| ORIX LEASING PAKISTAN LIMITED |
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| ANNUAL
REPORT 1997 |
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| CONTENTS |
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| Company
Information |
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| ORIX
Corporation, Japan- Group Profile |
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| Associated
Companies |
|
| Financial
Highlights of the Company |
|
| Notice
of Meeting |
|
| Report
of the Directors |
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| Auditors'
Report |
|
| Balance Sheet |
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| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
| ORIX
Group Directory |
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| COMPANY
INFORMATION |
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|
| Mr.
Yoshihiko Miyauchi |
(alternate Mr. Takafumi
Kanda) |
Chairman |
|
|
| Mr.
Shakirullah Durrani |
|
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|
Vice Chairman |
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| Mr.
Yoshiaki Ishida |
(alternate Mr. Hiromi
Kobayashi) |
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| Mr.
Takeshi Sato |
|
|
|
| Mr.
Muizuddin Ahmad |
(alternate Sayed Muzafar
All Shah) |
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| Mr.
Mohammed Aslam |
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|
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| Mr.
Rauf Ahmed Shamsi |
(resigned October 24,
1997) |
|
| Mr.
Shaheen Amin |
(appointed October 24,
1997) |
|
| Mr.
Humayun Murad |
|
Chief Executive |
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|
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| COMPANY
SECRETARY |
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| Mr.
Ramon AIfrey - ACA |
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| BANKERS
AND LENDING INSTITUTIONS |
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| Banks |
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| ABN-AMRO
Bank |
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| American
Express Bank Limited |
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| ANZ
Grindlays Bank Limited |
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| Citicorp
Investment Bank Pakistan Limited |
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| Credit
Agricole Indosuez |
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(Formerly Banque
Indosuez) |
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| Deutsche
Bank A.G. |
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| Faysal
Bank Limited |
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| First
International Investment Bank Limited |
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| Oman
International Bank SAOG |
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| Standard
Chartered Bank |
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| Societe
Generale, The French and International Bank |
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| The
Bank of Tokyo - Mitsubishi Limited |
|
|
| DFIs
and Lending Institutions |
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| Asian
Development Bank |
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| Asian
Finance and Investment Corporation Limited |
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| Bankers
Equity Limited |
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| Crescent
Investment Bank Limited |
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| F.
M. O., The Netherlands |
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| International
Bank for Reconstruction and Development |
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| International
Finance Corporation |
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| Pakistan
Kuwait Investment Company (Private) Limited |
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| Saudi
Pak Industrial & Agricultural Investment Company (Private) Limited |
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| AUDITORS |
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| Sidat
Hyder Qamar Maqbool & Co., Chartered Accountants |
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| LEGAL
ADVISORS |
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| Mansoor
Ahmad Khan & Co. |
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| Walker
Martineau Saleem |
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| REGISTRARS
AND SHARE TRANSFER OFFICE |
|
| Noble
Computer Services (Private) Limited |
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| 2nd
Floor, AI-Manzoor Building, |
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| Dr.
Ziauddin Ahmed Road, Karachi. |
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| REGISTERED
OFFICE & HEAD OFFICE |
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| Overseas
Investors Chamber of Commerce Building, |
|
| Talpur
Road, Karachi-74000 |
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| Tel:
2426020-9 Fax: 2425897 |
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|
| Lahore |
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| State
Life Building, Sir Aga Khan III Road (Davis Road), Lahore-54000. |
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| Tel:
6369946, 6301527, 6302620, 6304258, 6301866 and 6302897 |
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| Fax: 6305024 |
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|
| Faisalabad |
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| 3rd
Floor, Ahmed Plaza, Bilal Road, Faisalabad. |
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| Tel:
633926 and 633811-3 |
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| Fax: 633927 |
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|
| Sialkot |
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| 1st
Floor, Goolam Kadir Arcade, Aziz Shaheed Road, Sialkot Cantt. |
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| Tel:
260767 and 260616 |
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| Fax: 269548 |
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|
| Peshawar |
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| 1st
Floor, State Life Building, The Mall, Peshawar. |
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| Tel:
279789 and 278647 |
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| Fax: 273389 |
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| Universal
Access Number (UAN): 111-24 24 24 |
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|
| ORIX
CORPORATION, JAPAN - GROUP PROFILE |
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| ORIX
Corporation is Japan's largest leasing company and internationally a leading |
|
| diversified
financial services group. Since it's establishment in 1964, ORIX has played |
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| a
pioneering role, first in developing the market for lease financing in Japan
and |
|
| subsequently
in developing and introducing products and services to meet defined customer |
|
| needs
for financing growth and managing assets, not only in Japan but also in 26
countries |
|
| overseas.
