Bata A.Report-08.qxd

Prin

ted

by: O

GRO

Prin

ting

& P

acka

ging

Indu

stry

Bata Shoe Company (Bangladesh) LimitedTongi, Gazipur, Bangladesh

Tel: +880-2-9810501-5Fax: +880-2-9810511

www.batabd.comfacebook.com/batabangladesh

twitter.com/batabangladesh

1

welq m~Px Contents2 Board of directors

4 company information

6 notice of annual General meetinG

8 retail & marketinG events

9 manufacturinG

10 corporate social responsiBility

11. Human resources, product development &mercHandisinG

12 cHairman's statement

16 directors' report

20 corporate Governance

28 compliance certificate

29 audit committee report

31 auditors' report

32 statement of financial position

33 statement of profit or loss and otHer compreHensive income

34 statement of cHanGes in equity

35 statement of casH flows

37 notes to tHe financial statements

68 form of proxy

2 cwiPvjKgÐjx 4 †Kv¤úvwbi Z_¨ 5 evwl©K mvaviY mfvi weÁwß 12 mfvcwZi fvlY 16 cwiPvjKgÐjxi cÖwZ‡e`b 20 K‡c©v‡iU Mf‡b©Ý 28 Kgcøv‡qÝ mvwU©wd‡KU 29 wbixÿv KwgwUi cÖwZ‡e`b 31 wbixÿK‡ì cÖwZ‡e`b 32 w ’wZcÎ33 jvf-†jvKmvb wnmve34 BKz¨BwU cwieZ©‡bi weeiY35 bM` A_© cÖev‡ni weeiY 37 wnmv‡ei wUKvmg~n 67 cÖw· dig

2014

Board of directors

2 3

Rajeev Gopalakrishnanchairman(appointed on 1 april 2014)

Present positionGroup managing director, Bata emerging markets, south asia

Previous positionsmanaging director, Bata shoe company (Bangladesh) limitedmanaging director, Bata shoe of thailand public company limitedvice president, retail operations, Bata india limited vice president, wholesale operations, Bata india limited

Kumar Nitesh

Present positionvice chairman & managing director(retired on 1 april 2014)

Previous positionsmanaging director, Bata thailandvice president, retail operations, Bata india limited

Fernando Garcia Restrepo chairman(retired on 1 april 2014)

Present positionGroup managing director, manufacturing

Previous positionsGroup managing director, Bata emerging markets (west)president director, Bata indonesia managing director, Bata kenyamanaging director, Bata indiavice president, wholesale & marketing, Bata ltd, toronto, canadamanaging director, Bata Bangladesh

Chitpan Kanhasiri

Present positionvice chairman & managing director(appointed on 1 april 2014)

Previous positionsacting company manager, Bata malaysia sdn Bhdretail & non retail sales manager, Bata (thailand) limited

Shaibal Sinhadirector

Present position senior vice president-Business development & financeBata emerging markets

Previous positionchief financial officer, Bata india

K M Rezaul Hasanatindependent director

Present positionchairman and ceo, viyellatex Grouptrustee, Bangladesh csr center.advisory Board member, Green industry platform, unido

Rashidul Hasanindependent director

Present positionschairman, uttara finance & investments ltd.independent director, reckitt Benckiser Bangladesh ltd. independent director, monno Group of industriestrustee, kumudini welfare trust of Bangladesh ltd.

Previous positionsfounder chairman of idlc the first joint venture leasing company of Bangladeshceo & managing director of ipdc the first joint venture investment company ofBangladesh.director General, department of industries of the republic of Bangladesh

2014

evwl©K mvaviY mfvi weÁwß †Kv¤úvwb †m‡µUvwi †gvt nvwmg †iRv

wbixÿK ûmvBb dinv` GÛ †Kvs PvU©vW© GKvD›U¨v›Um evwo bs-15, †ivW bs-12eøK-Gd, wb‡KZb ¸jkvb-1 XvKv-1212

K‡c©v‡iU Mf‡b©Ý KgcøvBÝ wbixÿK Aiæb GÛ AÄYPvU©vW© GKvD›U¨v›Um evwo bs-18, (PZz_© Zjv), †ivW bs-16(cyivZb - 27), avbgwÛXvKv-1209

AvBb Dc‡`óvj& f¨vwj Avwgb DwÏb GÛ G‡mvwm‡qU&&m gvneyeyj nK GÛ G‡mvwm‡qU&&m

e¨vsKB÷vb© e¨vsK wjt WvP&& evsjv e¨vsK wjtGBP Gm we wm wjtBmjvgx e¨vsK (evsjv‡`k) wjt

d¨v±ix1. U½x, MvRxcyi 2. avgivB, XvKv

†iwRóvW© AwdmevUv my †Kv¤úvwb (evsjv‡`k) wjwg‡UW U½x wkí GjvKv U½x, MvRxcyi

Company Secretary

md. Hashim reza

Auditors

Hussain farhad & co. chartered accountantsHouse # 15, road # 12Block-f, niketon Gulshan-1dhaka-1212

Corporate Governance

Compliance Auditors

arun & anjanchartered accountantsHouse # 18 (4th floor), road # 16(old -27), dhanmondidhaka -1209

Legal Advisers

law valleyamin uddin & associatesmahbubul Hoque & associates

Bankers

eastern Bank ltd.dutch Bangla Bank ltd.HsBc ltd.islami Bank (Bangladesh) ltd.

Factories

1. tongi, Gazipur2. dhamrai, dhaka

Registered Office

Bata shoe company (Bangladesh) limitedtongi industrial areatongi, Gazipur

Company Information†Kv¤úvwbi Z_¨

GB weÁwßi gva¨‡g Rvbv‡bv hv‡”Q †h, evUv my †Kv¤úvwb (evsjv‡`k) wjwg‡UW-Gi 43Zg evwl©K mvaviY mfv wb¤œwjwLZ Kvh©vejxm¤úv`‡bi Rb¨ AvMvgx 25 Ryb 2015 e„n¯úwZevi mKvj 10:30 wgwb‡U avgivB KviLvbv, XvKvq AbywôZ n‡e:

1. 31 wW‡m¤i 2014 Zvwi‡L mgvß eQ‡ii Rb¨ cwiPvjKe„‡›ì cÖwZ‡e`b MÖnY, we‡ePbv I Aby‡gv`b|

2. 31 wW‡m¤i 2014 Zvwi‡L mgvß eQ‡ii Rb¨ wbixwÿZ wnmve Ges wbixÿK‡ì cÖwZ‡e`b MÖnY, we‡ePbv I Aby‡gv`b|3. cwiPvjKe„‡›ì mycvwikK„Z jf¨vsk †NvlYv|

4. cwiPvjKe„‡›ì wbe©vPb|

5. 2015 mv‡ji Rb¨ wbixÿK wb‡qvM Ges Zuv‡ì cvwikÖwgK wba©viY|

cwiPvjKgÐjxi Av‡`kµ‡g

†gvt nvwmg †iRvU½x, 27 GwcÖj 2015 †Kv¤úvwb †m‡µUvwi

ªóe¨:

1. 10 †g 2015 n‡”Q †iKW© †WU| †h me †kqvi‡nvìvi‡ì bvg D³ ZvwiL ch©šÍ †Kv¤úvwbi †kqvi †iwR÷vi wKsev wWcwRUix†iwR÷v‡i bw_fz³ n‡e, ZuvivB jf¨vs‡ki Rb¨ êa e‡j MY¨ n‡eb|

2. GKRb m`m¨ GB mvaviY mfvq Dcw ’Z _vK‡Z Ges †fvU cÖ`vb Ki‡Z cv‡ib wKsev Zuvi ¯c‡ÿ Dcw ’Z n‡Z Ges †fvU w`‡ZGKRb cÖw· wb‡qvM Ki‡Z cv‡ib|

3. cÖw· dig h_vh_fv‡e c~iY K‡i mfvi wba©vwiZ mg‡qi 48 N›Uv c~‡e© †Kv¤úvwbi †iwR÷vW© Awd‡m Aek¨B Rgv w`‡Z n‡e|cÖw· dig ms‡hvRb Kiv n‡jv|

4 5

notice of annual General meeting

6 7

notice is hereby given that the 43rd annual General meetinG of Bata shoe company (Bangladesh) limitedwill be held at dhamrai factory, dhaka, on 25 June 2015, thursday 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 2014.

2. to receive, consider and adopt the audited financial statements of the company and the auditors’ reportthereon for the year ended 31 december 2014.

3. to declare dividend as recommended by the directors.

4. to elect directors.

5. to appoint auditors for the year 2015 and to fix their remuneration.

By order of the Board

Md. Hashim Reza

tongi, 27 april 2015 company secretary

NOTES:

1. 10 May 2015 is the RECORD DATE. shareholders whose names appearing in the share register of thecompany or in the depository register on that date will be eligible to receive dividend as approved at the annualGeneral meeting.

2. a member eligible to attend and vote at the General meeting is entitled to appoint a proxy to attend the meetingand vote on his/her behalf.

3. form of proxy, duly completed, must be deposited at the company’s registered office at least 48 (forty- eight)hours before the appointed time for the meeting. a proxy form is enclosed.

2014

8 9

retail

our retail channel continues to grow with the current setup along with the newstores having achieved a growth of 8% as compared to previous year. in order tosustain this growth and to provide friendly and modern atmosphere in the stores,an amount of tk. 152.9 million has been spent to open twenty one new stores atkey business locations. moreover, fifteen stores have also been renovated duringthis period. much of the expansion / renovation were focused on the big formatstores concept. as part of our strategy to exit from low turnover and non profitablestores, we closed a total of thirteen stores which were under minimum benchmark.

manufacturing

Bata industrials

in our manufacturing operations we undertook some further restructuring in linewith company objectives at the beginning of the year. as a result, our productionfacilities at tongi and dhamrai remained fully loaded throughout the period to meetthe demand of higher value products in particular pu sole footwear. these facilitiesproduced 26.8 million pairs of shoes.

marketing eventsin 2014, we have done plenty of marketing events to highlight our brand image and to increase sell. BataBangladesh introduced many exclusive new lines of shoes the majority of which comes during festival periods.these new arrivals were introduced in different Bata brands. some of them are as follows:

fashion would never be completed without a well-designed pair of shoes. thismarketing insight prompted Bata to introduce a number of designers’ collections formen, women and children in this 2014 spring summer season. to emphasize itsattractive and colorful collection, Bata Bangladesh recently organized a fashionshow highlighting its spring summer collection at level-7 of Bashundhara mallshopping complex, dhaka. several journalists, media personals and a largenumber of customers were also present.

the show introduced 2014’s spring summer collection with its existing brands like–Bata, ambassador, marie claire, moccassino, weinbrenner, Bata comfit, patapata,power, north star and Bubblegummers. the launching of the new arrivals this yearbrings out many different colorful collections and quality footwear by Bata.uncompromising quality with striking designs have put Bata shoes in a key positionto appeal to different segments of consumers. the fashion show was segmentedin different categories (mens, ladies and children) and different lifestyles followingthe latest trend with the country's top fashion models ramping.

Bata Bangladesh proudly organized dealers’ meet-2014 with a prize givingceremony of “dhum dhamaka offer” at Hotel lakeshore, Gulshan dhaka on 3rddecember, 2014. dealers from all around the country participated in this grandevent enthusiastically. the daylong event has different types of activities with thedealers. the respected dealers participated in upcoming shoe line review and themerchandising team helped them for better understanding.

Bangladesh Brand forum (BBf) is an initiative with the vision: “transformingBangladesh through applying Branding ethos among local corporate”. with itsclear vision and to recognize leaders in Bangladesh’s corporate sector in theyear 2014, Bangladesh Brand Forum (BBF) in collaboration with MillwardBrown, a leading rating agency organized an award ceremony named BestBrand Award – 2014. the award unveiled the most highlighted brands inBangladesh in 30 categories, which was done through an extensivenationwide survey by millward Brown, Bangladesh.

mother’s day is a very special day to all of us. it is an event that iscelebrated in every corners of the world. this year Bata Bangladesh notonly celebrated mother’s day across the country but also took a specialinitiative to celebrate the precious occasion with its loyal customersthrough a contest.

as one of the largest manufacturers of safety shoes, Bata plays a major role in safeguardingthe health of the world’s workers. from the heavy duty work boots to elegant and sportyfootwear, Bata industrial has a wide range of shoes for every vocation, where safety counts.the brand’s exclusive features include; shock absorbing tunnel system, tritech plus anti-slip soles, Bata cool comfort linings and integrated tpu toe caps. Harnessing its globalexpertise, Bata industrial provides the highest level of protection while keeping the wearer’sfeet cool and comfortable while on the job.

