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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.
Muhammad Rashid Zahir Abdul Jabbar Kasim
Chairman Chief Executive
FIXED ASSETS 12 53,372,497 27,795,221
CAPITAL WORK-IN-PROGRESS 13 144,063 15,439,797
NET INVESTMENT IN LEASES 14
Minimum lease payments receivable 2,271,646,511 1,994,354,962
Add: Residual value of leased assets 317,704,087 287,807,263
------------------ ------------------
Lease contracts receivable 2,589,350,598 2,282,162,225
------------------ ------------------
Less: Unearned lease income 447,381,883 417,238,241
Provision for potential lease losses 30,000,000 41,000,000
------------------ ------------------
477,381,883 458,238,241
------------------ ------------------
Net investment in leases 2,111,968,715 1,823,923,984
Less: Current portion of net investment in leases 914,343,361 736,119,510
------------------ ------------------
1,197,625,354 1,087,804,474
LONG - TERM INVESTMENT 15 60,641,256 17,452,826
LONG - TERM LOANS 16 1,160,883 2,993,818
LONG - TERM PREPAYMENTS -- 18,650
DEFERRED COST 17 1,907,005 3,463,419
CURRENT ASSETS
Current portion of net investment in leases 914,343,361 736,119,510
Current portion of long-term loans 16 1,025,148 1,245,876
Short-term loans 18 50,180,077 61,512,055
Advances, deposits, prepayments
and other receivables 19 37,624,758 38,515,662
Short-term investments 20 489,377,784 366,726,303
Taxation 65,082,963 64,737,415
Cash and bank balances 21 108,124,158 20,639,662
------------------ ------------------
1,665,758,249 1,289,496,483
------------------ ------------------
2,980,609,307 2,444,464,688
========== ==========
PROFIT AND LOSS ACCOUNT
for the year ended June 30, 2001
Note 2001 2000
Rupees Rupees
REVENUES
Income from finance lease operations 22 292,903,905 323,922,634
Income from operating lease operations 5,567,040 630,500
Income on investments 23 77,510,184 75,105,133
Other income 24 9,395,017 1,750,484
------------------ ------------------
385,376,146 401,408,751
EXPENSES
Financial and other charges 25 308,211,575 300,188,425
Administrative and operating expenses 26 44,155,105 38,434,130
Direct cost of operating lease 27 4,131,619 487,438
------------------ ------------------
356,498,299 339,109,993
------------------ ------------------
Operating profit before provisions 28,877,847 62,298,758
------------------ ------------------
Provision for potential lease losses - net (11,000,000) 6,700,000
Provision for diminution in value of investments 520,416 8,300,000
------------------ ------------------
(10,479,584) 15,000,000
------------------ ------------------
PROFIT BEFORE TAXATION 39,357,431 47,298,758
Taxation 5,000,000 11,000,000
------------------ ------------------
PROFIT AFTER TAXATION 34,357,431 36,296,758
Unappropriated profit brought forward 11,033 8,275
Transferred from general reserves 24,100,000 27,650,000
------------------ ------------------
PROFIT AVAILABLE FOR APPROPRIATION 58,468,464 63,957,033
APPROPRIATIONS:
Transfer to:
Statutory reserve 6,871,486 7,260,000
Reserve for deferred taxation 24,075,100 29,186,000
Proposed dividend @ 12.50% (2000: 12.5%) 27,500,000 27,500,000
------------------ ------------------
58,446,586 63,946,000
------------------ ------------------
UNAPPROPRIATED PROFIT CARRIED FORWARD 21,878 11,033
========== ==========
EARNINGS PER SHARE 31 1.56 1.65
========== ==========
The annexed notes form an integral part of these accounts.
Muhammad Rashid Zahir Abdul Jabbar Kasim
Chairman Chief Executive
CASH FLOW STATEMENT
for the year ended June 30, 2001
Note 2001 2000
Rupees Rupees
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations 32 (25,365,510) 99,574,973
Mark-up paid (105,786,183) (114,242,585)
Deposits received 80,738,387 11,959,162
Taxes paid (5,345,548) (29,047,031)
Refund of amount paid as deferred cost 351,991 --
Net investment in leases (252,044,731) 13,432,422
Decrease in loans to employees 2,053,663 36,010
Decrease in long term prepayments 18,650 447,324
------------------ ------------------
(280,013,771) (117,414,698)
------------------ ------------------
Net cash used in operating activities (305,379,281) (17,839,725)
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure (18,760,138) (37,465,452)
Proceeds from sale of fixed assets 1,385,000 867,000
Dividend received 3,880,995 802,931
------------------ ------------------
Net cash used in investing activities (13,494,143) (35,795,521)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds of redeemable capital less repayments 36,341,899 77,528,380
Increase in certificates of investment less repayments 374,037,821 (31,340,492)
Dividend paid (27,386,059) (27,219,100)
------------------ ------------------
Net cash generated from financing activities 382,993,661 18,968,788
------------------ ------------------
Net increase/(decrease) in cash and cash equivalents 64,120,237 (34,666,458)
Cash and cash equivalents at July 1 (175,753,452) (141,086,994)
------------------ ------------------
Cash and cash equivalents at June 30 33 (111,633,215) (175,753,452)
========== ==========
The annexed notes form an integral pad of these accounts.
