Karachi, September 24, 2021 (PPI-OT): VIS Credit Rating Company Ltd. has assigned the initial Broker Management Rating of ‘BMR3+’ to DJM Securities Limited (DJMSL). Outlook on the assigned rating is ‘Stable’. The rating signifies sound business and financial sustainability. Ownership and governance, client services, internal controls and regulatory compliance are considered adequate.
Assigned ratings take into account adequate regulatory and supervisory framework which may be strengthened through increasing the Board size in line with best practices, allowing for formation of independently represented Board committees. Formation of audit committee at Board level may be considered. External control framework is considered sound. Including director’s report and statement of compliance of code in financial statements may improve disclosure levels. Internal control framework is adequate with mechanisms in place to preserve confidentiality of information and limitations on employee trading activities.
Ratings also take into account Client relationships of the company which may be more pronounced through greater visibility on website and increased communications with customers. HR is supported by a fully functional and integrated ERP system and adequate contingency measures. The same may be enhanced by keeping offsite data backup at a third party warehouse and increasing the frequency of disaster recovery exercises. Segregating risk management, compliance and internal audit as independent functions may improve overall compliance and risk management framework.
Profitability of the company improved significantly in FY20 and 1H’FY21, owing to revaluation gains and capital gains, although brokerage income also recorded an increase, albeit remaining small. Liquidity profile is strong, while gearing and leverage also remain within manageable limits, despite increased borrowing due to improved profitability. Going forward, an increase in core income, while curtailing administrative expenses will be important for maintaining operational efficiency along with maintaining low leverage for improvement in overall financial profile of the company. Acquiring additional licenses may support revenue growth in future.
DJMSL is a public unlisted company holding Trading Rights Entitlement Certificate (TREC) granted by Pakistan Stock Exchange Limited (PSX), and is registered with SECP to provide Trading and Self-Clearing Services. External auditors of the company are Baker Tilly Mehmood Idrees Qamar Chartered Accountants. External auditors belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP).
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan