- |
|
| Profit/(Loss)
before taxation |
|
|
16,619,715 |
13,080.37 |
|
| Provision
for contingencies related to Investments |
1,453,497 |
-- |
|
| Provision
for potential lease losses |
|
599,517 |
2,478,639 |
|
|
|
------------- |
------------- |
|
|
|
2,053,014 |
2,478,639 |
|
|
|
------------- |
------------- |
|
| Profit/(Loss)
before taxation |
|
|
14,566,701 |
10,601,726 |
|
| Provision
for taxation |
|
|
|
|
|
| Current |
|
21 |
277,202 |
177,295 |
|
| Prior year |
|
|
-- |
217,709 |
|
|
|
------------- |
------------- |
|
|
|
277,202 |
395,004 |
|
|
|
------------- |
------------- |
|
|
|
14,289,499 |
10,206,722 |
|
| Un-appropriated
profit |
|
|
|
|
|
| brought
forward |
|
|
7,338,166 |
4,964,671 |
|
|
|
------------- |
------------- |
|
|
|
21,627,665 |
15,171,393 |
|
| Appropriations: |
|
|
|
|
| Transfer
to statutory reserve |
|
|
2,778,899 |
2,120,345 |
|
| Transfer
to contingencies reserve |
|
|
824,050 |
2,313,600 |
|
| Transfer
to general reserve |
|
|
-- |
3,399,282 |
|
| Proposed
dividends |
|
|
12,500,000 |
-- |
|
|
|
------------- |
------------- |
|
|
|
16,102,949 |
7,833,227 |
|
|
|
------------- |
------------- |
|
| Un-appropriated
profit carried to balance sheet |
|
5,524,716 |
7,338,166 |
|
|
|
============= |
============= |
|
|
|
|
|
| CASH
FLOW STATEMENTS FOR THE PERIOD |
|
| FROM
JULY 01, 1996 TO JUNE 30, 1997 |
|
1997 |
1996 |
|
|
(Rupees) |
(Rupees) |
|
|
| Net
profit after taxation |
|
14,289,499 |
10,206,722 |
|
| Adjustments
for: Depreciation |
|
750,923 |
674,823 |
|
| Deferred
costs amortized |
|
2,266,578 |
1,270,862 |
|
| (Income)/loss
from Investments |
|
(3,042,128) |
67,376 |
|
