| B.R.R. International Modaraba |
|
|
|
|
|
|
|
|
|
|
| (Formerly
B.R.R. Capital Modaraba) |
|
| ANNUAL
REPORT 1998 |
|
|
|
| Contents |
|
|
| Corporate
Information |
|
| Directors'
Report |
|
| Lease
Portfolio |
|
| Auditors'
Report |
|
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Certificate Holding |
|
|
|
| Corporate
Information |
|
|
| Modaraba
Company |
B.R.R. Investments
(Private) Limited |
|
|
|
|
|
|
| Chairman |
|
Mr. Siddique Dawood |
|
|
|
|
|
|
| Chief
Executive |
Mr. Safdar Rashid |
|
|
|
| Directors |
|
Mr. Mansoorul Arfin |
|
|
|
Mr. Charles David
Blackmore |
|
|
|
|
| Auditors |
|
A.F. Ferguson & Co. |
|
|
|
Chartered Accountants |
|
|
|
| Bankers |
|
ABN Amro Bank |
|
|
|
Al-Faysal Investment Bank
Limited |
|
|
|
American Express Bank
Limited |
|
|
|
ANZ Grindlays Bank plc |
|
|
|
Askari Commercial Bank |
|
|
|
Faysal Bank Limited |
|
|
|
First International
Investment Bank Limited |
|
|
|
Muslim Commercial Bank
Limited |
|
|
|
National Bank of Pakistan |
|
|
|
Oman International Bank
Limited |
|
|
|
Prime Commercial Bank
Limited |
|
|
|
Standard Chartered Bank |
|
|
|
| Registrars |
|
Gangjees Investment &
Finance Consultants |
|
|
|
513 Clifton Centre, |
|
|
|
Khayaban-e-Roomi, |
|
|
|
Kehkeshan, Block 5, |
|
|
|
Clifton, Karachi. |
|
|
|
|
| Registered
Office |
Dean Arcade, Block-8,
Kehkeshan, Clifton, Karachi. |
|
|
|
| Directors'
Report |
|
|
| The
Board of directors of B.R.R. Investments (Private) Limited takes pleasure in |
|
| presenting
the Fourteenth Annual Report of B.R.R. International Modaraba (Formerly
B.R.R. |
|
| Capital
Modaraba) together with the audited accounts for the year ended June 30,
1998. |
|
|
| Financial
Results |
|
| The
financial results of your Modaraba for the year under review are summarised
below: |
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| New
Lease executed at prime cost |
|
|
390,389,442 |
221,325,532 |
|
|
|
|
|
---------- |
---------- |
|
| Total
Income |
|
|
|
556,020,235 |
467,158,841 |
|
|
|
|
|
---------- |
---------- |
|
| Profit
before management fee |
|
|
61,695,669 |
40,189,287 |
|
| Modaraba
Company's Management fee |
|
|
5,608,697 |
3,653,571 |
|
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
56,086,972 |
36,535,716 |
|
|
|
|
| Taxation |
|
|
|
| - Current |
|
|
|
10,000,000 |
3,000,000 |
|
| -
Prior years |
|
|
|
- |
(6,088,085) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
10,000,000 |
(3,088,085) |
|
|
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
|
46,086,972 |
39,623,801 |
|
|
|
|
| Unappropriated
profit brought forward: |
|
|
| Opening
balance of B.R.R. International Modaraba |
|
11,250,977 |
1,861,830 |
|
| Transfer
from B.R.R. Second Modaraba |
|
|
13,106,394 |
- |
|
| Transfer
from Equity International Modaraba |
|
7,519,957 |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
31,877,328 |
1,861,830 |
|
|
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
|
77,964,300 |
41,485,631 |
|
|
|
|
| Appropriations: |
|
|
|
| Cash
profit distribution @ 11% (1997: 11%) |
|
53,012,812 |
22,309,894 |
|
| Transfer
to statutory reserve |
|
|
9,217,394 |
7,924,760 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
62,230,206 |
30,234,654 |
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
15,734,094 |
11,250,977 |
|
|
|
========== |
========== |
|
|
| The
Board is pleased to declare a profit distribution in cash of Rs. 1.10 per
Modaraba Certificate |
|
| aggregating
Rs. 53.01 Million. With the transfer to reserve the break-up value of your
Modaraba |
|
| Certificate
now stands at Rs. 13.44 against a face value of Rs. 10 (1997: Rs. 14.29). |
|
|
| Operations |
|
| We
are pleased to report that during the year under review, your Modaraba
completed 12 years of |
|
| business
operations. The total number of leases executed in the merged entity since
