| Lease Pak Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
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|
| CONTENTS |
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|
| COMPANY
IN FORMATION |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
|
|
| COMPANY
INFORMATION |
|
|
| CHAIRMAN |
|
MIAN MISBAH UR REHMAN |
|
|
|
|
| PRESIDENT
& CEO |
|
M.T. FAROOQUI |
|
|
|
|
|
| DIRECTORS |
|
|
MR. M. SALEEM SHEIKH |
|
|
|
|
MR. ABDUL REHMAN |
|
|
|
|
MIAN SHUJA-UR-REHMAN |
|
|
|
|
MR. TARIQ REHMAN |
|
|
|
|
C.M. SALEEM CHEEMA |
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|
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|
AGHA NAJEEB RAZA |
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| COMPANY
SECRETARY |
|
AGHA NAJEEB RAZA |
|
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|
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| AUDITORS |
|
FORD, RHODES, ROBSON,
MORROW |
|
|
|
|
CHARTERED ACCOUNTANTS |
|
|
|
|
|
| BANKERS |
|
ALLIED BANK OF PAKISTAN
LIMITED |
|
|
|
UNION BANK LIMITED |
|
|
|
MUSLIM COMMERCIAL BANK
LIMITED |
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|
|
|
NATIONAL DEVELOPMENT
FINANCE CORPORATION |
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|
GULF COMMERCIAL BANK
LIMITED |
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| LEGAL
ADVISORS |
|
CORNELIUS LANE &
MUFTI ADVOCATES & SOLICITORS |
|
|
|
MOHAMMAD AZEEM MALIK -
ADVOCATE |
|
|
|
|
| SHARE
REGISTRARS |
|
M/S. SOFTLINK (PVT)
LIMITED |
|
|
| REGISTERED
OFFICE & HEAD OFFICE |
11-C, MAIN GULBERG,
LAHORE |
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|
TEL:
092-042-5764631-5764641-5756358 |
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|
FAX: 092-042-5713080 |
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|
Email:Iqlpak@brain.net.pk |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 7th Annual General Meeting of Lease Pak Limited will
be held at its Registered Office |
|
| at
11-C, Main Gulberg, Lahore on Thursday 31st December, 1998 at 10:30 A.M. to
transact the following |
|
| business: |
|
|
| (1)
To Confirm the Minutes of the 6th Annual General Meeting held on 2nd
December, 1997. |
|
|
| (2)
To receive and adopt the Audited Accounts of the Company for the year ended
30th June, 1998 together with |
|
| Directors'
and Auditors' Report thereon. |
|
|
| (3)
To approve interim cash dividend at the rate 10% as final dividend. |
|
|
| (4)
To appoint auditors of the Company for 1998-99 and fix their remuneration.
The present auditors M/s Ford, |
|
| Rhodes,
Robson, Morrow, Chartered Accountants retire and being eligible offer
themselves for reappointment. |
|
|
| (5)
To transact any other business with the permission of the Chair. |
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|
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|
By order of the Board |
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| Lahore |
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|
|
AGHA NAJEEB RAZA |
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| Dated:
7th December, 1998 |
|
Company Secretary |
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|
| Notes: |
|
|
| 1.
The share transfer books of the Company will remain closed from December 25,
1998 to December 31, |
|
| 1998
(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. Proxies must be received at the Registered
Office of the Company not less |
|
| than
48 hours before the time of holding the meeting. |
|
|
| 3.
Members are advised to lodge shares for transfer at the office of our
registrars M/S Softlink (Pvt) Limited, |
|
| Wings
Arcade, 1-K (Commercial), Model Town, Lahore. |
|
|
| 4.
