GRAY LEASING LIMITED
Annual Reports 2003
CONTENTS
COMPANY INFORMATION
VISION AND MISSION STATEMENT
NOTICE OF THE MEETING
DIRECTORS REPORT
STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES
OF CORPORATE GOVERNANNCE
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE
WITH BEST PRACTICES OF 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 SHAREHOL DING
COMPANY INFORMATION
BOARD OF DIRECTORS		Mr. Harold John Gray		Chairman
		Mr. Khawar Anwar Khawaja		Vice Chairman
		Mr. Abdul Rashid Mir		Chief Executive
		Mr. Paul Douglas Gray
		Mr. Ronald George Blake
		Mr. Muhammad Tahir Butt
		Mr. Khurram Anwar Khawaja
		Mr. Saeed Ahmad Jabal
		Mr. Muhammad Farooq
		Mrs. Nuzhat Khawar Khawaja
AUDIT COMMITTEE		Mr. Khawar Anwar Khawaja
		Mr. Muhammad Tahir Butt
		Mr. Muhammad Farooq
AUDITORS		Riaz Ahmad & Company
		Chartered Accountants
		10-B, Saint Mary Park
		Main Boulevard, Gulberg-lll
		Lahore-54000 (Pakistan)
		Ph: (042) 571 81 36-39
		Fax: (042)5714340
		E-mail: racolhr@brain.net.pk
MANAGEMENT CONSULTANT		Sarfraz Mahmood (Pvt) Ltd.
COMPANY SECRETARY/
CHIEF FINANCIAL OFFICER		Mr. Fawad Hanif
LEGAL ADVISOR		Saeed Akhtar
		Advocate & Corporate Counsel
REGISTERED AND HEAD OFFICE		41 -A, Lawrence Road, Lahore.
		Tel:   (042)6372159-61
		Fax: (042)6371898
		E-mail: gll@nexlinx.net.pk
BANKERS		Standard Chartered Grindlays
		BankAlfalah Ltd.
		The Bank of Punjab
		The Bank of Khyber
		Askari Commercial Bank Ltd.
		Muslim Commercial Bank Ltd.
		Faysal Bank Ltd.
		First Women Bank Ltd.
		Prime Commercial Bank Ltd.
		Habib Bank Ltd.
VISION
To be one of the most progressive institutions in the financial sector by providing quality
service to our clientele in a superior manner, maintaining high ethical and professional
standards, striving for continuous improvements and consistent growth to add value to our
shareholders and our team of conscientious employees and a fair contribution to the
national economy.
MISSION
To develop a client base representing all segments of the economy; emphasis being
placed on financial support to medium and small enterprises for their expansion,
balancing and modernization requirements.
To endeavor for a lasting relationship with clients and associates on the principles of
Mutualism.
To transform the company into a dynamic, profitable and growth oriented institution
through an efficient resource mobilization and the optimum utilization thereof.
To provide healthy environment and corporate culture for good governance of the
company which ensures exceptional value for clients, personnel and the investors
above all.
To implement the best professional standards with due observance of moral and
ethical values in all respects of corporate life which will Insha Allah bring social and
economic parity and prosperity among Nation and turn Pakistan into a Modern and
Liberal Muslim Welfare State.
NOTICE OF THE 8™ ANNUAL GENERAL MEETING
Notice is hereby given that the 8th Annual General Meeting of the Company will be held on October 25,
2003 at 11:00 a.m at registered office of the Company located at 41-A Lawrence Road, Lahore to
transact the following business:
Ordinary Business
1     To confirm the minutes of the 7th Annual General Meeting held on November 01, 2002;
2     To receive, consider and adopt the audited accounts of the company for the year ended June
30, 2003 together with the Directors' and Auditors' reports thereon;
3     To approve the payment of cash dividend @ 10% (Re. 1/- per share) as recommended by the
directors for the year ended June 30, 2003;
4     To appoint auditors and to fix their remuneration. The present auditors Messrs. Riaz Ahmad and
Company, Chartered Accountants, retire and being eligible, offer themselves for re-appointment;
5     To transact any other business with the permission of the chair.
BY ORDER OF THE BOARD
FAWAD HANIF
Lahore: September 27, 2003                                                                      (COMPANY SECRETARY)
NOTES:
1.    The members register will remain closed from October 18, 2003 to October 24, 2003 (both
days inclusive). Transfers received at the registered office by the close of business hours on
October 17, 2003 will be treated in time for the entitlement of dividend.
2.    A member entitled to attend and vote at the meeting may appoint another member as
his/her proxy to attend, speak and vote at the meeting. The instrument of proxy in order to
be effective must be received at the Registered Office of the Company not later than 48
hours before the meeting.
3.    Members are requested to immediately notify the change in address, if any.
4.    CDC account holders will have to follow the following guidelines for attending the meeting.
i. In case of individuals, the account holders, sub account holders and 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 original I.D card or
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 number in
CDS.
ii. In case of corporate entity, the Board of Directors' resolution/power of attorney with
specimen signature of the nominee shall be produced (unless provided earlier) at
the time of meeting.
