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Contents
2 4 5 12 16 20 28 29 31 32 33 34 35 37 67
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BOARD OF OF DIRECTORS
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COMPANY INFORMATION
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NOT NO TIC ICE E OF OF AN ANN NUA UAL L GE GENE NERA RAL L ME MEE ETIN ING G
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RETAIL & NON RETAIL
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MARK MA RKET ETIN ING G EVE EVENT NTS S & MA MANU NUF FAC ACTU TURI RING NG
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HUMA HU MAN N RESO RESOUR URCE CES S & CSR CSR ACT ACTIV IVIT ITIE IES S
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CHAI CH AIRM RMAN AN'S 'S ST STATE TEME MENT NT
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DIR DI REC ECT TORS RS'' REP REPOR ORT T
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CORP CO RPOR ORA ATE GO GOVE VERN RNAN ANCE CE
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COMP CO MPLI LIAN ANCE CE CERT CERTIF IFIC ICA ATE
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AUD UDIT IT CO COMM MMIT ITTE TEE E REPO REPOR RT
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AUD UDIT ITOR ORS' S' RE REP POR ORT T
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STA ST ATE TEME MENT NT OF FINA FINANC NCIA IAL L PO POSI SITI TION ON
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STA ST ATE TEME MENT NT OF COM COMPR PREH EHEN ENSI SIVE VE INC INCOM OME E
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STA ST ATE TEME MENT NT OF CH CHAN ANGE GES S IN EQ EQUI UITY TY
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STA ST ATE TEME MENT NT OF CA CASH SH FL FLOW OWS S
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NOTE NO TES S TO TO THE THE FIN FINAN ANCI CIAL AL ST STA ATE TEME MENT NTS S
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FORM OF PROXY
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Board of Directors Fernando Garcia Restrepo Chairman Present position Group Managing Director, Bata Emerging Markets (WEST) Previous positions President Director, Bata Indonesia Managing Director, Bata Kenya Managing Director, Bata India Vice President, Wholesale & Marketing, Bata Ltd, Toronto, Canada Managing Director, Bata Bangladesh
Kumar Nitesh Present position Vice Chairman & Managing Director (Appointed on 1 January 2013) Previous positions Managing Director, Bata Thailand Ltd. Vice-President (Retail), Bata India Limited
Muhammad Qayyum Present position Vice Chairman & Managing Director (Retired on 31 December 2012) Previous positions Retail Manager, Futura Footwear Limited, South Africa Retail Manager, Bata Pakistan Limited Merchandising Manager, Bata Pakistan Limited Area Manager, Bata Pakistan Limited Merchandise Planning & Budget Control Manager, Bata Pakistan Limited
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Shaibal Sinha Director Present position Chief Financial Officer, Bata Emerging Markets, Singapore Previous position Chief Financial Officer, Bata India
Rashidul Hasan Independent Director Present positions Chairman, Uttara Finance & Investments Ltd. Independent Director, Reckitt Benckiser Bangladesh Ltd. Independent Director, Monno Group of Industries Trustee, Kumudini Welfare Trust of Bangladesh Ltd. Previous positions Founder Chairman of IDLC the first joint venture leasing company of Bangladesh CEO & Managing Director of IPDC the first joint venture investment company of Bangladesh Director General, Department of Industries of the Republic of Bangladesh
K M Rezaul Hasanat Independent Director Present position Chairman and CEO, Viyellatex Group
3
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Company Information
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Company Secretary
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Md. Hashim Reza
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Auditors
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Hussain Farhad & Co.
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Legal Advisers
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S Ahmed & Associates
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Bankers
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Eastern Bank Ltd.
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Factories
House # 15, Road # 12 Block-F, Niketon Gulshan-1 Dhaka-1212
Law Valley Malik Law Associates
Dutch Bangla Bank Ltd. HSBC Ltd. Islami Bank (Bangladesh) Ltd.
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1. Tongi, Gazipur 2. Dhamrai, Dhaka
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Registered Office
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Chartered Accountants
Bata Shoe Company (Bangladesh) Limited Tongi Industrial Area Tongi, Gazipur Share Liaison Office 6, B. B. Avenue (2nd floor) Dhaka
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añL, 25 FKk´ u 2013
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1. 2. 3. 4.
8 ßo 2013 yPò ßrTct ßcaÇ ßp xm ßv~JrPyJflJrPhr jJo CÜ fJKrU kpt ∂ ßTJŒJjLr ßv~Jr ßrK\ˆJr KTÄmJ KckK\arL
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Notice of Annual General Meeting Notice is hereby given that the 41ST ANNUAL GENERAL MEETING of Bata Shoe Company (Bangladesh) Limited will be held at Dhamrai Factory, Dhaka, on 19 June 2013, Wednesday at 10:30 a.m. to transact the following business: 1.
To receive, consider and adopt the Directors’ Report for the year ended 31 December 2012.
2.
To receive, consider and adopt the audited financial statements of the Company and the Auditors’ Report thereon for the year ended 31 December 2012.
3.
To declare Dividend as recommended by the Directors.
4.
To elect Directors.
5.
To appoint Auditors for the year 2013 and to fix their remuneration.
By order of the Board
Tongi, 25 April 2013
Md. Hashim Reza Company Secretary
NOTES:
6
1.
8 May 2013 is the RECORD DATE. Shareholders whose names appearing in the share register of the Company or in the depository register on that date will be eligible to receive dividend as approved at the Annual General Meeting.
2.
A member eligible to attend and vote at the General Meeting is entitled to appoint a proxy to attend the meeting and vote on his/her behalf.
3.
Form of Proxy, duly completed, must be deposited at the Company’s Registered Office at least 48 (fortyeight) hours before the appointed time for the Meeting.
4.
A Proxy Form is enclosed.
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Retail The Retail channel sold 9.3 million pairs of shoes and with a turnover of Tk. 4.6 billion represents a 9% growth against last year. To achieve this outstanding growth in spite of global recession, the company took several initiatives like product innovation, aggressive marketing programmes, market expansion, human resource development, operational efficiency, team work etc. During the year, the company opened 23 new stores and renovated 16 potential stores. The new stores generated additional turnover of Tk. 105 million. More than 500 new lines were introduced before the biggest festival of Eid-ul-Fitre, which created a sensation among our valued customers.
Non Retail Non Retail business played a vital role in the company’s total turnover in 2012. This business channel includes 5 different divisions namely Dealers Support Program (DSP), Wholesalers, Rural Sales, Department Stores and Industrial & Institutions. The company focused on the big volume dealers to expand our market share. In addition, emphasis was given to open new dealers. More than 70 new dealers were opened last year which contributed around Tk. 104.5 million turnover. Currently, the company has more than 1,000 DSPs and wholesalers running under a sound meaningful business policy focused on development of good relationship. For retaining market leadership, the company focuses on appropriate shoe design and product development to meet the needs of the market. In communications with partners, the company organized a national Road Show of new products and received excellent positive feedback from customers to develop the right products and services.
8
Marketing events In 2012, we embarked on several marketing events to highlight our brand image and to increase customer awareness. Bata Bangladesh introduced many exclusive new lines of shoes the majority of which were during festival periods. These new arrivals were introduced in different Bata brands.
Bata Bangladesh organized the Annual Sales Conference for all store and depot managers where the business plan with appropriate business targets were highlighted and top achievers were rewarded. The program ended with a colourful Fashion show and cultural event.
To highlight our B.first brand we launched the “Back to School” promotion in our all stores throughout the country. For all things ingenious and all things bright, “B.First” represents children at their most curious years.
We also campaigned during the Bengali New Year. In this campaign we highlighted our summer collection all over the country.
Manufacturing
The company operates two modern manufacturing facilities, one in Tongi and the other in Dhamrai. Last year, the two manufacturing facilities produced a total of more than 28 million pairs of shoes.
9
Human Resources In 2012, Bata Bangladesh emphasised on various training programmes in view of employee development, better performance, productivity, quality & smooth business operations. The company organized 10 in-house training programmes for 1034 employees. 11 participants were sent overseas for training.
Bata Bangladesh organized a day long picnic at Savar Golf Club where the employees enjoyed a different day with games, laughter, fun, songs and ended with a raffle draw. This event offers an unique opportunity to refresh the enthusiasm and to strengthen interpersonal communication.
CSR Activities
Bata Bangladesh is committed to being a good corporate citizen. CSR activities involve supporting individuals and communities in need. Partnership with voluntary and charitable organizations is a prominent feature of Bata’s CSR. Among others, Bata Bangladesh works with Care, CRP and Sied.
Under the Bata children’s program Bata Bangladesh is actively involved in blood donations, shoe donations to school going children, National Immunization Day, Independence Day, art and essay writing competition and so on.
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11
xnJkKfr nJwe 2012
Chairman's Statement 2012
Fernando Garcia Restrepo Chairman
12
Kk´ ~ ßv~JrPyJøJrmO ª,
Dear Shareholders,
ßTJŒJKjr kKrYJuTo¥uLr kã ßgPT @Ko Vf 31 KcPx’r 2012 fJKrPU ßvw yS~J mZPrr mJKwt T @Kgt T k´ KfPmhj S KjrLãTPhr k´KfPmhjxy kKrYJuTo¥uLr k´KfPmhj @kjJPhr xJoPj Ck˙Jkj TrPf ßkPr @jKªf ßmJi TrKZÇ
On behalf of the Board of Directors of the company, it is my great pleasure to present to you the Directors’ Report along with the Financial Statements and Auditors’ Report thereon for the year ended 31 December 2012.
KmVf 2012 xJPu @kjJPhr ßhv ßTJj k´ TJr k´ JTí KfT hM Ppt JV KTÄmJ rJ\QjKfT IK˙rfJ ZJzJ ßoJaJoM Ka vJK∂kNe tnJPmA ßTPaPZÇ KT∂á @∂\t JKfT Igt QjKfT oªJ FmÄ mJÄuJPhPvr Igt jLKfPf Fr Km„k k´ nJPmr TJrPe @kjJPhr ßTJŒJKj jfáj jfá j YqJPuP†r xÿMU Lj y~Ç fJ ˝P•ôS @kjJPhr ßTJŒJKj CPuäUPpJVq k´ mO K≠ I\t Pjr k´ Kfv´ ∆Kf rãJ TPr YPuPZÇ FA k´ Kfv´ ∆Kfr iJrJmJKyTfJ~ @oJPhr ßâfJPhr k´ P~J\j FmÄ @PrJ Cjúffr ßxmJ k´ hJPjr uPãq KmKnjú mJKeK\qT èr∆fôkeN t FuJTJ~ jfá j jfá j UM YrJ FmÄ kJATJrL Kmâ~PTªs ßUJuJ ImqJyf rP~PZÇ 2012 xJPu @orJ ßâfJPhr KmKnjú ßoRxM o FmÄ C“xPmr KhPT uãq ßrPU @oJPhr kPeqr xrmrJy FmÄ k´ YJr k´ YJreJ YJKuP~KZ pJ @oJPhr xJoKV´ T KmâP~ nJu në KoTJ ßrPUPZÇ
While the country was relatively peaceful in 2012, without any major political disturbances and natural adversity, your company faced new challenges as a result of the global economic slowdown and its harmful impact on the economy of Bangladesh. Your company nevertheless remains committed to achieving a reasonable rate of growth. This commitment includes launching expansion programmes to increase the number of retail and wholesale outlets in important business locations to better serve the needs of our customers. During 2012, our promotional campaigns have been focused on boosting the market demand for seasonal and festival products, thus contributing positively to our turnover.
2012 xJPu @orJ KmVf mZPrr fáujJ~ vfTrJ 11 nJV Kmâ~ k´ mO K≠ I\t j TPrKZÇ FTAxPñ, C“kJhPjr k´ KfKa ßãP© mq~ xÄPTJYj FmÄ KmKnjú ßãP© Tí òfJ xJiPjr \jq @oJPhr @∂KrT k´ PYÓJ ImqJyf KZuÇ
In 2012, we achieved 11% growth in turnover while continuing our relentless efforts to reduce costs by taking various austerity measures in each and every area of our operations.
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Your company achieved a profit before tax of Tk.971 million representing a growth of 22% over the previous year. The net profit of the company was Tk. 672 million, an increase of Tk. 91million over the year 2011.
2012 xJPur UM YrJ Kmâ~ KZu 2011 xJPur fá ujJ~ vfTrJ 9 nJV ßmKvÇ UM YrJ Kmâ~ fgJ KrPaAu YqJPjPur Kmâ~ KZu ßTJŒJKjr ßoJa KmâP~r 62 nJVÇ UMYrJ KmâP~r Skr
During 2012, the retail turnover was 9% greater than in 2011. The retail channel contributed 62% of the total company’s turnover. Our increased focus on retail has been implemented through the opening of three City
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stores and twenty Family stores. We also upgraded and renovated several key stores during the year. Major promotional campaigns were held during the major festival periods and Back-to-School. Bata, North Star, Weinbrenner, B-First, Sandak, Marie Claire and Bubblegummers branded products were highlighted through print and electronic media. Wholesale turnover was 15% greater than in 2011. The wholesale channel contributed 37% of the total company’s turnover. Our increased focus on wholesale was implemented through the opening of 53 DSP outlets and 18 wholesalers. Special sales promotion campaigns were also launched, offering additional incentives and rewards for the dealers, in addition to other sales promotion activities. Your company continues in introducing new and innovative articles throughout the year and several new projects were launched in all categories. In addition, we sourced many exclusive products both from local and overseas suppliers. In the year 2012 your company continued to modernise and upgrade the production facilities in both the Tongi and Dhamrai factories. This has greatly improved the productivity and efficiency of the factories. With a view to improving the professional skills of our employees 11 executives participated in overseas training programmes and seminars, 15 executives participated in local and 1034 executives participated inhouse training to maintain their competitive edge by widening their knowledge of leather, footwear manufacturing, marketing and merchandising. Bata Bangladesh is committed to being a good corporate citizen. Corporate Social Responsibility (CSR) activities involve supporting individuals and communities in need. Partnership with voluntary and charitable organizations is a prominent feature of Bata’s CSR. Bata Bangladesh works with Care, CRP, Sied, Trust and various others. Bata Children’s Programme, a programme launched by the Bata head office to focus on helping disadvantaged children worldwide, supports underprivileged and street children through different NGOs like Utsho, Maer Achol, Sied, Trust Shishu Polli, UNICEF, Care etc.
