Origin

The paper is done on the operation of finance companies in Bangladesh on basis of 4 financial companies (Lanka Bangla, Prime, MIDAS and Peoples Finance Company) as a part of Financial Market and Institute (FIN 335) course.

Objective
To discuss the operation of finance companies in Bangladesh on basis of four companies (Lanka Bangla, Prime, MIDAS and Peoples Finance Company)

Scope
We worked on Lanka Bangla, Prime, MIDAS and Peoples Finance Company. We particularly worked on their basic information, source and use of fund, financial performance and share market status.

Methodology
We used out gathered information from various sources to make the whole term paper. We used online facility and collected data from the company also.

Limitation
Lack of details information source Lack of lab facility Lack of time

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Finance companies are non bank financial institute. sometimes called loan company, a financial institution that specializes in supplying credit for purchases of consumer goods; makes loans directly to consumers or purchases loan contracts made with stores; operates in most industrial nations; has existed since early 1900s, but had most prosperous years after World War II; General Motors Acceptance Corporation, founded 1919, best known for financing auto purchases. Finance companies are new concept in Bangladesh. They operating for around a decade or so. The main source of finance companies are: Loans from banks Commercial papers Deposits Bonds Capital

The main uses of funds are: Consumer loan Business loans and leasing Real Estate loans

Regulations for Finance Companies

In Bangladesh there are eight finance companies enlisted with Dhaka and Chittagong Stock Exchange. These companies follow the company act 1991. From the act we can summarize the following regulations: 1.Reserve Fund.(1) Every banking company incorporated in Bangladesh shall create a reserve fund and if the amount in such fund together with the amount in the share premium account is not less than its paid-up capital. (2) Where a banking company appropriates any money from the reserve fund or the share premium account for any purpose, it shall, within twenty-one days from the date of such appropriation, report the fact to the Bangladesh Bank: Provided that the Bangladesh Bank may extend the period for such report or condone any delay in the making of such report.
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2.Cash Reserve
(1) Should maintain in Bangladesh by way of cash reserve in cash with itself, or with the Bangladesh Bank or its agent, or both banks in equal parts, a sum equivalent to not less than five per cent. of its time and demand liabilities: Provided that the Bangladesh Bank may, in any particular case, change, by notification in the official Gazette and subject to the conditions settled therein in this behalf, the requirements relating to the cash reserve or repeal, on previous approval by the Government, such requirements. 3.Restrictions on the payment of dividends No banking company except new and special banks shall pay any dividend on its shares, unlessa) all its capitalised expenses including preliminary expenses, organisation expenses, commission for share selling and brokerage, losses and other items have been completely written off, or b) it manages to preserve constantly six per cent of its temporary and demand deposits as discharged and reserved capital. 4. should not create any charge upon any unpaid capital of the company and any such charge, if created, shall be invalid. 5.Restrictions on commission of sale of shares, brokerage, discount etc. .Notwithstanding anything to the contrary in sections 105 and 105 A of the Companies Act, no banking company shall pay out directly or indirectly by way of commission, brokerage, discount or remuneration or otherwise in respect of any shares issued by it, any amount exceeding two and one-half per cent of the paid-up value of the said shares.

Now we will look forward to 4 of the finance companies in Bangladesh.

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Lanka Bangla Finance Company:

Company Profile
Company Name : Registered Office: LankaBangla Finance Limited Safura Tower (Level 11) 20, Kemal Ataturk Avenue Banani Dhaka1-1213 Bangladesh Public Limited Company, incorporated in Bangladesh on November 5, 1996 under Companies Act of 1994. Certificate to Commence business received on October 30, 1997.

