| First Leasing Corporation Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 2000 |
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|
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| CONTENTS |
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| Company Information |
|
|
| Notice of Meeting |
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|
| Directors' Report |
|
|
| Auditors' Report |
|
|
| Balance
Sheet |
|
|
|
| Profit and Loss Account |
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|
| Cash Flow Statement |
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|
| Statement of Changes in Equity |
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| Notes to the Accounts |
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|
| Pattern of Shareholding |
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|
| Categories
of Shareholders |
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| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Khurshid Hadi |
|
Chairman / Chief
Executive |
|
| Mr.
Arshad Nawab |
|
Director |
|
| Mr.
Shoaib Qureshi |
|
Director |
|
| Mr.
Zaigham Mehmood Rizvi |
|
(Nominee - Pak Libya
Holding Company (Pvt) Ltd.) |
|
| Mr.
Ramadan A. Haggiagi |
|
(Nominee - Pak Libya
Holding Company (Pvt) Ltd.) |
|
| Mr.
S. Zubair Ahmed |
|
(Nominee - National
Investment Trust) |
|
| Mr.
K. M. M. Shah |
|
(Nominee - National
Investment Trust) |
|
|
| COMPANY
SECRETARY |
|
| Mrs.
Hina Usmani |
|
|
| REGISTERED
AND HEAD OFFICE |
|
| 5th
Floor, Block C, Finance & Trade Centre, |
|
| Shahrah-e-Faisal,
Karachi-74400 |
|
| Tel:
5661843 Fax: 5685329 |
|
|
| BRANCH
OFFICES |
|
| 5th
Floor, Davis Hytes, Davis Road, Lahore |
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| Ground
Floor, State Life Building, Peshawar |
|
|
| AUDITORS: |
|
| Ford,
Rhodes, Robson, Morrow |
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| Chartered
Accountants |
|
|
| LEGAL
ADVISORS |
|
| Orr
Dignam & Co. Advocates |
|
| Ahmer
Bilal Soofi Advocate |
|
|
| REGISTRAR
AND SHARE TRANSFER OFFICE |
|
| THK
Associates (Pvt) Limited, |
|
| Ground
Floor, Shaikh Sultan Trust Building No. 2 |
|
| Beaumont
Road, Karachi. |
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| Tel:
5688808, 5685805 |
|
|
| BANKERS |
|
| Albaraka
Islamic Bank |
|
| Emirates
Bank International |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Bank Limited |
|
| Standard
Chartered Grindlays Bank Limited |
|
| The
Bank of Khyber |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the Eight Annual General Meeting of First Leasing
Corporation Limited will be held |
|
| at
FTC Conference Room, Finance & Trade Centre, Shahrah-e-Faisal, Karachi on
Wednesday 20th December, 2000 |
|
| at
4.00 p.m to transact the following business: |
|
|
| Ordinary
Business |
|
|
| 1.
To confirm the minutes of the Seventh Annual General Meeting held on 22na
December, 1999~ |
|
|
| 2.
To receive, consider and adopt the audited accounts together with the
Directors' and Auditors' Report |
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| thereon
for the year ended June 30, 2000. |
|
|
| 3.
To appoint Auditors for the year 2000-2001. The present Auditors, Messrs,
Ford, Rhodes, Robson, Morrow, |
|
| Chartered
Accountants retire and being eligible have offered themselves for
reappointment. |
|
|
| 4.
Any other business with the permission of the Chair. |
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|
|
By Order of the Board |
|
|
|
Hina Usmani |
|
|
Company Secretary |
|
|
| Notes: |
|
| 1.
The share transfer books of the company will remain closed from December 13,
2000 to December 20, 2000 |
|
| (both
days inclusive) and no transfer of share will be made during the period the
register is closed. |
|
|
| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint a proxy to attend, speak |
|
| and
vote for him/her. |
|
|
| 3.