Members are requested to notify any change in their address immediately to
the Share |
|
| Registrar
of the Company. |
|
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Board of Director is pleased to present this annual report together with
audited financial statements of your |
|
| company
for the year ended 30 June 1998. |
|
|
| FINANCIAL
RESULTS |
|
|
|
|
|
|
(Rupees in thousand) |
|
|
|
1997 |
1998 |
|
| Revenue |
|
98,795 |
82,424 |
|
| Expenditure |
|
(86,391) |
(69,661) |
|
| Provision
- stock Portfolio |
|
(5,047) |
- |
|
| Provision
doubtful receivables |
|
(1,665) |
- |
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
5,692 |
12,763 |
|
| Provision
for taxation |
|
1,000 |
700 |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
4,692 |
12,063 |
|
| Unappropriated
profit brought forward |
|
10,752 |
2,142 |
|
|
|
---------- |
---------- |
|
| Profit
available for appropriations |
|
15,444 |
14,205 |
|
|
|
---------- |
---------- |
|
|
|
|
| Appropriations: |
|
|
|
| Interim
dividend @ 10% |
|
|
12,000 |
- |
|
| Transfer
to capital reserve |
|
940 |
2,413 |
|
| Reserves
for contingencies |
|
2,460 |
1,040 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carry forward |
|
44 |
10,752 |
|
|
|
|
========== |
========== |
|
|
|
| Increase
in Capital |
|
| The
company increased its capital by Rs. 13.2 million. These shares were issued
to M/s. Itochu Corporation of |
|
| Japan
which is one of the largest business houses of Japan. |
|
|
| Dividend |
|
|
| The
Board of Directors approved an interim dividend @ 10% which is the final
dividend for the year and has been |
|
| distributed. |
|
|
| Stock
Market Portfolio |
|
| The
capital market continued its decline and closed at 880 points in June 1998. A
provision of Rs.5.0 million has |
|
| been
made in the financial statements to partially cover diminution in the value
of stock portfolio. |
|
|
| The Economy |
|
| The
unprecedented turmoil and uncertainty in the state economy adversely affected
the prospects in all sectors. The |
|
| restrictions
on foreign exchange placed by State Bank of Pakistan towards close of the
financial year further |
|
| inhibited
growth. The economic indicators so far predict a declining trend and deeper
recession and this situation |
|
| has
not only restricted the new leases but also slowed down the recovery of past
rentals. To cope with this situation, |
|
| the
management has taken steps to limit the likely adverse impact on the
financial performance of the Company. |
|
|
| Operating
Performance |
|
| In
adverse economic conditions and specific difficulties faced by leasing
industry, your company has been able to |
|
| sustain
a nominal growth within selective segments of the market. The policy of
developing the lease investment in |
|
| small
and medium enterprises was maintained. The exposure of lease portfolio did
not exceed 22% in any single |
|
| sector. |
|
|
| During
the year under review, the gross revenue increased to Rs.98.8 million from
Rs. 82.4 million in the previous |
|
| year,
thus recording a nominal increase of 19.8%. However, the profit before
provisions and tax declined to Rs. |
|
| 12.4
million from Rs. 12.8 million, mainly due to increase in financial cost by
29.6%. |
|
|
|
| The
Company has decided to start making provisions for diminution in value of its
slack portfolio as well as for |
|
| rentals
which are doubtful of recovery. Resultantly, the profit after provisions and
tax is reduced 1o Rs. 4.69 million |
|
| as
against Rs. 12.06 million during previous year, a decline of 61.1%. |
|
|
| The
net investment in lease finance increased by 14.56% from Rs.403 million
previously to Rs.462 million at the |
|
| close
of current year. The company continued with the policy of diversifying its
marketing mix in sector as well as |
|
| asset
exposure and the investment in plant and machinery was rationally reduced to
80% of the 1otal portfolio at the : |
|
| end
of the current year from 84% in the previous year. |
|
|
| During
the year, the company was able to mobilize additional resources amounting to
Rs. 100 million in the form of |
|
| long
term loans, Musharika arrangements and certificates of investment. |
|
|
| The
total assets as of June 30, 1998 were Rs. 613 million recording on increase
of Rs. 70.5 million or 13% over |
|
| previous
year. |
|
|
|
|
| Company
Outlook |
|
| Lease
Pak is a medium sized growth Company which commenced its operation only five
years ago and has |
|
| recorded
a progressive increase in the size of its assets base. However, the present
economic conditions require |
|
| careful
analysis of company's operations. An effective survival strategy calls for a
renewed vigor and vision in the |
|
| company
to foster value added activities and possible alliance building within the
industry. In order to achieve the |
|
| challenging
objectives and goals in front of the company, your Board of Directors have
initialed the change |
|
| management
program. A critical element of the new strategy is in diversification of
operations 1o include financial |
|
| services
and project development functions while at the same time consolidating the
gains in the core business of |
|
| leasing.
