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      Chairman's Statement  
      Dear Shareholders  
   
     
On behalf of the Board of Directors, I am pleased to welcome you at the 21st Annual General Meeting of United Leasing
Company Limited.
  
  .  
 

At the outset, with a heavy heart I inform you that, Mr.P.A.Leggatt MBE, founding Director of your Company, nominated by our sponsor shareholder, Lawrie Group plc of the U.K, expired in London on 28 November 2009. Late Mr.P.A.Legatt MBE was instrumental in Company's formation and bringing in foreign investment, particularly that of the Commonwealth Development Corporation (CDC) into the Company. His contribution to the success of the Company will be gratefully remembered by us all. Let us pray for the peace and salvation of the departed soul.

Let me now brief you about the economic scenario of the Country and the performance of your Company during the year.

  
 
      Economy  
   
     
Bangladesh economy has been demonstrating considerable resilience despite adverse effects of global downturn. The country achieved GDP growth of 5.9% in FY2008-09 from 6.2% in the previous fiscal year.
  
       
The major contributor to the GDP growth was agriculture sector which registered a robust growth of 4.6% in FY2008-09. Last fiscal year the growth was 3.2%. Overall favorable climatic condition along with broad based government support helped achieve bumper crops during the year.
  
       
Industrial growth however was 5.9% in FY2008-09 compared with 6.8% in FY2007-08. This can be attributed to decline in both external and domestic demand. The decline was noticed mainly in export oriented industries due to poor response from the external buyers which resulted in weak domestic demand for the related industrial products. Deficiencies in power, gas and basic infrastructure were the major supply side bottlenecks for industry sector growth, investors were cautious to invest in new industrial ventures or expansion.
  
       
Government's implementation of projects under ADP and PPP also slowed down. The overall depressed demand, both in the private sector and Government, and decline in import price, especially of fuel, is well reflected in the all time high foreign currency reserve of US$ 10 billion and the excess liquidity in the Banking Sector. Inflation fell steadily from 9.94% in FY2007-08 to 6.66% in FY2008-09.
  
       
Despite slow down of the manpower intake abroad, remittances of Bangladesh nationals working abroad amounted to US$ 9.69 billion in FY2008-09 as against US$ 7.92 billion in the preceding financial year indicating an increase of 22.4%. This perhaps is the outcome of the efforts of the banks to improve their remittance networks. Worker's remittances are still growing, but at a decelerated pace. The number of workers leaving Bangladesh has fallen while the number of those returning has risen.
  
 
     
Industry
  
   
     
Companies predominantly involved in lease financing of equipment and machinery had a very challenging year in 2009.
  
       
Though Bangladesh Bank's move to fix maximum bank lending rate for finance companies at 13% helped many to reduce their funding cost, however, significant liquidity in the entire financial sector, coupled with low demand and the resulting intensification of competition among banks and financial institutions had an adverse effect on the portfolio and margins. Many had to face prepayment and/or had to lower margins to retain their customers which reduced profitability. You may recall that in 2007 the National Board of revenue (NBR) withdrew the depreciation allowance benefit for companies involved in leasing, therefore now there is no competitive advantage of leasing over other financing products and the
pricing as well as margin advantage is in favour of the banks.
  
       
As part of government's stimulus package, Bangladesh Bank allowed industries affected by the global recession to reschedule their loans within a specific time frame, without down payment. This brought a sigh of temporary relief to the industries who could not repay their loans due to down turn in business.
  
       
With a view to strengthening the financial base of the financial institutions and ensuring adherence to global best practices, Bangladesh Bank has asked the financial institutions to implement Basel-II by the end of 2010 and raise their paid-up capital to minimum BDT. 500 million from the existing minimum limit of BDT. 250 million within December 31, 2010. Furthermore cash dividend cannot be paid till the paid-up capital is brought to the minimum level.
  
       
To harmonise and standardise the presentation of financial statements, Bangladesh Bank directed financial institutions to prepare their annual financial statements in line with the banking companies. Therefore, our presentation of accounts in the annual report 2009 has been made in accordance with the Banking Companies Act.
  
   
 
      Company performance  
   
     
The company earned net interest income of BDT. 420 million and profit before tax of BDT. 212 million compared to BDT. 395 million and BDT. 203 million in 2008 registering a growth of 6.32% and 4.43% respectively. Cost of deposits and borrowing decreased by 5.56% from BDT. 726 million to BDT. 686 million, however operating expenses increased by 25.13% from BDT. 115 million to BDT. 145 million mainly due to consecutive effect of expansion in small enterprise financing, factoring of accounts receivable and individual investment services initiated at the end of 2008. Additional promotional expenses for expanding corporate image after completion of 20 years of service and imposition of VAT on rental expenses also contributed to the increase in operating expenses. Sufficient provision for bad debts has also been made this year to cover ourselves from recovery risk. Net asset value per share increased to BDT.478 from BDT. 434. Earning-per-share increased by 6.45% to BDT. 61.71 from BDT. 57.97 in 2008.
  
       
Despite the global economic recession and sluggish investment climate in the country, your Company's core business of lease financing of industrial machinery achieved reasonable success by focusing on exploring new markets and expanding customer base.
  
       
Small enterprise financing achieved reasonable growth in portfolio as did the Accounts Receivable financing business. Both these initiatives undertaken in 2005 were part of our effort to diversify and increase our support to country's small enterprises.
  