Muhammad Rashid Zahir Abdul Jabbar Kasim
Chairman Chief Executive
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2001
CAPITAL REVENUE
Issued, Contingency Statutory Deferred General Unappropriated Total
subscribed and reserve reserve Taxation Reserve profit
paid-up capital
Rupees
As at June 30, 1999 220,000,000 2,600,000 48,411,000 16,600,000 56,620,000 8,275 344,239,275
Profit after taxation for the
year ended June 30, 2000 -- -- -- -- -- 36,298,758 36,298,758
Transfer from/(to) profit
and loss account -- -- 7,260,000 29,186,000 (27,650,000) (8,796,000) --
Dividends -- -- -- -- -- (27,500,000) (27,500,000)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
As at June 30, 2000 220,000,000 2,600,000 55,671,000 45,786,000 28,970,000 11,033 353,038,033
Profit after taxation for the year
ended June 30, 2001 -- -- -- -- -- 34,357,431 34,357,431
Transfer from/(to) profit
and loss account -- -- 6,871,486 24,075,100 (24,100,000) (6,846,586) --
Proposed dividend -- -- -- -- -- (27,500,000) (27,500,000)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
As at June 30, 2001 220,000,000 2,600,000 62,542,486 69,861,100 4,870,000 21,878 359,895,464
========== ========== ========== ========== ========== ========== ==========
The annexed notes form an integral part of these accounts.
Muhammad Rashid Zahir Abdul Jabbar Kasim
Chairman Chief Executive
NOTES TO THE ACCOUNTS
for the year ended June 30, 2001
1. THE COMPANY AND ITS OPERATIONS
The company is incorporated in Pakistan and is listed on all the Stock Exchanges in Pakistan.
The main business activity of the company is leasing of assets.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting convention
These accounts have been prepared under the historical cost convention.
2.2 Basis of preparation
These accounts have been prepared in accordance with the requirements of the Companies
Ordinance, 1984 and International Accounting Standards as applicable in Pakistan.
2.3 Staff retirement benefits
The company operates:
(i) approved funded gratuity scheme for all employees. Annual contribution are made to the
scheme on the basis of actuarial recommendations. Actuarial gains and losses are amortized
over the expected future service of members.
Gratuity is payable upon completion of prescribed qualifying period of service.
(ii) recognized provident fund for all confirmed employees.
2.4 Revenue recognition
* The company follows the finance method in accounting for recognition of lease income.
Under this method the unearned income i.e. the excess of aggregate lease rentals and the
estimated residual value over the cost of leased assets is taken to income over the term of
the lease, so as to produce a systematic return on the net investment in the lease.
* The company recognises dividend income when the right to receive the dividend is established.
* Rental income from assets given on operating lease is recognised on accrual basis over the
lease period.
* Front-end fee, commitment fee and other commissions are taken to income when realised.
2.5 Fixed assets and depreciation
Fixed assets (including assets given under operating lease arrangements) are stated at cost
less accumulated depreciation. Depreciation is charged to income applying the straight-line
method whereby the cost of an asset is written off over its estimated useful life. In respect of
additions and deletions of assets during the year, depreciation is charged proportionately from
the quarter of acquisition and up to deletion respectively.
Maintenance and normal repairs are charged to income as and when incurred. Major exten-
sions, renewals and improvements are capitalised.
Gains and losses on disposal of assets, if any, are included in income currently.
2.6 Provision for potential lease losses
The provision for potential lease losses is based on the higher of the requirements laid down in
the Leasing Rules 2000 and the management's estimate of potential lease losses.
2.7 Investments
* Long-term investments are stated at cost less provision for any permanent diminution in value.
* Short-term investments are stated at lower of cost and market value.
* Profit and loss on sale of investments is included in income currently.
2.8 Government securities- repurchase transactions
The company enters into transactions of re-purchase (repo) and re-sale (reverse repo) of
securities at contracted rates for specified period of times. These are recorded as follows:
a) in case of sale under re-purchase obligations, the securities are deleted from the books and
charges arising from the differential in sale and re-purchase values are accrued on prorata
basis. Upon re-purchase the securities are re-instated at their respective face values; and
b) in case of purchases under re-sale obligations, the securities are booked at the contracted
purchase price and the differential of the contracted purchase price and re-sale price is
recognised over the period of the contract.
2.9 Taxation
Current
Income for the purpose of computing current taxation is determined under the provisions of the
tax law whereby lease rentals received or receivable are deemed to be income. Provision for
taxation is thus based on taxable income determined in accordance with the requirements of the
law.
Deferred
The company accounts for deferred taxation using the liability method on timing differences
arising from using the different method in the recognition of lease income for tax purposes and
accounting purposes, as well as for all other significant timing differences. The deferred tax is
currently being recognized in accordance with the requirements of the Circular No. 16 issued by
the Securities and Exchange Commission of Pakistan as disclosed in note 4.
2.10 Foreign currencies
Transactions in foreign currencies are accounted for in rupees at the rate prevailing on the date
of the transaction. Assets and liabilities in foreign currencies are translated into rupees at the
rate of exchange prevailing at the balance sheet date except for liabilities covered under forward
foreign exchange contracts, in which case the rates contracted for are used.
3. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
Ordinary shares of Rs 10 each
2000 2000 2000 2000
Rupees Rupees
10,000,000 10,000,000 Shares fully paid
in cash 100,000,000 100,000,000
12,000,000 12,000,000 Shares issued as fully
paid bonus shares 120,000,000 120,000,000
------------------ ------------------ ------------------ ------------------
22,000,000 22,000,000 220,000,000 220,000,000
========== ========== ========== ==========
4. RESERVES
CAPITAL REVENUE TOTAL
Contingency Statutory Deferred General 2001 2000
reserve reserve Taxation
Rupees
At the beginning of the year 2,600,000 55,671,000 45,786,000 28,970,000 133,027,000 124,231,000
Movement during the year
- Transfer from/(to) profit
and loss account -- 6,871,486 24,075,100 (24,100,000) 6,846,586 8,796,000
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
2,600,000 62,542,486 69,861,100 4,870,000 139,873,586 133,027,000
========== ========== ========== ========== ========== ==========
4.1 The contingency reserve has been created in respect of the demand raised by the Wealth Tax
Officer for Corporate Asset Tax of Rs 2,000,000 along with the additional tax of Rs 557,589. The
company's appeal against this tax is currently pending with the Appellate Tribunal. The company
has also filed a writ petition in the High Court of Sindh.
4.2 Statutory reserve represents profits set aside to comply with the Leasing Rules 2000.
4.3 The reserve for deferred taxation has been created as per the requirements of the Circular No. 16
issued by the Securities and Exchange Commission of Pakistan on September 9, 1999. The
unrecognised liability of the company for deferred taxation as at June 30, 2001 amounts to Rs. 32.568
million (2000: Rs 43.764 million).
5. REDEEMABLE CAPITAL - (NON-PARTICIPATORY)
Long-term finances utilised under mark-up arrangements
Repayment Sale Purchase Prompt Principal Outstanding
Period Price Price Payment rebate 2001 2000
Rupees Rupees
(Rupees in million)
Commercial Bank June 1998 -
June 2001 9.718 12.246 -- -- 4,575,132
Commercial Bank Dec. 1998-
Dec 2001 12.270 15.463 -- 2,437,963 7,416,864
Commercial Bank June 1999-
June 2001 80.000 116.405 9.205 -- 40,000,005
Commercial Bank Dec 1998 -
Dec 2001 75.000 * -- 12,500,000 37,500,000
Commercial Bank Nov. 1999-
Nov. 2001 35.000 46.550 -- 35,000,000 35,000,000
Commercial Bank Dec 1999-
Dec 2002 6.958 8.683 -- 3,866,285 6,957,928
Commercial Bank Dec 1999-
Dec 2003 24.492 32.719 -- 16,965,180 24,492,189
Commercial Bank Dec 1999 - 50.000 74.900 -- 50,000,000 50,000,000
Dec 2002
Commercial Bank June 2001-
June 2004 100.000 * * 100,000,000 --
Commercial Bank June 2001-
June 2004 75.000 * -- 75,000,000 --
Financial Institution Dec 1999 -
Dec 2002 30.000 44.053 3.904 20,000,000 30,000,000
Financial Institution Dec 1999- 100.000 * -- 69,710,705 90,696,116
(an associated Dec 2003
undertaking)
Unsecured
Others May 2001-
Aug 2002 40.000 47.512 -- 40,000,000 --
Term Finance Certificates
Term Finance Certificates
- note 5.2 January 1999-
January 2003 250.000 352.658 -- 125,000,000 187,500,000
------------------ ------------------
550,480,133 514,138,234
Less: Current maturity shown under current liabilities:
- Long-term finances utilised under mark-up arrangements 151,446,655 115,617,025
- Term Finance Certificates 62,500,000 62,500,000
------------------ ------------------
213,946,655 178,117,025
------------------ ------------------
336,533,478 336,021,209
========== ==========
* The mark-up rates on these finances are based on the yield on treasury bills/SBP discount
rates and are adjusted on half yearly basis.
5.1 The facilities are secured by hypothecation of specific leased assets and related lease
rentals. The facilities were utilised for disbursement against leasing contracts executed by the
company.
5.2 Term finance certificates are secured by a charge on specific leased assets and related lease rentals.
6. LONG-TERM DEPOSITS
2001 2000
Rupees Rupees
Security deposits on leases 271,324,796 190,586,409
Less: Current maturity shown under
Current liabilities 36,605,206 35,814,341
------------------ ------------------
234,719,590 154,772,068
========== ==========
These represent security deposits received from lessees under lease contracts and are repay-
able on expiry of the respective lease periods.
7. CERTIFICATES OF INVESTMENT
The company has issued certificates of investment under the permission granted by the Federal
Government. These certificates of investment are for periods ranging from 3 months to 5 years
and return on these certificates ranges from 11.5 to 18.0 percent per annum. Current maturity of
long-term certificates of investment amounting to Rs 231,378,000 (2000: Rs 160,624;000) is
included under current liabilities in short-term certificates of investment.
