| Crescent Leasing Corporation Limited |
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| Annual
Report 1999 |
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|
MISSION STATEMENT |
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CRESLEASE IS COMMITTED TO PURSUING THE IMPROVEMENT IN |
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SHAREHOLDERS VALUE THROUGH DEVELOPMENT OF A DEDICATED |
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HUMAN RESOURCE AND EFFICIENT SYSTEMS BASE CAPABLE OF |
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EFFECTIVELY PARTICIPATING IN A COMPETITIVE BUSINESS |
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ENVIRONMENT. CRESLEASE WOULD ENDEAVOR TO EXTEND |
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THE REACH OF THE CREDIT DELIVERY SYSTEM TO STIMULATE |
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THE ECONOMIC DEVELOPMENT. |
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| Contents |
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| Company
Information |
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| Notice
of Meeting |
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| Directors' Report |
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| Auditors' Report |
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| Financial
Statements of the Company |
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| Pattern
of Holding of Shares |
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| Company
Information |
|
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| BOARD
OF DIRECTORS |
|
| Mr.
Aftab Ahmed Khan |
|
Chairman |
|
| Mr.
Javed A. Callea |
|
Chief Executive |
|
| Mr.
Altaf M. Saleem |
|
| Mr.
David V. Johns |
|
| Mr.
Manzur-ul-Haq |
|
| Mr.
Nessar Ahmed |
|
| Mr.
Rashid Ahmed |
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| COMPANY
SECRETARY |
|
| Mr.
Zaheer A. Shaikh |
|
| Mr.
Rashid Sadiq |
|
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| AUDITORS |
|
| Khalid
Majid Husain Rahman & Co. |
Chartered Accountants |
|
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| LEGAL
ADVISORS |
|
| Cornelius
Lane & Mufti |
|
Advocates &
Solicitors |
|
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| RATING
AGENCY |
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| The
Pakistan Credit Rating Agency (Private) Limited |
|
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| BANKS
& LENDING INSTITUTIONS |
|
| Commonwealth
Development Corporation |
|
| Habib Bank Ltd. |
|
| Allied Bank Ltd. |
|
| Allied
Bank of Pakistan |
|
| Saudi-Pak
Industrial & Agricultural Investment Co. (Pvt) Ltd. |
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| National
Discounting Services Ltd. |
|
| Orix
Investment Bank Ltd. |
|
| Pak-Kuwait
Investment Co. (Pvt) Ltd. |
|
| Bank
of America (NT&SA) |
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| REGISTERED
AND SHARE TRANSFER OFFICE |
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| 83-Babar
Block, New Garden Town, Lahore |
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| Phone:
(042) 588-1974 & 75 Fax: (042) 588-1976 |
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| Email:
rashid.sadiq@cressoft.com.pk |
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| BRANCH
OFFICE |
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| Suit
No. F-7 (B) 1st Floor, |
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| Rehman
Business Suites, 32-B-III, Gulberg-III, |
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| Lahore |
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| HEAD OFFICE |
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| B-801
& 802, 8th Floor, Lakson Square, Bldg. #3, Sarwar Shaheed Road, Karachi. |
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| Phone:
021-566-1938, 48 & 58 Fax: 021-566-1988 |
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| Email:
crescent@super.net.pk |
|
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| *For
a copy of this report write to our Head Office/Registered Office. |
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| Notice
of Annual General Meeting |
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| NOTICE
is hereby given that the 12th Annual General Meeting of the shareholders of |
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| Crescent
Leasing Corporation Limited, will be held on Saturday, the December 04, 1999, |
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| at
12:00 noon, at Registered Office 83-Babar Block, New Garden Town, Lahore to
transact |
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| the
following business: |
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| 1.
To receive, consider and adopt the audited accounts of the company for the
year |
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| ended
June 30, 1999 together with Directors' and Auditors' Reports thereon. |
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| 2.
To declare dividend. The Directors have recommended the payment of Cash |
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| Dividend
@ Rs. 1.00 per share (i.e. @10%). |
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| 3.
