Significant shareholding of the company is held by financial institution Merrill Lynch, Pierce, Fenner, Smith, Inc USA. S.M. Nadim Shafiqullah was appointed as vice Chairman and Deputy Chief Executive of the Company. He owns 39.9% and Mrs Rehana Nadim Shafiqullah owns 3.48% of the company's stock.
During the year under review the company's total revenue grew at 62% as compared to leasing operation's revenue at 46%. The lower growth rate in the contribution to gross revenue by leasing department has been attributed to some diversion of focus to non-leasing business also.
"Other" diversion income, therefore, registered higher growth of 91%. Main components of "other income" comprised, "gain" on sale of listed securities and dividend income. While the gross revenue was highest the company it also achieved the highest disbursement of finance lease in a single year.
But expenses escalated at more steep rate as finance cost sharply went up because of rising mark-up rate and increased quantum of borrowings which were employed for more disbursements and investments to raise the level of business.
The company posted highest ever profit and announced cash dividend at the previous year's rate. In addition there was dividend for preference shareholders as well as bonus issues.
Security Leasing Corporation Limited was incorporated in Pakistan on December 6, 1993 and commenced its operations on May 21, 1995.
The company is an NBFC (Non Banking Finance Company) having leasing and housing finance licences, however, leasing remains its core business. It is operating from its registered/head office situated in Lakson Square Building No 3 Sarwar Shaheed Road Karachi-74200. It has two branches - one at City Towers Main Gulberg Road Lahore and the other at Huq Terrace, Buffer Zone Karachi.
As regards ownership of its equity, its significant shareholding of 42.50% is owned by the renowned international financial institution Merrill Lynch, Pierce, Fenner Smith, Inc, USA. Its other nine individual shareholders own only 0.11% of the company's stock. Remaining shares are owned by other institutional investors.
During 2005-06, the company generated gross revenue at Rs 510.02 million (2004-05: Rs 315.10 million) registering 61.8% growth over the preceding year's. Income from leasing operations amounted to Rs 296.40 million as against Rs 203.09 million showing 45.9% increase and this indicates lower growth rate than increase in gross revenue. Contribution of lease income to total income declined by 6.33 percentage points from 64.45% in the previous year to 58.12% in the year under review.
For this the directors affirmed having made diversification of their focus on generation of more revenues from non-leasing business. In this context, we see that the company earned "other" income of Rs 213.62 million (2004-05: Rs 112.01 million) which shows 90.7% increase over preceding year's. The major components of other income were gain on the disposal of listed securities at Rs 119.31 million and dividend income at Rs 38.43 million.
Total expenses increased to Rs 395.11 million from Rs 234.34 million in the previous year showing steep rise by 69% much higher escalation rate as compared to gross revenue. It can be seen from the P&L A/c of the company that almost all component of expenses were on the higher side while the finance cost escalation rate was much higher. It increased from previous year's Rs 140.14 million to Rs 285.41 million in the year under review by 103.6%.
However, it is gratifying to note that provision for potential lease losses became zero as compared to Rs 7.5 million in the previous year.
The directors reported that cost of borrowings increased sharply as the company used financing facilities for more investments and disbursements to improve revenue. Higher growth in revenue proves their point of view.
They informed that the company achieved highest level of "finance lease" disbursements in a single year and made a total disbursements of Rs 1.98 billion in new leases which were 40% higher than last year's. The net investment in leases increased by 46% to Rs 3.37 billion.
The company repeated last year's performance and earned the highest ever profit after tax at Rs 108.02 million (2004-05: Rs 74.28 million).
The directors recommended 10% cash dividend for the ordinary shareholders and 9.1% to preference shareholders - Class A as per the terms of the issue.
During the year the company made a total issue of bonus shares of 43.33% to its shareholders to strengthen its equity base.
The company is writing most of the new leases on floating rates linked with Kibor. Further, the company continues to pursue fresh financing facilities on competitive rates.
During the year the company issued privately placed term finance certificates of Rs 500 million and also obtained new long term lines of credit from the commercial bank.
As regards future business strategy the directors emphasize on continuing emphasis on broad spectrum of clients, industries for quality exposures.
==========================================================
Performance Statistics (Million Rupees)
==========================================================
30th June 2006 2005
==========================================================
Share Capital-Paid-up: 392.00 315.00
Reserves: 87.44 85.77
Shareholders Equity: 479.44 400.77
Unrealized (Loss) on Remeasurement
of available for sale investments
to Fair Value: (88.90) (54.10)
Surplus on Revaluation
of Fixed Assets: 15.20 16.01
L.T. Debts: 1,402.47 1,152.43
L.T. Deposits: 706.14 424.60
Current Liabilities: 2,256.20 1,707.81
Operating Assets: 221.79 173.18
Net Investment in Leases: 1,923.04 1,424.07
Deferred Costs: 3.06 4.55
L.T. Deposits: 0.42 0.48
L.T. Finances: 57.48 20.63
L.T. Investments: 286.47 290.23
Current Assets: 2,278.29 1,734.38
Total Assets: 4,770.55 3,647.52
----------------------------------------------------------
Revenue, Profit & Pay Out
----------------------------------------------------------
Revenue----
Income from Finance Leases: 235.21 162.23
Income from Operating Lease: 61.19 40.86
Other Income: 213.62 112.01
Gross Revenue: 510.02 315.10
Total (Expenditure & Provisions): (395.11) (234.34)
Profit Before Taxation: 114.91 80.66
Profit After Taxation: 108.02 74.28
Earning Per Share (Rs): 3.90 2.51
Dividend Cash (%): 10.00 10.00
Market Price of Share (Rs) on 05/10/06:16.00 -
----------------------------------------------------------
Financial Ratios
----------------------------------------------------------
Price/Earning Ratio: 4.10 -
Book Value Per Share (Rs): 12.23 12.72
Price Book Value Ratio: 1.31 -
Debt/Equity Ratio: 78:22 76:24
Current Ratio: 1.01 1.02
Lease Income/Total Income (%): 58.12 64.45
Net Profit/Total Income (%): 21.18 23.57
R.O.E. (%): 22.53 18.53
R.O.A. (%): 2.26 2.04
R.O.C.E. (%): 4.30 3.82
==========================================================