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Dawood Leasing Company Limited
Annual Report 2001
CONTENTS
Dawood Leasing Company Limited
Corporate Information
Notice of Meeting
Financial Highlights
Directors Report
Auditors Report
Balance Sheet
Profit & Loss Account
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Statements & Report Under Section 237of the Companies Ordinance, 1984
Pattern of Share Holding
Consolidated Account of Dawood Leasing Company Ltd. and its Subsidiaries
Auditors Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Financial Statements
CORPORATE INFORMATION
Board of Directors Mr. Rafique Dawood Chairman & Chief Executive
Mr. Rasheed Y. Chinoy
Mr. Ayaz Dawood
Mr. Asadullah Khawaja
Mr. Muhammad Latif (Nominee of SLIC)
Mr. Abdul Latif Uqaili (Nominee of ICP)
Mr. Ahmed Kamran (Nominee of A1-Faysal Inv. Bank)
Company Secretary Syed Jamal Macdi
Auditors M. Yousuf Adil Saleem & Co.
Chartered Accountants
Legal Advisors Mohsin Tayebaly & Co.
Bankers American Express Bank Ltd.
Bank Al-Habib Ltd.
Bank of Khyber
Emirates Bank International PJSC
Faysal Bank Ltd.
Habib Bank Ltd.
Habib Bank AG Zurich
Metropolitan Bank Ltd.
Muslim Commercial Bank Ltd.
Oman International Bank S.A.O.G.
Prime Commercial Bank Ltd.
PICIC Commercial Bank Ltd.
Societe General, The French & International Bank
Soneri Bank Ltd.
United Bank Ltd.
Union Bank Ltd.
Registered Office,
Head Office and 5-B, Lakson Square Building # 1,
Share Registrars Sarwar Shaheed Road, Karachi-74200
Tel.: (021) 568 7778
Fax.: (021) 568 5830
E-mail: dlc@cyber.net.pk
Branch Offices Office No. 20 & 21, Beverly Centre, 1st Floor,
56-G, Jinnah Avenue, Islamabad-744000
Tel.: (051) 227 6367 & 227 4194-5
Fax: (051) 227 1280
E-mail: moeen@comsats.net.pk
86-B/11, Punjab Government Employees,
Cooperative Housing Society, Lahore.
Tel/Fax: (042) 518 4710
E-mail: dlc@brain.net.pk
NOTICE OF SEVENTH ANNUAL GENERAL MEETING
Notice is hereby given that the Seventh Annual General Meeting of DAWOOD LEASING COMPANY LIMITED will be held
at the Registered Office, 5-B, Lakson Square Building # 1, Sarwar Shaheed Road, Karachi on Wednesday, December 26, 2001
at 8:30 a.m. to transact the following business:
1. To receive, consider and adopt the Audited Accounts of the Company for the year ended June 30, 2001 together with
the Directors' and Auditors' Report thereon.
2. To approve Dividend @ 10% as recommended by the Directors for the year ended June 30, 2001.
3. To appoint Auditors and to fix their remuneration.
Special Business:
4. To elect 7 Directors of the Company as fixed by the Board of Directors under the provisions of Section 178 of the
Companies Ordinance, 1984 for a term of three years. The retiring Directors are:
Mr. Rafique Dawood Mr. Rasheed Y. Chinoy
Mr. Ayaz Dawood Mr. Asadullah Khawaja
Mr. Muhammad Latif Mr. Abdul Latif Uqaili
Mr. Ahmad Kamran
5. To consider and if thought fit pass following resolution as Special Resolution under Section 208 of the Companies
Ordinance, 1984 with or without modification.
"Resolved, that Mr. Rafique Dawood, the Chief Executive of the Company be and is hereby authorized with approval of
the Board of Directors to make short term loans (upto 6 months) in the subsidiaries and associated companies/modarabas
namely: (1) Providence Modaraba Limited (PML) (2) Guardian Modaraba (GM), (3) General Modaraba Services (Pvt.)
Limited (GMSL) and (4) First General Leasing Modaraba (FGLM), on behalf of the Company, provided that the amount
of such loans at any time shall not exceed 10% of the paid up capital, plus free reserves of the Company and return on
these loans shall be 100 be more than the borrowing cost of the Company and subject to the compliance of rules and
regulations as applicable. This authority shall remain in force until revoked by the shareholders. The outstanding short
term loans and placements, amount at any one time should not exceed the following limits, PML Rs. 2.50 million, GM
Rs. 25 million, GMSL Rs. 2.50 million and FGLM Rs. 10 million."
By the Order of the Board
November 28, 2001 Syed Jamal Macdi
Karachi Company Secretary
Notes:
1. The Register of members of the Company will remain closed from December 18, 2001 to December 26, 2001 (both days
inclusive).
2. Any person who seeks to contest the election of the office of Director shall at the Registered Office of the Company, file
at the latest by December 12, 200I a notice of his intention to offer himself for election as Director in terms of Section
178(3) of the Companies Ordinance, 1984. The conditions imposed by the Securities & Exchange Commission Of Pakistan
require prior approval for any change in the Directors of the Company.
3. A member entitled to attend and vote at a General Meeting is entitled to appoint a proxy to attend and vote instead of
him/her. No person other than a member shall act as proxy. An instrument appointing a proxy and the power-of-attorney
or other authority (if any) must be deposited 48 hours before the Meeting at the Registered Office.
4. CDC account holders will in addition, have to follow the guidelines as laid down in Circular No. 1 dated January
26, 2000 of the Securities & Exchange Commission of Pakistan for attending the meeting:
Statement Under Section 160 of the Companies Ordinance, 1984
The Company (DLC) has been making investment in the shape of short term loans and placements from time to time and
creating reasonable portfolio on its own account. With the prevailing lower mark up rates and defaults it is desirable to
give loans and place funds in those companies/modarabas who are although subsidiaries and associated but have good
credit standing/history. Due to acquisitions and common directorships of Directors in other companies/modarabas, such
other companies/modarabas namely (1) PML (2) GM (3) GMSL & (4) FGLM become subsidiaries and associated
and loans to these companies/modarabas necessitate special resolution under section 208 of the Companies Ordinance,
1984. Since it is not practicable to pass a Special Resolution each time the Company to make a loan in such
companies/modarabas, it has become necessary to give a standing authority to the Chief Executive to make, vary or
withdraw investment in the companies/modarabas, as subsidiaries and associated, from time to time, with the approval
of Board of Directors and subject to the limitations laid down under the Special Resolution and Section 208 of the
Companies Ordinance, 1984.
The Directors have no personal interest in the above matters, except for the following limited interest:
Some of the directors may possibly be on the Board of the subsidiaries and associated companies for which the Chief
Executive is being granted the authority to make investment under Section 208 of the Companies Ordinance, 1984.
PML is the fully owned subsidiary of DLC, whereas GMSL is owned 51% by DLC and ICP and SAPICO have 25% and
24% holding respectively. GM and FGLM are the two modarabas being managed by PML and GMSL.
The outstanding short-term loan/placement amount at any one time should not exceed the following limits;
PML Rs. 2.50 million, GM Rs. 25 million, GMSL Rs. 2.50 million and FGLM Rs. 10 million.
FINANCIAL HIGHLIGHTS
2001 2000 1999 1998 1997 1996 1995*
Rupees in Million
Authorized Capital 500.00 500.00 500.00 500.00 300.00 300.00 300.00
Paid-up Capital 250.00 250.00 250.00 250.00 250.00 250.00 250.00
Shareholders Equity 313.24 306.72 300.62 305.59 295.52 281.60 267.92
Group Equity 674.38 542.48 543.34 -- -- -- --
Total Assets 2057.67 1529.65 1520.99 926.58 680.10 539.45 340.45
Group Assets 2625.07 1886.77 1805.46 -- -- -- --
Net Investment in Lease Finance 1372.17 1117.79 1036.38 791.63 620.50 510.57 253.37
Provision for Lease Losses 77.00 49.00 34.00 26.50 16.50 5.00 --
Revenue 272.69 214.14 163.21 141.34 121.96 89.12 28.00
Income from Leasing Operations 184.58 171.04 154.05 133.36 121.29 84.66 21.19
Profit before Taxation 47.32 41.65 35.29 28.06 46.41 46.21 18.09
Taxation 15.80 10.55 15.35 17.89 1.24 1.27 0.17
Profit after Taxation 31.51 31.10 19.94 10.17 45.16 44.94 17.92
Current Ratios 1:1.06 1:1.04 1:1.32 1:1.26 1:1.53 1:0.91 1:6.74
Book Value Per Share 12.48 12.27 12.02 12.22 11.82 11.26 10.71
Earning Per Share - After Tax 1.26 1.24 0.80 0.40 1.81 1.79 0.71
Return on Equity - Pre-Tax 15.43% 13.86% 11.50% 9.50% 16.48% 17.25% 6.75%
Dividend Per Share (Rs.) 1.00 1.00 1.00 -- 1.25 1.25 --
*6 months of operations.
DIRECTORS REPORT
We are pleased to present your Company s Seventh Annual Report for the year ended June 30, 2001.
Operating Result: 2001 2000
Rupees Rupees
Total Assets 2.057 billion 1.529 billion
Total Group Assets 2.626 billion 1.887 billion
Lease Income 184,582,954 171,044,261
Other Income 88,109,917 43,371,017
Provisions (net) 35,192,433 21,446,119
Profit after Taxation 31,511,749 31,103,850
Profit Available for Appropriation 31,894,652 31,603,673
Appropriations
Transfer to Statutory Reserve 6,302,350 6,220,770
Proposed Cash Dividend 25,000,000 25,000,000
Un-appropriated Profit 592,302 382,903
During the fiscal year 2000-2001, your Company made lease disbursements amounting to Rs. 616.08 million to 198 clients, raising
the net investment in leases to Rs. 1.372 billion. (1999-2000 Rs. l.117 billion). Scarcity of good leasing prospects continued this
year as well. The Plant & Machinery continued to dominate the asset mix of the portfolio while sector wise portfolio has not changed
significantly. The Textile Composite, Steel, Eng. & Automobile are our major areas of investment.
The total revenue of the Company has increased to Rs. 272.69 million, an increase of 27%, as compared to last year. The return on
short term investment has increased to Rs. 50.11 million from Rs. 30.125 million mainly due to investments in TFCs which were
made to support fixed income securities market in the country and to meet our liquidity requirement.
In continuation of our prudent accounting approach, this year we have provided Rs. 12 million on account of deferred tax liability
through the income statement thus raising the total to Rs. 49.2 million. The Company does not expect that this liability will materialize
in the foreseeable future. We also have made provision of Rs. 28 million for lease losses thus increasing the total to Rs. 77 million.
Credit Rating
Your Company s credit rating has been upgraded. The long term rating has been raised to A (single A) from A- (single A minus) and
the short term rating to A1(A one) from A2 (A two) by Pakistan Credit Rating Agency. The assign rating denotes low expectation
of credit risk and strong capacity for timely repayment of financial commitments.
Underwriting & Pre-IPOs
Your Company continued its policy to be an active participant in the development of secondary market. During the current year, your
Company participated in Pre-IPO of Term Finance Certificates (TFCs) issued by Alnoor Sugar Mills Limited, Atlas Lease Limited,
Network Leasing Limited and Shakarganj Mills Limited and underwrote the TFCs issue of Orix Leasing Limited, Alnoor Sugar Mills
Limited. Network Leasing Limited and Engro Asahi. These activities generated fee based income of Rs. 713,750.
Resource Mobilization
The last few years have been difficult for the leasing sector as there has been declining trend in credit availability from multilateral
agencies, the prohibitive cost of hedging made it difficult to avail even the approved credit lines. Meanwhile with the decline in
interest rates. the local sources have become attractive avenues of funds mobilization for the leasing sector.
Your Company s good rating and solid credit standing has contributed in raising funds through issues of Certificate of Investments
(COIs) to individual and corporate customers, an increase of 150 percent was achieved in COI deposits from last year. Our local
bankers have continued to enhance and extended credit lines, as such, your Company does not foresee any uncertainty in meeting
its future funding requirements.
Alhamdullah, after the balance sheet date, on September 12th this year, your Company successfully issued its Term Finance Certificates Communication
of Rs. 253 million, which were over subscribed. This was a unique issue because it was the First Five Year Perpetual TFC issued in
Pakistani history. These TFCs are listed on the Lahore Stock Exchange and have a floating rate based on the discount rate with a floor
of 13.5% and ceiling of 17.5%. We are thankful to all the investors for their support.