Legal Form :

Date of Incorporation: November 5, 1996 Chairman of Board of Directors:

Mr. Mohammad A. Moyeen

Company Secretary: A.K.M. Kamruzzaman Auditors: Lawyers: Acnabin & Co. Lee Khan and Associates

Lanka Bangla Finance Limited (LBFL) is a multinational joint venture financial institution. It was established in the year 1997 having license from Bangladesh Bank under Financial Institutions Act1993. Lanka Bangla Finance company has proved to be a diversified service providing company in the country. Institutional shareholding structure, educated & motivated human resources, friendly working environment & dynamic corporate culture has made it possible to be the one of the front line finance companies in the country. Sampath Bank Sri Lanka is providing the technical support. It has helped the company to be the most innovative financial solution provider in the country.
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LankaBangla went for public issue in 2006 and its shares are listed in both Dhaka Stock Exchange and Chittagong Stock Exchange on 17-October-2006 and 31-October-2006 respectively.The shareholding structure of LBFL consists of Commercial banks, Investment Bank, Corporate & prominent Industrialists from home & abroad. The current structure is: Details Foreign Sponsors a)Sampath Bank Limited, Sri Lanka b)First Gulf Asia Holdings Limited, Saudi Arab Local Sponsors a) One Bank Limited, Bangladesh b) SSC Holdings Limited, Bangladesh c) Shanta Apprels Limited, Bangladesh d) Others - Individuals, Bangladesh General Shareholders Total Percentage 22.86% 11.43% 10.39% 2.86% 2.60% 20.78 34.29%

36.62% 29.09% 100%

Issue Management:
The companies intend to raise fund from general public by issuing ordinary shares, preference shares and different types of bonds require professional service of an Issue Manager. LankaBangla Finance Limited has been providing issue management services to the issuing companies since 1998. The expertise developed over the years help LankaBangla Finance Limited provides issue management service with professional acumen. The major functions involved in issue management service are as follow: Lease Finance Determine fund requirement Identify appropriate instrument Fulfill regulatory compliance Prepare sales document like prospectus, information memorandum etc. Arrange underwriting Arrange subscription Arrange listing

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Portfolio Management:
LANKABANGLAs Portfolio Management service is designed to provide personalized, secure and simple financial solutions for a wide variety of investors who wish to enhance their opportunities while minimizing their administrative burden. Under LANKABANGLAs Portfolio Management services a client retains full discretion over all financial decisions. The Company administer and manage all investment documentation, collect investment income, act as custodian for the clients assets (but without physical control), provide a dedicated Client Service Officer, issue quarterly statements and last of all they provide loan facilities to the portfolio account holder at a very competitive rate.

LankaBangla Deposit Schemes:

LankaBangla offers various Deposit Schemes with attractive rates of interest.The client can choose any of them according to their preference. The general interest rate structure is: Deposit Amount 1 year 2 year 13.50% 13.75% 3 years and above 13.75% 14.00%

Less than Tk.5.00 13.25% million Tk. 5.00 million & 13.50% Above

Following Deposit Schemes are available with LankaBangla 1. LankaBangla Cumulative Term Deposit: Under this scheme the Deposit amount will turn into a desirable amount through accumulation of interest. Option 1: If you deposit less than Tk. 5.0 million assuming Tk. 100,000 deposit your receivables on maturity will be: Amount Tk.100,000 1 Year Tk. 113,250 2 Years Tk.128,823 3 Years Tk.147,182

Option 2: If you deposit Tk. 5.0 million or above assuming Tk. 100,000 deposit your receivables on maturity will be:

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Amount Tk.100,000

1 Year Tk. 113,500

2 Years Tk.129,391

3 Years Tk.148,154

2. LankaBangla Periodic Return Term Deposit Under this scheme you can draw the interest periodically (Monthly/Quarterly/Halfyearly/Annually) keeping the original deposited amount intact. Option 1 : If the deposit amount is less than Tk. 5.0 million then the interest income for a deposit of Tk. 100,000 for different period will be: Tenure 1 year 2 years 3 years Monthly Tk.1,035 Tk.1,055 Tk.1,074 Quarterly Tk.3,144 Tk.3,023 Tk.3,262 Half-Yearly Tk.6,401 Tk.6,522 Tk.6,643 Annually Tk.13,250 Tk.13,500 Tk.13,750