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FmÄ KkKZP~ kzJ ImPyKuf KvÊPhr KmKnjú FjK\S ßpoj C“x, oJP~r @Å Yu, xLc as Jˆ, KvÊ kuä L, ACKjPxl, ßT~Jr AfqJKhr oJiqPo xyJ~fJ TrJ y~Ç 2012 xJPur 31 KcPx’r kpt ∂ @kjJPhr ßTJŒJKjr xmt PoJa Tot L hJKzP~PZ 1,439 \jÇ ßkvJhJKrfô, Kao K¸Kra FmÄ vJK∂kNe t Kv· xŒTt m\J~ rJUJr \jq @kjJPhr ßTJŒJKj F mZr IjqJjq IjM ÔJjxy FTKa mJKwt T mjPnJ\j S xJÄÛí KfT IjM ÔJPjr @P~J\j TPrÇ ßhPvr vLwt \M fJ C“kJhjTJrL FmÄ mJ\Jr\JfTJrL KyPxPm @kjJPhr ßTJŒJKj 2012 xJPu \JfL~ ßTJwJVJPr 1,621 KoKu~j aJTJ k´ hJj TPrPZÇ 2012 xJPur 30 KcPx’r @kjJPhr ßTJŒJKjr k´ KfKa ßv~Jr dJTJ ˆT FTPYP† 535.70 aJTJ~ FmÄ 27 KcPx’r Y¢V´ Jo ˆT FTPYP† 518.10 aJTJ~ â~-Kmâ~ y~Ç @kjJPhr kKrYJuTo¥uL ßv~Jr k´ Kf 17.00 aJTJ KyPxPm ßoJa 232.56 KoKu~j aJTJ I∂mftLTJuLj unqJÄv IjM PoJhj TPrPZj pJ 24 KcPx’r 2012 fJKrPU k´ hJj TrJ y~Ç kKrYJuTo¥uL FUj 672 KoKu~j aJTJ oM jJlJr Skr 2012 xJPur Yë zJ∂ unqJÄv ßv~Jr k´ Kf 10.50 aJTJ KyPxPm ßoJa 143.64 KoKu~j aJTJ xMk JKrv TrPZjÇ lPu 31 KcPx’r 2012 fJKrPU ßvw yS~J mZPr ßoJa unqJÄPvr kKroJe hÅ JzJPm ßv~Jr k´ Kf 27.50 aJTJ KyPxPm ßoJa 376.20 KoKu~j aJTJÇ
Your company contributed Tk. 1,621 million to the country’s National Exchequer for the year 2012 as the leading manufacturer and marketer in the country’s footwear industry. Your company’s shares were traded at Tk. 535.70 on the Dhaka Stock Exchanges on 30 December 2012 and Tk. 518.10 on the Chittagong Stock Exchange on 27 December 2012. Your Board of Directors approved an interim dividend of Tk. 17.00 per share amounting to Tk 232.56 million, which was paid on 24 December 2012. The Board is now recommending a final dividend of Tk. 10.50 per share amounting to Tk. 143.64 million with respect to 2012 after making a net profit of Tk. 672 million. This will make a total dividend payment of Tk. 27.50 per share amounting to Tk.376.20 million for the year ended 31 December 2012. In accordance with the Articles of Association of the company, all the directors, except the Managing
ßTJŒJKjr xÄW-KmKi IjM xJPr mqm˙JkjJ kKrYJuT Tá oJr jLPfv ZJzJ Ijq kKrYJuTmO ª FA mJKwt T xnJ~ Imxr V´ ye TrPuj FmÄ kMj”Kjmt JYPjr ßpJVq KmiJ~ k´ Jgt L yPujÇ
Director, Kumar Nitesh, retire at the Annual General Meeting and, being eligible offer themselves for reelection.
kKrPvPw, @Ko kKrYJuTo¥uLr kã ßgPT ßTJŒJKjr k´Kf ImqJyf xJyJpq S xyPpJKVfJ k´ hJPjr \jq @oJPhr xÿJKjf ßv~JrPyJøJrmOª, ßâfJ xJiJre, xrmrJyTJrL, TotTftJ TotYJrLmOª FmÄ Vek´\JfπL mJÄuJPhv xrTJPrr KjTa Tí fùfJ k´ TJv S ijqmJh ùJkj TrKZÇ
Finally, on behalf of the Board of Directors, I would like to express our gratitude to you, our valued
lJjt JPªJ VJKxt ~J ßrxPas PkJ
Fernando Garcia Restrepo Chairman 25 April 2013
ßY~JroqJj 25 FKk´ u 2013
14
As at 31December 2012, a total of 1439 people were employed by your company. To uphold team spirit, integrity and harmonious industrial relations, your company organised, among other programmes, an annual picnic and cultural show during the year.
shareholders, as well as to our valued customers, suppliers, employees and to the Government of the People’s Republic of Bangladesh for the keen support and cooperation extended to the company.
15
Directors' Report 2012 Your Directors have pleasure in submitting their Report and Audited Financial Statements of the Company for the year ended 31 December 2012 along with the preceding five years as follows: Industry Outlook The footwear sector in the country witnessed a moderate growth during the year. The growth is expected to remain the same level next year. The Company attained growth of 11% during the current year. It is expected that, the growth trend will continue under the prevailing market conditions. Cost of Sales & Profit Margin The overall costs of raw materials have increased internationally. However, the cost of sales has decreased satisfactorily in 2012 as compared to net turnover due to strict control over the consumption of raw materials and other cost of productions. Consequently the gross profit has increased over that of 2011. Key Operating & Financial Information Your Directors have pleasure in submitting the key operating and financial data of the Company for the year ended 31 December 2012 along with the preceding five years below: Financial results
2012 Taka 000
2011 Taka 000
2010 Taka 000
2009 Taka 000
2008 Taka 000
2007 Taka 000
Net profit before tax
971,389
793,620
742,971
629,692
619,635
493,927
Provision for tax
299,473
213,003
199,000
180,286
170,219
148,052
Net profit after tax
671,916
580,617
543,971
449,406
449,416
345,875
1,313,782
1,075,165
873,195
724,748
575,292
571,417
Undistributed dividend reserve
-
-
-
-
1,000
-
Loss on BB Export winding up
(2,791)
-
-
-
-
-
1,982,907
1,655,782
1,417,166
1,174,154
1,025,708
917,292
Un-appropriated profit brought forward
Profit available for appropriation
From which the Directors recommended the following appropriations:
Final dividend paid (previous year)
143,640
143,640
143,640
143,640
143,640
Interim dividend paid (current year)
232,560
198,360
198,360
157,320
157,320
198,360
Total dividend
376,200
342,000
342,000
300,960
300,960
342,000
1,606,707
1,313,782
1,075,166
873,194
724,748
575,292
Un-appropriated profit carried forward
143,640
Dividend For the year ended 31 December 2012 the Board of Directors recommended an interim dividend of Tk. 17.00 per share amounting to Tk 232,560,000 and now recommends a final dividend of Tk. 10.50 per share amounting to Tk.143,640,000 thus making a total dividend of Tk. 376,200,000 per share amounting to Tk. 27.50. Directors Proposed for Re-Election The Directors retiring as per Article 104 of the Company’s Articles of Association are Mr. Fernando Garcia Restrepo, Mr. Shaibal Sinha, Mr. Rashidul Hasan and Mr. K M Rezaul Hasanat and being eligible offer themselves for re-election.
16
Audit Committee Meeting The Audit Committee is a sub-committee of the Board. All members of the Audit Committee were appointed by the Board of Directors from amongst the members. They met once during the year 2012. Except for Mr. Fernando Garcia Restrepo and Mr. K M Rezaul Hasanat all the members were present in the meeting of the committee. The Company Secretary was the Secretary of the Committee. The Audit Committee is comprised of: Mr. Fernando Garcia Restrepo Mr. Muhammad Qayyum Mr. Kumar Nitesh Mr. Shaibal Sinha Mr. Rashidul Hasan Mr. K M Rezaul Hasanat
– – – – – –
Chairman Member (resigned on 31 December 2012) Member (appointed on 1 January 2013) Member Member as Independent Director Member as Independent Director
Reports on Activities of the Audit Committee The Audit Committee has performed regularly the following activities:
Oversee the financial reporting.
Monitoring the choice of accounting policies, principles, internal control and risk management process.
Oversee performance of statutory auditors.
Reviewing the annual financial statements before submission to the Board for approval.
Reviewing the statement of significant related party transactions.
The System of Internal Control The Board of Directors assures the Shareholders that the Company has a robust risk management process to ensure that the system of internal control is sound in design and has been effectively implemented and monitored. Although it is possible that all risks to the business are not known at present, the Company takes reasonable steps to identify material risks that may hamper business results and systematically reviews these risks in light of the changing internal and external environment in order to assess that the controls in place are adequate to address these risks. Directors’ Declaration as to Financial Statements As part of preparation and presentation of the financial statements, the Directors also report that: a)
The Financial Statements prepared by the Management of the Company present a true and fair view of Company’s state of affairs, the result of its operations, cash flows and changes in equity.
b)
Proper books of accounts of the Company have been maintained as required by law.
c)
Appropriate accounting policies have been consistently applied in preparation of the Financial Statements and the accounting estimates are based on reasonable and prudent judgment.
d)
The Financial Statements were prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BF RS) as applicable in Bangladesh and there has not been any departure there from.
17
e)
The CEO and Finance Director have certified to the Board that: i)
ii)
they have reviewed the financial statements and believe: a)
these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;
b)
these statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws.
there are, to the best of their knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or in violation of the company’s codes of conduct.
Other Regulatory Disclosures:
BB Export Limited., the wholly owned subsidiary of the Company, has been wound up voluntarily by the members on 6 November 2012. The assets of the subsidiary company have been taken over by the parent Company at written down value as mutually agreed by the management of both the Companies.
The activity of the tannery unit has been discontinued as per resolution of the Board meeting No 208, dated 30 September 2012.
Auditors Hussain Farhad & Co., Chartered Accountants, have offered their willingness to be re-appointed as statutory auditors of the company. The Board recommends their appointment for the year 20 13 and to continue till the next Annual General Meeting. On behalf of the Board of Directors,
Kumar Nitesh Managing Director 25 April 2013
18
Pattern of Shareholdings
Annexure - 1
The names of the Shareholders along with the positions of their shares are listed below: Names of the shareholders i)
Number of share held
Parent/subsidiary/associate/related parties: Bafin Nederland (B.V.)
% holding
9,576,000
70.00
Directors/CEO/CS/CFO/Audit Head and their spouses and minor children Mr. Rashidul Hasan
64
–
iii)
Executives (Head of Functions)
Nil
Nil
iv)
Shareholders, who hold 10% or more
Nil
Nil
v)
Others Shareholders, who hold less than 10% International Finance Corporation Non-resident shareholders Local shareholders
2,840 908,928 3,192,168
0.02 6.64 23.34
13,680,000
100.00
ii)
Total Board Meetings
The Board met 4 (four) times during the year 2012. The Company Secretary and Finance Director were also present in the Board meetings. The attendance by each Director is stated below: Present Directors Name
No. of Attendance
Mr. Fernando Garcia Restrepo
1 meeting
Mr. Muhammad Qayyum
4 meetings
Mr. Rashidul Hasan
4 meetings
Mr. K M Rezaul Hasanat
1 meeting
Mr. Shaibal Sinha
4 meetings
Mr. Kumar Nitesh
0 meeting
(resigned on 31 December 2012)
(appointed on 01 January 2013)
19
Annexure – 2 Status of Compliance with the Conditions Imposed by BSEC’s Notification on Corporate Governance (Report under Condition No. 7.00)
20
Condition No.
Titles
Status
Remarks
1.1
Board Size: The number of the Board members of the company shall not be less than 5 (five) and more than 20 (twenty).
Complied
The Board of Bata is comprised of 5 (five) Directors.
1.2 (i)
Independent Directors: At least one fifth (1/5) of the total number of Directors in the company’s Board shall be Independent Directors.
Complied
There are two Independent Directors in the Bata Board, namely Mr. Rashidul Hasan, and Mr. K M Rezaul Hasanat.
1.2 (ii) (a)
Independent Director does not hold any share or holds less than 1% shares of the total paid-up capital.
Complied
1.2 (ii) (b)
Independent Director or his family members are not connected with the company's any sponsor or Director or Shareholder who holds 1% or more shares.
Complied
1.2 (ii) (c)
Does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies.
Complied
1.2 (ii) (d)
Independent Director is not a member, Director or officer of any Stock Exchange.
Complied
1.2 (ii) (e)
Independent Director is not a shareholder, Director or officer of any member of Stock Exchange or an intermediary of the capital market.