inception to |
|
| June
30, 1998 were 7,402 with a total value of Rs. 4.104 billion. |
|
|
| As
at 30th June 1998, there were a total of 780 "live" leases with a
prime cost of Rs 1.59 billion |
|
| (1997
= 794 leases with prime cost Rs. 1.26 billion). |
|
|
| Merger
~.:. |
|
| We
are pleased to report that the Honourable High Court at Sindh sanctioned the
merger of BRR |
|
| Second
Modaraba and Equity International Modaraba with and into BRR Capital Modaraba
with |
|
| effect
from 1st March 1998. This was a historical merger as it was the first merger
of Modarabas |
|
| in
Pakistan. |
|
|
| Change
of Name |
|
| As
a result of the merger, your Modaraba's international sponsors include Robert
Fleming |
|
| Nominees
Limited and International Finance Corporation, who were previously major
certificate |
|
| holders
of former Equity International Modaraba. In order to reflect the holding of
major foreign |
|
| investors,
the request of your Modaraba Management Company to change the name of |
|
| BRR
Capital Modaraba to BRR International Modaraba was approved by the Registrar
of |
|
| Modarabas
with effect from 14th April 1998. |
|
|
| Government
Policies |
|
| We
would like to express our thanks to the Government of Pakistan for accepting
the long |
|
| standing
demand of the modaraba sector to revive the tax exempt status of modarabas.
This |
|
| concession
has been restored effective from 1999/2000 to non-trading modarabas on
condition :5:.'~5:~5:~ |
|
| they
distribute 90% of their profits to the certificate holders. However, a lacuna
still exists in the ~ |
|
| law
in that Section 53 of the Income tax Ordinance has not been modified to
exempt non-trading |
|
| modarabas
from advance payment of tax. We are also grateful that the Government has
restricted |
|
| the
tax authorities from determining the fair market value of an asset in the
hands of a lessee, and ~f~ |
|
| has
bound them to accept the residual value. Another demand of the modaraba
sector which ~;~: |
|
| has
been accepted by the Government is that they have been exempted from
withholding tax on
:.,,~::~ |
|
| sale
and lease back transactions.
:'~: |
|
|
| Year
2000 Compliance |
|
| The
millennium bug is a problem that could potentially affect any system using a
computer chip. |
|
| Your
Modaraba tried to create awareness on this crucial matter by informing all
lessees on the |
|
| subject
during November, 1997. |
|
|
| The
Corporate Law Authority recently issued a directive requiring us to report
the status of our |
|
| Year
2000 compliance program. In this context, we are pleased to report that we
have taken |
|
| necessary
steps to ensure that all our systems are Year 2000 compliant latest by 30th,
June 1999. |
|
|
| Future
Outlook |
|
| The
nuclear testing conducted by Pakistan on 28th May 1998 resulted in
international sanctions |
|
| being
imposed on Pakistan. The sanction environment continues upto the date of this
report and |
|
| is
causing a recessionary effect on the economy. The massive decline of the
Rupee since then, |
|
| the
drying up of funds from major donor agencies, have all compounded the
problem. |
|
|
| We
expect a difficult year and will have to exercise greater efforts in ensuring
recovery of |
|
| outstanding
dues, and issue leases to customers with a good payment record. |
|
|
| We
are also pleased to report that very recently, decrees were obtained from the
court in respect |
|
| of
recovery cases initiated by your Modaraba against certain defaulters. We hope
the award of |
|
| such
decrees will impose financial discipline on these and other lessees. |
|
|
| Auditors |
|
| The
present auditors Messrs A.F. Ferguson & Co., Chartered Accountants are
due for retirement |
|
| and
have offered themselves for reappointment for the year ending June 30, 1999.
