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National Development Leasing Corporation Limited
Annual Report 1999
Contents
Company Information
Notice of Meeting
Ten Years at a Glance
Directors' Report
Auditors' Report
Balance Sheet
Profit and Loss Account
Statement of Changes in Financial Position
Notes to the Accounts
Pattern of Shareholding
Company Information
Board of Directors		Mr. Mohammad Naseem		Chairman
		Mr. Mohammad Salim		Director
		Mr. S. M. Saleem		Director
		Mr. Mohammad Sharif		Director
		Mr. Zahid Haleem Sheikh		Director
		Mr. Farrukh Hussain Sheikh		Director
		Ms. Naheed Hyder		Director
		Mr. Mubashir A. Akhtar		Managing Director & Chief Executive
Company Secretary		Mr. Abdul Ghafoor Ateeq
Auditors		Ford, Rhodes, Robson, Morrow
		Chartered Accountants
Legal Advisors		Orr. Dignam & Company, Advocates
		Liaquat Merchant Associates
		Sajjad Law Associates
Consultants		M. Yousuf Adil Saleem & Co.
		Chartered Accountants
Share Registrar		THK Associates (Pvt) Limited,
		Ground Floor, Sheikh Sultan Trust Building No.2,
		Beaumont Road,
		Karachi-75530
Bankers		Allied Bank of Pakistan Limited
		American Express Bank Limited
		Askari Commercial Bank Limited
		Bank of Punjab
		Citibank, N.A.
		Deutsche Bank A.G.
		Faysal Bank Limited
		First International Investment Bank Limited
		Habib Bank Limited
		Mashreq Bank psc.
		Muslim Commercial Bank Limited
		National Bank of Pakistan
		National Development Finance Corporation
		Platinum Commercial Bank Limited
		Prime Commercial Bank Limited
		Standard Chartered Bank
Correspondent Banks		Chase Manhattan Bank
		Deutsche Bank A.G.
Head Office and
Registered Office
Karachi		NIC Building, 10th Floor
		Abbasi Shaheed Road
		Tel: 5660671-78 Fax: 5680454
		E-mail: ndlckar@cyberaccess.com.pk
Branches
KARACHI CLIFTON		BC-1, Block-5,
		Kehkashan Scheme # 5, Main Clifton Road
		Tel: 5875666-777 Fax: 5875888
		Contact: Mr. Ahmed Noor
LAHORE		7/4, E-3, Main Boulevard,
		Gulberg III
		Tel: 5754111,5754122 Fax: 5754166
		Contact: Mr. Tahir Rizwan
LAHORE CANTT		Unit No. 3, Cantonment Commercial Complex,
		Abid Majeed Road,
		Tel: 6652317-8 Fax: 6652310
		Contact: Mr. Shahzad Afzal
FAISALABAD		Tile Mall Regency Shopping Arcade,
		Ground Floor.
		Tel: 617946-47 Fax: 612890
		Contact: Mr. Salim-ul-Haque
ISLAMABAD		State Life Building, Ground Floor
		Jinnah Avenue, Phase II,
		Blue Area.
		Tel: 277362-64 Fax: 277365
		Contact: Mr. Fuad Rasul
Notice of Annual General Meeting
Notice is hereby given that the Fifteenth Annual General Meeting of National Development Leasing
Corporation Limited will be held at FTC Auditorium, Finance and Trade Centre, Sharea Faisal, Karachi on
Tuesday, November 23, 1999 at 9:30 a.m. to transact the following business:
1. To confirm the Minutes of the Fourteenth Annual General Meeting held on December 15, 1998.
2. To receive, consider and adopt the Audited Accounts of the Corporation for the year ended June 30,
1999 together with Directors' and Auditors' Report thereon.
3. To approve 15% cash dividend as recommended by the Directors.
4. To appoint Auditors and fix their remuneration. The present Auditors, Messrs. Ford, Rhodes, Robson,
Morrow, Chartered Accountants, retire and being eligible, offer themselves for re-appointment.
5. To transact any other business with the permission of the Chair.
					By Order of the Board
					Abdul Ghafoor Ateeq
Karachi: October 19, 1999					Company Secretary
Notes:
a. An instrument of proxy duly stamped, signed and witnessed and the power of attorney or other
authority (if any) under which it is signed or a notarially certified copy of such power or authority,
in order to be valid, must be deposited at the registered office of the Corporation at least 48 hours
before the time of the meeting.
b. Members are requested to immediately inform of any change in their addresses.
