| B.R.R. International Modaraba |
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
|
| Contents |
|
|
| Corporate
Information |
|
| Directors'
Report |
|
| Notice
of Annual Review Meeting |
|
| 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. Majid Dawood |
|
| Auditors |
|
A.F. Ferguson & Co. |
|
|
|
Chartered Accountants |
|
|
|
| Bankers |
|
ABN Amro Bank |
|
|
A1-Faysal Investment Bank
Limited |
|
|
Habib Bank A. G. Zurich |
|
|
Metropoliton Bank Limited |
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|
National Bank of Pakistan |
|
|
Oman International Bank
Limited |
|
|
Prime Commercial Bank
Limited |
|
|
| Registrars |
|
Gangjees Investment &
Finance Consultants |
|
|
513, Clifton Centre, |
|
|
Khayaban-e-Roomi, |
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|
Kehkeshan, Block 5, |
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|
Clifton, Karachi. |
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|
Phone # 575 714 |
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|
583 6920 |
|
|
| Registered
Office |
Dean Arcade, Block-8,
Kehkeshan, Clifton, Karachi-75600. |
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|
|
| Directors'
Report |
|
|
| The
Board of Directors of B.R.R. Investments (Private) Limited, the Management
Company of B.R.R. |
|
| International
Modaraba (BRRIM), has pleasure in presenting the Directors' Report of BRRIM,
together |
|
| with
audited accounts for the year ended June 30, 2001. |
|
|
| Financial
Results |
|
| The
financial results are summarized as under: |
|
|
2001 |
2000 |
|
|
Rupees |
Rupees |
|
|
| New
leases executed during the year at prime cost |
|
561,687,807 |
233,465,354 |
|
|
========== |
========== |
|
|
|
|
| Total income |
|
585,835,832 |
609,804,892 |
|
|
========== |
========== |
|
| Profit
before management fee |
|
85,390,358 |
85,888,690 |
|
| Modaraba
Company's management fee |
|
8,539,036 |
8,588,869 |
|
|
---------- |
---------- |
|
| Profit
for the year |
|
76,851,322 |
77,299,821 |
|
| Add:
Unappropriated profit brought forward |
|
22,729,097 |
15,810,763 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
99,580,419 |
93,110,584 |
|
| Appropriations: |
|
| Profit
distribution 13% (2000: 13%) |
|
62,651,505 |
62,651,505 |
|
| Statutory
reserves |
|
7,685,132 |
7,729,982 |
|
|
---------- |
---------- |
|
|
70,336,637 |
70,381,487 |
|
|
---------- |
---------- |
|
| unappropriated
profit carried forward |
|
29,243,782 |
22,729,097 |
|
|
========== |
========== |
|
| Earning
per certificate |
|
1.59 |
1.60 |
|
|
| The
State of Pakistan's Economy |
|
| In
many ways, the second budget under the IMF program is being presented under
much the same conditions |
|
| as
the first: with the economy appearing to be trapped in a low growth, low
investment mode. While the |
|
| reasons
for investor hesitancy a year ago appeared to be influenced by non-economic
concerns, such as the |
|
| uncertainty
caused by the accountability drive and the impending tax survey, investor
concern this year |
|
| appears
to be centered upon recognized weakness of the economy itself. |
|
|
| Pakistan's
heavy debt burden indeed serves to outline a continuing economic constraint.
This issue has |
|
| assumed
growing seriousness through 1990s. It served to account for the alarming
increase in poverty |
|
| incidence
during the decade. It will also be recognized that the progressive decline in
real fixed investment |
|
| by
the private sector during the decade will pose constraints on the long-term
prospects for economic growth. |
|
|
| In
earlier years the leasing sector in Pakistan witnessed a growth rate of 20
percent on average. Under present |
|
| economic
conditions it is unlikely to maintain that rate. Banks and DFI's have also
started offering leases |
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| to
many projects. They have large financial resources to offer lower financing
rates as compared with |
|
| modarabas
and leasing companies. |
|
|
| Review
of Operations |
|
| Alhamd-o-Lillah
your Modaraba continued to make progress during the year under review despite
the difficult |
|
| economic
and business conditions. Your Modaraba has followed the policy of
consolidating its position |
|
| in
the lease market and has executed new leases amounting to Rs. 561.687 million
as compared to |
|
| Rs.
