Press Release

VIS Assigns Initial Ratings to CDC Share Registrar Services Limited (CDCSR)

Karachi, October 24, 2022: VIS Credit Rating Company Ltd. (VIS) has assigned initial entity ratings of ‘A/A-1’ (Single A /A-One) to CDC Share Registrar Services Limited (CDCSR). The medium to long-term rating of ‘A’ denotes good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ signifies high certainty of timely payment. Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’.

CDC Share Registrar Services Limited (‘CDCSR’, or ‘Company’) was originally formed as a department in Central Depository Company of Pakistan Limited (CDC) in 2008 and was later carved out as a wholly owned subsidiary of CDC in 2019. CDCSR is a Balloter/Share Registrar that offers a composite portfolio of handling IPOs, maintenance, registration, verification of shareholders data, handling of corporate actions, Intermediary Services, e-voting/e-meeting solutions and direct customer dealing & interaction with shareholders on behalf of client companies.

Ratings incorporate strength of the parent company-CDC, which has diversified and sizeable market presence in the Pakistan Capital Market for over two decades. Ratings also factor in business integration with the parent with reference to policies and procedures, IT infrastructure, Internal Audit and Compliance function. Furthermore, sound financial profile of the parent company with sizeable liquid assets on the books and low leverage levels supports the ratings of CDCSR. Continuity of implicit sponsor support to the company over the rating horizon in case need arises will be important for ratings.

Business risk profile of the Company is considered low supported by strong market presence with CDCSR holding market share of 25% in the share registrar services industry of listed companies in the country. Competitive advantage of the company stems from state-of-the-art technological infrastructure, single window operations, professional staff and consistent service excellence and performance. Revenue model of the company incorporates stability with inflationary adjustments reflected in the annual renewal of fee structure. Furthermore, revenue stability profile is also supported by low switching risk of clients due to one-window solutions provided by CDCSR.

Ratings factor in sound corporate governance framework implemented at the Company through the sponsor’s assistance for key functions. Revenue of CDCSR has depicted a healthy year on year growth during the last three years being a function of onboarding new clients, and revision in annual fee structure. With higher growth in its topline, efficient cost management, and support of other income, the Company has consistently improved its profitability profile. Albeit being small, equity base of the company has grown at a three-year CAGR of 24% owing to profit retention. With no debt on books, leverage indicators are on the lower side; while liquidity profile of the company is sound supported by liquid investments (one-half of the total asset base) on the balance sheet. Maintaining the same at low levels will be a key rating sensitivity.

For further information on this rating announcement, please contact the undersigned (Ext. 207) or Ms. Asfia Aziz (Ext: 212) at 021-35311861-70 or fax to 021-35311873.

Sara Ahmed

VIS Entity Rating Criteria: Corporates (August 2021)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .