Relevance Found

The accounts for Perbadanan Tabung Amanah Islam Brunei were published in the Weekend Borneo Bulletin (pages 55-58), for the year ended 31 December 2008. Part of my savings and investment portfolio is squirrelled away in TAIB Deposit Certificates (TDC’s) and I’m always interested to read about how my investments are doing.

As I was skimming through the accounts, I thought:

1. “Dividends” of $27m were paid out during the year, on annual profits of $44m. That’s a 61% payout ratio
   These are paid out to customers – the $1,514m deposits from customers (see note #9)
   So from the “Body” point of view – the customers = shareholders, and dividends are payable to them.
2. Accounts are prepared for “true and fair view” of the “Body”. The notes mention this is in accordance with “generally accepted accounting principles in Brunei Darussalam”.
   It took a while for me to figure out – but the reason for (1) above is because these principles are “modified to comply with the principles of Syariah”.
3. The return of 1% to 2.5% to deposit holders (calculated on average daily balance) is better than inflation rates of 0.4% in Brunei.
4. The Syariah Advisory Committee opines that the operations of TAIB have been conducted with the Syariah principles, to the best of their knowledge.
5. $16m has been provided for the diminution in value of unquoted investments. The provision increases by $12m this year, on a b/f balance of $76m investments. $12m is nearly half of the 2009 “dividends” payout.
   
6. $3m of the $12m “Building” fixed assets are Reclassified in the year to Leasehold properties, renovations and computer equipment. Interestingly, $500,000 (to the Dollar!) is reclassified as Computer Equipment. I’d be interested to see a $500,000 investment in Computer Equipment.

   Just as interesting, how did the $12m get classed as “Buildings” in the first place when a cool half a million (to the Dollar yo!) was Computer Equipment.

7. Audit fee of $75k, is 3 times what the previous auditors were billing. Goes to show that not all audits are won on the back of “Who lodged the cheapest possible bid”.
   This year TAIB spent$21k on consultancy fees, which is lower than the $133k on consultancy fees spent in prior year.
   In a year where TAIB invests $92m in unquoted investments, where are the due diligence and legal fees? Unless they’re not written off in the year and are included in the asset on the balance sheet? I’d be interested to know more about the Governance, Risk management and Compliance structures in place to guard against further write offs in unquoted investments.
8. $424k is charged to the P&L in the year for “Provision for retirement benefits”, and $176k in the year prior.
   I’m a little confused because in the accounts, under Notes for “Employee benefits costs”, the accounts only mention that TAIB contributes to Employee’s Trust Fund (TAP) which is a Defined Contribution scheme.  Because the Employer’s contribution rate of 5% has not changed from 2007 to 2008, does this mean that Employees at TAIB increased 2.4x fold over prior year? Or maybe salaries were increased 2.4x over prior year?

   Or maybe TAIB has a defined benefit scheme for some employees, and the charge to the provision of $424k in the year is to cover pension liabilities for their future retirement? If so – that’s a sweet deal. And one that may not be fully disclosed in the accounts.

More after the break.

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