233.465 million last year which shows significant increase of 140 percent in
leasing business, and will |
|
| enhance
the Modaraba profitability in future years. |
|
|
| Net
profit for the year was Rs. 76.851 million compared to Rs. 77.299 million
reported last year. This indicates |
|
| consistency
in profitability of the Modaraba, in spite of the fall in lease rentals
income by Rs. 43.020 million, |
|
| caused
principally by the application of the Prudential Regulations. By virtue of
these regulations overdue |
|
| lease
rentals should not be treated as income. |
|
|
| Other
business activities of Modaraba like Musharaka and Morabaha transactions have
been improved by |
|
| 85
percent in terms of the total income from such transactions. The income on
investments and other income |
|
| increased
by Rs. 12.607 million and Rs. 156 thousand respectively, during the year. |
|
|
| Operating
expenses of the Modaraba have been kept under control. Despite high inflation
the expenses have |
|
| not
increased, but have declined by Rs. 49.597 million due to the decline in
provisions for doubtful debts |
|
| and
amortization for the year. |
|
|
| Dividend |
|
| The
Board is pleased to declare a profit distribution in cash of Rs. 1.30 per
Modaraba Certificate |
|
| aggregating
Rs. 62.652 million. The break-up value of your Modaraba Certificate now
stands at Rs. 14.32 |
|
| (2000:
Rs. 14.03) against a face value of Rs. 10 each. |
|
|
| Future
Outlook |
|
| Pakistan's
economic position in terms of foreign reserves is more comfortable with US
Dollar 3.4 billion |
|
| in
the last week of September 2001. Nevertheless, the country is struggling to
pay off US Dollar 38 billion |
|
| overall
foreign debts. We hope, the ongoing current developments with the
multilateral agencies, serve to |
|
| indicate
good prospects for economic growth, followed by the growth in industrial,
capital and leasing sectors |
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| of
the economy. |
|
|
| Appointment
of Auditors |
|
| The
present Auditors Messrs A.F. Ferguson & Co., Chartered Accountants, being
due for retirement have |
|
| offered
themselves for reappointment for the year ended June 30, 2002. The Board,
subject to the approval |
|
| of
the Registrar, has confirmed their appointment. |
|
|
| Acknowledgement |
|
| The
Directors offer their sincere thanks to our valued clients, bankers and
certificate holders for their sustained |
|
| confidence
in the Modaraba. |
|
|
| We
extend our appreciation to State Bank of Pakistan, Securities & Exchange
Commission of Pakistan, |
|
| Registrar
Modaraba Companies and Modarabas for their continued support and guidance and
to all members |
|
| of
staff for their dedication and hard work. |
|
|
|
For and on behalf of the Board |
|
|
|
|
|
(SIDDIQUE DAWOOD) |
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| Karachi: October 25, 2001 |
|
Chairman |
|
|
|
| Notice
of Annual Review Meeting |
|
|
| Notice
is hereby given that the 2nd Annual Review Meeting of Certificate Holders of
B.R.R. International |
|
| Modaraba
will be held on Thursday, November 29, 2001 at 2:30 p.m. at the Auditorium of
The Institute |
|
| of
Chartered Accountants of Pakistan, Chartered Accountants Avenue, Clifton,
Karachi to review the |
|
| performance
of the Modaraba for the year ended June 30,200 l in terms of Clause 20 of
Prudential Regulations |
|
| for
Modarabas issued vide Circular No.5/2000 of Registrar Modaraba Companies and
Modarabas. |
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|
|
By Order of the Board |
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| Karachi: |
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| Dated:
October 25, 2001 |
|
Company Secretary |
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|
| NOTES: |
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| 1.