Future Outlook
Presently, the economy of Pakistan is in the throes of severe macro economic imbalances and deceleration of growth therefore it is
difficult to assess the future outlook. It is hoped that military regime would be in a better position to think and take decisions that would
reverse the country's economic slump. The task of reviving the economy and providing good governance is a monumental one.
With the events of September l 1, our Government supportive stands with the coalition partners will certainly help to boost our economy.
The Standard and Poor rating agency has maintained a stable outlook for Pakistan.
The trading at all the three stock exchanges of the country remained suspended for the whole week in September, the first instance in
the past two decades, in order to avert drastic market decline.
The cut in discount rate to 10% is not yet sufficient, compared with the other economies of the region, India (6%) and Bangladesh (7.5%).
A further cut is therefore expected which would certainly help our depressed economy.
Pressure on Pakistan rupee has eased considerably with the return of flight capital. Given the prevailing conditions, the management of
your Company sees few prospects of fixed investments and we continue to emphasize our conservative approach in leasing out assets.
We believe that your Company will continue to benefit from the improving trend in our economy.
M & A Activities
As part of the management s strategy for growth and diversification, your Company acquired another modaraba management company
namely Providence Modaraba Ltd., the manager of First Providence Modaraba in December 2000.
Guardian Leasing Modaraba (GLM) has been merged with First Providence Modaraba (FPM) as per Scheme of Amalgamation/Merger
approved by the Honourable High Court of Sindh.
The name of the merged modarabas has been changed to Guardian Modaraba with an equity base of Rs. 173.079 million and assets
of Rs. 339.993 million as of June 30th 2001.
Pattern of Shareholding
The pattern of Shareholding as on June 30, 2001 is annexed to these financial statements.
Auditors
The present auditors, M. Yousuf Adil Saleem & Co., Chartered Accountants, are due for retirement and being eligible offer themselves
for re-appointment.
Condolence
The members of the Board and staff of the Company record with deep sorrow the sad demise of Mr. Suleman Dawood, one of the pillars
of the Dawood family. May Allah place his soul in eternal rest and give the strength to the family members to bear this loss, Ameen.
Acknowledgements
We would like to express our appreciation for the support and encouragement given to your Company by the Regulator, the Securities
and Exchange Commission of Pakistan through the Chairman and the Governor of the State Bank of Pakistan. We also acknowledge
the continued competence of  our managements and staff.
On behalf of the Board
Refique Dawood
November 28, 2001 Chairman & CEO
AUDITORS REPORT TO THE MEMBERS
We have audited the annexed balance sheet of DAWOOD LEASING COMPANY LIMITED as at June 30, 2001 and the
related profit and loss account, statement of changes in equity and cash flow statement 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 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 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, statement of changes in equity and cash flow statement 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, 2001 and of the profit, changes
in equity and its cash flows 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.
Dated: November 28, 2001 M. Yousuf Adil Saleem & Co.
Karachi: Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 2001
2001 2000
Note Rupees Rupees
SHARE CAPITAL AND RESERVES
Authorized
50,000,000 Ordinary Shares
of Rs. 10/- each 500,000,000 500,000,000
========== ==========
Issued, Subscribed and Paid up
25,000,000 Ordinary Shares of
Rs. 10/- each. Fully Paid in Cash 250,000,000 250,000,000
Statutory Reserve 40,148,077 33,845,727
General Reserve 22,500,000 22,550,000
Unappropriated Profit 592,302 382,903
------------------ ------------------
313,240,379 306,728,630
LONG TERM LIABILITIES
Redeemable Capital 3 49,524,541 5,218,349
Long Term Loans 4 240,265,340 297,859,954
Long Term Deposits 305,900 --
Lease Deposits 5 194,431,475 112,511,803
Certificates of Investment 6 27,145,000 36,100,000
------------------ ------------------
511,672,256 451,690,106
DEFERRED LIABILITIES
Taxation 49,200,000 37,200,000
Staff Gratuity 2,047,235 1,392,973
------------------ ------------------
51,247,235 38,592,973
CURRENT LIABILITIES
Short Term Borrowings 7 734,016,863 496,539,426
Certificates of Investment 6 228,655,000 66,000,000
Current Portion of Long Term Liabilities 8 86,792,945 95,293,682
Accrued and Other Liabilities 9 103,045,228 47,213,529
Taxation 4,000,000 2,600,000
Proposed Dividend 25,000,000 25,000,000
------------------ ------------------
1,181,510,036 732,646,636
COMMITMENTS 10
------------------ ------------------
2,057,069,906 1,529,658,346
========== ==========
The annexed notes from 1 to 39 form an integral part of these financial statements.
FIXED CAPITAL EXPENDITURE 11 25,298,747 26,402,077
NET INVESTMENT IN LEASE FINANCE 12
Minimum Lease Payment Receivables 1,581,130,526 1,338,939,163
Residual Value of Leased Assets 195,578,249 159,531,402
------------------ ------------------
1,776,708,775 1,498,470,565
Unearned Finance Income (404,531,665) (380,678,513)
------------------ ------------------
Net Investment in Lease Finance 1,372,177,110 1,117,792,052
Provision for Lease Losses (44,675,000) (27,050,000)
------------------ ------------------
1,327,502,110 1,090,742,052
Current Portion of Net Investment in Lease Finance (592,126,053) (429,288,511)
------------------ ------------------
735,376,057 661,453,541
INVESTMENT IN SUBSIDIARIES /ASSOCIATE 13 59,094,447 51,530,850
LONG TERM LOANS 14 2,638,318 2,899,224
LONG TERM DEPOSITS 402,000 300,000
LONG TERM RECEIVABLE 15 10,775,000 21,950,000
CURRENT ASSETS
Current Portion of Net Investment in Lease Finance 592,126,053 429,288,511
Short Term Investments 16 521,008,202 297,765,560
Short Term Morabaha Finances 17 8,608,604 7,000,000
Advances against Lease Commitment 51,126,889 2,850,000
Advances, Deposits and Prepayments 18 4,727,280 4,507,617
Other Receivables 19 32,742,232 15,109,408
Cash and Bank Balances 20 13,746,077 8,601,558
------------------ ------------------
1,224,085,337 765,122,654
------------------ ------------------
2,057,669,906 1,529,658,346
========== ==========
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2001
2001 2000
Note Rupees Rupees
Income
Lease Income 184,582,954 171,044,261
Return on Deposits and Investments 21 51,745,620 33,351,769
Gain on Sale of Securities 9,836,110 9,294,278
Exchange Gain 23,947,808 --
Other Income 2,580,379 724,970
------------------ ------------------
272,692,871 214,415,278
Expenditure
Administration and Operating Expenses 22 26,863,283 26,585,556
Financial Charges 23 175,320,927 132,925,298
Provision for Lease Losses 28,000,000 15,000,000
Reversal of Diminution in Value of Investments (4,807,567) (1,753,881)
------------------ ------------------
225,376,643 172,756,973
------------------ ------------------
Profit Before Taxation 47,316,228 41,658,305
Provision for Taxation 24
Current 4,000,000 2,600,000
Prior (195,521) (245,545)
Deferred 12,000,000 8,200,000
------------------ ------------------
15,804,479 10,554,455
------------------ ------------------
Profit After Taxation 31,511,749 31,103,850
Unappropriated Profit Brought Forward 382,903 499,823
------------------ ------------------
Profit Available for Appropriation 31,894,652 31,603,673
Appropriations
Transferred to Statutory Reserve 6,302,350 6,220,770
Proposed Cash Dividend Rs. 1/- per share (2000 - Rs. 1/- per share) 25,000,000 25,000,000
------------------ ------------------
31,302,350 31,220,770
------------------ ------------------
Unappropriated Profit Carried Forward 592,302 382,903
========== ==========
Earning Per Share - Basic and Diluted 25
Pre-Tax 1.89 1.67
Post-Tax 1.26 1.24
The annexed notes from 1 to 32 form an integral part of these financial statements
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2001
Issued,
Subscribed
and Paid-up Statutory General Unappropriated Total
Capital Reserve * Reserve Profit
Rupees
Balance at June 30, 1999 250,000,000 27,624,957 22,500,000 499,823 300,624,780
Profit for the year -- -- -- 31,103,850 31,103,850
Appropriations:
Transferred to Statutory Reserve -- 6,220,770 -- (6,220,770) --
Dividend: Rs. 1/- per share -- -- -- (25,000,000) (25,000,000)
------------------ ------------------ ------------------ ------------------ ------------------
Balance at June 30, 2000 250,000,000 33,845,727 22,500,000 382,903 306,728,630
Profit for the year -- -- -- 31,511,749 31,511,749
Appropriations:
Transferred to Statutory Reserve -- 6,302,350 -- (6,302,350) --
Dividend: Rs. 1/- per share -- -- -- (25,000,000) (25,000,000)
------------------ ------------------ ------------------ ------------------ ------------------
Balance at June 30, 2001 250,000,000 40,148,077 22,500,000 592,302 313,240,379
========== ========== ========== ========== ==========
* The statutory reserve is created by transferring 20% after tax profit for the year as required under the  Leasing Companies
(Establishment and Regulation) Rules, 2000.
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2001
2001 2000
A. CASH FLOW FROM OPERATING ACTIVITIES Rupees Rupees
Profit After Taxation 31,511,749 31,103,850
Adjustments:
Depreciation 5,595,734 5,053,056
Loss on Sale of Investments (9,836,110) (9,294,278)
Financial Charges 175,320,927 132,925,298
Loss / (Gain) on Sale of Assets 52,500 (89,400)
Provision for Gratuity 706,463 747,632
Provision for Lease Losses 28,000,000 15,000,000
Reversal for Diminution in Value of Investments (4,807,567) (1,753,881)
Provision for Deferred Taxation 12,000,000 8,200,000
Provision for Taxation 3,804,479 2,354,455
------------------ ------------------
210,836,426 153,142,882
------------------ ------------------
242,348,175 184,246,732
Changes in Operating Assets and Liabilities
(Increase)/Decrease in Operating Assets
Advances, Deposits and Prepayments (865,274 263,791
Other Receivables (17,504,599) 12,140,412
Net Investment in Lease Finance/Receivables (253,585,058) (125,312,170)
Long Term Loans 239,668 (1,207,982)
Advances against Lease Commitment (48,276,889 6,850,000
Short Term Morabaha Finances (1,608,604) 96,051,816
------------------ ------------------
(321,600,756) (11,214,133)
------------------ ------------------
(79,252,581) 173,032,599
Increase/(Decrease) in Operating Liabilities
Long Term Deposits 305,900 --
Accrued and Other Liabilities 51,987,984 (9,034,413)
Lease Deposits 86,658,496 13,587,372
------------------ ------------------
59,699,799 177,585,558
Financial Charges Paid (172,454,568) (116,148,272)
Gratuity Paid (52,201) (212,691)
Tax Paid (1,865,855) (2,435,617)
------------------ ------------------
Net Cash (used in) / from Operating Activities (114,672,825) 58,788,978
========== ==========
B. CASH FLOW FROM FINANCING ACTIVITIES
Redeemable Capital Obtained 75,000,000 --
Redemption of Redeemable Capital (12,508,307) (21,665,065)
Long Term Loans - net (89,019,676) ( 107,731,287)
Repayment of Lease Liability -- (132,245)
Short Term Borrowings 237,477,437 62,991,347
Certificates of Investment 153,700,000 40,200,000
Dividend Paid (24,022,644) (24,664,666)
------------------ ------------------
Net Cash from / (used in) Financing Activities 340,626,810 (51,001,918)
C. CASH FLOW USED IN INVESTING ACTIVITIES
Long Term Deposits (102,000) --
Capital Expenditure (4,718,904) (9,137,403)
Proceeds From Sale of Fixed Assets 174,000 1,570,570
Purchase of Long Term Investment (7,563,597) (5,737,500)
Short Term Investments - net (208,598,965) (96,917,721)
------------------ ------------------
Net Cash Used in Investing Activities (220,809,466) (110,222,054)
Net Increase / (Decrease) in Cash and Bank Balances 5,144,519 (102,434,992)
Cash and Bank Balances at the Beginning of the Year 8,601,558 111,036,550
------------------ ------------------
Cash and Bank Balances at the End of the Year 13,746,077 8,601,558
========== ==========
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2001
1. THE COMPANY AND ITS OPERATIONS
The Company was incorporated on June 22, 1994 as a public limited Company under the Companies Ordinance, 1984
and is listed on the Karachi and Islamabad Stock Exchanges. The main business activity of the Company is leasing of
assets.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting Convention
These financial statements have been prepared under the historical cost convention.
2.2 Basis of Preparation
These accounts have been prepared in accordance with International Accounting Standard as applicable in
Pakistan.
2.3 Revenue Recognition
The Company follows the finance Method in recognizing income on lease contracts. Under this method the
unearned income i.e., the excess of aggregate lease rentals and the estimated residual value over the cost of
the leased asset is deferred and then amortized over the terms of the lease applying the annuity method, so
as to produce a constant rate of return on net investment in the leases.
Front end fee, commitment fee and other commissions are taken to income when realized.
The transaction of purchase and resale obligation of Government Securities at contracted rates for specified
period of time are recorded at the contracted purchase price and the differential of the contracted purchase and'
resale prices is taken to income.
Profit on Morabaha finance and other financing are accrued on time proportion basis.
Return on securities is recognized on accrual basis.
Dividend income is recognized at the time of closure of the shares transfer books of the company declaring
the dividend.
Lease income and profit on morabaha financing which are classified under the Leasing Companies
(Establishment and Regulation) Rules, 2000 issued by Securities and Exchange Commission of Pakistan are
not taken to income.
2.4 Staff Retirement Benefits
The Company operates a funded contributory Provident Fund Scheme for its employees. Employees are also
entitled to gratuity after completion of 3 years continuous service in accordance with the service rules
of the Company.
2.5 Provision for Lease Losses
Besides making a provision as per the requirements of the Leasing Companies (Establishment and Regulation)
Rules, 2000 issued by the Securities and Exchange Commission of Pakistan, the Company exercising prudence,
also makes a general provision at a reasonable level, which in the judgements of the management is adequate
to provide for potential losses on lease portfolio and other finance that can be reasonably anticipated.
2.6 Taxation
The charge for current taxation is based on taxable income at the current rates of taxation. On lease
income, it is computed as if all leases are operating leases, after taking into account allowances available
for depreciation in respect of fixed assets under lease.
The tax effect for deferred taxation is calculated using the liability method on all major timing differences. As
a matter of prudence, deferred tax debits are not accounted for.
2.7 Tangible Fixed Assets and Depreciation
These are stated at cost less accumulated depreciation. Depreciation is charged to income, applying the straight
line method whereby cost of an asset is written off over its estimated useful life. A full year s depreciation
is charged on all assets acquired during the year while no depreciation is charged on assets disposed off
during the year.
Normal repairs and maintenance are charged to income as and when incurred. Gains and losses on disposal.
if any, are taken to profit and loss account.
2.8 Investments
2.8.1 Subsidiary / Associate
The Company follows Cost Method of accounting in recognizing the investment in subsidiary /
associate.
2.8.2. Long Term
These are stated at cost and are reduced to recognize a decline, other than temporary in values, if
any.
2.8.3 Short Term
These are stated at lower of moving average cost and market / breakup value on aggregate portfolio
basis.
2.9 Foreign Currencies Transaction
These are accounted for in Rupees at the exchange rate on the date of transaction. Assets and liabilities in foreign
currencies are converted into Rupees at the rate of exchange on the balance sheet date. In cases, where
exchange risk cover has been obtained from State Bank of Pakistan, the foreign currency amounts are translated
into Rupees at the exchange rate prevailing on the date of disbursement or renewal.
Exchange risk fee and differences arising due to hedging mechanism are accounted for as deferred revenue
or costs as the case may be, and are credited to income or amortized respectively over the term of the
transaction.
2.10 Financial Assets
Financial assets comprise of net investment in leases and installment loans net of related deposits, long
term investments in Government Securities, long term loans and receivables, long term deposits, morabaha
finances and fund placements, advances and other receivables, short term investments and cash and bank
balances. Net investment in leases and installment loans are stated at their nominal value as reduced by
appropriate allowances for estimated irrecoverable amount while other financial assets are stated at cost.
2.11 Financial Liabilities
Financial liabilities are classified according to the substance of contractual arrangements entered into. Significant
financial liabilities are long term loans, long term deposits, certificates of investment, short term finances as well
as accrued and other liabilities.
2.12 Offsetting
A financial asset and financial liability is offset and the net amount reported in the balance sheet if the
Company has a legal enforceable right to set-off the transaction and also intends either to settle on a net basis
or to realize the asset and settle the liability simultaneously. Corresponding income on the asset and charge on
the liability is also offsetted.
2001 2000
Term Finance Certificates Rupees Rupees
3. REDEEMABLE CAPITAL -SECURED
(NON-PARTICIPATORY)
Opening Balance 14,274,989 -- 14,274,989 35,940,054
Obtained during the year -- 75,000,000 75,000,000 --
------------------ ------------------ ------------------ ------------------
14,274,989 75,000,000 89,274,989 35,940,054
Paid during the year (9,056,640) (3,451,667) (12,508,307) (21,665,065)
------------------ ------------------ ------------------ ------------------
5,218,349 71,548,333 76,766,682 14,274,989
Payable within one year
shown under current liabilities (5,218,349) (22,023,792) (27,242,141) (9,056,640)
------------------ ------------------ ------------------ ------------------
-- 49,524,541 49,524,541 5,218,349
========== ========== ========== ==========
Repayment period quarterly Sept. 01, 1998 to Dec. 26, 2000 to
Sept. 01 2001 May 18, 2004
Sale Price 25,000,000 75,000,000
Purchase Price 35,712,210 95,868,168
Prompt Payment Bonus 1,271,106
The redeemable capital is secured by way of a pari-passu charge on all assets and book debts of the Company
through hypothecation. Similar arrangements unless specified have been made to secure the long term loans
(Refer Note No. 4) and short term borrowings (Refer Note No. 7).
2001 2000
Rupees Rupees
4. LONG TERM LOANS - SECURED
Foreign Currency
Asian Development Bank (4.1) 164,868,775 159,853,286
Local Currency
Commercial Banks (4.2) 56,666,668 60,000,000
Investment Bank (4.3) 50,000,000 140,70i,833
------------------ ------------------
271,535,443 360,555,119
Payable within one year shown under current liabilities (31,270,103) (62,695,165)
------------------ ------------------
240,265,340 297,859,954
========== ==========
4.1 This represents a 15 years term loan facility, with a grace period of three years, obtained in tranches under
Financial Sector Intermediation Loan # 1371-PAK. The loan is subject to interest @ 0.25% over variable
Ordinary Capital Resource (OCR) rate of Asian Development Bank. The loan repayments are semi-annual and
secured by guarantee of a development financial institution. The guarantee is secured against hypothecation of
redeemable assets including book debts of the Company ranking pari-passu with charges created to secure
of capital (Refer Note No. 3) and short term borrowings (Refer Note No. 7) and term finance certificates
Rs. 9,994,000/- of NDLC (Refer Note No. 16). The Company has obtained exchange risk cover from the State
Bank of Pakistan. Principal repayment of the facility will commence from March 15, 2002 and end on
March 15, 2014
4.2 These are secured against hypothecation of assets including book debts of the Company ranking pari passu, with
the charge created in favour of other lenders to secure redeemable capital (Refer Note No. 3)
and short term borrowings (Refer Note No. 7). These facilities are payable on various dates by May 2004.
These are subject to markup rate ranging from Re. 0.3808 to Re. 0.4657 per Rs. 1,000/- per day.
4.3 These are secured against hypothecation of assets including book debts of the Company ranking pari passu, with
the charge created in favour of other lenders to secure redeemable capital (Refer Note No. 3) and short term
borrowings (Refer Note No.7). These facilities are payable on various dates by May 2004.
These are subject to markup rate ranging from Re. 0.4384 to Re. 0.50 per Rs. 1,000/- per day.
5. LEASE DEPOSITS
These represent interest free security deposits received against lease contracts and are refundable / adjustable at the
expiry/termination of the respective lease.
6. CERTIFICATES OF INVESTMENT
These represent the mobilization of fund under the Scheme of certificates of investment issued with the permission of
the Securities and Exchange Commission of Pakistan. The scheme is based on profit and loss sharing basis. The certificates
are for the terms ranging from three months to five years. The expected rate of profit ranges from 11.75% to 19.25%
2001 2000
Rupees Rupees
7. SHORT TERM BORROWINGS
Secured- under markup arrangement (7.1)
From Commercial Banks
Term Loan 119,480,377 8,300,000
Morabaha Finance 50,000,000 --
Running Finance 113,286,486 78,239,426
From Non-Banking Financial Institutions 50,000,000 75,000,000
Unsecured
From Commercial Banks 150,000,000 145,000,000
From Non Banking Financial Institutions 251,250,000 190,000,000
------------------ ------------------
734,016,863 496,539,426
========== ==========
7.1 These facilities are secured against hypothecation of assets including book debts of the Company ranking pari
passu with the charge created to secure redeemable capital (Refer Note No. 3) and long term loans (Refer Note
No. 4). These include Rs. 100 million which is secured by pledge of US dollar bonds and Rs. 50 million which
is secured by pledge of Term Finance Certificates.
The sanctioned running finance facilities of Rs. 185 million from commercial banks are renewable yearly. The
letter of credit acceptance facilities of Rs. 45 million from commercial banks are not utilized on the balance sheet
date.
The rate of markup ranges from Re. 0.3561 to Re. 0.4863 per Rs. 1,000/- per day.
8. CURRENT PORTION OF LONG TERM LIABILITIES
Redeemable Capital 27,242,141 9,056,640
Long Term Loans 31,270,103 62,695,165
Lease Deposits 28,280,701 23,541,877
------------------ ------------------
86,792,945 95,293,682
========== ==========
9. ACCRUED AND OTHER LIABILITIES
Mark-up on Secured
Redeemable Capital 2,126,287 951,666
Long Term Loans 6,767,697 19,974,427
Short Term Borrowings 11,064,105 2,497,058
Mark-up / Return on Unsecured
Short Term Borrowings 11,072,681 10,236,920
Certificates of Investment 11,677,080 6,181,420
Advance against Leases 11,813,227 3,083,782
Accrued Expenses 1,705,057 1,287,600
Guarantee Commission 879,775 --
Purchase of Listed Securities 41,248,442 --
Unclaimed Dividend 1,807,655 830,299
Others 2,883,222 2,170,357
------------------ ------------------
103,045,228 47,213,529
========== ==========
10. COMMITMENTS
Lease financing contracts committed but not executed at the balance sheet date amounted to Rs. 86.6 million
(2000 - Rs. 147 million) and underwriting commitments of TFCs amounted to Rs. 65 million (2000 Rs. 35 million).
11. FIXED CAPITAL EXPENDITURE
Operating Assets - Tangible (11.1) 24,298,747 26,402,077
Capital Work in Progress
Advance for Renovation of Office Premises 1,000,000 --
------------------ ------------------
25,298,747 26,402,077
========== ==========
11.1 Operating Assets - Tangible
Cost at Addition/ Cost at Accumulated Depreciation/ Accumulated Book value
July 01, Transfer/ June 30, Depreciation (Deletion) Depreciation at June Rate
2000 (Deletion) 2001 at July 01, for the at June 30, 30, 2001 %
2000 year 2001
Office Premises 16,029,956 -- 16,029,956 4,282,833 1,602,996 5,885,829 10,144,127 10
Lease Hold Improvements 8,592,686 489,605 9,082,291 2,328,235 908,229 3,236,464 5,845,827 10
Furniture and Fixtures 4,767,177 205,650 4,972,827 2,005,494 497,282 2,502,776 2,470,051 10
Equipment and Appliances 5,365,838 607,649 5,913,487 3,556,727 883,758 4,392,485 1,521,002 20
(60,000) (48,000)
Vehicles 7,809,714 2,416,000 10,011,214 3,990,005 1,703,469 5,693,474 4,317,740 20
(214,500)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Rupees 42,565,371 3,718,904 46,009,775 16,163,294 5,595,734 21,711,028 24,298,747
(274,500) (48,000)
========== ========== ========== ========== ========== ========== ==========
2000 Rupees 37,273,336 9,137,403 42,565,371 13,474,436 5,053,056 16,163,294 26,402,077
(3,845,368) (2,364,198)
========== ========== ========== ========== ========== ========== ==========
11.1.1 Disposal of Operating Assets - by negotiation
Particulars Cost Accumulated Written Sale Name and Address
Depreciation Down Value Proceed
Furniture and
Fixture 60,000 48,000 12,000 24,000 Mr. Noman Akhter, Ex-,employee
C- 10, Jason Luxury Apartments
Kehkashan Clifton, Karachi.
Vehicle 214,500 -- 214,500 150,000 Mr. Munawar Raza (CDR)
House No. C-4, PNS Johar, Karachi.
