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