A N N U A L R E P O R T B.R.R. Guardian Modaraba (An Islamic Financial Institution) Managed by: B.R.R. Investment (Private) Limited 2019 B.R.R. Guardian Modaraba (An Islamic Financial Institution) Contents Page Corporate Information 3 Mission Vision and Overall Corporate Strategy 4 Organogram 5 Board of Directors & Management 6 Notice of Annual Review Meeting 7 Chairmans Review Report 10 Directors' Report 11 18 Statement of Compliance with the Code of Corporate Governance 27 Auditors' Review Report 30 Auditors' Report to the Certificate Holders 32 Shariah Advisor Report 34 Balance Sheet 35 Profit and Loss Account 36 Statement of Comprehensive Income 37 Statement of Cash Flows 38 Statement of Changes in Equity 39 Notes to the Financial Statements 40 B.R.R. Guardian Modaraba (An Islamic Financial Institution) Contents Page Directors' Report to the Consolidated Financial Statements 85 92 Auditors' Report to the Certificate Holders 101 Consolidated Balance Sheet 102 Consolidated Profit and Loss Account 103 Consolidated Statement of Comprehensive Income 104 Consolidated Statement of Cash Flows 105 Consolidated Statement of Changes in Equity 106 Notes to the Consolidated Financial Statements 107 Pattern of Certificate Holding & Additional Information 150 Six Years Financial Summary 153 B.R.R. Guardian Modaraba (An Islamic Financial Institution) CORPORATE INFORMATION Modaraba Company B.R.R. Investment (Private) Limited Chairman Mr. Rafique Dawood Chief Executive Mr. Ayaz Dawood Directors Mr. Waqas Anwar Qureshi - Director Syed Ali Raza - Director Audit Committee Mr. Waqas Anwar Qureshi - Chairman Mr. Rafique Dawood - Member Syed Ali Raza - Member HR and Remuneration Syed Ali Raza - Chairman Committee Mr. Rafique Dawood - Member Mr. Waqas Anwar Qureshi - Member Shariah Advisor Mufti Muhammad Aqeel Chief Financial Officer Syed Tariq Masood Company Secretary Mr.Tahir Mehmood Head of Internal Audit Abdul Rahman Subhan Auditors Horwath Hussain Chaudhury & Co. Chartered Accountants Legal Advisor A.Q. Abbasi & Associates Malik & Malik Law Associates Minto & Mirza Nuruddin Saki & Co. Rabbani & Ansari Advocates S & B Durrani Law Associate Bankers Al-Baraka Bank(Pakistan) Limited Habib Metropolitan Bank Limited National Bank of Pakistan Web-site www.firstdawood.com/brr Registered Office & 18th Floor, B.R.R. Tower Head Office Hassan Ali Street off. I.I. Chundrigar Road, Karachi-74000 PABX 92-21-32602401-06 Fax : 92-21-3227-1912 Registrars F.D. Registrar Services (SMC-Pvt.) Ltd 1705, 17th Floor, Saima Trade Tower "A" I.I. Chundrigar Road, Karachi-74000 Phone # 92-21-35478192-3 # 92-21-32271905-6 Fax # 92-21-32213243 Branch Offices Office No. 405 4th Floor, ISE Tower Jinnah Avenue, Islamabad Security Vault G-187, Block-2, Shahrah-e-Quaideen, PECHS Karachi-754000 3 B.R.R. Guardian Modaraba (An Islamic Financial Institution) MISSION To become a symbol for spreading a variety of Islamic modes of financing, thereby providing ample and profitable investment opportunities to the stake holders who demand Halal profits according to Sharia Laws, optimizing returns to the certificate holders, management and customers. VISION To innovate and promote Islamic Financial Products, based on Sharia Principles and to curb interest based financial systems, thereby facilitating establishment of an equitable economic system. OVERALL CORPORATE STRATEGY To become a market leader of Islamic Financial Products through: ( i ) maintaining highest standards of integrity and honesty; ( ii ) strict adherence with Sharia principles; ( iii ) making improvement in every department a process through education and professional development with latest innovations through awareness techniques; ( iv ) providing opportunities to employees for career development and rewarding them according to their caliber; ( v ) safeguarding the interests of certificate holders while providing best possible returns; ( vi ) building a long lasting relationship with the customers by suggesting the most suitable Islamic product for their needs at competitive rates; ( vii ) practical and conservative judgment of risks. 4 B.R.R. Guardian Modaraba (An Islamic Financial Institution) ORGANOGRAM Board of Directors HR & Remuneration Company Secretary Audit Committee Chief Executive Officer Committee Internal Audit Shariah Compliance Department Finance / Marketing / Recovery Administration & HR Accounts Operations Department Risk Management Information Technology 5 B.R.R. Guardian Modaraba (An Islamic Financial Institution) BOARD OF DIRECTORS Rafique Dawood (Chairman) Syed Ali Raza Ayaz Dawood Waqas Anwar Qureshi (Director) (Chief Executive) (Director) MANAGEMENT Syed Tariq Masood Tahir Mehmood S. Iqbal Hussain Rizvi (Chief Financial Officer) (Company Secretary) (G.M. BRR Security Vault) 6 B.R.R. Guardian Modaraba (An Islamic Financial Institution) NOTICE OF ANNUAL REVIEW MEETING (ARM -XX) of B.R.R. Guardian Modaraba The Board of Directors of B.R.R. Investment (Pvt) Ltd, Manager of B.R.R Guardian Modaraba (BRRGM) in their meeting held on September 30, 2019 has declared cash dividend @ Re. 0.24 per Modaraba Certificate for the year ended June 