An instrument of proxy and the power of attorney or other authority (if any)
under which it is signed |
|
| or
a notarially certified copy of such power of authority, 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 requested to notify any change in their address immediately. |
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|
|
| DIRECTORS'
REPORT |
|
|
| BUSINESS
ENVIRONMENT |
|
| For
the past several years we have anxiously awaited rational and consistent
policies aimed at the promotion |
|
| of
sustainable economic activity. The intent of the current economic managers is
unambiguous and policies aimed |
|
| at
reduction in fiscal imbalances and at price and monetary stability are
relentless and consistent. Despite optimism |
|
| though,
tangible evidence of the impact of structural reforms is still till elusive.
Nevertheless there is no denying |
|
| the
impact of this government's unyielding efforts at reform at the enterprise
level. It is a matter of enormous |
|
| relief
that all organizations and agencies involved with the financial sector - the
State Bank, SECP, CBR, BOI |
|
| and
the banks are all pulling in the same direction. They are open to all
reasonable debate and are a support |
|
| to
the private sector financial institutions. |
|
|
| Nevertheless
for the financial institutions the problems of the past years
persist-sourcing of long-term fund |
|
| at
economic pricing, non-performing assets and persistent increase in overdue
installments. Many of these problems |
|
| would
become automatically manageable with the revival of industrial and commercial
activity - but this, a |
|
| prospect
not clearly in evidence. Amidst these difficult business conditions, the
leasing sector has been unable |
|
| to
develop its potential and despite commendable organization and managerial
skills continues to be vulnerable |
|
| to
fluctuating business trends that are beyond its control. The management of
your company has constantly |
|
| strived
to meet these challenges and adjust business strategy accordingly as the
business environment changes. |
|
|
| OPERATING
RESULTS |
|
| The
operating results for the year ended 30th June 2000 demonstrate an
improvement in operating performance |
|
| and
an increase of 173% over the previous year. Financial costs comprise 86%
lease income an increase of 4% |
|
| was
the previous year whereas overheads have been kept maintained at the same
level as last year; a further |
|
| rationalization
during the current year will result in further cost control. |
|
|
| These
accounts have incorporated full provisions required under prevalent
prudential regulations and further- |
|
| more
the Board has determined that full provision against the diminution in value
of long-term investment is |
|
| to
made at this time. Your company had made a strategic investment in the
privatization of Bankers Equity |
|
| Limited,
which despite an undertaking to buy-back our investment at our purchase
price, the buyer has been |
|
| unable
to fulfill. As there appears to be a permanent impairment we have provided
for the diminution in asset |
|
| value.
This has resulted in a loss for the first time. However we have approached
the Securities and Exchange |
|
| Commission
of Pakistan to approve the write-back of the special reserve created from
profits over the past seven |
|
| years
as a set-off against the carried forward loss. As such the company will be
able to post a profit for the current |
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| year,
which would be available for distribution. |
|
|
| The