The company is making modest investment in restructuring which would position
it better to formulate and |
|
| implement
an action plan which ensures the viability of operations in the immediate
future and a fair return to the |
|
| shareholders
on their investment in the medium term. The risk management and human
resource development will be |
|
| the
prime objectives in front of the management which we intend to put in place
in minimum possible time. The next |
|
| 12-18
months are going to be difficult but particularly challenging as the company
seeks enhancement in the |
|
| quality
of its assets while at the same lime aiming at a selective growth in its
operations and overall leverage. |
|
|
| The
Millennium Bug |
|
| The
company has addressed the year 2000 compliance issue in relation to the
Computer |
|
| hardware
and software. The year 2000 compliance has already been ensured in most of
the |
|
| modules
being used by the Company. |
|
|
| Acknowledgements |
|
| We
wish to acknowledge the support of lending institutions, investors,
shareholders who have shown confidence |
|
| and
extended warm cooperation throughout the year. We also like to thank the
Corporate Law Authority and the |
|
| State
Bank of Pakistan for providing guidance and support as needed. |
|
|
| Finally,
we would like to place on record our appreciation for the dedicated work put
in by the management and |
|
| staff
of the company. |
|
|
|
|
For and on behalf of the Board of Directors |
|
|
|
|
|
|
|
M.T. Farooqui |
|
|
|
President & CEO |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Lease Pak Limited as at June 30,
1998 and the related profit and |
|
| loss
account and statement of sources and application of funds, 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 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 consistently applied; |
|
|
| ii)
the expenditure incurred during the year was for the purposes of the
Company's business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in accor- |
|
| dance
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 sources and application of
funds, 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, 1998 |
|
| and
of the profit and the changes in sources and application of funds for the
year then ended; and |
|
|
|
|
| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980, was deducted by the |
|
| Company
and deposited in the Central Zakat Fund established under Section 7 of that
Ordinance. |
|
|
|
|
| Lahore |
|
|
Ford, Rhodes, Robson, Morrow |
|
| 8-Dec-98 |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
|
Notes |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
| CAPITAL
AND LIABILITIES |
|
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised |
|
|
|
| 30,000,000
(1997: 30,000,000) |
|
|
| ordinary
shares of Rs. 10/- each |
|
300,000,000 |
300,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
4 |
133,201,800 |
120,000,000 |
|
| Reserves |
|
|
|
|
| Capital
reserve |
|
|
5 |
7,639,000 |
6,699,000 |
|
| Reserve
for contingencies |
|
6 |
6,500,000 |
4,040,000 |
|
| Unappropriated
profit |
|
|
|
44,236 |
10,751,848 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
14,183,236 |
21,490,848 |
|
|
|
|
|
| REDEEMABLE
CAPITAL |
|
7 |
55,220,000 |
- |
|
| LONG
TERM LOANS |
|
8 |
103,440,269 |
75,000,001 |
|
| OBLIGATION
UNDER ASSETS SUBJECT TO FINANCE LEASE |
9 |
2,768,809 |
243,532 |
|
| DEPOSIT
ON LEASE CONTRACTS |
|
10 |
71,997,084 |
48,616,256 |
|
| DEFERRED
LIABILITY |
|
11 |
759, 801 |
- |
|
| CERTIFICATES
OF INVESTMENT |