To appoint Auditors and fix their remuneration. |
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| BOOK
CLOSURE |
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| The
Register of Member of the company will remain closed from November 30, 1999
to |
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| December
06, 1999 (both days inclusive). The members whose names appear on the |
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| Register
of Members as on November 29, 1999 shall be entitled for cash dividend. |
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|
BY ORDER OF THE BOARD |
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|
ZAHEER A. SHAIKH |
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|
Corporate Secretary |
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| REGISTERED
OFFICE: |
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| 83-Babar
Block New Garden Town |
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| LAHORE. |
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| Telephone
No. (042) 5881974-75, 5839631 |
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| Fax
No. (042) 5881976 |
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| Email:
rashid.sadiq@cressoft.com.pk |
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| Dated:
October 19, 1999. |
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| NOTE: |
|
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| 1.
A member eligible to attend and vote at this Meeting may appoint another
member |
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| as
his/her proxy to attend and vote instead of him/her. Proxies in order to be
effective |
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| must
be received by the Company at the Registered Office not later than 48 hours |
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| before
the time for holding the Meeting. |
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| 2.
Shareholders are requested to immediately notify the change in address, if
any. |
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| 3.
Account holders and sub-account holders holding book entry securities of the |
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| company
in Central Depository System of Central Depository Company of Pakistan |
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| Limited
who wish to attend the Annual General Meeting are requested to please bring |
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| original
I.D. Card alongwith copy thereof duly attested by their Bankers for
identification |
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| purpose. |
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| Directors'
Report |
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| Your
Directors have pleasure in presenting the Audited Accounts for the period
from |
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| July
1, 1998 to June 30, 1999. |
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| FINANCIAL
RESULTS |
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|
Rupees in Million |
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| Net
Profit before tax |
|
31.271 |
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| Provision
for taxation |
|
1.726 |
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| Net
Profit after taxation |
|
29.545 |
|
| Un-appropriated
profit brought forward |
|
0.118 |
|
| Profit
available for appropriation |
|
29.662 |
|
| Appropriations |
|
|
|
| Transfer
from general reserve |
|
(8.161) |
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| Transfer
to reserves under NBFI Regulations |
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5.909 |
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| Transfer
to reserve for deferred taxation |
|
14.649 |
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| Proposed
dividend @ 10% |
|
17.250 |
|
| Un-appropriated
profit carried forward |
|
0.015 |
|
|
|
| Net
profit for the year after charging all expenses, including allowance for
potential lease |
|
| losses
amounted to Rs. 29.545 million. |
|
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| In
compliance of the policy for deferred taxation prescribed by the SECP for
leasing |
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| companies
an amount Rs. 14.6 million has been transferred to Reserve for Deferred |
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| Taxation. |
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| The
performance of your company, in the review period, needs to be seen in the
light of |
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| economic
and policy factors affecting the business environment in general and the long |
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| term
investment climate in particular. |
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| ECONOMIC
SCENARIO |
|
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| Fiscal
1999 was a difficult and challenging year for Pakistan's economy, with output |
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| growth
slipping to 3.1% as against 4.3% in 1997-98, drop in total investment to
14.8% of Gross |
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| Domestic
Product from 17.1% in Fiscal '98 and worsening of the current account of |
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| balance
of payments due to fall in exports and substantial decline in private
transfers and |
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| invisible
receipts. The nuclear tests of May 1998, the economic sanctions that followed
and |
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| the
related dryings up of most external capital flows led to severe financial
stresses and |
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| strains.
Combination of sensible economic and financial management and international |
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| financial
assistance has, however, allowed Pakistan to mitigate the effects of the
crisis and |
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| maintain
a positive growth rate of GDP in an ambiance of stability. |
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| Lackluster
economic growth and an inhospitable investment milieu had an adverse |
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| impact
on the demand for leasing, where a contraction, both in volume and quality
was |
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| observed. |
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| The
shareholders would recall that certain factors emanating out of the freezing
of foreign |
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| currency
accounts were identified in the Half-Yearly report. These related to the non- |
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| recoverability
of premium paid on market purchase of forex for creating hedging deposits |
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| and
penal interest on overdue installments due to delayed approval of
availability of forex |
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| by
State Bank. In the Interim period, prior to valuation of foreign currency
accounts at par |
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| with
inter-bank-floating rate, an exchange loss was suffered on one remittance.
