Leasing Companies: SIGMA LEASING CORPORATION LIMITED - Half Year ended December 31 2006

The company was incorporated in Pakistan on April 11, 1996 as a public limited company and received certificate of commencement of business on January 27, 1997. The company is principally engaged in the business of leasing and is listed on the Karachi Stock Exchange since 1997.
At the end of half year on December 31, 2006 (HYD 06-07), the company's net investment in finance leases amounted to Rs 1.224 billion as compared to Rs 1.239 billion on June 30, 2006 showing marginally diminished lease portfolio on the balance sheet date of HYD 06-07, the period under review.
Nearly 37.6% of the portfolio's tenure is for one year only and needs replenishment soon to ensure at least the same size of portfolio of December 31, 2006. It has been experienced that in terms of profitability, generally, the last year of lease tenure carries relatively less profit as compared to the first year of agreement. What is more gratifying record here's that "as at December 31, 2006, there were no 'over' dues and none of the leases were rescheduled/restructured" (source: Note No 43 of the half yearly account under review).
As regards other details of lease business, the company entered into various lease agreements for periods ranging from three to five years carrying IRR (Implicit Rate of Return) ranging from 8.00 percent to 18.22 percent (June 30, 2006, 8.00 percent to 8.22 percent). About revenue side of leases, during HYD 06-07, total lease income amounted to Rs 66.96 million (HYD 05-06: Rs 43.38 million) showing impressive growth of 54%. This is all the more commendable in the backdrop of almost static lease portfolio during six months and at the same time more than one third of portfolio bracketed for one year or less.
The quality of monitoring and lease content is evidenced more so from enhanced lease revenue and no over dues.
The directors report of Sigma Leasing Corporation Ltd emphasizes that its performance remained steady during the period under review. Leases worth Rs 262 million were written. Resource mobilization is the mainstay of leasing business, it has been reported that credit line worth Rs 150 million was obtained and utilized during HYD 06-07.
Total revenue amounted to Rs 80.64 million (HYD-05-06: Rs 60.62 million) and total expenses amounted to Rs 55.31 million (HYD 05-07: Rs 40.06 million) resulting in Pre-Tax profit of Rs 25.33 million (HYD-05-06: Rs 20.56 million) showing 23.2% increase over same period last year.
JCR-VIS Credit Rating Company enhanced the medium to long term entity rating of Sigma Leasing to 'A-' from BBB+ while the outlook remains stable and short term rating remains 'A-2'.
The market price of its share during the last 52 weeks remained within Rs 22.95 and Rs 24.60 per share (Source: Business Recorder Dated 26-05-2007). At the prevalent share price of Rs 24.60 per 10-rupee share its market capitalization has soared to Rs 738 million.

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Balance sheet                            ---As At----

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December 31 June 30                 2006         2006

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Un-audited                                    Audited

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Share Capital-Paid-up:            300.00       300.00

Reserves:                          54.67        55.59

Shareholders Equity:              354.67       355.59

Surplus on Fixed Assets:           55.45        55.45

Lease Key Money Deposits:         230.12       214.10

Certificates Of Investments:       53.14        56.43

L.T. Debts:                       277.83       287.94

Deferred Tax Liability:            44.44        44.44

Current Liabilities:              469.06       430.23

Fixed Assets Tangible:             87.84        85.56

Intangible Assets:                  0.10         0.15

Net Investment in Finance Lease:  764.24       759.14

Deferred Cost:                      1.75         4.75

Current Assets:                   630.78       594.58

Total Assets:                   1,484.71     1,444.18

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Profit & Loss A/C for Half Year ended:

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December 31                         2006         2005

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Income

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Lease Income:                      66.96        43.38

Markup on Deposits & Placements:    1.60         4.13

Other Operating Income:            12.08        13.11

Total Income:                      80.64        60.62

Admin & Operating (Expenses):     (10.39)      (8.07)

Financial (Charges):              (41.92)     (28.99)

Amortization of Deferred (Cost):   (3.00)      (3.00)

Total Expenses:                   (55.31)     (40.06)

Profit Before Taxation:            25.33        20.56

Profit After Taxation:             23.78        19.42

Earnings Per Share (Rs):            0.79         0.78

Share Price (Rs) on 25/05/07:      24.60            -

Price/Earning Ratio:               31.14            -

Debt/Equity Ratio:                 40:60        41:59

Current Ratio:                      1.34         1.38

Lease/Total Income Ratio (%):      83.03        71.56

Net Profit/Total Income Ratio (%): 29.48        32.03

R.O.A. (%):                         1.60         1.34

R.O.E. (%):                         6.70         5.46

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