Vision To catalyze the untapped potential of the economy through ease of access to finances across sectors ranging from the agrobased to industrial leading the country towards prosperity. Mission Prefrably to provide lease finance and other products a n d s e r v i c e s, t a i l o r m a d e t o s u i t t h e requirements of the customer, be it a small f a r m e r, s m a l l a n d m e d i u m s i z e entrepreneur(s) or enterprise(s) or woman owned business, for sustainable and long term financial solutions. 1
Corporate Information Board of Directors Mrs.Masooma Hussain Mr. Najam Ahmed Shah Mr. Naim Farooqui Mr. Muhammad Aftab Alam Mr. Muhammad Raja Abbas Mr. Muhammad Bilal Sheikh Mr. Muhammad Shahid Murtuza Chairperson Independent NonExecutive Director NonExecutive Director NonExecutive Director Independent NonExecutive Director NonExecutive Director Executive Director Non Executive Director CFO & Company Secretary Mr. Rehan Anjum Registered Office Third Floor, Imperial Court Building Dr. Ziauddin Ahmed Road, Karachi Audit Committee Branch Offices Mr. Naim Farooqui Chairman Mr. Muhammad Aftab Alam Member Mr. Raja Muhammad Abbas Member Larkana / Naudero Branch Raza Shah Mohalla, VIP Road, Larkana Human Resource Committee Mrs.Masooma Hussain Mr. Muhammad Bilal Sheikh Mr. Naim Farooqui Mr. Najam Ahmed Shah Banker Sindh Bank Limited Bank Islami Pakistan Limited United Bank Limited NRSP Microfinance Bank Auditors BDO Ebrahim & Co. Chartered Accountants nd 2 Floor, Block C Lakson Square Building1 Sarwar Shaheed Road Karachi. Web: www.sindhleasingltd.com Chairperson Member Member Member Karachi Branch Plot No #117118, Shah Abdul Lafit Education Trust, Block A, Sindhi Muslim, Cooperative Housing Society Karachi. Hyderabad Branch Plot No. 11 Faraz Villas Housing Scheme Taluka Qasimabad Hyderabad Islamabad Branch Select One Plaza, F11 Markaz, Sindh Bank Ltd, Islamabad Lahore Branch 2nd Floor, Plot No. S19, R30 ShahraheQuaideAzam Lahore Legal Advisor Muhammad Nadeem Khan nd Suite # 28A, 2 Floor Fareed Chamber Abdullah Haroon Road Karachi 2
Table of Contents Vision & Mission Statements Corporate Information Directors Report Balance Sheet Condensed Interim Profit and Loss Account (Unaudited) Condensed Interim Statement of Comprehensive Income (Unaudited) Condensed Interim Cash Flow Statement (Unaudited) Condensed Interim Statement of Changes in Equity (Unaudited) Condensed Interim Notes to the Financial Information (Unaudited) 01 02 04 05 06 07 08 09 10 3
Directors Report On behalf of the Board of Directors of Sindh Leasing Company Limited (SLCL), I am pleased to present the Directors' review along with the unaudited condensed interim financial information for the half year and quarter ended December 31, 2018. Operating Results and Business overview Balance Sheet Paidup capital Total equity Fixed assets Investment in Finance lease Working Capital loan and others Accumulated general provisions December 31, June 30, 2018 2018 (PKR Million) 3,500.00 3,500.00 3,775.939 3,712.091 20.172 23.274 2,717.305 2,678.384 731.012 695.007 43.908 21.890 Profit & Loss Revenue Net Administrative expenses General provision against potential lease losses Profit before tax Profit after tax EPS July 01, 2018 to December 31, 2018 198.339 (106.253) (15.161) 76.925 63.848 0.182 July 01, 2017 to December 31, 2017 109.723 (80.313) (6.464) 22.943 19.272 0.096 The increase in revenue is the result of injection of additional capital coupled with increase in discount rate resulting in rise in KIBOR rate during the quarter under review. As a matter of prudence and also accounting for potential future bad debts our provision in the current quarter has been raised from 1% to 2% of outstanding portfolio. This is as per Board of Directors guidance and resolutions. The after tax profit of Rs 63.848 million is 231% higher compared to corresponding half year despite declining three proposals amounting to Rs 351 million. This shows consistency in good performance and sound business strategy. Board of Directors During the quarter under review Dr. Noor Alam submitted his resignation as he