------------------ ------------------ ------------------ ------------------
Rupees 274,500 48,000 226,500 174,000
========== ========== ========== ==========
2000 Rupees 3,845,368 2,364,198 1,481,170 1,570,570
========== ========== ========== ==========
12. NET INVESTMENT IN LEASE FINANCE 2001 2000
Rupees Rupees
12.1 Minimum Lease Payment Receivables
Less than one year 911,499,912 593,660,855
More than one year and less than five years 669,630,614 745,278,308
------------------ ------------------
1,581,130,526 1,338,939,163
========== ==========
12.2 Net Investment in Lease Finance
Less than one year 592,126,053 429,288,511
More than one year and less than five years 780,376,057 661,453,541
------------------ ------------------
1,327,502,110 1,090,742,052
========== ==========
12.3 The Company had extended leasing facilities to Pakland Cement Limited (PCL) against which a sum of
Rs. 112.38 million was outstanding as at December 31, 2000. The creditors of PCL have filed petition in
the Sindh High Court under section 284, 285,286 and 288 of the Companies Ordinance, 1984 with the
consent of the majority of creditors for restructuring of their outstanding liabilities and repayment thereof.
Consequently, the lease facilities and borrowings of PCL shall be converted into Term Finance Certificates
(TFCs) to be issued as redeemable capital under provisions of Section 120 of the Companies Ordinance,
1984. The TFCs will be for a period of eight and half years, secured by a pari - passu charge / mortgage over
the assets and securities of PCL created in favour of the Trustees appointed on behalf of the TFC
holders / Creditors and will be redeemed in 13 semi annual installments with grace period of two and half
years from the effective date.
TFCs will be issued by PCL in two series. TFCs Series A represent the principal and overdue lease rentals/
borrowings and will carry a yield of 16% per annum. TFCs Series B will be issued for the accrued profit /
markup on which no yield will be applicable.
These TFC s will be freely tradable amongst the TFC holders except that for a sell/transfer to party other than
creditor, prior consent of PCL would be required.
The State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) have granted
specific exemptions from the applicability for the Prudential Guidelines in respect of the restructuring and
additional facilities regarding PCL. No additional provision shall be made.
The carried over provisions will be reversed by the Company on the basis of the actual recoveries effected
according to the repayment schedule of the TFCs.
The amount will be transferred to investment in TFCs on receiving approval of the High Court.
13. INVESTMENT IN SUBSIDIARIES/ASSOCIATE
Subsidiaries
Guardian Modaraba 191anagement (Pvt.) Limited
Percentage of holding 99.80%
2,495,000 Ordinary shares of Rs.10/- each
Net assets value at June 30, 2001: Rs. 20.69 million 15,793,350 15,793,350
(2000: Rs.20.26 million)
Certificates were with open transfer deeds
General Modaraba Services (Pvt.) Limited
Percentage of holding 51%
637,500 Ordinary shares of Rs. 10/- each
Net assets value as at June 30, 2001: Rs. 0.40 million 5,737,500 5,737,500
(2000: Rs. 0.28 million)
Providence Modaraba Limited
Percentage of holding 99%
990,000 Ordinary shares of Rs.10/- each
Net assets value as at June 30, 2001: Rs. 4.42 million 7,563,597 --
Certificates were with open transfer deeds
Associate
Pakistan Venture Capital Limited
Percentage of holding 30%
3,000,000 Ordinary shares of Rs. 10/- each
Net assets value as at June 30, 2001: Rs 36.91 million 30,000,000 30,000,000
(2000: Rs. 35.55 million)
Market value Rs.8.3 million (2000:Rs.15 million)
------------------ ------------------
59,094,447 51,530,850
========== ==========
13.1 The above investments are carried at cost. Had these investments been accounted for using the
Equity Method, the value of investments on the basis of latest available audited accounts for the
year ended June 30, 2001 of the investees and their effects on the profit and loss account would
have been as follows:-
Value of
Investment
under Equity Effect on
Method Profit
Rupees Rupees
Guardian Modaraba Management (Pvt.) Limited 23,016,617 7,223,267
General Modaraba Services (Pvt.) Limited 2,844,917 (2,892,583)
Providence Modaraba Limited 6,100,718 (1,462,879)
Pakistan Venture Capital Limited 36,521,678 6,521,678
------------------ ------------------
68,483,930 9,389,483
========== ==========
14. LONG TERM LOANS - STAFF
Considered good
Chief Executive 2,254,696 2,415,942
Executive 644,528 722,950
------------------ ------------------
2,899,224 3,138,892
Less: Current Portion (260,906) (239,668)
------------------ ------------------
2,638,318 2,899,224
========== ==========
Outstanding for Period:
- Within three years 854,871 784,759
- Exceeding three years 2,044,353 2,354,133
------------------ ------------------
2,899,224 3,138,892
========== ==========
The loans under the scheme have been provided to Chief Executive and an Executive of the Company to facilitate
construction or purchase of house, which are repayable over a period of 10 years with service charge @ 5% to 10%
per annum.
Maximum aggregate amount outstanding during the year in respect of Chief Executive and Executive is
Rs. 3,138,892/-(2000 - Rs. 4,430,910/-).
15. LONG TERM RECEIVABLE
Principal due 43,100,000 43,900,000
Provision made
Opening balance 21,950,000 --
Provided during the year 10,375,000 21,950,000
------------------ ------------------
32,325,000 21,950,000
------------------ ------------------
10,775,000 21,950,000
========== ==========
The Company had filed a suit against the lessee in the courts of law and decree of recovery for Rs. 64.412
million was awarded by the Banking Court under the Banking Companies (Recovery of Loans, Advances,
Credits and Finance) Act 1997. The Company also holds additional security by way of equitable mortgage on
factory land and building. As a matter of prudence, provision has also been made.
16. SHORT TERM INVESTMENTS
Shares & Securities 16.1 186,978,087 95,098,144
Federal Investment Bonds 16.2 4,000,000 4,000,000
US Dollar Bonds 16.3 135,798.60 115,911,357
Euro Bonds 16.4 21,775,982 6,093,470
Certificates of Investment -- 10,000,000
Placements and Deposits 16.5 172,455,533 66,662,589
------------------ ------------------
521,008,202 297,765,560
========== ==========
16.1 Marketable Securities COST
No. of Shares/Certificates 2001 2000
Quoted 2001 2000 Rupees Rupees
Shares / Certificates
Adamjee Insurance Company Ltd. 328,277 252 18,355,550 15,520
Glaxo Wellcome Pakistan Ltd. 2,000 2,000 80,500 80,500
ICI Pakistan Ltd. 589,250 336,250 5,363,912 5,046,600
Hub Power Company Ltd. 60,000 115,000 1,157,807 1,699,530
KASB Premier Fund Ltd. 50,000 50,000 500,000 500,000
Pakistan State Oil Company Ltd. 5,122 5,122 678,816 894,441
Pakistan Telecommunication Co. Ltd. 1,705,000 5,000 30,604,505 164,259
World Call Payphone Ltd. 1,000,000 -- 15,700,000 --
Saadi Cement Ltd. -- 2,500,000 -- 12,500,000
Engro Chemicals Ltd. 23,023 32,020 1,579,757 2,526,664
Sui Southern Gas Company Ltd. 6,988 155,939 97,299 2,541,251
Sui Northern Gas Company Ltd. 11,500 -- 109,910 --
Sitara Energy Ltd. 15,000 -- 339,000 --
Bank A1-Habib Ltd. 13,114 10,929 204,923 204,923
First Imrooz Modaraba 500 500 10,600 10,600
B.R.R International Modaraba 2,000 2,000 10,260 10,260
First General Leasing Modaraba 118,675 -- 213,615 --
First Providence Modaraba 320,956 -- 2,034,867 --
Dawood Hercules Ltd. 1,200 1,200 92,500 92,500
I.C.P. SEMF Mutual Fund 7,500 7,500 105,575 105,576
Dewan Farooq Motors Ltd. 400,000 400,000 3,884,479 4,000,000
Ibrahim Fibres Ltd. -- 50,000 -- 720,000
Dhan Fibre Ltd. -- 100,000 -- 1,050,000
Dewan Salman Fibres Ltd. 10,000 -- 179,000 --
Nishat Mills Ltd. 50,000 -- 865,000 --
D.G. Khan Cement Ltd. -- 60,000 -- 480,000
Fauji Fertilizers Ltd. -- 11,500 -- 452,525
Tripack Films Ltd. 177,500 -- 5,413,750 --
National Refinery Ltd. -- 28,000 -- 1,195,600
------------------ ------------------
Balance c/f 87,581,625 34,290,749
Balance b/f 87,581,625 34,290,749
Saudi Pak Leasing Company Ltd. 50 75 5,000,000 7,500,000
Dewan Salman Fibres Ltd. 100 100 9,992,000 9,996,000
National Development Leasing Ltd. 100 100 9,994,000 9,998,000
Pakistan Industrial Leasing Corporation Ltd. 150 100 14,994,000 9,998,000
Sigma Leasing Ltd. 100 100 9,000,000 10,000,000
Paramount Leasing Ltd. 100 100 9,800,000 10,000,000
Atlas Lease Ltd. 75 -- 7,498,500 --
Network Leasing Ltd. 100 -- 9,998,000 --
Al-Noor Sugar Mills Ltd. 150 -- 14,997,000 --
------------------ ------------------
91,273,500 57,492,000
Provision for diminution in value of investments
Opening balance (7,284,605) (9,038,486)
Reversal during the year 4,807,567 1,753,881
------------------ ------------------
(2,477,038) (7,284,605)
------------------ ------------------
176,378,087 84,498,144
Unquoted
Shares
Image Graphics Solution (Private) Limited
Chief Executive - Mr. Tariq Mian 60,000 60,000 600,000 600,000
Term Finance Certificates
Dewan Salman Fibres Ltd. 1 1 10,000,000 10,000,000
------------------ ------------------
186,978,087 95,098,144
========== ==========
17. SHORT TERM MORABAHA FINANCES
Secured
These represent funds provided under morabaha arrangement on markup / profit basis. These are secured
by hypothecation of all present and future goods, merchandise, work-in-progress, finished and unfinished goods.
The markup / profit rate is from Re. 0.4384 to Re. 0.5548 per Rs. 1,000/- per day.
2001 2000
Rupees Rupees
18. ADVANCES, DEPOSITS AND PREPAYMENTS
Current Portion of Long Term Loans 260,906 239,668
Advance Income Tax 1,859,724 2,526,573
Deposits -- 41,000
Prepayments 1,593,550 1,550,376
Others 1,013,100 150,000
------------------ ------------------
4,727,280 4,507,617
========== ==========
19. OTHER RECEIVABLES
Considered Good
Receivable against Sale of Securities 14,119,120 182,261
Accrued Profit / Return 14,986,977 10,379,954
Income Tax Refundable 1,118,518 990,293
Receivable against Matured Leases 2,192,263 2,161,602
Others 325,354 1,395,299
------------------ ------------------
32,742,232 15,109,408
========== ==========
20. CASH AND BANK BALANCES
Cash in Hand
Local Currency -- 19,726
Foreign Currency 510,245 355,098
Cash with Banks
In Deposit Accounts 9,667,664 7,569,845
In Current Accounts 3,568,168 656,889
------------------ ------------------
13,746,077 8,601,558
========== ==========
21. RETURN ON DEPOSITS AND INVESTMENTS
Return on Short Term Investments 50,118,261 30,125,915
Profit on PLS Account / Bank Deposit (Net of Zakat) 76,518 75,179
Dividend 1,550,841 3,150,675
------------------ ------------------
51,745,620 33,351,769
========== ==========
22. ADMINISTRATION AND OPERATING EXPENSES
Salaries and Benefits (22.1) 10,626,756 9,115,019
Directors Meeting Fees 5,500 3,500
Rent, Rates and Taxes 592,515 520,571
Insurance 949,037 748,693
Legal, Professional and Consultancy 1,627,842 2,231,777
Travelling and Conveyance 780,234 2,108,171
Postage and Telephone 969,506 1,033,581
Utilities 627,105 450,884
Printing and Stationery 754,584 731,464
Vehicles Running and Maintenance 1,386,015 1,212,182
Computerisation -- 208,157
Entertainment 590,780 477,606
Advertisement 91,710 66,640
Repairs and Maintenance 621,229 625,355
Auditors Remuneration (22.2) 272,000 249,500
Share Department -- 250,000
Credit Rating 460,930 304,000
Depreciation 5,595,734 5,053,056
Fees and Subscription 502,462 605,987
Commission and Brokerage 331,559 357,286
Donation (22.3) 77,786 118,550
Others -- 113,578
------------------ ------------------
26,863,283 26,585,556
========== ==========
22.1 Salaries and benefits include Rs. 1,215,424 (2000: Rs. 1,142,485/-) in respect of retirement benefits.
22.2 Auditors Remuneration
Statutory Audit Fee 100,000 100,000
Tax and Other Consultancy 122,000 123,000
Other Services 40,000 20,000
Out of Pocket 10,000 6,500
------------------ ------------------
272,000 249,500
========== ==========
None of the directors or their spouse had any interest in the donees fund.
