| Ibrahim Leasing Limited |
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|
|
| Annual Report 1999 |
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| Contents |
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| Company Information |
|
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| Notice of Meeting |
|
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| Directors'
Report to the Shareholders |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes to the Accounts |
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| Pattern of Shareholding |
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| Company Information |
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| Board of Directors |
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| Sheikh Mukhtar Ahmed |
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| (Chairman) |
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| Abdul Aziz Khan |
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| (Chief Executive) |
|
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| Sheikh Mohammad Yaseen |
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| Mohammad Naeem Mukhtar |
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| Mohammad Waseem Mukhtar |
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| Asim Yaseen |
|
| Atif Yaseen |
|
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| · Secretary |
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| Anwarul Haque |
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| B.Com., FCA |
|
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| · Auditors |
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| M. Yousuf Adil Saleem &
Co. |
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| Chartered Accountants, |
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| Lahore, Pakistan. |
|
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| · Tax Consultants |
|
|
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| F. R. Merchant & Co. |
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|
| Chartered Accountants, |
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| Karachi, Pakistan. |
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|
|
|
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| ·
Information Technology Consultants |
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| KPMG Peat Marwick |
|
|
| Associates (Pvt) Limited |
|
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| Karachi, Pakistan. |
|
|
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| · Bankers |
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| Al-Faysal
Investment Bank Limited |
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| AI-Baraka Islamic Bank |
|
| Askari
Commercial Bank Limited |
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| Faysal Bank Limited |
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| Muslim
Commercial Bank Limited |
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| The Bank of Punjab |
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| ·
Registered Office/Share Department |
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| Ibrahim Centre |
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| GK-7/59, Bagh-e-Zehra Street |
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| Kharadar |
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| Karachi, Pakistan. |
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| · Head Office |
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| Ibrahim Centre |
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| 1-A, Ahmed Block |
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| New Garden Town |
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| Lahore, Pakistan. |
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| Notice of Meeting |
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| Notice
is hereby given that the 6th Annual General Meeting of the shareholders of
the company will be |
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| held
on 31-12-1999 at 12.00 noon at F-352, S.I.T.E., Karachi to transact the
following business:- |
|
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| 1.
To confirm the minutes of the preceding meeting of the shareholders of the
company. |
|
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| 2.
To consider and approve the Annual Audited Accounts for the year ended
30-06-1999. |
|
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| 3.
To consider and approve the declaration of Cash Dividend @ 10% as recommended
by the Board |
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| of Directors. |
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|
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| 4.
To appoint Auditors for the year 1999-2000 and to fix their remuneration. The
present auditors |
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| M/s. M. Yousuf Adil Saleem & Co.
Chartered Accountants, being eligible for appointment, offer |
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| themselves for re-appointment. |
|
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| 5.
To consider any other matter with the permission of the chair. |
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| By order of the Board |
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| Place' Karachi. |
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|
Anwarul Haque |
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| Date: November 15, 1999 |
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|
Company Secretary |
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| Notes: |
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| i.
The share transfer books of the company shall remain closed from 22-12-1999
to 31-12-1999 |
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| (both
days inclusive) to determine the names of members entitled to receive
dividend and to |
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| attend
the meeting. Transfers received in order at the registered office of the
company at Ibrahim |
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| Centre,
GK-7/59, Bagh-e-Zehra Street, Kharadar, Karachi at the close of business on |
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| 21-12-1999
will be treated in time. |
|
|
| ii.
A member entitled to attend and vote at the meeting may appoint another
member as his/her |
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| proxy
to attend and vote on his/her behalf. |
|
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| iii.