2014

10 11

corporate social responsibility Human resources

we are very much focused improving the professional skills of thehuman resources of the company. a large number of our personnelparticipated in both overseas and local training programmes andseminars. during 2014 a total of 9 employees participated in 9overseas training and 700 employees were envolved in 22 local training programmes.

product development & merchandising

Bata ComfitBata comfit promises unmatched comfort to its customers. through anatomically designedfootwear, soft uppers and footbeds featuring latest cushioning technologies, the branddelivers comfort like no other. Bata comfit leverages chic, contemporary designs with itspatented comfort technology to ensure the wearer stays relaxed and stylish all day long.

WeinbrennerBuilt to suit the true outdoor explorers, weinbrenner embodies the essence of nature,exploration and leisure. weinbrenner features heavy duty materials combined with ruggedoutsoles to ensure it withstands even the harshest challenges of nature. as a brand, it holdsloyal to its unbroken and unshaken “no nonsense” and “for real” reputation, something thatechoes with the true blue explorers it caters to.

Bubblegummersstylish and colorful shoes for active kids. an international brand, specializing in children’sfootwear, clothes and accessories, which is constantly innovating new designs andenhancing the quality of its products. Bubblegummers specializes in fun, fashionablefootwear with an emphasis attention to the needs of the growing feet of the little stars.

Patapatacolorful, funky and carefree. there’s a certain energy that comes from being outside on asun-splashed day in a world alight with promise. whether you’re vacationing in the beachesof st.martin’s or just puttering around the house, patapata is like a little holiday for your feet.vibrant and fun, with distinctive designs that lets one express their playful side.

BCP-BANGLADESH, SCHOLARSHIP FOR EMPLOYEE'S CHILDREN

under Bata children’s program Bata Bangladesh arranged a scholarshipprogram on 18th march, 2014. in this program they gave awayscholarship to five children of permanent unionized employees of tongiand dhamrai who did outstanding result on their secondary examination.

VITAMIN A PLUS CAMPAIGN-2014, BCP BANGLADESH

under Bata children’s program Bata Bangladesh participated “vitamin aplus campaign” on 5th april, 2014 organized by Health and familywelfare ministry of Bangladesh Government. the four day vitamin a pluscampaign began across the country in a bid to prevent childhoodblindness and reduce child mortality.

BCP-Bangladesh, Art Competition & Health Check up program

Bata children’s program Bangladesh organized a day long program on3rd June, 2014 at Bata dhamrai plant.

a colorful art competition, Health checkup and factory visit at dhamraiplant attended by 30 underprivileged children from munmun kindergartenschool with the support of Bcp volunteers. 15 Bcp volunteers gave theirfull support to make the program successful. Bcp-Bangladesh alsodonated a bookshelf with books on various categories and toys for thelibrary of the school.

BCP BANGLADESH-HEALTH CHECKUP & SHOE DONATIONPROGRAM

Bata children’s program Bangladesh organized a day long program on10th september, 2014 at Bata tongi plant.

Bcp-Bangladesh arranged a primary Health check up & distributemedicine for 30 underprivileged children from mojar school, mirpur,dhaka.10 Bcp volunteers gave their full support to make the programsuccessful. Bcp-Bangladesh also donated school shoes, socks andtoiletries item to those children. children received refreshment after theprogram.

mr. chitpan kanhasiri, company manager and mr. muhammad sohailaslam, finance director attended the program

BCP BANGLADESH - SUPPORT GIRLS FOR TAILORING TRAINING

Bata children’s program Bangladesh organized a day long program on17th december, 2014 at maer achol shelter, mirpur on the occasion ofcelebrating international Girl’s day.

Bcp-Bangladesh donated two sewing machines to those underprivilegedgirls for their self dependent. 6 Bcp volunteers gave their full support tomake the program a successful.

2014

12 13

Avgv‡ì LyPiv wefvM eZ©gvb cwiw ’wZi g‡a¨ †ek wKQy bZzb †óviLy‡j‡Q Ges MZ eQ‡ii Zzjbvq 8 fvM cÖe„w× AR©b K‡i‡Q| GB cÖe„w×a‡i ivLv Ges †`vKvb¸wj‡Z 152.9 wgwjqb UvKv LiP K‡i ¸iZ¡c~Y©eëmvwqK ’v‡b 21 wU eÜzZ¡c~Y© I AvaywbK cwi‡ek mg„× bZzb †óvi†Lvjv n‡q‡Q| ZvQvov GB mg‡qi g‡a¨ 15wU †`vKv‡bi ms¯‹vi Kivn‡q‡Q| eo eo †`vKv‡bi avibv‡K mvg‡b †i‡LB AwaKvsk m¤úªmviYI ms¯‹viKvh© Pvjv‡bv n‡qwQj| Avgv‡ì eëmvwqK b~¨bZg gvb`‡Ûi†KŠkj wn‡m‡e Kg wewµ I AjvfRbK 13wU †óvi Avgiv eÜ K‡iw`‡qwQ| †Kv¤úvwbi mvgwMÖK eëmvq cvBKvix wefv‡Mi Ae`vb MZ eQ‡iiZzjbvq mvgvb¨ Kg wQj| Gi KviY, Kg gy‡jï Pàj, cøvw÷K,Bb‡RK‡UW cb¨mvgMÖx‡Z ’vbxq Drcv`K I Avg`vbxKviK‡ì m‡½Zxeª cÖwZ‡hvwMZvi m¤§yLxb n‡Z n‡q‡Q| †Kv¤úwvb BwZg‡a¨ GBcwieZ©‡bi w`‡K „wó w`‡q‡Q| eëmv m¤úªmvi‡Yi j‡¶¨ Ges GBcÖwZ‡hvwMZv †gvKv‡ejvi Rb¨ bZzb bZzb cY¨mvgMÖx †hvM Kiv n‡”Qhv‡Z Zvrch©c~Y©fv‡e GKK wewµ, gv‡K©U †kqvi Ges Mo weµqg~‡jïgva¨‡g cvBKvix wefv‡Mi eëmv e„w× Kiv hvq| GB mewKQzB AR©bKiv n‡e ewa©Z †µwW‡Ui gva¨‡g bv n‡q eis we‡µZv I cwi‡ekK‡ìcvIbv UvKv Av`v‡q c~Y© wbqš¿b Av‡iv‡ci gva¨‡g| ißvwb eëmv MZ eQ‡ii Zzjbvq 3% †e‡o‡Q| Gi djkÖæwZ‡Z ißvwbeëmv D”P g~‡jï Pvgovi cY¨ wewµ‡Z mswkøó Ab¨vb¨ †Kv¤úvwbicÖPwjZ c‡Yï Zzjbvq GwM‡q‡Q| Avgv‡ì Drcv`b eë ’vcbvq eQ‡ii ïiæ‡Z †Kv¤úvwbi ms‡MmsMwZc~Y© AviI wKQz cybM©Vb Kiv nq| Gi d‡j Avgv‡ì U½x IavgivB cø v‡›U Drcv`b Kiv we‡kl K‡i D”Pg~‡jï wcBD †mv‡jicv yKvmvgMÖx mviv eQ‡ii Pvwn`v †gUv‡Z †c‡i‡Q| GB myweavq†Kv¤úvwb 26.8 wgwjqb RyZv Drcv`b K‡i‡Q| Avcbv‡ì †Kv¤úvwb Zvi HwZn¨MZ cY¨ Pàj, m¨vbWvK, mvgvijvB‡bi cÖPzi cwigvY weµq‡K D‡c¶v bv K‡i MÖvn‡Ki Pvwn`v K_vgv_vq †i‡L wbqwgZfv‡e wewfbœ wefv‡M bZzb bZzb ÷vBj IwWRvB‡bi cY¨ evRv‡i nvwRi Ki‡Q| GB mKj D‡`¨v‡Mi AšÍf~©w³Avgv‡ì cv yKvi gh©v`v eûjvs‡k e„w× K‡i‡Q, AR©b K‡i‡QMÖvnK‡ì AvbyMZ¨| Avgv‡ì m¤§vwbZ MÖvnK‡ì Rb¨ me©vaywbKe¨v‡Ûi RyZv Avgiv cÖwZwbqZ evRv‡i wb‡q AvmwQ| Avcbv‡ì †Kv¤úvwb †`‡ki RyZv wk‡í e„nËi Ki `vZv wn‡m‡e ZviAe`vb Ae¨vnZ †i‡L‡Q| 2014 mv‡j K‡c©v‡iU Ki, f¨vU, weµqKi, ïé Ges Ab¨vb¨ †jfx wn‡m‡e RvZxq †KvlvMv‡i 2.064 wewjqbUvKv cÖ`vb K‡i‡Q hv weMZ eQ‡ii Zzjbvq 15% †ewk| Avgv‡ì AvšÍwiK Kg©¶gZv †`‡ki kxl© RyZv Drcv`bKvix wnmv‡eAvgv‡ì cwiwPZ K‡i‡Q| GiB ¯xK…wZmiƒc eQ‡ii †miv eª¨v‡Ûicyi¯‹vi, AvBwmGgGwe KZ©„K cª`Ë †miv K‡c©v‡iU m¤§vbbv cÖksmvcÎAvBwmGgGwe mvwU©wd‡KU Ae †gwiU 2014 jvf K‡i‡Q| evUv †`‡kiK‡cv©‡iU mvgvwRK `vwqZ¡kxjZvq wØZxq ’vb AR©b K‡i‡Q| K‡cv©‡iUmvgvwRK `vwqZ¡kxjZvi Ask wn‡m‡e JITA cÖK‡íi AvIZvqbvixmgvR‡K MÖvgxb GjvKvq Zvi weµq cªK‡í mshy³ K‡i mgv‡RZv‡ì ¶gZv†K Av‡iv my „p K‡i‡Q| G¸‡jv mgv‡Ri DbœwZ‡Z†Kv¤úvwbi Aw½Kvi I AvMÖn cybe©¨³ K‡i‡Q|

dividend for the year 2014 inclusive of 175% interim cashdividend which has already been paid in december, 2014.

our retail channel continues to grow with the current setupalong with the new stores having achieved a growth of 8%as compared to previous year. in order to sustain thisgrowth and to provide friendly and modern atmosphere inthe stores, an amount of tk. 152.9 million has been spentto open twenty one new stores at key business locations.moreover, fifteen stores have renovated during this period.much of the expansion / renovation were focused on thebig format stores concept. as part of our strategy to exitfrom low turnover and non profitable stores, we closed atotal of thirteen stores which were under minimumbenchmark.

performance from our wholesale division was slightlybelow than the last year reason being more competition inthe market with the local and imported merchandizeavailable especially in the low price articles like thongs,plastic and injected. company has already noticed thechange in this segment. new product is being introduced toovercome this challenge to provide opportunity to grow thebusiness significantly and to capture unit sales, marketshare and also average selling price. all this will beachieved without the need to buy the business throughextended credit having absolute control over accountreceivables from dealers and distributors.

export business showed an increase of 3% over the lastyear as a result of shifting business to high priced leathercollection as compared to conventional products to otherassociate companies.

in our manufacturing operations we undertook somefurther restructuring in line with company objectives at thebeginning of the year. as a result, our production facilitiesat tongi and dhamrai remained fully loaded throughout theperiod to meet the demand of higher value products inparticular pu sole footwear. these facilities produced 26.8million pairs.

your company constantly introduced new products in allcategories; taking into account consumer demand invarious market segments for new styles and designs,without ignoring the necessity for volume sales, which isour traditional strength, particularly in thongs, sandals andsummer lines. this initiative included improving the statusof our footwear, gaining loyalty and introducing the latestbranded product for our valued customer.

the company continues to be a major contributor to thenational exchequer and during 2014, paid tk. 2.064 billionin corporate tax, vat, custom duty and other levies whichwas 15% more than the last year.

our sterling performance has made us a market leader inthe shoe business. the company also managed to achieve“Brand of the year” award and icmaB certificate of meritfor Best corporate report domestically and secondposition in Bata award of the year in category crs underJita project which is empowering women’s within thecountry to involve themselves in the rural area salesproject. this proves our commitment and enthusiasmtowards the growth of the company.

