sindh leasing 2015 · 2017. 11. 9. · muhammad nadeem khan suite # 28-a, 2 floor fareed chamber...

Annual Report June 2015 Annual Report June 2015Annual Report June 2015SINDH EL ASING

Annual Report June 2015Annual Report June 2015SINDH EL ASING

Annual Report June 2015

1


Corporate Information

Board of Directors

- Non-Executive Director- Non-Executive Director

- Executive Director

- Independent Non-Executive Director- Independent Non-Executive Director- Independent Non-Executive Director

CFO & Company Secretary

Mr. Rehan Anjum

Audit Committee Registered Office

Syed Shahnawaz Nadir Shah

Mr. Muhammad Imran MalikSyed Saeed Reza - Chairman

- Member- Member

Third Floor, Imperial Court BuildingDr. Ziauddin Ahmed Road, Karachi

Banker

Branch Offices

Sindh Bank Limited

Mr. Muhammad Imran MalikMr. Muhammad Bilal SheikhMr. Naim FarooquiMr. Sohail Khan Rajput

Larkana / Naudero BranchRaza Shah Mohalla, VIP Road,Larkana

Chairman - Non-Executive Director-

Chief Executive-

Hyderabad Branch

Auditors

BDO Ebrahim & Co.Chartered Accountants2 Floor, Block CLakson Square Building-1Sarwar Shaheed RoadKarachi.

nd

Legal Advisor

Muhammad Nadeem Khan

Suite # 28-A, 2 FloorFareed ChamberAbdullah Haroon RoadKarachi

nd

Web: www.sindhleasingltd.com

Plot No. 11Faraz Villas Housing SchemeTaluka QasimabadHyderabad

Bank Islami Pakistan Limited

Mr. Muhammad Bilal SheikhMr. Sohail Khan RajputSyed Shahnawaz Nadir ShahSyed Saeed RezaMr. Muhammad Imran MalikMr. Ali Murtaza KazmiMr. Naim Farooqui

Human Resource Committee

- Chairman- Member

-- MemberMember

Member

United Bank Limited

2



Table of Contents

Directors’ Report 05

Statement of Compliance with the Public Sector Companies (Corporate Governance) Rules, 2013 08

12

Notice of Annual General Meeting 04

Auditors’ Report to the Members

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements

28Form of Proxy

Statement of Comprehensive Income

Review Report to the members on Statement of Compliance withCorporate Governance) Rules, 2013Public Sector Companies (

13

14

16

17

18

15

19

3


Notice of Annual General Meeting

Notice is hereby given that the Second Annual General Meeting of Sindh Leasing Company Limited (“Company”) will be held on

October 27, 2015 at 11.15 a.m at the Registered office of the Company, Third Floor, Imperial Court Building, Dr. Ziauddin Ahmed Road,

Karachi, to transact the following business:

1. To confirm the minutes of the First Annual General Meeting held on October 31, 2014.

2. To receive, consider and adopt the Audited Accounts of the Company for the year ended June 30, 2015, along with the Directors’ and

Auditor's Reports thereon.

3. To approve the re-appointment of external auditors of the Company for the year ending June 30, 2016 and fix their remuneration.

4. To discuss any revisions in director fees.

5. Any other business with the permission of the Chair.

By Order of the Board

Rehan Anjum

Company Secretary

Karachi: August 20, 2015

4



Directors’ Report

On behalf of the Board of Directors of Sindh Leasing Company Limited (SLCL, the Company), it is my pleasure to present the Second AnnualAudited Financial Statements for the year ended June 30, 2015.

The Company earned a net revenue of Rs. 100.62 million during the year under review against a budgeted net revenue of Rs 108.32 million.Total administrative expenses and provisions for the year amounted to Rs 53.40 million against a budgeted amount of Rs 78.52 million earningan after tax profit of Rs 32.71 million. This compares with a budgeted amount of Rs 19.92 million.

For the reporting year ended June 30, 2015, SLCL’s performance remained satisfactory. The Company managed to book various lease assetsof Rs. 511.48 million successfully during its first full year of operation. SLCL is gradually gearing up to aggressively marketing its product whichis evident from the fact that in the last quarter alone leases worth Rs. 267.12 million were booked.

Despite the drop in the base rate by 300 bps, challenging business environment and uncertain political and security situation, SLCL hasmanaged and sustained its operations in line with its goals and objectives.

On the funding side, while SLCL is presently fairly liquid, it seeks to build relationships with other banks and financial institutions to havecompetitive and diversified funding sources.

Review of Business and Operation

Operating Results

Balance SheetAs at June

30, 2015As at June 30,

2014

----------(PKR Million) ---------

Paid-up capital 1,000.00 1,000.00Total equity 1,059.75 1,027.04Fixed Assets 32.37 34.09Net investment in finance leases 444.18 29.68

Profit & LossFor the yearEnded June

30, 2015

For the periodEnded June 30,

2014

Revenue 100.62 50.32Administrative expenses & Provisions 53.40 10.55

Profit before tax 46.38 39.77Profit after tax 32.71 27.04

Board of Directors

During the year under review election of directors was held and two new independent directors elected. While all the previous five directorswere re-elected, the Board welcomes the new directors, namely, Mr. Muhammad Imran Malik and Mr. Ali Murtaza Kazmi.

The Board of Directors (BoD) of the Company presently comprise of the following seven members.

1. Mr. Mohammad Bilal Sheikh, President, Sindh Bank Ltd.2. Mr. Sohail Rajput, Secretary Finance, Government of Sindh3. Syed Shahnawaz Nadir Shah, Chief Investment Specialist, Government of Sindh4. Syed Saeed Reza, Ex-Executive Director, ORIX Leasing Pakistan Ltd.5. Mr. Ali Murtaza Kazmi, Ex-Head of Legal Department in Pakistan Textile City6. Mr. Muhammad Imran Malik Ex-CEO and President of First Credit and Investment Bank7. Mr. Naim Farooqui, Chief Executive Officer, Sindh Leasing Company Limited

During the year under review, four meetings of the Board of Directors of SLCL were held. Attendance by each director was as follows:

Directors' Meeting

S.No Name of Director

1 Muhammad Bilal Sheikh2 Mr. Sohail Rajput3 Syed Shahnawaz Nadir shah

4 Syed Saeed Reza5 Mr. Muhammad Imran Malik67

Mr. Ali Murtaza KazmiMr. M. Naimuddin Farooqui

the

No. ofmeeting(s) held

duringTenor in the year

444

4444

Total no. of

meeting(s)attended

43*4

42**2**4

* Leave of absence was granted to Director who could not attend the Board meeting.**Appointed on January 30, 2015

5


Directors’ Report

Audit Committee’s Meetings

During the year under review, four meetings of the Audit committee of SLCL were held. Attendance by each director was as follows:

S.No Name of Director

1 Muhammad Bilal Sheikh2 Syed Shahnawaz Nadir shah

3 Syed Saeed Reza4 Mr. Muhammad Imran Malik

No. of meeting(s)held during the

Tenor in the year

44

44

Total no. ofmeeting(s)attended

3*4

41**

*Resigned on January 30, 2015

**Appointed on January 30, 2015

No of

Shareholders

Shareholding

From To

No of Shares

Held Percentage

1 1 99,999,993 99,999,993 99.999993

7

99,999,994 100,000,000

7 0.000007

8 Total 100,000,000 100

Pattern of Shareholding

The pattern of shareholding as at June 30, 2015 is as follows:

Corporate and Financial Reporting Framework

External Auditors

Internal Control and Compliance

Credit Rating

This part of the Directors’ report to shareholders is given as required under section 236 of the Companies Ordinance 1984:

1. The financial statements prepared by the management of Sindh Leasing Company Limited present fairly its state of affairs, the resultof its operations, cash flows and changes in equity.

2. Proper books of account of Sindh Leasing Company Limited have been maintained.

3. Appropriate accounting policies have been consistently applied in preparation of financial statements. Accounting estimates arebased on reasonable and prudent judgment.

4. International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements.

5. The system of internal control is sound in design and has been effectively implemented and monitored.

6. There are no significant doubts upon the ability of Sindh Leasing Company Limited to continue as a going concern.

7. The appointment of Chairman and other members of Board and the terms of their appointment along with the Remuneration policyadopted are in the best interests of the Public Sector Company as well as in line with the best practices.

The present auditors M/s. BDO Ebrahim & Co., Chartered Accountants, retire and being eligible, offer themselves for re-appointment. TheAudit Committee has recommended appointment of retiring auditor for the year ending June 30, 2014.

The management has built and implements internal controls to ensure accuracy and reliability of financial reporting. Review and monitoring ofinternal controls is an ongoing process. The internal audit function has been out sourced to Grant Thornton Anjum Rahman, CharteredAccountants who report directly to the Audit Committee.