had been transferred to another department of GoS and Mr. Najam Ahmad Shah was appointed as new Secretary, Finance in GoS and was nominated as Director in SLCL by GoS. The Board wishes to place on record its appreciation for Dr. Noor Alam s valuable contribution in the Company. Future Outlook The current fiscal year has brought with it new and tougher challenges namely a difficult economic environment and static economic growth which is predicted to remain under 4% for FY2019 compared to the target of 6.2%. Considering the recent increase(s) in policy rate(s) and uncontrolled depreciation in local currency, SLCL apprehends a challenging future ahead until the economy settles down. SLCL s position nonetheless is unchanged where utmost care will be executed in onboarding new business and customers. Our risk management processes are in line with general practices in the financial sector to avoid occurrence of any default(s) to our clean lending portfolio. Credit Rating In view of sound portfolio performance, support of GoS and management quality the JCRVIS Credit Rating Company Limited (JCRVIS) has maintained the entity ratings of the Company for longterm A and short term A+. Outlook on the assigned rating is 'Stable'. Acknowledgements On behalf of the Board I would like to express my gratitude to the valued customers for their continued patronage and confidence. The Board appreciates the support of our sponsors, i,e the Government of Sindh (GoS) and the confidence that its valued customers have exhibited in the Company. Acknowledgements are also due to the Securities and Exchange Commission of Pakistan for their guidance and support. The Board also wishes to place on record its appreciation for SLCL's staff for their continued hard work, dedication and commitment without which the Company could not have achieved the exceptional growth during this quarter as well. Muhammad Bilal Sheikh Date: January 29, 2019 4
Condensed Interim Balance Sheet (Unaudited) As at 31 December 2018 December 31, June 30, Note 2018 2018 Rupees ASSETS NONCURRENT ASSETS Property, plant and equipment 20,172,298 23,273,880 Intangible assets 1 8,318 Net investment in finance leases 4 2,031,121,937 2,049,986,587 Long term loans and advances 33,465,342 34,511,067 Long term deposits 432,600 432,600 2,085,192,178 2,108,212,452 CURRENT ASSETS Short term investment 5 456,958,544 453,959,611 Accrued markup 29,866,440 10,689,042 Loans and advances 688,461,070 647,649,089 Current maturity of noncurrent assets 6. 695,269,738 641,244,567 Prepayments & other receivables 7,543,760 5,522,933 Cash and bank balances 447,074,140 412,035,562 2,325,173,692 2,171,100,804 TOTAL ASSETS 4,410,365,870 4,279,313,256 EQUITY AND LIABILITIES CAPITAL AND RESERVES Authorized share capital 350,000,000 ordinary shares of Rs. 10/ each 3,500,000,000 3,500,000,000 Issued, subscribed and paidup share capital 3,500,000,000 3,500,000,000 Reserve 275,939,062 212,091,271 Total equity 3,775,939,062 3,712,091,271 NON CURRENT LIABILITIES Long term security deposit against leases 7 458,420,996 424,922,243 Certificates of Deposit 8 17,100,001 11,600,001 475,520,997 436,522,244 CURRENT LIABILITIES Trade and other payables 35,183,213 28,651,130 Current maturity of security deposit against leases 7 90,164,985 82,829,232 Current portion of certificates of deposit 8 17,600,001 12,300,000 Mark up accrued 282,785 43,265 Taxation net 15,674,827 6,876,114 CONTINGENCIES AND COMMITMENTS 9 158,905,810 130,699,741 TOTAL EQUITY AND LIABILITIES 4,410,365,870 4,279,313,256 The annexed notes from 1 to 11 form an integral part of these condensed interim financial information. Chairperson 5
