The directors are pleased to present their report and unaudited accounts of your Company for the period ended March 31, 2005.

It is heartening to report that the Company continued to consolidate its growth in the period under review. Compared to 30th June 2004 its total assets increased to Rs. 3,381.9 million from Rs.2,271.1 million and the net investment in leases increased to Rupees 2,138.3 million from Rupees 1,542.3 million. The revenue amounted to Rupees 214.3 million including income from non-leasing operations amounting to Rupees 101.9 million. The profit after tax was Rupees 71.8 million, compared to Rs. 36.1 million in the previous corresponding period. The annualized basic earning per share amounted to Rs. 6.22.

The stakeholders will be pleased to know that considering the financial results achieved during the nine months ended March 31, 2005, the directors have recommended the issue of 25% Bonus shares which would be in addition to the 10% Bonus issue in the quarter ended September 30, 2004 and 20% Bonus shares issued in December 31, 2004. This will further enhance the financial strength of the Company.

As reported previously, the sharp increase in inflation and the international oil prices have forced the government to stop giving further subsidy in local oil prices, which were not changed since May 2004. As a result in December 2004, the oil prices in local market started moving upward very significantly. In the second week of April 2005, State Bank of Pakistan raised the discount rate by 150 basis points to 9% and yield on Treasury bills by 138 basis points. This move hopefully would have beneficial affect on check mating the spiraling inflation which otherwise would have serious implications for the economy. In the wake of measures taken by the State Bank, the interest rates have also moved up and the Karachi Inter Bank Offer Rate (KIBOR) has risen by 100 basis points affecting significantly the cost of borrowings. This increase in interest rates has also affected the
leasing rates, which are gradually moving upward. In order to mitigate the effect of increased costs of borrowings, your Company is writing most of the new leases on floating rates linked with KIBOR.

Your Company is, however, well poised to take stock of these problems and is adopting measures, which will minimize the adverse effects and further improve its profitability in the coming years as already reflected in the quarterly results relating to the period ended March 31, 2005. Financing facilities on short and long-term basis are being arranged in addition to focusing on the quality leases, timely recovery of lease rentals and cost control measures coupled with the strengthening of Company’s other business activities. Efforts to obtain additional long-term credit lines are being undertaken on a continuing basis. Adequate resource mobilization at reasonable cost remains a challenging task for sustained growth and higher return for the shareholders.

The lease portfolio of your Company remained well diversified with investments in several sectors of the economy, with exposure not exceeding 20% in any one sector. As a result, the lease rental recovery remained high during the period even though some borrowers were experiencing cash-flow problems.

Your directors recognize and appreciate the support of the lending institutions and the dedicated services rendered by the management and other members of staff of the Company to promote its steady growth during the period under review.

For and on behalf of the Board of Directors

                        NOTES TO THE FINANCIAL STATEMENTS


1. The Company was incorporated on December 6, 1993 and commenced its operations on May 21, 1995.     The Company is principally engaged in the business of leasing and is listed on the Karachi Stock Exchange.


2. BASIS OF PREPARATION

These financial statements are prepared in accordance with the approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards (IASs) as notified under the provisions of the Companies Ordinance, 1984. Whereever the requirements of the Companies Ordinance, 1984 or directives issued by the Securities & Exchange Commission of Pakistan(SECP) differ with the requirements of these standards, the requirements of the    Companies Ordinance, 1984 or the requirements of the said directives take precedence. The    disclosures made in these financial statments have, however, been limited based on the    requirements of the International Accounting Standard 34, "Interim Financial Reporting".


3. ACCOUNTING POLICIES

3.1 The accounting policies adopted in the preparation of these financial statements are the same as those applied in the preparation of the preceding annual financial statements of the company except for changes mentioned in notes 3.2 and 3.3.


3.2 Change in accounting policy
During the period, the SECP substituted the fourth schedule to the Companies Ordinance, 1984, which is effective from the financial year ending on or after July 05, 2004. This has resulted in the change in accounting policy pertaining to the recognition of dividends declared subsequent to the year / period end. The change in accounting policy has been accounted for retrospectively and comparative information has been restated in accordance with the benchmark treatment specified in International Accounting Standard 8, "Net Profit or Loss for the period, Fundamental Errors and changes in Accounting Policies". Had there been no change in the accounting policy, the unappropriated profit would have been lower and current liabilities would have been higher for the year ended June 30, 2003 and June 30, 2004 by Rs.10 million each. The effect of the change in accounting policy has been reflected in the statement of changes in equity. The change in accounting policy has not resulted in any change in the profit for the current period.

3.3 Held to Maturity investments are securities of fixed or determinable payments with fixed maturity periods where management has the positive intent and ability to hold these investments till maturity. These are subsequently re-measured at amortized cost less impairment losses other than temporary if any. Pakistan Investment Bonds were previously classified as Available for Sale investments and measured at fair value have been reclassified as Held to Maturity investment. The change in accounting policy has been accounted for retrospectively and comparative information has been restated in accordance with the benchmark treatment specified in International Accounting Standard 8, "Net Profit or Loss for the period, Fundamental Errors and changes in Accounting Policies". Had there been no change in the accounting policy, the unappropriated profit and investments would have been lower by Rs.25,115,840 respectively for the year ended June 30, 2004. The effect of the change in accounting policy has been reflected in the statement of changes in equity. The change in accounting policy has not resulted in any change in the profit for the current period.