JCR-VIS Credit Rating Company Limited has assigned A and A-2 rating to the Company for medium to long term and short term respectivelyduring the year.

6



Directors’ Report (Contd.)

Dividend

Director Training Program

Product Portfolio

Company Infrastructure

Future Outlook

Acknowledgements

The Company has not declared any dividend for the year ended June 30, 2015.

In compliance with clause 11(1) of Public Sector Companies Code of Corporate Governance Rules 2013 an orientation course was conductedfor the directors on April 19, 2015 by a certified training institution.

SLCL is geared to offer leasing and working capital facilities to Consumer and Corporate/SME sectors with an aim to generate economicactivity. To ensure safety of the capital and its portfolio, due diligence of each proposal is conducted thoroughly before extending any facility.

During the year, the Company has invested in developing the infrastructure including selection of premises and its construction, and purchaseof furniture. The IT equipment and core leasing software were tendered and selected in accordance with SPPRA rules.

For security reasons, CCTV system has also been installed with the option of monitoring offsite through mobile application. Fire alarms andfire fighting system have also been installed to prevent damage to the assets.

The challenges faced by the leasing industry remain uncertain to date and management is well aware of this. As a measure to deal with theunfavorable environment SLCL plans to tap its shareholders' and associate companies' network in addition to the efforts being madeindependently to build a sizeable portfolio. Considering the challenges SLCL is taking cautious approach, in the initial stages to maintain a100% recovery of rentals.

The main focus in terms of portfolio development initially is to target assets in the corporate business segment moving gradually to the SMEsector. The Company also plans to expand its geographical reach and diversify its portfolio.

Much would however depend on the private sector’s credit appetite under the prevailing political and economic condition of the country. It ishoped that the situation would settle down for a meaningful growth in the economy.

We acknowledge the support of our sponsors, the Government of Sindh (GoS) and the valued customers who have reposed confidence in ournewly established leasing company. It is hoped that we would continue to enjoy their patronage and support. I would also like to place onrecord appreciation for the guidance and support provided by the Securities and Exchange Commission of Pakistan.

Acknowledgements are also in order for the thin and lean staff without whose unwavering dedication and support the Company could not haveachieved the growth that it did in the first full year of operation.

Naim FarooquiChief ExecutiveAugust 20, 2015

7


Statement of Compliance with the Public Sector Companies(Corporate Governance) Rules, 2013

I. This statement is being presented to comply with the Public Sector Companies (Corporate Governance) Rules, 2013 (hereinafter called“the Rules’) issued for the purpose of establishing a framework of good governance, whereby a public sector company is managed incompliance with the best practice of public sector governance.

II. The company has complied with the provisions of the Rules in the following manner:

1.The independent directors meet the criteria of independence, as defined underthe Rules.

2(d) √

2.

The Board has the requisite percentage of independent directors.At present the board includes :

IndependentDirectors

1.Syed Saeed Reza

2. Mr. Muhammad Imran Malik3. Mr. Ali Murtaza Kazmi

October 31, 2014

Executive Directors Mr. Naim Farooqui

Non-ExecutiveDirectors

1.Mr. Sohail Rajput2.Syed Shahnawaz Nadir Shah3.Mohammad Bilal Sheikh

3(2) √

3.Any casual vacancy occurring on the board was filled up by the directors withinninety days.

3(4) √

4.The directors have confirmed that none of them is serving as a director on morethan five public sector companies and listed companies simultaneously, excepttheir subsidiaries.

3(5) √ **

5.The appointing authorities have applied the fit and proper criteria given in theAnnexure in making nominations of the persons for election as board membersunder the provisions of the Ordinance.

3(7) √

6.The Chairman of the board is working separately from the Chief Executive of theCompany.

4(1) √

7. The Chairman has been elected from amongst the independent directors. 4(4) √ **

8.

The Board has evaluated the candidates for the position of the chief executiveon the basis of the fit and proper criteria as well as the guidelines specified bythe commission.

5(2) √

October 31, 2014

October 31, 2014

8



Statement of Compliance with the Public Sector Companies(Corporate Governance) Rules, 2013 (Contd.)

9.

(a) The company has prepared a “Code of Conduct” and has ensured thatappropriate steps have been taken to disseminate it throughout the companyalong with its supporting policies and procedures, including posting the same onthe company’s website (www.sindhleasingltd.com).

(b) The Board has set in place adequate systems and controls for theidentification and redressal of grievances arising from unethical practices.

√

10.

The Board has established a system of sound internal control, to ensurecompliance with the fundamental principles of probity and propriety; objectivity,integrity and honesty; and relationship with the stakeholder, in the mannerprescribed in the Rules.

5(5) √

11.

The Board has developed and enforced an appropriate conflict of interest policyto lay down circumstances or considerations when a person may be deemed tohave actual or potential conflict of interests, and the procedure for disclosingsuch interest.

5(5)(b)(ii)

√

12.The Board has developed and implemented a policy on anticorruption tominimize actual or perceived corruption in the company.

5(5)(b)(vi)

√

13.

(a) The Board has ensured equality of opportunity by establishing open andfair procedures for making appointments and for determining terms andconditions of service.

vestigating deviations from the(b) A Committee has been formed to incompany’s code of conduct.

5(5)(c)(ii)

√

√

14.

The Board has ensured compliance with the law as well as the company’sinternal rules and procedures relating to public procurement, tender regulations,and purchasing and technical standards, when dealing with suppliers of goodsand services, in accordance with the SPPRA Rules.

5(5)(c)(iii)

√

15.

The Board has developed a vision or mission statement, corporate strategy andsignificant policies of the company. A complete record of particulars of significantpolicies along with the dates on which they were approved or amended has beenmaintained.

5(6) √

16.

The Board has quantified the outlay of any action in respect of any servicedelivered or goods sold by the Company as a public service obligation, and hassubmitted its request for appropriate compensation to the Government forconsideration.

5(8) N/A

17.

(a) The Board has met at least four times during the year.

(b) Written notices of the board meetings, along with agenda and workingpapers, were circulated at least seven days before the meetings.

(c) The minutes of the meetings were appropriately recorded and circulated.

6(1)

6(2)

6(3)

√

18.

The Board has carried out performance evaluation of its members, including thechairman and chief executive, on the basis of a process, based on specifiedcriteria, developed by it. The board has also monitored and assessed theperformance of senior management on annual / half yearly/quarterly basis*.* Strike out whichever is not applicable

8 √

9



19.

The Board has reviewed and approved the related party transactions placedbefore it after recommendations of the audit committee. A party wise record oftransactions entered into with the related parties during the year has beenmaintained.

9 √

20.

The Board has approved the profit and loss account for, and balance sheet as atthe end of the first second and third quarter of the year as well as the financialyear end, and has placed the annual financial statements on the company’swebsite. Monthly accounts were also prepared and circulated amongst the boardmembers.

10 √

21All the board members underwent an orientation course arranged by thecompany to apprise them of the material developments and information asspecified in the Rules.

11 √

22.

(a) The Board has formed the requisite committee, as specified in the Rules.(b) The Committees were provided with written term of reference defining their

duties, authority and composition.(c) The minutes of the meetings of the committee were circulated to all the board

members.(d) The committees were chaired by the following non-executive directors:

CommitteeNumber ofMembers

Name of Chair

Audit Committee Three Saeed Reza

Risk ManagementCommittee

Nil N/A

Human ResourcesCommittee

Three Mr. M. Imran Malik

Procurement Committee Three Mr. M. Imran Malik

Nomination CommitteeFour

Mr. Ali MurtazaKazmi

12 √

23.The Board has approved appointment of Chief Financial Officer, CompanySecretary and Chief Internal Auditor, with their remuneration and terms andconditions of employment, and as per their prescribed qualification.

13/14 √

24.The company has adopted International Financial Reporting Standards notifiedby the Commission under clause (i) of sub-section (3) of section 234 of theOrdinance.

16 √

25.The directors’ report for this year has been prepared in compliance with therequirements of the Ordinance and the Rules and fully described the salientmatters required to be disclosed.

17 √

26.The directors, CEO and executives do not hold any interest in the shares of thecompany other than that disclosed in the pattern of shareholding.

18 √

10




29.

The Board has formed an audit committee, with defined and written terms ofreference, and having the following members:

Name of member CategoryProfessionalbackground”

Syed Saeed Reza Independent Leasing Specialist

Syed Shahnawaz NadirShah

Non- Executive InvestmentSpecialist

Mr. M. Imran Malik Independent Ex-Banker

The Chief executive and chairman of the Board are not members of the auditcommittee.

21 √

√

30.The Board has set up and effective internal audit function, which has an auditcharter, duly approved by the committee, and which worked in accordance withthe applicable standards.

22 √

31.The Company has appointed its external auditors in line with the requirementsenvisaged under the Rules.