8. FINANCES UNDER MARK-UP ARRANGEMENTS
Short-term running finance (secured) - note 8.1 20,757,373 76,393,114
Short-term finance (unsecured) - note 8.2 199,000,000 120,000,000
------------------ ------------------
219,757,373 196,393,114
========== ==========
8.1 The facilities for running finance available from commercial banks amounted to Rs 50 million
(2000: Rs 105 million). The rates of mark-up on these finances range from Re 0.3973 to Re
0.4383 per Rs 1,000 per day. The purchase prices are payable on various dates by May 31, 2002.
These facilities are secured by hypothecation of specific leased assets and related lease rentals.
8.2 The facilities available for short-term finance amounted to Rs 199 million (2000: Rs 120 million)
and carry mark-up ranging from Re 0.3219 to Re 0.4493 per Rs 1,000 per day. These facilities
are repayable on various dates by September 25, 2001.
2001 2000
Rupees Rupees
9. CREDITORS, ACCRUED AND OTHER LIABILITIES
Creditors 256,142 279,527
Accrued liabilities 1,609,461 1,579,520
Mark-up on:
- redeemable capital 11,035,619 18,153,059
- running finance 809,859 965,170
- short-term finances 3,538,006 2,805,696
Accrued return on certificates of investment 23,595,140 15,013,836
Rentals received in advance 4,383,222 6,729,529
Tax deducted at source 1,342,568 747,594
Contractors' retention money 22,706 9,114
Zakat payable -- 627,681
Others 27,624,814 12,615,930
------------------ ------------------
74,217,537 59,526,656
========== ==========
9.1 Amount due to Saudi Pak Industrial & Agricultural Investment Company (Private) Limited
an associated undertaking at the year end amounted to Rs 1,017,366 (2000: Rs 1,544,352).
10. DIVIDEND
Proposed dividend 27,500,000 27,500,000
Unclaimed dividend 995,591 881,650
------------------ ------------------
28,495,591 28,381,650
========== ==========
11. COMMITMENTS
Commitments for lease disbursements 45,000,000 11,578,940
Commitments in respect of "Repo" transactions:
- Sale and repurchase agreements 90,000,000 95,000,000
- Purchase and resale agreements 69,000,000 --
Commitments in respect of underwriting of the
offer of shares of Al-Meezan Investment
Bank Limited -- 11,500,000
12. FIXED ASSETS
12.1 The following is a statement of operating assets:
Cost Additions/ Cost at Accumulated Depreciation Accumulated Written Rate
at July (deletions) June 30, depreciation charge for depreciation down value %
1, 2000 during the 2001 at July 1, the year/ at June 30, at per
year 2000 (accumulated 2001 June 30, annum
depreciation 2001
on deletions)
Rupees
Assets - own use
Building improvements 2,750,097 -- 2,750,097 2,750,097 -- 2,750,097 -- 20
Office premises 18,540,389 5,874,745 24,415,134 231,755 1,121,979 231,755 23,061,400 5
Furniture, fixtures & fittings 1,610,909 3,136,991 4,747,900 1,318,368 553,377 1,318,368 2,876,155 20
Vehicles 9,948,057 2,533,245 10,455,088 6,743,673 1,423,488 6,743,673 3,696,125 20
(2,026,214) (1,408,198)
Office equipment &
appliances 12,508,695 5,506,675 18,008,620 8,723,825 2,066,544 10,783,620 7,225,000 20
(6,750) (6,749)
Operating lease assets
Plant and machinery 2,431,360 17,004,216 19,435,576 226,568 2,695,191 2,921,759 16,513,817 20
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
47,789,507 34,055,872 79,812,415 19,994,286 7,860.58 26,439,918 53,372,497
(2,032,964) (1,414,947)
========== ========== ========== ========== ========== ========== ==========
2000 27,019,780 23,294,018 47,789,507 17,311,560 4,116,580 19,994,286 27,795,221
(2,524,291) (1,433,854)
========== ========== ========== ========== ========== ========== ==========
12.2 The following assets were disposed off during the year:
Description Cost Accumulated Written Down Disposal Mode of Particulars of purchaser
Depreciation Value Proceeds Disposal
Vehicles 545,200 545,199 1 75,000 As per terms Chief Executive Officer
of appointment
599,000 598,999 1 510,000 Negotiation Antar Enterprises
Karachi
399,814 239,889 159,925 310,000 Negotiation Muhammad Saleem
Karachi
419,000 20,952 398,048 419,000 Negotiation Dr. Ghazala Parveen
Karachi
63,200 3,159 60,041 66,000 Insurance Claim New Jubilee Insurance
------------------ ------------------ ------------------ ------------------ Co. Karachi
2,026,214 1,408,196 616,016 1,380,000
Office Equipment &
Appliances 6,750 6,749 1 5,000 Insurance Claim New Jubilee Insurance
------------------ ------------------ ------------------ ------------------ Co. Karachi
2,032,964 1,414,947 618,017 1,385,000
========== ========== ========== ==========
2001 2000
Rupees Rupees
13. CAPITAL WORK-IN-PROGRESS
Cost of civil works, furniture and fittings -- 3,669,323
Advances - for civil works 144,063 1,419,018
- for furniture and fixtures -- 464,951
- against assets to be leased out -- 9,886,505
------------------ ------------------
144,063 15,439,797
========== ==========
14. NET INVESTMENT IN LEASES
(i) This includes lease contracts receivable of Rs 158,472,705 (2000: Rs. 180,331,743) outstanding
from Sui Southern Gas Company Limited.