The Modaraba Certificates transfer books shall remain closed from Tuesday,
20th November. 2001 |
|
| to
Thursday, 29th November, 2001 (both days inclusive) to determine the names of
Certificate Holders |
|
| entitled
to receive profit and to attend the Annual Review Meeting. Transfer received
in order at the |
|
| Registrars
Office of the Modaraba (whose address is given below) up to the close of
business hours |
|
| on
Monday, 19th November, 2001 will be treated in time for the entitlement of
profit distribution. |
|
|
| 2.
The Certificate Holders are advised to notify to the Registrars of B.R.R.
International Modaraba, of |
|
| any
change in their addresses to ensure prompt delivery of mails. Further any
Certificates for transfer |
|
| etc.,
should lodged with the Registrars, Gangjees Investment & Finance
Consultants 513, Clifton |
|
| Centre,
Khayaban-e-Roomi, Kehkeshan, Block-5, Clifton, Karachi-75600. PhoneNo.575714,
5836920). |
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
|
| We
have audited the annexed balance sheet as at June 30, 2001 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 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 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, 2001; and the profit and the cash flows for the year ended on that date; |
|
|
| (ii)
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. |
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|
|
A.F.Ferguson & Co |
|
| Karachi:
November 2, 2001 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at June 30, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
| Certificate
capital |
|
| Authorised |
|
| 62,500,000
Modaraba Certificates of Rs. 10 each |
|
625,000,000 |
625,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
3 |
481,934,650 |
481,934,650 |
|
|
|
|
| Reserves
- capital |
|
4 |
140,680,016 |
132,894,884 |
|
| - general |
|
38,372,637 |
38,372,537 |
|
| Unappropriated
profit |
|
29,243,782 |
22,729,097 |
|
|
---------- |
---------- |
|
|
690,130,985 |
675,931,168 |
|
| REDEEMABLE
CAPITAL |
|
5 |
1,001,000,000 |
784,488,000 |
|
| LONG
TERM MORABAHAS |
|
6 |
265,102,764 |
214,981,448 |
|
| DEFERRED
LIABILITY |
|
| Customers'
security deposits |
|
93,285,959 |
99,121,183 |
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of long term morabahas |
|
6 |
136,003,684 |
118,503,684 |
|
| Current
maturity of customers' security deposits |
|
41,545,746 |
43,510,352 |
|
| Working
capital finance under |
|
|
|
| mark-up
arrangements |
|
7 |
104,505,941 |
58,469,020 |
|
| Creditors,
accrued and other liabilities |
|
8 |
172,789,955 |
147,822,432 |
|
| Unclaimed
profit distribution |
|
|
2,829,135 |
2,561,391 |
|
| Profit
distribution |
|
62,651,505 |
62,651,505 |
|
|
---------- |
---------- |
|
|
520,325,966 |
433,518,384 |
|
|
| COMMITMENTS |
|
9 |
|
|
---------- |
---------- |
|
|
2,560,845,674 |
2,208,040,183 |
|
|
========== |
========== |
|
|
| FIXED
ASSETS - tangible |
|
| Assets
leased out |
|
10.1 |
877,259,100 |
689,844,716 |
|
| Work
in progress of assets to be leased out |
|
|
7,186,379 |
45,731,960 |
|
|
|
---------- |
---------- |
|
|
|
884,445,479 |
735,576,676 |
|
| Assets
in own use |
|
10.2 |
62,031,223 |
68,557,950 |
|
|
| LONG
TERM DEPOSITS |
|
504,500 |
444,500 |
|
|
|
| LONG
TERM MUSHARAKA AND |
|
|
|
| MORABAHAS |
|
11 |
|
|
|
|
61,571,543 |
55,797,676 |
|
| INVESTMENTS |
|
12 |
|
|
|
|
1,152,779,869 |
946,889,607 |
|
| CURRENT
ASSETS |
|
| Trade debts |
|
13 |
44,875,510 |
101,088,294 |
|
| Current
portion of hire purchase instalments receivable |
14 |
-- |
85,936 |
|
| Current
maturity of long term musharaka and morabahas |
11 |
16,951,673 |
29,253,714 |
|
| Advances
and prepayments |
|
15 |
2,768,656 |
2,167,822 |
|
| Other
receivables |
|
16 |
28,815,343 |
46,801,725 |
|
| Taxation |
|
|
13,955,538 |
12,309,123 |
|
| Short
term investments |
