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Saudi Pak Leasing Company Limited
Annual Report 2001
Contents
Corporate Mission
Corporate Objective
Corporate Information
Financial Highlights
Notice of Meeting
Chairman's Review
Directors' Report
Auditors' Report
Balance Sheet
Profit and Loss Account
Cash flow Statement
Notes to the Accounts
Pattern of Shareholding
Corporate Mission
Saudi Pak Leasing shall maximize
the net wealth of shareholders by
operating in the Financial Services
sector. The Company would seek
market leadership in its core
business of leasing by providing
superior quality service, developing
innovative customer oriented
solutions, and valuing people as the
greatest resource.
Corporate Objectives
* Extend lease finance to businesses which are expected to contribute
positively to economic development;
* Support enterprises that create value; and
* Provide lease finance in areas that offer compatible risk and returns.
Corporate Information
Board of Directors
Mr. Muhammad Rashid Zahir Chairman
Senator Ihsanul Haq Piracha Vice Chairman
Mr. Parvez Abbasi Director
Mr. Abdul Jabbar Kasim Chief Executive
Mr. Faridullah Khan Director
Mr. Muhammad Tariq Masud Director
Mr. Haroon Ihsan Director
Company Secretary
Mr. Shakil Akhtar Qureshi, FCA
Auditors
A. F. Ferguson & Co.
Legal Advisors
Mohsin Tayebaly & Co.
Bankers
Standard Chartered Bank Mashreq Bank psc
Askari Commercial Bank Ltd. Faysal Bank Limited
Oman International Bank S.A.O.G. ANZ Grindlays Bank
Bank of America NT & SA The Bank of Khyber
Muslim Commercial Bank Limited Habib Bank Limited
The Bank of Tokyo - Mitsubishi Ltd. Bank Al Habib Limited
Credit Agricole Indosuez
Registered Office
6th floor, Lakson Square,
Building # 1, Sarwar Shaheed Road,
Saddar, Karachi.
Tel: 5655181-85, 5655205-19
Branches
Lahore
131-A-E/1, Main Boulevard,
Gulberg-III, Lahore.
Tel: 5762644-47, 5762634
Fax: 5762633
Islamabad
2nd Floor, High-Rise Block, Saudi Pak Tower
61-A, Jinnah Avenue, Blue Area Islamabad
Tel: 2272652 Fax: 2272657
Faisalabad
Standard Chartered Bank Building Railway Road, Faisalabad
Tel: 619056, 618056, 642013 Fax: 642012
Universal Access Number: 111-888-999
Karachi, Lahore and Islamabad
Registrars and Share Transfer Office
THK Associates (Pvt.) Ltd.
Ground Floor, Sheikh Sultan Trust
Building # 2, Beaumont Road, Karachi.
Tel: 5689021, 5686658
Financial Highlights
2001 2000 1999 1998 1997
Authorised Capital 400 400 400 400 400
Paid up Capital 220 220 220 220 200
Total Reserves 140 133 124 117 129
Net Investment in Leases 2,112 1,824 1,870 1,702 1,516
Income from Leasing
Operations 299 325 320 280 292
Profit before taxation 39 47 44 49 74
Taxation 5 11 9 8 19
Profit after taxation 34 36 35 41 55
Dividends 12.50% 12.50% 12.50% 15% 15%, 10%*
Total Assets 2,981 2,444 2,342 2,076
Current Ratio 1.48 1.58 1.08 0.96 1.21
Return on average Equity 9.63% 10.41% 10.28% 12.17% 17.35%
Book Value of Share 16.36 16.05 15.65 15.31 16.46
(Rupees per Share) * Stock Dividend
Notice of Annual General Meeting
Notice is hereby given that the Eleventh Annual General meeting of the members
of Saudi Pak Leasing Company Limited will be held at Multipurpose Hall, 3rd
Floor, Low Rise Building, Saudi Pak Tower, 61/A Jinnah Avenue, Blue Area,
Islamabad, on December 24, 2001 at 11.30 a.m. to transact the following business:
ORDINARY BUSINESS:
1. To confirm the minutes of the 10th Annual General Meeting of the company
held on November 22, 2000.
2. 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.
3. To approve the payment of cash dividend. The Board of Directors has
recommended cash dividend @ 12.5% i.e. Rs.1.25 per share of Rs.10 each
for the year ended June 30, 2001.
4. To appoint auditors for the year 2001-2002 and to fix their remuneration. The
present Auditors, Messrs. A.F. Ferguson & Co., Chartered Accountants, retire
and being eligible, offer themselves for reappointment.
5. To consider any other business with the permission of the chair.
By Order of the Board
SHAKIL AKHTAR QURESHI
Karachi: November 30, 2001 Company Secretary
NOTES:
1. The Register of members of the Company will remain closed from December 12, 2001 to December 24,
2001 (both days inclusive).
2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote for
him/her. A proxy must be a member of the Company.