23 √

32.The external auditors of the company have confirmed that the firm and all itspartners are in compliance with International Federation of Accountants (IFAC)guideline on Code of Ethics as applicable in Pakistan.

23(4) √

33.The external auditors have not been appointed to provide non-audit services andthe auditors have confirmed that they have observed applicable guideline issuedby IFAC in this regard.

23(5) √

34.The Company has complied with all the corporate and financial reportingrequirements of the Rules.

√

√ ** Securities and Exchange Commission of Pakistan has granted exemption for non compliance of this rule.

27.A formal and transaction procedure for fixing the remuneration packages ofindividual directors has been set in place. The annual report of the companycontains criteria and details of remuneration of each director.

19 √

28.The financial statements of the company were duly endorsed by the chiefexecutive and chief financial officer, before approval of the board.

20 √

Naim Farooqui

Chief Executive

11


Explanation for Non-Compliance with the Public Sector Companies(Corporate Governance) Rules, 2013

We confirm that all other material requirements envisaged in the Rules have been complied with [except for the following, toward whichreasonable progress is being made by the Company to seek compliance by the end of June 30, 2016]:

1. Rule 8 The Board has yet to decide on the criteria againstwhich the performance of the Board members can beevaluated.

The management is in the process of defininga Charter for the Board as well as amethodology for performance evaluation.

2. Rule 12 Being a new Company we are still in the process of

forming committee(s) as and when the need arises.

Noted for future compliance.

3. Rule 7 (b), (c),

(f)-(j), (l) and

(p)

Being a new Company we are still in the process of

forming policies where applicable.

Noted for future compliance.

12



Review Report to the Members on Statement of Compliance with thePublic Sector Companies (Corporate Government) Rules, 2013

S.No Reference Clause description

1. Rule 8 The Board has not carried out members, including

the Chairman and the Chief Executive, on the basis of a process based on specified

criteria.

performance evaluation of Board

2. Rule 12 Risk Management Committee was not formed.

3. Rule 7 (b), (c), (f)

(j), (l) and (p)Certain significant policies were not formulated by the Company.

Place: Karachi

Dated: August 20, 2015CHARTERED ACCOUNTANTS

Engagement Partner: Mr. Zulfikar Ali Causer

We have reviewed the Statement of Compliance with the Public Sector Companies (Corporate Governance) Rules 2013 (the Rules) for

the year ended June 30, 2015 prepared by the Board of Directors of Sindh Leasing Company Limited (the Company) to comply with

the provisions of the Rules. Based on our review, nothing has come to our attention which causes us to believe that the Statement of

Compliance does not appropriately reflect the Company’s compliance, in all material aspects with the Public Sector Companies

(Corporate Governance) Rules 2013, as applicable to the Company for the year ended June 30, 2015. Further, we highlight below

instances of non-compliance with the requirements of the Rules reflected in the paragraph 18, where these are stated in the

Statement.

2nd Floor, Block CLakson Square Building-1Sarwar Shaheed RoadKarachi.

13


Auditors’ Report to the Members

We have audited the annexed Balance Sheet of Sindh Leasing Company Limited, as at June 30, 2015 and the related Profit & loss account,Statement of Comprehensive Income, Cash Flow Statement and Statement of Changes in Equity together with the notes forming part thereof,for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge andbelief, were necessary for the purposes of our audit.

It is the responsibility of the company’s management to establish and maintain a system of internal control, and prepare and present the abovesaid statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Ourresponsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan andperform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includesassessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of abovesaid statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

a) in our opinion, proper books of accounts have been kept by the company as required by the Companies Ordinance, 1984;

b) in our opinion:

i) the Balance Sheet and together with the notes thereon have been drawn up in conformity with theCompanies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accountingpolicies 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 ofthe company;

c) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, ,Statement of Comprehensive Income, Cash Flow Statement and Statement of Changes in Equity together with the notes forming partthereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the CompaniesOrdinance, 1984, in the manner so required and respectively give a true and fair view of the state of the company’s affairs as at June30, 2015 and of the income, its comprehensive income its cash flows and changes in equity for the year then ended; and

d) In our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

The Financial Statements for the period from December 16, 2013 to June 30, 2014 were audited by another firm of chartered accountants whohad expressed an unqualified opinion thereon vide their report dated October 10, 2014.

profit & loss account

profit & loss account

Date: August 20, 2015

Place:Karachi

BDO Ibrahim & Co

Chartered Accountants

Engagement partner Mr. Zulfikar Ali Causer

2nd Floor, Block CLakson Square Building-1Sarwar Shaheed RoadKarachi.

14



BALANCE SHEETAS AT JUNE 30, 2015

___________ ___________________

Chairman Chief Executive

Note 2015 2014

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 5 32,369,754 34,096,369

Intangible assets 6 611,003 -

Net investment in finance leases 7 357,053,069 22,503,331

Long term loans and advances 8 13,431,219 499,998

Long term deposits 374,600 299,600

403,839,645 57,399,298

CURRENT ASSETS

Short term investments 9 347,669,705 900,000,000

Accrued markup 3,270,961 739,726

Current maturity of non-current asset 10 85,698,795 7,185,787

Prepayments 11 3,887,259 3,614,385

Taxation - net 12 5,686,994 -

Cash and bank balances 13 392,385,487 82,029,295

838,599,201 993,569,193

TOTAL ASSETS 1,242,438,846 1,050,968,491

EQUITY AND LIABILITIES

CAPITAL AND RESERVES

Authorized share capital

1,000,000,000 1,000,000,000

Issued, subscribed and paid-up share capital 14 1,000,000,000 1,000,000,000

Reserves 15 59,748,636 27,039,959

1,059,748,636 1,027,039,959

NON CURRENT LIABILITIES

Long term security deposits against leases 16 70,250,138 4,850,000

Deferred taxation 17 6,124,085 2,686,953

76,374,223 7,536,953

CURRENT LIABILITIES

Trade and other payables 18 10,506,040 16,263,768

Markup accrued on short term borrowings 809,947 -

Short term borrowings 19 95,000,000 -

Taxation - net 12 - 127,811

106,315,987 16,391,579

CONTINGENCIES AND COMMITMENTS 20

TOTAL EQUITY AND LIABILITIES 1,242,438,846 1,050,968,491

The annexed notes from 1 to 33 form an integral part of these financial statements.

(Rupees)

100,000,000 (2014: 100,000,000) ordinary shares of Rs. 10/- each

15


PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED JUNE 30, 2015

___________ ___________________


2015

Note

INCOME

Income from finance lease and auto loans 19,550,661 634,487

Return on investments and deposits 21 92,202,228 49,684,583

Other income 258,129 5,500

9 (11,389,931) -

100,621,087 50,324,570

EXPENSES

Finance cost 22 (845,268) (638)

Administrative expenses 23 (47,834,529) (10,554,723)

Profit before provision and taxation 51,941,290 39,769,209

Provision for potential lease losses (3,806,000) -

Provision for Workers' Welfare Fund (1,758,090) -

Profit before taxation 46,377,200 39,769,209

Taxation 24 (13,668,523) (12,729,250)

Profit for the year / period 32,708,677 27,039,959

Earnings per share - basic and diluted (Rupee) 25 0.33 0.27


For the period

from December 16,

2013 to June

30, 2014

(Rupees)

Unrealised loss on remeasurement of financial

assets “at fair value through profit & loss”

16



STATEMENT OF COMPREHENSIVE INCOME

___________ ___________________


2015

Profit for the year / period 32,708,677 27,039,959

Other comprehensive income - -

Total comprehensive income for the year / period 32,708,677 27,039,959


(Rupees)

FOR THE YEAR ENDED JUNE 30, 2015

For the period

from December 16,

2013 to June

30, 2014

17


CASH FLOW STATEMENT

___________ ___________________


2015

CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 46,377,200 39,769,209

Adjustment for:

Depreciation 5,256,450 445,723

Amortization 35,938 -

Provision for potential lease losses 3,806,000 -

Finance cost 845,268 638

11,389,931 -

21,333,587 446,361

Operating profit before working capital changes 67,710,787 40,215,570

Movement in working capital

Increase in operating assets

Net investment in finance lease (414,496,905) (29,689,118)

Long term loans and advances (15,303,062) (499,998)

Long term deposits (75,000) (299,600)

Prepayments (272,874) (3,614,385)

Accrued markup (2,531,235) (739,726)

(Decrease) / Increase in operating liabilities

Trade and other payables (5,757,728) 16,263,768

Long term security deposit against lease 65,400,138 4,850,000

(373,036,666) (13,729,059)

Cash (used in) / generated from operations (305,325,879) 26,486,511

Finance cost paid (35,321) (638)

Taxes paid (16,046,195) (9,914,486)

Net cash (used in) / generated from operating activities (321,407,395) 16,571,387