mfvcwZi fvlY 2014 chairman's statement 2014

Rajeev Gopalakrishnanchairman

wcªq †kqvi‡nvìvie„›`,†Kv¤úvwbi cwiPvjKgÛjxi c¶ †_‡K 43Zg evwl©K mvaviY mfvqAvMZ mKj‡K ¯vMZ Rvbvw”Q Ges GKB mv‡_ Avwg MZ 31 wW‡m¤i2014 Zvwi‡L †kl nIqv eQ‡ii evwl©K Avw_©K cÖwZ‡e`b Iwbix¶K‡ì cÖwZ‡e`bmn cwiPvjKgÛjxi cÖwZ‡e`b Avcbv‡ìm¤§y‡L Dc ’vcb Ki‡Z †c‡i m¤§vwbZ‡eva KiwQ|2014 mvj wQj eëmv Ges A_©‡bwZK cwi‡e‡ki Rb¨ DwØMœ nevi gZAv‡iKwU KwVb eQi | †`k 2013 mv‡ji gZ Av‡iKwU ivR‰bwZKAw ’iZv we‡kl K‡i eQ‡ii wØZxqv‡a© ag©NU, niZvj, moKAe‡iv‡ai gZ ivR‰bwZK Av‡›`vjb cÖZ¨¶ K‡i | ZeyI GgbAw ’iZvi g‡aÏ Avcbv‡ì †Kv¤úvwb j¶¨ AR©‡bi Rb¨ cÖwZkÖæwZe×wQj| eë ’vcbv KZ©„c‡¶i K‡Vvi bRi`vwi m‡Ë¡¡I Drcv`b I weµ‡qigZ Kvh©vewj †`‡ki AvBb-k„•Ljv cwiw ’wZ, gy ªvùxwZi µgvMZ Pvc,weµqKg©x msµvšÍ Af¨šÍixY welqvejx †bwZevPKfv‡e eëmv‡KevavMÖ Í K‡i‡Q| 2014 mv‡j †Kv¤úvwbi †gvU weµq wQj 8.077 wewjqb UvKv hv MZeQ‡ii Zzjbvq 3% †ewk Ges †gvU gybvdv n‡q‡Q 3.132 wewjqbUvKv hv MZ eQ‡ii Zzjbvq 4% †ewk| †Kv¤úvwbi cwiPvjbvMZ gybvdvmvgvb¨ K‡g 1.207 wewjqb UvKv †_‡K 1.063 wewjqb UvKvquvwo‡q‡Q, hv MZ eQ‡ii Zzjbvq 12% Kg| gybvdv Kg nIqvi wcQ‡b

cÖavb KviY wQj †`vKv‡bi BRviv Pzw³i LiP e„w×, weµq-Kg©x‡ìweµq Kwgk‡bi kZKiv nvi e„w×, ZvQvov Zuv‡ì wKQz my‡hvM myweavI fvZv e„w× | †Kv¤úvwb G eQi Ki cieZ©x gybvdv K‡i‡Q 700.670wgwjqb UvKv hv MZ eQ‡i wQj 813.084 wgwjqb UvKv| GLv‡b D‡jø LKiv cÖ‡qvRb †h, Avgv‡ì †Kv¤úvwbi BKz¨wqwUi wecix‡Z gybvdvK‡i‡Q 27.26% Ges †kqvi cªwZ Avq K‡i‡Q 51.22 UvKv|†Kv¤úvwbi GKwU Kvh©Kix Znwej cÖevn eë ’vcbv Pvjy i‡q‡Q †hLv‡bA‡_©i AšÍtcÖevn I ewntcÖevn wbqwgZfv‡e cÖwZdwjZ nq|cwiPvjKgÛjx mš‘ó Gi Rb¨ †h eQi †k‡l †Kv¤úvwbi m¦í I `xN©†gqv`x †Kvb Avw_©K mxgve×Zv †bB| †Kv¤úvwbi Kg©¶gZv I AMÖMwZi Dci wfwË K‡i 2014 mv‡ji RbÄvcbv‡ì cwiPvjKgÛjx bM` 105% P~ovšÍ jf¨vsk mycvwikK‡i‡Qb hv AšÍe©Z©xKvjxb jf¨vsk 175% mn †gvU 280%| 2014mv‡ji AšÍe©Z©xKvjxb jf¨vsk 175% wW‡m¤i gv‡mB cwi‡kva Kivn‡q‡Q|

dear shareholders,

on behalf of the Board, i welcome you all to the 43rdannual General meeting of the company and feel pleasedto present the annual review of the company’sperformance and the audited financial statements for theyear ended december 31, 2014.

the year 2014 was yet another difficult year as far asbusiness and economic environment is concerned. thecountry experienced legacies of 2013 in the form ofagitated political disorder accompanied with strikes, hartalsand road blockades especially in the second half of theyear. even so your company remained committed toachieve its target. the operational performance, in terms ofproduction and sales were achieved under the incredibleguidance of our management team despite, bleak law andorder situation, persistent inflationary pressure and somein-house issues linked to sales staff that negativelyimpacted the business.

the company business witnessed its record level with netturnover of tk. 8.077 billion signifying a growth of 3% overlast year. the Gross profit was recorded at tk. 3.132 billionwith improvement of 4% over previous year. operatingprofit slightly decreased from tk. 1.207 billion to tk.1.063billion, showing a decrease of 12% as compared toprevious year. this decline is mainly because of increasein stores lease agreement cost and settlement with thesales staff to increase their commission percentage andcertain allowances. profit after taxation was tk. 700.670million compared to tk. 813.084 million of last year. it isalso worth mentioning here that our company achievedreturn on equity of 27.26% and earnings per share of tk.51.22.

the company has an effective cash flow managementsystem in place whereby cash inflows and outflows areprojected on regular basis. the Board is satisfied that thereare no short or long term financial constraints at the closeof the period.

Based on the performance and progress made by thecompany, your directors have decided to recommend105% final cash dividend. this will make a total 280% cash

1515

Avcbv‡ì †Kv¤úvwb †`‡ki mgv‡Ri K_v we‡ePbv K‡i 2014 evUvwPj‡Wªbm& †cÖvMªv‡gi AvIZvq QvÎ‡ì g‡a¨ QvÎe„wË Pvjy K‡i‡Q| GiBAvIZvq U½x Ges avgivB‡qi BDwbqbfz³ 5 Rb ’vqx Kg©xi mšÍvb‡ìg‡a¨ gva¨wgK cix¶vq Amvgvb¨ djvd‡ji Rb¨ e„wË cÖ`vb Kiv nq|ZvQvov wPj‡Wªbm& †cÖvMªv‡gi AvIZvq mgv‡Ri myweav ewÂZ wkï‡ìAskMÖn‡b GKwU Avb›`gq wPÎvsKb cÖwZ‡hvwMZv, Zv‡ì ¯v ’¨ cix¶vI KviLvbv cwi`k©‡bi eë ’v K‡i‡Q| †Kv¤úvwbi eëmv e„w× eûjvs‡k wbf©i K‡i Dchy³ cÖwk¶‡bi gva¨‡gKg©x‡ì ¶Zv e„w×i Dci| †Kv¤úvwb GiB avivevwnKZvq gvbe m¤ú`Dbœqb, †Kv¤úvwbi cÖhyw³MZ m¤úªmvib I eëmv cÖmvk‡bi DbœwZ‡Zh‡_ó mgq I A_© wewb‡qvM K‡i‡Q| GwU †Kv¤úvwbi GKwU PjgvbcÖwµqv| Avgv‡ì Kg©x‡ì cÖwk¶b memgq fwel¨‡Zi Rb¨ GKwUwewb‡qvM wn‡m‡e we‡ePbv Kiv n‡q‡Q hv‡Z Zv‡ì Rb¨ my ’ I wbivc`Kv‡Ri cwi‡ek cÖ`vb Kiv hvq| eQie¨vcx kÖwgK-eë ’vcbv m¤úK© LyeB †mŠnv ©¨c~b© wQj| kÖwgK‡ìwZbeQi †gqv`x Pzw³wU AvMvgx Ry‡b DËxb© n‡j Zv‡ì `vex`vIqv Iewa©Z †eZb myweavw` wb‡q Av‡jvPbv K‡i bZzb Pzw³ ¯v¶wiZ n‡e|Avwg Avkv ivwL fvj djvdj AR©‡bi j‡¶¨ eë ’vcbv I wmweGmswk¬ó Df‡qi g‡a¨ GKwU m‡šÍvlRbK m¤úK© eRvq ivL‡e | my›ìKg©gq cwi‡ek I kvwšÍc~Y© my›ì m¤úK© eRvq ivLvi Rb¨ †Kv¤úvwbGeQi GKwU evwl©K eb‡fvRb I AvšÍtwefvMxq wµ‡KU †LjviAv‡qvRb K‡i| cwiPvjKgÛjx‡Z GKwU cwieZ©b G‡m‡Q| eë ’vcbv cwiPvjK wn‡m‡ewg. Kzgvi wb‡Zk Gi RvqMvq wg. wPUcvb Kvbnv‡kix `vwqZ¡ MÖnbK‡i‡Qb| Avwg Zuvi cÖksmbxq D‡`¨vM I w`K wb‡ ©kbvq †Kv¤úvwbA‡bK ~i GwM‡q hv‡e Avkv KiwQ| †Kv¤úvwbi msNwewa Abymv‡i eë ’vcbv cwiPvjK wg. wPUcvbKvbnv‡kix Qvov Ab¨vb¨ cwiPvjKe„›` GB evwl©K mfvq Aemi MÖnbKi‡jb Ges cybtwbe©vP‡bi †hvM¨ weavq cÖv_©x n‡jb| 2014 mv‡ji 30 wW‡m¤i Avcbv‡ì †Kv¤úvwbi 10 UvKvi cÖwZwU†kqvi XvKv ÷K G·‡P‡Ä 1,172.10 UvKv Ges PÆMÖvg ÷K G·‡P‡Ä1,143.80 UvKvq µq-weµq nq| Avgiv hw` mvg‡b G¸‡Z PvB Zvn‡j Avgv‡ì m`v cwieZ©bkxjA_©‰bwZK, wecbb kZ©vejx I k³ cÖwZØwÜZvi †gvKv‡ejv Ki‡Zn‡e| Avgv‡ì †h kw³ i‡q‡Q Zv w`‡q Avgiv fwel¨‡Z †mB mKjcÖwZ‡hvwMZv‡K mdjfv‡e AwZµg Ki‡Z cvie| Avwg cwiPvjKgÛjxi c¶ †_‡K †Kv¤úvwbi cÖwZ Ae¨vnZ mvnvh¨ Imn‡hvwMZvi Rb¨ †µZvmvaviY huviv Avgv‡ì c‡Yï Dci Av ’v†i‡L‡Qb, Avgv‡ì Kg©KZ©v-Kg©Pvixe„›`, mKj †kqvi‡nvìvie„›`,Ges MYcÖRvZš¿x evsjv‡`k miKv‡ii wbKU K…ZÁZv cÖKvk I abëv`Ávcb KiwQ|

ivRxf †MvcvjvK…òvb†Pqvig¨vb

your company believes in the development of thecommunity in the country. in the year 2014 under Batachildren’s (Bcp) program your company arranged ascholarship program. under this, five scholarships havebeen awarded to the children of permanent unionizedemployees of both factories who did outstanding result intheir secondary school examination. Bcp also arranged acolorful art competition, health check and factory visitattended by underprivileged children.

the growth of our business is highly dependent on theskills imparted to our personnel through sound training.the company has invested considerable time and moneyon developing human resources during the period toacquire latest development in the field of technology andbusiness administration. this would be the ongoingprocess for future periods. training of our employees hasalways been considered as an investment for the futurewith the objective to provide them with safe and healthyworking environment.

during the year, management and labour relations werevery cordial showing full harmony. a three-year agreementis expiring in June next year and will be signed with theunion, which would provide increased benefits and higherincome to our unionized staff. i hope that the managementand the c.B.a. will maintain a satisfactory relationship toachieve better results for the benefit of all concerned. anevent like annual picnic and departmental cricketcompetition was also held to provide them pleasantenvironment.

one change has been witnessed in the composition of theBoard, where mr. chitpan kanhasiri took over as managingdirector; in place of mr. kumar nitesh. i would like to placeon record my utmost regards and appreciation for hisadmirable efforts towards the growth of the company.

in accordance with the articles of association of thecompany, all the directors, except the managing director,mr. chitpan kanhasiri will retire at the annual Generalmeeting and being eligible offer themselves for re-election.

your company shares of a nominal value of tk. 10.00were traded at tk 1,172.10 on the dhaka stock exchangeand tk. 1,143.80 on the chittagong stock exchangerespectively on 30, december 2014.

as we move forward, we are certain to face competitionsand challenges due to ever changing economic andmarketing conditions. Based on our strengths we areconfident to overcome successfully all the challenges infuture.

on behalf of your Board, i take this opportunity to expressmy gratitude and appreciation to our customers for theirconfidence in our products, our employees for their efforts,all other stakeholders and the Government of the people’srepublic of Bangladesh for their continuous support andcooperation extended to the company.

Rajeev Gopalakrishnanchairman

14

2014

your directors have pleasure in submitting their report and audited financial statements of the company forthe year ended 31 december 2014 along with the preceding five years as follows:

Industry Outlook

the footwear sector in the country witnessed a moderate growth during the year. the company attained agrowth of 3% during the current year. it is expected that the growth trend will increase under the prevailingmarket conditions.

Cost of Sales & Profit Margin

the overall costs of raw materials remain stable internationally. so, the cost of sales has decreased in 2014 ascompared to net turnover due to strict control over the consumption of raw materials and other cost ofproduction. consequently the gross profit has increased over that of 2013.