comparative results for the year 2000 and 1999 are as follows: |
|
|
|
2000 |
1999 |
|
|
(Rupees in million) |
|
|
|
| Income
from finance lease operations |
|
144.62 |
160.78 |
|
| Profit
from operating leases |
|
9.55 |
6.61 |
|
| Corporate
finance & treasury operations |
|
15.29 |
11.62 |
|
| Capital gains |
|
20.75 |
3.79 |
|
|
----------- |
----------- |
|
|
190.21 |
182.80 |
|
| Operating cost |
|
172.95 |
176.49 |
|
|
----------- |
----------- |
|
| Operating
profit before provision for long-term investment |
|
17.26 |
6.31 |
|
| Provision
for diminution in value of long-term quoted investment |
|
(45.02) |
(0.45) |
|
|
----------- |
----------- |
|
|
(27.76) |
5.86 |
|
| Provision
for taxation |
|
0.65 |
(1.96) |
|
|
----------- |
----------- |
|
|
(27.11) |
3.90 |
|
| Unappropriated
profit brought forward |
|
6.06 |
2.94 |
|
|
----------- |
----------- |
|
|
(21.05) |
6.84 |
|
|
| APPROPRIATIONS |
|
| Special reserve |
|
-- |
0.78 |
|
|
| Unappropriated
profit carried forward |
|
(21.05) |
6.06 |
|
|
========== |
========== |
|
| The
historical trend in respect of growth and profitability is set out below: |
|
|
|
18 months to |
12 months to |
12 months to |
12 months to |
12 months to |
|
|
30th June |
30th June |
30th June |
30th June |
31st December |
|
|
1996 |
1997 |
1998 |
1999 |
2000 |
|
|
| Net
investment in leases |
|
855.65 |
908.65 |
862.12 |
861.18 |
879.87 |
|
| Income
from finance lease operations |
208.80 |
180.26 |
153.86 |
160.78 |
144.62 |
|
| Operating
profit before provision |
|
| for
long-term investment |
|
45.39 |
46.24 |
31.70 |
6.31 |
17.26 |
|
|
| Operating
profit |
|
45.39 |
46.24 |
31.70 |
5.86 |
27.76 |
|
|
| DIVIDENDS |
|
| In
view of the continuing depressed business environment and in view of the
material write-down of its strategic |
|
| investment
in Bankers Equity Limited, your Board has considered it proper and prudent
not to declare a divi- |
|
| dend
for the year ended 30'h June, 2000. |
|
|
| DIRECTORS |
|
| Mr.
Nasim Beg, nominee of National Investment Trust, resigned on 13th October,
2000 and has been replaced |
|
| by
Mr. S. Zubair Ahmed. We are grateful to Mr. Beg for his counsel and welcome
Mr. S. Zubair Ahmed to the |
|
| Board. |
|
|
| ACKNOWLEDGMENT |
|
| The
Board of Directors wish to place on record their sincere appreciation of the
devoted services of our staff |
|
| and
to reemphasize our commitment to the development of their professional
careers and to their well-being. |
|
| The
board also acknowledges the support of all our institutional lenders. |
|
|
| For
and on behalf of the Board |
|
|
| Khurshid Hadi |
|
| Chairman/Chief
Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of FIRST LEASING CORPORATION LIMITED
as at |
|
| June
30, 2000 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 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 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 purpose of the |
|
| company's
business; and |
|
|
| (iii)
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 and to the best of our information and according to the
explanations |
|
| given
to us, 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, 2000 and of the loss, its cash flows and changes in equity for the year
then |
|
| ended; and |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980 (XVIII of 1980). |
|
|
| Karachi - |
|
| November
28, 2000 |
|
Chartered Accountants. |
|
|
|
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| FIXED
ASSETS-Tangible |
|
3 |
101,266,320 |
115,377,300 |
|
| INVESTMENT
IN LEASES |
|
|
|
|
| Instalment
contracts receivable |
|
4 |
939,256,144 |
993,062,668 |
|