Option-2 : If the deposit amount is Tk. 5.0 million or above then the interest income for a deposit of Tk. 100,000 for different period will be: Tenure 1 year 2 years 3 years Monthly Tk.1,055 Tk.1,055 Tk.1,074 Quarterly Tk.3,023 Tk.3,023 Tk.3,262 Half-Yearly Tk.6,522 Tk.6,522 Tk.6,643 Annually Tk.13,500 Tk.13,500 Tk.13,750

3. LankaBangla Double Money Term Deposit: Deposit amount placed at a time will turn double on completion of 5 years 9 months 4. LankaBangla Money Builders Term Deposit: Under this scheme the depositor will open an account with an amount of deposit, there after he will deposit a fixed amount on monthly basis for an agreed period. On expiry the depositor will receive the deposited amount along with the interest accrued there on. Assuming a depositor open an account with Tk. 100,000 & thereafter make deposit fixed amount monthly, then the accumulated amount will be: Monthly Amount 1 year 2 year 3 year
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Tk.10,000 Tk.15,000 Tk.20,000 Tk.25,000

Tk.242,221 Tk.306,707 Tk.371,192 Tk.435,678

Tk.405,672 Tk.544,097 Tk.682,522 Tk.820,947

Tk.594,769 Tk.818,563 Tk.1,042,357 Tk.1,266,151

Financial Ratio Analysis:

Ratios Current ratio Debt equity ratio Return of equity (%) 2003 1.38 5.09 30.17 2004 1.09 7.83 18.71 2.42 2005 1.13 5.05 23.50 3.26 2006 1.07 5.67 19.32 3.00 2007 1.14 8.68 41.23 4.89 Growth 6.56% 52.99% 113.38% 62.76

Return of total assets 2.74 (%)

60 50 40 30 20 10 0 2003 2004 2005 2006 2007 retutn on asset Return on equity Debt-Equity Current

Graph: Ratios over different time period

We can observe an upward tendency in the curves of the given ratios. It indicates that the company is in growth stage. And they getting more and more efficient day by day. If we look at the growth of teturn of total asset ratio we can see that the growth is 62.76%. which indicates that
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the company has become more capable in earning more profit using the same amount of asset. Similar things can be observed in the other ratios as well.

Share Information:
2003 No. of share outstanding Net asset value per share Earning per share (%) 20.11 6.40 10.34 2004 24.11 8.08 13.70 2005 26.00 1031 21.40 2006 35.00 12.11 24.30 2007 35.00 17.07 60.10 Growth 40.98 147.33

Here we can see that the company is presently earning 147% more than that the company could earn before against same amount of share. Concerning all the above factors we can conclude that it can a very safe and profitable investment source.

Prime Finance Company :

Prime Finance & Investment Limited incorporated as a public limited company on 10 March 1996 is an integrated financial service provider in the fields of financing, investment and capital market operations. The company offers its business and institutional customers a comprehensive package of products and services through its corporate head office at Dhaka and branch office at Chittagong. In its competitive market, Prime Finance & Investment Limited with its sound financial position, broad risk spread and extensive expertise occupies a strong position in leasing, term financing, corporate financial services and capital market operations. Prime Finance holds a leading position in the capital market operations. It is the undisputed number one in providing comprehensive and integrated capital market services. Prime Finance boasts up a broadly diversified business profile. This enables us to offer our clients the full range of services, they expect from a leading financial institution. Shareholding structure as on 31 December 2004 Name of Shareholder no. ofshares A Corporate shareholder 1. Pedrollo NK Limited 3. Khaled Textile Mills Limited 4. Acorn Limited 227,100 222,660 222,660 % of total shareholding 12.62 12.37 12.37
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5. GQ Enterprise Limited 6. Agami Apparels Limited 7. Maksons (Bangladesh) Limited 8. Mawsons Limited 9. Abeeco Industries Limited Total corporate shareholdings IPO size and issue price Total no of share to be issued 500,000 Issue price 100

220,680 194,580 180,000 126,000 92,220 1,713,180

12.26 10.81 10.00 7.00 5.12 95.18

Total public issue 50,000,000

The proceeds of shares to be offered will be used in the financing and investment activities of the company. The offering price of the common stock of the company has been determined by assessing the book value per share based on financial statements for the year ended 31 December 2004.