Key Operating & Financial Information

your directors have pleasure in submitting the key operating and financial data of the company for the yearended 31 december 2014 along with the preceding five years below:

Financial results 2014 2013 2012 2011 2010 2009Taka Taka Taka Taka Taka Taka000 000 000 000 000 000

net profit before tax 1,017,920 1,153,284 971,389 793,620 742,971 629,692

provision for tax 317,250 340,200 299,473 213,003 199,000 180,286

Net profit after tax 700,670 813,084 671,916 580,617 543,971 449,406

un-appropriated profit brought forward 2,009,391 1,606,707 1,313,782 1,075,166 873,194 724,748

earlier year tax adjustment (3,240) - - - - -

loss on BB export winding up - - (2,791) - - -

Profit available for appropriation 2,706,771 2,414,792 1,982,907 1,655,782 1,417,166 1,174,154

From which the Directors recommended the following appropriations:

final dividend paid (previous year) 143,640 143,640 143,640 143,640 143,640 143,640

interim dividend paid (current year) 239,400 264,760 232,560 198,360 198,360 157,320

Total dividend 383.040 410,400 376,200 342,000 342,000 300,960

Un-appropriated profit carried forward 2,323,731 2,004,391 1,606,707 1,313,782 1,075,166 873,194

Dividend

for the year ended 31 december 2014 the Board of directors recommended an interim dividend of tk. 17.50 pershare amounting to tk 239,400,000 and now recommends a final dividend of tk. 10.50 per share amounting totk. 143,640,000 thus making a total dividend of tk. 28 per share amounting to tk. 383,040,000.

Directors Proposed for Re-Election

the directors retiring as per article 104 of the company’s articles of association are mr. rajeev Gopalakrishnan,mr. shaibal sinha, mr. rashidul Hasan and mr. k m rezaul Hasanat and being eligible offer themselves forre-election.

directors' report 2014

Audit Committee Meeting

the audit committee is a sub-committee of the Board. all members of the audit committee were appointed bythe Board of directors from amongst the members. they met twice during the year 2014. the companysecretary was the secretary of the committee. the audit committee is comprised of:

mr. rashidul Hasan – chairman independent director mr. fernando Garcia restrepo – member (resigned on 1 april 2014) mr. rajeev Gopalakrishnan – member (appointed on 1 april 2014)mr. kumar nitesh – member (resigned on 1 april 2014)mr. chitpan kanhasiri – member (appointed on 1 april 2014)mr. shaibal sinha – member mr. k m rezaul Hasanat – 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 toensure that the system of internal control is sound in design and has been effectively implemented andmonitored. although it is possible that all risks to the business are not known at present, the company takesreasonable steps to identify material risks that may hamper business results and systematically reviews theserisks in light of the changing internal and external environment in order to assess that the controls in place areadequate 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 ofcompany’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 statementsand the accounting estimates are based on reasonable and prudent judgment.

d) the financial statements were prepared in accordance with Bangladesh accounting standards (Bas) andBangladesh financial reporting standards (Bfrs) as applicable in Bangladesh and there has not been anydeparture there from.

e) the md and fd have certified to the Board that:

16 17

2014

18 19

i) they have reviewed the financial statements and believe:

a) these statements do not contain any materially untrue statement or omit any material fact orcontain statements that might be misleading;

b) these statements together present a true and fair view of the company’s affairs and are incompliance with existing accounting standards and applicable laws.

ii) there are, to the best of their knowledge and belief, no transactions entered into by the companyduring the year which are fraudulent, illegal or in violation of the company’s codes of conduct.

Auditors

rahman rahman Huq (kpmG) chartered accountants, have offered their willingness to be appointed asstatutory auditors of the company. the Board recommends their appointment for the year 2015 and to continuetill the next annual General meeting.

on behalf of the Board of directors,

Chitpan Kanhasiri managing director 27 april 2015

Pattern of Shareholdings Annexure - 1

names of the shareholders along with their position of the shares are listed below:

Names of the shareholders Number of % holdingshare held

i) parent/subsidiary/associate/related parties:◆ Bafin nederland (B.v.) 9,576,000 70.00

ii) directors/ceo/cs/cfo/audit Head and their spouses and minor children◆ mr. rashidul Hasan 64 0.00

iii) executives (Head of functions) nil nil

iv) shareholders, who hold 10% or more nil nil

v) others shareholders, who hold less than 10%◆ non-resident shareholders 1,101,254 8.05◆ local shareholders 3,002,682 21.95

Total 13,680,000 100.00

Board Meetings

the Board met 6 (six) times during the year 2014. the company secretary and finance director were also presentin the Board meetings. the attendance by each director is stated below:

Present Directors Name No. of Attendance

mr. fernando Garcia restrepo 02 meetings (resigned on 1 april 2014)mr. kumar nitesh 02 meetings (resigned on 1 april 2014) mr. rashidul Hasan 06 meetings mr. k m rezaul Hasanat 03 meetings mr. shaibal sinha 05 meetings mr. chitpan kanhasiri 04 meetings (appointed on 1april 2014)mr. rajeev Gopalakrishnan 01 meeting (appointed on 1 april 2014)

2014

20 21

Annexure

Status of compliance with the conditions imposed by the Bangladesh Securities and ExchangeCommission's Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 Issued under

section 2CC of the Securities and Exchange Ordinance, 1969:

sec checklist: (report under condition no.7)

Compliance Status(Put √ in the

appropriate column)

Not Complied Complied

Remarks(if any)TitleCondition

No.

1.0

1.1

1.2

(i)

(ii) a)

(ii) b)

(ii) c)

(ii) d)

(ii) e)

(ii) f)

(ii) g)

(ii) h)

(ii) i)

(iii)

√

√

√

√

√

√

√

√

√

√

√

√

at least one fifth (1/5) of the total number of directors inthe company’s board shall be independent directors.

who either does not hold any share or holds less than1% shares to the total paid-up shares of the company;

who is not a sponsor of the company and is notconnected with the companies any sponsor or directoror shareholder who holds one percent (1%) or moreshare of the total paid-up shares of the company on thebasis of family relationship.

who does not have any other relationship whetherpecuniary or otherwise, with the company or itssubsidiary/ associated companies or its subsidiary/associated companies.

who is not a member, director or officer of any stockexchange?

who is not a shareholder, director or officer of anymember of stock exchange or an intermediary of thecapital market.

who is not a partner or an executive or was not apartner or an executive during the preceding 3 (three)years of the concerned company’s statutory audit firm.

who shall not be an independent director in more than3 (three) listed companies.

who has not been convicted by a court of competentjurisdiction as a defaulter in payment of any loan to abank or a non-Bank financial institution (nBfi).

who has not been convicted for a criminal offenceinvolving moral turpitude.

the independent director(s) shall be appointed by theboard of directors and approved by the shareholders inthe annual General meeting (aGm).


appropriate column)


Remarks(if any)

1.3

1.4

1.5

(iv)

(v)

(vi)

(i)

(ii)

(iii)

(i)

(ii)

(iii)

(iv)

(v)

(vi)

notapplicable

√

√

√

√

notapplicable

√

√

√√

√

notapplicable

√

no suchvacancy

created 2014

no suchgain/lossoccurred

presented inthe financial

statement

the post of independent director(s) can not remainvacant for more than 90 (ninety) days.

the Board shall lay down a code of conduct of all Boardmembers and annual compliance of the code to berecorded.

the tenure of office of an independent director shall befor a period of 3 (three) years, which may be extendedfor 1 (one) term only.

independent director shall be a knowledgeableindividual with integrity who is able to ensurecompliance with financial, regulatory and corporate lawsand can make meaningful contribution to business.

the person should be a Business leader / corporateleader / Bureaucrat / university teacher witheconomics or Business studies or law background /professionals like chartered accountants, cost &management accountants, and chartered secretaries.the independent director must have at least 12 (twelve)years of corporate management / professionalexperience.

in special cases the above qualifications may berelaxed subject to prior approval of the commission.

industry outlook and possible future development in theindustry.

segment-wise or product-wise performance.

risks and concerns.

a discussion on cost of Goods sold, Gross profit marginand net profit margin.

discussion on continuity of any extra-ordinary gain orloss.

Basis for related party transactions- a statement of allrelated party transactions should be disclosed in theannual report.

Qualification of Independent Director (ID)

Chairman of the Board and Chief Executive Officer

the positions of the chairman of the Board and the chiefexecutive officer of the companies shall be filled by differentindividuals with defined different roles and responsibilities. thechairman of the company shall be elected from among thedirectors of the company.

The Directors’ Report to Shareholders

TitleConditionNo.

Board of Directors

Board’s Size

the number of Board directors should not be less than 5 (five)and more than 20 (twenty)

Independent Directors

2014

22 23


appropriate column)


Remarks(if any)

(vii)

(viii)

(ix)

(x)

(xi)

(xii)

(xiii)

(xiv)

(xv)

(xvi)

(xvii)

(xviii)

(xix)

(xx)

notapplicable

notapplicable

notapplicable

√

√

√

√

√

√

√

not

applicable

√

notapplicable

√

during 2014there were nopublic or rightissue of share

no suchvarianceoccurred

ability of thecompany tocontinue as

going concern

utilization of proceeds from public issues, rights issuesand / or through any others instruments.

an explanation if the financial result deteriorate after thecompany goes for initial public offering (ipo), repeatpublic offering (rpo), rights offer, direct listing, etc.

if significant variance occurs between quarterlyfinancial performance and annual financial statementsthe management shall explain about the variance ontheir annual report.

remuneration to directors including independentdirectors.

the financial statements prepared by the management ofthe issuer company present fairly its state of affairs, theresult of its operations, cash flows and changes in equity.

proper books of account of the issuer company havebeen maintained.

appropriate accounting policies have been consistentlyapplied in preparation of the financial statements andthat the accounting estimates are based on reasonableand prudent judgment.

international accounting standards (ias)/ Bangladeshaccounting standards (Bas)/ international financialreporting standards (ifrs)/ Bangladesh financialreporting standards (Bfrs), as applicable inBangladesh, have been followed in preparation of thefinancial statements and any departure there-from hasbeen adequately disclosed.

the system of internal control is sound in design andhas been effectively implemented and monitored.

there are no significant doubts upon the issuercompany's ability to continue as a going concern. if theissuer company is not considered to be a goingconcern, the fact along with reasons thereof should bedisclosed.

significant deviations from the last year’s operatingresults of the issuer company shall be highlighted andthe reasons thereof should be explained.

key operating and financial data of at least preceding 5(five) years shall be summarized.

if the issuer company has not declared dividend (cashor stock) for the year, the reasons thereof shall be given.

the number of Board meetings held during the year andattendance by each director shall be disclosed.


appropriate column)


Remarks(if any)

2.0

2.1

2.2

3.0

3.1

(xxi)

(xxi) a)

(xxi) b)

(xxi) c)

(xxi) d)

(xxii)

(xxii) a)

(xxii) b)

(xxii) c)

(i)

(ii)

(iii)

(i)

√

√

√

√

√√

√

√

√

√

√

√

√

parent/subsidiary/associated companies and otherrelated parties (name wise details).

directors, chief executive officer, company secretary,chief financial officer, Head of internal audit and theirspouses and minor children (name wise details).

executives (top five salaried employees of the company,other than the directors, chief executive officer,company secretary, chief financial officer and Head ofinternal audit).

shareholders holding ten percent (10%) or more votinginterest in the company (name wise details).

the company shall have an audit committee as a sub-committee of the Board of directors.

the audit committee shall assist the Board of directorsin ensuring that the financial statements reflect true andfair view of the state of affairs of the company and inensuring a good monitoring system within the business.

the audit committee shall be responsible to the Boardof directors. the duties of the audit committee shall beclearly set forth in writing.

the audit committee shall be composed of at least 3(three) members.

a brief resume of the director.

nature of his/her expertise in specific functional areas.

names of companies in which the person also holds thedirectorship and the membership of committees of theboard.

the company shall appoint a chief financial officer (cfo), a Headof internal audit (internal control and compliance) and a companysecretary (cs). the Board of directors should clearly definerespective roles, responsibilities and duties of the cfo, the Head ofinternal audit and the cs.

the cfo and the company secretary of the companies shallattend the meetings of the Board of directors.

Audit Committee

TitleConditionNo.

TitleConditionNo.

The pattern of shareholdings and name wise details disclosing the aggregate numberof shares:

In case of appointment/re-appointment of a Director the Company shall disclose the followinginformation to the Shareholders:

Chief Financial Officer (CFO), Head of Internal Audit and Company Secretary (CS)

Constitution of the Audit Committee

2014

24 25


appropriate column)


Remarks(if any)

3.2

3.3

(ii)

(iii)

(iv)

(v)

(vi)

(i)

(ii)

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

√

√

notapplicable

√

√

√

√

√

√

√

√

√

√

√

√

√

there was nosuch vacancy

created

the Board of directors shall appoint members of theaudit committee who shall be directors of the companyand shall include at least 1 (one) independent director.

all members of the audit committee should be“financially literate” and at least 1 (one) member shallhave accounting or related financial managementexperience.

when the term of service of the committee membersexpires or there is any circumstance causing anycommittee member to be unable to hold office untilexpiration of the term of service, thus making thenumber of the committee members to be lower than theprescribed number of 3 (three) persons, the Board ofdirectors shall appoint the new committee member(s)to fill up the vacancy(ies) immediately or not later than 1(one) month from the date of vacancy(ies) in thecommittee to ensure continuity of the performance ofwork of the audit committee.

the company secretary shall act as the secretary of thecommittee.

the quorum of the audit committee meeting shall notconstitute without at least 1 (one) independent director.

the Board of directors shall select 1 (one) member ofthe audit committee to be chairman of the auditcommittee, who shall be an independent director.

chairman of the audit committee shall remain present inthe annual General meeting (aGm).

oversee the financial reporting process.

monitor choice of accounting policies and principles.

monitor internal control risk management process.

oversee hiring and performance of external auditors

review along with the management, the annualfinancial statements before submission to the board forapproval.

review along with the management, the quarterly andhalf yearly financial statements before submission to theboard for approval.

review the adequacy of internal audit function.

review statement of significant related partytransactions submitted by the management.

review management letters/ letter of internal controlweakness issued by statutory auditors.


appropriate column)


Remarks(if any)

3.4

3.4.1

3.4.2

3.5

(x)

(i)

(ii)

(ii) a)

(ii) b)

(ii) c)

(ii) d)

notapplicable

√

notapplicable

notapplicable

notapplicable

notapplicable

notapplicable

√

when money is raised through initial public offering(ipo)/repeat public offering (rpo)/rights issue thecompany shall disclose to the audit committee aboutthe uses/applications of funds by major category(capital expenditure, sales and marketing expenses,working capital, etc), on a quarterly basis, as a part oftheir quarterly declaration of financial results. further,on an annual basis, the company shall prepare astatement of funds utilized for the purposes other thanthose stated in the offer document/prospectus.

the audit committee shall report on its activities to theBoard of directors.

report on conflicts of interests.

suspected or presumed fraud or irregularity or materialdefect in the internal control system.

suspected infringement of laws, including securitiesrelated laws, rules and regulations.

any other matter which shall be disclosed to the Boardof directors immediately.

The Audit Committee shall immediately report to the Board of Directors on the followingfindings, if any:-

TitleConditionNo.

TitleConditionNo.

Chairman of the Audit Committee

Role of Audit Committee

Reporting of the Audit Committee

Reporting to the Board of Directors

Reporting to the Shareholders and General Investors:

Reporting to the Authorities:

if the audit committee has reported to the Board of directors aboutanything which has material impact on the financial condition andresults of operation and has discussed with the Board of directorsand the management that any rectification is necessary and if theaudit committee finds that such rectification has beenunreasonably ignored, the audit committee shall report suchfinding to the commission, upon reporting of such matters to theBoard of directors for three times or completion of a period of 6(six) months from the date of first reporting to the Board ofdirectors, whichever is earlier

report on activities carried out by the audit committee, includingany report made to the Board of directors under condition 3.4.1 (ii)above during the year, shall be signed by the chairman of theaudit committee and disclosed in the annual report of the issuercompany.

2014

26


appropriate column)


Remarks(if any)

4.0

5.0

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(i)

(ii)

(iii)

(iv)

(v)

√

√

√

√

√

√

√

√

√

notapplicable

notapplicable

notapplicable

notapplicable

notapplicable

External /Statutory Auditors should not engage in the following services

Subsidiary Company


appropriate column)


Remarks(if any)

6.0

7.0

(i)

(i) a)

(i) b)

(ii)

(i)

(ii)

√

√

√

√

√

the certificateis enclosed in

this annualreport 2014

Duties of Chief Executive Officer (CEO) and Chief Financial Officer (CFO)

the ceo and cfo shall certify to the Board that:-

Reporting and Compliance of Corporate Governance

they have reviewed financial statements for the year and that to the best of their knowledge and belief:

these statements do not contain any materially untruestatement or omit any material fact or containstatements that might be misleading;

these statements together present a true and fair viewof the company’s affairs and are in compliance withexisting accounting standards and applicable laws.

there are, to the best of knowledge and belief, notransactions entered into by the company during theyear which are fraudulent, illegal or violation of thecompany’s code of conduct.

the company shall obtain a certificate from a practicingprofessional accountant/ secretary (chartered accountant/cost and management accountant/ chartered secretary)regarding compliance of conditions of corporateGovernance Guidelines of the commission and shall sendthe same to the shareholders along with the annual reporton a yearly basis.

the directors of the company shall state in the directors'report whether the company has complied with theseconditions.

27

TitleConditionNo.

TitleConditionNo.

appraisal or valuation services or fairness opinions.

financial information systems design andimplementation.

Book-keeping or other services related to theaccounting records or financial statements.

Broker-dealer services.

actuarial services.

internal audit services.

any other service that the audit committee determines.

no partner or employees of the external audit firms shallpossess any share of the company they audit at leastduring the tenure of their audit assignment of thatcompany.

audit/certification services on compliance of corporategovernance as required under clause (i) of condition no. 7

provisions relating to the composition of the Board ofdirectors of the holding company shall be madeapplicable to the composition of the Board of directorsof the subsidiary company.

at least 1 (one) independent director on the Board ofdirectors of the holding company shall be a director onthe Board of directors of the subsidiary company.

the minutes of the Board meeting of the subsidiarycompany shall be placed for review at the followingBoard meeting of the holding company.

the minutes of the respective Board meeting of theholding company shall state that they have reviewed theaffairs of the subsidiary company also.

the audit committee of the holding company shall alsoreview the financial statements, in particular theinvestments made by the subsidiary company.

2014

28 29

Audit Committee Report

the Board of directors of Bata shoe company (Bangladesh) limited has constituted an audit committee to supportthe Board in fulfilling its oversight responsibilities.

the audit committee meeting was held twice for the year 2014. the finance director, company secretary and theHead of internal audit were invitees to the audit committee meeting.

Purpose of the Audit Committeethe 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 main board on business risks, internal controls and compliance.the committee satisfies itself by means of suitable steps and appropriate information, that proper and satisfactoryinternal control system are in place to identify and contain business risks and the company’s business is conductedin a proper and financially appropriate manner.

Major Responsibilities of the Audit Committeein 2014, the audit committee reviewed its terms of reference in line with requirements of Bangladesh securities andexchange commission’s (Bsec) notification on corporate governance. the committee carried out its duties inaccordance with the terms of reference of the audit committee. some of the major responsibilities of the auditcommittee are as follows:

• review the annual, half-yearly and quarterly financial statements and other financial results, and uponits satisfaction of the review, recommend the same to the Board.

• review the adequacy and effectiveness of financial reporting process, internal control system, riskmanagement, auditing matters, and the company’s processes for monitoring compliance with laws andregulations and the codes of conduct.

• recommend appointment, termination and determination of audit fees for statutory auditors. considerthe scope of work, and oversee and evaluate the work performed by statutory auditors. review permittednon-audit services performed by statutory auditors.

• exercise its oversight of the work of internal audit department of the company. review the effectivenessof internal audit function including performance, structure, adequacy of resources, and compliance withprofessional standards. examine audit findings and material weaknesses and monitor implementation ofaudit 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, 2014.• considered and made recommendation to the Board on the appointment and remuneration of external

auditors, rahman rahman Haq., chartered accountants for the year 2015.• reviewed the management letter from external auditors for the year 2014 together with management’s

responses to the findings.• approved the internal audit plan for 2015, 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 timelycompletion of action plans.

• reviewed the activities of the compliance function, incidence reporting and actions, and the status ofenforcement 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.

Rashidul Hasanchairman, audit committee

Certificate on Compliance with Conditions of Corporate Governance Guidelines

to the Shareholders of Bata Shoe Company (Bangladesh) Limited

(issued under condition no. 7 (i) of corporate Governance Guidelines of “Bsec” vide notification no.

sec/cmrrcd/2006-158/134/admin/44 dated 07 august 2012)

we have examined the compliance with conditions of the corporate governance guidelines by Bata shoe company

(Bangladesh) limited (herein after referred to “the company”) for the year ended 31 december 2014. these

conditions of corporate governance were issued by the Bangladesh securities and exchange commission (Bsec)

vide its notification no. sec/cmrrcd/2006-158/134/admin/44 dated 07 august 2012 and sec/cmrrcd/2006-

158/147/admin/48 dated 21 July 2013.

those charged with governance and the management of the company is responsible for complying with the

conditions of corporate governance guidelines were issued by the Bangladesh securities and exchange

commission (Bsec). those charged with the governance of the company are also responsible for stating in the

director's report whether the company has complied with the conditions of corporate governance guidelines.

our responsibility is to provide a certificate about whether the company is in compliance with the said conditions of

corporate governance based on our examination. our examination for the purpose of issuing this certificate was

limited to the procedures including implementation thereof as adopted by the company for ensuring the compliance

of the conditions of corporate governance and correct reporting of the status of the compliance on the attached

statement on the basis of evidence gathered and representation received. it is neither an audit nor an expression

of opinion on the financial statement of the company.

to the best of our information and according to the explanations provided to us by the company, we certify that, the

company has complied for the year ended 31 december 2014 with the conditions of corporate governance

stipulated in the above mentioned guidelines issued by Bsec dated 07 august 2012.

arun kumer kundu, acamanaGinG partner

dated, dHaka; ARUN & ANJAN28 april, 2015 CHARTERED ACCOUNTANTS

Arun & AnjanC H A R T E R E D A C C O U N TA N T S

office: House # 18 (4th floor), road # 16 (old-27), dhanmondi, dhaka – 1209. tel: 9104704, cell: 01819 401724, e-mail: [email protected]

independent auditors' report to the shareholders ofBata shoe company (Bangladesh) limited

Report on the Financial Statements

we have audited the accompanying financial statements of Bata shoe company (Bangladesh) limited ("the company") whichcomprise the statement of financial position as at 31 december 2014, and the statement of profit or loss and other comprehensiveincome, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significantaccounting 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 Bangladeshfinancial reporting standards, and for such internal control as management determines is necessary to enable the preparation offinancial 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 accordancewith Bangladesh standards on auditing. those standards require that we comply with ethical requirements and plan and performthe 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 financialstatements, whether due to fraud or error. in making those risk assessments, we consider internal control relevant to the entity’spreparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, 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 2014, and of its financial performance and its cash flows for the year then ended in accordance withBangladesh financial reporting standards.

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 thepurpose 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 ourexamination of those books;

c) the statement of financial position and statement of profit or loss and other comprehensive income dealt with by the report arein agreement with the books of account; and

d) the expenditure incurred was for the purposes of the company’s business.

dhaka, 27 april 2015 Hussain Farhad & Co.Chartered Accountants

31

For every step

30

2014Bata Shoe Company (Bangladesh) Limitedstatement of financial position as at 31 December 2014

Bata Shoe Company (Bangladesh) Limitedstatement of profit or loss and other comprehensive income

for the year ended 31 December 2014

32 33

Notes 2014 2013Taka Taka

Assets

property, plant and equipment 4 998,104,774 932,544,605 capital work in progress 5 59,367,881 - prepayments of rent 9.1 136,911,904 113,965,000

Total non-current assets 1,194,384,559 1,046,509,605

inventories 7 2,159,099,409 2,167,843,253 accounts receivable 8 455,472,117 435,657,233 advances, deposits and prepayments 9 798,868,138 702,987,654 cash and cash equivalents 10 292,396,800 257,439,710

Total current assets 3,705,836,464 3,563,927,850

Total assets 4,900,221,023 4,610,437,455

Total equity attributable to equity holders of the company

share capital 11 136,800,000 136,800,000 reserves and surplus 12 2,434,223,893 2,119,884,143

Total equity 2,571,023,893 2,256,684,143

Liabilities

deferred liability 13 162,343,000 134,506,744 deferred tax liability 6 750,000 14,500,000

Total non-current liabilities 163,093,000 149,006,744

creditors for goods 14 526,075,948 460,953,222 creditors for expenses 15 346,800,443 443,624,893 creditors for other finance 16 262,185,527 273,340,269 accrued expenses 17 382,765,944 375,921,784 provision for tax 18 579,559,130 586,559,130 unclaimed dividend 68,717,138 64,347,270

Total current liabilities 2,166,104,130 2,204,746,568

Total liabilities 2,329,197,130 2,353,753,312

Total equity and liabilities 4,900,221,023 4,610,437,455

The annexed notes 1 to 40 form an integral part of these financial statements.

Chitpan Kanhasiri Rashidul Hasan Md. Hashim Rezamanaging director director company secretary

& finance manager

as per our report of same date.