Complied
1.2 (ii) (f)
Independent Director is not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of any statutory audit firm.
Complied
1.2 (ii) (g)
Independent Director shall not be an Independent Director in more than 3 (three) listed companies.
Complied
1.2 (ii) (h)
Independent Director has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a bank or a Non-Bank Financial Institution (NBFI).
Complied
1.2 (ii) (i)
Independent Director has not been convicted for a criminal offence involving moral turpitude.
Complied
1.2 (iii)
The Independent Director(s) shall be appointed by the Board of Directors and approved by the shareholders in the AGM.
Complied
1.2 (iv)
The Post of Independent Director(s) can’t remain vacant for more than 90 (ninety) days.
Complied
Condition No.
Titles
Status
1.2 (v)
The Board shall lay down a code of conduct of all Board members and annual compliance of the code to be recorded.
Complied
1.2 (vi)
The tenure of office of an Independent Director shall be for a period of 3 (three) years, which may be extended for 1 (one) term only.
1.3 (i)
Independent Director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial, regulatory and corporate laws and can make meaningful contribution to business.
Complied
1.3 (ii)
Independent Director should be a Business Leader/Corporate Leader/Bureaucrat/University Teacher with Economics or Business Studies or Law background/Professionals like Chartered Accountants, Cost & Management Accountants, Chartered Secretaries. The Independent Director must have at least 12 (twelve) years of corporate management/professional experiences.
Complied
1.3 (iii)
In special cases the above qualifications may be relaxed subject to prior approval of the Commission.
Not Applicable
1.4
Chairman and CEO shall be filled by different individuals. Chairman shall be elected from among the Directors. The Board of Directors shall clearly define respective roles and responsibilities of the Chairman and the CEO.
Complied
1.5
The Directors’ Directors’ Repor Reportt to Shareh Shareholders olders on:
1.5 (i)
Remarks
Industry outlook and possible future developments in the industry.
Complied
1.5 (ii)
Segment-wise or product-wise performance.
Complied
Stated in the financial statement at note no. 35.
1.5 (iii)
Risks and concerns.
Complied
Stated in the financial statement at note no. 34.
1.5 (iv)
A discus discussion sion on Cost Cost of Goods sold, sold, Gross Profit Profit Margin and Net Profit Margin.
Complied
1.5 (v)
Discussion on continuity of any Extra-Ordinary gain or loss.
Not Applicable
1.5 (vi)
Basis for related party transactions - a statement of all related party transactions should be disclosed in the annual report.
Complied
1.5 (vii)
Utilization of proceeds from public issues, rights issues and/or through any others instruments.
Stated in the financial statement at note no. 36.
Not Applicable
21
22
Condition No.
Titles
Status
1.5 (viii)
An explanation if the financial results deteriorate after the company goes for Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Offer, Direct Listing, etc.
Not Applicable
1.5 (ix)
If significant variance occurs between Quarterly Financial performance and Annual Financial Statements the management shall explain about the variance on their Annual Report.
Not Applicable
1.5 (x)
Remuneration to Directors including Independent Directors.
Complied
1.5 (xi)
The financial statements prepared by the management of the issuer company present fairly its state of affairs, the result of its operations, cash flows and changes in equity.
Complied
1.5 (xii)
Proper books of account of the issuer company have been maintained.
Complied
1.5 (xiii)
Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment.
Complied
1.5 (xiv)
International Accounting Standards (IAS)/Bangladesh Accounting Standards (BAS)/International Financial Reporting Standards (IFRS)/Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there-from has been adequately disclosed.
Complied
1.5 (xv)
The system of internal control is sound in design and has been effectively implemented and monitored.
Complied
1.5 (xvi)
There are no significant doubts upon the issuer company's ability to continue as a going concern. If the issuer company is not considered to be a going concern, the fact along with reasons thereof should be disclosed.
Complied
1.5 (xvii)
Significant deviations from the last year’s operating results of the issuer company shall be highlighted and the reasons thereof should be explained.
Not Applicable
1.5 (xviii)
Key operating and financial data of at least preceding 5 (five) years years shall be summarized. summarized.
Complied
1.5 (xix)
No declaration of Dividend.
1.5 (xx)
The number of Board meetings held during the year and attendance by each Director shall be disclosed.
Remarks
No significant variance.
Stated in the financial statement at note no. 23.
Not Applicable Complied
Stated in Annexure – 1 to the Directors’ Directors’ report report..
Condition No.
Titles
Status
Remarks
1.5 (xxi)
The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with name wise details where stated below) held by:-
1.5 (xxi) (a)
Parent/Subsidiary/Associated Companies and other related parties (name wise details);
Complied
Stated in Annexure – 1 to the Directors’ Directors’ report.
1.5 (xxi) (b)
Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and their spouses and minor children (name wise details);
Complied
Do
1.5 (xxi) (c)
Executives;
Complied
Do
1.5 (xxi) (d)
Shareholders holding ten percent (10%) or more votes’ interest in the company (name wise wise details).
Complied
Do
1.5 (xxii)
In case of the appointment/re-appointment of a Director the company shall disclose the following information to the shareholders: a brief resume resume of the Director; Director; nature of his/her expertise in specific functional areas; names of companies in which the person also holds the Directorship and the membership of committees of the Board
Complied
Disclosed in the annual report.
2.1
The company shall appoint a Chief Financial Officer (CFO), a Head of Internal Audit (internal Control and Compliance) and a Company Secretary (CS). The Board of Directors should clearly define respective roles, responsibilities and duties of CFO, the Head of Internal Audit and the CS.
Complied
2.2
Attendance of CFO and the Company Secretary in the Board meeting.
Complied
Stated in Annexure – 1 to the Directors’ Directors’ report.
3 (i)
The company shall have an Audit Committee as a sub-committee of the Board of Directors.
Complied
Stated in the Directors’ report.
3 (i (ii) i)
The Audit Committee shall assist the Board of Directors’ Direct ors’ in ensuring that that the financial financial statements statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business.
Complied
3 (i (iii ii))
The Audit Committee shall be responsible to the Board of Directors. The duties of the Audit Committee shall be clearly set forth in writing.
Complied
3.1 (i)
The Audit Committee shall be composed of at least 3 (three) members.
Complied
3.1 (ii)
The Board of Directors shall appoint members of the Audit Committee who shall be Directors of the company and shall include at least 1 (one) Independent Director.
Complied
The Audit Committee is composed of 5 (five) members.
23
24
Condition No.
Titles
Status
3.1 (iii)
All members of the Audit Committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management experience: The term Financially literate means the ability to read and understand the financial statements i.e. Balance Sheet, Income Statement and Cash F low Statement and a person will be considered to have accounting or related financial management expertise if s/he possesses professional qualification or Accounting/finance graduate with at least 12 (twelve) years of corporate management/professional experiences.
Complied
3.1 (iv)
Casual vacancy in Audit Committee (AC) shall be filled by the Board.
Complied
3.1 (v)
The company secretary shall act as the secretary of the Committee.
Complied
3.1 (vi)
The quorum of the Audit Committee (AC) meeting shall not constitute without at least 1 (one) Independent Director.
Complied
3.2 (i)
The Board of Directors shall select 1 (one) member of the Audit Committee to be Chairman of the Audit Committee, who shall be an Independent Director.
Complied
3.2 (ii)
Chairman of the audit committee shall remain present in the Annual General Meeting.
Complied
3.3 (i)
The Role of Audit Committee: Oversee the financial reporting process.
Complied
3.3 (ii)
Monitor choice of accounting policies and principles.
Complied
3.3 (iii)
Monitor Internal Control Risk management process.
Complied
3.3 (iv)
Oversee hiring and performance of external auditors.
Complied
3.3 (v)
Review along with the management, the annual financial statements before submission to the Board for approval.
Complied
3.3 (vi)
Review along with the management, the quarterly and half yearly financial statements before submission to the Board for approval.
Complied
3.3 (vii)
Review the adequacy of internal audit function.
Complied
3.3 (viii)
Review statement of significant related transactions submitted by the management.
party
Complied
3.3 (ix)
Review Management Letters/ Letter of Internal Control weakness issued by statutory auditors.
Complied
Remarks
Mr. Rashidul Hasan has been appointed as chairman in March 2013.
Condition No.
Titles
Status
3.3 (x)
When money is raised through Initial Public Offering IPO)/Repeat Public Offering (RPO)/Rights Issue the company shall disclose to the Audit Committee about the uses/applications of funds by major category (capital expenditure, sales and marketing expenses, working capital, etc), on a quarterly basis, as a part of their quarterly declaration of financial results. Further, on an annual basis, the company shall prepare a statement of funds utilized for the purposes other than those stated in the offer document/ prospectus.
Not Applicable
3.4
Remarks
Reporting of Audit Committee:-
3.4.1 (i)
The Audit Committee shall report on its activities to the Board of Directors.
Complied
3.4.1 (ii) (a)
Report on conflicts of interests to the Board of Directors.
Not Applicable
There was no reportable case of conflict of interest in 2012.
3.4.1 (ii) (b)
Will report any suspected or presumed fraud or irregularity or material defect in the internal control system to the Board.
Not Applicable
There was no such case in 2012.
3.4.1 (ii) (c)
Will report any suspected infringement of laws, including securities related laws, rules and regulations to the Board.
Not Applicable
Do
3.4.1 (ii) (d)
Will report any other matter which shall be disclosed to the Board of Directors immediately.
Not Applicable
Do
3.4.2
Reporting to the Authorities: If the Audit Committee has reported to the Board of Directors about anything which has material impact on the financial condition and results of operation and has discussed with the Board of Directors and the management that any rectification is necessary and if the Audit Committee finds that such rectification has been unreasonably ignored, the Audit Committee shall report such finding to the Commission, upon reporting of such matters to the Board of Directors for three times or completion of a period of 6 (six) months from the date of first reporting to the Board of Directors, whichever is e arlier.
Not Applicable
Do
3.5
Reporting to the Shareholders and General Investors: report on activities carried out by the Audit Committee, including any report made to the Board of Directors under condition 3.4.1 (ii) above during the year, shall be signed by the Chairman of the Audit Committee and disclosed in the annual report of the issuer company.
Complied
4 (i)
Non-engagement of external/statutory auditors in appraisal or valuation services or fairness opinions.
Complied
Stated in Directors’ Report.
25
26
Condition No.
Titles
Status
Remarks
4 (ii)
Non-engagement of external/statutory auditors in financial information systems design and implementation.
Complied
4 (iii)
Non-engagement of external/statutory auditors in Book-keeping or other services related to the accounting records or financial statements.
Complied
4 (iv)
Non-engagement of external/statutory auditors in Broker-dealer services.
Complied
4 (v)
Non-engagement of external/statutory auditors in Actuarial services.
Complied
4 (vi)
Non-engagement of external/statutory auditors in Internal audit services.
Complied
4 (vii)
Non-engagement of external/statutory auditors in any other service that the Audit Committee determines.
Complied
4 (viii)
No partner or employees of the external audit firms shall possess any share of the company they audit at least during the tenure of their audit assignment of that company.
Complied
5 (i)
Provisions relating to the composition of the Board of Directors of the holding company shall be made applicable to the composition of the Board of Directors of the subsidiary company.
Complied
Subsidiary company has been wound up on 6th November 2012.
5 (ii)
At least 1 (one) Independent Director on the Board of Directors of the holding company shall be a Director on the Board of Directors of the subsidiary company.
Complied
Do
5 (iii)
The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company.
Complied
Do
5 (iv)
The minutes of the respective Board meeting of the holding company shall state that they have reviewed the affairs of the subsidiary company also.
Complied
Do
5 (v)
The Audit Committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company.
Not Applicable
6 (i) (a)
The CEO and CFO will certify to the Board that they have reviewed the financial statements and believe that these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading.
Complied
The subsidiary company did not go into operation since inception.
Condition No.
Titles
Status
6 (i) (b)
The CEO and CFO will certify to the Board that they have reviewed the financial statements and believe that these statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws.
Complied
6 (ii)
There are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violation of the company’s code of conduct.
Complied
7 (i)
The company shall obtain a certificate from a Professional Chartered Secretary/Accountants (Chartered Accountants/Cost & Management Accountants/Chartered Secretary) regarding compliance of conditions of Corporate Governance Guidelines of the Commission and shall send the same to the shareholders along with the Annual Report on a yearly basis.
Complied
7 (ii)
The Directors of the company shall state, in accordance with the Annexure attached, in the Directors' report whether the company has complied with these conditions.
Complied
Remarks
27
CERTIFICATE OF COMPLIANCE TO THE SHAREHOLDERS OF Bata Shoe Company (Bangladesh) Limited (As required under the BSEC Guidelines)
We have examined compliance to the BSEC guidelines on Corporate Governance by Bata Shoe Company (Bangladesh) Limited for the year ended 31st December 2012, These guidelines relate to the Notification no. SEC/CMRRCD/2006-158/134/Admin/44 dated 7th August 2012 of Bangladesh Securities and Exchange Commission (BSEC) on Corporate Governance. Such compliance to the codes of Corporate Governance is the responsibility of the Company. Our examination was limited to the procedures and implementation thereof as dopted by the Mangement in ensuring compliance to the conditions of Corporate Governance. This is a dcrutiny and verification only and not an expression of opinion or audit on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations provided to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned guidelines issued by BSEC. We also state that such compliance is neiter an assurance as to the future viability of the Company nor a certification on the efficiency or effectiveness with which the Mangement has conducted the affairs of the Company.