Condensed Interim Profit and Loss Account (Unaudited) For the Six Months and Quarter Ended December 31, 2018 Half Year Ended December 31 Quarter Ended December 31 2018 2017 2018 2017 INCOME Rupees Income from finance leases Income from Auto Finance & Working Capital loan Return on investments and deposits Other income EXPENSES 126,455,141 34,031,793 39,103,479 199,590,413 76,764,571 15,658,973 28,292,732 435,842 121,152,118 66,917,049 17,727,088 20,008,482 104,652,619 43,497,400 5,870,835 8,032,081 57,400,316 Finance cost Administrative expenses Provision for potential lease losses Profit before taxation (1,250,790) (106,253,490) (15,161,083) (122,665,363) 76,925,049 (11,429,707) (80,313,997) (6,464,536) (98,208,240) 22,943,878 (486,357) (53,460,456) (7,701,702) (61,648,515) 43,004,103 (1,358,015) (39,595,267) (5,565,113) (46,518,395) 10,881,921 Taxation (13,077,258) (3,671,021) (7,310,697) (1,280,488) Profit after taxation 63,847,791 19,272,857 35,693,406 9,601,433 Earnings per share basic and diluted (Rupee) 0.182 0.096 0.102 0.096 The annexed notes from 1 to 11 form an integral part of these condensed interim financial information. Chairperson 6
Condensed Interim Statement of Comprehensive Income (Unaudited) For the Six Months and Quarter Ended December 31, 2018 Half Year Ended December 31 Quarter Ended December 31 2018 2018 2017 2017 Rupees Profit after taxation for the quarter 63,847,791 19,272,857 35,693,406 9,601,433 Other comprehensive income Total comprehensive income for the quarter 63,847,791 19,272,857 35,693,406 9,601,433 The annexed notes from 1 to 11 form an integral part of these condensed interim financial information. Chairperson 7
Condensed Interim Cash Flow Statement (Unaudited) For the Six Months and Quarter Ended December 31, 2018 December 31, December 31, 2018 2017 Rupees CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation 76,925,049 22,943,879 Adjustment for: Depreciation & amortization 3,136,810 3,278,034 Provision for potential lease losses 15,161,083 6,464,536 Finance Cost 1,250,790 11,429,706 Gain on sale of Fixed Assets (435,842) Interest Income (34,557,564) (38,074,813) (15,008,881) (17,338,379) Operating profit before working capital changes 61,916,169 5,605,500 Movement in working capital (Increase) / decrease in operating assets Working capital loan, advances and prepayments (42,832,808) (12,372,728) Accrued mark up (19,177,398) 10,480,368 Investment in finance leases (60,939,653) (555,025,716) Long term loans and deposits 4,807,029 (27,253,204) Increase / (decrease) in operating liabilities Accrued and other liabilities 6,771,602 29,581,524 Short term borrowings 25,137,971 Long term security deposit against lease 40,834,506 107,050,612 (70,536,721) (422,401,173) Cash utlized from operations (8,620,553) (416,795,673) Finance Cost Paid (1,011,271) (31,435,145) Taxes paid / recoverable (8,784,117) 12,374,353 Net cash utlised from operating activities (18,415,940) (435,856,465) CASH FLOW FROM INVESTING ACTIVITIES Capital expenditure (83,405) Interest Received 45,178,953 11,193,655 Proceeds against sale of Fixed Asset 909,000 Purchases of Tbill during the period (15,763,714) Proceeds against sale of Tbills and maturity of TDR 13,322,683 900,000,000 Net cash utilised from investing activities 42,654,517 912,102,655 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from certificates of deposits 10,800,001 Long term loan GoS (450,000,000) Net cash generated from financing activities 10,800,001 (450,000,000) Net increase in cash and cash equivalents 35,038,578 26,246,190 Cash and cash equivalents at begning of the quarter 412,035,562 267,170,786 Cash and cash equivalents at end of the quarter 447,074,140 293,416,976 The annexed notes from 1 to 11 form an integral part of these condensed interim financial information. Chairperson 8
Condensed Interim Statement Of Changes In Equity (Unaudited) For the Six Months and Quarter Ended December 31, 2018 Reserves Issued, subscribed and paidup share capital Statutory reserve Un appropriated profit Total Rupees Balance as at July 01, 2017 2,000,000,000 66,266,811 82,490,786 2,148,757,597 Total comprehensive income for the six months period ended December 31, 2017 19,272,858 19,272,858 Transfer to statutory reserve 9,636,429 (9,636,429) Balance as at December 31, 2017 2,000,000,000 75,903,240 92,127,214 2,168,030,455 Equity injection Total comprehensive income for the Period ended June 30, 2018 1,500,000,000 44,060,817 1,500,000,000 44,060,817 Transfer to statutory reserve 22,030,408 (22,030,408) Balance as at June 30, 2018 3,500,000,000 97,933,648 114,157,622 3,712,091,271 Total comprehensive income for the six months ended December 31, 2018 63,847,791 63,847,791 Transfer to statutory reserve 31,923,895 (31,923,895) Balance as at December 31, 2018 3,500,000,000 129,857,544 146,081,518 3,775,939,062 The annexed notes from 1 to 11 form an integral part of these condensed interim financial information. Chairperson 9