CASH FLOW FROM INVESTING ACTIVITIES

Capital expenditure incurred - own use and intangible assets (4,176,776) (34,542,092)

Short term investments - net 540,940,364 (900,000,000)

Net cash generated from / (used in) investing activities 536,763,588 (934,542,092)

536,763,588 (934,542,092)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of shares - 1,000,000,000

Short term running finance 95,000,000 -

Net cash generated from financing activities 95,000,000 1,000,000,000

Net increase in cash and cash equivalents 310,356,193 82,029,295

Cash and cash equivalents at beginning of the year / period 82,029,295 -

Cash and cash equivalents at end of the year / period 392,385,487 82,029,295

0 (0)


Unrealised loss on remeasurement of financial assets

“at fair value through profit and loss”

(Rupees)


For the period

from December 16,

2013 to June

30, 2014

18



STATEMENT OF CHANGES IN EQUITY

___________ ___________________


Capital reserve Revenue reserve

Transactions with owners:

Issue of share capital 1,000,000,000 - - 1,000,000,000

Total comprehensive income for the period - - 27,039,959 27,039,959

Transfer to statutory reserve - 5,407,992 (5,407,992) -

Balance as at June 30, 2014 1,000,000,000 5,407,992 21,631,967 1,027,039,959

---------------------------------------- Rupees----------------------------------------

Issued,

subscribed and

paid-up share

capital

TotalUn-

appropriated

profit

Statutory

reserve

Total comprehensive income for the year - - 32,708,677 32,708,677

Transfer to statutory reserve - 16,354,338 (16,354,338) -

Balance as at June 30, 2015 1,000,000,000 21,762,330 37,986,306 1,059,748,636



19


1. LEGAL STATUS AND NATURE OF BUSINESS

2. BASIS OF PREPARATION

2.1 Statement of compliance

2.2 Basis of Measurement

2.3 Functional and presentation currency

3 NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED ACCOUNTING STANDARDS

Sindh Leasing Company Limited (the Company) was incorporated in Pakistan on December 16, 2013 as an unlisted public companyunder the Companies Ordinance, 1984. The Company was granted licence on March 27, 2014 to carry out leasing business as a Non-Banking Finance Company (NBFC) under the Non-Banking Finance Companies (Established and Regulations) Rules, 2003. Theregistered 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.

JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned A and A-2 ratings to the Company for medium to long term and shortterm respectively on April 28, 2015.

These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan.Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by InternationalAccounting Standards Board (IASB) as are notified under the Companies Ordinance 1984, the Non-Banking Finance Companies(Establishment and Regulations) Rules, 2003 (the NBFC Rules), the Non-Banking Finance Companies and Notified EntitiesRegulations, 2008 (the NBFC Regulations) and the directives issued by the Securities and Exchange Commission of Pakistan (SECP).In case the requirements differ, the provisions of and directives issued under the NBFC Rules, the NBFC Regulations, CompaniesOrdinance, 1984 and the directives issued by SECP shall prevail.

These financial statements have been prepared under historical cost convention except for certain financial assets and financialliabilities 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.

These financial statements are presented in Pak Rupees which is the Company's functional currency and presentation currency.

3.1 Standards or interpretations that are effective in current year but not relevant to the Company

The Company has adopted the following accounting standards and interpretations which became effective during the year:


NOTES TO THE FINANCIAL STATEMENTS

IFRS 2

July 01, 2014

IFRS 3

July 01, 2014

IFRS 8

July 01, 2014

IFRS 10

IFRS 12

Share-based Payment - Amendments resulting from Annual Improvements 2010-2012 Cycle

(definition of 'vesting condition')

Business Combinations - Amendments resulting from Annual Improvements 2010-2012 Cycle

(accounting for contingent consideration) and 2011-2013 Cycle (scope exception for joint ventures)

Operating Segments - Amendments resulting from Annual Improvements 2010-2012 Cycle

(aggregation of segments, reconciliation of segment assets)

Consolidated Financial Statements - Amendments for investment entities

Disclosure of Interests in Other Entities - Amendments for investment entities

IFRIC 21 Levies January 01,

2014

(annual periods

beginning on

or after)

3.2 Amendments that are effective in current year but not relevant to the Company

The Company has adopted the amendments to the following accounting standards which became effective during the year:

January 01,

2014

January 01,

2014

20



IFRS 13

July 01, 2014

IAS 16

July 01, 2014

IAS 19

July 01, 2014

IAS 24

July 01, 2014

Jan 01, 2014

Jan 01, 2014

Jan 01, 2014

IAS 27

IAS 32

IAS 36

IAS 38

July 01, 2014

Jan 01, 2014

July 01, 2014

IAS 39

IAS 40

Related Party Disclosures - Amendments resulting from Annual Improvements 2010-2012

Cycle (management entities)

Separate Financial Statements - Amendments for investment entities

Financial Instruments - Presentation - Amendments relating to the offsetting of assets and liabilities

Impairment of Assets - Amendments arising from recoverable amount disclosures for non financial

assets

Intangible Assets - Amendments resulting from Annual Improvements 2010-2012

Cycle (proportionate restatement of accumulated depreciation on revaluation)

(annual periods

beginning on

or after)

Financial Instruments: Recognition and Measurement - Amendments for novations of derivatives

Investment Property - Amendments resulting from Annual Improvements 2011-2013

Cycle (interrelationship between IFRS 3 and IAS 40)

Fair Value Measurement - Amendments resulting from Annual Improvements 2011-2013

Cycle (scope of the portfolio exception in paragraph 52)

Property, Plant and Equipment - Amendments resulting from Annual Improvements 2010-2012

Cycle (proportionate restatement of accumulated depreciation on revaluation)

Employee Benefits - Amended to clarify the requirements that relate to how contributions from

employees or third parties that are linked to service should be attributed to periods of service

3.3 Amendments not yet effective

The following amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would beeffective from the dates mentioned below against the respective standard or interpretation:

IFRS 5

January 01,

2016

IFRS 7

January 01,

2016

IFRS 9

January 01,

2018

IFRS 10

January 01,

2016

Non-current Assets Held for Sale and Discontinued Operations: Amendments resulting from

September 2014 Annual Improvements to IFRSs

Financial Instruments: Disclosures - Amendments resulting from September 2014 Annual

Improvements to IFRSs (Servicing Contracts and Applicability of the offsetting amendments in

condensed interim financial statements)

Consolidated Financial Statements - Amendments regarding the sale or contribution of assets

between an investor and its associate or joint venture

Financial Instruments - Finalised version, incorporating requirements for classification and

measurement, impairment, general hedge accounting and derecognition.



21


IFRS 10

January 01,

2016

IFRS 11

January 01,

2016

IFRS 12

January 01,

2015

IAS 1 January 01,

2016

IAS 16

January 01,

2016

Joint Arrangements - Amendments regarding the accounting for acquisitions of an interest in a joint

operation

Disclosure of Interests in Other Entities - Amendments regarding the application of the

consolidation exception

Consolidated Financial Statements - Amendments regarding the application of the consolidation

exception

Presentation of Financial Statements - Amendments resulting from the disclosure initiative

Property, Plant and Equipment - Amendments regarding the clarification of acceptable methods of

depreciation and amortisation and amendments bringing bearer plants into the scope of IAS 16

(annual periods

beginning on

or after)

IAS 19 January 01,

2016

IAS 27

January 01,

2016

IAS 28

January 01,

2016

IAS 28

January 01,

2016

IAS 34

January 01,

2016

IAS 38

January 01,

2016

IAS 39 January 01,

2018

IAS 41 January 01,

2016

Investments in Associates and Joint Ventures - Amendments regarding the application of the

consolidation exception

Interim Financial Reporting - Amendments resulting from September 2014 Annual Improvements

to IFRSs

Intangible Assets - Amendments regarding the clarification of acceptable methods of depreciation

and amortisation

Employee Benefits - Amendments resulting from September 2014 Annual Improvements to IFRSs

Separate Financial Statements (as amended in 2011) -Amendments reinstating the equity method

as an accounting option for investments in subsidiaries, joint ventures and associates in an

entity's separate financial statements

Investments in Associates and Joint Ventures - Amendments regarding the sale or contribution of

assets between an investor and its associate or joint venture

Financial Instruments: Recognition and Measurement: Amendments to permit an entity to elect to

continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the

interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS

9 is applied, and to extend the fair value option to certain contracts that meet the 'own use' scope

exception

Agriculture - Amendments bringing bearer plants into the scope of IAS 16



22



3.4 Standards or interpretations not yet effective

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Property, plant and equipments

Owned assets

Capital work-in-progress

4.2 Intangibles

4.3 Net investment in finance leases

4.4 Provision against non performing leases

4.5 Loans and advances

The following new standards and interpretations have been issued by the International Accounting Standards Board (IASB), whichhave not been adopted locally by the Securities and Exchange Commission of Pakistan:

IFRS 1 First Time Adoption of International Financial Reporting Standards

IFRS 9 Financial Instruments

IFRS 14 Regulatory Deferral Accounts

IFRS 15 Revenue from Contracts with Customers

The Company expects that the adoption of the above amendments and interpretations of the standards will not have any materialimpact and therefore will not affect the Company's financial statements in the period of initial application.