HUSSAIN FARHAD & CO. Dhaka, 25 April 2013
28
Chartered Accountants.
Audit Committee Report The Board of Directors of Bata Shoe Company (Bangladesh) Limited has constituted an Audit Committee to support the Board in fulfilling its oversight responsibilities. The Audit Committee meeting was held once for the year 2012. The Finance Director, Company Secretary and the Head of Internal Audit were invitees to the Audit Committee meeting. Purpose of the Audit Committee The role of Audit Committee is to monitor the integrity of the financial statements of the company and review and, when appropriate, make recommendations to the Board of Directors on business risks, internal controls and compliance. The Committee satisfies itself by means of suitable steps and appropriate information, that proper and satisfactory internal control system are in place to identify and contain business risks and the company’s business is conducted in a proper and financially appropriate manner. Major Responsibilities of the Audit Committee In 2012, the Audit Committee reviewed its terms of reference in line with requirements of Bangladesh Securities and Exchange Commission’s (BSEC) notification on corporate governance. The Committee carried out its duties in accordance with the terms of reference of the Audit Committee. Some of the major responsibilities of the Audit Committee are as follows: Review the annual, half-yearly and quarterly financial statements and other financial results, and upon its satisfaction of the review, recommend the same to the Board. Review the adequacy and effectiveness of financial reporting process, internal control system, risk management, auditing matters, and the company’s processes for monitoring compliance with laws and regulations and the Codes of Conduct. Recommend appointment, termination and determination of audit fees for statutory auditors. Consider the scope of work, and oversee and evaluate the work performed by statutory auditors. Review permitted nonaudit services performed by statutory auditors. Exercise its oversight of the work of Internal Audit department of the company. Review the effectiveness of Internal Audit function including performance, structure, adequacy of resources, and compliance with professional standards. Examine audit findings and material weaknesses and monitor implementation of audit action plans. Major Activities of the Audit Committee Reviewed and recommended to the Board the quarterly and annual financial statements for the year ended 31 December, 2012. Considered and made recommendation to the Board on the appointment and remuneration of external auditors, Hussain Farhad & Co., Chartered Accountants for the year 2013. Reviewed the management letter from external auditors for the year 2012 together with management’s responses to the findings. Approved the Internal Audit Plan for 2013, monitored progress and effected revisions when necessary. Discussed Internal Audit reports and findings in detail with auditors and members of management and monitored the status of implementation of audit action plans and provided guidance to ensure timely completion of action plans. Reviewed the activities of the compliance function, incidence reporting and actions, and the status of enforcement of the company’s Codes of Conduct. Reviewed the Internal Audit Charter. Reviewed and received report on the matters as per requirement from the Securities and Exchange Commission (SEC). The above matters are significant recommendations for continuous improvement and therefore duly noted.
29
30
Independent Auditors' Report to the Shareholders of Bata Shoe Company (Bangladesh) Limited Report on the Financial Statements We have audited the accompanying financial statements of Bata Shoe Company (Bangladesh) Limited ("the Company") which comprise the statement of financial position as at 31 December 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of Bata Shoe Company (Bangladesh) Limited as at 31 December 2012, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards. Other Matter The financial statements of Bata Shoe Company (Bangladesh) Limited for the year ended 31 December 2011, were audited by another auditor who expressed an unmodified opinion on those statements on 16 April 2012. Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994 and the Securities and Exchange Rules 1987, we also report the following: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books; c) the statement of financial position and statement of comprehensive income dealt with by the report are in agreement with the books of account; and d) the expenditure incurred was for the purposes of the Company’s business.
Dhaka, 25 April 2013
Hussain Farhad & Co. Chartered Accountants
31
Bata Shoe Company (Bangladesh) Limited Statement of Financial Position as at 31 December 2012 Notes
2012 Taka
2011 Taka
Assets Property, plant and equipment Capital work in progress
4 5
880,326,133 2,059,472
731,871,393 38,251,715
Investment in subsidiary
6
-
19,970,000
Prepayments of rent
10
132,100,000
63,835,963
1,014,485,605
853,929,071
Total non-current assets Inventories Accounts receivable
8 9
1,888,784,523 276,562,580
1,756,397,259 190,610,122
Advances, deposits and prepayments
10
566,731,442
443,022,574
Cash and cash equivalents
11
233,459,170
302,767,543
Total current assets
2,965,537,715
2,692,797,498
Total assets
3,980,023,320
3,546,726,569
Equity Share capital
12
136,800,000
136,800,000
Reserves and surplus
13
1,717,200,579
1,424,274,906
1,854,000,579
1,561,074,906
Total equity attributable to equity holders of the company
Liabilities Deferred liability
14
123,817,664
150,704,000
Deferred tax liability
7
12,300,000
1,500,000
136,117,664
152,204,000
Total non-current liabilities Creditors for goods Creditors for expenses
15 16
353,751,438 420,194,568
409,263,569 300,735,251
Creditors for other finance
17
241,388,294
230,638,433
Accrued expenses
18
385,280,477
346,740,381
Provision for tax Unclaimed dividend
19 34.2
530,956,889 58,333,411
483,230,866 62,839,163
Total current liabilities
1,989,905,077
1,833,447,663
Total liabilities
2,126,022,741
1,985,651,663
Total equity and liabilities
3,980,023,320
3,546,726,569
The notes on pages 37 to 63 are an integral part of these financial statements.
Kumar Nitesh Managing Director
Rashidul Hasan Director
Md. Hashim Reza Company Secretary As per our report of same date.
Dhaka, 25 April 2013
32
Hussain Farhad & Co. Chartered Accountants
Bata Shoe Company (Bangladesh) Limited Statement of Comprehensive Income for the year ended 31 December 2012 Notes
2012 Taka
2011 Taka
Revenue
20
7,384,505,735
6,647,846,013
Cost of sales
21
(4,718,506,064)
(4,286,593,663)
2,665,999,671
2,361,252,350
(4,130,083)
(2,517,182)
Gross profit Exchange gain/(loss) Other income
22
26,776,981
21,210,803
Administration, selling and distribution expenses
23
(1,683,027,051)
(1,529,417,293)
1,005,619,518
850,528,678
Profit from operating activities Finance income
24
21,335,940
6,071,420
Finance expenses
25
(4,440,402)
(21,210,569)
16,895,538
(15,139,149)
1,022,515,056
835,389,529
(51,125,753)
(41,769,476)
29
971,389,303
793,620,053
Current tax
19
288,673,000
204,503,000
Deferred tax
7
10,800,000
8,500,000
299,473,000
213,003,000
671,916,303
580,617,053
49.12
42.44
Net finance income/(expenses) Profit before contribution to workers' profit participation fund
Contribution to workers' profit participation fund Profit before income tax Income tax expense:
Profit for the year Basic earnings per share (par value Tk 10)
32
The notes on pages 37 to 63 are an integral part of these financial statements.
Kumar Nitesh Managing Director
Rashidul Hasan Director
Md. Hashim Reza Company Secretary As per our report of same date.
Dhaka, 25 April 2013
Hussain Farhad & Co. Chartered Accountants
33
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34
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3 5 8 , 7 5 4 , 2 2 3 , 1
1 1 0 2 r o f 1 e 1 0 m 2 o c y n r i a u e r v a n i e a y J s n e 1 e h t h t a e r r o s p f t a m i f e o o c c r n l P a t a l a o B T
1 s r 0 1 e 1 0 2 1 d l 0 r 1 o 2 a 0 r h a e 2 y r e r e e a y e b h e h t s h r m t o e e r f c h o d e t f D n h d e t i n d 1 e i w d v 3 t i s i v d a n i m s o d i i r a t l e e c a n t i a n c s F I n a n l a a r T B
2
1 y r 0 a i 2 d i r o s f b e u S m n o i c t i n n r e e v a m i e t s s y e n e v e h n h t I e r n r o o p f t s m i f s o o o c r L l P a t o T
0 0 , 3 6 8 , 8 4
2 6 , 8 9 9
8 1 , 1 3 6 , 0 6
0 0 , 0 0 8 , 6 3 1
2 s r 1 1 e 1 0 2 2 d l 0 r 1 o 2 a 0 r h a e 2 y r e r e e a y e b h e h t s h r m t o e e r f c h o d e t f D n h d e t i n d 1 e i w d v 3 t i s i v d a n i m s o d i i r a t l e e c a n t i a n c s F I n a n l a a r T B
Bata Shoe Company (Bangladesh) Limited Statement of Cash Flows for the year ended 31 December 2012 2012 Taka
2011 Taka
Cash flows from operating activities Cash receipts from customers
7,285,702,413
6,636,928,275
Cash payments to and on behalf of employees
(1,122,268,755)
(923,261,386)
Cash payments to suppliers and contractors for goods and services
(5,419,187,323)
(4,768,014,274)
Cash payments for deferred liabilty
(20,886,394)
(14,414,896)
Cash generated from operating activities
723,359,941
931,237,719
7,511,347
4,801,594
(8,570,485)
(23,727,751)
(244,240,492)
(233,574,896)
478,060,311
678,736,666
13,811,858
1,186,843
-
(24,500)
28,908,376
5,100,484
(207,323,694)
(73,949,546)
(2,059,472)
(143,661,720)
(166,662,932)
(211,348,439)
Dividend paid
(380,705,752)
(337,137,797)
Net cash used in financing activities
(380,705,752)
(337,137,797)
Net cash increase/(decrease) in cash and cash equivalents
(69,308,373)
130,250,430
Cash and cash equivalents as at 1 January
302,767,543
172,517,113
Cash and cash equivalents as at 31 December (Note 11)
233,459,170
302,767,543
Interest received from STD account Interest paid Income tax paid Net cash from operating activities Cash flows from investing activities Interest received from FDR Acquisition of subsidiary Proceeds from sales of property, plant and equipment Acquisition of property, plant and equipment Payment for capital work in progress Net cash used in investing activities Cash flows from financing activities
35
36
Bata Shoe Company (Bangladesh) Limited Notes to the Financial Statements as at and for the year ended 31 December 2012 1.
Reporting entity Bata Shoe Company (Bangladesh) Limited (hereinafter referred to as "Bata"/"the Company") is a public Company limited by shares. It was incorporated in Bangladesh in 1972 under the Companies Act 1913. The address of the registered office of the Company is Tongi, Gazipur, Bangladesh. The Company is one of the operating companies of worldwide Bata Shoe Organization (BSO). The shares in the Company are listed in both Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and mostly held by Bafin (Nederland) B.V. The financial year of the Company covers one year from 1 January to 31 December. In November 2009, the Company established a wholly owned subsidiary named "BB Export Ltd." (hereinafter referred to as "BB Export"/"the subsidiary Company"). BB Export Ltd. has been wound up voluntarily on 6 November, 2012. The Company is mainly engaged in manufacturing and marketing of leather, rubber, plastic, canvas footwear, hosiery and accessories items as well as finished leather. Manufacturing plants of the Company are situated at Tongi and Dhamrai.
2.
Basis of preparation
2.1
Statement of compliance These financial statements have been prepared in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. These financial statements were authorised for issue by the Board of Directors at its 211th meeting held on 25 April 2013.
2.2
Basis of measurement These financial statements have been prepared on historical cost basis except for land at Tongi in the statement of financial position which was revalued in 1979.
2.3
Functional and presentational currency These financial statements are presented in Bangladesh Taka (Taka/Tk) which is both functional and presentational currency of the Company. The amounts in these financial statements have been rounded off to the nearest Taka except for the amounts presented in revenue in note 20, statement of production in note 21.2, related party transactions in note 36.1 & 36.2 and operating lease payments disclosure in note 37 which have been rounded off to the nearest thousand Taka and credit facilities available as at 31 December in note 11.2 have been rounded off to the nearest milli on Taka.
2.4
Use of estimates and judgements The preparation of these financial statements in conformity with BFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes: Note 4
Property, plant & equipment
Note 7
Deferred tax assets / (liabilities)
Note 8
Inventories
Note 14
Deferred liability
Note 19
Provision for tax
37
3.
Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently, except as explained in note 3.3.3 which addresses review of useful lives of property, plant and equipment by management during the year 2012.
3.1
Foreign currency Transactions in foreign currencies are translated to the respective functional currencies of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Nonmonetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are recognised in profit or loss.
3.2
Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
3.2.1
Non-derivative financial assets The Company initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date the Company becomes a party to the contractual provisions of the instrument. The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Copmany classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available for- sale financial assets.
3.2.1.1
Financial assets at fair value through profit or loss A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is designated as such on initial recognition. Attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, which takes into account any dividend income, are recognised in profit or loss.
3.2.1.2
Held-to-maturity financial assets If the Company has the positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held to maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses.
3.2.1.3
Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise accounts receivables and cash and cash equivalents.
38
3.2.1.3.1
Accounts receivables Accounts receivables represent the amounts due from institutional customers, export customers etc. Accounts receivables are stated net of bad debts provision. Provision for doubtful debts is made based on the Company policy. Bad debts are written off on consideration of the status of individual debtors.
3.2.1.3.2
Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash in transit and cash at bank including fixed deposits having maturity of three months or less which are available for use by the Company without any restriction. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents.
3.2.1.4
Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the above categories of financial assets. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. Available for sale financial assets comprise security deposits.
3.2.2
Non-derivative financial liabilities The Company recognises all financial liabilities on the trade date which is the date the Company becomes a party to the contractual provisions of the instrument. The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. Financial liabilities comprise trade and other creditors only.
3.2.2.1
Trade and other creditors The company recognises a financial liability initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.