(ii) The rentals due from National General Insurance Company Limited, an associated undertakings
as at June 30, 2001 amounted to Rs NIL (2000: Rs 343,980) including unearned lease income
of Rs NIL (2000: Rs 17,690).
(iii) The internal rate of return on lease contracts receivable mainly ranges from 15.89% to 20% per
annum.
(iv) The maximum aggregate amount of rentals due from National General Insurance Company Limited
an associated undertaking at the end of any month during the year was Rs 343,980 (2000:
Rs726,180) including unearned lease income of Rs 16,189 (2000: Rs 102,296).
15. LONG-TERM INVESTMENT
Shares of listed company - note 15.1 68,188,430 25,000,000
Less: Provision for diminution in the value
of investments 7,547,174 7,547,174
------------------ ------------------
60,641,256 17,452,826
========== ==========
15.1 Last year, the company acquired 1,8861792 shares of Dandot Cement Limited as part of the
settlement of the lease amount receivable by the company from Dandot Cement Limited. Subsequent
to June 30, 2001, the company has acquired 1,257,861 additional shares to compensate for the
decline in market value between June 30, 2000 and June 30,2001 of the shares originally acquired.
Under the terms of the Memorandum of Understanding between the company and Dandot Cement
Limited, the company can sell these shares only as per the following terms.
* 10% of the original holding can be sold after expiry of each year from the date of the agreement
* The remaining share holding can be sold after the expiry of 5 years from the date of the agreement
15.2 The aggregate market value of the above investments at June 30, 2001 including the market value of the
1,257,861 additional shares of Dandot Cement Limited amounted to Rs 51,510,325 (2000: 17,452,826).
16. LONG-TERM LOANS - considered good
Secured
Due from - chief executive 1,800,200 2,664,200
                 - executives 281,230 1,310,844
                 - employees 104,601 264,650
------------------ ------------------
2,186,031 4,239,694
Less: Recoverable within one year shown as
current portion of long-term loans 1,025,148 1,245,876
------------------ ------------------
1,160,883 2,993,818
========== ==========
The above loans include an amount of Rs 1,800,200 (2000: Nil) outstanding for a period more
than 3 years. The loans have been provided to employees for purchase of motor vehicles and
purchase of house and are repayable between three to ten years. Mark-up on these loans is
charged at rates ranging from 2% to 10% per annum.
Maximum amount due from chief executive and executives at the end of any month during the
year was Rs 2,592,200 (2000: Rs 3,232,000) and Rs 1,436,069 (2000: Rs 1,663,355) respectively.
17. DEFERRED COST
Balance at the beginning of the year 3,463,419 5,831,563
Less: Amortisation during the year 1,204,423 2,368,144
Reversal during the year 351,991 --
------------------ ------------------
Balance at the end of the year 1,907,005 3,463,419
========== ==========
The above amount mainly include cost incurred on issue of Term Finance Certificates. This cost
is being amortised over the term of these certificates as the economic benefits associated with
these certificates will accrue throughout the period of their issue.
18. SHORT-TERM LOANS
Loans to customers - Considered good 50,180,077 61,512,055
    - Considered doubtful 17,431,000 17,431,000
------------------ ------------------
67,611,077 78,943,055
Less: Provision for doubtful loan 17,431,000 17,431,000
------------------ ------------------
50,180,077 61,512,055
========== ==========
These represent loans to customers for a period up to one year on mark-up basis under sale and
repurchase agreements. The rate of mark-up ranges from 17% to 22% per annum.
19. ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Advances
- against assets to be leased out 525,000 4,828,000
- to executives - note 19.1 56,196 47,731
- to employees 9,066 55,090
- to others 136,438 --
Trade deposits 1,458,620 1,322,020
Prepayments 1,090,042 1,132,082
Accrued income on operating leases 1,759,066 210,000
Accrued return on investments 10,730,135 12,641,495
Accrued mark-up on short-term loans and advances 1,941,405 2,058,055
Corporate asset tax recoverable 2,057,589 2,057,589
Receivable from gratuity fund -- 231,755
Residual value receivable 5,717,138 11,657,747
Cost of assets repossessed 3,339,741 --
Others 8,804,322 2,274.10
------------------ ------------------
37,624,758 38,515,662
========== ==========
19.1 The maximum amount due from executives at the end of any month during the year was
Rs 150,264 (2000: Rs 427,053).
20. SHORT-TERM INVESTMENTS
LISTED
Shares and certificates of listed companies
and modarabas - note 20.1 17,405,090 56,684,768
40,000 units of National Investment Trust (NIT) 568,000 568,000
Investment in Term Finance Certificates 35,073,725 6,373,725
------------------ ------------------
53,046,815 63,626,493
UNLISTED
Federal Government Securities 121,578,968 145,182,636
Placement under certificates of investment/
deposits and musharika arrangement 1,325,000,000 172,500,000
------------------ ------------------
446,578,968 317,682,636
------------------ ------------------
499,625,783 381,309,129
Provision for diminution in the value of
investments (10,247,999) (14,582,826)
------------------ ------------------
489,377,784 366,726,303
========== ==========
Aggregate market value of above quoted investments as at June 30, 2001 was Rs 42,798,816
(2000: Rs 49,043,667).