Notes to the Condensed Interim Financial Information (Unaudited) For the Six Months Ended December 31, 2018 1. LEGAL STATUS AND NATURE OF BUSINESS Sindh Leasing Company Limited (the Company) was incorporated in Pakistan on December 16, 2013 as an unlisted public Company under the Companies Ordinance, 1984. The Company was granted licence on March 27, 2014 to carry out leasing business as a NonBanking Finance Company (NBFC) under the NonBanking Finance Companies (Established and Regulations) Rules, 2003. The registered office of the Company is situated at 3rd Floor, Imperial court building, Dr. Ziauddin Ahmad Road, Karachi. 100% shares of the Company are held by the Government of Sindh. JCRVIS Credit Rating Company Limited (JCRVIS) has assigned A+ and A1 ratings to the Company for medium to long term and short term respectively. The rating has been reaffirmed on May 28, 2018. The license of the Company to carry out the business of leasing has been renewed and valid for a period of three years w.e.f January 24, 2017. 2. BASIS OF PREPARATION 2.1 Statement of Compliance These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017 and provisions of and directives issued under the Companies Act, 2017. Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions of and directives issued under the Companies Act, 2017 have been followed. The third and fifth schedules to the Companies Act, 2017 became applicable to Company for the first time for the preparation of these financial statements. The Companies Act, 2017 (including its third and fifth schedules) forms an integral part of the statutory financial reporting framework applicable to the Company. Specific additional disclosures and changes to the existing disclosures have been included in these financial statements. 2.2 Basis of Measurement These condensed interim financial information have been prepared under historical cost convention except for certain financial assets and financial liabilities which have been stated at their fair values, cost or amortized cost. These financial statements have been prepared following accrual basis of accounting except for cash flow information. 2.3 Functional and presentation currency These Condensed interim financial information are presented in Pak Rupees, which is the functional and presentation currency of the Company and rounded off to the nearest rupee. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these Condensed interim financial information are the same as those applied in the preparation of the annual audited financial statements of the Company for the year ended June 30, 2018. 10
Notes to the Condensed Interim Financial Information (Unaudited) For the Six Months Ended December 31, 2018 4. NET INVESTMENT IN FINANCE LEASES December 31, June 30, 2018 2018 Rupees Lease rentals receivable 2,757,256,430 2,643,680,220 Add: Residual value of leased assets 548,585,981 507,751,475 Gross investment in finance leases 3,305,842,411 3,151,431,695 Less: Unearned finance lease income (544,629,166) (451,158,103) Net investment in finance leases 2,761,213,245 2,700,273,592 Less: Current maturity of net investment in finance leases (686,183,224) (628,396,749) Less: Provision for finance leases (43,908,084) (21,890,256) 2,031,121,937 2,049,986,587 5. SHORT TERM INVESTMENTS Held to Maturity Government Securities Market Treasury Bills Term deposit reciepts NRSP Bank Limited 6,958,544 3,959,611 450,000,000 450,000,000 456,958,544 453,959,611 6. CURRENT MATURITY OF NON CURRENT ASSETS Net investment in finance leases Long term loans and advances 686,183,224 628,396,749 9,086,514 12,847,818 695,269,738 641,244,567 7. LONG TERM SECURITY DEPOSIT AGAINST