23. FINANCIAL CHARGES
Mark-up / Return on
Redeemable Capital 5,473,350 4,836,425
Long Term Loans 36,777,379 45,334,061
Long Term Certificates of Investment 3,458,702 2,841,970
Short Term Borrowings 87,311,074 52,320,463
Short Term Certificates of Investment 24,441,918 10,728,745
Financial Charges on Lease Liability -- 9,565
Forward Cover Fee 13,801,593 13,390,894
Documentation, Project Examination, Guarantee
Commission and Bank Charges 4,056,911 3,463,175
------------------ ------------------
175,320,927 132,925,298
========== ==========
24. TAXATION
The Company has provided for deferred taxation in compliance with circular No. 16 of the Securities and Exchange
Commission of Pakistan to ensure that the liability arising on June 30, 2003 has been fully provided upto that year. The
deferred taxation, arising out of timing difference between accounting and income tax revenue or charges computed
under the liability method, is estimated at Rs. 59.2 million (2000 - Rs. 49.493 million). Part provision of Rs. 49.20 million
has been made as of these accounts.
25. EARNING PER SHARE
There is no effect of dilution on the earning per share of the Company which is based on:
2001 2000
Profit Before Taxation Rs. 47,316,228 41,658,305
Profit After Taxation Rs. 31,511,749 31,103,850
Weighted Average Number of Ordinary Shares 25,000,000 25,000,000
Earning Per Share - Pre-Tax Rs. 1.89 1.67
Earning Per Share - Post-Tax Rs. 1.26 1.24
26. REMUNERATION TO DIRECTORS AND EXECUTIVES
2001 2000
Chief Director Executives Chief Director Executives
Executive Executive
Managerial Remuneration 1,277,424 619,356 3,284,096 838,710 619,356 2,804,259
Housing and Utilities 702,576 340,644 1,513,486 461,291 340,644 1,225,143
Bonus -- 80,000 378,811 100,000 80,000 280,874
Gratuity 356,673 50,906 283,185 171,603 187,073 388,956
Provident Fund 127,740 61,932 296,624 77,424 61,932 255,497
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Rupees 2,464,413 1,152,838 5,756,202 1,649,028 1,289,005 4,954,729
========== ========== ========== ========== ========== ==========
Number of Persons 1 1 16 1 1 10
26.1 The Chief Executive, Director and Executives are also provided with free use of company cars, medical
insurance cover and travelling allowance. The monetary value of these are Rs.2,157,259/-(2000-Rs. 1,723,646/-)
approximately.
2001 2000
Rupees Rupees
27. TRANSACTIONS WITH ASSOCIATED COMPANIES
Share of Common Expenses 1,135,613 259,089
========== ==========
28. CREDIT RISK AND CONCENTRATIONS OF SIGNIFICANT CREDIT RISK
Credit risk is the risk faced when one party to a financial instrument fails to discharge its obligation and cause the other party
to incur a financial loss.
The Company follows two sets of guidelines, an operating policy duly approved by the Board of Directors and the Prudential
Regulations for NBFIs issued by the Securities & Exchange Commission of Pakistan. The operating policy defines the extent
of exposure with reference to a particular sector or group of leases. The leases are classified on the basis of Prudential Regulations
guidelines.
The Company believes in maintaining a balance between profitability and portfolio riskiness. Diversification of lease portfolio
is the focal point of Company s exposure policy. Extra care is taken to ensure that per party and per sector exposures remain
within limits prescribed by the operating policy and Prudential Regulations.
Details of the industry / sector analysis of lease portfolio is given below:
Segment by Class of Business Rupees %
Textile Composite 219,373,028 15.99
Steel, Engineering & Automobile 179,750,834 13.10
Cement 160,521,837 11.70
Sugar and Allied 151,628,170 11.05
Transport & Communication 142,488,188 10.38
Food, Tobacco and Beverages 100,653,579 7.34
Chemicals, Fertilizers and Pharmaceuticals 58,783,603 4.28
Health Care 50,106,301 3.65
Textile Finishing 49,313,813 3.59
Energy, Oil and Gas 48,171,204 3.51
Power Generation 14,178,539 1.03
Electrical Goods 11,235,701 0.82
Financial 4,928,746 0.36
Miscellaneous 181,043,567 13.20
------------------ ------------------
1,372,177,110 100.00
========== ==========
29. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of all the financial instruments reflected in the financial statements approximates to their fair values.
30. INTEREST RATE RISK MANAGEMENT
Interest rate risk arises from the possibility when changes in interest rate affect the value of financial instruments. The
Company is exposed to interest rate risk as a result of mismatches or gaps in the amounts of assets and liabilities that mature
or reprice in a given period. The Company manages this risk by matching the repricing of assets and liabilities.
The Company s exposure to interest rate risk on its financial assets and liabilities are summarized as follows:-
Not Exposed
Less than One Month Over to Interest
ASSETS One Month to One Year One Year Rate Risk Total
Fixed Capital Expenditure -- -- -- 25,298,747 25,298,747
Net Investment in Lease Finance 37,464,004 554,662,049 557,338,887 222,712,170 1,372,177,110
Long Term Receivable -- -- 10,775,000 -- 10,775,000
Long Term Loans 20,855 240,051 2,638,318 -- 2,899,224
Long Term Deposits -- -- -- 40,200 402,000
Investment in Subsidiaries / Associate -- -- -- 59,094,447 59,094,447
Short Term Investments 57,455,530 463,552,672 -- -- 521,008,202
Short Term Morabaha Finance -- 8,608,604 -- -- 8,608,604
Advances Against Lease Commitment -- 51,126,889 -- -- 51,126,889
Advances, Deposits and Prepayments -- -- -- 4,466,374 4,466,374
Other Receivables -- -- -- 32,742,232 32,742,232
Cash and Bank Balances 9,667,664 -- -- 4,078,413 13,746,077
------------------ ------------------ ------------------ ------------------ ------------------
Rupees 104,608,053 1,078,190,265 570,752,205 348,794,383 2,102,344,906
========== ========== ========== ========== ==========
CAPITAL AND LIABILITIES
Capital and Reserves -- -- -- 313,240,379 313,240,379
Provision for Lease Losses -- -- -- 44,675,000 44,675,000
Deferred Liabilities -- -- -- 51,247,235 51,247,235
Redeemable Capital -- 27,242,141 49,524,541 -- 76,766,682
Long Term Loans -- 31,270,103 240,265,340 -- 271,535,443
Certificates of Investment 71,450,000 157,205,000 27,145,000 -- 255,800,000
Lease Deposits -- -- -- 222,712,176 222,712,176
Long Term Deposits -- -- -- 305,900 305.90
Short Term Borrowings 50,000,000 684,016,863 -- -- 734,016,863
Accrued Expenses and Other Liabilities -- -- -- 103,045,228 103,045,228
Taxation -- -- -- 4,000,000 4,000,000
Proposed Dividend -- 25,000,000 -- -- 25,000,000
------------------ ------------------ ------------------ ------------------ ------------------
Rupees 121,450,000 924,734,107 316,934,881 739,225,918 2,102,344,906
========== ========== ========== ========== ==========
On-Balance Sheet Gap Rupees (16,841,947) 153,456.16 253,817,324 (390,431535) --
------------------ ------------------ ------------------ ------------------ ------------------
Total Interest Rate Sensitivity Gap (16,841,947) 136,614,211 390,431,535 -- --
========== ========== ========== ========== ==========
The effective average interest rate/mark-up for each of the monetary financial instrument is as follows.
2001
Effective Average Interest
Rate / Mark-up
%
Assets
Net Investment in Lease Finance 20.50
Long Term Loans 5 - 10
Short Term Investments 18.29
Short Term Morabaha Finances 18.79
Cash & Bank Balances 5.27
Liabilities
Redeemable Capital 16.92
Long Term Loans 16.83
Certificates of Investment 16.04
Short Term Borrowings 16.85
31. NUMBER OF EMPLOYEES
Total number of permanent employees as at year end are 22 (2000 - 22)
32. GENERAL
Figures have been rounded off nearest to Rupee.
Corresponding figures have been re-arranged wherever necessary for the purpose of comparison.
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
STATEMENT & REPORT
2001 2001 2001 2000 2000
General Guardian Providence General Guardian
Statement and Report under Section 237 of Modaraba Modaraba Modaraba Modaraba Modaraba
Companies Ordinance, 1984 Services Management Limited Services Management
(Pvt.) Ltd (Pvt.) Ltd (Pvt.) Ltd (Pvt.) Ltd
STATEMENT UNDER SECTION (1) (E)
a. Extent of the interest of Dawood Leasing
Company Limited (the holding company) in the
equity of its subsidiaries as at the end of the last
of the financial year of the subsidiaries. 51.00% 99.80% 99.00% 51.00% 99.80%
b. The net aggregate amount of profits less losses
of the subsidiary companies so far as these
concern members of the holding company and
has not been dealt with in the accounts of the
holding company for the year ended June 30,
2001 are:
i) for the financial year of the subsidiaries (713,410) 5,619,006 (1,832,779) (967,563) 3,176,711
ii0 for the previous financial year of the subsidiary
since it became the Holding Company s subsidiary. (3,951,588) 1,834,262 -- (2,984,025) (1,342,449)
c. The net aggregate amount of profit less losses of
the subsidiary companies so far as these concern
member of the holding company and have been
dealt with in the account of the holding company
for the year ended June 30, 2001
i) for the financial year of the subsidiaries N/A N/A N/A N/A N/A
ii) for the previous financial year of the subsidiary
since it became the holding Company s subsidiary. N/A N/A N/A N/A N/A
STATEMENT UNDER SECTION (1) (f) N/A N/A N/A N/A N/A
STATEMENT UNDER SECTION (1) (g) N/A N/A N/A N/A N/A
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
PATTERN OF SHARE HOLDING AS AT JUNE 30, 2001
No. of Share Holding Shares
Shareholders From To Held
28 1 -- 100 2,100
1571 101 -- 500 780,500
178 501 -- 1000 164,400
192 1001 -- 5000 510,700
44 5001 -- 10000 364,100
16 10001 -- 15000 201,100
10 15001 -- 20000 199,100
8 20001 -- 25000 198,000
6 25001 -- 30000 177,900
2 30001 -- 35000 65,500
1 40001 -- 45000 42,500
10 45001 -- 50000 494,600
2 50001 -- 55000 107,500
3 55001 -- 65000 181,000
1 65001 -- 75000 371,100
14 75001 -- 100000 1,279,700
5 100001 -- 105000 435,800
2 105001 -- 125000 240,500
1 125001 -- 130000 145,000
1 140001 -- 145000 250,000
3 145001 -- 250000 810,000
3 305001 -- 390000 1,098,600
1 390001 -- 395000 426,000
3 405001 -- 500000 972,000
1 500001 -- 505000 502,500
1 505001 -- 545000 542,800
1 545001 -- 955000 950,100
1 955001 -- 985000 983,200
1 985001 -- 1000000 1,000,000
3 1000001 -- 1510000 3,771,300
3 1510001 -- 4215000 7,732,400
------------------ ------------------
2,116 25,000,000
========== ==========
Categories of Shareholders
PARTICULARS Number of Shares Held Percentage
Shareholders %
Individuals 2035 7,910,300 22.88
Insurance Companies 5 4,395,500 12.71
Joint-Stock Companies 41 11,419,700 33.04
Financial Institutions 15 7,958,200 23.02
Associated Companies 1 71,100 0.21
Modarabas 7 96,900 0.28
Ft)reign Investors 1 983,200 0.84
Investment Companies 7 1,709,200 4.94
Modarabas Management Companies 1 23,000 0.07
Others 3 2,000 0.01
------------------ ------------------ ------------------
2116 34,567,100 100.00
========== ========== ==========
CONSOLIDATED ACCOUNTS OF
DAWOOD LEASING COMPANY LIMITED
AND
ITS SUBSIDIARIES
AUDITORS REPORT TO THE MEMBERS
We have examined the annexed consolidated financial statements comprising consolidated Balance Sheet of DAWOOD
LEASING COMPANY LIMITED and its subsidiary companies as at June 30, 2001 and the related consolidated Profit and
Loss Account and consolidated Cash Flow Statement and consolidated Changes in Equity together with the notes forming
part thereof, for the year ended June 30, 2001. We have also expressed separate opinion on the financial statements of
DAWOOD LEASING COMPANY LIMITED and its subsidiary Company General Modaraba Services (Private) Limited.