These |
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| uncontrollable
and unfavourable external factors adversely affected the profitability
of |
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| the company. |
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| OPERATING
RESULTS |
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| In
view of, different and uncertain economic and business environment in the
review |
|
| period
your company followed the strategy of consolidating its position in the lease |
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| market. |
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| New
leases executed during the period amounted to Rs. 331.7 million (1998, Rs.
276 |
|
| million).
The net investment in leases in placed at Rs. 704 million (1998, Rs. 634
million). |
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| Lease
income during the review period increased and amounted to Rs. 119 million
(1998, |
|
| Rs.
106 million). Income from other business activities increased from Rs. 44
million in 1998 |
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| to
Rs. 53 million in 1999. Factors identified in the preceding paras reduced the
pre-tax |
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| profit
to Rs. 31 million (1998, Rs. 41 million). The post-tax earning per share in
placed at Rs. 1.71. |
|
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| The
focus during the year continued to be on market penetration in the small and |
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| medium
ticket leases, improved client service and development of the consumer
leasing |
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| activity.
The lease portfolio of your company's is prudently diversified over the
industrial |
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| and
services base in Pakistan comprising nearly two dozen leading sectors. The
individual |
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| exposure
in any single sector (textile) does not exceed 13 percent (1998 in Energy Oil
& |
|
| Gas
13.16 percent). |
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| Plant
and machinery remained the major lease asset at 71 percent of the portfolio |
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| followed
by automobiles at 25 percent and office equipment at 4 percent. Lackluster |
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| business
conditions placed pressures on recovery during the year. However, persistent |
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| and
vigilant monitoring and follow-up enabled to post a 95 percent recovery
during the |
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| year. |
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| The
entity rating of your company for long-term obligations is maintained at BBB
and for |
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| short-term
at A2, indicating a low expectation of credit risk. |
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| Your
company raised Rs. 45 million in long-term credits and Rs. 125 million in
short-term |
|
| credits
from premier financial institutions at competitive rates. In addition long
and |
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| short-term
credits of Rs. 125 million were also negotiated. |
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| FUTURE
OUTLOOK |
|
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| The
fundamental factors for the revival of the economy and its sustained growth
on an |
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| increasingly
self-reliant basis still need to be tackled effectively. These inter-alia,
include, |
|
| restoration
of the overseas and local investors' confidence, adequate resource |
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| mobilization,
financial sector development, good governance, public sector reforms and |
|
| improved
policy environment characterized by coherence and consistency. |
|
|
| The
deflationary pressures operating in the economy are likely to continue well
into FY |
|
| 2000.
The public sector infrastructure programs, which are under implementation,
are |
|
| likely
to absorb some liquidity in the money market during the year propping up the |
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| interest
rates and the capacity utilization of the industries linked to such projects.
This |
|
| along
with increased agricultural production particularly in cotton and concerted
efforts |
|
| to
boost exports may provide the desired impetus for revival of the economy late
in the |
|
| year.
The industrial investment in most of FY 2000 is likely to remain depressed
and the |
|
| demand
for industrial and consumer durable goods would exhibit weakness. Your |
|
| company
would continue with its risk management policy of extending business in low
risk |
|
| profile
sectors and entities. |
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|
| Year
2000 compliance |
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| All
the systems and procedures and software and hardware packages have been |
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| adjusted/reprogrammed
to be fully Y2K compliant. |
|
|
| Acknowledgement |
|
| The
Board wishes to record their appreciation of the valuable contribution of Mr.
Shabbir |
|
| Hashmi
during his term. The Board welcomes Mr. David V. Johns on the Board. |
|
|
| The
Board acknowledges the support of the regulatory authorities, banks and
lending |
|
| institutions.