The return on these investments ranges from
- Federal Government Securities 12.5% to 15% per annum
- Placement under certificates of investments/
deposits and musharika arrangements 17% to 20% per annum
- Term Finance Certificates 14.15% to 18% per annum
20.1 Details of investment in listed companies/modarabas:
June 30, 2001 June 30, 2000
Number of Cost Number of Cost
modaraba Rupees Modaraba Rupees
certificates/ certificates/
ordinary ordinary
shares shares
First Grindlays Modaraba 128,482 4,303,875 128,482 4,303,875
Modaraba Al-Mali 159,207 3,128,640 159,207 3,128,640
Modaraba Al-Tijarah 149,806 2,111,930 149,806 2,111,930
Sajjad Textile Mills Limited 30,700 654,555 30,700 654,555
First Hajveri Modaraba 160 365 160 365
Ibrahim Fibre Limited -- -- 25,000 391,000
Al-Ata Leasing Modaraba 55,671 414,014 55,671 414,014
Dandot Cement Limited 10,000 83,100 10,000 83,100
D.G. Khan Cement Limited 10,000 165,800 10,000 165,800
Fauji Fertilizer Limited 38,000 2,227,971 38,000 2,227,971
Pakistan State Oil -- -- 133,000 25,452,128
PTCL -- -- 436,000 12,807,565
Hub Power Limited 30,000 559,490 80,000 1,491,975
ICI Pakistan Limited 80,000 1,331,500 60,000 1,028,000
ICP SEMF 30,000 699,000 30,000 699,000
Karachi Electric Supply Corporation 50,000 852,350 50,000 852,350
Lucky Cement Limited 20,000 242,000 20,000 242,000
Sui Northern Gas Pipelines Limited 28,750 405,500 25,000 405,500
Sui Southern Gas Company Limited 5,750 113,750 5,000 113,750
Sunflo Citruss 25,000 111,250 25,000 111,250
------------------ ------------------
17,405,090 56,684,768
========== ==========
21. CASH AND BANK BALANCES
2001 2000
Rupees Rupees
With State Bank of Pakistan in current account 13,302,953 11,539,585
With banks:
- in current accounts - local currency 89,810,047 8,996,841
      - foreign currency 29,723 25,740
- in saving accounts - note 21.1 2,413 2,746
Cash in transit 4,852,811
Cash in hand 126,211 74,750
------------------ ------------------
108,124,158 20,639,662
========== ==========
21.1 Return on these saving accounts is earned at rates ranging from 5% to 9%.
22. INCOME FROM FINANCE LEASE OPERATIONS
Income on lease contracts 292,865,948 313,505,815
Gain on cancellation of lease contracts 37,957 10,416,819
------------------ ------------------
292,903,905 323,922,634
========== ==========
23. INCOME ON INVESTMENTS
Income from:
- Federal Investment Bonds 22,474,007 26,084,633
- Shod-term loans 14,274,887 11,289,500
Income on Term Finance Certificates 1,263,207 1,772,227
Return on certificates of investment/deposits
and musharika placements 33,336,180 27,636,704
Income from saving accounts 858,442 1,041,114
Dividend income 4,824,136 1,030,931
Gain on sale of investments 479,325 6,250,024
------------------ ------------------
77,510,184 75,105,133
========== ==========
24. OTHER INCOME
Mark-up, commission and fee income 7,347,497 1,421,732
Gain on disposal of fixed assets 766,983 328,752
Others 1,280,537 --
------------------ ------------------
9,395,017 1,750,484
========== ==========
25. FINANCIAL AND OTHER CHARGES
Mark-up on:
- redeemable capital 71,937,789 84,273,736
- running finance 3,969,883 2,562,817
- short-term finance 23,338,070 25,395,040
Return on certificates of investment 206,388,356 183,398,898
Arrangement fee 401,388 310,798
Amortisation of deferred cost 1,204,423 2,368,144
Others 971,666 1,878,992
------------------ ------------------
308,211,575 300,188,425
========== ==========
26. ADMINISTRATIVE AND OPERATING EXPENSES
Salaries, allowances and benefits- note 26.1 22,471,909 17,893,443
Rent 1,555,459 2,874,661
Repairs and maintenance 991,175 608,766
Electricity, gas and water 1,172,065 1,107,483
Depreciation 5,165,388 3,890,012
Insurance 1,021,750 985,741
Vehicle running expenses 1,416,557 1,245,742
Printing and stationery 1,643,970 1,145,747
Telephone and postage expenses 1,634,594 1,690,315
Travelling, conveyance and entertainment 821,508 956,954
Fees and subscriptions 646,890 1,167,464
Legal and professional charges 4,169,267 2,167,042
Training and development 35,064 57,650
Advertising expenses 264,309 433,614
Fixed assets written off -- 552,189
Auditors' remuneration:
Audit fee 180,000 180,000
Special certifications -- 120,000
Out of pocket expenses 28,335 22,690
------------------ ------------------
208,335 322,690
Zakat 32,963 12,265
Sundry expenses 903,902 1,322,352
------------------ ------------------
44,155,105 38,434,130
========== ==========
26.1 Salaries, allowances and benefits include Rs 1,269,962 (2000: Rs 1,120,974) in respect of
staff retirement benefits.