3.3
Property, plant and equipment
3.3.1
Recognition and measurement Items of property, plant and equipment excluding land are measured at cost less accumulated depreciation and accumulated impairment losses. Land is measured at revalued amount. Cost includes expenditures that are directly attributable to the acquisition of assets. The cost of self-constructed assets includes the following: -
the cost of materials and direct labour;
-
any other cost directly attributable to bringing the asset to a working condition for the intended use;
-
when the Company has an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and
-
capitalised borrowing costs.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. 3.3.2
Subsequent costs Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. Ongoing repairs and maintenance is expensed as incurred.
39
3.3.3
Depreciation Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over the estimated useful lives of each component. Land is not depreciated. Addition during the year of property, plant and equipment are depreciated for full year irrespective of date of acquisition, while no depreciation is charged in the year of disposal. The estimated useful lives for the current and comparative years of property, plant and equipment are as follows:
Building Plant and machinery Motor vehicles Furniture, fixtures and equipment
2012 Year
2011 Year
40
40
13.33
13.33
5
5
4-13.33
4-13.33
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. The useful lives and depreciation method of certain type of property, plant and equipment were revised in 2011. 3.3.4
Capital work in progress Property, plant and equipment that is being under construction/acquisition is accounted for as capital work in progress until construction/acquisition is completed and measured at cost.
3.4
Inventories Inventories except raw material in transit are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.
3.5
Impairment
3.5.1
Non-derivative financial assets A financial asset not classified at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss events had an impact on the estimated future cash flows of that asset that can be estimated reliably.
3.5.1.1
Financial assets measured at amortised cost The Company considers evidence of impairment for financial assets measured at amortised cost at both a specific asset and collective level. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate.
40
3.5.1.2
Available-for-sale financial assets Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principle repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss.
3.5.2
Non-financial assets The carrying amounts of the Company's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the recoverable amount of the asset is estimated. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.
3.6
Share capital Paid up capital represents total amount contributed by the shareholders and bonus shares issued by the Company to the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at shareholders' meetings. In the event of a winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation.
3.7
Employee benefits The Company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds.
3.7.1 Defined contribution plan A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or los s in the periods during which related services are rendered by employees. The Company maintains three contributory provident funds for its permanent employees categorised as managers, officers and supervisors and workers. The Company also maintains a managerial staff pension fund which was a defined benefit as contribution plan. These are administered by the Boards of Trustees. 3.7.2 Defined benefit plan A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. The Company maintains an unfunded gratuity scheme, provision in respect of which is made annually for the employees other than managerial staff. Gratuity payable at the end of each year has been determined on the basis of existing rules and regulations of the Company. Actuarial valuation of the gratuity fund is carried out by a professional actuary. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profitsharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. 3.8
Provisions A provision is recognised if, as a result of past event, the Company has a present legal or constructive obligation that can reliably be estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation.
3.9
Revenue Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, Value Added Tax and trade discounts. Revenue is recognised when persuasive evidence exists that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated r eliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
3.10
Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expenses, over the term of the lease. At inception of an arrangement, the Company determines whether such an arrangement is or contains a lease. This will be the case if the following two criteria are met: - the fulfilment of the arrangement is dependent on the use of a specific asset or assets; and - the arrangement contains a right to use the asset(s).
41
3.11
Finance income and expenses Finance income comprises interest income on funds invested, interest on shop managers account held with the Company and foreign exchange gain on translation of foreign currency that are recognised in profit or loss. Interest income is recognised on accrual basis. Finance expense comprises interest expense on overdraft, finance lease and interest on shop managers account held with the Company and foreign exchange loss on translation of foreign currency. All finance expenses are recognised in the statement of comprehensive income.
3.12
Tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
3.12.1 Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Bata qualifies as a Publicly Traded Company"; hence the applicable tax rate i s 27.50 %. It enjoys 10% rebate on income tax payable for declaring dividend at more than 20% of paid up capital. 3.12.2 Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they are reversed, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporti ng date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 3.13
Earnings per share The Company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company with the weighted average number of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares for bonus issue, share split and reverse split. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the relevant periods.
3.14
Segment reporting An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. All operating segments’ operating results are reviewed regularly by the Company’s management to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. Segment results that are reported to the management include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
42
3.15
Duty drawback Duty drawback claimed on export sales is adjusted against cost of imported raw materials.
3.16
Sales proceeds from wastage, scrap etc. Sales of empty drum of chemicals, split leather and other wastage of materials have been adjusted with cost of raw materials consumed. Income from non-operating activities is recognised as other income.
3.17
Workers' profit participation fund (WPPF) The Company provides 5% of its profit before charging such expense as WPPF in accordance with "The Bangladesh Labour Act 2006.
3.18
Events after the reporting period Events after the reporting period that provide additional information about the Company's position at the date of statement of financial position or those that indicate the going concern assumption is not appropriate are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material.
4.
Property, plant and equipment 4(a) Year 2012 Cost/Valuation
Particulars
Land 1
As at 1 January 2012
Additions during the year
Disposals/ transfers during the year
As at 31 December 2012
As at 1 January 2012
Charged for the year
Adjustment for disposals/ transfers
As at 31 December 2012
Written down value as at 31 December 2012
Taka
Taka
Taka
Taka
Taka
Taka
Taka
Taka
Taka
86,057,856
-
311,515,463
64,684,221
Plant and machinery 728,467,578
76,685,218 5,559,199
Building 2
Motor vehicles Furniture, fixtures and equipment
Depreciation
20,564,552
-
86,057,856
-
-
376,199,684
165,633,274
7,737,270
(89,571,529)
715,581,267
471,736,404
31,168,993
(1,115,000)
25,008,751
18,698,786
2,064,441
-
-
86,057,856
173,370,544
202,829,140
(82,395,747)
420,509,650
295,071,617
(1,115,000)
19,648,227
5,360,524
453,568,460
115,826,141
(68,361,293)
501,033,308
212,234,052
59,581,899
(61,789,639)
210,026,312
291,006,996
1,600,173,909
262,754,779
(159,047,822)
1,703,880,866
868,302,516
100,552,603
(145,300,386)
823,554,733
880,326,133
4(b) Year 2011 Cost/Valuation Particulars
Land 1
As at 1 January 2011
Additions during the year
Disposals/ transfers during the year
As at 31 December 2011
As at 1 January 2011
Charged for the year
Adjustment for disposals/ transfers
As at 31 December 2011
Written down value as at 31 December 2011
Taka
Taka
Taka
Taka
Taka
Taka
Taka
Taka
Taka
86,057,856
-
304,122,635
7,392,828
Plant and machinery 632,678,103
116,807,988 116,555
Building 2
Motor vehicles Furniture, fixtures and equipment
Depreciation
21,562,997
-
86,057,856
-
-
311,515,463
159,606,219
6,027,055
(21,018,513)
728,467,578
459,960,675
32,081,567
(1,115,000)
20,564,552
13,644,660
5,712,422
-
-
86,057,856
165,633,274
145,882,189
(20,305,838)
471,736,404
256,731,174
(658,296)
18,698,786
1,865,766
397,434,662
63,948,735
(7,814,937)
453,568,460
162,309,395
55,109,575
(5,184,918)
212,234,052
241,334,408
1,441,856,253
188,266,106
(29,948,450)
1,600,173,909
795,520,949
98,930,619
(26,149,052)
868,302,516
731,871,393
1 Land of Tongi factory was revalued by Tk. 60,631,183 in 1979. 2 Building includes properties at 24 Bangabandhu Avenue, Dhaka which were purchased in 1985 from the Government of Bangladesh at a cost of Tk 5,344,417. Sale deed is yet to be executed.
4.1
Depreciation charged to: 2012 Taka
4.2
2011 Taka
Cost of goods sold (Note 21.1)
31,040,297
34,030,288
Administration, selling and distribution expenses (Note 23)
69,512,306
64,900,331
100,552,603
98,930,619
Disposal of property, plant and equipment Original cost
Accumulated depreciation
Book value
Sales value
Taka
Taka
Taka
Taka
Machinery
89,571,529
82,395,747
7,175,782
Computer
43,430,633
40,381,568
Motor vehicles
1,115,000
Furniture, fixtures and equipment Shop furniture and equipment
Particulars
Mode of disposal
Purchaser
25,252,330
Auction
Various parties
3,049,065
364,495
Auction
Various parties
1,115,000
-
-
Negotiation
Mr. B. R. Begh
9,438,868
7,294,367
2,144,501
238,532
Auction
Various parties
15,491,792
14,113,704
1,378,088
3,053,018
Auction
Various parties
159,047,822
145,300,386
13,747,436
28,908,375
43
4.3
CIF value of capital assets No capital assets were imported under CIF basis. However, import of capital assets by the Group under C&F basis was as follows:
Capital assets
Plant and machinery
5.
Foreign currency 2012 2011 USD GBP EUR
417,446 417,446
1,111,993 18,574 90,065 1,220,632
2012 Taka
2011 Taka
38,251,715
8,906,555
2,059,472
143,661,720
40,311,187
152,568,275
38,251,715
114,316,560
2,059,472
38,251,715
-
38,041,066
2,053,987
201,314
5,485
9,335
2,059,472
38,251,715
Capital work in progress Balance as at 1 January Add: Addition during the year Less: Transfer to property plant & equipment during the year Balance as at 31 December (Note 5.1)
5.1
Local currency 2012 2011 (Taka) (Taka) 34,710,944 85,372,671 2,080,019 8,989,954 34,710,944 96,442,644
Capital work in progress represent as follows Building Plant and machinery Equipment
6.
Investment in subsidiary BB Export Limited, the wholly owned subsidiary of the Company, have been wound up voluntarily by the members on 6 November 2012. The assets of the subsidiary company has been taken over by the parent Company at written down value as mutually agreed by the management of both the Companies.
7.
Deferred tax liabilities Deferred tax assets is arrived at as follows: 2012 Taka
2011 Taka
(1,500,000)
7,000,000
Addition/(reduction) during the year
(10,800,000)
(8,500,000)
Balance as at 31 December
(12,300,000)
(1,500,000)
Balance as at 1 January
(a)
Tax base
Taxable/ (deductible) temporary difference
Taka
Taka
Taka
791,930,824
596,187,798
195,743,026
(123,817,664) (22,618,287)
-
(123,817,664) (22,618,287)
As at 31 December 2012 Property, plant and equipment (excluding land and certain motor vehicles) Provision for staff gratuity (Note 14) Provision for bad and doubtful debts (Note 9.1) Net deductible temporary difference Deferred tax liability
44
Carrying amount on the date of statement of financial position
49,307,075 (12,300,000)
(b)
Carrying amount on the date of statement of financial position
Tax base
Taxable/ (deductible) temporary difference
Taka
Taka
Taka
As at 31 December 2011 Property, plant and equipment (excluding land and certain motor vehicles)
645,707,373
469,215,014
176,492,359
Provision for staff gratuity (net of payment) Provision for bad and doubtful debts
(150,704,000) (19,819,104)
-
(150,704,000) (19,819,104)
Net deductible temporary difference
5,969,255
Deferred tax liability
(1,500,000) 2012 Taka
8.
Inventories Raw materials Work in process Finished goods
9.
2011 Taka
433,360,454 61,989,523 1,393,434,546
458,166,010 60,596,257 1,237,634,992
1,888,784,523
1,756,397,259
6,216,924 13,931,813 190,793,961 47,867,930
7,342,346 16,358,590 117,443,145 18,863,226
258,810,628
160,007,307
19,108,225 705,675 184,518 196,347
32,526,411 52,407 113,326 442,448
20,194,765
33,134,592
20,175,474
17,287,327
Total accounts receivable
299,180,867
210,429,226
Provision for doubtful debts (Note: 9.1)
(22,618,287)
(19,819,104)
276,562,580
190,610,122
Balance as at 1 January Provision made during the year Bad debts written off during the year Provision reversed during the year
19,819,104 2,799,183 -
35,923,248 336,169 (15,615,160) (825,153)
Balance as at 31 December
22,618,287
19,819,104
Accounts receivable Trade (unsecured) - considered good Export customers - Non BSO companies Export customers - BSO companies Receivables from dealers Receivables from institutional sale
Others (unsecured) - considered good Insurance claims VAT claims Joint venture commission receivable Duty drawback claim receivable
Agents and employees
9.1
Provision for doubtful debts
45
Accounts receivable are aged as below: 2012 Below six months Taka Export customers - Non BSO companies
9.2
2011
Over six months Taka
Below six months Taka
Over six months Taka
6,216,924
-
7,342,346
-
Export customers - BSO companies Receivables from dealers Receivables from institutional sale
13,931,813 188,432,184 47,786,894
2,361,777 81,036
16,358,590 114,911,368 18,863,226
2,531,777 -
Insurance claims VAT claims Claim receivable on import Joint venture commission receivable Duty draw back claim receivable Agents and employees
19,108,225 705,675 184,518 196,347 -
20,175,474
32,526,411 52,407 113,326 442,448 -
17,287,327
276,562,580
22,618,287
190,610,122
19,819,104
Debts due by directors, officers and other related parties As at 31 December 2012, accounts receivable does not include any receivable from: (a) The directors and other officers of the Company; (b) Firms or private limited companies respectively in which any director of the Company is a partner, director or member, other than those disclosed in note 34.1; and (c) Companies under the same management. 2012 Taka
10.