As part of this pioneering role,, ORIX has worked to encourage deregulation
and to |
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| provide
a positive competitive stimulus for further evolution in the financial
services industry. In |
|
| the
development of its operations, ORIX has emphasised innovation in products and
services |
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| and
geographical diversification into growth markets in Japan and overseas. |
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| BUSINESS
OPERATIONS |
|
| In
the early stages of its development, ORIX offered primarily full pay out
finance leases for |
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| machinery,
office automation equipment and computers. Gradually, the company broadened |
|
| the
range of leased assets to include vessels, aircraft and automobiles.
Thereafter, ORIX |
|
| expanded
its activities to provide a wider range of financial services and today these
services |
|
| include
instalment loans, investment banking, rentals, securities brokerage, venture
capital, |
|
| futures
and options trading, commody funds, life insurance and real estate related
activities. As |
|
| of
March 31, 1997, ORIX had a domestic network of 503 offices. ORIX has
diversified its |
|
| service
portfolio primarily through the establishment of specialised subsidiaries
which are fully |
|
| integrated
into the operations of the ORIX group. Each of these subsidiaries has the
principal |
|
| responsibility
of responding quickly and flexibly to the market needs in its area of
operations |
|
| and
is expected to contribute to the consolidated profitability of the ORIX
group. At the same |
|
| time
each of these companies draws on ORIX's strong marketing capabilities
developed |
|
| through
the leasing business and its close relationship with a broad spectrum of
customers. |
|
| ORIX
is the leading automobile fleet leasing company in Japan with 200,000
vehicles under |
|
| maintenance
leases. The Company owns a fleet of 27 commercial aircraft, which it leases
to |
|
| airline
companies around the world. |
|
|
| INTERNATIONAL
ACTIVITIES |
|
| While
building the strongest domestic market position among diversified financial
services |
|
| companies
in Japan, ORIX has worked to strengthen global synergies through the |
|
| development
of an extensive network of overseas subsidiaries and affiliates. ORIX began |
|
| setting
up its international network in 1971 and today its overseas presence is
represented |
|
| across
26 countries by 43 companies with 181 offices. To encourage close ties with
host |
|
| nations,
ORIX has emphasised the establishment of affiliates in co-operation with
locally based |
|
| financial
institutions and other leading companies. It has wholly owned subsidiaries in
the USA, |
|
| UK,
Ireland, Hong Kong, Singapore, Taiwan, Australia and New Zealand. In April
1997, ORIX |
|
| and
BANC ONE, a leading U.S. regional bank established a joint venture that
focuses primarily |
|
| on
the securitisation and servicing of mortgage loans. Preparation for the
establishment of |
|
| other
joint venture leasing companies is in process including an auto leasing
company in |
|
| Brazil. |
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| FINANCIAL
HIGHLIGHTS |
|
| ORIX
Group, Japan |
|
(For the year ended March
31) |
|
|
|
|
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|
Translation into |
|
|
Japanese Yen (millions) |
U.S. Dollars (thousands) |
|
|
|
1997 |
1996 |
1997 |
1996 |
|
|
| Total
Revenues |
|
347,784 |
317,594 |
2,804,710 |
2,561,242 |
|
| Income
before Income taxes |
|
36,889 |
35,027 |
297,492 |
282,476 |
|
| Net Income |
|
19,044 |
18,003 |
153,581 |
145,185 |
|
| Shareholders'
Investment |
|
308,584 |
276,251 |
2,488,580 |
2,227,831 |
|