27. DIRECT COST OF OPERATING LEASE
Management Fee 405,112 159,650
Depreciation 2,695,191 226,568
Business Promotion 24,350 44,720
Insurance 51,529 40,500
Others 955,437 16,000
------------------ ------------------
4,131,619 487,438
========== ==========
28. STAFF RETIREMENT GRATUITY
The latest actuarial valuation of the gratuity fund was carried out as at June 30, 2001. The fair
value of the fund's assets and liabilities at the latest valuation date were as follows:
Rs in million
Present value of defined benefit obligation 1.288
Less: fair value of plan assets 2.332
------------------
Surplus 1.044
Less: Unrecognised net actuarial gain (1.033)
------------------
Surplus 0.011
==========
The following amounts have been charged to the profit and loss account during the current year
in respect of the gratuity fund.
Rs in million
Current service cost 0.528
Interest cost 0.187
Expected return on plan assets (0.305)
------------------
0.410
Less: Excess amount charged last year (0.089)
------------------
0.321
==========
The movement in the net liabilities/(assets) recognized in the balance sheet in respect of the
gratuity fund is as follows:
Rs in million
Opening balance as at July 1 (0.232)
Add: Charge for the year 0.321
Payments made during the year (0.100)
------------------
Closing balance as at June 30 (0.011)
==========
Projected Unit Credit Method using the following significant assumptions was used for the
valuation of the fund:
- Discount rate 14% per annum
- Expected long-term rate of increase in salary level 11.83% per annum
- Expected long-term rate of interest 14% per annum
29. TRANSACTIONS WITH ASSOCIATED
UNDERTAKINGS
2001 2000
Rupees Rupees
Term Finance Certificates
- repaid during the year 6,250,000 6,250,000
- mark-up charged for the year 3,136,738 3,817,188
Long Term Finances
- borrowed during the year -- 100,000,000
- repaid during the year 20,985,411 16,803,884
- mark-up charged for the year 13,560,752 8,458,054
Certificates of investment
- encashed during the year -- 1,000,000
- mark-up charged for the year -- 36,548
30. REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES
The aggregate amount charged in these accounts for remuneration including all benefits, to the
Chief Executive and Executives is as follows:
Chief Executive Executives Total
2001 2000 2001 2000 2001 2000
Rupees
Managerial remuneration 2,665,450 2,075,307 5,411,640 5,109,684 8,077,090 7,184,991
House rent, utilities etc 914,825 1,076,977 2,629,933 2,736,896 3,544,758 3,813,873
Retirement benefits 291,321 311,139 676,702 795,539 968,023 1,106,678
Leave passage 1,127,650* 132,960 224,000 180,667 1,351,650 313,627
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
4,999,246 3,596,383 8,942,275 8,822,786 13,941,521 12,419,169
========== ========== ========== ========== ========== ==========
Number of persons 1 1 28 23 29 24
========== ========== ========== ========== ========== ==========
* The Chief Executive is paid leave passage once in two years.
The Chief Executive and certain executives are provided with free use of company maintained
cars.
31. EARNINGS PER SHARE
2001 2000
Rupees Rupees
Net profit after tax for the year 34,357,431 36,298,758
Number of shares
Average ordinary shares in issue during the year 22,000,000 22,000,000
Rupees
Earnings per share 1.56 1.65
========== ==========
32. CASH GENERATED FROM OPERATIONS
Profit for the year before taxation 39,357,431 47,298,758
Add/(less): Adjustment for non cash charges and
other items
Depreciation 7,860,579 4,116,580
Amortisation of deferred cost 1,204,423 2,368,144
Provision for potential lease losses (11,000,000) 6,700,000
Provision for diminution in value of
investments 520,416 8,300,000
Mark-up expenses 99,245,742 112,231,593
Fixed assets written-off -- 552,189
Dividend income (4,824,136) (1,030,931)
Gain on disposal of fixed assets (766,983) (328,752)
------------------ ------------------
92,240,041 132,908,823
------------------ ------------------
Operating profit before working capital changes 131,597,472 180,207,581
MOVEMENT IN WORKING CAPITAL
(Increase)/decrease in current assets
Advances, deposits, prepayments and
other receivables 1,834,045 (2,795,038)
Short-term investments (191,360,327) (67,791,557)
Short-term loans 11,331,978 (19,499,812)
------------------ ------------------
178,194,304 (90,086,407)
(Decrease)/increase in creditors, accrued and
other liabilities 21,231,322 9,453,799
------------------ ------------------
(156,962,982) (80,632,608)
------------------ ------------------
(25,365,510) 99,574,973
========== ==========
33. CASH AND CASH EQUIVALENTS
Cash and bank balances 108,124,158 20,639,662
Finances under mark-up arrangements (219,757,373) (196,393,114)
------------------ ------------------
(111,633,215) (175,753,452)
========== ==========