The proxies in order to be effective must be received at the registered
office of the company |
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| atleast
48 hours before the time for holding the meeting. |
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|
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| Directors'
Report to the Shareholders |
|
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| The
Board of Directors of your company feels pleasure in presenting the sixth
Annual Report together |
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| with
the Audited Accounts for the year ended June 30, 1999. |
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| Financial Results |
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| Financial
results of your company for the year under review are summarized below: |
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|
|
Rupees |
|
|
|
|
| G ross revenue |
|
|
47,575,348 |
|
| Expenditure |
|
|
28,911,858 |
|
| Profit before taxation |
|
|
18,663,490 |
|
| Provision for taxation |
|
|
350,720 |
|
| Profit after taxation. |
|
|
18,312,770 |
|
| Un-appropriated
profit brought forward |
|
6,669,774 |
|
| Profit
available for appropriation |
|
24,982,544 |
|
|
| Appropriations: |
|
|
| Directors
of your company are pleased to recommend a cash |
|
| dividend
@ 10% i.e. Rupee 1/- per share out of profits earned. |
|
|
| Proposed dividend |
|
|
10,000,000 |
|
| Special reserve |
|
|
3,662,554 |
|
| Capital reserve |
|
|
5,000,000 |
|
| Un-appropriated
profit carried forward |
|
6,319,990 |
|
|
|
|
| Earning per share |
|
|
1.83 |
|
|
| This
is the sixth year of leasing operations and your company has maintained its
trend of continuous |
|
| growth
despite depressed economic condition in the country. |
|
|
| During
the year under review, gross revenue of the company has increased by Rs. 6.08
million registering |
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| a
growth of 14.66% and profit after tax has gone up by Rs. 2.74 million with a
growth of 17.59% when |
|
| compared
to the last year. No provision for potential lease losses is considered
necessary for the year. |
|
|
| Financial
charges, the main item of expenditure, escalated to Rs. 22.31 million for the
year ended |
|
| June
30~ 1999 from Rs. 13.70 million for the year 1998. This is due to increase in
borrowings required to |
|
| finance
the company's expanding business. Increase in administrative and other
expenditure is negligible |
|
| due
to exercise of strict cost control measures by the management. |
|
|
| of
23.56% over the year 1998. Management continues to maintain its policy to
write leases to clients |
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| having
good market reputation supposed by sound financial position. The company has
maintained a |
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| well-diversified
lease portfolio. Sector-wise and asset-wise lease portfolio is annexed in
graphical |
|
| presentation. |
|
|
| Your
company has been able to successfully arrange funds of Rs.164.50 million from
different banks |
|
| and
DFIs during the year under review to finance its leasing business. The
company has maintained |
|
| satisfactory
track record of financial dealings with the lenders during the last five
years. |
|
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| A
local commercial bank has already sanctioned a term finance facility of Rs.
25 million. We are pleased |
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| to
report that in the backdrop of confidence reposed by the financial
institutions in the company, we are |
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| comfortable
to mobilise funds, both on medium and short term basis, for our future
requirements. |
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| Future Prospects |
|
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| The
recent deteriorating law and order situation has overshadowed the success
chances of early economic |
|
| revival
and accelerating the industrial growth, a fundamental source of lease
business. The continuing |
|
| adverse
operating environment therefore leads to a difficult year ahead. The
management of your company |
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| is
well prepared to face the future challenges and re-adjust its policies with
the emerging scenario. The |
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| company
has undertaken steps to do more business in small and medium enterprise
sector, a largely |
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| untapped
potential alongwith repeat business transactions with the existing clients
having satisfactory |
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| credit relationship history. |
|
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| Year 2000 compliance |
|
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| We
are please to report that all the computer systems of your company are fully
year 2000 compliant. |