| Total Assets |
|
5,089,975 |
4,751,756 |
41,048,185 |
38,320,613 |
|
|
| Note:
The dollar amounts above represent translations of Japanese yen at an
exchange rate of ¥124 to |
|
| US$1. |
|
|
| BUSINESS
ACTIVITIES |
|
| ORIX
Group, Japan: |
|
|
| General
Industrial Equipment Leasing |
|
Computer and Software
Development |
|
| Ship
Management and Leasing |
|
|
Securities Brokerage and
Investment |
|
| Aircraft
Finance and Operating Leasing |
|
Investment Banking |
|
| Computer
Leasing |
|
Futures and Options
Trading |
|
| Computer
Software and Development |
|
Commodity Funds |
|
| Automobile
Rentals & Maintenance Leasing |
|
Venture Capital
Investment |
|
| Real
Estate Rentals and Management |
|
Industrial Finance |
|
| Housing Loans |
|
Life Insurance |
|
| Office
& Electronic Equipment Rentals |
|
Casualty Insurance Agency
Services |
|
| Mortgage
- Backed Securities Loans |
|
Hotel Management and
Resort Development |
|
| Consumer
Finance & Insraiment Sales |
|
Broadcasting Service via
Communication Satellite |
|
|
| ASSOCIATED
COMPANIES |
|
|
| OVERSEAS
JOINT VENTURES |
|
|
|
| 1.
Oman ORIX Leasing Company SAOG (Oman ORIX) |
|
| Oman
ORIX completed its second full year of commercial operations on December
31,1996 in |
|
| which
it made a net profit before tax of Rial Omani (RO) 230,576 (Rs. 24.4 million)
enabling |
|
| the
Company to declare a dividend of 7.5%. Volume of business increased by 248%
with |
|
| purchase
cost of new business written at RO 8.2 million (Rs. 867.1 million). Gross
lease |
|
| receivables
stood at RO 8.8 million (Rs. 930.5 million), an increase of 245% over last
year. |
|
| Oman
ORIX has total assets of RO 10.8 million (Rs. 1.14 billion) and net worth of |
|
| RO
2.05 million (Rs. 216.8 million). |
|
|
| Oman
ORIX's main business is leasing of moveable assets to individuals, small and
medium |
|
| size
companies and large sub-contractors in diverse economic sectors including
services, |
|
| trading
and contracting, construction and manufacturing. Oman ORIX is the first
non-bank |
|
| financial
institution in Oman to receive a formal credit rating, earning an
"A" long-term rating |
|
| and
an "AI" short-term rating from Maghreb Rating, a subsidiary of IBCA
UK. |
|
|
| 2.
ORIX Leasing Egypt SAE (ORIX Egypt) |
|
| ORIX
Egypt is OLP's second joint venture leasing company in the Middle East. The
joint |
|
| venture
agreement was signed in September 1996 and ORIX Egypt was incorporated in
June |
|
| 1997
with a paid up capital of 20 million Egyptian Pounds (USS 5.9 million).
Sponsoring |
|
| shareholders
are National Bank of Egypt, (24%), ORIX Corporation, Japan, (23%), ORIX |
|
| Leasing
Pakistan Limited (23%), International Finance Corporation (15%), and
Commercial |
|
| International
Investment Company (15%). ORIX Egypt will be a pioneer of leasing in Egypt |
|
| which
offers attractive opportunities for the promotion of leasing business. The
Company's |
|
| business
strategy will focus upon leasing of industrial plant and machinery. |
|
|
| JOINT
VENTURE IN PAKISTAN |
|
|
| ORIX
Investment Bank Pakistan Limited (OIB) |
|
| OIB
is a joint venture sponsored by ORIX Corporation, Japan, International
Finance |
|
| Corporation,
Asian Finance & Investment Corporation (an affiliate of Asian Development
Bank) |
|
| and
other major financial institutions in Pakistan. The Bank is primarily engaged
in providing a |
|
| range
of investment banking products which include corporate advisory services,
project |
|
| packaging,
structuring and placement of capital market debt products, issuance and |
|
| discounting
of bankers acceptance and treasury operations. |
|
|
| OIB
completed its first full year of operations on June 30, 1997 with total
revenue of Rs. 90 million |
|
| and
profit before tax of Rs. 11.5 million. The Bank's deposit level stood at Rs.