Audit of its other subsidiary Companies Guardian Modaraba Management (Private) Limited and Providence Modaraba
Limited was done by other firms of Chartered Accountants for the year ended June 30, 2001 whose reports have been
furnished to us and our opinion in so far as it relates to the amounts included for such company, is based solely on the report
of such other auditors. These financial statements are the responsibility of the Holding Company s management. Our
responsibility is to express an opinion on these financial statements based on our examination.
Our examination was made in accordance 'with International Standards on Auditing and accordingly included such tests of
accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements examined by us present fairly the financial position of DAWOOD
LEASING COMPANY LIMITED and its subsidiary companies as at June 30, 2001 and the results of their operations for
the year then ended.
Dated: November 28, 2001 M. Yousuf Adil Saleem & Co.
Karachi: Chartered Accountants
CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2001
2001 2000
Note Rupees Rupees
SHARE CAPITAL AND RESERVES
Authorized
50,000,000 Ordinary Shares
of Rs. 10/- each 500,000,000 500,000,000
========== ==========
Issued, Subscribed and Paid up
25,000,000 Ordinary Shares of
Rs. 10/- each. Fully Paid in Cash 250,000,000 250,000,000
Statutory Reserve 40,148,077 33,845,727
General Reserve 22,500,000 22,500,000
Unappropriated profit 10,825,573 6,757,205
------------------ ------------------
323,473,650 313,102,932
MINORITY INTEREST 1,121,186 1,750,804
LONG TERM LIABILITIES
Redeemable Capital 49,524,541 5,218,349
Long Term Loans 240,265,340 297,859,954
Long Term Deposits 305,900 --
Lease Deposits 194,431,475 112,511,804
Certificates of Investment 27,145,000 36,100,000
------------------ ------------------
511,672,256 451,690,107
DEFERRED LIABILITIES
Taxation 49,200,000 37,200,000
Staff Gratuity 2,047,235 1,392,973
------------------ ------------------
51,247,235 38,592,973
CURRENT LIABILITIES
Short Term Borrowings 3 736,016,863 497,966,052
Certificates of Investment 228,655,000 66,000,000
Current Portion of Long Term Liabilities 86,792,945 95,293,682
Accrued and Other Liabilities 4 104,955,148 48,368,053
Taxation 4,502,551 2,782,133
Proposed Dividend 25,000,000 25,000,000
------------------ ------------------
1,185,922,507 735,409,920
CONTINGENCIES AND COMMITMENTS 5 ------------------ ------------------
2,073,436,834 1,540,546,736
========== ==========
The annexed notes from 1 to 20 form all integral part of these financial statements.
FIXED CAPITAL EXPENDITURE 6 25,807,721 27,073,857
GOODWILL ON CONSOLIDATION 7 2,903,591 4,056,985
NET INVESTMENT IN LEASE FINANCE
Minimum Lease Payment Receivables 1,581,130,526 1,338,939,163
Residual Value of Leased Assets 195,578,249 159,531,402
------------------ ------------------
1,776,708,775 1,498,470,565
Unearned Finance Income (404,531,665) (380,678,513)
------------------ ------------------
Net Investment in Lease Finance 1,372,177,110 1,117,792,052
Provision for Lease Losses (44,675,000) (27,050,000)
------------------ ------------------
1,327,502,110 1,090,742,052
Current Portion of Net Investment in Lease Finance (592,126,053) (429,288,511)
------------------ ------------------
735,376,057 661,453,541
INVESTMENT IN ASSOCIATES 8 70,163,597 55,477,605
LONG TERM LOANS 2,638,318 2,899,224
LONG TERM DEPOSITS 402,000 300,000
LONG TERM RECEIVABLE 10,775,000 21,950,000
CURRENT ASSETS
Current Portion of Net Investment in Lease Finance 592,126,053 429,288,511
Short Term Investments 9 521,483,479 298,201,611
Short Term Morabaha Finances 8,608,604 7,000,000
Advances Against Lease Commitment 51,126,888 2,850,000
Advances, Deposits and Prepayments 10 5,076,560 4,774,614
Other Receivables 11 32,993,983 16,372,771
Cash and Bank Balances 12 13,954,983 8,848,018
------------------ ------------------
1,225,370,550 767,335,525
------------------ ------------------
2,073,436,834 1,540,546,736
========== ==========
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
CONSOLIDNFED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2001
2001 2000
Note Rupees Rupees
Income
Lease Income 184,582,954 171,044,261
Return on Deposits and Investments 13 53,276,924 30,380,052
Management Fee 251,751 1,250,789
Gain on Sale of Securities 9,287,244 9,290,096
Exchange Gain 23,947,808 --
Other Income 2,605,175 1,544,159
------------------ ------------------
273,951,856 213,509,357
Expenditure
Administration and Operating Expenses 14 28,615,393 27,183,070
Financial Charges 15 176,231,459 133,160,014
------------------ ------------------
(204,846,852) (160,343,084)
------------------ ------------------
69,105,004 53,166,273
Other Charges / Provision
Negative Goodwill recognized as Income from Subsidiary/Associate 896,726 526,826
Amortization of Goodwill on Acquisition (1,153,394) (1,153,394)
Provision for Lease Losses (28,000,000) (15,000,000)
Provision for Doubtful Debts (1,297,941) --
Reversal for Diminution in Value of Investments 5,425,744 1,733,068
------------------ ------------------
(24,128,865) (13,893,500)
------------------ ------------------
44,976,139 39,272,773
Share of Profit from Associates 16 6,862,941 3,642,103
------------------ ------------------
Profit Before Taxation 51,839,080 42,914,876
Provision for Taxation
Current 4,219,410 2,684,500
Prior (187,163) (304,934)
Deferred 12,000,000 8,200,000
------------------ ------------------
(16,032,247) (10,579,566)
------------------ ------------------
Profit After Taxation 35,806,833 32,335,310
Minority Interest 707,462 923,654
------------------ ------------------
17 36,514,295 33,258,964
Unappropriated Profit Brought Forward 5,613,628 4,719,011
------------------ ------------------
Profit Available for Appropriation 42,127,923 37,977,975
Appropriations
Transferred to Statutory Reserve 6,302,350 6,220,770
Proposed Cash Dividend Rs. 1/- per share (2000 - Rs. 1/- per share) 25,000,000 25,000,000
------------------ ------------------
31,302,350 31,220,770
------------------ ------------------
Unappropriated Profit Carried Forward 10,825,573 6,757,205
========== ==========
Earning Per Share 18
Pre-Tax 2.07 1.72
Post-Tax 1.43 1.29
The annexed notes from 1 to 20 form an integral part of these financial statements
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2001
2001 2000
A. CASH FLOW FROM OPERATING ACTIVITIES Rupees Rupees
Profit After Taxation 35,806,833 32,335,310
Adjustments:
Depreciation 5,758,640 5,220,544
Gain on Sale of Investments (9,287,244) (9,290,093)
Negative Goodwill (896,726) (526,826)
Amortization of Goodwill on Acquisition 1,153,394 1,153,394
S hare of Profit from Associated Undertaking (6,862,941) (3,642,103)
Financial Charges 176,231,459 133,160,014
Loss / (Gain) on Sale of Assets 56,024 (89,400)
Provision for Gratuity 706,463 747,632
Provision for Lease Losses / Doubtful Debts 29,297,941 15,000,000
Reversal for Diminution in Value of Investments (5,425,749) (1,733,068)
Provision for Deferred Taxation 12,000,000 8,200,000
Provision for Taxation 3,804,479 2,379,566
------------------ ------------------
206,535,745 150,559,660
------------------ ------------------
242,342,578 182,894,970
Changes in Operating Assets and Liabilities
(Increase)/Decrease in Operating Assets
Advances, Deposits and Prepayments (1,104,574) 276,757
Other Receivables (16,505,560) 10,889,623
Net Investment in Lease Finance/Receivables (253,585,058) (125,312,170)
Long Term Loans 239,668 (1,207,982)
Advances Against Lease Commitment (48,276,889) 6,805,000
Short Term Morabaha Finances (1,608,604) 96,051,816
------------------ ------------------
(320,841,017) (12,451,956)
------------------ ------------------
(78,498,439) 170,443,014
(Increase)/Decrease in Operating Liabilities
Long Term Deposits 305,900 --
Accrued and Other Liabilities 52,724,490 (10,266,292)
Lease Deposits 86,658,495 13,587,372
------------------ ------------------
61,190,446 173,764,094
Financial Charges Paid (173,529,540) 116,382,987)
Gratuity Paid (52,201) (212,691)
Tax Paid (2,076,229) (2,435,617)
------------------ ------------------
Net Cash (used in) / from Operating Activities (114,467,524) 54,732,799
------------------ ------------------
B. CASH FLOW FROM FINANCING ACTIVITIES
Redeemable Capital Obtained 75,000,000 --
Redemption of Redeemable Capital (12,508,307) (107,731,287)
Long Term Loans - Net (89,019,676) (21,665,065)
Repayment of Lease Liability -- (132,245)
Short Term Borrowings 238,050,811 63,917,974
Certificates of Investment 153,700,000 40,200,000
Dividend Paid (24,022,644) (24,664,668)
------------------ ------------------
Net Cash from / (Used in) Financing Activities 341,200,184 (50,075,291)
------------------ ------------------
C. CASH FLOW USED IN INVESTING ACTIVITIES
Acquisition of Subsidiary Net of Cash Acquired (7,205,034) (5,733,896)
Dividend Received -- 3,200,000
Long Term Deposits 6,324 --
Capital Expenditure (4,718,904) (9,137,403)
Proceeds from Sale of Fixed Assets 261,109 1,570,570
Long Term Investments (1,400,311) --
Short Term Investments - net (208,568,897) (96,915,313)
------------------ ------------------
Net Cash Used in Investing Activities (221,625,695) ( 107,016,042)
------------------ ------------------
Net Increase/(Decrease) in Cash and Bank Balances 5,106,965 (102,358,534)
Cash and Bank Balances at the Beginning of the Year 8,848,018 11,206,552
------------------ ------------------
Cash and Bank Balances at the End of the Year 13,954,983 8,848,018
========== ==========
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2001
Paid-up Statutory General Unappropriated Total
Capital Reserve* Reserve Profit
Rupees
Balance at June 30, 1999 250,000,000 27,624,957 22,500,000 4,719,011 304,843,968
Profit for the year -- -- -- 33,258,964 33,258,964
Appropriations
Transferred to Statutory Reserve -- 6,220,770 -- (6,220,770) --
Dividend -Rs. 1/- per share -- -- -- (25,000,000) (25,000,000)
------------------ ------------------ ------------------ ------------------ ------------------
Balance at June 30, 2000 250,000,000 33,845,727 22,500,000 6,757,205 313,102,932
Profit for the year -- -- -- 36,514,295 36,514,295
Adjustment in Opening Retained
Earning (Note No. 17) -- -- -- (1,143,577) (1,143,577)
Appropriations
Transferred to Statutory Reserve -- 6,302,350 -- (6,302,350) --
Dividend - Rs. 1/- per share -- -- -- (25,000,000) (25,000,000)
------------------ ------------------ ------------------ ------------------ ------------------
Balance at June 30, 2001 250,000,000 40,148,077 22,500,000 10,825,573 323,473,650
========== ========== ========== ========== ==========
*The statutory reserve is created by transferring 20% after tax profit of holding company for the year as required under the
Leasing Companies (Establishment and Regulation) Rules, 2000.
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2001
1. THE COMPANY AND ITS OPERATIONS
1.1 The Company was incorporated on June 22, 1994 as a public limited Company under the Companies Ordinance,
1984 and is listed on the Karachi and Islamabad Stock Exchanges. The main business activity of the Company
is leasing of assets.
1.2 Subsidiaries of Dawood Leasing company Limited are companies limited by shares incorporated in Pakistan.
The principal activities of companies are to promote, float and manage modarabas. The following subsidiaries
have been consolidated in the accounts of the Company.