Dividend, voting, pre-emption rights

The share capital of the Company is divided into ordinary shares and receives dividend in terms of the relevant provision of the Companies Act 1994 and the Articles of Association of the company. Shareholders shall have the usual voting right proportionate to the number of shares held by individual shareholders. The Shareholders exercise their voting right upon show of hands present in person or by Attorney or Proxy in connection with, among others, election of Directors, Auditors and the usual Agenda for General Meeting.

Conversion and liquidation rights

In terms of the provisions of the Companies Act, 1994, Articles of Association of the Company and other relevant rules in force, the shares of the Company are freely transferable. The Company shall not charge any fee for registering transfer of shares. No transfer shall be made to a firm, an infant or person of unsound mind.

Dividend policy
1. The profit of the Company, subject to any special right relating thereto created or authorized to be created by the Memorandum of Association and subject to the provisions of the Articles of Association, shall be divisible among the members in proportion to the amount of capital paid-up on the shares held by them respectively.
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2. No larger dividend shall be declared than is recommended by the Directors, but the Company in its General Meeting may declare a smaller dividend. The declaration of Directors as to the amount of Net Profit of the Company shall be conclusive. 3. No dividend shall be payable except out of the profits of the Company or any other undistributed profits. Dividend shall not carry interest as against the Company. 4. The Directors may from time to time pay the members such interim dividend as in their judgment the financial position of the Company may justify. 5. A transfer of shares shall not pass the right to any dividend declared thereon before the registration of transfer.

Financial structure
Authorized capital 5,000,000 ordinary shares of Tk. 100 each. Subscribed Capital 1,800,000 ordinary shares of Tk. 100 each subscribed by the Sponsors Total subscribed capital before subscription of IPO Issue of shares Initial Public Offering (IPO) Total paid up capital after subscription of IPO Tk 500,000,000 Tk 180,000,000 Tk 180,000,000 Tk 50,000,000 Tk 230,000,000

Debt securities:
The Company has offered five years term bonds of Tk 300 million under private placement for which consent from SEC was obtained (Reference no SEC/CPLC/06/2003/307 dated November 30, 2004) and Tk 90 million has been subscribed within December 31, 2004. Subscription of balance amount is being processed in current year and is expected to be closed within December 2005. The detail features of the said bond is given below: Sl. no Name of subscribers Principal outstanding as on 31 December, 2004 (Taka)
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1 2 3 4 5 6 7 8

ICB ICB unit Firm Third ICB Mutual Fund Fourth ICB Mutual Fund Fifth ICB Mutual Fund Sixth ICB Mutual Fund Seventh ICB Mutual Fund .Eighth ICB Mutual Fund

25,000,000 45,000,000 1,000,000 1,000,000 3,000,000 5,000,000 5,000,000 5,000,000 5,000,000

Products and services Prime Finance & Investment Limited offers both fund based and fee based products and services. which include the followings: Fund based services Lease finance Term finance Real estate finance Bill discounting Bridge/equity finance Syndicated finance SME financing Fee based services Public issue of securities Underwriting of securities Portfolio management Merger & amalgamation Corporate financial services

Financial Performance:
2008 Cash flow Operating revenue Operating expenses Profit before tax 819.62 7 531.07 288.55 24.42 522.46 201.96 445.16 319.23 125.93 378.74 275.80 2 103.45 337.12 59.94 77.18 2007 2006 2005 2004

Balance Sheet
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Total investments

5,079.41

4,174.8

3,473.88

2,927.44

2,372.65

Total Deposits Total liabilities Paid-up capital Shareholders' equity Cash flow Operating revenue Operating expenses Profit before tax

