During the year under review the company's total assets almost doubled. The company has highly attractive profit distribution profile as it has never skipped dividend for the last 5 years. Its stock dividend ranged between 10% to 15% per year. If the share price is high then effective yields to the investors tend to exceed original the pay out rate.
For the year under review the company announced cash dividend @15% as well as and bonus stock dividend at 10%. The price of Trust Leasing share closed on 2nd November 2004 at Rs 20 carrying 100% premium over the par value. The company's gross revenue increased by 45.8% to Rs 229.38 million as compared to Rs 157.30 million posted in the preceding year.
Profit after taxation was record highest figure in its history and this amounted to Rs 120.31 million (2002-03: Rs 48.02 million). The company garnered funds from banks through issue of commercial papers and TFC's and also from money market.
Trust Leasing Corporation Ltd is a public limited company and is classified as non-banking finance company (NBFC) and is regulated by Securities and Exchange Commission of Pakistan (SECP). It was incorporated in the province of Punjab in 1992 having its registered office located at Aziz Avenue, Canal Bank Lahore. It is listed on Lahore, Karachi and Islamabad Stock Exchanges.
The company's core business is leasing from where 65.9 percent of gross revenue is generated. Last year leasing income had contributed 70.24 percent of gross revenue.
The management took the appropriate steps to take advantage of the buoyant stock market and gains from investments were of substantial amount. This also opened second channel of income which not incur much expense relative to leasing operations. The company is operating from its head office in Lahore. The business is augmented by its an elaborate network of branches mainly located in its home province. Its branches located at Gujrat, Sargodha, Multan, Mandi Bahaudin.
In those cities one branch in each city. But in Lahore it has three branches. The management feel satisfied with their strategy to open branches for expansion in the lease business. The company has planned also to open branches at Rawalpindi, Faisalabad and Karachi in near future.
Chairman S. Amjad Ali envisions that a branch in Karachi will introduce the company in the largest commercial centre of the country. Similarly opening of branches in major cities of Punjab will enable the company to cater the funding needs of these areas and establish a strong and wider area of operation, contributing towards increase in the market share of the company.
But it can be also debated that more branches will increase the intermediation costs. Hence there is also trend towards minimum network of branches and doing business from the central office with the support of information technology by creating enabling environment targeted towards a digital company with the thrust on Customer Relations Management (CRM).
This will ensure reduction in expense which may be passed on to lessees and hence will provide competitive edge as well as market penetration. Due to handling of lease business by commercial banks with margins/spreads have become wafer thin. Any attempt to bring intermediation costs will neutralise at least some adverse impact of entry in leasing business by banks.
The company's results show that the organisation did achieve its objective by opening of branches. In the short run the experience has been rewarding. Hopefully there is continued upward trend in business expansion and sustainability of higher profit in the medium to long term also.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30
2004 2003
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Share Capital-Paid-up: 308.58 223.61
Reserve & Profit: 271.67 205.91
Shareholders Equity: 580.25 429.52
Liabilities
Creditor, Accrued
& Other Liabilities: 71.62 23.79
Current Maturities of
L T Liabilities: 152.40 33.30
Borrowings From Financial
Institutions: 397.91 210.42
Liabilities Against Assets
Subject of Finance Lease: 0.11 1.51
Certificates of Investment: 122.96 104.98
Marginal Deposits on
Lease Arrangements: 245.02 63.20
Redeemable Capital: 589.62 242.49
Deferred Liabilities: 6.03 3.59
Assets
Balance With State Bank
of Pakistan: - 0.04
Cash & bank Balances: 476.44 63.32
Investments Held for Trading: 48.67 67.17
S T Finances: 50.17 69.72
S T Placements: 110.10 40.00
Advances, Prepayment
& Other Receivables: 138.93 161.18
Net Investments In Lease
Finance-Current Portion: 322.32 181.59
Investments Available for Sale: 16.81 2.25
Investments Held-to-Maturity: 0.30 3.30
L T Deposits and Deferred Costs: 3.30 1.42
Net Investment in Lease Finance: 973.81 515.14
Operating Fixed Assets: 25.07 7.67
Total Assets: 2,165.92 112.80
Revenue, Profit & pay Out:
Income From Lease Operations: 151.10 110.50
Income From Investments: 77.64 18.05
Other Income: 0.64 28.75
Gross Revenue: 229.38 157.30
Total (Expenditure & Provisions): (111.31) (104.28)
Profit Before Taxation: 118.07 53.02
Profit After Taxation: 120.31 48.02
Earning Per Share (Rs): 4.38 2.01
Dividend @ 15% (2003 Nil): 46.29 -
Share Price (Rs) Dated 2-11-04: 20.00 -
Price/Earning Ratio: 4.57 -
Book Value Per Share (Rs): 18.80 19.21
Lease Income/Total Income (%): 65.87 70.24
Net Profit/Total Income (%): 52.45 30.52
R O E (%): 20.73 11.18
R O A (%): 5.55 4.31
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COMPANY INFORMATION: Chairman: S. Amjad Ali; M.D. & Chief Executive: Ihsan Ullah Khan; Director: Tajammal Hussain; Company Secretary: Rahat Saleem; Registered Office & Head Office: 35 A/11 Aziz Avenue, Canal Bank Lahore; Branches: Gujrat, Sargodha, Multan, Mandi Bahaudin, Jail Road Lahore, Cavalry Ground Lahore, Faisal Town Lahore; Web Address: www.trustleasing.com
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