2011 Taka
Advances, deposits and prepayments Advances (considered good) to: Agents and employees
6,268,911
3,952,820
Suppliers against materials and services
7,638,007
17,582,745
13,906,918
21,535,565
Advance income tax
134,409,803
126,822,403
Security and other deposits
335,292,718
241,121,785
83,122,003
53,542,821
566,731,442
443,022,574
215,222,003
117,378,784
83,122,003
53,542,821
132,100,000
63,835,963
Prepayments to landlords (current portion - Note 10.1)
10.1
Prepayments of rent Prepayments to landlords Less: Current portion (Note 10) Non-current portion
10.2
Loans and advances to directors, officers and other related parties Other than those mentioned in note above, there were no loans or advances to: (a)
Directors of the company;
(b)
Firms or private limited companies respectively in which any director of the company is a partner, director or member; and Subsidiaries or companies under the same management.
(c)
46
11.
Cash and cash equivalents 2012 Taka
2011 Taka
Cash balances: On hand
In transit: From stores From depots From institutions Balances with banks in: Current accounts In Taka In USD Fixed deposits Short term deposits
11.1
567,781
45,177,358 1,374,000 11,032,568
45,034,924 5,173,288 8,799,532
(67,641,911) 20,158,297 4,000,000 218,028,719
(6,074,357) 24,276,758 27,904,500 197,085,117
174,545,105
243,192,018
233,459,170
302,767,543
Book overdrafts The current accounts include book overdrafts (i.e. cheque outstanding in excess of deposits) from Eastern Bank Limited and HSBC as follows: 2012 2011 Taka Taka Eastern Bank Limited HSBC
11.2
1,330,139
85,057,920
40,865,601
3,352,603
-
88,410,523
40,865,601
Credit facilities available as at 31 December The company enjoys both funded and non funded short term working capital facilities with two banks. The non funded facilities include Letters of Credit (LC), Letters of Guarantee, Packing Credit, LDBP, FDBP and foreign exchange forward contracts (FX Forward). The funded facilities include overdraft facility, short term loan and import loan. The aggregate amount of available short term working capital facilities is Tk 99 4 million (2011: Tk 969 million) of which n on funded limit is Tk 694 million (2011: Tk 669 million) and funded limit is Tk 300 million (2011: Tk 300 million). Details of the total facilities are stated below: (a)
HSBC Bank i) L/C facility - Tk 300 million (2011: Tk 500 million). ii) Overdraft / short term loan facility - Tk 100 million (2011: Tk 100 million).
(b)
EBL Bank i) L/C facility - Tk 394 million (2011: Tk 400 million). ii) Overdraft facility / short term loan facility - Tk 200 million (2011: Tk 200 million). 2012 (Tk in million)
Total credit facilities available Credit facilities availed
1,000 223
2011 (Tk in million) 1,200 969
47
12.
Share capital 2012 Taka
2011 Taka
200,000,000
200,000,000
28,507,230
28,507,230
108,292,770
108,292,770
136,800,000
136,800,000
Authorised: 20,000,000 ordinary shares of Tk 10 each Issued, subscribed and paid up: 2,850,723 ordinary shares of Tk 10 each issued for cash
10,829,277 ordinary shares (including 7,202,400 bonus shares) of Tk 10 each issued for consideration other than cash
The shares are listed both in the Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited and quoted at Tk 535.70 (2011: Tk 598.50) and Tk 518.10 (2011: Tk 605.00) per share at 31 December 2012 respectiv ely. Percentage of shareholdings : 2012
2011
%
Taka
%
Taka
70.00
95,760,000
70.00
95,760,000
International Finance Corporation
0.02
28,400
0.02
29,400
Other non-resident shareholders
6.64
9,089,280
6.15
8,410,800
23.34
31,922,320
23.83
32,599,800
100.00
136,800,000
100.00
136,800,000
Bafin (Nederland) B.V.
Local shareholders
Classification of shareholders by range:
Shareholder's range
Number of shares
2012
2011
2012
2011
5,163
5,305
630,001
650,889
387
420
600,676
623,001
5,001 to 10,000 shares
34
45
251,000
326,656
10,001 to 20,000 shares
25
26
374,645
384,564
20,001 to 30,000 shares
9
9
215,302
215,446
30,001 to 40,000 shares
5
7
175,000
246,800
40,001 to 50,000 shares
2
1
91,000
47,600
50,001 to 100,000 shares
5
4
360,676
284,444
100,001 to 1,000,000 shares
4
4
1,405,700
1,324,600
Over 1,000,000 shares
1
1
9,576,000
9,576,000
5,635
5,822
13,680,000
13,680,000
Less than 501 shares 501 to 5,000 shares
48
Number of shareholders
13.
Reserves and surplus 2012 Taka Reserve on revaluation of land Non-distributable special reserve (Note 13.1) General reserve Unappropriated profit (Note 13.2)
13.1
2011 Taka
60,631,183 998,620 48,863,000 1,606,707,776
60,631,183 998,620 48,863,000 1,313,782,103
1,717,200,579
1,424,274,906
Non-distributable special reserve This represents 90% of the cumulative post-tax profit i n respect of certain categories of income up to 1992 as defined and directed by Bangladesh Bank. Since 1993, the requirement for continuing to create such special reserve is applicable only to the profit on sale of immovable assets such as land, buildings, etc.
13.2
Unappropriated profit Balance as at 1 January Profit for the year Loss of BB Export Interim dividend Final dividend
14.
1,313,782,103 671,916,303 (2,790,630) (232,560,000) (143,640,000)
1,075,165,050 580,617,053 (198,360,000) (143,640,000)
1,606,707,776
1,313,782,103
Balance as at 1 January Add: Provision made / (reversed) during the year
150,704,000 (5,999,942)
147,847,820 17,271,076
Less: Paid during the year
144,704,058 20,886,394
165,118,896 14,414,896
Balance as at 31 December
123,817,664
150,704,000
Deferred liability
Deferred liability represents provision for staff gratuity up to 31 December 2012. 15.
Creditors for goods Payable to local suppliers Payable to BSO companies
16.
340,871,856 12,879,582
404,165,187 5,098,382
353,751,438
409,263,569
97,864,002 322,330,566
72,815,182 227,920,069
420,194,568
300,735,251
Workers' profit participation fund Personal accounts of employees and agents Security and other deposits Payable to subsidiary company
51,125,753 68,792,575 23,105,500 -
41,769,476 58,234,811 22,558,000 1,110,410
Provident fund Tax deducted at source Pension fund VAT deducted at source Salary and wages payable Others
6,540,438 53,845,380 1,642,750 6,551,877 15,389,842 14,394,179
7,923,902 35,426,199 1,613,419 32,377,079 14,573,848 15,051,289
241,388,294
230,638,433
Creditors for expenses Payable to local suppliers Payable to BSO companies
17.
Creditors for other finance
49
18.
Accrued expenses 2012 Taka Bonus Utility Legal & audit fee Royalty Joint venture commission Other accrued liabilities
19.
19.1
Provision for tax Current year Earlier years (net of advance tax)
2011 Taka
81,610,676 7,333,000 2,011,250 15,692,857 13,279,976 265,352,718
79,929,670 6,991,000 1,848,850 19,434,122 9,679,648 228,857,091
385,280,477
346,740,381
288,673,000 242,283,889
204,508,000 278,727,866
530,956,889
483,230,866
Reconciliation of effective tax 2012
2011
%
Taka
%
Taka
Profit for the year
671,916,303
580,617,053
Total income tax expense
299,473,000
213,003,000
Profit excluding income tax
971,389,303
793,620,053
Factors affecting the tax charge for current period:
Income tax using the Company’s domestic tax rate 27.50%
27.50%
218,245,515
Non-deductible expenses
6.29%
61,063,982
7.29%
57,838,086
Income subject to reduced tax rate
0.00%
-
-5.30%
(42,035,843)
Tax exempt income
-0.17%
(1,632,233)
-0.18%
(1,407,096)
Tax incentives
-3.24%
(31,500,251)
-2.51%
(19,902,050)
Round off adjustment
-0.16%
(1,552,129)
0.14%
1,080,225
0.61%
5,961,572
-0.10%
(815,836)
30.83%
299,473,000
26.84%
213,003,000
Under/(Over) Provided in prior year
20.
267,132,058
Revenue
Unit
2012
2011
Quantity in '000
Amount '000 Taka
Quantity in '000
Amount '000 Taka
30,241
7,100,105
28,142
6,345,623
Local Shoes Hosiery & accessories Export
50
Pair
206,025
218,964
78,376
83,259
7,384,506
6,647,846
21.
Cost of sales 2012 Taka Stock of finished goods as at 1 January Add: Cost of goods manufactured (Note 21.1) Finished goods purchased Cost of finished goods available for sale Less: Stock of finished goods as at 31 December
2011 Taka
1,237,634,992 4,247,028,045 627,277,573 6,111,940,610 1,393,434,546
1,151,001,712 3,493,591,114 879,635,829 5,524,228,655 1,237,634,992
4,718,506,064
4,286,593,663
The opening and closing stocks of goods produced are shown below: Figures in '000 pairs Closing
Opening
stock
stock
4,534
4,509
Shoes
21.1
Cost of goods manufactured 2012 Taka Cost of materials consumed (Note 21.1.1) Direct wages Prime cost
2011 Taka
3,355,624,874
2,669,598,255
525,819,839
446,140,419
3,881,444,713
3,115,738,674
146,723,635 55,935,882 91,608,741 4,047,163 1,021,939 19,099,221 9,471,572 2,094,741 607,484 1,746,733 3,579,190 31,040,297
143,823,792 49,923,152 65,265,016 2,845,394 455,811 17,462,228 7,310,678 1,550,937 983,815 1,269,091 3,363,059 34,030,288
366,976,598
328,283,261
4,248,421,311
3,444,021,935
60,596,257 61,989,523
110,165,436 60,596,257
(1,393,266)
49,569,179
4,247,028,045
3,493,591,114
Manufacturing overhead: Remuneration to employees Gas, water and electricity Repairs and maintenance (Note 21.1.2) Insurance Uniform to workers Health and other welfare expenses Travelling Postage Freight and transport Stationery Entertainment Depreciation (Note 4.1) Cost of production Difference in work in process: Work in process as at 1 January Work in process as at 31 December Cost of goods manufactured
51
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k c o t ) s e a u k g l a a n i V T ( n e p O
d e m u s n o c s l a i r e t a m f o t s o C 1 . 1 . 1 2
52
n o i t p i r c s e D
4 7 5 , 4 1 5 , 7 8 0 , 1
4 1 9 , 4 2 8 , 1 8 2 , 2
9 5 2 , 1 6 9 , 9 4 1
7 2 4 , 6 0 4 , 9 6 2
2 8 3 , 3 0 9 , 7 7 0 , 1
1 5 4 , 2 7 5 , 9 5 1
7 4 6 , 0 0 7 , 3 6 2 , 2
4 9 6 , 0 3 5 , 7 8 2
e s a h c d r u e p t r l o a p c o m L I
) 4 1 6 , 4 1 7 , 3 1 (
4 7 8 , 4 2 6 , 5 5 3 , 3
5 5 2 , 8 9 5 , 9 6 6 , 2
- 6 8 6 , 7 6 3 , 9 1 4
5 4 1 , 3 0 1 , 7 4 4
) 4 1 6 , 4 1 7 , 3 1 (
5 1 4 , 9 8 8 , 7 2 3 , 3
- 5 4 1 , 3 0 1 , 7 4 4
. c m t o e r , f d p a e r e c c s , o r e p g a s t e s l a a S w
2 1 0 2
5 4 1 , 3 4 4 , 5 0 7 , 2
5 5 2 , 8 5 2 , 1 1 4
1 1 0 2
. ) d e s a h c r u p y l l a . c s l o l a i r % e 1 t a 6 m d n w a a r d e f t o r t o s p o m c i t s % n 9 i a 3 : g 1 a 1 d 0 e ( 2 t s u d j d e a s a n h e c e r b u p e l y v l a a h c o s l e l % a 8 s 6 t r d o n p a x e d e n t o r d o e p m m i i a % l c 2 0 3 9 i s 1 , 1 d 3 e 0 , m 1 u . s k n T o f c s o l a k i c r e a t b a w m a r f d o y t t s u o D C
g n i t n e s e r p e r ) s m e t i d e t r o p m i f o 7 4 3 , 2 R U E d n a 7 1 5 , 9 1 6 $ S U f o e u l a v F & C g n i d u l c n i ( 5 7 7 , 8 7 2 , 1 5 k T s e d u l c . n d i 1 e 4 m 7 , u 8 s 0 n 6 , o 1 c 9 s e k i r T o o s s t g e n c i t c n a u d o n m a e a s c e l d n c u a n o n a m e n t , e s n t t i n r i a a a m m p e d d r n n a a a p s s s r i r f i o a a t p p s e e o R R c 2 . 1 . 1 2
s r i a p n 0 i 0 ' n 0 o n i t i c s u e d r u o r i p g l F a u t c A
s r i a p n 0 i y 0 t i 0 c ' n a i p s a e c r n u o g i t i c F u d o r P n o i t c u d o r p l a u t c a d n a y t i c a p a c n o i t c u d o r p f o t n e m e t a t S 2 . 1 2
1 1 0 2
2 5 9 , 9 1
2 9 7 , 5
4 4 7 , 5 2
2 1 0 2
7 1 1 , 1 2
7 6 9 , 6
4 8 0 , 8 2
1 1 0 2
2 2 4 , 3 2
6 0 3 , 8
8 2 7 , 1 3
2 1 0 2
6 7 3 , 4 2
3 9 5 , 8
9 6 9 , 2 3
i g n o T
i a r m a h D
22.