2,177.79 4,700.36 460.46 921.31

2,124.82 3,843.98 328.90 635.26

1,480.68 3,236.61 299.00 498.10

1,217.82 2,676.72 230.00 390.75

1,010.44 2,187.33 180.00 284.40

819.62 531.07 288.55

724.42 522.46 201.96

445.16 319.23 2 125.93

378.74 75.80 103.45

337.12 259.94 77.18

Ordinary shares information Earning per share Dividend Book value (end of period) Financial ratios (%) ROI ROA Return on equity Current ratio (times) Price earnings ratio (times) Debt equity ratio (times) 6.18 5.66 36.75 1.31 17.80 3.94 5.15 4.80 34.76 2.22 9.89 4.97 3.23 3.04 3.27 2.09 8.27 5.31 3.62 3.46 28.42 2.70 8.49 5.61 3.65 3.44 29.07 1.32 n/a 4.84 62.12 40B 200.09 59.89 40B 193.15 33.99 20, 10B 166.59 48.79 30B 169.89 40.10 20 158.00

Investment Growth (Taka in million) Investment growth enhanced at a satisfactory level. At year-end 2005, total investment stood at Tk. 2.6 billion as against Tk. 2.2 billion at the year end 2004 showing an increase of 21.66 percent.

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Return on Average Shareholders' Equity (%) The return on shareholders' equity marginally fell from 29.07 percent to 28.42 percent as the outstanding shares has increased because of injection of fresh capital of Tk. 50 million in 2005 through IPO.

Earnings Per Share (In Taka) The Company could maintain a highly satisfactory EPS for the year 2005. In 2005, earnings per share increased to Tk. 48.10 from Tk. 40.10 of 2004. Per share earning has increased by 171.06 percent over the period from 2001 through 2005.

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MIDAS Finance Company:

MIDAS Financing Ltd. (MFL) is a Public Limited Company limited by shares duly incorporated vide registration no. C-28404 (2250)/95 date May 16, 1995 under section 150 of the Companies Act 1994 with share contribution from MIDAS, the members of the general body of MIDAS and other interested organizations and persons acceptable to MIDAS Board. The Company has obtained license from Bangladesh Bank vide license no. FID (L)/22 dated 11 October, 1999 to operate as a non-banking financial institution. MIDAS (Micro Industries Development Assistance and Services) was created in 1982 as a nonprofit organization. It is a knowledge based, service oriented organization which has addressed the challenge of poverty in the most practical way: by creating jobs. Its main goal is to generate sustainable employment opportunities by promoting the development of small and micro enterprises. It is a pioneer in promoting small-time entrepreneurs and committed to build an enterprising society in Bangladesh through them. MIDAS is the major sponsor and shareholder of MIDAS Financing Ltd. All the Board Members of MIDAS Financing Ltd. are on the Board of Directors of MIDAS. Besides them there are some additional members. MIDAS Financing Ltd. (MFL) is a subsidiary of MIDAS. MFL was set up with the primary objective of taking over the enterprise financing role of MIDAS and performing it in a better way and on a larger scale. MFL is a public Company limited by shares and is licensed by Bangladesh Bank to operate as a non-banking financial institution. The credit and investment services of MIDAS are being provided through MFL since January 2000. MFL extends long-term and medium term project loans, short-term working capital loans and lease financing for the establishment and expansion of small and micro enterprises. The Prospectus has been prepared by First Securities Services Ltd.(FSSL) from information supplied by MIDAS Financing Limited (the Company) and also several discussions with the Managing Director and concerned executives of the Company. MLF Shares MIDAS Financing Ltd. (MFL) is a Public Limited Company limited by shares duly incorporated vide registration no. C 28404 (2250)/95 date May 16, 1995 under section 150 of the Companies Act 1994. The Company obtained license from Bangladesh Bank vide license no. FID (Q/22 dated I I October, 1999) under the Financial Institutions Act 1993 to operate as a non bank financial institution and it started operation in full swing from January 2000. Initial Public Offering (IPO)