Ten Years at a Glance
												Rupees in Million
		Year				18 months
		Ended	June 30	June 30	June 30	June 30	Dec 31	Dec 31	Dec 31	Dec 31	Dec 31	Dec 31
			1999	1998	1997	1996	1994	1993	1992	1991	1990	1989
FINANCIAL POSITION
Authorised Capital			500	500	500	500	500	500	500	500	100	100
Paid-up Capital			377	377	359	359	259	207	159	88	68	68
Reserves			856	823	828	780	687	620	595	479	378	158
Shareholders Equity			1,233	1,200	1,187	1,139	946	827	754	567	446	226
Long Term Loans '-Foreign			791	802	910	690	821	569	651	469	506	212
-Local			723	502	367	304	154	220	247	223	507	501
Certificates of Investment			715	1,090	1,576	1,755	881	671	964	1,008	2,977	1,622
Net Investment in Lease Finance			3,782	3,650	3,767	3,971	2,739	2,344	2,044	1,789	1,709	1,214
Total Assets			4,805	4,924	5,312	5272	3,644	2,878	3,071	2,666	5,061	3,011
OPERATING POSITION
Lease Income			572	614	625	807	398	299	255	243	193	120
Total Revenue			698	739	785	1,115	540	425	393	507	571	329
Total Expenditure			534	543	599	755	317	250	237	361	395	216
Operating Profit			164	196	186	360	223	175	156	146	176	113
Profit Before Taxation			120	78	130	266	187	165	149	146	176	113
Profit After Taxation			90	50	102	211	157	125	111	146	234	75
DISTRIBUTION
Cash Dividend			15.00%	10.00%	15.00%	30.00%	15.00%	25.00%	20.00%	20.00%	20.00%	12.00%
Stock Dividend			--	--	0	--	25.00%	25.00%	30.00%	--	30.00%	--
RIGHT ISSUE			--	--	--	--	10.00%	--	--	30.00%	50.00%	--
RATIOS
Current Ratio			1.08	1.01	1.00	0.81	1.17	1.25	1.52	1.19	0.97	0.96
Debt/Equity			1.27	1.28	1.38	1.25	1.42	1.34	1.76	1.69	4.00	5.54
Book Value Per Share (in Rupees)			16.34	15.90	16.52	15.85	18.29	20.00	23.71	32.12	24.06	12.18
Note: Prior years' figures have been rearranged, wherever necessary, for the purpose of comparison.
Directors' Report to the Shareholders
The Director are pleased to present the financial results of the Company for the year ended June 30, 1999.
Board of Directors
The composition of the Board of Directors has changed since the last Annual General Meeting due to
acceptance of resignation of Mr. Shahid Hassan. The Directors place on record their appreciation of the
services rendered by the outgoing Director. The Directors welcome Ms. Naheed Hyder as Director of the
Company and look forward to her valuable contribution.
Financials
Your Directors are pleased to report an after tax profit of Rs. 90.048 million for the year ended June 30, 1999
and propose that profit be appropriated as follows:
					(Rupees in 000's)
					June 30	June 30
					1999	1998
Profit before taxation					120,048	78,027
Taxation					30,000	28,000
					------------------	------------------
Net Profit after taxation					90,048	50,027
Unappropriated profit brought forward					1,139	1,353
					------------------	------------------
Profit available for appropriation					91,187	51,380
APPROPRIATIONS
Proposed Dividend 15 % (1998: 10%)					56,610	37,740
Transfer to General Reserve					29,000	10,000
Transfer to Special Reserve					4,502	2,501
Transfer from General Reserve for deferred taxation					(68,410)	--
Transferred to Capital Reserve for deferred taxation					68,410	--
					------------------	------------------
					90,112	50,241
					------------------	------------------
Unappropriated profit carried forward					1,075	1,139
					==========	==========
The Economy
The economy has shown a net GDP growth rate of 3.1 percent as against the revised GDP growth rate of 4.3
percent last year and targeted growth rate of 6 percent. The growth in respect of agriculture, manufacturing
and services sectors have shown decline as compared to budgeted targets set for fiscal 1998-99. A praise
worthy feature of 1998-99, is a noticeable slowdown in the rate of inflation which declined to about 6
percent. The Government after several meetings and hectic negotiations was successful in reaching an
agreement with IMF to reactivate its stalled aid program, which was followed by restoration of financial
support by the World Bank and the Asian Development Bank. The Paris club rescheduled external debt to
the extent of US $ 3.3 billion for a period upto December 2000. The economy appears to have survived
through the crisis and has been able to secure fiscal space to move forward under the mid-term policy
framework.