34. FINANCIAL ASSETS AND LIABILITIES
Interest/Mark-up bearing Non-Interest Bearing
Maturity Maturity Sub-total Maturity Maturity Sub-total Total
upto one year after one year upto one year after one year
Rupees
Financial Assets
Net Investment in leases 9,143,431,361 11,971,625,354 2,111,968,715 -- -- -- 2,111,968,715
Long term investment -- -- -- -- 60,641,256 60,641,256 60,641,256
Loans to employees 1,025,148 1,160,883 2,186,031 -- -- -- 2,186,031
Short term loans 50,180,077 -- 50,180,077 -- -- -- 50,180,077
Advances ,deposits
prepayments and
other receivables 201,700 -- 201,700 34,275,427 -- 34,275,427 34,477,127
Short term investments 481,652,693 -- 481,652,693 71,725,091 -- 7,725,091 489,377,784
Cash and bank balances 2,413 -- 2,413 108,121,745 -- 108,121,745 108,124,158
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
1,447,405,392 1,198,786,237 2,646,191,629 150,122,263 60,641,256 210,763,519 2,856,955,148
========== ========== ========== ========== ========== ========== ==========
Financial Liabilities
Redeemable capital 213,946,655 336,533,478 550,480,133 -- -- -- 550,480,133
Deposits -- -- -- 36,605,206 234,719,590 271,324,796 271,324,796
Certificates of investment 554,345,212 922,093,201 1,476,438,413 -- -- -- 1,476,438,413
Finances under mark-up
arrangements 219,757,373 -- 219,757,373 -- -- -- 219,757,373
Creditors, accrued and
other liabilities -- -- -- 69,834,315 -- 69,834,315 69,834,315
Dividend payable -- -- -- 28,495,591 -- 28,495,591 28,495,591
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
988,049,240 1,258,626,679 2,246,675,919 134,935,112 234,719,590 3,691,654,702 2,616,330,621
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
459,356,152 (59,8401442) 399,515,710 15,187,151 (174,078,334) (158,891,183) 240,624,527
========== ========== ========== ========== ========== ========== ==========
35. CONCENTRATION OF CREDIT RISK
Out of the total financial assets of Rs 2,856.956 million the financial assets which were
subject to credit risk amounted to Rs 2,843.525 million. The company's major credit
risk is concentrated in the Fuel and Energy, Pharmaceutical and Textile sectors. To
manage credit risk the company applies credit limits to its customers. Investment in
Federal Government Securities amounting to Rs 121.579 million is guaranteed by the
Government of Pakistan.
36. FOREIGN EXCHANGE RISK MANAGEMENT
Foreign currency risk arises mainly where receivables and payables exist due to trans-
actions with foreign undertakings. Liabilities exposed to foreign currency risks are usu-
ally covered through foreign exchange forward cover contracts on the basis of
management's assessment of fluctuation in rates.
37. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
The carrying value of all financial assets and liabilities reflected in the financial state-
ments approximate their fair values.
38. NUMBER OF EMPLOYEES
Total number of employees as at end of the year was 79 (2000: 46).
39. CORRESPONDING FIGURES
Corresponding figures have been rearranged and reclassified, wherever necessary,
to facilitate comparison.
Muhammad Rashid Zahir Abdul Jabbar Kasim
Chairman Chief Executive
Pattern of Shareholding as of 30 June 2001
Number of Shareholding Total
Shareholders From To Shares held
408 1 100 13,233
340 101 500 93,799
177 501 1000 142,242
553 1001 5000 1,188,833
64 5001 10000 468,196
30 10001 15000 335,830
9 15001 20000 167,464
13 20001 25000 293,624
3 25001 30000 79,500
2 30001 35000 63,250
5 40001 45000 205,581
2 45001 50000 91,320
2 55001 60000 116,282
1 75001 80000 75,200
1 85001 90000 86,460
2 95001 100000 196,800
2 100001 105000 207,532
2 105001 110000 220,000
1 115001 120000 120,000
3 120001 125000 366,300
2 125001 130000 253,732
1 135001 140000 136,866
1 145001 150000 146,665
1 150001 155000 154,592
1 205001 210000 208,486
1 215001 220000 220,000
1 300001 305000 300,300
1 315001 320000 316,872
1 745001 750000 746,424
2 875001 880000 1,760,000
1 915001 920000 917,400
1 1500001 1505000 1,504,102
1 2000001 2005000 2,003,115
1 2195001 2200000 2,200,000
1 6595001 6600000 6,600,000
------------------ ------------------
1637 22,000,000
========== ==========
Categories of Shareholders
As of 30 June 2001
Categories of Number of Shares Percentage
Shareholders Shareholders held
1. Individuals 1,586 7,086,716 32.21
2. Investment Companies 2 32,900 0.15
3. Insurance Companies 3 1,833,974 8.34
4. Joint stock Companies 25 2,651,581 12.05
5. Financial Institutions 13 10,054,269 45.70
6. Modaraba Companies 3 33,260 0.15
7. Leasing Companies 2 5,500 0.03
8. Others 2 300,800 1.37
9. Non-resident (U.S. $) 1 1,000 0.0045
------------------ ------------------ ------------------
1,637 22,000,000 100.00
========== ========== ==========
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