|
12 |
- |
78,000,000 |
|
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of redeemable capital |
|
48,000,000 |
- |
|
| Current
maturity of long term loans |
|
31,708,398 |
58, 166,666 |
|
| Current
maturity of obligations under |
|
|
|
| assets
subject to finance lease |
|
|
1,134,656 |
205,566 |
|
| Current
maturity of deposits on lease contract |
|
5,437,913 |
4,829,476 |
|
| Current
maturity of Certificates of Investment |
|
- |
22,000,000 |
|
| Short
term Certificates of Investment |
13 |
45,000,000 |
54,000,000 |
|
| Short
term finances |
|
14 |
66,759,256 |
11,939,866 |
|
| Redeemable
capital |
|
15 |
12,592,000 |
27,800,000 |
|
| Accrued
and other liabilities |
|
16 |
20,800,811 |
19,648,731 |
|
| Unclaimed
dividend |
|
|
204,475 |
134, 139 |
|
| Income
Tax payable |
|
|
177,111 |
770,639 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
231,814,620 |
99,495,083 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
17 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
613,385,619 |
542,845,720 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| PROPERTY
AND ASSETS |
|
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
18 |
15,431,860 |
12,484,828 |
|
| NET
INVESTMENT IN LEASE FINANCE |
|
19 |
|
| Minimum
lease payments receivable |
|
|
536,831,707 |
479,182,239 |
|
| Add:
Residual Value |
|
|
84,744,987 |
55,572,890 |
|
|
|
|
---------- |
---------- |
|
| Gross
lease payments receivable |
|
|
621,576,694 |
534,755,129 |
|
| Less:
Unearned finance income |
|
|
159,264,328 |
131,186,803 |
|
|
|
|
---------- |
---------- |
|
| Net
investment in lease finance |
|
|
462,312,366 |
403,568,326 |
|
| Less:
Current maturity of net investment in lease finance |
114,880,071 |
120,164,628 |
|
| Less:
Provision for doubtful receivables |
|
768,090 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
346,664,205 |
283,403,698 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
20 |
37,282,496 |
40,482,242 |
|
| LONG
TERM ADVANCES |
|
21 |
4,902,816 |
2,863,378 |
|
| LONG
TERM DEPOSITS AND DEFERRED COSTS |
22 |
5,627,467 |
7,510,128 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Current
maturity of net investment in lease finance |
19.1 |
114,692,484 |
120,164,628 |
|
| Short
term finance considered good |
|
23 |
35,300,000 |
52,200,000 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
24 |
28,351,611 |
8,276,904 |
|
| Short
term investments |
|
25 |
1,000,100 |
525,000 |
|
| Accrued
income |
|
26 |
21,727,102 |
14,243,535 |
|
| Cash
and bank balances |
|
27 |
2,405,478 |
691,379 |
|
|
|
|
---------- |
---------- |
|
|
|
|
203,476,775 |
196,101,446 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
613,385,619 |
542,845,720 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
President & CEO |
|
Director |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE, 30, 1998 |
|
|
|
|
Notes |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
| REVENUE |
|
|
|
|
| Income
from leasing operations |
|
28 |
86,766,663 |
68,515,106 |
|
| Income
from bank deposits |
|
|
335,488 |
336,779 |
|
| Income
an long term investments |
|
29 |
983,151 |
1,402,556 |
|
| Other
income |
|
30 |
10,709,260 |
12,169,942 |
|
|
|
|
---------- |
---------- |
|
|
|
|
98,794,562 |
82,424,383 |
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
|
| Return
on borrowings and financial charges |
31 |
70,290,582 |
54,222,578 |
|
| Administrative
and operating expenses |
32 |
15,029,417 |
14,620,320 |
|
| Amortization
of deferred costs |
|
22.1 |
1,069,784 |
818,749 |
|
|
|
|
---------- |