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Under advice from Bangladesh Bank the Company went for Initial Public Offering (IPO) of 0.446 million ordinary shares of Tk. 100.00 each in June 2002. The entire process was successfully completed by August 2002 and thereon the Company's Paid-Up Capital rose from Tk. 55.4 million to Tk. 100.00 million. Dividend: The Company declared stock dividend for the years 2003, 2004, 2005 and 2006 at the ratio of 2B: 25,1B: 10, 1B:10 & 2% Cash and 1B:10 & 2% respectively. Rights Offer: To comply with the Bangladesh Bank FID Circular No. 02 dated 29 June 2003 for raising the paid-up capital and reserve of all non-bank financial institutions to Tk. 25 crore, the Company offered 1,175,812 Rights shares of Tk. 100.00 each for subscription in full to its shareholders at the ratio of 1:1 at par. The entire process was successfully completed by May 2005 and thereon the Company's Paid-Up Capital rose from Tk. 117.58 million to Tk. 235.16 million

Financial Structure as on June 30, 2006:

Authorised Capital: Paid up capital: Tk. 500,000,000 Tk. 284,546,500

1. Evaluation of paid-up capital: Particulars a)Issued and Paid up Capital as on 3 1 st December 2001 b c d e f g Individual and Institutional Pre IPO Placement IPO Stock Dividend for the year 2003: Stock Dividend for the year 2004: Rights Issue (Ratio 1:1 at par): Stock Dividend for the year 2005: Tk. 55,400,000 Tk. 29,600,000 Tk. 15,000,000 Tk. 6,892,000 Tk. 10,689,200 Tk.117,581,200 Tk. 23,516,200 Tk. 55,400,000 Tk. 85,000,000 Tk.100,000,000 Tk.106,892,000 Tk.117,581,200 Tk.235,162,400 Tk.258,678,600 Page | 16 Amount of the event Paid-up Capital after the event

Stock Dividend for the year 2006:

Tk.25,867,900

Tk.284,546,500

Enlistment with the Stock Exchanges: The Company was enlisted with the Dhaka Stock Exchange Limited on October 2002 and with the Chittagong Stock Exchange Limited on July 2004. Its shares are being regularly traded in the Market.

Category Shareholders as on 30 June 2007: Category Shareholders Sponsors Non resident No. of Shares 1,517,192 787,233 541,040 2,845,465 Percentage of total Shares 53.32% 0.00% 27.67% 19.01% 100.00%

Companies & Institutions General Public Total:

Financial Performances:
(Tk. in Million) 2002-03 (%) Financial Performance Loan / Lease portfolio 289.59 Total assets 312 466.38 502 627.72 849 1026.411272.6223.99% 1104 1468 32.97% 2003-04 2004-05 2005-06 2006-07 Growth

Long term liabilities 141 Shareholders' equity 110 Net profit- after tax Page | 17 131 286 322 372 15.53% 221 380 333 329 (1.20)%

7.88 Financial Ratios Debt equity ratio 1.67 Current ratio 1.03:1

21.81

42.45

35.35

55.16

56.04%

2.60 1.61:1

1.64 4:1

1.58 1.23:1

1.75 1.39:1

10.76% 13%

Net asset value per share (Tk) 110 122 124 125 131 4.80%

Return on shareholders' equity(%) 7.16 117.13% Earnings per share 7.89 Price earnings ratio 15.84 Dividend per share (%) 8 10 12 12 15 25.00% 13.52 17.95 15.5 16.16 4.26% 20.41 18.06 13.67 19.39 41.84% 16.59 16.23 10.80 23.45

MIDAS provide wide range of schemes to the clients from their various operations we are going to discuss the key schemes of MIDAS.

Consumers Credit Scheme (CCS)

Credit facility for purchase of consumer durables and household equipment is becoming popular day by day in our country especially to middle and fixed income group, who have a dream and desire but do not have required financial solvency. MIDAS Financing Limited (MFL) in keeping launched its Consumers Credit Scheme (CCS) in August 2001 to provide financial assistance to acquire household items and others consumer durables to the consumers to limited and fixed income of the society in order to improve their standard of living. Confirmed employees within the age limit of 25-55 and business persons of the following types of Organization can availed the loans under CCS:
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Government Organization Semi-Government Organization Bank/Financial Institutions Autonomous bodies Multi national Companies Educational Institutions