The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have beenconsistently applied to all the periods presented unless or otherwise stated.

These are stated at cost less accumulated depreciation and impairment, if any. Depreciation is charged to income over the useful life ofthe asset on a systematic basis, by applying the straight line method at the rates specified in note 5 to the financial statements. Inrespect of additions and disposal of assets during the period, depreciation is charged from the date of acquisition and up to the datepreceding the disposal respectively.

Maintenance and normal repairs are charged to profit and loss account as and when incurred. Major renewals and improvements arecapitalized and assets so replaced, if any, are retired.

An item of tangible fixed assets is de-recognized upon disposal or when no future economic benefits are expected from its use ordisposal. Gains or losses on disposals of fixed assets, if any, are included in income or expense respectively.

These are stated at cost less accumulated impairment losses, if any and represent expenditure in connection with specific assetsincurred during the construction period. These are transferred to specific assets as and when assets are available for use / sale.

These are stated at cost less accumulated amortization and impairment, if any. Amortization is charged to income over the useful life ofthe asset on a systematic basis by applying the straight line method.

The cost of intangible asset comprises of its purchase price and any directly attributable expenditure incurred in preparing the asset forits intended use.

Leases in which the Company transfers substantially all the risks and rewards incidental to the ownership of an asset to the lessees areclassified as finance leases. A receivable is recognized at an amount equal to the present value of the minimum lease payments underthe lease agreement, including guaranteed residual value and unamortized initial direct cost which are included in the financialstatements as "net investment in finance leases".

Provision against non performing leases is maintained at a level which, in the judgment of management, is adequate to provide forlosses on lease portfolio which can be reasonably anticipated. The provision is increased by additional charge to income and isdecreased by charge offs, net of recoveries.

Calculating provision against non performing leases is subject to numerous judgments and estimates. In evaluating the adequacy ofprovision, management considers various factors, including the requirements of the NBFC Regulations, the nature and characteristicsof the obligor, current economic conditions, credit concentrations or deterioration in pledged collateral, historical loss experience anddelinquencies. Lease receivables are charged off, when in the opinion of management, the likelihood of any future collection is believedto be minimal.

These are stated at cost, which is the fair value of consideration given, less provision for doubtful receivables.



23


4.6 Investments

a) Financial assets at fair value through profit or loss

b) Available for sale

4.6.3 Basis of valuation of investments

4.7 Impairment

4.8 Taxation

4.8.1 Current

4.8.2 Deferred

4.6.1 All investments are initially recognised at cost, being the fair value of the consideration given including the transaction cost associatedwith the investment, except in case of held for trading investments, in which case the transaction costs are charged to the incomestatement.

4.6.2 The Company classifies its investments in the following categories:

This category has two sub-categories, namely; financial instruments classified as held for trading, and those designated at fair valuethrough profit or loss upon initial recognition:

i) Investments which are acquired principally for the purposes of generating profit from short term fluctuation in price or are part of theportfolio in which there is recent actual pattern of short term profit taking are classified as held for trading.

ii) Investments designated at fair value through profit or loss upon initial recognition include those group of financial assets which aremanaged and their performance evaluated on a fair value basis, in accordance with the investment strategy.

After initial recognition, above investments are remeasured at fair value determined with reference to the period-end quoted rates.Gains or losses on re-measurement of these investments are recognised in income statement.

Investments which do not fall under the above categories and which may be sold in response to the need for liquidity or changes inmarket rates are classified as available-for-sale. After initial recognition, investments classified as available-for-sale are remeasured atfair value, determined with reference to the year-end quoted rates. Gains or losses on remeasurement of these investments arerecognised directly in the equity until the investment is sold, collected or otherwise disposed-off, or until the investment is determined tobe impaired, at which time the cumulative gain or loss previously reported in equity is included in income.

Fair value of the investments in units of mutual funds are determined by reference to Net Asset Value (NAV) rate notified by the MutualFund Association of Pakistan (MUFAP) as of the period end.

All regular way purchases and sales of investments are recognised on the trade date i.e. the date the Company commits to purchase /sell the investments.

The carrying amount of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. Ifsuch indication exists then the asset's recoverable amount is estimated. Where the carrying value exceeds the estimated recoverableamount, assets are written down to their recoverable amount. The resulting impairment loss is taken to profit and loss account.

Tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss account except to the extent that itrelates to items recognized directly in equity or in other comprehensive income, in which case it is recognized in equity or othercomprehensive income.

The charge for current taxation is based on taxable income at the current rate of taxation after taking into account applicable tax credit,rebates and exemption available if any or minimum taxation at the rate of one percent of the turnover whichever is higher. However, forincome covered under final tax regime, taxation is based on applicable tax rates under such regime.

Deferred tax is recognized using the balance sheet liability method on all temporary differences between the carrying amount of assetsand liabilities used for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the ratesthat are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted orsubstantively enacted by the reporting date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which theasset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probablethat the related tax benefit will be realised. Deferred tax is charged or credited to the profit and loss account except deferred tax, if any,on revaluation of investments which is recognized in other comprehensive income.



24



4.9 Revenue recognition

4.9.1 Finance leases

4.9.2 Income on non-performing lease and loan receivables

4.9.3 Interest income

4.9.4 Return on investment

4.10 Financial instruments

4.11 Offsetting

4.12 Repossessed leased assets

4.13 Provisions

4.14 Cash and cash equivalents

4.15 Transactions with related parties

4.16 Earnings per share

The Company follows the 'effective interest method' in accounting for recognition of finance lease. The total unearned finance incomei.e. the excess of aggregate installment contract receivables plus residual value over the cost of the leased asset is deferred and thenamortized over the term of the lease, so as to produce a systematic return on the net investment in finance leases.

Processing, front end and commitment fees and commission are recognized on accrual basis.

Late payment charges are recognized as income when realized.

Revenue from finance leases is not accrued when rent is past due by ninety days or more. Income on non-performing loan and leasereceivables is recognized on receipt basis in accordance with the requirements of the NBFC Regulations.

Interest income is recognized using effective interest method.

Profit on bank account is recognized on accrual basis.

Dividend income from investments is recognised when the Company’s right to receive the dividend is established.

Gain / loss on sale of investments is taken to income in the period in which it arises.

All financial assets and liabilities are recognized at the time when the Company becomes a party to the contractual provisions of theinstrument. All financial assets are derecognized at the time when the Company loses control of the contractual rights that comprise thefinancial assets. All financial liabilities are derecognized at the time when they are extinguished, i.e. when the obligation specified in thecontract is discharged, cancelled or expires. Any gain or loss on recognition of the financial assets and financial liabilities is taken toprofit and loss account.

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when there is a legallyenforceable right to set off the recognized amounts and the Company intends to either settle on a net basis or to realise the asset andsettle liability.

These are the assets acquired in settlement of non-performing lease finance. These are stated at lower of the original cost of therelated asset and net realizable value of the asset repossessed. Gain or loss on disposal of such assets is taken to income currently.

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probablethat an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.

Cash and cash equivalents comprises of cash balances and bank deposits. For the purpose of cash flow statements, cash and cashequivalents carried in the balance sheet comprises of cash in hand, balance with bank in daily product accounts and stamp papers inhand.

Transactions with related parties are carried out at arm's length prices.

The Company presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the profitor loss attributable to ordinary share holders of the Company by the weighted average number of ordinary shares outstanding duringthe year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted averagenumber of ordinary shares outstanding for the effect of all dilutive potential ordinary shares, if any.



25


4.17 Proposed dividend and transfer between reserves

4.18 Segment reporting

4.19 Significant accounting judgments and critical accounting estimates / assumptions

Dividends and appropriations to reserves, except appropriations which are required by law, made subsequent to the balance sheetdate are considered as non-adjusting events and are recorded in the financial statements in accordance with the requirements ofInternational Accounting Standard (IAS) 10, ‘Events after the Balance Sheet Date’ in the year in which they are approved / transfers aremade.

Segment results that are reported to the Company's CEO include items directly attributable to a segment as well as those that can beallocated on a reasonable basis. Unallocated items, if any, comprise corporate assets and tax assets and liabilities. Management hasdetermined that the Company has a single reportable segment and therefore it has only presented entity wide disclosures.