|
17 |
168,919,986 |
113,787,403 |
|
| Cash
and bank balances |
|
18 |
123,226,354 |
95,279,757 |
|
|
---------- |
---------- |
|
|
399,513,060 |
400,773,774 |
|
|
---------- |
---------- |
|
|
2,560,845,674 |
2,208,040,183 |
|
|
========== |
========== |
|
| 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, 2001 |
|
|
|
|
Note |
2001 |
2000 |
|
|
|
|
Rupees |
Rupees |
|
| REVENUES |
|
| Lease rentals |
|
417,579,671 |
460,599,663 |
|
| Income
on musharaka and morabaha transactions |
|
13,680,271 |
7,392,108 |
|
| Income
on investments |
|
19 |
98,584,336 |
85,977,207 |
|
| Other
income |
|
20 |
55,991,554 |
55,835,914 |
|
|
|
---------- |
---------- |
|
|
|
585,835,832 |
609,804,892 |
|
| EXPENSES |
|
|
|
|
| Operating
expenses |
|
21 |
346,510,273 |
396,107,558 |
|
| Financial
charges |
|
22 |
153,935,201 |
127,808,644 |
|
|
---------- |
---------- |
|
|
500,445,474 |
523,916,202 |
|
|
---------- |
---------- |
|
|
85,390,358 |
85,888,690 |
|
| Modaraba
Company's management fee |
|
8,539,036 |
8,588,869 |
|
|
---------- |
---------- |
|
| Profit
for the year |
|
76,851,322 |
77,299,821 |
|
| Unappropriated
profit brought forward |
|
22,729,097 |
15,810,763 |
|
|
---------- |
---------- |
|
| Profit
available for appropriations |
|
99,580,419 |
93,110,584 |
|
| Appropriations: |
|
| Final
profit distribution 13 % (2000: 13%) |
|
62,651,505 |
62,651,505 |
|
| Transfer
to statutory reserve |
|
4 |
7,685,132 |
7,729,982 |
|
|
---------- |
---------- |
|
|
70,336,637 |
70,381,487 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
29,243,782 |
22,729,097 |
|
|
========== |
========== |
|
| Earning
per certificate |
|
23 |
1.59 |
1.60 |
|
|
========== |
========== |
|
| 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, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
| Cash
flow from operating activities |
|
| Cash
generated from operations |
|
26 |
439,416,801 |
583,839,605 |
|
| Profit
paid on redeemable capital |
|
(61,190,064) |
(50,851,350 |
|
| Profit
paid on morabahas and working capital |
|
|
|
| finance
under mark-up arrangements |
|
(65,562,265) |
(67,671,575 |
|
| Taxes paid |
|
(1,646,415) |
(6,142,702 |
|
| Increase
in long term deposits |
|
(60,000) |
-- |
|
| Decrease
/ (Increase) in long term musharaka and morabahas |
6,528,174 |
(72,160,281 |
|
| (Decrease)
/ Increase in customers' security deposits |
|
(7,799,830) |
3,860,658 |
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
309,686,401 |
390,874,355 |
|
|
|
|
| Cash
flow from investing activities |
|
|
|
| Fixed
capital expenditure |
|
(526,304,976) |
(281,303,272) |
|
| Proceeds
on disposal of assets given on lease |
|
103,107,699 |
70,967,262 |
|
| Proceeds
on disposal of assets in own use |
|
8,426,300 |
740,000 |
|
| (Increase)
/ Decrease in long term investments |
|
(5,209,858) |
2,447,130 |
|
| Income
on investments |
|
96,966,555 |
83,182,066 |
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
(323,014,280) |
(123,966,814) |
|
|
|
|
| Cash
flow from financing activities |
|
| Increase
/ (Decrease) in long term morabahas |
|
57,621,316 |
(81,253,684) |
|
| Increase
/ (Decrease) in working capital finance |
|
|
|
| under
mark-up arrangements |
|
46,036,921 |
(48,595,087) |
|
| Profits paid |
|
(62,383,761) |
(52,791,461) |
|
|
---------- |
---------- |
|
| Net
cash inflow / (outflow) from financing activities |
|
41,274,476 |
(182,640,232) |
|
|
---------- |
---------- |
|
| Net
increase in cash and cash equivalents |
|
27,946,597 |
84,267,309 |
|
| Cash
and cash equivalents at the beginning of the year |
|
95,279,757 |
11,012,448 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
|
123,226,354 |
95,279,757 |
|
|
========== |
========== |
|
| 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 |
|
|
|
| Notes
to the Accounts for the year ended June 30, 2001 |
|
|
| 1.