546 million of which |
|
| Rs.
175 million were in foreign currency. At June 30, 1997 OIB had a net worth of
Rs. 207 million |
|
| and
total assets in excess of Rs. 1.1 billion. |
|
|
| FINANCIAL
HIGHLIGHTS OF THE COMPANY AS AT JUNE 30, 1997 |
|
|
| (Rupees
in thousands) |
|
|
|
1993 |
1994 |
1995 |
1996 |
1997 |
|
|
| Gross
lease receivables |
|
1,703,286 |
2,406,518 |
3,535,871 |
4,752,997 |
5,281,276 |
|
| Total
lease disbursements |
|
728,136 |
1,051,872 |
1,559,699 |
1,957,318 |
1,725,997 |
|
| Rents received |
|
599,558 |
778,342 |
1,040,187 |
1,446,490 |
1,596,027 |
|
| Gross income |
|
230,394 |
320,943 |
466,777 |
656,982 |
782,225 |
|
| Profit
before tax |
|
49,061 |
60,578 |
112,983 |
166,536 |
157,097 |
|
| Shareholders'
equity |
|
158,815 |
197,412 |
570,505 |
685,872 |
749,188 |
|
| Earning
per share (in Rs.) |
|
6.16 |
7.33 |
6.61 |
9.22 |
8.20 |
|
| Dividends: |
|
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Cash |
|
17.50% |
20.00% |
35.00% |
45.00% |
45.00% |
|
| Bonus |
|
10.00% |
10.00% |
0.00% |
0.00% |
0.00% |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Total |
|
27.50% |
30.00% |
35.00% |
45.00% |
45.00% |
|
|
| NOTICE
OF MEETING |
|
| Notice
is hereby given that the eleventh Annual General Meeting of the Company will
be held at |
|
| The
Institute of Chartered Accountants of Pakistan, G-31/8, Kehkashan, Clifton,
Karachi on Friday, |
|
| December
5, 1997 at 9:30 am to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To receive, consider and adopt the audited accounts together with the
Directors' and Auditors' |
|
| Reports
for the year ended June 30, 1997. |
|
|
| 2.
To approve the payment of cash dividend to the Shareholders at the rate of
Rs. 4.50 per share of |
|
| Rs.
10/- each for the year ended June 30,1997. |
|
|
| 3.
To appoint Auditors and fix their remuneration. The present Auditors Messrs.
Sidat Hyder Qamar |
|
| Maqbool
& Co., Chartered Accountants, retire and being eligible, offer themselves
for |
|
| re-appointment. |
|
|
| SPECIAL
BUSINESS |
|
| 4.
To consider and if approved, pass the following resolution as a Special
Resolution in respect of the |
|
| issue
of Term Finance Certificates and fully paid ordinary shares other than rights
issue: |
|
| "Resolved
that the Company raise finance for its medium term funding requirement by the
issue of |
|
| Term
Finance Certificates ("TFCs") with share warrants granting option
to share warrant holders to |
|
| subscribe
to new shares of the Company under the following terms and conditions: |
|
|
| Amount |
|
: |
Upto Rs. 410 million |
|
| Term of TFC |
|
: |
Redemption over 3 years |
|
| Profit on TFCs |
|
To be determined by the
Board of Directors |
|
| Attached
share warrants |
|
: |
4.1 million |
|
| New
shares to be issued |
|
: |
4.1 million (in exchange
for share warrants) |
|
| Period
of option |
|
: |
On or before June 30,
1998 |
|
| New
shares to be issued at |
|
: |
|
| Face value |
|
: |
Rs. 10 per share |
|
| Premium |
|
: |
Rs. 35 per share |
|
| TFCs
to be reserved for |
|
| existing
public shareholders |
|
| at the time of TFC issue |
|
: |
Rs. 12 million with share
warrants |
|
|
| Further
resolved that the Board of Directors may reduce the amount of the TFCs to be
issued if in |
|
| the
opinion of Directors marketing conditions require such reduction and that the
Board of |
|
| Directors
is empowered to take such other action for issuance of TFCs with warrants as
may be |
|
| determined
by the Board to be in best interest of the Company or be required to be taken
by the |
|
| Corporate
Law Authority or any Stock Exchange and to further issue upto 4.1 million new
ordinary |
|
| shares
other than as rights shares without offering the same to existing
shareholders, except for |
|
| new
shares to be issued against share warrants attached to TFCs of Rs. 12 million
reserved for |
|
| public
shareholders, subject to the approval of the Federal Government being
obtained in terms of |
|
| section
86 of the Companies Ordinance, 1984, such shares shall rank pari-passu in all
respects |
|
| with
the existing shares of the Company." |
|
|
| 5.