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptionsare based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result ofwhich forms the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from othersources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized in theperiod in which the estimate is revised if the revision affects only that period, or in period of revision and future periods if the revisionaffects both current and future periods. The estimates and judgments that have a significant effect on the financial statements are inrespect of the following:

Note

Determining the residual values and useful lives of tangible fixed assets 4.1 & 5

Provision against non performing leases 4.3, 4.4 & 7

Recognition of taxation and deferred tax 4.8 & 17

5 PROPERTY, PLANT AND EQUIPMENTS

Written down

As at Additions / Adjustment / As at As at For the As at

01-07-2014 transfer Reclassification 30-06-2015 % 01-07-2014 year 30-06-2015 30-06-2015

Owned

Leasehold improvements 18,427,466 - - 18,427,466 10 131,264 401,235 532,499 17,894,967

Furniture and fixtures 3,856,628 180,851 - 4,037,479 10 18,994 1,546,514 1,565,508 2,471,971

Electrical equipments 7,345,990 535,699 4,017 7,885,706 20 80,504 418,172 498,676 7,387,030

Computer equipments 513,738 1,813,194 (253,926) 2,073,006 33.33 9,871 1,025,487 1,035,358 1,037,648

Vehicles 4,398,270 1,250,000 - 5,648,270 20 205,090 1,865,042 2,070,132 3,578,138

Total Rupees - 2015 34,542,092 3,779,744 (249,909) 38,071,927 445,723 5,256,450 5,702,173 32,369,754

2015

ParticularsC o s t

RateD e p r e c i a t i o n



26



Written down

As at Additions / Adjustment / As at As at For the As at

16-12-2013 transfer Reclassification 30-06-2014 % 16-12-2013 year 30-06-2014 30-06-2014

Owned

Leasehold improvements - 18,427,466 - 18,427,466 10 - 131,264 131,264 18,296,202

Furniture and fixtures - 3,856,628 - 3,856,628 10 - 18,994 18,994 3,837,634

Electrical equipments - 7,345,990 - 7,345,990 20 - 80,504 80,504 7,265,486

Computer equipments - 513,738 -

-

513,738 33.33 - 9,871 9,871 503,867

Vehicles - 4,398,270 4,398,270 20 - 205,090 205,090 4,193,180

Total Rupees - 2014 - 34,542,092 - 34,542,092 - 445,723 445,723 34,096,369

ParticularsC o s t

RateD e p r e c i a t i o n

2014

2015 2014

Note Rupees Rupees

6. INTANGIBLE ASSETS

Software licenses 6.1 611,003 -

6.1 Net carrying value basis

Additions (at cost) 646,941 -

Amortization charge (35,938) -Closing net book value 611,003 -

Gross carrying value basis

Cost 646,941 -

Accumulated amortization (35,938) -Net book value 611,003 -

33.33 -

7. NET INVESTMENT IN FINANCE LEASES

Lease rentals receivable 465,589,270 30,945,740

Add: Residual value of leased assets 70,250,138 4,850,000

Gross investment in finance leases 535,839,408 35,795,740

Less: Unearned finance lease income (91,653,385) (6,106,622)

Net investment in finance leases 444,186,023 29,689,118

Less: Current maturity of net investment in finance leases (83,326,954) (7,185,787)

360,859,069 22,503,331

Provision for potential lease losses 7.1 (3,806,000) -

357,053,069 22,503,331

Amortization rate (% per annum)



7.1 This represents provision against potential lease losses booked on subjective evaluation of the lease portfolio.

27


7.2 Details of investment in finance lease

2015 2014 2015 2014Rupees Rupees Rupees Rupees

Less then one year 121,257,059 7,185,787 83,326,954 7,185,787

One to five years 414,582,349 28,609,953 360,859,069 22,503,331

535,839,408 35,795,740 444,186,023 29,689,118

finance lease

Net investments in

finance lease

Gross investments in

7.3 The leases executed by the Company is for a term of 3 to 5 years. Security deposit varies as per the requirement of the lessee. TheCompany requires the lessee to insure the leased asset in favour of the Company. Additional surcharge is charged on delayed rentals.

2015 2014

Rupees Rupees

8. LONG TERM LOANS AND ADVANCES

Considered good

Loans to employees 8.1 7,113,061 499,998

Advance to vendor 8.2 600,000 -

Auto finance loan 8.3 8,089,999 -

15,803,060 499,998

Loans to employees 1,061,655 -

Auto finance loan 1,310,186 -

2,371,841 -

13,431,219 499,998

Less: Current portion shown under current assets

8.1 Loans to employees

2015 2014 2015 2014

Rupees Rupees Rupees Rupees

499,998 - - -

- 600,000 7,838,638 -

(200,004) (100,002) (1,025,571) -

299,994 499,998 6,813,067 -

Executives

Balance at the end of

the year / period

Chief Executive

Balance at the

beginning of the year / period

Disbursements made

during the year / period

Repayments received

during the year / period

These represent house loans and car loans provided by the Company to its executives staff as per service rules. House loans arerepayable in a maximum of 300 monthly installments and carry mark-up at the rate of 6 percent per annum. Job entitled car loans arerepayable in 60 monthly installments and carry mark-up at the rate of zero percent.

8.2 This represents advance given to vendor for purchase of Almanac (accounting software).

8.3 This represents vehicle financing facility provided to customers on markup basis. The mark-up on these finances ranges between10.00% and 12.30% (2014: nil) per annum. These finances are repayable within a period of 5 years (2014: nil) and are secured againstfirst exclusive charge by way of hypothecation of the motor vehicles and personal guarantee of the customer.



28



2015 2014

Note Rupees Rupees

9. SHORT TERM INVESTMENTS

Held to maturity

Certificate of investments 9.1 100,000,000 -

Term deposit receipts- United Bank Limited 9.2 100,000,000 -

- Sindh Bank Limited - 900,000,000

200,000,000 900,000,000

At fair value through profit and loss

Units of open ended mutual funds 9.3 147,669,705 -347,669,705 900,000,000

9.1

Pair Investment Company Limited 9.1.1 100,000,000 -

Certificate of Investment

9.1.1 This represents investment made by the Company in certificate of investments for a period of three months and having maturity date ofJuly 21, 2015. This investment carries mark-up at the rate of 8.5% per annum.

9.2 Term deposit receipts

Sindh Bank Limited - 900,000,000

United Bank limited 9.2.1 100,000,000 -

100,000,000 900,000,000

9.2.1 This represents investment made by the Company in Term Deposit Receipts for a period of three months and having maturity date ofJuly 13, 2015. This investment carries mark-up at the rate of 7.2% per annum.

2015 2014 2015 2014 2015 2014

NIT - Government Bond Fund

(9,649,059 units (2014: nil) 109,059,636 - 97,669,705 - (11,389,931) -

(4,983,852 units (2014: nil) 50,000,000 - 50,000,000 - - -

159,059,636 - 147,669,705 - (11,389,931) -

ABL - Government Securities

Fund - B

Cost Market value Unrealised loss

---------------------------------------------------------------------(Rupees)------------------------------------------------------------------

9.3 Units of open ended mutual funds

2015 2014

Note Rupees Rupees

10. CURRENT MATURITY OF NON-CURRENT ASSETS

Net investment in finance leases 7 83,326,954 7,185,787

Long term loans and advances 8 2,371,841 -

85,698,795 7,185,787

11. PREPAYMENTS

560,481 3,614,385

3,186,153 -

140,625 -

3,887,259 3,614,385

12. TAXATION - NET

Advance income tax 25,897,663 9,914,486

Less: Provision for taxation (20,210,669) (10,042,297)

5,686,994 (127,811)

Prepaid insurance

Prepaid rent

Prepaid membership fee



29


13. CASH AND BANK BALANCES

Cash and other equivalent

Cash in hand 17,255 -

Stamp papers in hand 32,000 16,830

49,255 16,830

Cash at bank

Current account 76,851 -

Saving account 13.1 392,259,381 82,012,465

392,336,232 82,012,465

392,385,487 82,029,295

2015 2014

Note Rupees Rupees

13.1 This represents daily product account (saving account) maintained with Sindh Bank Limited carrying mark-up at the rate of 6.75%(2014: 9.5%) per annum receivable on monthly basis.

14. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL

2015 2014

100,000,000 100,000,000

1,000,000,000 1,000,000,000

(Number of shares)

Ordinary shares of Rs. 10

each fully paid in cash

14.1 The Government of Sindh, held 99,999,993 shares as at June 30, 2015. The remaining shares are held by the Directors of the SindhLeasing Company Limited in nominee capacity.

2015 2014

Note Rupees Rupees

15. RESERVES

Capital reserve

15.1 21,762,330 5,407,992

Revenue reserve

37,986,306 21,631,967

59,748,636 27,039,959

Statutory reserve

Un-appropriated profit

15.1 This represents reserve created in compliance with Non-Banking Finance Companies and Notified Entities Regulation, 2008 (theregulations). In accordance with the regulations, the Company is required to transfer atleast 20% of its profit after tax to a statutoryreserve. In order to comply with this requirement, the Company has transferred an amount of Rs. 16.354 million, representing 50% ofprofit after tax, (2014: Rs. 5.408 million) to the statutory reserve as approved in the Board of Directors meeting held on August 20,2015.