LEASES Lease deposits 548,585,981 507,751,475 Less: Current maturity if security deposits against leases (90,164,985) (82,829,232) 458,420,996 424,922,243 These represent deposits received from lessee under finance lease and are adjustable against the residual value of the asset leased at the expiry of respective lease term. 8. CERTIFICATES OF DEPOSITS Certificate of Deposit Less : Current portion shown under current liability 34,700,002 23,900,001 (17,600,001) (12,300,000) 17,100,001 11,600,001 9. CONTINGENCIES AND COMMITMENTS Contingencies One letter of comfort issued on behalf of the client for opening letters of credit amounting to Rs.50 M against lease disbursments. Commitments Finance lease contracts committed but not executed at the balance sheet date amounted to Rs.666.80 M 11
Notes to the Condensed Interim Financial Information (Unaudited) For the Six Months Ended December 31, 2018 10 RELATED PARTY TRANSACTIONS The Company has a related party relationship with its Associated Company / Undertaking, Government of Sindh, staff retirement funds, key management personnel and other related parties. Companies Sindh Insurance Company Limited Sindh Leasing Employees Gratuity Fund Sindh Leasing Employees Provident Fund Sindh Bank Limited Sindh Microfinance Bank Limited Sindh Modaraba Management Limited Sindh Engro Coal Mining Limited Shaheed Zulfiqar Ali Bhutto Law College Pioneer Cement Limited Sindh Nooriabad Company Limited Haleeb Foods Limited Key Executives Mr. Muhammad Bilal Sheikh Mr. Rehan Anjum Mr. Husnain Raza Mr. Farrukh Husain Mr. Salman Hamid Ghazi Mr. Sumair Ahsanullah Mr. Amer Lodhi Ms. Sanam Nizar Ali CEO CFO Head of Credit and Administration Head of Information Technology Branch Manager Lahore Admin Incharge Head of liability Manager Compliance Board of Directors Mr. Muhammad Bilal Sheikh Mr. Najam Ahmed Shah Mr. Muhammad Aftab Alam Mrs. Masooma Hussian Mr. Naim Farooqui Muhammad Shahid Murtaza Muhammad Raja Abbas 12
Notes to the Condensed Interim Financial Information (Unaudited) For the Six Months Ended December 31, 2018 The details of significant related party transactions during the healf yearly period and balances as at December 31, 2018 are as follows: 2018 2017 Nature of Nature of transaction Basis of Relation (Rupees) Relation Transactions during the year Profit on bank account and TDR Sindh Bank Limited Insurance services Sindh Insurance Limited Markup accrued Government of Sindh Sindh Bank Limited Long term loan Government of Sindh Nature of transaction Associated Company Associated Company Other related Associated Company Other related Nature of Relation Common Directorship Common Directorship 5,865,246 15,620,851 440,974 638,469 Wholly owned subsidiary of Government of Sindh 9,559,453 Common Directorship 1,870,254 Wholly owned subsidiary of Government of Sindh 50,000,000 2018 2017 Basis of Relation (Rupees) Rent charges Sindh Bank Limited Associated Company Common Directorship 2,004,579 900,000 Salary to seconded staff Sindh Bank Limited Associated Company Common Directorship 2,301,924 2,271,768 Sindh Modaraba Management Limited Associated Company 279,384 268,401 Others Sindh Nooriabad Power Common Company Other related Directorship 300,545 849,660 Shaheed Zulfiqar Ali Bhutto Law College Other related Owned by GoS 165,592 196,984 Remuneration paid Officer Directorship 40,914,796 37,508,102 Meeting Fees paid Directors Directorship 650,000 650,000 Remuneration paid Key Management Personnel Employees 10,623,710 9,303,455 Directors' meeting fees accrued Director Directorship 750,000 650,000 10.1 Balances for the six months ended Name of related parties Common Directorship Bank balances Sindh Bank Limited 152,141,869 168,741,051 Rent payable Sindh Bank Limited 90,000 Prepaid insurance Sindh Insurance Company Limited 406,658 570,105 Lessee Sindh Nooriabad Power Company 288,825 778,588 Lessee Shaheed Zulfiqar Ali Bhutto Law College 106,134 11 DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue by the Board of directors on January 29, 2019. Chairperson 13
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