       
The investment marketing team also made considerable gains this year and established Company's deposit products. The deposit network has widened as has the range of product offerings.
  
   
 
      Collection  
   
     
It has been a tough and challenging year for the Collection teams. A number of industries suffered due to global economic condition resulting in repayment difficulties. Despite these constraints the collection teams fared well due to intensive and proactive monitoring which helped in achieving the collection target. Overall recovery ratio during the year was 92%.
  
   
 
      Human resource  
   
     
Recognising that service quality improvement is an on-going process, during 2009, your Company focused on increasing the overall efficiency of the organisation by recruiting quality personnel to ensure our motto, “aiming to serve better …everyday”. ULC is an equal opportunity employer offering an excellent work environment with a relatively young and motivated work force. We value high ethical standards, integrity and dedication.
  

 

  
To equip the resources to operate in a competitive environment and to keep them updated with knowledge and techniques, the Company provided 785 man-day training throughout the year both locally and overseas. Due to competitive environment, employee retention continued to be a challenge and we successfully met this challenge by providing a motivating and inspiring work environment.
  
   
      Risk management  
   
     

The element of risk management is inherent in every department's activity of your Company, however here I would like to highlight the key developments that took place in 2009.

  
   
The Basel-II compliant, two dimensional credit risk assessment model, developed and tuned in the last four years now has all our assets rated. This Internal Rating Based (IRB) approach, recommended by the Basel-II committee and also by the Bangladesh Bank in its Supervisory Review Process, coupled with our data integrity management process of monthly credit audit, is also proving to be a valuable tool for managing small enterprise asset quality and establishing a prudent credit culture within the Company. The team now also gives monthly feedback on client specific risk to Credit and Relationship Management teams.
  
   
Risk Administration department also expanded their activity to Industry Risk Assessment. Now both the Credit and Relationship Management departments are better aware of the sector specific risks and opportunities. We are hopeful that this department will expand its activities to Operation risk Management issues shortly.
  
   
The Control and Compliance teams expanded the scope and intensity of their activities as well. This has improved the effectiveness of check and balance which ensures quality and transparency in all spheres of Company's operation.
  
   
The Company further strengthened its anti money laundering supervision by updating its personnel with latest techniques to identify and mitigate risk areas through various seminars, workshops and training. Committees were formed for establishing key operational control in head office and branches for mitigating reputation and financial risk.
  
   
      Treasury operation  
   
     
Treasury continued to look for diversity in its funding sources to minimise concentration and related cost of fund which is vital for our existence in this competitive business environment. The treasury department assumed special care with regard to the balance sheet risk management, ensuring the level of business as well as effectively managing the risks of liquidity and interest rates.
  
   
The main challenge for treasury this year was to significantly reduce funding costs by taking advantage of the market liquidity. I am pleased to report that this was quite effectively accomplished this year.
  
   
      Corporate governance  
   
     
It is a pleasure to inform you that the Company complied with all the provisions of the Corporate Governance Compliance Report issued by the Securities and Exchange Commission and the Corporate Governance circulars issued by the Bangladesh Bank. It has always been the Company's earnest endeavor to maintain high standards of corporate governance, business integrity and professionalism in all its activities.
  
   
      Post balance sheet date events  
   
     
Subsequent to the balance sheet date, the Directors recommended cash dividend of BDT 7.5 per share and one bonus share for every share held. There are no circumstances in the Company of which non-disclosure would affect the ability of the users of the financial statements to make proper evaluation and decisions.
  
     
 
To improve coverage of the north-eastern areas of the Country, our Sylhet branch was formally opened on January 27, 2010. The Chittagong Branch is also being relocated to accommodate the expanded work force which is already yielding result by expanding our coverage to the southern region.
  
     
      Outlook  
 
     
The FY2009-10 GDP growth prediction ranges from 5.2% (International Donor Agencies) to 6% (Bangladesh Bank). The global economic recovery is still very slow and how well we can recover as a nation is uncertain, however, in all likely hood, 2010 may fair better than the last if inflation is reasonably managed.
  
     
 
In an easy credit environment as well as intensifying competition, the major challenge will be to succeed in retaining and expanding our customer base by offering robust, risk mitigated products and services.
  
     
 
I am pleased to inform you that your Company has adequately positioned itself to succeed in this challenging environment. To achieve our desired goals we shall continue to improve our geographic market penetration of all our products. We shall continue to expand our geographic coverage and as the regional portfolio grows our regional presence shall expand as well. Improving our service quality for all our product shall continue to dominate our agenda as that is the only way to ensure a sustainable client base.
  
     
 
We are therefore looking forward to a challenging yet rewarding year ahead as we feel there are many milestones to cross. We shall remain conscious in managing costs and continually work to improve our service quality and add value to all our stakeholders.
  
     
      Acknowledgment  
 
     
We wish to thank our valued customers, shareholders, regulators, lenders and the international agencies for their continuous support and cooperation.
  
     
 
I take the privilege of thanking my colleagues in the Board of Directors of the Company for their contribution towards development of the Company and the support rendered to me during the year in conducting the meetings of the Board of Directors.
  
     
 
Last but not the least, I also express my gratitude to all the employees of the Company for their sincere and dedicated services to the growth of the Company.