LEGAL STATUS AND NATURE OF THE BUSINESS |
|
| B.R.R.
International Modaraba is a multipurpose, perpetual Modaraba floated under
the |
|
| Modaraba
Companies and Modaraba (Floatation and Control) Ordinance, 1980 and the |
|
| Rules
framed thereunder and is managed by B.R.R. Investments (Private) Limited, a
company |
|
| incorporated
in Pakistan. The Modaraba is listed on the Karachi and Lahore Stock
Exchanges. |
|
| The
Modaraba's principal activity is leasing of assets, deployment of funds in
musharakas, |
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| morabahas
and investment in equity and securities. |
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| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| (a)
Overall valuation policy |
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| These
accounts have been prepared under the historical cost convention. |
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|
| (b)
Fixed assets |
|
| (i)
Assets leased out and amortisation |
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| Leased
assets are stated at cost less accumulated amortisation. Amortisation is |
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| charged
to income applying the straight-line method whereby the cost of an asset |
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| is
written off over its lease period. In respect of additions and disposals
during |
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| the
year, amortisation is charged proportionately to the period of lease. |
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| Profit
or loss on disposal of leased assets is included in income currently. |
|
|
| (ii)
Assets in own use and depreciation |
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| Operating
assets are stated at cost less accumulated depreciation except for freehold |
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| land
which is stated at cost. Depreciation is charged to income applying the
straight- |
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| line
method whereby the cost of an asset is written off over its estimated useful |
|
| life.
In respect of additions and disposals during the year, depreciation is
charged |
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| proportionately
to the period of use. |
|
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| Profit
or loss on disposal of assets is included in income currently. |
|
|
| (c)
Investments |
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| Investments
are stated at lower of cost and market value on an aggregate basis. Profit |
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| or
loss on sale of investments is taken to profit and loss account currently. |
|
|
| (d)
Revenue recognition |
|
| (i)
Lease rentals |
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| Income
from leases is recognised as and when lease rentals become due on a |
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| systematic
basis over the lease period. |
|
|
| (ii)
Hire purchase transactions |
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| For
hire purchase transactions, the unearned finance income is deferred and taken |
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| to
income over the period of hire purchase, applying the annuity method to
produce |
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| a
constant rate of return on the net investment. |
|
|
| (iii)
Morabaha transactions |
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| Income
from morabaha transactions is recognised on the basis of pro rata accrual |
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| of
the profit estimated for the transaction over the period. |
|
|
| (e)
Deferred expenditure |
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| Project
evaluation and documentation fee paid for obtaining long term finance is
written |
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| off
over the period of five years. |
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|
| (f) Taxation |
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| Provision
for taxation is made on taxable income at the prevailing rates of tax after |
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| taking
into account tax credit available, if any. |
|
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| The
income of non-trading modarabas is exempt from tax, provided not less than
90% |
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| of
their profits are distributed to the certificate holders. Accordingly, no
provision has |
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| been
made in these accounts for tax liability for the current year. |
|
|
| (g)
Foreign currencies |
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| Assets
and liabilities in foreign currencies are. translated into Rupees at the
rates of |
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| exchange
approximating to those prevalent on the balance sheet date. Exchange gains |
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| and
losses on translation are taken to income currently. |
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|
2001 |
2000 |
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|
Rupees |
Rupees |