The Board wishes to place on record its appreciation of the hard work and |
|
| dedication
shown by the company personnel. |
|
|
| Auditors |
|
| The
auditors, Khalid Majid Husain Rahman, Chartered Accountants retire and being |
|
| eligible,
offer themselves for re-appointment. |
|
|
| Pattern
of Holding of Shares |
|
| The
pattern of Holding of Shares as on June 30, 1999, is placed at page No. 32. |
|
|
|
|
on behalf of the Board |
|
|
|
|
|
| October
19, 1999 |
|
Javed A. Callea |
|
| Karachi. |
|
Chief Executive |
|
|
| Khalid
Majid Husain Rahman |
|
|
|
| Chartered
Accountants |
1st Floor, Modern Motors
House |
|
|
|
Beaumount Road,
Karachi-75530 |
|
|
|
Tel: UAN 111 - 404040 |
|
|
|
Fax: (021) 5688834 |
|
|
|
Email:
kmhrkhi@paknet3.ptc.pk |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Crescent Leasing Corporation
Limited as at |
|
| June
30, 1999 and the related profit and loss account and the statement of changes
in financial |
|
| position
(cash flow statement), together with the notes forming part thereof, for the
year then |
|
| ended
and we state that we have obtained all the information and explanations which
to the |
|
| best
of our knowledge and belief were necessary for the purposes of our audit and,
after due |
|
| verification
thereof, 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 except for the change as stated in note 2.7 with which
we |
|
| concur; |
|
|
| (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 and the statement of changes
in financial |
|
| position
(cash flow statement) together with the notes forming part thereof, give the
infor- |
|
| mation
required by the Companies Ordinance, 1984, in the manner so required and
respec- |
|
| tively
give a true and fair view of the state of the company's affairs as at June
30, 1999 and |
|
| of
the profit and the changes in financial position for the year then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Karachi:
October 19, 1999 |
|
Chartered Accountants |
|
|
| Deloitte Touche |
|
| Tohmatsu |
|
| International |
|
|
|
| Balance
Sheet As At June 30, 1999 |
|
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|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
Capital |
|
|
|
| 30,000,000
ordinary shares of Rs. 10/- each |
|
|
300,000,000 |
300,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
3 |
172,500,000 |
150,000,000 |
|
| Reserves |
|
|
135,191,390 |
145,396,852 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
307,691,390 |
295,396,852 |
|
|
|
|
|
|
| DEFERRED
INCOME |
|
4 |
475,977 |
-- |
|
| LONG-TERM
FINANCES |
|
5 |
198,756,310 |
246,303,680 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
|
| TO
FINANCE LEASES |
|
6 |
3,974,707 |
813,213 |
|
|
|
|
|
|
| LONG-TERM
CERTIFICATES OF INVESTMENT |
|
7 |
21,100,000 |
-- |
|
| LONG-TERM
DEPOSITS |
|
8 |
92,033,209 |
54,430,049 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of long-term liabilities |
|
9 |
103,122,410 |
88,387,266 |
|
| Current
maturity of liabilities against |
|
|
| assets
subject to finance leases |
|
|
1,662,743 |
304,238 |
|
| Short-term
certificates of investment |
|
7 |
80,000,000 |
50,000,000 |
|
| Short-term
finances |
|
10 |
80,000,000 |
35,000,000 |
|
| Running
finances under mark-up arrangement |
|
11 |
75,972,271 |
28,537,633 |
|
| Creditors,
accrued and other liabilities |
|
12 |
26,239,049 |
27,897,260 |
|
| Proposed
dividend |
|
|
17,250,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
384,246,473 |
230,126,397 |
|
| COMMITMENTS |
|
13 |
------------------ |
------------------ |
|
|
|
|
1,008,278,066 |
827,070,191 |
|
|
|
|
|
========== |
========== |
|
|
| OPERATING
FIXED ASSETS |
|
14 |
17,059,171 |
14,664,836 |
|
|
|
|
|
|
|
| NET
INVESTMENT IN LEASES |
|
|
| Minimum
lease rental receivables |
|
|
739,150,538 |
707,372,887 |
|
| Residual value |
|
|
129,577,427 |
91,049,712 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