The Government has done well to raise the development expenditure for fiscal year 1999-2000 to Rs. 116.3
billion which is 26.2 percent higher than the revised Rs.92.1 billion of the previous fiscal year. Debt servicing
which consumes 65 percent of the total revenue, has not been allowed to hit the growth of the economy.
Foreign exchange crisis had a direct as well as indirect bearing on the economy. Home remittances have
declined after freezing of the private foreign currency accounts and a steep fall was witnessed in net foreign
private investment. Local investment during the last few years has been abysmal with only balancing;
modernization and replacement taking place, in the already established industrial sector signaling sharp
contraction of investment in the country. There is a need to take a wide ranging and difficult economic
policy decisions to build a durable basis for growth and financial stability. While we expect growth to pick
up in fiscal 1999-2000 to over 4 percent, higher long-term growth will come only from successful economic
restructuring.
Leasing sector in Pakistan which portrayed rapid growth, in the past, both in the number of companies and
quantum of business is now faced with some formidable challenges. This sector witnessed growth of 20
percent, on an average, is now finding it difficult to maintain sustained growth rate due to difficult economic
conditions. Banks and DFIs are providing long-term funds and have entered leasing business. These institutions
have resources and access to low cost deposits and pose a major threat to leasing companies. Though
commercial banks have provided funds to leasing companies, the risk of mismatch, availability of funds at
economical rates and lack of demand have forced companies to adopt conservative lending policies. Despite
this, I am pleased to report that your Company was able to generate quality business in the current financial
year. Your Corporation continued to emphasis on its core activity i.e. leasing which despite the backdrop of
economic recession produced commendable results.
Overview of Operations
Your Corporation achieved strong results for the year under review. Profit before taxation was Rs. 120 million
as compared to 78 million in the previous year. Total income earned in fiscal 1999 dropped from Rs.739
million to Rs.698 million depicting a fall of 5.9 percent. The reduction in lease revenue is mainly on account of
decline in disbursements in the previous years. Cost of borrowing decreased to Rs.447 million from Rs.458
million in the previous year, due to availability of comparatively cheaper funds and downward revision of
borrowing rates coupled with efficient handling of short term borrowings. The Company was successful in
arresting the inflationary impact by controlling operating expenses which increased marginally from 85 to 87
million. The Company has been able to stem the rising trend of infection and as a result of focused recovery
efforts, there are visible signs of improvement in recovery position. The Company has made a provision
of Rs.29 million against potential lease losses as against 111 million provided in the previous year. Provision for
diminution in value of investments increased to Rs. 16 million from Rs.7 million in the previous year, in view
of provision made during the year for long term equity investments. We expect future provision for diminution
in value of investments to be minimal. The investments made by your Company are diversified in key economic sectors.
Funding
Your Company was able to generate long-term funds in line with its objective of reducing mismatch of
funds. The funds were invested principally in leasing business. Local financial institutions once again
demonstrated their confidence by extending credit lines and enhancing credit facilities. The Company
continued to maintain excellent relations with multilateral agencies and the closing date of an undrawn loan
amount of US $ 5 million was extended by one year as cost of foreign exchange cover for the entire period
of loan remained uncertain. We propose to raise long-term funds during 1999-2000 from the issue of Term
Finance Certificates. The issue will help expand year Corporation's core leasing business and tap a new
funding base.
Equity Investment
The stock market began to show signs of recovery from the effects of economic sanctions on the basis of
loan rescheduling and IMF support. The KSE - 100 index, reflecting improving fundamentals, reached a
high of 1428, in May 1999, but later bottomed out, at around 1054 on June 30, 1999. Management has not
ventured into new buying activities and has marked the prices of trading portfolio to market values. During
the year under review, a provision of Rs. 18 million was made for diminution in value of long term investments
in compliance with Technical Release 23.