Their |
|
| appointment
has been confirmed by the Board subject to the approval of the Registrar,
Modaraba |
|
| Companies
& Modarabas. |
|
|
| Directors |
|
| The
Board welcomes the appointment Mr. Charles David Blackmore of Robert Fleming |
|
| Nominees
Limited, who joined the Board on 29th July 1998. Mr. Syed Ghulam Abbas has
left |
|
| the
Board and we thank him for his valuable contribution during the many years he
was |
|
| associated
with us. |
|
|
| Acknowledgment |
|
| The
Board would like to express its gratitude for the support and guidance given
by the |
|
| Chairman
Corporate Law Authority and Registrar of Modarabas to enable us to achieve
the |
|
| historic
merger. We are thankful to our certificate holders for their support for the
merger. We are |
|
| grateful
to all the lending institutions with whom we had dealings for issuing us the
necessary |
|
| "no
objection certificates" needed for the purpose of our merger. We are
thankful to Pakistan |
|
| Credit
Rating Agency for allowing us to complete the merger before commencing with
rating |
|
| your
Modaraba, as required by State Bank of Pakistan. No report of ours is
complete without the |
|
| Boards
appreciation of the hard work and positive efforts of the staff and thanks
them for their |
|
| dedication. |
|
|
|
|
For and on behalf of Board of Directors |
|
|
|
|
|
|
| Karachi:
December 14, 1998 |
|
Chairman |
|
|
|
| Auditors'
Report to the Certificate Holders |
|
|
| We
have audited the annexed balance sheet as at June 30, 1998 and the related
profit and loss |
|
| account
and cash flow statement together with the notes to the accounts for the year
then ended |
|
| of
B.R.R. International Modaraba (Formerly B.R.R. Capital Modaraba) which are
Modaraba |
|
| Company's
{B.R.R. Investments (Private) Limited} representation and we state that we
have |
|
| obtained
all the information and explanations which we required and, after due
verification |
|
| thereof,
we report that: |
|
|
| (a)
In our opinion proper books of account have been kept by the Modaraba Company |
|
| in
respect of B.R.R. International Modaraba (Formerly B.R.R. Capital Modaraba) |
|
| as
required by the Modaraba Companies and Modaraba (Floatation and Control) |
|
| Ordinance,
1980; and Modaraba Companies and Modaraba Rules, 1981; |
|
|
| (b)
In our opinion, the balance sheet and the profit and loss account have been
drawn |
|
| up
in conformity with the Modaraba Companies and Modaraba (Floatation and |
|
| Control)
Ordinance, 1980; and Modaraba Companies and Modaraba Rules, 1981; and |
|
|
| (c)
In our opinion and to the best of our information and according to the
explanations |
|
| given
to us: |
|
|
| (i)
the balance sheet and the related profit and loss account and cash flow |
|
| statement,
which are in agreement with the books of account, exhibit |
|
| respectively
a true and fair view of the state of the Modaraba's affairs as at |
|
| June
30, 1998; and the profit and the cash flows for the year ended on that date; |
|
|
| (ii)
in our opinion Zakat deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980; has been deducted by the Modaraba and deposited in the |
|
| Central
Zakat Fund, established under Section 7 of that Ordinance; and |
|
|
| (iii)
the business conducted, investments made and expenditure incurred by the |
|
| Modaraba
are in accordance with the objects, terms and conditions of the |
|
| Modaraba. |
|
|
|
|
A.E FERGUSON & CO. |
|
| Karachi:
December 16th, 1998 |
|
Chartered Accountants |
|
|
|
|
| Balance
Sheet as at June 30, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
|
|
|
|
|
| Certificate
capital |
|
|
|
| Authorised |
|
|
|
|
| 62,500,000
(1997: 62,500,000) |
|
|
| Modaraba
Certificates of Rs. 10 each |
|
|
625,000,000 |
625,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
| Issued,
subscribed and paid up |
|
3 |
481,934.65 |
202,817,220 |
|
| Reserves
- Capital |
|
|
4.1 |
111,892,532 |
44,658,207 |
|
|
- General |
|
4.2 |
38,372,537 |
31,000,000 |
|
| Unappropriated
profit |
|
|
|
15,734,094 |
11,250,977 |
|
|
|
|
---------- |
---------- |
|
|
|
|
647,933,813 |
289,726,404 |
|