To transact any other business with permission of the Chair. |
|
|
| STATEMENT
UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984 |
|
| I.
(a) The Company has traditionally relied on International lending institution
to meets it's term |
|
| funding
requirements and is now ready to tap the domestic capital market as a new
source of |
|
| medium
term funds for the Company. It is considered feasible to raise financing
through |
|
| issuance
of Term Finance Certificates ("TFCs") of upto Rs. 410 million to be
redeemed over a |
|
| three
year period. |
|
|
| (b)
It is recommended by the Board of Directors that TFCs be issued with share
warrants enabling |
|
| the
TFC holders to subscribe to ordinary shares of the Company having a face
value of |
|
| Rs.
10 each at a premium of Rs. 35 per share on or before June 30, 1998. The
maximum |
|
| number
of shares to be issued to the TFCs holders against the warrants will be 4.1
million |
|
| shares.
In the opinion of the Board the issuance of warrants will enable the TFCs to
be priced |
|
| competitively
thus reducing cost of funds. |
|
|
| (c)
The Corporate Law Authority has cleared the scheme of the proposed issue of
TFCs with |
|
| warrants
in principle via letter reference C.57(1)/3/97 dated October 3, 1997, subject
to |
|
| statutory
compliance with the issue of debt securities and share warrants. |
|
|
| (d)
None of the Directors have any direct or indirect interest in the Special
Resolution to be |
|
| passed. |
|
|
| Notes: |
|
|
|
| a)
The Register of Members of the Company will be closed from November 28, 1997
to December 5, |
|
| 1997
(both days inclusive). Dividend will be paid to those Shareholders whose
names appear on |
|
| the
Register of Members as at the close of business on November 27, 1997. |
|
|
|
|
| b)
A Member entitled to attend and vote at the General Meeting of Members is
entitled to appoint a |
|
| proxy
to attend and vote on his behalf. A proxy need not be a Member of the
Company. |
|
|
| c)
The instrument appointing a proxy and the power of attorney or other
authority under which it is |
|
| signed
or a notarially certified copy of the power of attorney must be deposited at
the registered |
|
| office
of the Company at least 48 hours before the meeting. A form of proxy is
enclosed. |
|
| Shareholders
are requested to notify any change of address immediately. |
|
|
|
| REPORT
OF THE DIRECTORS |
|
| The
Directors are pleased to present the eleventh Annual Report together with the
audited |
|
| accounts
of the Company for the year ended June 30, 1997. |
|
|
|
Rupees |
|
| Net
profit for the year after charging all expenses, |
|
|
157,096,907 |
|
|
| Less: Taxation |
|
25,000,000 |
|
|
---------- |
|
|
132,096,907 |
|
|
| Unappropriated
profit brought forward |
|
10,045,675 |
|
|
---------- |
|
|
142,142,582 |
|
| Appropriations: |
|
|
| Transfer
to General Reserve |
|
65,000,000 |
|
| Cash Dividend |
|
72,499,289 |
|
|
---------- |
|
|
137,499,289 |
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
4,643,293 |
|
|
| DIVIDEND |
|
| The
Directors recommend a cash dividend of 45%. In maintaining the same payment
as 1996, |
|
| despite
a marginal fall in current year's profit, the Directors endorse their
commitment to |
|
| maximise
return to shareholders by as much as is considered prudent. |
|
|
| REVIEW
OF OPERATIONS |
|
| The
year was overshadowed by political and economic difficulties, and whilst the
post election |
|
| period
removed political uncertainties, the economic recovery will take time to
respond to the |
|
| structural
changes being introduced by the Government. Against this backdrop, demand for |
|
| machinery
and equipment remained soft and overall volume of lease disbursements
contracted. |
|
| As
reported in the half-year results, new lease volume fell by 23% in the six
months |
|
| to
December 31, 1996 against the previous comparative period, but the Company