Notes 2014 2013Taka Taka

Revenue 19 8,076,995,037 7,878,975,170 cost of sales 20 (4,945,486,549) (4,857,762,141)

Gross profit 3,131,508,488 3,021,213,029

exchange gain/(loss) 6,886,918 4,351,351 other income 21 20,221,586 18,424,860 administration, selling and distribution expenses 22 (2,096,017,729) (1,837,320,706)

Profit from operating activities 1,062,599,263 1,206,668,534

finance income 23 13,846,600 13,361,966 finance expenses 24 (4,951,020) (6,047,801)

Net finance income 8,895,580 7,314,165 contribution to workers' profit participation fund 25 (53,574,742) (60,699,135)

Profit before income tax 29 1,017,920,101 1,153,283,564

income tax expense:current tax 18 331,000,000 338,000,000 deferred tax 6 (13,750,000) 2,200,000

317,250,000 340,200,000

Profit for the year 700,670,101 813,083,564

Basic earnings per share (par value TK 10) 32 51.22 59.44

The annexed notes 1 to 40 form an integral part of these financial statements.

Chitpan Kanhasiri Rashidul Hasan Md. Hashim Rezamanaging director director company secretary

& finance manager

as per our report of same date.


2014Bata Shoe Company (Bangladesh) Limitedstatement of cash flows for the year ended 31 December 2014

34 35

Bat

a S

ho

e C

om

pan

y (B

ang

lad

esh

) L

imit

eds

tate

men

t of c

hang

es in

equ

ity fo

r th

e y

ear

ended 3

1 D

ecem

ber

2014

Par

ticu

lars

Sh

are

Res

erve

on

No

n-

Gen

eral

Ret

ain

edTo

tal

cap

ital

reva

luat

ion

dis

trib

uta

ble

rese

rve

earn

ing

seq

uit

yo

f la

nd

spec

ial

rese

rve

Taka

Ta

kaTa

kaTa

ka

Taka

Ta

ka

Bal

ance

as

at 1

Jan

uar

y 20

1313

6,80

0,00

0 60

,631

,183

99

8,62

0 48

,863

,000

1,

606,

707,

776

1,85

4,00

0,57

9

Tota

l co

mp

reh

ensi

ve i

nco

me

for

2013

pro

fit fo

r th

e ye

ar-

-

-

-

81

3,08

3,56

4 81

3,08

3,56

4

Tran

sact

ion

s w

ith

th

e sh

areh

old

ers

fin

al d

ivid

end

for

the

year

201

2-

-

-

-

(1

43,6

40,0

00)

(143

,640

,000

)

inte

rim d

ivid

end

for

the

year

201

3-

-

-

-

(2

66,7

60,0

00)

(266

,760

,000

)

Bal

ance

as

at 3

1 D

ecem

ber

201

313

6,80

0,00

0 60

,631

,183

99

8,62

0 48

,863

,000

2,

009,

391,

340

2,25

6,68

4,14

3

Tota

l co

mp

reh

ensi

ve i

nco

me

for

2014

pro

fit fo

r th

e ye

ar-

-

-

-

70

0,67

0,10

1 70

0,67

0,10

1

ear

lier

year

tax

adju

stm

ent

-

-

-

-

(3,2

90,3

51)

(3,2

90,3

51)

Tran

sact

ion

s w

ith

th

e sh

areh

old

ers

fin

al d

ivid

end

for

the

year

201

3-

-

-

-

(1

43,6

40,0

00)

(143

,640

,000

)

inte

rim d

ivid

end

for

the

year

201

4-

-

-

-

(2

39,4

00,0

00)

(239

,400

,000

)

Bal

ance

as

at 3

1 D

ecem

ber

201

413

6,80

0,00

0 60

,631

,183

99

8,62

0 48

,863

,000

2,

323,

731,

090

2,57

1,02

3,89

3 2014 2013Taka Taka

Cash flows from operating activities

cash receipts from customers 8,035,999,651 7,703,564,659

cash payments to and on behalf of employees (1,299,182,104) (1,250,878,202)

cash payments for deferred liabilities (10,350,777) (23,906,443)

cash payments to suppliers and contractors for goods and services (5,718,535,019) (5,568,042,699)

Cash generated from operating activities 1,007,931,751 860,737,315

interest received from std account 6,117,072 5,192,660

interest paid (4,951,020) (6,047,801)

income tax paid (371,925,383) (296,401,727)

Net cash from operating activities 637,172,420 563,480,447

Cash flows from investing activities

interest received from fdr 7,123,001 8,169,306

proceed from sales of property, plant and equipment 897,655 2,945,866

acquisition of property, plant and equipment (179,084,891) (150,580,289)

payment for capital work in progress (59,367,881) -

Net cash used in investing activities (230,432,116) (139,465,117)

Cash flows from financing activities

dividend paid (378,670,132) (404,386,141)

Net cash used in financing activities (378,670,132) (404,386,141)

Net cash increase/(decrease) in cash and cash equivalents 28,070,172 19,629,189

Cash and cash equivalents as at 1 January 257,439,710 233,459,170

effect of exchange rate fluctuations on cash held 6,886,918 4,351,351

Cash and cash equivalents as at 31 December (Note 10) 292,396,800 257,439,710

2014Bata Shoe Company (Bangladesh) Limitednotes to the financial statements as at and for the year ended 31 December 2014

36 37

1. Reporting entity

Bata shoe company (Bangladesh) limited (hereinafter referred to as "Bata"/"the company") is a public companylimited by shares. it was incorporated in Bangladesh in 1972 under the companies act 1913. the address of theregistered office of the company is tongi, Gazipur, Bangladesh. the company is one of the operating companies ofworldwide 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 thecompany covers one year from 1 January to 31 december.

the company is mainly engaged in manufacturing and marketing of leather, rubber, plastic, canvas footwear, hosieryand accessories items. 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 andregulations.

these financial statements were authorised for issue by the Board of directors at its 221st meeting held on 27 april2015.

2.2 Basis of measurement

these financial statements have been prepared on historical cost basis except for land at tongi in the statement offinancial 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 presentationalcurrency of the company. the amounts in these financial statements have been rounded off to the nearest takaexcept for the amounts presented in revenue in note 19, segment reporting in note 35, related party transactions innote 36.1 & 36.2 and operating lease payments disclosure in note 37 which have been rounded off to the nearestthousand taka and credit facilities available as at 31 december in note 10.2 have been rounded off to the nearestmillion 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 arerecognised 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 theamounts recognised in the financial statements is included in the following notes:

note 4 property, plant & equipment

note 6 deferred tax assets / (liabilities)

note 7 inventories

note 13 deferred liability

note 18 provision for tax

2014

38 39

3.2.1.3.1 Accounts receivables

accounts receivables represent the amounts due from institutional customers, export customers etc. accountsreceivables are stated net off bad debts provision.

provision for doubtful debts is made based on the company policy. Bad debts are written off on consideration ofthe 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 depositshaving maturity of three months or less which are available for use by the company without any restriction. Bankoverdrafts that are repayable on demand and form an integral part of the company’s cash management areincluded 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 orare not classified in any of the above categories of financial assets. available-for-sale financial assets arerecognised 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 currencydifferences on available-for-sale debt instruments, are recognised in other comprehensive income and presentedin the fair value reserve in equity. when an investment is derecognised, the gain or loss accumulated in equity isreclassified 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 partyto the contractual provisions of the instrument.

the company derecognises a financial liability when its contractual obligations are discharged, cancelled orexpired. 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 effectiveinterest 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 andaccumulated impairment losses. land is measured at amount revalued in 1979.

cost includes expenditures that are directly attributable to the acquisition of assets. the cost of self-constructedassets 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 ofdismantling 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 asseparate 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 thenet 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 withthe expenditure will flow to the company. ongoing repairs and maintenance is expensed as incurred.

3. Significant accounting policies

the accounting policies set out below have been applied consistently to all periods presented in these financialstatements, and have been applied consistently, except as explained in note 3.3.3 which addresses review ofuseful lives of property, plant and equipment by management during the year 2011.

3.1 Foreign currency

transactions in foreign currencies are translated to the respective functional currencies of the company atexchange rates on the date of the transactions. monetary assets and liabilities denominated in foreign currencieson 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 areretranslated to the functional currency at the exchange rate on the date that the fair value was determined. non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchangerate on 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 orequity 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 otherfinancial assets are recognised initially on the trade date, which is the date the company becomes a party to thecontractual 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 whichsubstantially 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 orto realise the asset and settle the liability simultaneously.

the company classifies non-derivative financial assets into the following categories: financial assets at fair valuethrough profit or loss, held-to-maturity financial assets, loans and receivables and available for- sale financialassets.

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 isdesignated 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 takesinto 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 areclassified as held to maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directlyattributable transaction costs. subsequent to initial recognition, held-to-maturity financial assets are measured atamortised 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 activemarket. 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 effectiveinterest method, less any impairment losses.

2014

40 41

3.6 Share capital

paid up capital represents total amount contributed by the shareholders and bonus shares issued by the companyto the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time totime and are entitled to vote at shareholders' meetings. in the event of a winding up of the company, ordinaryshareholders rank after all other shareholders and creditors and are fully entitled to any residual proceeds ofliquidation.

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 aseparate entity and has no legal or constructive obligation to pay further amounts. obligations for contributions todefined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during whichrelated 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 adefined 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 netobligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of futurebenefit 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 theemployees other than managerial staff. Gratuity payable at the end of each year has been determined on the basisof existing rules and regulations of the company. actuarial valuation of the gratuity fund is carried out by aprofessional actuary.

Short-term employee benefits

short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the relatedservice is provided. a liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the company has a present legal or constructive obligation to pay this amount as a result of pastservice 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 thatcan reliably be estimated, and it is probable that an outflow of economic benefits will be required to settle theobligation.

3.9 Revenue

revenue from the sale of goods in the course of ordinary activities is measured at fair value of the considerationreceived 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 havebeen transferred to the customer, recovery of the consideration is probable, the associated costs and possible returnof goods can be estimated reliably, there is no continuing management involvement with the goods, and the amountof 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 thelease. lease incentives received are recognised as an integral part of the total lease expenses, over the term of thelease.at inception of an arrangement, the company determines whether such an arrangement is or contains a lease. thiswill be the case if the following two criteria are met:- the fulfillment 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).

3.3.3 Depreciation

items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over the estimateduseful 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 ofacquisition, 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:

Year Year2014 2013

Building 40 40

plant and machinery 13.33 13.33

motor vehicles 5 5

furniture, fixtures and equipment 4-13.33 4-13.33

depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate. the useful lives and depreciation method of certain type of property, plant and equipment wererevised 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 inprogress 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 ofinventories 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 productionoverheads based on normal operating capacity.

net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion 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 determinewhether there is objective evidence that it is impaired. a financial asset is impaired if objective evidence ofimpairment as a result of one or more events that occurred after the initial recognition of the asset, and that lossevents 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 specificasset and collective level. an impairment loss in respect of a financial asset measured at amortised cost iscalculated as the difference between its carrying amount and the present value of the estimated future cash flowsdiscounted at the asset’s original effective interest rate.

3.5.1.2 Available-for-sale financial assets

impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulatedin the fair value reserve in equity to profit or loss. the cumulative loss that is reclassified from equity to profit orloss is the difference between the acquisition cost, net of any principle repayment and amortisation, and thecurrent 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, arereviewed at each reporting date to determine whether there is any indication of impairment. if any such indicationexists then the recoverable amount of the asset is estimated. an impairment loss is recognised if the carryingamount of an asset or its related cash-generating unit (cGu) exceeds its estimated recoverable amount.

2014

42 43

4. Property, plant and equipment

4(a) Year 2014

cost/valuation depreciation

disposals/ adjustment written down particulars as at additions transfers as at as at charged for as at value as at

1 January during during 31 december 1 January for disposals/ 31 december 31 december 2014 the year the year 2014 2014 the year transfers 2014 2014

taka taka taka taka taka taka taka taka taka

land 1 86,057,856 - - 86,057,856 - - - - 86,057,856

Building 2 377,877,942 6,201,709 - 384,079,651 181,131,213 7,915,712 - 189,046,925 195,032,726

plant and machinery 738,770,886 16,119,562 - 754,890,448 442,684,864 33,102,947 - 475,787,811 279,102,637

motor vehicles 25,008,751 - (4,257,655) 20,751,096 21,376,683 1,408,389 (4,257,655) 18,527,417 2,223,679

furniture, fixtures and equipment 611,965,123 156,763,620 (2,307,471) 766,421,272 261,943,193 70,788,228 (1,998,025) 330,733,396 435,687,876

1,839,680,558 179,084,891 (6,565,126) 2,012,200,323 907,135,953 113,215,276 (6,255,680) 1,014,095,549 998,104,774

4(b) Year 2013

cost/valuation depreciation

disposals/ adjustment written down particulars as at additions transfers as at as at charged for as at value as at

1 January during during 31 december 1 January for disposals/ 31 december 31 december 2013 the year the year 2013 2013 the year transfers 2013 2013

taka taka taka taka taka taka taka taka taka

land 1 86,057,856 - - 86,057,856 - - - - 86,057,856

Building 2 376,199,684 1,678,258 - 377,877,942 173,370,544 7,760,669 - 181,131,213 196,746,729

plant and machinery 715,581,267 34,001,788 (10,812,169) 738,770,886 420,509,650 32,483,177 (10,307,963) 442,684,864 296,086,022

motor vehicles 25,008,751 - - 25,008,751 19,648,227 1,728,456 - 21,376,683 3,632,068

furniture, fixtures and equipment 501,033,308 116,959,715 (6,027,900) 611,965,123 210,026,312 57,719,700 (5,802,819) 261,943,193 350,021,930

1,703,880,866 152,639,761 (16,840,069) 1,839,680,558 823,554,733 99,692,002 (16,110,782) 907,135,953 932,544,605

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:2014 2013Taka Taka

cost of goods manufactured (note 20.1) 32,565,175 32,168,316

administration, selling and distribution expenses (note 22) 80,650,101 67,523,686

113,215,276 99,692,002

4.2 Disposal of property, plant and equipment

original accumulated Book sales mode ofparticulars cost depreciation value value disposal purchaser

taka taka taka taka

machinery 4,257,655 4,257,655 - 486,238 auction various parties

computer 414,086 282,781 131,305 282,624 negotiations insurance claim / various parties

furniture and

equipment in shops 1,893,385 1,715,244 178,141 128,793 auction various parties

6,565,126 6,255,680 309,446 897,655

3.11 Finance income and expensesfinance income comprises interest income on funds invested, interest on shop managers account held with thecompany and foreign exchange gain on translation of foreign currency that are recognised in profit or loss. interestincome is recognised on accrual basis.finance expense comprises interest expense on overdraft, finance lease and interest on shop managers accountheld with the company and foreign exchange loss on translation of foreign currency. all finance expenses arerecognised in the statement of comprehensive income.