Form charge- 50 TK. Amount of loan- Tk. 10,000/= to Tk. 200,000/= Interest Rate- 12% (Flat) p.a Loan Term The loan will be amortized over a period of 1(one) to 4(four) years. Security i. Personal guarantee and demand promissory note of the borrower for timely repayment of installments ii. Post dated cheques in favour of MFL for all the installments covering entire loan period. In addition to the installment cheques, the borrower shall issue to MFL two cheques perfect in all respects except that the date shall be left bank, each for the half amount of the loan and payable on demand. These cheques will be placed for encashment only on default of the borrower to pay all or any three consecutive installments. iii. Guarantee from a responsible person accepted to MFL.

Housing Loan Program:

MIDAS Financing Ltd, (MFL) has entered into an agreement with Bangladesh Bank to provide housing loan to limited income people under the Refinance Scheme. Eligibility to avail the Loan Facility Any Bangladeshi citizen, whose monthly gross salary/income does not exceed Tk.30,000/-.

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 The persons who, in the name of their wives or husbands or children, have no house/apartment in 6 (six) city corporation (Dhaka, Chittagong, Rajshahi, Khulna, Barishal, & Sylhet) areas and Tongi, Gazipur, Savar, & Narayangonj Municipality areas. The salaried applicants who do not have any housing loan scheme in their organizations.

The persons who have not availed any housing loan so far from any bank/financial institution Size of the Apartment 1,250 sft. Maximum Size of the Loan An applicant can avail maximum Tk.20.00 (Twenty) lac loan facility, but not more than 60% of total price of the apartment to be purchased. Period of the Loan 20 years maximum. Mode of Repayment The loan will be repayable in monthly installments. Rate of Interest The interest rate is @10% per annum calculated on quarterly rests basis. Disbursement of Loan The sanctioned loan will be disbursed at a time or in installments as per the approved schedule within 1 (one) year from the date of disbursement of the 1st installment. Security Property purchased with MFL loan shall remain under registered mortgaged till liquidation of the loan. Advance Repayment of Loan Loan can be repaid, partially or in full, any time before the maturity without any extra charges. Loan Processing Fees Application fees: A non refundable amount @ 0.5% of the loan, but not exceeding Tk.5,000/-, is payable at the time of submission of application.
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Appraisal fees: Appraisal expenses @ 1% of the loan sanctioned is payable while accepting the sanction letter. Documentation Expenses All documentation expenses are to be borne by the borrower.

Involvement in Call money Market:

Operation in Call money market is a new product of MIDAS Financing Limited. MIDAS Financing Limited started operation in Call Money Market from April, 2005 with a small amount of fund. Now it is gradually increasing day by day and still dominating in the lending side.

Peoples Leasing and Financial services Limited

Corporate information:
Registered Name: Peoples Leasing and Financial services Limited Date of incorporation: August 12, 1996 Business Commencement: August 26, 1996 Registered Office: City Heart (7th floor), 67 Nayapaltan, Dhaka-1000, Bangladesh. Tel: 9331281, Fax: 88028318275, Email: plfs@bol-online.com, Website: www.plfsbd.com. Authorized Capital: Tk 100, 00, 00,000 Paid up capital: Tk 34, 22, 00,000 Board of directors: 9 Number of employees: 34 Number of shareholders: 1039 Last AGM held: May 29, 2006 Financial year: January to December Auditor: Syful Shamsul Alam & co. Chartered Accountants Listing With Stock Exchanges: July 20, 2005

Company Objectives:
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Peoples Leasing and Financial services Limited, a financial Institution, commenced i9ts business operation with the distinct objective of providing lease and loan finance for the developmental productive enterprises and industrial units for overall economic development of the country

Sources of Fund:
Peoples Leasing and Financial services Limited depends on the term loans from the Commercial banks to obtain necessary funding. Besides, the company entered into an agreement with Bangladesh bank for fund to finance the SME. The company is launching different types of deposit schemes for encouraging individuals savings. Different sources of fund of Peoples Leasing and Financial services Limited are: 1. Lease Income 2. Income from Loan and Advances 3. Income from Term Finance 4. Dividend Income