3. An instrument of Proxy and the power of attorney or other authority (if any) under which it is signed, or
notarially certified copy of such power of attorney, in order to be valid must be deposited at the registered
office of the Company not less than 48 hours before the time of the meeting.
4. Members are advised to lodge shares for transfer at the office of our Register, THK Associates (Pvt) Ltd.,
Ground Floor, Sheikh Sultan Trust Building # 2, Beaumont Road, Karachi.
5. CDC account holders will further have to follow the under mentioned guidelines as laid down in Circular
No.1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan.
(i) In case of individuals, the account holder or sub-account holder and/or the person, whose securities
are in group account and their registration details are uploaded as per the Regulations, shall
authenticate his/her identity by showing his/her original National Identity Card (NIC) or original
passport at the time of attending the meeting. The shareholders registered on CDS are also
requested to bring their participants I.D. numbers and account numbers in CDS.
(iii) In case of a corporate entity, the Board of Directors' resolution/power of attorney with specimen
signature of the nominee shall be produced (unless it has been provided earlier) at the time of
Chairman's Review
It gives me great pleasure to present before you
the eleventh Annual Report together with the
audited accounts of Saudi Pak Leasing Company
Limited for the year ended June 30, 2001.
The fiscal year 2000-01, witnessed an increase
in fixed capital investment in the economy. The
upturn in fixed capital investment enhanced
investment opportunities for the financial sector.
The competition in leasing sector remained
intense, and led generally to strain the profit
margins of the leasing companies.
Notwithstanding tough competition in the leasing
sector, your Company performed well in terms
of business volume. Maintaining its presence in
the corporate sector, as its core business, activities
were diversified to the areas of Small and Medium
Enterprises (SMEs) and Operating Leases.
The Company achieved total revenues of
Rs.385.38 million for the year ended June 30,
2001, as compared to Rs.401.41 million in the
previous year and realized profit after tax of
Rs.34.36 million as against Rs.36.30 million in
the previous year. The decline in revenue and net
profit is due largely to the stress on profit
margins. The Company maintained an upward
growth in total assets which grew from Rs.2,444
million as on June 30, 2000 to Rs.2,981 million
as on June 30, 2001, depicting an increase of 22
per cent.
New disbursements exceeded Rupees one billion
mark for the first time and Investment in Leases
went up by 15 per cent from Rs.1,823.92 million
to Rs.2,111.97 million during the year under
report. The positive impact of increased business
turnover will trickle down to the subsequent
period. Financial charges increased by 2.7 per
cent while administrative and operating expenses
were up by 16 per cent. Increase in financial,
administrative and operating expenses is
attributable mainly to the opening of new office
premises owned by the Company and increase
in business volume.
Investment in equities of listed companies did
not produce the desired returns, owing to the
bearish trend in the capital market.
Your Company has focused on improving the risk
profile of the lease portfolio and reducing overall
cost of borrowing through optimal utilization of
funds. It is heartening to note that the Lease
Investment Portfolio built during the recent years
has performed significantly well.
As a conscious corporate strategy, the Company
has chosen to take prudent sectoral exposure.
Lease investment is spread over all key sectors
of the economy. Energy, Oil and Gas sectors have
seen the maximum exposure followed by Textile
(including weaving, composite and garments).
Highest exposure in any single sector has been
17.23 per cent of Total Net Investment in Lease.
The Company's strategy of diversifying revenue
base Inshallah will bring incremental benefits.
During the period under review, lease financing
of over Rs.200 million was extended to the SMEs
and there was a substantial increase in income
from operating leases. Forty five per cent of the
total disbursements for the FY: 2000-01 were for
leases upto Rs.5 million. These initiatives are
expected to stall any further pressure on
profitability. The positive results of the new
strategy will be reflected in the ensuing years.
Plant and Machinery accounts for a major part
of our lease financing, in line with our corporate
objective to contribute to capital formation in the
economy. Seventy per cent of our Net Investment
in Lease is on account of lease financing of Plant
and Machinery. Leasing of passenger vehicles in
both the corporate and consumer segments has
shown uptrend.
The Company enjoys immense confidence of
depositors and lenders. The deposits raised
through Certificates of Investments (COIs)
reached a figure of Rs.1,476.44million including,
long-term deposits through COIs amounting to
Rs.1,153.47 million as on June 30, 2001. The
Company also arranged term financing of Rs.215
million. It helped in matching of the assets and
liabilities, which is vital to the financial health of
the leasing companies.
In order to further strengthen our resource base,
the Company has planned a Term Finance
Certificates (TFCs) issue before December 31,
2001. Rating of new TFCs is under process.
JCR-VIS Credit Rating Company has assigned
medium to long-term entity rating of A+ (Single
A plus) and short-term rating A-1 (A one) to the
Company. The outlook of these ratings is stable.
In the coming year our efforts Inshallah, will be
to maintain the momentum of growth and
improve market share in the leasing business.