3.12 Taxincome tax expense comprises current and deferred tax. income tax expense is recognised in the statement ofcomprehensive income except to the extent that it relates to items recognised directly in equity, in which case it isrecognised in equity.

3.12.1 Current taxcurrent tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantivelyenacted 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 is 27.50 %. it enjoys 10% rebate on income tax payablefor declaring dividend at more than 30% of paid up capital.

3.12.2 Deferred taxdeferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilitiesfor financial reporting purposes and the amounts used for taxation purposes. deferred tax is measured at the taxrates that are expected to be applied to the temporary differences when they are reversed, based on the laws thathave been enacted or substantively enacted by the reporting date. deferred tax assets and liabilities are offset ifthere is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes leviedby 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 theextent that it is probable that future taxable profits will be available against which they can be utilised. deferred taxassets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the relatedtax benefit will be realised.

3.13 Earnings per sharethe company presents basic and diluted (when dilution is applicable) earnings per share (eps) for its ordinaryshares. Basic eps is calculated by dividing the profit or loss attributable to ordinary shareholders of the companywith the weighted average number of ordinary shares outstanding during the period, adjusted for the effect of changein number of shares for bonus issue, share split and reverse split. diluted eps is determined by adjusting the profitor loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, forthe effects of all dilutive potential ordinary shares. However, dilution of eps is not applicable for these financialstatements as there was no dilutive potential ordinary shares during the relevant periods.

3.14 Segment reportingan operating segment is a component of the company that engages in business activities from which it may earnrevenues and incur expenses, including revenues and expenses that relate to transactions with any of thecompany’s other components. all operating segments’ operating results are reviewed regularly by the company’smanagement to make decisions about resources to be allocated to the segment and to assess its performance, andfor which discrete financial information is available.segment results that are reported to the management include items directly attributable to a segment as well asthose that can be allocated on a reasonable basis.

3.15 Duty drawbackduty 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 rawmaterials 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 Bangladeshlabour act 2006".

3.18 Events after the reporting periodevents after the reporting period which provide additional information about the company's position at the date ofstatement of financial position or those that indicate the going concern assumption is not appropriate are reflected inthe financial statements. events after the reporting period that are not adjusting events are disclosed in the noteswhen material.

2014

44 45

carrying amount taxable/on the date of (deductible)statement of temporary

financial position tax base difference

Taka Taka Taka

(b) As at 31 December 2013property, plant and equipment (excluding land and certain motor vehicles) 845,586,872 629,033,786 216,553,086

provision for staff gratuity (net of payment) (134,506,744) - (134,506,744)reserve against personal accounts (24,106,081) - (24,106,081)net taxable temporary difference 57,940,261

deferred tax liability (14,500,000)

2014 2013Taka Taka

7. Inventories

raw materials 349,157,694 414,102,307

work in process 63,491,401 43,306,956

finished goods 1,746,450,314 1,710,433,990

2,159,099,409 2,167,843,253

8. Accounts receivable

trade (unsecured) - considered good export customers - non Bso companies 1,458,871 14,961,782

export customers - Bso companies 8,053,327 5,928,296

receivables from dealers 446,760,746 375,027,081

receivables from institutional sale 18,943,582 38,303,981

475,216,526 434,221,140

others (unsecured) - considered good

interest receivable 606,527 -

vat claims 586,664 249,379

import claim receivable 36,094 -

Joint venture commission receivable - 589,838

duty drawback claim receivable - 596,876

1,229,285 1,436,093

total accounts receivable 476,445,811 435,657,233

provision for doubtful debts (note: 8.1) (20,973,694) -

455,472,117 435,657,233

8.1 Provision for doubtful debts

Balance as at 1 January - -

provision made during the year 20,973,694 -

Balance as at 31 december 20,973,694 -

4.3 C&F value of imported capital assets

the import of capital assets by the company at c&f value was as follows:

capital assets foreign currency local currency2014 2013 2014 2013

(taka) (taka) plant and machinery and usd 1,014,479 139,165 78,746,051 10,968,163 furniture and fixtures in shops GBp - 44,447 - 5,502,514

eur - 123,000 - 13,265,796 1,014,479 306,612 78,746,051 29,736,473

2014 2013Taka Taka

5. Capital work in progress

Balance as at 1 January - 2,059,472

add: addition during the year 59,367,881 36,749,879

59,367,881 38,809,351

less: transfer to property plant & equipment during the year - 38,809,351

Balance as at 31 december (note 5.1) 59,367,881 -

5.1 Capital work in progress represent as follows

plant and machinery 56,203,366 -

furniture for different stores 3,164,515 -

59,367,881 -

6. Deferred tax assets / ( liabilities)

deferred tax assets/(liability) is arrived at as follows:

Balance as at 1 January (14,500,000) (12,300,000)

addition/reduction during the year 13,750,000 (2,200,000)

Balance as at 31 december (750,000) (14,500,000)

carrying amount taxable/on the date of (deductible)statement of temporary

financial position tax base difference

Taka Taka Taka

(a) As at 31 December 2014

property, plant and equipment (excluding land and certain motor vehicles)

911,481,709 697,795,195 213,686,514

provision for staff gratuity (note 13) (162,343,000) - (162,343,000)provision for bad and doubtful debts (note 8.1) (20,973,694) - (20,973,694)reserve against personal accounts (27,467,293) - (27,467,293)net taxable temporary difference 2,902,527

deferred tax liability (750,000)

2014

46 47

10. Cash and cash equivalents

2014 2013Taka Taka

cash balances:

on hand 1,817 16,325

in transit:

from stores 33,107,436 35,328,276

from depots 37,767,000 490,000

from institutions 4,986,350 47,403,691

Balances with banks in:

current accounts

in taka (192,689,653) (109,532,576)

in usd 2,885,844 19,420,791

fixed deposits 200,000,000 6,000,000

short term deposits 206,338,006 258,313,203

216,534,197 174,201,418

292,396,800 257,439,710

10.1 Book overdraftsthe current accounts include book overdrafts (i.e. cheque outstanding in excess of deposits) from eastern Banklimited and HsBc as follows:

2014 2013Taka Taka

eastern Bank limited 200,021,799 122,976,414

HsBc 1,131,093 3,569,506

201,152,892 126,545,920

10.2 Credit facilities available as at 31 Decemberthe company enjoys both funded and non funded short term working capital facilities with two banks. the non fundedfacilities include letters of credit (lc), letters of Guarantee, packing credit, ldBp, fdBp and foreign exchangeforward contracts (fx forward). the funded facilities include overdraft facility, short term loan and import loan. theaggregate amount of available short term working capital facilities is tk 1,000 million (2013: tk 1,000 million) of whichnon funded limit is tk 700 million (2013: tk 700 million) and funded limit is tk 300 million (2013: tk 300 million).

details of the total facilities are stated below:

(a) HSBC Bank

i) l/c facility - tk 300 million (2013: tk 300 million).ii) overdraft / short term loan facility - tk 100 million (2013: tk 100 million).

(b) EBL Bank

i) l/c facility - tk 394 million (2013: tk 394 million).ii) overdraft facility / short term loan facility - tk 200 million (2013: tk 200 million).iii) letters of Guarantee - tk. 6 million (2013: tk 6 million)

2014 2013(Tk in million) (Tk in million)

total credit facilities available 1,000 1,000 credit facilities availed 110 248

accounts receivable are aged as below:2014 2013

Below Over Below Oversix months six months six months six months

Taka Taka Taka Taka

export customers - non Bso companies 1,458,871 - 14,961,782 -

export customers - Bso companies 8,053,327 - 5,928,296 -

receivables from dealers 426,052,762 20,707,984 375,027,081 -

receivables from institutional sale 18,677,872 265,710 38,303,981 -

interest receivable 606,527 - - -

vat claims 586,664 - 249,379 -

Joint venture commission receivable 36,094 - 589,838 -

duty draw back claim receivable - - 596,876 -

455,472,117 20,973,694 435,657,233 -

8.2 Debts due by directors, officers and other related parties

as at 31 december 2014, accounts receivables does not include any amount due by:

(a) 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.

2014 2013Taka Taka

9. Advances, deposits and prepayments

advances (considered good) to:

agents and employees 15,378,295 2,729,173

suppliers against materials and services 6,695,559 8,931,150

22,073,854 11,660,323

advance income tax 179,048,804 148,413,771

security and other deposits 485,239,534 441,512,793

prepayments to landlords (current portion - note 9.1) 112,505,946 101,400,767

798,868,138 702,987,654

9.1 Prepayments of rent

prepayments to landlords 249,417,850 215,365,767

less: current portion (note 9) 112,505,946 101,400,767

non-current portion 136,911,904 113,965,000

9.2 Loans and advances to directors, officers and other related parties

other than those mentioned in the 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

(c) companies under the same management.

2014

48 49

12. Reserves and surplus

2014 2013Taka Taka

reserve on revaluation of land 60,631,183 60,631,183 non-distributable special reserve (note 12.1) 998,620 998,620 General reserve 48,863,000 48,863,000 unappropriated profit (note 12.2) 2,323,731,090 2,009,391,340

2,434,223,893 2,119,884,143

12.1 Non-distributable special reserve

this represents 90% of the cumulative post-tax profit in respect of certain categories of income up to 1992 as definedand directed by Bangladesh Bank. since 1993, the requirement for continuing to create such special reserve isapplicable only to the profit on sale of immovable assets such as land, buildings, etc.

12.2 Unappropriated profit

2014 2013Taka Taka

Balance as at 1 January 2,009,391,340 1,606,707,776 profit for the year 700,670,101 813,083,564 earlier year tax adjustment (3,290,351) - interim dividend (239,400,000) (266,760,000)final dividend (143,640,000) (143,640,000)

2,323,731,090 2,009,391,340

13. Deferred liabilityBalance as at 1 January 134,506,744 123,817,664 add: provision made / (reversed) during the year 38,142,033 34,595,523

172,648,777 158,413,187 less: paid during the year 10,305,777 23,906,443 Balance as at 31 december 162,343,000 134,506,744

deferred liability represents provision for staff gratuity up to 31 december 2014.