2001 2000
Holding
Guardian Modaraba Management (Pvt.) Ltd. 99.80% 99.80%
General Modaraba Services (Pvt.) Limited 51.00% 51.00%
Providence Modaraba Limited 99.00% --
1.3 Basis of Consolidation
1.3.1 The consolidated financial statements include the accounts of Dawood Leasing Company Limited (the
holding Company) and its subsidiary companies. The financial statements of such subsidiaries have
been consolidated on line by line basis. All material intercompany balances and transactions have been
eliminated. Minority interest in the equity and results of the subsidiaries that are controlled by holding
company are shown as separate item in the consolidated financial statements.
1.3.2 The significant accounting policies and disclosures required by Companies Ordinance, 1984 which are
same and stated in the Dawood Leasing Company Limited financial statements are not reproduced
in these consolidated financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting Convention
These financial statements have been prepared under the historical cost convention.
2.2 Basis of Preparation
These accounts have been prepared in accordance with International Accounting Standard as applicable in
Pakistan.
2.3 Goodwill
Any excess of the cost of acquisition over the Company s interest in the fair value of the identifiable assets and
liabilities acquired as at the date of the exchange transaction is described as goodwill. Any excess, as at the date
of the exchange transaction, of the company s interest in the fair values of the indentifiable assets and
liabilities acquired over the cost of the acquisition, is described as negative goodwill.
Goodwill recognized as an asset, is amortized on a systematic basis over its useful life. The amortization method
used reflects the pattern in which future economic benefits arising from goodwill are expected to be consumed.
The amortization for each period is recognized as an expense.
The negative goodwill is recognized as income in the following manner:
- if excess of fair value of acquired identifiable non monetary assets, negative goodwill is
recognized as income immediately, and
- if not exceeding the fair values of acquired identifiable non monetary assets, negative goodwill
is recognized as income on systematic basis over the remaining weighted average useful life
of the identifiable acquired depreciable assets.
2.4 Investments
2.4.1 Investment in Associate
Investment in associated companies are included in the balance sheet at cost plus the appropriate share
of post acquisition retained profits and reserves. The appropriate share of profits of associates have been
included in the profit and loss account.
2.4.2 Short Term
These are stated at lower of moving average cost and market / breakup value on aggregate portfolio
basis.
2001 2000
Rupees Rupees
3. SHORT TERM BORROWINGS
Secured - under markup arrangement (3.1)
From Commercial Banks
Term Loan 119,480,377 8,300,000
Morabaha Finance 50,000,000 --
Running Finance 113,286,486 78,239,426
From Non-Banking Financial Institution 50,000,000 75,300,000
Unsecured
From Commercial Banks 150,000,000 145,000,000
From Non Banking Financial Institutions 253,250,000 191,126,626
------------------ ------------------
736,016,863 497,966,052
========== ==========
3.1 These facilities are secured against hypothecation of assets including book debts of the Company ranking pari
passu with the charge created to secure redeemable capital and long term loans. These includes Rs. 100 million
which is secured by pledge of US dollar bonds and Rs. 50 million which is secured by pledge of Term Finance
Certificates.
The sanctioned running finance facilities of Rs. 185 million from commercial banks are renewable yearly. The
letter of credit acceptance facilities of Rs. 45 million from commercial banks are not utilized on the balance
sheet date.
The rate of markup ranges from Re. 0.3561 to Re. 0.4863 per Rs. 1.000/- per day.
4. ACCRUED AND OTHER LIABILITIES
Mark-up on Secured
Redeemable Capital 2,126,287 951,666
Long Term Loans 6,767,697 19,974,427
Short Term Borrowings 11,064,105 2,497,058
Mark-up / Return on Unsecured
Short Term Borrowings 11,072,681 10,236,920
Certificates of Investment 11,677,080 6,181,420
Advance Against Leases 11,813,277 3,083,782
Due to Associated Company 1,260,437 399,165
Accrued Expenses 2,048,554 1,568,950
Guarantee Commission 879,775 --
Purchase of Listed Securities 41,248,442 --
Unclaimed Dividend 1,807,655 830,299
Others 3,189,208 2,644,366
------------------ ------------------
104,955,148 48,368,053
========== ==========
5. CONTINGENCIES AND COMMITMENTS
Contingencies
5.1 The Income Tax Department has demanded of Rs. 422,461 for the assessment years 1998-99 and 1999-2000,
which are not acknowledged by one of the subsidiary company. The orders of the assessing officer has been set-
aside by the Deputy Commissioner of Income Tax.
5.2 In finalizing the one of the Subsidiary company s tax assessment for the year 1997-98, the Deputy commissioner
of Income Tax (DCIT) has made certain disallowance and also made an addition of Rs. 2,050,000/- under section
12(18) of the Income Tax Ordinance, 1979 as undisclosed receipt resulted in tax liability of Rs. 851,723/-.
Further, the DCIT has also not allowed brought forward losses of Rs. 5,042,790/-. The Company has filed an
appeal with the Commissioner of Income Tax (CIT Appeals).
The management is confident that the decision will be in favour of the Company, therefore, no provision has
been made in the accounts for the above liability.
Commitments
5.3 Lease financing contracts committed but not executed at the balance sheet date amounted to Rs. 86.6 million
(2000 - Rs. 147 million) and underwriting commitments of TFCs amounted to Rs. 65 million
(2000 - Rs. 35 million).
6. FIXED CAPITAL EXPENDITURE
Operating Assets - Tangible (6.1) 24,807,721 27,073,857
Capital Work in Progress
Advance for Renovation of Office Premises 1,000,000 --
------------------ ------------------
25,807,721 27,073,857
========== ==========
6.1 Operating Assets - Tangible
Cost at Addition / Cost at Accumulated Depreciation Accumulated Book value
Particulars July 01, (Deletion) June 30, Depreciation (Deletion) Depreciation at June
2000 2001 at July 01, for the at June 30, 30, 2001 Rate
2000 year 2001 %
Office Premises 17,658,016 -- 17,658,016 5,239,114 1,765,802 7,004,916 10,653,100 10
Lease Hold Improvements 8,592.69 489,605 9,082,291 2,328,235 908,229 3,236,464 5,845,827 10
Furniture and Fixtures 5,167,177 205,650 5,372,827 2,405,493 497,282 2,902,775 2,470,052 10
Equipment and Appliances 5,365,838 607,649 5,913,487 3,556,727 883,758 4,392,485 1,521,002 20
(60,000) (48,000)
Vehicles 7,809,714 2,416,000 10,011,214 3,990,005 1,703,469 5,693,474 4,317,740 20
(214,500)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Rupees 44,593,431 3,718,904 48,037,835 17,519,574 5,758,540 23,230,114 24,807,721
(274,500) (48,000)
========== ========== ========== ========== ========== ========== ==========
2000 Rupees 39,301,396 9,137,403 44,593,431 14,435,710 5,215,862 17,519,574 27,073,857
(3,845,368) (2,364,198)
========== ========== ========== ========== ========== ========== ==========
6.1.1 Disposal of Operating Assets - by negotiation
Particulars Cost Accumulated Written Sale Name and Address
Depreciation Down Value Proceed
Furniture and
Fixtures 60,000 48,000 12,000 24,000 Mr. Noman Akhter, Ex-employee
C-I0, Jason Luxury Apartments
Kehkashan Clifton, Karachi.
Vehicle 214,500 -- 214,500 150,000 Mr. Munawar Raza (CDR)
House No. C-4, PNS Johar, Karachi.
------------------ ------------------ ------------------ ------------------
Rupees 274,500 48,000 226,500 174,000
========== ========== ========== ==========
2000 Rupees 3,845,368 2,364,198 1,481,170 1,570,570
========== ========== ========== ==========
General Guardian
Modaraba Modaraba
Services Management 2001 2000
(Pvt.) Limited (Pvt.) Limited Rupees Rupees
7. GOODWILL ON CONSOLIDATION
Amortized          2,984,023 2,782,945 5,766,968 5,766,968
Opening Balance 596,805 1,113,178 1,709,983 556,589
During the year 596,805 556,589 1,153,394 1,153,394
------------------ ------------------ ------------------ ------------------
(1,193,610) (1,669,767) (2,863,377) (1,709,983)
------------------ ------------------ ------------------ ------------------
1,790,413 1,113,178 2,903,591 4,056,985
========== ========== ========== ==========
8. INVESTMENT IN ASSOCIATES
Pakistan Venture Capital Limited 8.1 36,521,679 34,634,243
First General Leasing Modaraba 8.2 3,253,050 4,927,500
Guardian Modaraba
(formerly First Providence Modaraba) 8.3 30,388,868 --
Guardian Leasing Modaraba 8.4 -- 15,915,862
------------------ ------------------
70,163,597 55,477,605
========== ==========
8.1 Pakistan Venture Capital Limited
Value of investment 36,905,699 35,545,089
Negative Goodwill
At the time of Acquisition 3,564,478 3,564,478
------------------ ------------------
Amortized 2,653,632 2,126,806
Opening Balance 526,826 526,826
------------------ ------------------
During the year (3,180,458) (2,653,632)
------------------ ------------------
384,020 910,846
------------------ ------------------
36,521,679 34,634,243
========== ==========
8.1.1 The Company holds 30% shares in the equity of Pakistan Venture Capital Limited 3,000,000 Shares of Rs. 10
each (2000 - 3,000,000 shares). The market value of this investment is Rs. 8.3 million ( 2000 - Rs. 15 million).
Net assets value at June 30, 2001 is Rs. 36.91 million (2000 - Rs. 35.55 million).
8.1.2 The Company holds 20% certificates in the equity of First General Leasing Modaraba 1,125,000 certificates
of Rs. 10 each (2000 - 1,125,000 certificates ). The Market value of this investment is Rs. 2.64 million
(2000 - Rs. 1.97 million). Net assets value at June 30, 2001 is Rs. 3.25 million (2000 - Rs. 4.972 million)
8.3 The Company holds 17.56% certificates in the equity of Guardian Modaraba (formerly First Providence Modaraba)
2,864,455 certificates of Rs. 10/- each. The market value of this investment is Rs. 4.29 million. Net assets value
at June 30, 2001 is Rs. 30.39 million.
8.4 The merger of Guardian Leasing Modaraba (GLM) into First Providence Modaraba (FPM) effective from
July 01, 2000 resulted in transfer to and vesting in FPM of the entire undertaking of GLM, together with all
rights, liabilities and obligations against the issuance of one ordinary certificate of Guardian Modaraba (formerly
First Providence Modaraba) for every ordinary certificate of GLM of Rs. 10/- each to the certificate holders of
GLM.