Other income Notes Gain /(Loss) on disposal of property, plant and equipment Discount for early payment
23.
2011 Taka
15,160,939 11,616,042
1,301,086 19,909,717
26,776,981
21,210,803
391,870,027 10,622,174 54,107,094 1,667,458 62,521,818 20,516,456 9,130,976 16,309,984 1,722,583 36,343,828 248,014,167 23,816,917 53,000 517,500 4,943,242 3,269,861 377,125 58,593,866 69,279,077 256,189,444 11,033,951 4,658,906 112,645,846 51,517,764 156,442,887 7,348,794 69,512,306
382,966,850 9,907,002 41,017,327 8,146,029 63,672,453 18,526,192 8,803,358 12,260,958 800,144 27,824,449 173,557,146 15,953,947 68,000 470,250 3,564,865 1,620,490 431,678 46,061,762 72,308,329 269,124,377 12,167,317 5,962,843 102,642,666 39,779,957 139,733,398 7,145,175 64,900,331
1,683,027,051
1,529,417,293
2,799,183 -
336,169 (825,153)
2,799,183
(488,984)
Administration, selling and distribution expenses Remuneration to employees Health and other welfare expenses Travelling expenses Bank charges Repairs and maintenance Stationery Postage, telegram and telephone Entertainment expenses Subscription and donation Advertisement Rent, rates and taxes General charges Directors' fees Auditors' fees Legal and other professional fees Insurance Land revenue Freight and transport Packing expenses Commission Royalty on Hush Puppies brand Royalty on Dr. Scholl brand Global Footwear Services fees Electricity Trade mark licence fees IT fees Depreciation
23.1
2012 Taka
23.1
23.2
23.3 23.4 23.4 23.4 23.4 4.1
General charges General charges represent security services, samples, bad debts, etc. Bad debts represent the following: Provision for doubtful debt made Provision for doubtful debts reversed
23.2
Legal and other professional fees Legal and other professional fees include fees of Tk 845,750 (2011: Tk 1,196,350) of the statutory audit firm in connection with global reporting, tax certification and services regarding assessments/appeals and advisory services .
53
23.3
Commission 2012 Taka Retail Wholesale Export
2011 Taka
145,202,014 110,441,910 545,520
156,041,707 111,918,575 1,164,095
256,189,444
269,124,377
23.4
Royalty on Hush Puppies and Dr. Scholl brands, Global Footwear Services fees and trade mark licence fees of Tk.11,033,951 Tk.4,658,906 Tk.112,645,846 and Tk.156,442,887 respectively represent equivalent foreign curr ency of USD 138,482 USD 58,472 SGD 1,680,000 and USD 1,963,438 provided during the year.
24.
Finance income Interest on: Fixed deposit Short term deposit Personal account
25.
Emoluments to directors Remuneration Bonus Retirement benefit schemes Housing
27.
28.
1,186,843 4,801,594 82,983
21,335,940
6,071,420
312,920 4,127,482
17,907,047 3,303,522
4,440,402
21,210,569
Finance expenses Interest on: Overdraft Personal account
26.
13,811,858 7,511,347 12,735
2012
2011
11,600,000 6,889,492 900,000 2,640,000
10,245,000 3,476,000 790,000 2,160,000
22,029,492
16,671,000
Emoluments to managers
2012
2011
Remuneration Retirement benefit schemes Housing
76,308,154 11,757,667 7,757,101
73,157,923 12,944,166 8,175,143
95,822,922
94,277,232
Contribution to employees' provident fund and pension fund During the year the company contributed the following amounts to the employees' provident fund and pension fund: 2012 Provident fund : Managers Officers & supervisors Workers Pension fund
29.
2011
5,291,325 8,413,033 9,857,199 23,561,557 6,466,342
4,880,409 7,587,956 10,817,036 23,285,401 5,756,244
30,027,899
29,041,645
Profit before tax Profit before tax Tk. 971,389,303 (2011: Tk. 793,620,053) includes profit amounting to Tk 300,421,822 (2011 : Tk 368,084,552) of leather shoe factory at Dhamrai and Tk. 670,967,481 (2011: Tk. 425,535,501) at Tongi.
54
30.
Remittance of foreign currency
Name of party
Nature of transaction
Currency
Amount
Amount
in foreign
in local
currency
currency Taka
Bafin (Nederland) B.V.
Dividend
USD
2,915,733
237,006,000
SSL International PLC
Royalty on Dr. Scholl Brand
GBP
56,874
3,337,864
Global Footwear Services
Footwear services fees
SGD
1,413,390
93,642,018
Wolverine World
Royalty on Hush Puppies Brand
USD
116,125
9,522,248
Euro Footwear Holdings S.a.r.l
IT Fees
EUR
60,000
6,402,000
Pte. Ltd., Singapore
The figures represent net of tax. 31.
Earnings in foreign currency
Export of finished leather and shoes
32.
Earnings per share
32.1
Basic earnings per share (EPS)
2012
2011
Taka
Taka
78,376,405
83,258,452
2012
2011
Taka
Taka
The computation of EPS is given below: Earnings attributable to the ordinary shareholders (net profit after tax) Weighted average number of ordinary shares outstanding during the year Basic earnings per share (EPS) 32.2
671,916,303
580,617,053
13,680,000
13,680,000
49.12
42.44
Diluted earning per share No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during these years.
33.
Number of employees The number of employees for the whole year or part thereof who received a total remuneration of Tk 36,000 and above was 1,439 (2011: 1,433).
55
34.
Financial risk management The management has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. This note presents information about the Company's exposure to each of the following risks, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital. The Company has exposure to the following risks from its use of financial instruments.
34.1
Credit risk Liquidity risk Market risk
Credit risk Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from dealers, institutional and export customers etc. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. In monitoring credit risk, debtors are Grouped according to their risk profile, i.e. their legal status, financial condition, ageing profile etc. Accounts receivable are mainly related to sale of shoes, hosiery, accessories and finished leather etc. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. a) Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: 2012 Taka Trade Receivable Export customers - Non BSO companies Export customers - BSO companies Receivables from depots Receivables from institutional sale
Others Receivable Security and other deposits Cash and cash equivalents
2011 Taka
6,216,924 13,931,813 188,432,184 47,786,894
7,342,346 16,358,590 114,911,368 18,863,226
256,367,815
157,475,530
20,194,765 335,292,718 233,459,170
33,134,592 241,121,785 302,767,543
845,314,468
734,499,450
The maximum exposure to credit risk for accounts receivable as at 31 December by geographic regions was: Domestic Asia Australia Africa
56
236,792,760 19,575,055 -
135,947,019 15,295,139 1,725,058 4,508,314
256,367,815
157,475,530
b)
Ageing of receivables 2012 Taka
2011 Taka
The ageing of gross accounts receivables as at 31 December was: Accounts receivable were aged as below: Export customers - Non BSO companies Invoiced 0-30 days Invoiced 31-60 days
6,216,924 -
6,163,994 1,178,352
6,216,924
7,342,346
13,931,813
16,358,590
13,931,813
16,358,590
178,158,339 42,859,307 4,241,400 10,960,032 -
111,997,971 2,792,888 76,089 2,576,197
236,219,078
117,443,145
Export customers - BSO companies Invoiced 0-30 days
Receivables from domestics Invoiced Invoiced Invoiced Invoiced Invoiced
c)
0-30 days 31-60 days 61-90 days 91-365 days over 365 days
Impairment losses Impairment losses on the above receivables were recognised as per the Company policy mentioned in note 3.2.1.1. Quantitative disclosure for such impairment losses are as below: Receivables from depots Accounts receivable Provision for doubtful debts (note 9.1)
Receivables from institutional sale Accounts receivable Provision for doubtful debts (note 9.1)
190,793,961 (2,361,777)
117,443,145 (2,531,777)
188,432,184
114,911,368
47,867,930 (81,036)
18,863,226 -
47,786,894
18,863,226
20,175,474 (20,175,474)
17,287,327 (17,287,327)
-
-
Other Receivables Receivable from Agents and employees Provision against advances to agents and employees (note 9.1)
57
- - - -
- 8 8 9 9 3 , 3 , 3 3 3 3 7 , 7 , 9 9 3 3 1 1
8 - - - - - 8 5 5 8 8 , , 4 4 7 7 1 1 , , 0 0 5 5
- - - 2 - 1 3 2 6 8 1 7 , , 8 , 4 0 4 3 7 0 4 5 , , 0 , 9 4 4 1 1 3 1 1
3 6 1 , 9 3 8 , 2 2
7 2 - 9 8 8 6 1 5 , 3 , , 5 8 3 6 9 6 1 2 , 0 , , 4 5 9 0 0 4 4
2 1 3 8 7 5 1 , 6 , 8 , 5 6 1 1 8 0 8 , 1 , 0 , 2 8 1 7 8 6 1
3 0 9 9 8 9 8 5 0 9 7 4 8 6 9 , 0 , 1 , 0 , 8 , 2 , 3 , 9 8 6 7 3 1 6 5 5 2 7 7 5 4 0 , 5 , 4 , 3 , 5 , 0 , 0 , 8 2 5 2 4 5 8 2 3 3 1 1 2 1
0 0 0 - 8 0 8 7 0 5 4 3 9 6 6 , 0 , 8 , , 3 , 4 , 9 1 8 9 6 5 2 9 4 7 8 3 9 6 , 9 , 8 , , 2 , 7 , 9 6 1 9 4 2 7 1 1 1 2
0 0 0 , 0 0 0 , 0 4
7 2 - 9 8 8 6 1 5 , 3 , , 5 8 3 6 9 6 1 2 , 0 , , 4 5 9 0 0 4 4
2 9 1 8 6 5 1 , 0 , 2 , 5 0 5 1 2 3 8 , 9 , 7 , 2 7 0 7 2 0 2 3
1 0 9 9 8 9 6 1 0 9 7 4 8 2 8 , 0 , 1 , 0 , 8 , 2 , 2 , 4 8 6 7 3 1 1 3 5 2 7 7 5 2 2 , 5 , 4 , 3 , 5 , 0 , 2 , 8 2 5 2 4 5 8 5 2 3 3 1 1 7 1
0 0 0 2 8 1 1 7 0 5 2 4 9 8 6 , 0 , 8 , 1 , 6 , 0 , 3 , 9 1 8 4 9 7 0 2 9 4 3 7 5 4 9 , 9 , 8 , 4 , 6 , 8 , 7 , 9 6 1 9 9 8 6 7 1 2 4 2 3
3 6 1 , 9 3 8 , 2 6
A / A / A / N N N
A / A / N N
% A / A / A / A / A / 5 . N N N N N 8
A / A / A / A / A / A / N N N N N N
A / N
2 2 1 1 0 0 2 2 e e n n u u J J
2 2 1 1 0 0 2 2 e r e n b u J m e c e D
2 2 2 2 2 2 1 1 1 1 1 1 0 0 0 0 0 0 2 2 2 2 2 2 e e e e e e n n n n n n u u u u u u J J J J J J
2 2 2 2 2 2 1 1 1 1 1 1 0 0 0 0 0 0 2 2 2 2 2 2 r e e e r e e e n n n b n b u u u u J J J m J m e e c c e e D D
2 1 0 2 r e b m e c e D
7 2 - 9 8 8 6 1 5 , 3 , , 5 8 3 6 9 6 1 2 , 0 , , 4 5 9 0 0 4 4
2 9 1 8 6 5 1 , 0 , 2 , 5 0 5 1 2 3 8 , 9 , 7 , 2 7 0 7 2 0 2 3
1 0 9 9 8 9 6 1 0 9 7 4 8 2 8 , 0 , 1 , 0 , 8 , 2 , 2 , 4 8 6 7 3 1 1 3 5 2 7 7 5 2 2 , 5 , 4 , 3 , 5 , 0 , 2 , 8 2 5 2 4 5 8 5 2 3 3 1 1 7 1
0 0 0 2 8 1 1 7 0 5 2 4 9 8 6 , 0 , 8 , 1 , 6 , 0 , 3 , 9 1 8 4 9 7 0 2 9 4 3 7 5 4 9 , 9 , 8 , 4 , 6 , 8 , 7 , 9 6 1 9 9 8 6 7 1 2 4 2 3
3 6 1 , 9 3 8 , 2 6
2 1 - s 6 h a t k n i n a o T h t i m W
s h t n o s m s e 6 l r n i o h t i W
1 1 0 2 r e b m e c e D 1 3 t a s A
a k a T
l a s u w t o c l f a a r h k a t n s T o a C c t s e r e t n e I l t a a n r i m o N
d o i r e p y t i r u t a M t n u o m a a k g a n T i y r r a C
e l b a y a p s t n u o c c A
s r e i l p s p u e s s r i n n e a i p i l g p p m e r u o o s c f l s a O r e d c S h t o l o B o o g t o t o t o r e e e o l l l f b b b s a a a r y y y o a a a t i P P P d e r C
s e s r i n e i a l p p m s p o e u s s l c n a O e c S p l o B x e t o t o r e e o l l f b b s a a r y y o a a t i P P d e r C
s t n e g a d n a s e e y o t s l e p i l s b o e e m a e e p c c c f y e r r n o d u u o a a o s p s r n t s t s i e t f n h e r u t a a g s e o a i o e d d c i h e w t l e t i t c d t n o a a c c d b u n l a r l u d a i y d o a e y s n t i f e r r s o u d d r e s a h r r c x T l t o e e a A a t P S T V S O i d e r C
e e f t i n d o s i u s i e a s t i l y m i i s y & t l l b u i a m i a n t l a y o l o i t g o c d e r s b u l e r r r r e e i t o f o f o f o r i f r u u l i n n n n t c b o o o o n e c a i i i i a i v s s s s l i i i i t r v v v v n e d o o o o i t e r r r r o h u P P P P J O r c c A
d n e d i v i d d e m i a l c n U
m o r f s e s i r a e r u s o . p s x h e t h n c o u m s x n i i s s n e a c h n t e r s e s f e f l i d f o e h d o T i . r e e v p o y b t i a r u t m a o r f m y a l t s n a a h c i f h i c n i g h i s w ) y r 0 a 5 v 2 , t 2 o 5 n . s k e T o ( d e e 1 f 1 t 0 i 2 d r u e a b & m l e a c g e e D l r 1 f o 3 t n a i o s i s t n v e o r m p e t d a n t s a l ) a 0 i c 1 n 4 , a 0 n 1 i 1 f , s 1 ' . y k n a T p ( e m r o a C h s e f h t o f n o o t i c t p e i p r s c s e r b u n i s k r o s f i r t r y t i o d p x i u E q i l B o B t o t e r e u l s b o a p y x a E p
59
34.3
Market risk Market risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. a) Currency risk/foreign exchange rate risk The Company is exposed to currency risk on sales and purchases with foreign customers and suppliers including Bata Group (globally) and on royalty payment. Majority of the Company's foreign currency transactions are denominated in USD. The Company maintains USD bank account where all receipts are deposited and all corresponding payments are made. i) Exposure to currency risk The Company's exposure to foreign currency risk was as follows based on notional amounts: As at 31 December 2012 USD SGD EUR
As at 31 December 2011 USD SGD EUR
Foreign currency denominated assets Accounts receivable Cash at bank Eastern Bank Limited HSBC
261,187
-
-
289,636
-
-
206,283 46,707 514,178
-
-
392,351 181,105 863,092
-
-
(756,000) (66,667) (756,000) (66,667) (756,000) (66,667)
(1,774,200) (1,774,200) (911,108)
Foreign currency denominated liabilities Trade and other payables for exp. Net exposure
(3,881,063) (3,881,063) (3,366,885)
(1,512,000) (66,667) (1,512,000) (66,667) (1,512,000) (66,667)
Payable to other entities represents payable for Global footwear service fees, IT fees etc. Exposure to currency risk as at 31 December 2012 in respect of the separate financial statements does not vary from above. The company has a foreign exchange loss amounting to Tk. 4,130,083 during the year ended 31 December 2012. The following significant exchange rates are applied during the year: Exchange rate as at 31 Dec 2012 31 Dec 2011 Taka Taka US Dollar Singapore Dollar EURO (EUR) ii)
60
79.68 65.22 105.05
81.83 63.13 105.94
Foreign exchange rate sensitivity analysis for foreign currency expenditures A strengthening or weakening of t he Taka, as indicated below, against the USD, SGD and EUR at 31 December would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the reporting date. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2012, albeit that the reasonably possible foreign exchange rate variances were different, as indicated below: Strengthening profit or loss Taka
Weakening profit or loss Taka
At 31 December 2012 USD (2 percent movement) SGD (2 percent movement) EUR (1 percent movement)
(5,365,467) 986,126 (70,033)
5,365,467 (986,126) 70,033
At 31 December 2011 USD (3 percent movement) SGD (3 percent movement) EUR (3 percent movement)
2,236,679 2,863,577 211,881
(2,236,679) (2,863,577) (211,881)
b)
Interest rate risk The only interest bearing financial instrument for the Company is the short term deposit (STD) account maintained by the Company with its commercial banks. These are highly liquid and very short term deposits with nominal interest rate. Interest rate fluctuation for such investment have little impact on financial statements. Therefore, interest rate risk for the Company is insignificant.