|
|
|
|
| REDEEMABLE
CAPITAL |
|
|
5 |
693,450,000 |
405,611,000 |
|
|
|
|
|
|
| LONG-TERM
MUSHARAKAS, MORABAHAS AND |
|
|
| FINANCE
UNDER MARK-UP ARRANGEMENTS |
|
6 |
298,212,500 |
129,000,000 |
|
|
|
|
|
| DEFERRED
LIABILITY |
|
|
|
|
|
|
|
|
| Customers'
security deposits |
|
|
116,807,080 |
95,503,926 |
|
|
|
|
|
| CURRENT
LIABILITIES
~:~ |
|
| Current
maturity of long-term |
|
|
|
| musharakas,
morabahas and finance |
|
|
|
| under
mark-up arrangements |
|
6 |
87,280,000 |
49,082,006 |
|
| Current
maturity of Customers' |
|
|
| security
deposits |
|
|
|
29,594,357 |
29,910,534 |
|
| Short-term
profit and loss sharing loan |
|
- |
8,516,588 |
|
| Short
term morabaha and working capital |
|
| finance
under mark-up arrangements |
|
7 |
217,794,522 |
247,313,710 |
|
| Creditors,
accrued and other liabilities |
8 |
85,615,568 |
58,225,303 |
|
| Taxation |
|
|
|
4,376,917 |
11,116,138 |
|
| Unclaimed
profit distribution |
|
|
1,483,747 |
1,126,334 |
|
| Profit
distribution |
|
|
|
53,012,812 |
22,309,894 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
479,157,923 |
427,600,507 |
|
| COMMITMENTS |
|
|
9 |
---------- |
---------- |
|
|
|
|
2,235,561,316 |
1,347,441,837 |
|
|
|
|
|
========== |
========== |
|
|
| FIXED
ASSETS - tangible |
|
|
|
|
|
|
|
|
| Assets
leased out |
|
10.1 |
933,334,950 |
682,039,828 |
|
| Work-in-progress
of assets to be |
|
|
|
| leased out |
|
|
|
- |
2,981,374 |
|
|
|
|
---------- |
---------- |
|
|
|
|
933,334,950 |
685,021,202 |
|
|
|
|
|
| Assets
in own use |
|
10.2 |
74,474,394 |
72,009,592 |
|
| Work
in progress of assets in own use |
|
- |
3,829,200 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,007,809,344 |
760,859,994 |
|
| HIRE
PURCHASE INSTALLMENTS RECEIVABLE |
11 |
1,300,909 |
- |
|
| DEFERRED
EXPENDITURE |
|
12 |
719,470 |
1,447,154 |
|
| LONG-TERM
DEPOSITS |
|
|
44,500 |
44,500 |
|
| LONG
TERM MORABAHA |
|
13 |
1,012,500 |
- |
|
| INVESTMENTS |
|
14 |
747,131,168 |
423,083,117 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
| Trade
debts |
|
15 |
114,199,909 |
70,719,674 |
|
| Morabaha
transactions |
|
16 |
11,557,337 |
- |
|
| Current
portion of long-term receivables |
|
|
|
| and
hire purchase installments receivable |
|
4,994,170 |
1,415,926 |
|
| Advances
and prepayments |
|
17 |
3,971,736 |
4,562,552 |
|
| Other
receivables |
|
18 |
57,138,054 |
6,867,350 |
|
| Short-term
investments |
|
19 |
181,849,570 |
35,000,000 |
|
| Cash
and bank balances |
|
20 |
103,832,649 |
43,441,570 |
|
|
|
|
---------- |
---------- |
|
|
|
|
477,543,425 |
162,007,072 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,235,561,316 |
1,347,441,837 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
B.R.R. Investments |
|
B.R.R. Investments |
|
B.R.R. Investments |
|
|
(Private) Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
|
|
|
| Profit
and Loss Account for the year ended June 30, 1998 |
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| REVENUES |
|
|
|
| Lease
rentals |
|
|
466,488,410 |
405,087,399 |
|
| Income
on morabaha transactions |
|
1,874,491 |
- |
|
| Income on hire
purchase arrangements |
|
452,445 |
- |
|
| Other
income |
|
21 |
87,204,889 |
62,071,442 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
556,020,235 |
467,158,841 |
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
| Operating
expenses |
|
22 |
380,013,517 |
316,588,246 |
|
| Financial
charges |
|
|
23 |
114,311,049 |
110,381,308 |
|
|
|
|
---------- |
---------- |
|
|
|
|
494,324,566 |
426,969,554 |
|
|
|
|
|
|
61,695,669 |
40,189,287 |
|
|
|
---------- |
---------- |
|
| Modaraba
Company's management fee |
|
5,608,697 |
3,653,571 |
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
56,086,972 |
36,535,716 |
|
| Taxation |
|
|
|
| - Current |
|
|
10,000,000 |
3,000,000 |
|
| -
Prior years |
|
- |
(6,088,085) |
|
|
|
---------- |
---------- |
|
|
|
10,000,000 |
(3,088,085) |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
46,086,972 |
39,623,801 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit brought forward |
|
11,250,977 |
1,861,830 |
|
| Unappropriated
profit as at March 1, 1998 of: |
|
| B.R.R.