16.

Lease deposits 16.1 70,250,138 4,850,000

LONG TERM SECURITY DEPOSITS AGAINST

LEASES

16.1 These represent deposit received from lessee under finance lease and are adjustable against the residual value of the asset leased atthe expiry of respective lease term.

17.

Deferred taxation 17.1 6,124,085 2,686,953

6,124,085 2,686,953

DEFERRED TAXATION



30



17.1 The net balance for deferred taxation is in respect of following temporary differences:

Tax effect of:

2,909,088 2,988,544

30,597,886 (218,091)

(25,846,997) -

(1,535,892) (83,500)

6,124,085 2,686,953

Carry forward tax loss

Others

Difference between accounting book value and tax

base of property, plant and equipment

Difference in net book value of net investment in

finance lease

2015 2014

Note Rupees Rupees

18. TRADE AND OTHER PAYABLES

Payable to vendors 18.1 3,829,512 15,396,299

Provident fund payable - 601,452

EOBI payable - 12,987

Workers' Welfare Fund 18.2 1,758,090 -

Bonus payable 2,529,286 -

Others 2,389,152 253,030

10,506,040 16,263,768

18.1 This includes amounts payable to different vendors against the renovation and purchase of new office building, equipments, furnituresand fixtures.

18.2 This includes provision in amounting to Rs. 0.759 million in respect of period from December 16, 2013 to June 30, 2014.

19. SHORT TERM BORROWINGS

Secured

From banking company 19.1 95,000,000 -

95,000,000 -

19.1 This facility is secured against lien over deposit with UBL with 5% margin. The facility carries markup at three months KIBOR plus 0.5%per annum. Total sanctioned limit is Rs. 500.00 million.

A letter of comfort issued on behalf of a client for opening letter of credit amounting to Rs. 14.00 million.

Finance lease contracts committed but not executed at the balance sheet date amounted to Rs. 164 million.

20. CONTINGENCIES AND COMMITMENTS

20.1 Contingencies

20.2 Commitments



31


For the period

from December

16, 2013 to

June 30,

2015 2014

Rupees Rupees

21. RETURN ON INVESTMENTS AND DEPOSITS

From financial assets

Interest / markup on:

Term deposit receipts 44,630,136 44,876,712

PLS accounts 23,920,984 4,807,871

Fund placements 11,571,593 -

Dividend income 12,079,515 -

92,202,228 49,684,583

22. FINANCE COST

Mark up on short term borrowings 809,947 -

Bank charges 35,321 638

845,268 638

23. ADMINISTRATIVE EXPENSES

Salaries and benefits 23.1 28,845,765 7,970,775

Directors' fee 465,000 120,000

Rent, rates and taxes 4,487,458 607,097

Communication and utility expenses 371,509 39,250

Travelling and conveyance 2,484,502 115,461

Repair and maintenance 995,328 -

Office and computer accessories supplies - 135,395

Insurance expense 1,154,464 19,296

Auditors' remuneration 23.2 130,450 60,000

Advertising expense 92,946 245,689

Depreciation 5,256,450 445,723

Amortization 35,938 -

Legal and professional charges 1,983,079 99,255

Printing and stationary 556,200 44,461

Brokerage for premises - 229,600

Others 975,440 422,721

47,834,529 10,554,723

23.1 This amount includes Rs. 1.874 million (2014: 0.554 million) in respect of employees’ retirement benefits.

For the period

from December

16, 2013 to

June 30,

2015 2014

Note Rupees Rupees23.2 Auditors' remuneration

Audit fee 125,000 50,000

Out of pocket expenses 5,450 10,000

130,450 60,000

24. TAXATION

Current 24.1 10,168,372 10,042,297

Prior 63,019

Deferred 3,437,132 2,686,953

13,668,523 12,729,250



24.1 The income tax for the year ended June 30, 2015 has been charged at the rate applicable as per the provision of Income TaxOrdinance, 2001 (the Ordinance).

32



24.2

Accounting profit for the current year 46,377,200 39,769,209

Tax on income @ 33% (2014: 34% ) 15,304,476 13,521,531

Relationship between tax expense and accounting profit

Tax effect of difference of accounting and tax

75,056 (297,976)

Tax effect of lease income and rentals 20,844,961 (433,817)

5,027,136 2,530

Effect of final tax under presumptive tax regime (1,799,128) -

Tax effect of carry forward tax losses (25,846,997) -

Effect of prior year adjustment 63,019 (63,019)

13,668,523 12,729,250

base of owned assets

Tax effect of expenses that are not deductible

determining taxable profit

For the period

from December

16, 2013 to

June 30,

2015 2014

Note Rupees Rupees

25. EARNINGS PER SHARE - BASIC AND DILUTED

Profit for the year / period - Rupees 32,708,677 27,039,959

Weighted average number of ordinary shares 100,000,000 100,000,000

Earnings per share - basic and diluted - Rupee 0.33 0.27

There is no dilution effect on the basic earning per share as the Company has no convertible, dilutive potential ordinary sharesoutstanding as at the year / period end.

The aggregate amount charged in the financial statements for the period in respect of the remuneration and benefits to the ChiefExecutive, Directors and Executives are as follows:

26. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

Chief

ExecutiveDirectors Executives Total

Fee - 465,000 - 465,000

Managerial remuneration 7,084,854 - 3,596,773 10,681,627

Perquisites and allowances 4,605,146 - 3,884,335 8,489,481

Retirement benefit 1,113,132 - 447,203 1,560,335

12,803,132 465,000 7,928,311 21,196,443

Number of persons 1 5 5 11

Chief

ExecutiveDirectors Executives Total

Fee - 120,000 - 120,000

Managerial remuneration 3,036,366 - 525,551 3,561,917

Perquisites and allowances 2,470,516 - 501,963 2,972,479

Retirement benefit 553,756 - - 553,756

6,060,638 120,000 1,027,514 7,208,152

Number of persons 1 3 3 7

2015

Rupees

Rupees

2014



33


Director's remuneration / fee represents remuneration paid for attending Board and sub-committee meetings.

The Chief Executive and certain employees at the executive level are also provided with the Company owned and maintained car andother benefits in accordance with their entitlement as per rules of the Company.

The Company has a related party relationship with its Associated Company, staff retirement funds and key management personnel.

The details of significant related party transactions during the year and balances as at June 30, 2015 are as follows:

27. RELATED PARTY TRANSACTIONS

Associated

Company

Other

related

Key

managementpersonnel

Directors

Profit on term deposit 44,630,136 - - -Profit on daily product account 23,916,789 - - -Remuneration paid - - 11,690,000 -Retirement benefits - - 1,874,303 -Directors' meeting fees - - - 465,000

Balances

Daily product account 391,489,464 - - -

Associated

Company

Other

related

party

Key

management

personnel

Directors

Profit on term deposit 44,876,712 - - -Profit on daily product account 4,807,871 - - -Remuneration paid - - 6,534,406 -Retirement benefits - - 553,746 -Directors' meeting fees 120,000

- 3,391,150 - -Balances

Term deposit receipt 900,000,000 - - -Daily product account 82,012,465 - - -Accrued mark-up on term deposit

739,726 - - -

Payment made on behalf

-----------------------For the year ended June 30, 2015 --------------

--------For the period from December 16, 2013 to June 30, 2014--------

Transactions during the year

-----------------------------------Rupees-----------------------------------

-----------------------------------Rupees-----------------------------------

Transactions during the period

Sindh Insurance CompanyLimited and Sindh ModarabaManagement Company

receipt

28. FINANCIAL RISK MANAGEMENT

28.1 Financial risk factors

28.2 Credit risk

The Company’s activities expose it to a variety of financial risks from the use of financial instruments, including:

- Credit risk- Liquidity risk- Market risk

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.The Board is also responsible for developing and monitoring the Company’s risk management policies.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractualobligation, and arises principally from the Company’s receivables from customers and investment securities. The Company hasestablished procedures to manage credit exposure including credit approvals, credit limits, collateral and guarantee requirements.These procedures incorporate both internal guidelines and requirements of the NBFC Rules and the NBFC Regulations. The Companyalso manages risk through credit department which evaluates customers’ credit worthiness and obtains adequate securities whereapplicable.