c)
Accounting classification and fair values Fair value of financial assets and liabilities together with carrying amount shown in the statement of financial position are as follows: 2012
2011
Carrying amount Taka
Fair value Taka
Carrying amount Taka
Fair value Taka
Loans and receivables Trade receivable, net Receivable from agents and employees Other receivables Cash and cash equivalents
256,367,815 20,194,765 233,459,170
256,367,815 20,194,765 233,459,170
157,475,530 33,134,592 302,767,543
157,475,530 33,134,592 302,767,543
Available for sale financial assets Security deposits
335,292,718
335,292,718
241,121,785
241,121,785
Liabilities carried at amortised costs Creditors for goods Creditors for expenses Creditors for other finance
353,751,438 805,475,042 241,388,294
353,751,438 805,475,042 241,388,294
409,263,569 647,500,632 230,638,433
409,263,569 647,500,632 230,638,433
*Accounting classification and fair values as at 31 December 2012 in respect of the separate financial statements does not vary significantly from the consolidated one. 35.
Segment reporting The Company has two operating segments, Domestic and Export & Unallocated which are the Company's strategic divisions. They are managed separately because they require different technology and marketing strategies. For each of the strategic divisions, the Company's management reviews internal management reports at least on a monthly basis. Of these two, only domestic segment is reportable. The following summary describes the operations in the Company's reportable segments: Domestic This segment is mainly engaged in manufacturing and marketing of leather, rubber, plastic and canvas footwear, hosiery and accessories as well as finished leather in domestic market.
Particulars
Revenue Cost of sales Gross profit Exchange gain/(loss) Other income Administrative, selling and distribution expenses Reportable segment result
2012
2011
Reportable business segment
Reportable business segment
Domestic
Export & Unallocated
Total
Domestic
Export & Unallocated
Total
Taka ‘000
Taka ‘000
Taka ‘000
Taka ‘000
Taka ‘000
Taka ‘000
7,306,130 4,693,339 2,612,791 -
78,376 25,167 53,209 (4,130) 26,777
7,384,506 4,718,506 2,666,000 (4,130) 26,777
6,564,587 4,159,362 2,405,225 -
83,259 127,232 (43,973) (2,517) 21,211
6,647,846 4,286,594 2,361,252 (2,517) 21,211
(1,163,436) 1,449,355
(519,591) (443,735)
(1,683,027) 1,005,620
(1,043,782) 1,361,443
(487,052) (1,530,834) (512,331) 849,112
Segment assets and liabilities The necessary information regarding assets and liabilities of operating segments are not separable and individually identifiable for this purpose. For this reason the assets and liabilities of the respective segments have not been presented here.
61
36.
Related party disclosures During the year ended 31 December 2012, the Company entered into a number of transactions with related parties in the normal course of business. The names of the related parties, nature of these transactions and amount thereof have been set out below in accordance with the provisions of BAS 24: Related Party Disclosures.
36.1
Related party transactions Nature of
Nature of
2012
2011
Name of the party
relationship
transaction
Taka ‘000
Taka ‘000
Bafin (Nederland) B.V
Parent Company
Dividend Payment
(237,006)
(239,400)
Bata Singapore
Group company
Purchase
(282,102)
(288,188)
(1,652)
(1,160)
Claim
49
613
Service received
Bata Peru
Group company
Sales
2,870
1,069
Bata Zambia
Group company
Sales
4,215
15,930
Bata Sri Lanka
Group company
Sales
32,178
20,772
Bata Malaysia
Group company
Service received
(44)
-
Bata South Africa
Group company
Service received
-
(169)
Service provide
-
211
Sales
711
-
Sales
-
1,663
Service received
-
(192)
-
(3,242)
Bata Thailand
Group company
Bata Indonesia
Group company
Purchase
Global Footwear Services Pte. Ltd., Singapore
Group company
Service received
(101,381)
(92,378)
Bata Brands S.a.r.l.,
Group company
Trade mark licence fees
(156,488)
(139,733)
Group company
Service received
(38)
(322)
Purchase
(422)
-
Purchase
(1,220)
-
Sales
3,367
53
Luxembourg Bata Colombia
Bata Kenya
Group company
Bata Malawi
Group company
Sales
-
476
Bata Zimbabwe
Group company
Service provided
-
37
999
-
(7,348)
(7,145)
Sales
62
Euro Footwear Holdings s.a.r.l.
Group company
Service received
Bata India
Group company
Purchase
(22,813)
(35,517)
Bata Netherland
Group company
Purchase
(497)
(3,307)
BB Export Limited
Subsidiary company
Payment for subscription of shares
-
25
36.2
37.
Receivables/(payables) with related parties Nature of
Nature of
Name of the party
relationship
transaction
Bata Singapore
Group company
Purchase
Bata Kenya
Group company
Bata Zambia
2012
2011
Taka ‘000
Taka ‘000
(11,555)
(5,098)
Sales
574
-
Group company
Sales
-
4,508
Bata Sri Lanka
Group company
Sales
13,358
11,850
Bata Colombia
Group company
Service received
-
(351)
Global Footwear Services Pte. Ltd., Singapore
Group company
Sales
(49,307)
(95,453)
Bata Brands S.a.r.l., Luxembourg
Group company
Trade mark licence fees
(296,176)
(139,733)
Euro Footwear Holdings s.a.r.l.
Group company
Service received
(7,183)
(7,063)
Bata India
Group company
Purchase
(1,325)
-
BB Export Limited
Subsidiary company
Subscription of shares
-
(1,110)
Operating lease payments disclosure Non-cancellable operating lease rentals are payable as follows: 2012 Amount ‘000 Taka Less than one year Between one and five years More than five years
2011 Amount ‘000 Taka
316,855 1,571,558 460,562
211,911 1,151,782 355,618
2,348,975
1,719,311
38.
Capital expenditure and financial commitment There were no capital expenditure and financial commitments as at 31 December 2012 (2011: Nil)
39.
Contingent liabilities There are contingent liabilities on account of unresolved disputed corporate tax assessments and VAT claims by the authority aggregating to Tk. 328,524,000 (2011: Tk 312,514,000). Considering the merits of the cases, it has not been deemed necessary to make provisions for all such disputed claims. There is also contingent liability in respect of outstanding letters of credit of Tk. 218 million (2011: Tk. 231 million) and letter of guarantee of Tk. 5.7 million (2011: Tk. 4.7 million).
40.
Ot her disclosures
40.1
Comparatives Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.
40.2
Interim dividend Bata paid an interim dividend @ Tk 17.00 per share of Tk 10 each aggregating to Tk 232,560,000 which was approved by the Board of Directors at its 209 th meeting held on 28 November 2012.
40.3
Events after the reporting period The Board of Directors of Bata, at its 211th meeting held on 25 April 2013, proposed Tk 10.50 per share, amounting to a total of Tk.143,640,000 as final dividend for the year ended 31 December 2012, which represents 105% of the paid up capital. Total dividend for the year ended 31 December 2012 including the interim dividend (see note 40.2) thus comes to Tk.376,200,000, which is 275% of paid up capital. These dividends are subject to final approval by the shareholders at the forthcoming Annual General Meeting of the company.
63
Bata Shoe Company (Bangladesh) Limited Statement of Comprehensive Income for the year ended 31 December 2012 Exhibit - I 2012
2011
Manufacturing
Trading
Total
Total
Taka
Taka
Taka
Taka
6,328,331,186
1,056,174,549
7,384,505,735
6,647,846,013
(4,130,180,935)
(588,325,129)
(4,718,506,064)
(4,286,593,663)
Gross profit
2,198,150,251
467,849,420
2,665,999,671
2,361,252,350
Other income
26,776,981
-
26,776,981
21,210,803
(1,387,676,966)
(295,350,085)
(1,683,027,051)
(1,529,417,293)
837,250,266
172,499,335
1,009,749,601
853,045,860
Finance income
14,186,445
3,019,412
17,205,857
3,554,238
Finance expenses
(3,661,167)
(779,235)
(4,440,402)
(21,210,569)
Profit before contribution to WPPF
847,775,544
174,739,512
1,022,515,056
835,389,529
Contribution to WPPF
(42,153,826)
(8,971,927)
(51,125,753)
(41,769,476)
Profit before tax
805,621,718
165,767,585
971,389,303
793,620,053
Current tax
273,380,437
15,292,563
288,673,000
204,503,000
Deferred tax
10,800,000
-
10,800,000
8,500,000
284,180,437
15,292,563
299,473,000
213,003,000
521,441,281
150,475,022
671,916,303
580,617,053
Revenue Cost of goods sold
Administration, selling and distribution expenses Profit from operating activities
Tax expense:
Profit after tax for the year
64
65
66
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Form of Proxy Please Quote Shareholder's Folio / BO No.
No. of Shares held
I/We of being shareholder(s) of BATA SHOE COMPANY (BANGLADESH) LIMITED, entitled to vote hereby appoint Mr./Ms. as my/our proxy to attend and vote for me/us and on my/our behalf at the 41 st Annual General Meeting of the Company to be held on Wednesday 19 June 2013 and any adjournment thereof and poll that may be taken in consequenced thereof. As witness my/our hand this
day of
Signature of Shareholder (s)
2013
Signature of Proxy
Date
Signature of Witness
Revenue Stamp of Tk. 10.00 (Signature of Shareholder (s) must be in accordance with specimen signature with the Company.)
ATTENDANCE I/We hereby record my/our presence at the 41 st Annual General Meeting of Bata Shoe Company (Bangladesh) Limited at Dhamrai Factory, Dhaka on Wednesday 19 June 2013 at 10:30 a.m.
Full name of the Shareholder (in block letter)
Signature
Full name of the Proxy (in block letter)
Signature
Shareholder's Folio / BO No. Shareholders are requested to hand over the Attendance Slip at entrance of the meeting hall.
68