|
|
| Auditors |
|
|
| The
present auditors M/s M. Yousuf Adil Saleem & Co., Chartered Accountants,
being due for retirement, |
|
| have
offered themselves for reappointment for the year ending June 30, 2000. |
|
|
| Pattern of shareholding |
|
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| Pattern
of share holding as on June 30, 1999 is annexed. |
|
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| Acknowledgment |
|
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| We
wish to thank our valuable clients, regulatory agencies, banks and financial
institutions and |
|
| shareholders
for their continued support and confidence on the company. The company
personnel deserve |
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| appreciation
for their dedication, devotion and hardwork. |
|
|
| On behalf of the Board |
|
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| Place: Lahore |
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|
Abdul Aziz Khan |
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| Date: November 15, 1999 |
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|
Chief Executive |
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|
|
| Auditors'
Report to the Members |
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|
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| We
have audited the annexed balance sheet of IBRAHIM LEASING LIMITED as at June
30, 1999 and |
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| the
related profit and loss account and statement of changes in financial
position, 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 purpose of 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 |
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| Companies Ordinance, 1984; |
|
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| b) in our opinion: |
|
|
|
| i) the balance sheet and profit and loss
account together with the notes thereon have been |
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| drawn up in conformity with the Companies
Ordinance, 1984, and are in agreement with |
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| 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; |
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| and |
|
|
|
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| iii)
the business conducted, investments made and the expenditure incurred during
the year |
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| 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 |
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| balance sheet, profit and loss account and
statement of changes in financial position, together |
|
| with the notes forming part thereof, give
the information required by the Companies Ordinance, |
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| 1984, in the manner so required and
respectively give a true and fair view of the state of Company's |
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| affairs as at June 30, 1999 and of the
profit and the changes in the financial position for the year |
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| then ended; and |
|
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| d)
Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 has been
deducted by the |
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| Company
and deposited in the Central Zakat Fund established under section 7 of that
Ordinance. |
|
|
| Place: Lahore. |
|
|
M. Yousuf Adil Saleem
& Co. |
|
| Date: November 15, 1999 |
|
|
Chartered Accountants |
|
|
|
| Balance
Sheet |
|
| as at June 30, 1 999 |
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
| Capital and reserves |
|
|
| Authorised capital |
|
| 10,000,000
ordinary shares of Rs. 10/- each |
|
100,000,000 |
100,000,000 |
|
|
============ |
============ |
|
| Issued,
subscribed and paid-up capital |
|
| 10,000,000
ordinary shares of Rs. 10/- each |
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| fully paid in cash |
|
|
100,000,000 |
100,000,000 |
|
| Special reserve |
|
3 |
15,329,997 |
11,667,443 |
|
| Capital reserve |
|
4 |
5,000,000 |
- |
|
| Unappropriated profits |
|
|
6,319,990 |
6,669,774 |
|
|
--------------------- |
--------------------- |
|
|
|
|
126,649,987 |
118,337,217 |
|
| Long term loans |
|
5 |
5,625,000 |
10,000,000 |
|
| Long term security deposits |
|
6 |
35,656,372 |
31,008,049 |
|
| Deferred liabilities |
|
|
| Gratuity |
|
|
1,032,622 |
807,762 |
|
|
| Current liabilities |
|
|
|
|
| Short
term borrowings - secured |
|
7 |
99,927,896 |
56,603,999 |
|
| Current
portion of long term liabilities |
|
8 |
26,310,053 |
23,010,774 |
|
| Creditors,
accrued and other liabilities |
|
9 |
16,190,564 |
14,696,832 |
|
| Unclaimed dividend |
|
|
1,340,751 |
1,820,868 |
|
| Proposed dividend |
|
|
10,000,000 |
10,000,000 |
|
| Provision for taxation |
|
|
425,000 |
553,921 |
|
|
--------------------- |
--------------------- |
|
|
|
154,194,264 |
106,686,394 |
|
|
|
--------------------- |
--------------------- |