made a |
|
| strong
recovery in the second half through greater marketing efforts and
introduction of new |
|
| lease
products. To the first six months volume of Rs. 705 million, new leases of
Rs. 1.01 billion |
|
| were
added in the second half giving a total for the year of Rs. 1.73 billion, a
12% fall over the |
|
| 1996
volume of Rs. 1.96 billion. New rent receivables of Rs. 2.5 billion were
booked during the |
|
| year
(1996: Rs. 2.8 billion) taking the rent receivables to Rs. 5.3 billion at the
year end. |
|
|
| Recovery
of lease rentals remained strong and Rs. 1.6 billion was received on account
of |
|
| current
leases (1996: Rs. 1.45 billion), thus further strengthening internal cash
generation |
|
| which
is traditionally the Company's main source of funding. Lease income rose by
16% to |
|
| Rs.
690.3 million, but this growth was slower than the 38% increase registered in
1996. |
|
| Installment
loans continue to grow steadily and contributed Rs. 43.2 million to income,
an |
|
| increase
of 23% over the previous year. For the first time, the income side benefited
from a |
|
| dividend
payment by an associated company. Oman ORIX Leasing declared a maiden |
|
| dividend
of 7.5% which contributed Rs. 3.17 million to your Company's income. |
|
|
| Net
profit before tax amounted to Rs. 157.1 million, a decrease of 5.7% over
1996. Earning per |
|
| share,
after tax, was Rs. 8.20 as against the 1996 earning of Rs. 9.22 per share.
The fall in |
|
| profit
is attributable to a lower volume of business and higher financial charges.
As old lines of |
|
| credit
are repaid, they are being replaced by funds which are costlier. |
|
|
| In
light of weaker demand for industrial machinery, the Company increased its
auto lease |
|
| business,
and motor cars and commercial vehicles accounted for 52% of the total lease |
|
| disbursements.
Plant and machinery made up 41% of the volume and the balance of 7% was |
|
| for
computer and office equipment leases. The lease portfolio is well balanced
over a wide |
|
| sectoral
base, with the highest exposure to any sector being 16%. Financial assistance
was |
|
| provided
to 1,032 business enterprises, majority of which were small and medium sized |
|
| enterprises
which represent the core customer base of the Company. |
|
|
| On
the expenditure side, the main item is financial cost which rose by 31% to
Rs. 474.4 million. |
|
| Total
loans availed by the Company at the year end were Rs. 2.9 billion against Rs.
2.5 billion |
|
| in
1996. The combination of higher level of borrowings, and as mentioned
earlier, the higher |
|
| cost
of new loans, increased the financial charges by Rs. 112 million over the
previous year. |
|
| Selling,
general and administrative expenses increased by 21% to Rs. 99.7 million
reflecting |
|
| both
inflationary impact and administrative cost of supporting a broader business
base. In |
|
| accordance
with the normal practice of the Company, and ORIX Group worldwide, a general |
|
| provision
for potential lease losses is made to safeguard the Company from future
unforeseen |
|
| losses.
The charge for the year is Rs. 35.2 million (1996: Rs. 32.5 million). While
the Company |
|
| continues
to maintain an excellent collection ratio, a higher provision has been made
this year |
|
| to
absorb delinquent accounts which increase in difficult economic conditions. |
|
|
| FUNDING |
|
| The
Company continues to enjoy the confidence of domestic and international
financial |
|
| institutions
and banks which provide the Company adequate funding to meet its requirement |
|
| for
growth. During the year drawdowns were made on the ADB loan of USS 20 million
and the |
|
| Company
continues to utilise the World Bank line of USS 26 million for micro and
small |
|
| enterprises. |
|
|
| Our
business requires term financing since leases being written are for three
years or longer |
|
| periods.