---------- |
|
|
|
|
86,389,783 |
69,661,647 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE PROVISIONS AND TAX |
|
|
12,404,779 |
12,762,736 |
|
|
|
|
---------- |
---------- |
|
| Provision
for diminution in value of shares |
|
5,046,990 |
- |
|
| Provision
for doubtful debts |
|
|
1,665,401 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
6,712,391 |
- |
|
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE TAX |
|
5,692,388 |
12,762,736 |
|
|
|
|
| PROVISION
FOR TAXATION |
|
|
|
|
|
|
| Prior years |
|
85,273 |
(57,323) |
|
| Current
year |
|
914,727 |
757,323 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
1,000,000 |
700,000 |
|
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAX |
|
4,692,388 |
12,062,736 |
|
|
|
|
|
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
10,751,848 |
2,142,112 |
|
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATIONS |
|
15,444,236 |
14,204,848 |
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
|
|
| Interim
dividend @ 10% (1997: Nil) |
|
12,000,000 |
- |
|
| Transfer
to capital reserve |
|
940,000 |
2,413,000 |
|
| Reserve
for contingencies |
|
2,460,000 |
1,040,000 |
|
|
|
---------- |
---------- |
|
|
|
15,400,000 |
3,453,000 |
|
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
44,236 |
10,751,848 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
President & CEO |
|
|
Director |
|
|
|
|
| STATEMENT
OF SOURCES AND APPLICATION |
|
| OF
FUNDS (CASH FLOW) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
Notes |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| Net
cash from operating activities |
|
A |
26, 125,872 |
9,185,342 |
|
|
|
|
|
|
|
| Cash
flow from investing activities |
|
|
|
|
| Purchase
of fixed assets |
|
|
(4,997,900) |
(399,000) |
|
| Sale
proceeds on disposal of fixed assets |
|
257,607 |
- |
|
| Investment
in lease finance |
|
|
(136,083,325) |
(162,131,323) |
|
| Repayment
of investment in lease finance |
|
77,339,285 |
51,724,987 |
|
| Long
term investments |
|
|
(1,847,244) |
8,799 |
|
| Long
term advances-disbursed |
|
|
(3,975,696) |
(238,923) |
|
| Long
term advances-recovered |
|
|
1,853,768 |
334,313 |
|
| Long
term deposits and deferred cost |
|
(2 805,700) |
(4,804,000) |
|
|
|
|
---------- |
---------- |
|
| Net
cash from investing activities |
|
(70,259,205) |
(115,505,147) |
|
|
|
|
|
|
| Cash
flow from financing activities |
|
|
|
|
| Share
capital |
|
|
|
13,201,800 |
- |
|
| Redeemable
capital |
|
|
3,220,000 |
- |
|
| Long
term loans acquired |
|
1,982,000 |
(6,833,333) |
|
| Marginal
deposit on lease arrangements |
|
24,650,110 |
20,241,031 |
|
| Marginal
deposit on lease arrangements- adjusted |
|
(660,845) |
(4,416,319) |
|
| Obligation
under finance lease - acquired |
|
4,318,975 |
- |
|
| Obligation
under. finance lease repaid |
|
(864,608) |
(1,215,181) |
|
| Certificates
of Investment issued |
|
- |
100,000,000 |
|
| Certificates
of Investment-repaid |
|
- |
(1,500,000) |
|
|
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
45,847,432 |
106,276,198 |
|
|
|
|
---------- |
---------- |
|
| Net
increase/(decrease)in cash and cash equivalents |
|
1,714,099 |
(43,607) |
|
| Cash
and cash equivalents at the beginning of the year |
691,379 |
734,986 |
|
|
|
|
|
| Cash
and cash equivalents at the end of the year |
B |
2,405,478 |
691,379 |
|
|
|
|
========== |
========== |
|
|
|
President & CEO |
|
Director |
|
|
|
|
|
| NOTES
TO THE STATEMENT OF SOURCES |
|
| AND
APPLICATION OF FUNDS (CASH FLOW) |
|
|
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