| Residual
value of leased assets |
|
|
103,282,052 |
100,650,532 |
|
|
|
----------- |
----------- |
|
| Gross
investment in lease finance |
|
|
1,042,538,196 |
1,093,713,200 |
|
| Less:
Unearned income |
|
|
(162,665,691) |
(232,532,097) |
|
|
|
----------- |
----------- |
|
| Net
investment in leases |
|
|
879,872,505 |
861,181,103 |
|
| Less:
Current portion of net investment in leases |
|
|
(442,250,427) |
(320,796,338) |
|
|
|
----------- |
----------- |
|
|
|
437,622,078 |
540,384,765 |
|
| Less:
Provision for lease losses and doubtful receivables |
5 |
(44,788,257) |
(36,381,575) |
|
|
|
----------- |
----------- |
|
|
|
392,833,821 |
504,003,190 |
|
|
|
|
|
| LONG-TERM
FINANCE, ADVANCES AND RECEIVABLE |
6 |
17,314,775 |
5,660,660 |
|
| LONG-TERM
INVESTMENTS |
|
7 |
37,247,342 |
96,929,094 |
|
| LONG-TERM
DEPOSIT AND DEFERRED COSTS |
8 |
1,536,748 |
1,448,469 |
|
| CURRENT
ASSETS |
|
|
|
| Current
portion of net investment in leases |
|
442,250,427 |
320,796,338 |
|
| Current
maturity of long-term finance, advances and receivables |
9 |
8,758,437 |
10,831,122 |
|
| Short-term
and morabaha finances |
|
10 |
24,127,984 |
58,320,729 |
|
| Advances,
deposits, prepayments and other receivables |
11 |
82,113,415 |
100,072,764 |
|
| Investment
in marketable securities |
|
12 |
25,285,960 |
31,314,456 |
|
| Cash
and bank balances |
|
13 |
13,448,261 |
17,189,891 |
|
|
----------- |
----------- |
|
|
595,984,484 |
538,525,300 |
|
|
----------- |
----------- |
|
|
1,146,183,490 |
1,261,944,013 |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| Authorised |
|
|
|
| 50,000,000
ordinary shares of Rs. 10/~ each |
|
500,000,000 |
500,000,000 |
|
|
| Issued,
subscribed and paid-up capital |
|
14 |
272,782,340 |
272,782,340 |
|
| Reserves |
|
15 |
24,573,631 |
51,689,719 |
|
|
----------- |
----------- |
|
| Shareholders'
equity |
|
297,355,971 |
324,472,059 |
|
|
| LONG-TERM
FINANCES UNDER |
|
| MUSHARIKA
ARRANGEMENTS |
|
16 |
19,818,754 |
105,945,655 |
|
| LONG-TERM
FINANCES |
|
17 |
134,850,407 |
149,223,514 |
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
18 |
2,428,511 |
6,267,061 |
|
| LONG-TERM
DEPOSITS AND LIABILITIES |
|
19 |
74,826,747 |
119,810,508 |
|
| CURRENT
LIABILITIES |
|
| Current
maturity of long-term liabilities |
|
20 |
206,666,617 |
155,004,022 |
|
| Other
current liabilities |
|
21 |
410,236,483 |
401,221,194 |
|
|
----------- |
----------- |
|
|
616,903,100 |
556,225,215 |
|
| COMMITMENTS |
|
22 |
|
|
----------- |
----------- |
|
|
1,146,183,490 |
1,261,944,013 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. The auditors' report
is annexed hereto. |
|
|
|
|
Khurshid Hadi |
|
Zaigham Mehmood Rizvi |
|
|
Chairman / Chief Executive |
|
Director |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| Income |
|
| Income
from finance lease operations |
|
23 |
144,621,942 |
160,778,505 |
|
| Profit
from operating leases |
|
24 |
9,551,355 |
6,611,985 |
|
| Corporate
finance and treasury operations |
|
25 |
15,297,199 |
11,622,877 |
|
| Gain
on marketable securities |
|
|
20,745,875 |
3,788,357 |
|
|
|
----------- |
----------- |
|
|
|
190,216,371 |
182,801,724 |
|
| Expenditure |
|
|
|
| Financial
and bank charges |
|
26 |
124,663,860 |
131,396,128 |
|
| Selling
general and administrative expenses |
|
27 |
31,528,891 |
31,452,029 |
|
| Provision
for diminution in value of short-term investments |
|
4,244,383 |
4,706,352 |
|
| Provision
for lease losses and doubtful receivables |
|
12,288,295 |
8,745,484 |
|
| Write
off of net investment in lease finance |
|
226,488 |
188,763 |
|
|
----------- |
----------- |
|
|
172,951,917 |