Second Modaraba |
|
13,106,394 |
- |
|
| Equity
International Modaraba |
|
7,519,957 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
31,877,328 |
1,861,830 |
|
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
|
77,964,300 |
41,485,631 |
|
| Appropriations: |
|
|
| Final
profit distribution @ 11% (1997:11%) |
|
53,012,812 |
22,309,894 |
|
| Transfer
to statutory reserve |
|
4 |
9,217,394 |
7,924,760 |
|
|
|
|
---------- |
---------- |
|
|
|
|
62,230,206 |
30,234,654 |
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
15,734,094 |
11,250,977 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
B.R.R. Investments |
|
B.R.R. Investments |
|
B.R.R. Investments |
|
|
(Private) Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
| Cash
Flow Statement for the year ended June 30, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| Cash
flow from operating activities |
|
|
| Cash
generated from operations |
|
26 |
393,613,899 |
317,021,317 |
|
| Profit
paid on redeemable capital |
|
(26,770,326) |
(1,548,261) |
|
| Profit
paid on musharakas, morabahas |
|
|
|
| and
finance under mark-up arrangements |
|
(75,560,021) |
(78,434,727) |
|
| Taxes paid |
|
(13,615,271) |
(5,797,476) |
|
| Long-term
deposits and prepayments |
|
- |
46,662 |
|
| Customers'
security deposits |
|
1,231,380 |
(5,800,705) |
|
| Hire
purchase installments |
|
2,687,096 |
- |
|
| Long-term
morabaha |
|
3,744,000 |
- |
|
| Long-term
receivables |
|
- |
852,890 |
|
| Deferred
expenditure |
|
- |
(300,000) |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
285,330,757 |
226,039,700 |
|
|
|
|
|
| Cash
flow from investing activities |
|
|
| Fixed
capital expenditure |
|
(391,065,918) |
(228,175,872) |
|
| Proceeds/assignment
price on disposal |
|
|
|
| of
assets given on lease |
|
45,790,724 |
50,703,306 |
|
| Proceeds
on disposal of assets in own use |
|
695,000 |
1,070,000 |
|
| Investments
made |
|
|
(6,177,013) |
(5,842,965) |
|
| Dividend
received |
|
|
93,692 |
736,789 |
|
| Mark-up/Profit
received on deposit and PLS |
|
|
|
| saving
accounts and certificates of investments |
|
52,753,169 |
35,061,227 |
|
|
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
(297,910,346) |
(146,447,515) |
|
|
|
|
|
| Cash
flow from financing activities |
|
|
| Long-term
musharakas, morabahas and |
|
|
| finance
under mark-up arrangements |
|
77,760,494 |
30,586,769 |
|
| Short-term
profit and loss sharing loan |
|
(8,516,588) |
5,920,245 |
|
| Short-term
mushariaka, morabaha and |
|
|
|
| working
capital finance under mark-up |
|
|
|
| arrangements |
|
(44,019,188) |
(59,990,729) |
|
| Profits
paid |
|
|
(23,230,842) |
(19,548,642) |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from financing activities |
1,993,876 |
(43,032,357) |
