Leasing Companies: SECURITY LEASING CORPORATION LIMITED - Year Ended 30-06-2005 & Half Year Ended 31 December 2005

The company has active website which has made possible to download the company's financials of the first half of the current year financial year (HY 2005-06). The review of last financial year (FY 2004-05) and its performance statistics are mentioned after the review of HY 2005-06.
During the first half of the current year (HY 2005-06), the company posted total revenue at Rs 264.06 million and pretax profit at Rs 76.39 million registering impressive growth of 120% and 124% respectively over the figures of same period last year (SPLY).
Total expenditure shot up by 118%. Financial charges steeply escalated as these were three times of the amount of SPLY.
The directors are pleased to achieve higher financial results during the half year ended December 31, 2005 and recommended the issue of 33.33%. Bonus shares which will strengthen considerably the capital base of the company.
The lease portfolio is widely diversified with exposure not exceeding 20% in any one sector. The directors' strategy is to write new leases on floating rates linked with KIBOR to avoid the potential impact of interest changes and to mitigate to effect of higher borrowing costs.
The company of USA, Merrill Lynch, Pierce, Fenner, Smith, Inc holds majority (42.50%) share of the company. The other largest number of share is held by the director of the company S.M. Nadim Shafiqullah holding 39.85% of the company's stock.
At the apex of the Board of Directors of the company is the chairman and CEO M.R. Khan, a veteran banker. The head of the management is highly skilled financial and leasing professional, managing director of the company Mohammad Khalid Ali.
Security Leasing Corporation Limited commenced its operations on May 21, 1995 from its corporate and registered office situated at Lakson Square Building No 3, opposite Karachi Press Club. The company has two more branches - one in Main Gulberg Road Lahore and the other in North Karachi Buffer Zone.
The core business of the company is leading although it has also housing finance license. JCR-VIS Credit Rating Company (Private) Limited has assigned to the company entity rating "A1" (A One) for short term and "A" for long term, interpreting, outlook stable.
The company is listed on the Karachi and Lahore stock exchanges. Currently the market value of its share has been quoted at Rs 16.25 per share carrying 62.5% premium over the par value. During last one year market value of the share peaked at Rs 31.10 per share.
In the 20-member sector of leasing companies, whose present market capitalisation is Rs 8.47 billion, there are only nine leasing companies whose shares are trading at more than par value. If one ranks the share according to market value then the share value of Security Leasing comes on the fourth position. The highest priced share is of Trust Lease & Investment Bank (Rs 38), followed by Askari Leasing (Rs 31) and Orix Leasing (Rs 25.45).
At present market value the company's market capitalisation works out to Rs 511.9 million. Since the last two years the company has been announcing bonus stock dividends which will further improve its capital base.
The company has improved its profit distribution profile since the last three years as it has been making regular announcements of annual dividends. For the year ended June 30, 2005, (FY 2004-05) the company had announced dividend at 55% (cash dividend 10% plus bonus stock dividend at 45%). For the previous year FY 2003-04, the announcement for dividend was at 20% (cash dividend at 10% and bonus stock dividend at 10%).
Last year (FY 2004-05) the company generated total income of Rs 315.10 million and pretax profit of Rs 80.66 million which were record highest figures in the history of the company.
The other characteristics of the income growth has been that there has been upward trend every year during the last six year as mentioned in the published data. Although net profit figure for last year is higher at Rs 74.28 million compared to the previous year's (FY 2003-04) Rs 50.88 million but net profit to total income ratio was almost identical at 64.45% to the previous year's 64.55%.
The directors rejoiced that for the first time the company had crossed the threshold of rupees one billion in writing new leases. The company made total finance lease disbursement of Rs 1.43 billion during FY 2004-05 which was 53% higher than previous year FY 2003-04. Net investment in leases increased by 52% to Rs 2.26 billion which is laudable increase.
The other noteworthy feature of the operation is that the company achieved substantial growth in the operating leases. It has one of the largest stocks of generators and has made efforts to diversify to portfolio in saloon cars, billboards, machinery and hi-tech equipments.
The company has widely diversified its lease exposure as there was highest exposure of 21% in transport and communication followed by 15% in textile and 12% in engineering sector. The controlled diversity in the lease portfolio has led to lower risk of losses.

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Performance Statistics                      (Million Rupees)

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30th June                                2005           2004

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Share Capital-Paid-up:                 315.00         315.00

Reserves:                               31.67          23.33

Shareholders Equity:                   346.67         338.33

Surplus on Rev. F/Assets:               16.01              -

L.T. Debts:                          1,152.43         902.07

L.T. Deposits:                         424.60         299.13

Deferred Liability-Gratuity:                -           5.04

Current Liabilities:                 1,707.81         751.04

Operating Fixed Assets:                173.18          69.24

Net Investment in Leases:            1,424.07         972.46

Deferred Costs:                          4.55           5.84

L.T. Deposits:                           0.47           0.99

L.T. Finance:                           20.63              -

L.T. Investments-Held to Maturity:     290.24         229.25

Current Assets:                      1,734.38       1,017.83

Total Assets:                        3,647.52       2,295.61

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Revenue, Profit & Pay Out

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Income from Leasing Operations:        203.09         134.03

Other Income:                          112.01          73.58

Gross Revenue:                         315.10         207.61

Admin & Operating (Expenses):          (60.32)       (40.68)

Financial (Charges):                  (140.15)       (78.20)

Direct Cost of Leases-Optg Leases:     (25.22)        (7.97)

Provision for Potential Leases Losses:  (7.50)       (12.75)

Amortization of Deferred Costs:         (1.25)          2.18

Lease Receivables-Written Off:              -           4.48

Reversal/(Provision Against)

Receivables-Others:                     13.36           8.02

Other Receivable-Written Off:          (13.36)             -

Total (Expenditure & Provisions):     (234.44)      (154.28)

Profit Before Taxation:                 80.66          53.33

Profit After Taxation:                  74.28          50.88

Earnings Per Share (Rs):                 3.67           2.35

Payout Dividend (Cash) (%):             10.00          10.00

Payout Dividend (Stock) (%):            45.00          10.00

Share Price (Rs) on 13-07-2006:         16.25              -

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Financial Ratios

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Price/Earning Ratio:                     4.42              -

Book Value Per Share (Rs):              11.00          10.74

Price Book Value Ratio:                  1.47              -

Debt/Equity Ratio (Time):                7.98           6.46

Current Ratio:                           1.02           1.35

Income/Expense Ratio (Times):            1.34           1.35

Lease Income/Total Income (%):          64.45          64.55

Total Assets Turnover Ratio (Times):    11.58          11.06

Net Profit/Total Income (%):            23.57          24.51

R.O.E. (%):                             21.43          15.03

R.O.A. (%):                              2.04           2.22

R.O.C.E. (%):                            3.82           3.29

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