176,488,756 |
|
|
----------- |
----------- |
|
| Operating
profit before provision for long-term investments |
|
17,264,454 |
6,312,968 |
|
| Provision
for diminution in value of long-term quoted investments |
|
45,026,335 |
450,000 |
|
|
----------- |
----------- |
|
| (Loss)/profit
for the year before taxation |
|
(27,761,881) |
5,862,968 |
|
| PROVISION
FOR TAXATION |
|
| - current |
|
(1,743,203) |
(1,746,878) |
|
| - prior years |
|
2,388,996 |
(219,674) |
|
|
----------- |
----------- |
|
|
645,793 |
(1,966,552) |
|
|
----------- |
----------- |
|
| (Loss)/profit
for the year after taxation |
|
(27,116,088) |
3,896,416 |
|
| Unappropriated
profit brought forward |
|
6,060,896 |
2,943,763 |
|
|
----------- |
----------- |
|
|
(21,055,192) |
6,840,179 |
|
| APPROPRIATIONS: |
|
|
|
| Transfer
to special reserve |
|
-- |
779,283 |
|
|
----------- |
----------- |
|
| Unappropriated
(loss)/profit carried forward |
|
(21,055,192) |
6,060,896 |
|
|
========== |
========== |
|
| Earning
per share |
|
30 |
(0.99) |
0.14 |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Khurshid Hadi |
|
Zaigham Mehmood Rizvi |
|
|
Chairman / Chief Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| (Loss)/profit
for the year before taxation |
|
(27,761,881) |
5,862,968 |
|
| Adjustments
for: |
|
| Depreciation
on fixed assets |
|
16,639,085 |
15,213,350 |
|
| Amortization
of deferred costs |
|
602,739 |
859,956 |
|
| Provision
for lease losses and doubtful receivables |
|
12,288,295 |
8,745,484 |
|
| Provision
for diminution in value of investments |
|
| - short-term |
|
4,244,383 |
4,706,352 |
|
| - long-term |
|
45,026,335 |
450,000 |
|
| (Gain)
on sale of marketable securities |
|
(18,593,537) |
(4,038,357) |
|
| (Gain)/loss
on sale of long-term investments |
|
(2,152,338) |
250,000 |
|
| (Profit)
on sale of fixed assets |
|
(1,179,090) |
(585,901) |
|
| Finance/mark-up
expenses |
|
124,056,509 |
130,606,887 |
|
| Investment
income |
|
(11,998,713) |
(10,325,064) |
|
|
------------ |
------------ |
|
|
168,933,668 |
145,882,707 |
|
|
------------ |
------------ |
|
| Operating
profit before working capital changes |
|
141,171,787 |
151,745,675 |
|
|
| (Increase)/Decrease
in current assets |
|
| Short-term
finances and morabaha finances |
|
341,927,451 |
(4,841,703) |
|
| Investment
in marketable securities |
|
22,529,988 |
(8,559,451) |
|
| Advances,
deposits, prepayments and other receivables |
|
25,007,887 |
(42,928,368) |
|
|
------------ |
------------ |
|
|
81,730,620 |
(56,329,522) |
|
| Increase/(Decrease)
in current liabilities |
|
|
|
| Certificates
of Investment |
|
13,215,000 |
(22,010,000) |
|
| Short-term
finances |
|
64,345,392 |
181,306,791 |
|
| Finance
under mark-up arrangements |
|
(52,108,784) |
17,571,707 |
|
| Accrued
and other liabilities |
|
(16,632,571) |
4,456,567 |
|
|
------------ |
------------ |
|
|
8,819,037 |
181,325,065 |
|
| Cash
generated from operations |
|
| Income
taxes paid |
|
(1,810,396) |
(3,066,488) |
|
| Finance/mark-up
paid |
|
(123,612,614) |
(133,235,261) |
|
| Investment
income received |
|
7,406,364 |
14,382,830 |
|
|
------------ |
------------ |
|
|
(118,016,646) |
(121,918,919) |
|
|
------------ |
------------ |
|
| Net
cash generated from operating activities |
|
113,704,798 |
154,822,299 |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Long-term
investment |
|
(5,344,583) |
2,250,000 |
|
| Capital
expenditure |
|
(26,921,934) |
(28,361,236) |
|
| Long-term
deposits and deferred costs |
|
(691,018) |
(297,730) |
|
| Net
investment in lease finance (net of repayments) |
|
(18,691,402) |
935,167 |
|