2001 2000
Rupees Rupees
9. SHORT TERM INVESTMENTS
Shares & Securities 9.1 187,453,364 95,534,195
Federal Investment Bonds 9.2 4,000,000 4,000,000
US Dollar Bonds 9.3 135,798,600 115,911,357
Euro Bonds 9.4 21,775,982 6,093,470
Certificates of Investment 9.5 -- 10,000,000
Placements and Deposits 9.6 172,455,533 66,662,589
------------------ ------------------
521,483,479 298,201,611
========== ==========
9.1 Marketable securities
No. of shares/certificates COST
2001 2000
Quoted
Shares / Certificates
Adamjee Insurance Company Ltd. 328,277 252 18,355,550 15,520
Glaxo Wellcome Pakistan Ltd. 2,000 2,000 80,500 80,500
ICI Pakistan Ltd. 589,250 336,250 5,363,912 5,046,600
Hub Power Company Ltd. 60,000 115,000 1,157,807 1,699,530
KASB Premier Fund Ltd. 50,000 50,000 500,000 500,000
Pakistan State Oil Company Ltd. 5,122 5,122 678,816 894,441
Pakistan Telecommunication Co. Ltd. 1,705,000 5,000 30,604,505 164,259
World Call Payphone Ltd. 1,000,000 -- 15,700,000 --
Saadi Cement Ltd. -- 2,500,000 -- 12,500,000
Engro Chemicals Ltd. 23,023 32,020 1,579,757 2,526,664
Sui Southern Gas Company Ltd. 6,988 155,939 97,299 2,541,251
Sui Northern Gas Company Ltd. 11,500 -- 109,910 --
Sitara Energy Ltd. 15,000 -- 339,000 --
Bank AI-Habib Ltd. 13,114 10,929 204,923 204,923
First Imrooz Modaraba 500 500 10,600 10,600
B .R.R International Modaraba 2,000 2,000 10,260 10,260
First General Leasing Modaraba 221,475 106,300 548,549 890,187
First Providence Modaraba 320,956 -- 2,034,867 --
Dawood Hercules Ltd. 1,200 1,200 92,500 92,500
I.C.P. SEMF Mutual Fund 7,500 7,500 105,576 105,576
Dewan Farooq Motors Ltd. 400,000 400,000 3,884,479 4,000,000
Ibrahim Fibres Ltd. -- 50,000 -- 720,000
Dhan Fibres Ltd. -- 100,000 -- 1,050,000
Dewan Salman Fibres Ltd. 10,000 -- 179,000 --
Nishat Mills Ltd. 50,000 -- 865,000 --
D.G. Khan Cement Ltd. -- 60,000 -- 480,000
Fauji Fertilizers Ltd. 500 12,000 39,700 492,225
Tripack Films Ltd. 177,500 -- 5,413,750 --
National Refinery Ltd. -- 28,000 -- 1,195,600
------------------ ------------------
Carried Forward 87,956,260 35,220,636
Brought Forward 87,956,260 35,220,636
Crescent Board Mills Ltd. 5,000 5,000 35,829 35,829
Din Textile Mills Ltd. 100 100 976 976
First Habib Bank Modaraba 87 87 755 755
Guardian Leasing Modaraba 6,500 6,500 9,880 9,880
Wah Nobel Chemicals Ltd. 3,000 3,000 74,984 74,984
First Leasing Corporation 1,000 1,000 33,660 33,660
Salfi Textile Mills Ltd. 4,200 4,200 651 651
First Grindlays Modaraba 1,080 1,080 30,250 30,250
Second Prudential Modaraba 2,057 2,057 13,260 13,260
Schon Modaraba 850 850 9,067 9,067
Mari Gas Co. Ltd. 750 1,250 38,000 38,000
Pakistan Venture Capital Ltd. 1,000 2,000 23,700 47,400
Baluchistan Wheels Ltd. 125 125 5,330 5,330
------------------ ------------------
88,232,602 35,520,678
Term Finance Certificates (TFCs)
Saudi Pak Leasing Company Ltd. 50 75 5,000,000 7,500,000
Dewan Salman Fibres Ltd. 100 100 9,992,000 9,996,000
National Development Leasing Ltd. 100 100 9,994,000 9,998,000
Pakistan Ind. Leasing Corporation Ltd. 150 100 14,994,000 9,998,000
Sigma Leasing Ltd. 100 100 9,000,000 10,000,000
Paramount Leasing Ltd. 100 100 9,800,000 10,000,000
Atlas Lease Ltd. 75 -- 7,498,500 --
Network Leasing Ltd. 100 -- 9,998,000 --
Al-Noor Sugar Mills Ltd. 150 -- 14,997,000 --
------------------ ------------------
179,506,102 93,012,678
Provision for diminution in value of investments
Opening Balance (8,078,483) (9,822,390)
Reversal During the Year 5,425,745 1,743,907
------------------ ------------------
(2,652,738) (8,078,483)
------------------ ------------------
176,853,364 84,934,195
Unquoted
Shares
Image Graphics Solution (Private) Limited
Chief Executive - Mr. Tariq Mian 60,000 60,000 600,000 600,000
Term Finance Certificate
Dewan Salman Fibres Ltd. 1 1 10,000,000 10,000,000
------------------ ------------------
187,453,364 95,534,195
========== ==========
Market value of quoted share / certificate is Rs. 85,579,863/- (2000 - Rs. 27,442,195/-) and breakup value of unquoted
shares from unaudited account is Rs. 24.94 each (2000 - Rs. 12.05 each). Face value of shares is Rs. 10/- each.
The amount of TFCs represent redeemed value till year end. The TFCs are redeemed semi-annually and earn
expected profit ranging from Re. 0.4110 to Re. 0.5205 per Rs. 1,000 per day. Market value of quoted TFCs is
Rs. 102,325,180/- (2000- Rs. 61,566,118/-).
9.1 Investment in Federal Investment Bond, has a maturity period of 10 years. Rate of return is 15% per annum.
9.2 Investment in Special US Dollar Bonds of US$ 2,190,300 has a maturity period of 3 & 7 years. Interest
rates are 2% and 4% over LIBOR respectively.
9.3 Investment in GOP Euro Bonds at discounted price of US$ 351,225 (face value US$ 490,000)
has a maturity of 5 years. Interest rate is 10% per annum.
9.4 Short term placements and deposits of fund to financial institutions are made in the normal course of
business at profit rates ranging from Re. 0.3630 to Re. 0.5890 per Rs. 1,000/- per day.
2001 2000
Rupees Rupees
10. ADVANCES, DEPOSITS AND PREPAYMENTS
Current Portion of Long Term Loans 260,906 239,668
Advance Income Tax 2,205,230 2,790,570
Deposits -- 41,000
Prepayments 1,593,550 1,550,376
Others 1,016,874 153,000
------------------ ------------------
5,076,560 4,774,614
========== ==========
11. OTHER RECEIVABLES
Considered good
Receivable Against Sale of Securities 14,119,120 182,261
Accrued Profit / Return 14,986,977 10,379,954
Income Tax Refundable 1,118,518 1,002,866
Receivable Against Matured Leases 2,192,263 2,161,602
Others 577,105 2,646,088
------------------ ------------------
32,993,983 16,372,771
========== ==========
12. CASH AND BANK BALANCES
Cash in Hand
Local Currency 23,196 26,776
Foreign Currency 510,245 355,098
Cash with Banks
In Deposit Accounts 9,697,930 7,769,503
In Current Accounts 3,723,612 696,641
------------------ ------------------
13,954,983 8,848,018
========== ==========
13. RETURN ON DEPOSITS AND INVESTMENTS
Return on Short Term Investments 51,599,028 30,125,915
Profit on PLS Account / Bank Deposit (Net of Zakat) 79,200 82,012
Dividend 1,598,696 172,125
------------------ ------------------
53,276,924 30,380,052
========== ==========
14. ADMINISTRATION AND OPERATING EXPENSES
Salaries and Benefits (14.1) 10,857,756 9,172,619
Directors Meeting Fees 5,500 4,500
Rent, Rates and Taxes 1,497,693 677,046
Insurance 949,037 748,693
Legal, Professional and Consultancy 1,705,793 2,290,777
Travelling and Conveyance 844,145 2,251,001
Postage and Telephone 1,004,138 1,033,581
Utilities 717,105 450,884
Printing and Stationery 785,420 731,464
Vehicle Running and Maintenance 1,422,763 1,212,182
Computerisation -- 208,157
Entertainment 594,923 481,724
Advertisement 91,710 66,640
Repairs and Maintenance 621,229 625,355
Auditors Remuneration (14.2) 307,000 269,500
Sham Department -- 250,000
Credit Rating 460,930 304,000
Depreciation 5,758,540 5,200.55
Fees and Subscription 543,372 613,987
Commission and Brokerage 331,559 357,286
Donation (14.3) 79,358 118,550
Others 37,422 114,579
------------------ ------------------
28,615,393 27,183,070
========== ==========
14.1 Salaries and benefits include Rs. 1.215,424/- (2000: Rs. 1,142,485/-) in respect of retirement benefits.
14.2 Auditors Remuneration
Statutory Audit Fee 135,000 120,000
Tax and Other Consultancy 122,000 123,000
Special Audit 40,000 20,000
Out of Pocket 10,000 6,500
------------------ ------------------
307,000 269,500
========== ==========
14.3 None of the directors or their spouse had any interest in the donees fund.
15. FINANCIAL CHARGES
Mark-up / Return on 5,473,350 4,836,425
Redeemable Capital 36,777,379 45,334,061
Long Term Loans 3,458,702 2,841,970
Long Term Certificates of Investment 88,221,606 52,555,179
Short Term Borrowings 24,441,918 10,728,745
Short Term Certificates of Investment -- 9,565
Financial Charges on Lease Liability 13,801,593 13,390,894
Forward Cover Fee
Documentation, Project Examination, Guarantee 4,056,911 3,463,175
Commission and Bank Charges ------------------ ------------------
176,231,459 133,160,014
========== ==========
16. Its include share of profit of Rs. 6,049,143/- due to merger of Guardian Leasing Modaraba into First Providence Modaraba.
17. OPENING RETAINED EARNINGS
Opening Balance 6,757,205 4,719,011
Adjustment due to change in income from management fee
of Guardian Modaraba Management (Private) Limited (1,143,577) --
------------------ ------------------
5,613,628 4,719,011
========== ==========
18. EARNING PER SHARE
There is no effect of dilution on the earnings per share of the Company which is based on:
Profit before taxation Rs. 51,839,080 42,914,876
Profit after taxation Rs. 35,806,833 32,335,310
Weighted average number of Ordinary shares 25,000,000 25,000,000
Earning per share - Pre - Tax Rs. 2.07 1.72
Earning per share - Post - Tax Rs. 1.43 1.29
19. INTEREST RATE RISK MANAGEMENT
Interest rate risk arises from the possibility when changes in interest rate affect the value of assets and liabilities. The
Company is exposed to interest rate risk as a result of mismatches or gaps in the amounts of assets and liabilities that mature
or reprice in a given period. The Company manages this risk by matching the repricing of assets and liabilities.
The Company's exposure to interest rate risk on its financial assets and liabilities are summarized as follows:
Not Exposed
Less than One Month Over to Interest Total
ASSETS one Month to One Year One year Rate Risk
Fixed Capital Expenditure -- -- -- 25,807,721 25,807,721
Goodwill -- -- -- 2,903,591 2,903,591
Net Investments in Lease Finance 37,464,004 554,662,049 557,338,887 222,712,170 1,372,177,110
Investment in Associates -- -- -- 70,163,597 70,163,597
Long Term Receivable -- -- 10,775,000 -- 10,775,000
Long Term Loans 20,855 240,051 2,638,318 -- 2,899,224
Long Term Deposits -- -- -- 402,000 402,000
Short Term Investments 57,455,530 464,027,947 -- -- 521,483,477
Short Term Morabaha Finance -- 8,608,604 -- -- 8,608,604
Advances Against Lease Commitment -- 51,126,889 -- -- 51,126,889
Advances, Deposits and Prepayments -- -- -- 4,815,654 4,815,654
Other Receivables -- -- -- 32,993,983 32,993,983
Cash and Bank Balances -- 9,697,930 -- 4,257,053 13,954,983
------------------ ------------------ ------------------ ------------------ ------------------
Rupees 94,940,389 1,088,363,470 570,752,205 364,055,769 2,118,111,833
========== ========== ========== ========== ==========
CAPITAL AND LIABILITIES
Capital and Reserves -- -- -- 323,473,650 323,473,650
Minority Interest -- -- -- 1,121,186 1,121,186
Provision for Lease Losses -- -- -- 44,675,000 44,675,000
Deferred Liabilities -- -- -- 51,247,235 51,247,235
Redeemable Capital -- 27,242,141 49,524,541 -- 76,766,682
Long Term Loans -- 31,270,103 240,265,340 -- 271,535,443
Certificates of Investment 71,450,000 157,205,000 27,145,000 -- 255,800,000
Lease Deposits -- -- -- 222,712,176 222,712,176
Long Term Deposits -- -- -- 305,900 305,900
Short Term Borrowings 50,000,000 686,016,863 -- -- 736,016,863
Accrued Expenses and Other Liabilities -- -- -- 104,955,148 104,955,148
Taxation -- -- -- 4,502,550 4,502,550
Proposed Dividend -- 25,000,000 -- -- 25,000,000
------------------ ------------------ ------------------ ------------------ ------------------
Rupees 121,450,000 926,734,107 316,934,881 752,992,845 2,118,111,833
========== ========== ========== ========== ==========
On-Balance Sheet Gap Rupees (26,509,611) 161,629,363 253,817,324 (388,937,076) --
========== ========== ========== ========== ==========
Total Interest Rate Sensitivity Gap (26,509,611) 135,119,752 388,937,076 -- --
========== ========== ========== ========== ==========
The effective average interest rate/mark-up for each of the monetary financial instrument is as follows:
2001
Effective Average Interest
Rate / Mark-up
%
Assets
Net Investment in Lease Finance 20.50
Long Term Loans 5-10
Short Term Investments 18.29
Short Term Morabaha Finances 18.79
Cash & Bank Balances 5.27
Liabilities
Redeemable Capital 16.92
Long Term Loans 16.83
Certificates of Investment 16.04
Short Term Borrowings 16.85
20. GENERAL
Figures have been rounded off nearest to Rupee.
Corresponding figures have been re-arranged wherever necessary for the purpose of comparison.
Rafique Dawood Abdul Latif Uqaili
Chairman & Chief Executive Director
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