30, 2019. To determine the names of Certificateholders entitled to receive dividend and to attend the ARM the Certificate Transfer Books of the Modaraba will be closed from October 22, 2019 to October 28, 2019 (both days inclusive) the Transfers received at the Registrar Office, F.D. Registrar Services (SMC-Pvt.) Ltd at 1705, 17th Floor, Saima Trade Towers A, I.I. Chundrigar Road Karachi (Registrar Office), before the close of business hours on October 21, 2019 will be treated in time for the purpose of above entitlement to the transferees. Further, the Certificate holders are advised to notify to the Registrar Office of any change in their addresses. The ARM-XX of Certificateholders of BRRGM will be held on Monday October 28, 2019 at 5:00 p.m.at Ground Floor, BRR Tower, Hassan Ali Street, off: I.I Chundrigar Road Karachi, 74000 Place Karachi By Order of the Board October 3, 2019 Tahir Mehmood Company Secretary REQUEST TO CERTIFICATE-HOLDERS Pursuant to the directives of the Securities and Exchange Commission of Pakistan (SECP) CNIC number of Modaraba Certificateholders has become mandatory to be mentioned on Dividend Warrant. Therefore, all Modaraba Certificateholders who have not yet submitted their CNIC are hereby requested to immediately send valid copy of CNIC. In order to comply with the directives of SECP vide their SRO 831(1)/2012 dated July 5, 2012 the Registrar Office may withhold the dispatch of Dividend Warrant under Section 243(2) (a) of the Companies Act, 2017 of those Certificateholders who fails to submit the copy of CNIC before the close of book of Certificateholders for entitlement of dividend as for the year ended June 30, 2019 announced by the Board of Directors in their meeting held on September 30, 2019 Certificateholders holding book entry securities of the BRRGM in the Central Depository Company of Pakistan Limited who wish to attend the ARM are requested to bring original Computerized National Identity Card for identification purpose and will in addition to this, have to follow the guidelines as laid down in Circular No. 01 of 2000 dated January 25, 2000 of the SECP for attending the meeting. Placement of Annual Report on Website In terms of Securities and Exchange Commission of Pakistan's (SECP) S.R.O. 634 (1)/ 2014, the Annual Report for the year ended 30 June 2019 will also be placed on Modaraba's website www.firstdawood.com/brr simultaneously with the dispatch of the same to the certificate holders. 7 B.R.R. Guardian Modaraba (An Islamic Financial Institution) Transmission through E-mail As per the directives issued by the Securities and Exchange Commission of Pakistan ("SECP") vide S.R.O.787(1)2014 dated 08 September 2014, companies are allowed the circulation of Audited Financial Statements along with Notice of Annual Review Meeting to their certificateholders through email. Certificateholders who wish to receive Modaraba's Annual Report via email in future are requested to fill the consent form (available at B.R.R Guardian Modaraba website) and return it to our Share Registrar at: F.D. Registrar Services (SMC-Pvt.) Ltd, 1705, 17th Floor, Saima Trade Towers A, I.I. Chundrigar Road, Karachi Deduction of withholding tax on the amount of Dividend The Government of Pakistan through the Finance Act, 2019 has made certain amendments in Section 150 of the Income Tax Ordinance, 2001 whereby different rates are prescribed for deduction of withholding tax on the amount of dividend paid by the companies. These tax rates are as under: a. Rate of tax deduction for filer of income tax returns: 15% b. Rate of tax deduction for non-filers of income tax return: 30% All the certificateholders whose names are not entered into the Active Tax Payers List (ATL) as maintained by FBR, despite the fact that they are filers, are advised to make sure that their names are entered into ATL before the start of book closure date otherwise tax on their cash dividend will be deducted @ 30% instead of 15%. A valid Exemption Certificate under Section 159 of the Ordinance is mandatory to claim exemption of withholding tax under Clause 47B of Part-IV of Second Schedule to the Ordinance. Those who fall in the category mentioned in the above Clause must provide a valid Tax Exemption Certificate to our Share Registrar; else tax will be deducted on dividend amount as per rates prescribed in Section 150 of the Ordinance. Certificateholders desiring non- deduction of zakat are also requested to submit a valid declaration for non-deduction of zakat. The corporate certificateholders having CDC accounts are required to have their National Tax Number (NTN) updated with their respective participants, whereas corporate physical certificate holders should send a copy of their NTN certificate to the Company or its Share Registrar. The certificateholders while sending NTN or NTN certificates, as the case may be, must quote company name and their respective folio numbers. Certificateholders seeking exemption from deduction of income tax or are eligible for deduction at a reduced rate are requested to submit a valid tax certificate or necessary documentary evidence as the case may be.