International lending institutions have been our main source of long-term
loans. The |
|
| Company
is now ready to tap the domestic capital market as a new source of
medium-term |
|
| funds.
It was stated in last year's Annual Report that preparatory work had been
done for the |
|
| issuance
of Term Finance Certificates (TFCs). The Board is pleased to announce the
final |
|
| proposal
for this TFC issue of upto Rs. 410 million, redeemable over a three year
period. The |
|
| TFCs
have share warrants attached which gives a TFC holder the right to subscribe
to a |
|
| determined
number of shares at a price of Rs. 45 per share. If share warrants are fully |
|
| exercised,
4.1 million new shares will be issued which will raise an additional amount
of |
|
| Rs.
184.5 million making a total of Rs. 594.5 million from the entire TFC issue. |
|
|
| The
share warrant provides three benefits. Firstly, it will enable the TFC to be
priced |
|
| competitively,
thus helping the Company to lower its cost of funds. Secondly, the new shares |
|
| will
take the total issued share capital to over Rs. 200 million which is likely
to become a |
|
| minimum
requirement for all leasing companies in the near future. Thirdly, the larger
capital |
|
| base
will facilitate the overseas expansion of your Company. The TFCs will be
listed, and of |
|
| the
total, Rs. 60 million will be offered to the public. To enable ORIX's
existing public |
|
| shareholders
to participate in the issue, TFCs with a face value of Rs. 12 million, which
will |
|
| have
0.12 million attached share warrants, are being reserved for existing public
shareholders. |
|
| The
Directors are of the opinion that the proposed TFC issue, which is a new
instrument in the |
|
| domestic
capital market, is beneficial to the Company, and request the shareholders'
support |
|
| in
approving the proposal. |
|
|
| CREDIT
RATING |
|
| The
Pakistan Credit Rating Agency has updated the Company's credit ratings for
the year to |
|
| June
30, 1996 and maintained its ratings of AI+ and A1 for short and long term
debt |
|
| respectively.
These are the highest credit ratings achieved by any leasing company in
Pakistan |
|
| in
the East two years. |
|
|
| ASSOCIATED
COMPANIES |
|
| Oman
ORIX Leasing Company SAOG completed its second full year of operations on |
|
| December
31, 1996, in which it made a profit of Rs. 24.4 million and declared a maiden |
|
| dividend
of 7.5%. The Company is progressing rapidly and its share price of Omani Rial
2.70 |
|
| at
June 30, 1997 gives your Company's investment of Rs. 33.9 million a market
value of |
|
| Rs. 114 million. |
|
|
| ORIX
Leasing Egypt SAE (OLE) our second overseas joint-venture, was incorporated
in June |
|
| 1997
and is now operational in Cairo. Your Company has 23% shareholding and has |
|
| seconded
Mr. Saeed Reza as the first Managing Director of OLE. The Egyptian economy is |
|
| expanding
robustly and business prospects for OLE are bright. |
|
|
| ORIX
Investment Bank Pakistan Limited completed its first year of operations on
June 30, |
|
| 1997
earning a profit before tax of Rs. 11.5 million. The Bank's main focus is to
develop |
|
| investment
banking business and promote a link for this business with the Middle East
and Far |
|
| Eastern
operations of the ORIX Group. |
|
|
|
| FUTURE
PROSPECTS |
|
| The
incentives for industry announced by the Government together with structural
changes |
|
| being
introduced in the economy are expected to revive business confidence. The
Company is |
|
| ready
to participate fully in meeting any increase in demand for machinery and
equipment |
|
| which
should result from an upturn in the economy. Additionally, steps which have
already |
|
| been
taken to promote ancillary financial products should contribute more to the
next year's |
|
| results.
Adequate funding arrangements are in place to meet obligations of higher
volume of |
|
| lease
disbursements. |
|
|
| ORIX
Corporation, Japan has designated Pakistan as its base for the Middle East
region. |
|
| Expansion
in the Middle East by the ORIX group is being spearheaded by ORIX Leasing |
|
| Pakistan
which has opened new opportunities for your Company's international
expansion. |
|
|