Regulatory Environment
Securities and Exchange Commission of Pakistan (SECP) has replaced the Corporate Law Authority. The
Commission will monitor and regulate capital markets in the country, administer the Companies Ordinance
and regulate leasing companies and modarabas. The creation of SECP is viewed as a major step towards the
complete deregulation and the creation of independent regulatory bodies in the country.
Year 2000 compliance
The Y2K compliance program is progressing well. We have installed new hardware and software applications
that are Y2K compliant. Though no one can predict with absolute certainty what may happen as a result of
the millennium bug, we are confident that our preparations will enable our computer system to meet our
needs.
Credit Rating
The Pakistan Credit Rating Agency has updated the Company's credit rating for the year to June 30, 1999. I
am pleased to report that your Company has maintained the entity rating of A (Single A) for long term and
A1 (A One) for short term despite difficult economic conditions. These ratings are applicable to the unsecured
creditors of the Company. The rating for secured Term Finance Certificates has also been maintained at A+
(A Plus).
Year	Long Term	Short Term	TFC
1999	A	A 1	A+
1998	A	A 1	A+
1997	A	A1	--
Future Outlook
We are committed to further development of the leasing business by concentrating on intensifying our core
activities, which will Insha Allah result in consistent and profitable growth. We will continue in our quest to
maintain high quality portfolio with prudent diversification of risks. We shall, create an environment conducive
to professional growth and development of the employees, retain and attract superior managerial talents and
apply proficient technological and organization support system.
Mission Statement
As mankind enter into a new millennium it faces greater challenges and new millennium promises, to be full
of hope. We at National Leasing are prepared to meet these challenges by adopting a proactive and dynamic
approach. We are confident and look forward to meeting these challenges posed and opportunities offered
by the new millennium. Our objective is to strengthen various aspects of Corporate Governance, lead the
industry standards for adhering to business practices and compliance of regulatory requirements and improve
our corporate image as largest leasing company.
Auditors
The retiring auditors Messrs. Ford, Rhodes, Robson, Morrow, Chartered Accountants, being eligible, offer
themselves for reappointment.
Acknowledgment
We offer our sincere thanks to our valued clients, bankers, shareholders and sponsors for the trust and
confidence they have placed in the Corporation.
We extend our appreciation to the Board of Directors, State Bank of Pakistan, Securities and Exchange
Commission of Pakistan and Multilateral Agencies for their continued support and guidance. We equally
appreciate the hard work and commitment demonstrated by our team members in contributing towards
achieving the objectives of the Company.
Shareholding Pattern
A statement reflecting the pattern of shareholding is attached to the Annual Report.
					On behalf of the Board
					Mubashir A. Akhtar
Karachi: September 13, 1999.					Managing Director and Chief Executive
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of NATIONAL DEVELOPMENT LEASING
CORPORATION LIMITED as at June 30, 1999 and the related profit and loss account and
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;
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 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, 1999 and of the profit and the changes in financial position 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-					Chartered Accountants
September 13, 1999
Balance Sheet as at June 30, 1999
					(Rupees in 000's)
				Note	June 30	June 30
					1999	1998
CAPITAL AND RESERVES
Authorised Capital
100,000,000 Ordinary Shares of Rs 5 each					500,000	500,000
					==========	==========
Issued, Subscribed and Paid-up Capital				3	377,400	377,400
Reserves				4	855,989	822,551
					------------------	------------------
Shareholders' Equity					1,233,389	1,199,951
DEFERRED LIABILITIES
Gratuity					5,319	4,294
LONG TERM FINANCE AND LIABILITIES
Long Term Finances				5	1,146,803	1,004,046
Certificates of Investment				6	174,918	105,807
Deposits on Lease Contracts				7	242,526	421,876
					------------------	------------------
					1,564,247	1,531,729
CURRENT LIABILITIES
Short Term Finances				8	479,200	446,977
Current Maturity
Long Term Finances				5	366,779	300,487
Certificates of Investment				6	540,089	984,569
Deposits on Lease Contracts				7	293,308	133,727
Obligation under Finance Lease					--	1,551