|
|
|
323,158,245 |
266,839,422 |
|
|
============ |
============ |
|
|
|
| Operating fixed assets |
|
10 |
2,097,530 |
955,170 |
|
| Net
investment in lease finance |
|
11 |
202,186,244 |
162,894,106 |
|
| Long
term investments in securities |
|
12 |
21,204,200 |
21,204,200 |
|
| Long
term deposits and deferred costs |
|
13 |
497,896 |
961,587 |
|
|
|
|
| Current assets |
|
|
| Short
term investment in securities |
|
14 |
- |
1,500,01 3 |
|
| Current
potion of net investment |
|
|
|
|
| in lease finance |
|
11 |
94,303,497 |
76,117,402 |
|
| Advances,
deposits, prepayments and |
|
|
|
|
| other receivables |
|
15 |
1,138,112 |
709,143 |
|
| Cash and bank balances |
|
16 |
1,730,766 |
2,497,801 |
|
|
|
|
--------------------- |
--------------------- |
|
|
|
|
97,172,375 |
80,824,359 |
|
|
|
|
--------------------- |
--------------------- |
|
|
|
|
323,158,245 |
266,839,422 |
|
|
|
|
============ |
============ |
|
| The
annexed notes from 1 to 26 form an integral part of these accounts. |
|
|
| Chief Executive |
|
|
|
Director |
|
|
|
|
|
| Profit and Loss Account |
|
|
| for
the year ended June 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Revenue |
|
| Income from lease operations |
|
17 |
47,207,765 |
40,364,806 |
|
| Profit on bank deposits and |
|
| short term placements |
|
155,183 |
131,558 |
|
| Dividend income |
|
|
212,400 |
994,800 |
|
|
--------------------- |
--------------------- |
|
|
|
47,575,348 |
41,491,164 |
|
|
| Expenditure |
|
|
|
| Financial charges |
|
18 |
22,308,647 |
13,700,778 |
|
| Administrative
and operating expenses |
|
19 |
5,985,220 |
5,335,882 |
|
| Deferred cost amortized |
|
|
617,991 |
607,990 |
|
| Provision
for potential lease losses |
|
|
- |
5,000,000 |
|
|
--------------------- |
--------------------- |
|
|
|
28,911,858 |
24,644,650 |
|
|
--------------------- |
--------------------- |
|
| Profit before taxation |
|
18,663,490 |
16,846,514 |
|
|
|
|
|
| Provision for taxation |
|
|
| For the year |
|
20 |
425,000 |
553,921 |
|
| Prior year |
|
|
(74,280) |
718,905 |
|
|
--------------------- |
--------------------- |
|
|
|
350,720 |
1,272,826 |
|
|
--------------------- |
--------------------- |
|
| Net profit after taxation |
|
|
18,312,770 |
15,573,688 |
|
| Unappropriated
profit brought forward |
|
6,669,774 |
4,210,824 |
|
|
--------------------- |
--------------------- |
|
| Profit
available for appropriation |
|
24,982,544 |
19,784,512 |
|
|
| Appropriation |
|
| Transferred to special
reserve |
|
|
3,662,554 |
3,114,738 |
|
|
| Transferred to capital
reserve |
|
|
5,000,000 |
-- |
|
| Proposed
dividend 1999 @ 10% (1998 @ 10%) |
|
10,000,000 |
10,000,000 |
|
|
|
--------------------- |
--------------------- |
|
|
18,662,554 |
13,114,738 |
|
|
|
--------------------- |
--------------------- |
|
| Unappropriated
profit carried forward |
|
|
6,319,990 |
6,669,774 |
|
|
|
|
============ |
============ |
|
| Earning per share |
|
23 |
1.83 |
1.56 |
|
|
============ |
============ |
|
|
| The
annexed notes from 1 to 26 form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
| A.
Cash flow from operating activities |
|
|
| Profit before taxation |
|
|
18,663,490 |
16,846,514 |
|
|
| Adjustments
to reconcile profit to net cash |
|
| provided
by operating activities |
|
|
| Provision for gratuity |
|
387,481 |
320,829 |
|
| Provision
for potential lease losses |
|
- |
5,000,000 |
|
| Amortization of deferred
costs |
|
617,991 |
607,990 |
|
| Financial charges |
|
22,308,647 |
13,700,778 |
|
| Depreciation |
|
446,260 |
164,150 |
|
|
--------------------- |
--------------------- |
|
|
|
|
23,760,379 |
19,793,747 |
|
|
|
|
--------------------- |
--------------------- |
|
| Operating
profit before working capital changes |
|
|
42,423,869 |
36,640,261 |
|
| Changes in working capital |
|
| (Increase)/decrease
in current assets |
|
| Advances,
deposits, prepayments & other receivables |
|
(508,479) |
(59,121) |
|
| Increase/(decrease)
in current liabilities |
|
|
| Creditors,
accrued and other liabilities |
|
(477,994) |
11,969,096 |
|
|
|
--------------------- |
--------------------- |
|
| Net
(Increase)/decrease in working capital |
|
(986,473) |
11,909,975 |
|
| Gratuity paid |
|
|
(162,621) |
(39,590) |
|
| Financial charges paid |
|
|
(20,336,921) |
(12,390,580) |
|
| Income tax paid |
|
|
(400,131) |
(1,085,922) |
|
|
|
--------------------- |
--------------------- |
|
| Net
cash from operating activities |
|
20,537,723 |
35,034,144 |
|
|
|
--------------------- |
--------------------- |
|
| B.
Cash flow from investing activities |
|
| Increase in long term
deposits |
|
(154,300) |
(148,780) |
|
| Investment
in lease finance - Net |
|
(57,478,233) |
(47,903,443) |
|
| Investments in securities -
Net |
|
1,500,013 |
(1,500,013) |
|
| Sale proceeds of fixed assets |
|
284,926 |
- |
|
| Capital expenditure |
|
(1,873,546) |
(175,655) |
|
|
|
--------------------- |
--------------------- |
|
| Net
cash used in investing activities |
|
(57,721,140) |
(49,727,891) |
|
|
--------------------- |
--------------------- |
|
|
| C.