DIRECTORS' REPORT
On behalf of the Board of Directors, I am pleased to present the Annual Report together with the audited
financial statements for the year ended June 30,2003.
OPERATING RESULTS
The operating results of the company forthe year are as under:				Rupees
Total revenue				104,434,972
Total expenses				64.570.937
Profit before tax				39,864,035
Provision for taxation:
Current				1,766,661
Deferred				5.700.000
				7.466.661
Profit after tax				32,397,374
Un-appropriated profit brought forward				711.293
Profit available for appropriation				33,108,667
Appropriations:
Transfer to statutory reserve				6,479,475
Proposed dividend @ 1 0 %				18.000.000
				24,479.48
Un-appropriated profit				8,629,192
Earning per share				1.8
KEY OPERATING AND FINANCIAL DATA
Key operating and other financial data for the last six years is being given hereinafter this report.
REVIEW OF OPERATIONS
During the year under review, we transacted business worth Rupees 446 million comprising 403 leases as
compared to Rupees 400 million placed in 283 leases during the preceding year; growth being 11.5 percent.
Gross investment in finance leases as at 30 June 2003 stands at Rupees 1,020 million against Rupees 853
million on 30 June 2002, while the net investment stands at Rupees 861 million on 30 June 2003 against
Rupees 696 million the last year - growth during this year has been 24 percent.
The gross revenue from operations was Rupees 104.435 million (Rupees 90.960 million in 2002 and net profit
before and after tax was Rupees 39.864 million and Rupees 32.397 million respectively as compared to
Rupees 32.178 million and Rupees 23.219 million during the preceding year.
Dear shareholders, we still emphasize on small and medium size leases with Select-Clientele in various
industrial and commercial sectors to finance their "balancing, modernization and expansion" activities, and
for this very purpose, we have all along concentrated on lease financing of plant, machinery and equipments
to various industrial units to strengthen their production base. However, the management of your company
also believes in assets quality; assets which do have a ready market at reasonable resale values. From this
point of view, vehicles are presently considered to be on top; hence, much of the leasing business presently
concentrates on and around the automobile financing. Your company has also done quite a handsome
business in this sector.
However, irrespective of the nature or type of asset, we have all along been quite vigilant and strict in our
evaluation and risk management procedures and internal controls. All leases are very carefully screened by
the Credit Evaluation Department being monitored by the Executive Committee and the Senior Management.
Risk diversification is also ensured by maintaining a balanced sector-wise exposure.
CREDIT RATING
JCR-VIS has assigned us Medium to Long-Term Entity Rating at BBB+ (Triple B Plus) while the
Short-Term Entity Rating and the Equity Rating was maintained at A-2 ( A Two ) and PE-3+. The
outlook on the Entity and Equity Ratings was considered "Stable". The surveillance of these ratings is
again in process and we hope it will improve by another notch when our net investment in lease
finance crosses a billion rupees figure.
RESOURCE MOBILIZATION
Long-Term credit lines of Rupees 166 million have been availed during this period. Further, your
company also succeeded in managing a blend of medium and short term cheaper funds which
enabled the company to keep the average cost of funding compatible with our placements. We have
also raised short-term funds by issuing Certificates of Investment.
At present, we are almost at the final stage of issuance of Privately Placed Term Finance Certificates
amounting to Rupees 250 million for a tenor of four years while arrangements for floatation of Listed
Term Finance Certificates amounting to Rupees 250 million for 4-5 years tenor are also underway
and will hopefully be concluded during the second half of this year.
Human resource development is an equally important area. To develop a team of dedicated and
devoted professionals, we have very recently engaged a number of persons, mostly at the very entry
level, who are undergoing appropriate training in various fields according to our future requirements.
THE ECONOMY AND THE LEASING SECTOR
The economy
Having remained in a state of stagnation for over five years, Pakistan's Economy has made
significant strides during the year under review. Despite lack of clarity on domestic political and
external geo-political fronts, massive un-empioyment, grave poverty and low productivity problems,
the Fconnr-y has been remarkably resilient. This indicates that the economic strategy had so far
focused almost exclusively on the restoration of mac^c economic stability while poverty reduction
and employment generation is considered to be achieved as an eventual outcome of macro-
ic stability
Pakistan is currently undergoing dramatic political and economic changes which have resulted in
strong economic fundamentals and international political and economic support. Consequently, the
liquidity flows have been unprecedented interest rates are at their lowest and foreign exchange
reserves are at their highest ever. Moving forward to fiscal 2003-04 when the economic indicators are
much stronger than we have seen in a decade, the socio-political stability in the country will surely
lead to a lot of improvements in key fundamentals and positive spill over effect on the overall
economy.
We believe that these indicators will remain stable and create a favorable climate for investment
which would obviously work as a growth engine for the economy. A pickup in investment in turn will
lead to an upswing in employment, rise in per capita income and higher consumption. Furthermore,