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The
directors are pleased to present their report and unaudited
accounts of your Company for the period ended December 31,
2004.
Your Company
continued to consolidate its growth in the period under review.
Compared to 30th June 2004, its total assets increased to
Rs. 3,042.1 million from Rs. 2,271.1 million and the net investment
in leases increased to Rupees 1,932.5 million from Rupees
1,542.3 million. The revenue amounted to Rupees 112.5 million,
including income from non-leasing operations amounting to
Rupees 37.6 million. The profit after tax was Rupees 27.6
million, compared to Rs. 23.2 million in the previous corresponding
period. The annualized basic earnings per share amounted to
Rs. 3.77.
The stakeholders
will be pleased to know that considering the financial results
achieved during the half year ended December 31, 2004, the
directors have recommended the issue of 20% Bonus shares which
would be in addition to the 10% Bonus shares issued in the
quarter ended September 30, 2004. As reported previously,
the sharp increase in inflation and the international oil
prices 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. The interest rates
continue to rise as the market is short of liquidity which
coupled with the rise in cutoff yield of government papers
and Karachi Inter Bank Offer Rate (KIBOR) affected significantly
the cost of borrowings. This increase in interest rates has
also affected the IRRs, which are gradually increasing and
in order to mitigate the effect of increased costs of borrowings,
most of the new leases are now being written on floating rates
linked with KIBOR.
Your Company
is, however, well poised to take stock of these difficulties
and is adopting measures, which will minimize the adverse
effects and further improve its profitability in the coming
years. To this end, financing facilities on short and long
term basis are being arranged in addition to concentrating
on the quality of Company’s lease portfolio, timely
recovery of lease rentals and cost control coupled with the
strengthening of its other business activities.
Directors are
pleased to announce that your Company in the Extra ordinary
general meeting has approved a new issue of Preference shares
of Rs. 150 million to strengthen its equity further and help
its improved business growth. The Preference shares are expected
to be issued after necessary approvals in March 2005. This
new issue would help the Company to undertake new activities
permitted under the Non Banking Finance Companies Rules. It
will be recalled that in October 2004, the Company had also
issued bonus shares @ 10% which increased its total outstanding
share capital to Rs. 260 million.
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. The lease rental recovery remained high during
the period even though some borrowers were experiencing cash-flow
problems due to macro-economic conditions.
Your directors recognize and
appreciate the support of the lending institutions and the
dedicated services rendered by the management and other members
of the Company to promote its steady growth during the period
under review.
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