Cash flow from financing activities |
|
|
| Long term security deposits |
|
|
7,114,270 |
10,041,923 |
|
| Long term loans |
|
|
15,000,000 |
20,200,000 |
|
| Repayment of long term loans |
|
|
(18,541,668) |
(3,333,332) |
|
| Short term bank borrowings |
|
|
43,323,897 |
4,131,642 |
|
| Dividend paid |
|
|
(10,480,117) |
(14,643,661) |
|
| Repayment of lease liability |
|
|
- |
(115,530) |
|
|
|
|
--------------------- |
--------------------- |
|
| Net
cash from financing activities |
|
|
36,416,382 |
16,281,042 |
|
|
--------------------- |
--------------------- |
|
| Net increase/(decrease) |
|
| cash
& bank balances (A+B+C) |
|
|
(767,035) |
1,587,295 |
|
|
| Cash and bank balances |
|
| at the beginning of the year |
|
|
2,497,801 |
910,506 |
|
|
|
| Cash & bank balances at
the |
|
--------------------- |
--------------------- |
|
| end of the year |
|
|
1,730,766 |
2,497,801 |
|
|
|
|
============ |
============ |
|
|
| Chief Executive |
|
|
Director |
|
|
|
| Notes to the Accounts |
|
| for
the year ended June 30, 1999 |
|
|
| 1. Status and activities |
|
|
| The
company was incorporated as a public limited company on July 26, 1993 and is
listed on the |
|
| Stock Exchanges in Pakistan. |
|
|
|
| The
company is classified as a non-banking financial institution by the State
Bank of Pakistan |
|
| under
the Banking Companies Ordinance, 1962 and is mainly engaged in the business
of leasing. |
|
|
| 2.
Significant accounting policies |
|
|
| 2.1 Accounting convention |
|
| These accounts have been prepared on the
basis of "Historical Cost Convention". |
|
| 2.2 Staff retirement benefits |
|
|
| The
company operates an unfunded gratuity scheme covering all its employees.
Provision |
|
| is
made annually to cover the liability under the scheme. |
|
|
| 2.3 Operating fixed assets |
|
|
|
| Operating
fixed assets are stated at cost less accumulated depreciation. Depreciation
is |
|
| charged
to income applying the reducing balance method at the rates specified in
operating |
|
| assets
note. Depreciation on additions during the year is charged on the basis of
whole |
|
| year
while no depreciation is charged on deletions during the year. |
|
|
| 2.4 Deferred cost |
|
| This will be amortized in a maximum period
of five years from the year of deferment. |
|
|
| 2.5 Lease accounting |
|
|
| All
lease agreements are accounted for in accordance with the International
Accounting |
|
| Standard
17 "Leases (Revised)". |
|
|
| 2.6 Long term investment |
|
|
| Investment
in securities are stated at cost / book value on overall portfolio basis.
Only |
|
| permanent
diminution in value of investments is recognized. |
|
|
| 2.7 Taxation |
|
|
|
| The
charge for current taxation is based on taxable income at the current tax
rate after |
|
| taking
into account tax credit and tax rebates available, if any. Deferred tax is
accounted for |
|
| by
using the liability method on all major timing differences excluding tax
effects on those |
|
| timing
differences which are not likely to reverse in foreseeable future. In
pursuance of |
|
| Securities
& Exchange Commission of Pakistan Circular No. 110/C/SEC/99 dated |
|
| September
09, 1999 deferred tax liability pertaining to the periods prior to June 30,
1998 |
|
| and
liability for the year has been transferred to Capital Reserve. |
|
|
| 2.8 Revenue recognition |
|
|
| Lease Revenue |
|
|
| The
company follows the financing method in accounting for and recognition of
lease income. |
|
| Under
this method the earned income i.e. the excess of aggregate lease rentals and
estimated |
|
| residual
value over the net investment (cost of leased assets) is deferred and then
amortized |
|
| to
income over the term of the lease, applying the annuity method to produce a
constant |
|
| rate
of return on the net invest |