868,727,965 |
798,422,599 |
|
| Less:
Unearned finance income |
|
|
164,853,846 |
164,495,719 |
|
|
|
|
------------------ |
------------------ |
|
| Net
investment in leases |
|
|
703,874,119 |
633,926,880 |
|
|
|
------------------ |
------------------ |
|
| Less:
Current maturity |
|
|
270,162,303 |
223,425,370 |
|
| Allowance
for potential lease losses -General |
|
12,849,656 |
6,275,392 |
|
|
- Specific |
|
4,592,088 |
2,146,117 |
|
|
|
------------------ |
------------------ |
|
|
|
416,270,072 |
402,080,001 |
|
|
|
|
| LONG-TERM
INVESTMENTS |
|
16 |
31,764,507 |
4,125,000 |
|
|
|
|
|
|
| LONG-TERM
DEPOSITS AND DEFERRED COSTS |
17 |
13,053,360 |
18,711,558 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Current
maturity of net investment in leases |
|
|
270,162,303 |
223,425,370 |
|
| Short-term loan |
|
18 |
4,623,036 |
-- |
|
| Advances,
prepayments and other receivables |
|
19 |
42,337,421 |
23,121,491 |
|
| Short-term
investments |
|
20 |
114,868,191 |
64,252,913 |
|
| Cash
and bank balances |
|
21 |
98,140,005 |
76,689,022 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
530,130,956 |
387,488,796 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
1,008,278,066 |
827,070,191 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
JAVED A. CALLEA |
|
AFTAB AHMED KHAN |
|
|
Chief Executive |
|
Chairman |
|
|
|
| Profit
And Loss Account For The Year Ended June 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Income
from lease operations |
|
118,758,255 |
106,041,312 |
|
| Other income |
|
22 |
53,345,898 |
48,652,867 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
172,104,153 |
154,694,179 |
|
|
|
|
|
| Administrative
and operating expenses |
|
23 |
16,002,124 |
13,391,752 |
|
| Financial
charges |
|
24 |
114,921,094 |
91,776,524 |
|
| Amortization
of deferred cost |
|
|
889,970 |
488,750 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
131,813,188 |
105,657,026 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
40,290,965 |
49,037,153 |
|
|
|
|
| Allowance
for potential lease losses -General |
|
6,574,264 |
6,275,392 |
|
|
|
- Specific |
|
2,445,971 |
1,301,881 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
9,020,235 |
7,577,273 |
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
31,270,730 |
41,459,880 |
|
| Taxation |
|
|
26 |
1,726,192 |
1,267,069 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
29,544,538 |
40,192,811 |
|
| Unappropriated
profit brought forward |
|
117,538 |
19,924,727 |
|
|
|
------------------ |
------------------ |
|
|
|
29,662,076 |
60,117,538 |
|
| Appropriations: |
|
|
|
|
|
|
| Transfer from: |
|
|
|
| - general reserve |
|
|
|
8,161,438 |
-- |
|
| Transfer to: |
|
|
|
|
| -
reserve under NBFI rules |
|
|
(5,908,908) |
(8,038,562) |
|
| - general reserve |
|
|
|
-- |
(51,961,438) |
|
| -
reserve for deferred taxation |
|
26 |
(14,649,296) |
-- |
|
| -
Proposed dividend @ 10% (1998:Nil) |
|
|
(17,250,000) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(29,646,766) |
60,000,000 |
|
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
15,310 |
117,538 |
|
|
|
|
========== |
========== |
|
| Earnings
per share |
--Basic |
|
27 |
1.71 |
2.33 |
|
|
|
-- Diluted |
|
|
N/A |
N/A |
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
JAVED A. CALLEA |
|
AFTAB AHMED KHAN |
|
|
Chief Executive |
|
Chairman |
|
|
|
| Statement
Of Changes In Financial Position (Cash Flow Statement) |
|
| For
The Year Ended June 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
| Cash
flows from operating activities |
|
|
|
|
|
| Profit
before taxation |
|
|
31,270,730 |
41,459,880 |
|
|
|
|
|
|
| Adjustments for: |
|
|
|
|
| Amortization
of deferred cost |
|
|
889,970 |
488,750 |
|
| Depreciation |
|
|
1,511,452 |
2,617,883 |
|
| Allowance
for potential lease losses |
|
|
9,020,235 |
7,577,273 |
|
| (Gain)/Loss
on sale of operating fixed assets |
|
|
(78,529) |
48,322 |
|
|