The asset size of the Company will grow steadily
through increased lease investment and business
diversification, with special attention on quality
of lease investment portfolio. The underlying
objective is to earn sustainable return on
investment and add to shareholders' value.
The growth and expansion of leasing sector
depends on the improvement in the economic
performance. Demand for lease financing is a
derived demand. Investment activities and
industrial expansion contribute to foster demand
plans to the emerging developments and will
move with due care.
The Board recommends a cash dividend of 12.5
per cent or Rs.1.25 per share, for the year ended
June 30, 2001. This is the sixth consecutive year
that the Company has distributed cash dividend
to the shareholders.
The directors welcome Mr. Muhammad Tariq
Masud on the board to replace Mr. Nauman A.
Qureshi who resigned. The directors place on
record their appreciation for his services.
We owe our gratitude to the banks and financial
institutions and also our customers and
depositors. The guidance and cooperation of
Regulatory Authorities is appreciated with thanks.
Finally, I would like to place on record the
dedicated efforts and hard work of the
management and employees in the smooth
running of the affairs of the Company.
Muhammad Rashid Zahir
Karachi: November 6, 2001 Chairman
Director's Report
The Directors have pleasure in presenting the Audited Accounts
for the year ended June 30, 2001.
Financial Results Rupees
Net profit for the year after charging all
expenses and provision for potential
lease losses and diminution in value
of investments 39,357,431
Provision for taxation 5,000,000
------------------
Profit after tax 34,357,431
Unappropriated profit brought forward 11,033
Transfer from general reserves 24,100,000
------------------
Profit available for appropriation 58,468,464
Appropriations:
Transfer to
- statutory reserve 6,871,486
- reserve for deferred taxation 24,075,100
- proposed cash dividend 27,500,000
------------------
58,446,586
------------------
Unappropriated profit carried forward 21,878
------------------
Earning per share Rs. 1.56
==========
Dividend
The Directors are pleased to recommend a cash dividend @ 12.5
% i.e. Rs. 1.25 per share of Rs. 10/- each.
Pattern of shareholding
The pattern of shareholding as on June 30, 2001 is annexed to
this report.
Auditors
The present auditors, Messrs. A. F. Ferguson & Co., Chartered
Accountants, retire and being eligible offer themselves for
reappointment.
For and on behalf of the
Board of Directors
Muhammad Rashid Zahir Abdul Jabbar Kasim
Karachi: November 06, 2001 Chairman Chief Executive
Financial Statements
Auditors' Report to the Members
We have audited the annexed Balance Sheet of Saudi Pak Leasing Company Limited as
at June 30, 2001 and the related Profit and Loss Account, Cash Flow Statement and
Statement of changes in equity together with the notes forming part thereof, for the year then
ended and we state that we have obtained all the information and explanations which, to
the best of our knowledge and belief, were necessary for the purposes of our audit.
It is the responsibility of the company's management to establish and maintain a system of
internal control, and prepare and present the above said statements in conformity with the
approved accounting standards and the requirements of the Companies Ordinance, 1984.
Our responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan.
These standards require that we plan and perform the audit to obtain reasonable assurance
about whether the above said statements are free of any material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the above said statements. An audit also includes assessing the accounting policies and
significant estimates made by management, as well as, evaluating the overall presentation
of the above said statements. We believe that our audit provides a reasonable basis for our
opinion and, after due verification, we report that:
(a) in our opinion proper books of 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, Cash Flow Statement and
Statement of Changes in equity together with the notes forming part thereof confirm
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, its cash flows and changes in equity 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.
Karachi A.F. FERGUSON & CQ
Dated: November 6, 2001 Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 2001
Note 2001 2000
SHARE CAPITAL & RESERVES Rupees Rupees
Authorised capital
40,000,000 (2000: 40,000,000) ordinary
shares of Rs 10 each 400,000,000 400,000,000
========== ==========
Issued, subscribed and paid-up capital 3 220,000,000 220,000,000
Reserves 4 139,873,586 133,027,000
Unappropriated profit 21,878 11,033
------------------ ------------------
359,895,464 353,038,033
REDEEMABLE CAPITAL 5 336,533,478 336,021,209
LONG - TERM DEPOSITS 6 234,719,590 154,772,068
LONG - TERM CERTIFICATES
OF INVESTMENT 7 922,093,201 781,847,092
CURRENT LIABILITIES
Current maturity of redeemable capital 5 213,946,655 178,117,025
Current maturity of long term deposits 6 36,605,206 35,814,341
Short-term certificates of investment 7 554,345,212 320,553,500
Finances under mark-up arrangements 8 219,757,373 196,393,114
Creditors, accrued and other liabilities 9 74,217,537 59,526,656
Dividend 10 28,495,591 28,381,650
------------------ ------------------
1,127,367,574 818,786,286
COMMITMENTS 11 -- --
------------------ ------------------
2,980,609,307 2,444,464,688
========== ==========
The annexed notes form an integral part of these accounts.