Uses of fund:
Companys operating asset port folio, which includes Lease finance, loan and investment in shares stood at tk 2848 million in December 2006. This reflects more than 36 % growth. Lease finance portfolio of the company is spread in a balanced way in different sectors namely Industrial machineries, transport ,food and agro- based industries, services, pharmaceuticals, medical diagnostics equipment, RMGs & textiles. The company also provide loan for Industrial, commercial and personal use in Bangladesh and also allows temporary finance to its client within the purview of the law. Companys exposure of 3 wheeler CNG vehicles has been commendable; PLFS has a very prudent investment in shares in the capital market.

Area of Lease / Loan financing:

Consumer durables Garments and Textiles Capital machineries Syndication of loan Office and communication equipment Bridge finance Bill discounting Short term loan
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Construction equipment Developers loan Home loan Generators All type of motor vehicles Loan for shares

Sector wise breakup of investment

As on December31, 2006

Sector Exports/RMG Services commercial transports Vehicles Taxicab Foods Medical Electronic Pharmaceuticals Agriculture Investment in share Total

Amount in taka 614,657,583 397,319,782 352,331,524 284,827,425 92,568,913 178,017,140 199,379,197 263,465,368 291,948,110 142,413,712 31,345,493 2,848,274,247

% 21% 14% 12% 10% 3% 6% 8% 9% 10% 5% 1% 100%

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Portfolio of Investment
1% 5% 10% 9% 8% 6% 3% 10% 12% 14% 22%

Exports/RMG Services commercial transports Vehicles Taxicab Foods Medical Electronic Pharnaceutical s Agriculture Investment in share

Financial Highlights:
Year Operational Income Operational Expenses profit Before tax Net profit after tax Investment in Leases Investment in term Finances Shareholders Equity Paid up capital 2006 358 200 158 148 1129 1283 510 342 2005 226 137 88 81 967 920 362 236 2004 102 63 38 33 750 187 217 130 2003 63 43 20 20 311 33 75 63 2002 19 16 3 2 131 0 55 52

Year Earning per share Dividend

2006 49.58 30%

2005 39 45%

2004 28 0%

2003 39 20%

2002 3 0% Page | 24

Return on equity

29%

23%

15%

27%

3%

EPS:
Earning per share is calculated in accordance with IAS 33 Earning per share. Basic Earning per share has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the year. Weighted average number of ordinary shares outstanding during the period was 29,79,500 (i.e. 23,60,000+ (10,62,000 * 7/12))
2006 49.58 2005 39 2004 28 2003 39 2002 3

Year Earning per share

Earning Per Share

2500 2000 1500 Year 1000 500 49.58 0 1 2 3 4 5 39 28 39 3 Earning per share 2006 2005 2004 2003 2002

Dividend:
Year Dividend 2006 30% 2005 45% 2004 0% 2003 20% 2002 0%

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Dividend
2500 2006 2000 2005 2004 2003 2002

1500 Year Dividend 1000

500 30% 0 1 2 3 4 5 45% 0% 20% 0%

Return on equity:

Year Return on equity

2006 29%

2005 23%

2004 15%

2003 27%

2002 3%

Auditors:
The auditors of the company M/S Syful Alam & co. Chartered Accountants has carried out the audit for the year 2006 of the company and being eligible express their willingness to continue in the office for the year 2007 with a remuneration of Tk 70,000.

Conclusion:
Finance company is not a very old concept in Bangladesh. We can see that the Finance companies that are prevailing in the country are operating for around or less than a decade. Though they have a great prospects not yet all the finance companies have been completely successful in their business run. People of Bangladesh still do not know very well about finance companies. Again some feel it is more profitable to invest in individual stock rather than investing in finance companies as here the margin of profit decreases by the diversified investment. Manager of some finance companies are not very efficient. Uttara Finance companys standing in top 5 losers is the clear indication of the fact. We do not hope this to be happen in the finance companies. Rather we hope that the managers will be more efficient in their decision making and portfolio management and gain peoples faith.
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