34



28.2.1 Exposure to credit risk 2015 2014

Rupees Rupees

The maximum exposure to credit risk at the reporting date is:

Net investment in finance leases 357,053,069 22,503,331

Long term loans and advances 13,431,219 499,998

Long term deposits 374,600 299,600

Short term investments 347,669,705 900,000,000

Accrued markup 3,270,961 739,726

Current maturity of non-current asset 85,698,795 7,185,787

Cash at bank 392,336,232 82,012,465

1,199,834,581 1,013,240,907

The aging of net investment in finance lease at the reporting date is as follows:

Past due but not impaired:

up to 29 days - -

30 to 89 days - -

Past due and impaired

90 days to 1 year - -

1 year to 2 years - -

2 years to 3 years - -

more than 3 years - -

Impaired but not past due 3,806,000 -

Neither past due nor impaired 440,380,023 29,689,118

Total amount 444,186,023 29,689,118

28.2.2 Concentration of credit risk

Concentration of credit risk arises when a number of counterparties are engaged in similar business activities, or activities in the samegeographical region, or have similar economic features that would cause their ability to meet contractual obligations to be similarlyaffected by changes in economic, political or other conditions. The Company manages credit risk and its concentration exposurethrough diversification of activities to avoid undue concentration of risks. For this purpose, the Company has established exposurelimits for individuals and industrial sectors.

The Company is exposed to credit risk from its operating activities (primarily for net investments in leases) and from its financingactivities, including bank account and other financial instruments. The exposure to banks is managed by dealing with variety of majorbanks and monitoring exposure limits on continuous basis. The ratings of banks ranges from A+ to AA+.

Details of the industrial sector analysis of lease portfolio are as follows:

Percentage Gross amount

2015 2015% Rupees

Sector

Oil and petroleum marketing 34.70% 158,054,940

Sugar 16.60% 75,633,624

Cinematography theatre 13.69% 62,376,769

Transport 12.44% 56,643,290

Textile 7.92% 36,053,305

Media 6.11% 27,823,644

Packaging 2.28% 10,403,228

Energy 1.60% 7,285,514

Miscellaneous 4.66% 21,214,374

100% 455,488,688

Financial assets



35


28.3 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. Liquidity risk arisesbecause of the possibility that the Company could be required to pay its liabilities earlier than expected or difficulty in raising funds tomeet commitments associated with financial liabilities as they fall due. The Company's approach to managing liquidity is to ensure, asfar as possible, that it will always have sufficient liquidity to meet its liabilities when they become due, under both normal and stressedconditions, without incurring unacceptable losses or risking damage to the Company's reputation. The following are the contractualmaturities of financial liabilities.

Trade and other payables 10,506,040 10,506,040 - - -

809,947 809,947 - - -

Short term borrowings 95,000,000 95,000,000 - - -

June 30, 2015 106,315,987 106,315,987 - - -

June 30, 2014 16,263,763 16,263,763 - - -

Over one year

to five years

Over five

yearsFinancial liabilities Total

Over three

months to

one year

Up to three

months

--------------------------------------- Rupees ---------------------------------------

June 30, 2015

Accrued interest on short

term borrowings

28.4 Market Risk

28.4.1 Interest rate risk

Market risk is the risk that changes in market price, such as foreign exchange rates, interest rates and equity prices will affect theCompany’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage andcontrol market risk exposure within acceptable parameters, while optimizing the return.

Market risk comprise of three types of risk : interest rate risk, currency risk and other price risk, such as equity risk.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in marketinterest rates. Currently the Company's interest rate exposure arises on net investment in finance lease, term deposit receipts withbanks, certificate of investments and bank balances in profit and loss sharing account. The Company monitors the interest rateenvironment on a regular basis and may change the mix of its portfolio to enhance the earning potential of the Company subject to theabove defined guidelines. Other risk management procedures are the same as those mentioned in the credit risk management.

28.4.1.1 Details of the interest rate profile of the Company's interest bearing financial assets and financial liabilities were as follows:

2015 2014 2015 2014

Rupees Rupees

Fixed rate instruments

Financial assets

8.5 - 100,000,000 -

Term deposit receipts 7.2 10 100,000,000 900,000,000

Bank balances 6.75 9.5 392,336,232 82,012,465

Loans to employees 6 6 7,113,061 499,998

592,336,232 982,012,465

Variable rate instruments

Financial assets

10 to 14.49 16 444,186,023 29,689,118

10 to 12.3 - 8,089,999 -

452,276,022 29,689,118

Financial liabilities

Short term running finance 7.59 - 95,000,000 -

Effective rate

(In percent)

Carrying amount

Net investment in finance lease

Auto finance loan

Certificate of Investment



36



28.4.2 Cash flow sensitivity analysis for variable rate instruments

28.4.3 Foreign exchange risk

28.4.4 Other price risk

28.5 Fair value of financial instruments

A change of 100 basis points in interest rates at the year end, unit holder fund would have increased / (decreased) by Rs. 2.387 (2014:Rs. 0.190) million. The analysis assumes that all other variables remain constant.

Foreign exchange risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. TheCompany is not exposed to foreign exchange risk at the year end as there is no financial instrument in foreign currency.

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in marketprices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to theindividual financial instruments or it’s issuer, or factors affecting all similar financial instruments traded in the market.

Other price risk arises from the Company’s investment in units of mutual funds and ordinary shares of listed companies. To manage itsprice risk arising from aforesaid investments, the Company diversifies its portfolio and continuously monitors developments in equitymarkets. In addition, the Company actively monitors the key factors that affect stock price movement.

A 10% increase / decrease in redemption prices at year end would have increased / decreased the Company’s profit in caseof investments classified as ‘at fair value through profit and loss’ by Rs. 14.767 million (2014: nil).

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties at an armslength transaction other than in a forced or liquidation sale. The carrying values of all financial assets and liabilities reflected in thefinancial statements approximate their fair values.

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset orliability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Fair value measurements using inputs for the asset or liability that are not based on observable market data (i.e. unobservableinputs).

As at June 30, 2015, the Company held the following financial instruments measured at fair value:

Level 1 Level 2 Level 3 Total

147,669,705 - - 147,669,705

147,669,705 - - 147,669,705

-------------------------- Rupees --------------------------

Investment in units of mutual funds

28.6 Financial instruments by category

Financial assets

At fair value through profit and loss

147,669,705 -

Held to maturity

200,000,000 900,000,000

Loans and receivables at amortised cost

444,186,023 29,689,118

15,203,060 499,998

374,600 299,600

3,270,961 739,726

392,385,487 82,029,295

Financial liabilities

Financial liabilities at amortised cost

8,747,950 15,649,329

95,000,000 -

Long term loans and advances

Short-term borrowings

Accrued markup

Cash and bank balances

Trade and other payables

Short term investments

Short term investments

Net investment in finance leases

Long term deposits



37


29. CAPITAL RISK MANAGEMENT

30. NUMBER OF EMPLOYEES

31. CORRESPONDING FIGURES

The objective of the Company when managing capital is to safeguard its ability to continue as a going concern so that it can continue toprovide returns for shareholders and benefits for other stakeholders, and to maintain a strong capital base to support the sustaineddevelopment of its business.

The Company manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes ineconomic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to itsshareholders or issue new shares. The Company is in compliance with the minimum capital requirement of NBFC Regulations.

The total number of employees as at year end were 24 (2014: 14).

Corresponding figures have been rearranged and reclassified, wherever necessary for the purpose of comparison. Significantreclassifications for purposes of correct presentation, are as under:

Note Rupees

Advances and prepayments 11 799,598

8 499,998

Long term deposits 299,600

Long term loans and

advances

Reclassification from

components

Reclassification to

components

32. DATE OF AUTHORIZATION FOR ISSUE

33. GENERAL

These financial statements were authorized for issue by the Board of directors on August 20, 2015.

Figures have been rounded off to the nearest rupee.

___________ ___________________




38



I/We __________________________________________________________________________________________________________

of ____________________________________________________________________________________________________________

being member(s) of Sindh Leasing Company Limited holding ______________________________________________________________

of ______________________________________________ who is/are also member(s) of Sindh Leasing Company Limited

as my/our Proxy in my/our absence to attend and vote for me/us and on my/our behalf at the 2 Annual General Meeting of thend

company to be held on October 27, 2015, at its registered office in Karachi.

Signed this__________________________________ day of __________________________________, 2015

ordinary shares hereby appoint _____________________________________________________________________________________

of ______________________________________________ or failing him/her _______________________________________________

in the presence of _______________________________________________________________________________________________

Form of Proxy

Folio No.

Signatureon Rs. 5/-Revenue Stamp

WITNESSES:

1. Signature:

2. Signature:

Note:

1. The Proxy Form should be deposited in the registered office of the Company, as soon as possiblebut not latter than 48 hours before the time of holding the meeting, failing which; Proxy Form willnot be treated as valid.

2. No person shall act as proxy unless he/she is a member of the Company.

Name:

Address:

CNIC No:

Passport No:

Name:

Address:

CNIC No:

Passport No:

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