14. Creditors for goodspayable to local suppliers 508,452,080 450,535,227 payable to Bso companies 17,623,868 10,417,995

526,075,948 460,953,222

15. Creditors for expensespayable to local suppliers 74,952,545 43,945,078 payable to Bso companies 271,847,898 399,679,815

346,800,443 443,624,893

16. Creditors for other financeworkers' profit participation fund (note 25) 53,574,742 60,699,135 personal accounts of employees and agents 78,983,164 77,488,548 security and other deposits 25,544,500 24,794,500 provident fund 9,168,418 6,983,994 tax deducted at source 47,441,190 60,933,617 pension fund 1,942,427 1,992,092 vat deducted at source 2,972,806 5,318,418 salary and wages payable 21,321,732 20,469,098 others 21,236,548 14,660,867

262,185,527 273,340,269

11. Share capital

2014 2013Taka Taka

authorised:

20,000,000 ordinary shares of tk 10 each 200,000,000 200,000,000

issued, subscribed and paid up:

2,850,723 ordinary shares of tk 10 each issued for cash 28,507,230 28,507,230

10,829,277 ordinary shares (including 7,202,400 bonus shares)

of tk 10 each issued for consideration other than cash 108,292,770 108,292,770

136,800,000 136,800,000

the shares are listed both in the dhaka stock exchange limited and chittagong stock exchange limited and quotedat tk 1,172.10 (2013: tk 690.00) and tk 1,143.80 (2013: tk 691.00) per share at 31 december 2014 respectively.

percentage of shareholdings :

2014 2013

% Taka % Taka

Bafin (nederland) B.v 70.00 95,760,000 70.00 95,760,000

non-resident shareholders 8.05 11,012,540 7.47 10,216,680

local shareholders 21.95 30,027,460 22.53 30,823,320

100.00 136,800,000 100.00 136,800,000

classification of shareholders by range:

Shareholder's range Number of shareholders Number of shares

2014 2013 2014 2013

less than 501 shares 5,195 5,562 683,221 683,221

501 to 5,000 shares 375 432 653,626 653,626

5,001 to 10,000 shares 24 38 277,540 277,540

10,001 to 20,000 shares 27 21 310,597 310,597

20,001 to 30,000 shares 11 5 122,768 122,768

30,001 to 40,000 shares 6 6 212,500 212,500

40,001 to 50,000 shares 1 3 143,100 143,100

50,001 to 100,000 shares 2 4 280,500 280,500

100,001 to 1,000,000 shares 7 4 1,420,148 1,420,148

over 1,000,000 shares 1 1 9,576,000 9,576,000

5,649 6,076 13,680,000 13,680,000

2014

50 51

20. Cost of sales2014 2013Taka Taka

stock of finished goods as at 1 January 1,710,433,990 1,393,434,546 add: cost of goods manufactured (note 20.1) 3,795,906,908 4,160,006,319

finished goods purchased 1,185,595,965 1,014,755,266 cost of finished goods available for sale 6,691,936,863 6,568,196,131 less: stock of finished goods as at 31 december 1,746,450,314 1,710,433,990

4,945,486,549 4,857,762,141

the opening and closing stocks of goods produced are shown below:

Figures in '000 pairs

Closing Opening

stock stock

shoes 4,923 5,812

20.1 Cost of goods manufactured2014 2013Taka Taka

cost of materials consumed (note 20.1.1) 2,908,608,450 3,175,668,229

direct wages 539,920,622 608,160,128 prime cost 3,448,529,072 3,783,828,357

manufacturing overhead:

remuneration to employees 171,410,278 166,539,121 Gas, water and electricity 52,694,243 53,987,687 repairs and maintenance (note 20.1.2) 64,774,558 61,780,700 insurance 7,612,131 6,628,127 uniform for workers - 1,295,831 Health and other welfare expenses 24,048,092 19,461,945 travelling 7,020,354 7,272,112 postage 1,927,520 2,248,952 freight and transport - - stationery 2,355,905 2,200,109 entertainment 3,154,025 3,912,495 depreciation (note 4.1) 32,565,175 32,168,316

367,562,281 357,495,395 cost of production 3,816,091,353 4,141,323,752

difference in work in process:

work in process as at 1 January 43,306,956 61,989,523

work in process as at 31 december 63,491,401 43,306,956

(20,184,445) 18,682,567

cost of goods manufactured 3,795,906,908 4,160,006,319

17. Accrued expenses

2014 2013Taka Taka

Bonus 63,280,000 77,190,000 utility 10,958,000 9,320,000 legal & audit fee 2,418,050 1,681,500 royalty 23,043,028 16,222,717 Joint venture commission 8,453,726 9,953,699 other accrued liabilities 274,613,140 261,553,868

382,765,944 375,921,784

18. Provision for tax

current year 331,000,000 338,000,000 earlier years (net of advance tax) 248,559,130 248,559,130

579,559,130 586,559,130

18.1 Reconciliation of effective tax2014 2013

% Taka % Taka

profit for the year 700,670,101 813,083,564

total income tax expense 317,250,000 340,200,000

profit excluding income tax 1,017,920,101 1,153,283,564

factors affecting the tax charge for current period:

income tax using the company’s domestic tax rate 27.50% 279,928,028 27.50% 317,152,980

non-deductible expenses 8.74% 88,931,627 5.22% 60,233,055

tax exempt income -0.20% (2,000,995) -0.18% (2,033,809)

tax incentives -3.60% (36,685,866) -3.25% (37,447,238)

round off adjustment 0.07% 699,046 0.01% 158,298

under/(over) provided in prior year -1.34% (13,621,840) 0.19% 2,136,714

31.17% 317,250,000 29.50% 340,200,000

19. Revenue

Unit 2014 2013

Quantity Amount Quantity Amount

in '000 '000 Taka in '000 '000 Taka

local

shoes pair 29,050 7,673,652 30,885 7,536,145

Hosiery & accessories 313,467 255,830

export 89,876 87,000

8,076,995 7,878,975

2014

52 53

21. Other income

2014 2013Notes Taka Taka

Gain /(loss) on disposal of property, plant and equipment 588,209 2,216,579

discount for early payment 19,633,377 16,208,281

20,221,586 18,424,860

22. Administration, selling and distribution expenses

remuneration to employees 527,535,810 432,844,696

Health and other welfare expenses 13,780,529 11,447,544

travelling expenses 77,962,266 64,177,638

Bank charges 1,603,264 1,518,053

repairs and maintenance 70,465,915 67,779,048

stationery 17,982,488 18,859,686

postage, telegram and telephone 10,406,046 10,591,968

entertainment expenses 16,370,347 19,044,746

subscription and donation 1,653,134 1,175,134

advertisement 34,003,739 38,701,217

rent, rates and taxes 385,356,807 308,222,099

General charges 22.1 51,479,092 20,176,439

directors' fees 104,000 98,000

auditors' fees 546,250 517,500

legal and other professional fees 22.2 6,925,960 5,534,136

insurance 5,881,058 4,405,721

land revenue 999,786 486,191

freight and transport 72,028,955 69,974,432

packing expenses 80,936,766 65,782,437

commission 22.3 240,690,360 259,626,584

royalty on Hush puppies brand 22.4 13,592,913 11,220,757

royalty on dr. scholl brand 22.4 4,385,579 5,001,960

royalty on naturalizer Brand 22.4 434,965 -

Global footwear services fees 22.4 131,340,405 117,443,066

trade mark licence fees 22.4 171,167,152 167,796,620

it fees 9,882,726 7,333,587

electricity 67,851,316 60,037,761

depreciation 4.1 80,650,101 67,523,686

2,096,017,729 1,837,320,706

22.1 General charges

General charges comprises of provision for bad debt tk 20,973,694 (note: 8.1).

22.2 Legal and other professional fees

legal and other professional fees include fees of tk 1,134,700 (2013: tk 1,740,300) to the audit firms in connection

with global reporting, tax certification and services regarding assessments/appeals and advisory services.20.1

.1C

ost

of

mat

eria

ls c

on

sum

ed

ope

ning

sto

ck

pur

chas

ec

losi

ng s

tock

c

onsu

mpt

ion

des

crip

tion

valu

eva

lue

valu

eva

lue

(tak

a)(t

aka)

(t

aka)

(tak

a)

impo

rted

126,

583,

059

838,

960,

194

108,

958,

065

856,

585,

188

loca

l pur

chas

e26

4,44

5,01

1 2,

009,

801,

074

222,

222,

823

2,05

2,02

3,26

2

2014

39

1,02

8,07

0 2,

848,

761,

268

331,

180,

888

2,90

8,60

8,45

0

2013

41

9,36

7,68

6 3,

147,

328,

613

391,

028,

070

3,17

5,66

8,22

9

dut

y dr

awba

ck o

f tk.

1,3

53,3

08 c

laim

ed o

n ex

port

sal

es h

ave

been

adj

uste

d ag

ains

t cos

t of r

aw m

ater

ials

.

cos

t of m

ater

ials

con

sum

ed is

29%

impo

rted

and

71%

loca

lly p

urch

ased

(20

13: 3

2% im

port

ed a

nd 6

8% lo

cally

pur

chas

ed).

20.1

.2R

epai

rs a

nd

mai

nte

nan

ce

rep

airs

and

mai

nten

ance

am

ount

ing

to t

k 64

,774

,558

incl

udes

tk

39,0

61,8

47 (

incl

udin

g c

&f

val

ue o

f us

$ 47

7,12

0 an

d e

ur

18,

120

of im

port

ed it

ems)

rep

rese

ntin

gco

st o

f spa

re p

arts

, mou

lds

and

acce

ssor

ies

cons

umed

.

20.2

Sta

tem

ent

of

pro

du

ctio

n c

apac

ity

and

act

ual

pro

du

ctio

n

pro

duct

ion

capa

city

in p

airs

act

ual p

rodu

ctio

n in

pai

rs

fig

ures

in '0

00

fig

ures

in '0

00

2014

2013

2014

2013

tong

i26

,487

26

,487

19

,742

22

,884

dha

mra

i9,

954

9,50

4 7,

060

7,03

3

36,4

41

35,9

91

26,8

02

29,9

17

2014

54 55

29. Profit before tax

profit before tax tk.1,017,920,101 (2013: tk. 1,153,283,564) includes profit amounting to tk 34,150,225 (2013: tk.96,321,757) of leather shoe factory at dhamrai and tk.983,769,876 (2013: tk. 1,056,961,807) at tongi.

30. Remittance of foreign currency

Amount Amount

in foreign in local

Name of party Nature of transaction Currency currency currency

Taka

Bafin (nederland) B.v. dividend usd 3,085,147 241,315,200

ssl international plc royalty on dr. scholl Brand GBp - -

Global footwear services management services fees sGd 1,663,200 103,862,682 pte. ltd., singapore

wolverine world royalty on Hush puppies Brand usd 127,912 10,098,681 wide inc., usa

euro footwear Holdings it fees eur 60,000 6,525,000 s.a.r.l usd 1,318 102,773

Bata Brands s.a.r.l - trade mark licence fees usd 3,850,524 301,945,237 swiss Branch

the figures represent net off tax.

31. Earnings in foreign currency

2014 2013

Taka Taka

export of shoes and other footwear goods 89,875,763 87,000,227

32. Earnings per share

32.1 Basic earnings per share (EPS)

the computation of eps is given below:

earnings attributable to the ordinary shareholders (net profit after tax) 700,670,101 813,083,564

weighted average number of ordinary shares outstanding during the year 13,680,000 13,680,000

Basic earnings per share (eps) 51.22 59.44

32.2 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 1,816 (2013: 1,464).

22.3 Commission2014 2013Taka Taka

retail 149,478,335 157,079,228 wholesale 90,954,453 101,594,988 export 257,572 952,368

240,690,360 259,626,584

22.4 royalty on Hush puppies, dr. scholl and naturalizer brands, Global footwear services fees and trade mark licencefees of tk 13,592,913 tk. 4,385,579 tk.434,965 tk. 131,340,405 and tk 171,167,152 respectively representequivalent foreign currency of usd 175,945, usd 56,767, usd 5,630, sGd 2,100,000 and usd 2,215,572 providedduring the year.

23. Finance income

interest on:fixed deposit 7,123,001 8,169,306short term deposit 6,117,072 5,192,660personal account 606,527 -

13,846,600 13,361,966 24. Finance expenses

interest on:overdraft 375,145 1,261,274 personal account 4,575,875 4,786,527

4,951,020 6,047,801

25. Contribution to workers' profit participation fund

profit from operating activities 1,062,599,263 1,206,668,534 net finance income/(expenses) 8,895,580 7,314,165 profit before contribution to workers' profit participation fund 1,071,494,843 1,213,982,699

workers' profit participation fund @ 5% 53,574,742 60,699,135

26. Emoluments to directors

remuneration 13,063,088 14,013,348 Bonus 4,185,600 6,857,534 retirement benefit schemes 994,239 1,141,200 Housing 3,960,000 3,300,000

22,202,927 25,312,082

27. Emoluments to managers

remuneration 99,558,844 85,642,410 retirement benefit schemes 13,909,833 13,792,865 Housing 12,539,349 10,168,444

126,008,026 109,603,719

28. 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:

provident fund:managers 6,597,914 6,176,487 officers & supervisors 10,421,968 9,396,078 workers 11,027,469 10,415,714

28,047,351 25,988,279

pension fund 8,306,158 7,616,378 36,353,509 33,604,657

2014

b) Ageing of receivables2014 2013Taka 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 1,458,871 10,709,730

invoiced 31-60 days - 4,252,052

1,458,871 14,961,782

Export customers - BSO companies

invoiced 0-30 days 2,009,362 2,694,588

invoiced 31-60 days 2,678,863 1,840,583

invoiced 61-90 days 3,365,102 1,393,125

8,053,327 5,928,296

Receivables from domestics

invoiced 0-30 days 239,917,290 236,670,250

invoiced 31-60 days 165,819,770 171,420,677

invoiced 61-90 days 22,993,621 4,038,684

invoiced 91-365 days 20,688,011 1,201,451

invoiced over 365 days 16,285,636 -

465,704,328 413,331,062

c) 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 dealers

accounts receivable 446,760,746 375,027,081

provision for doubtful debts (note 8.1) (20,960,474) -

425,800,272 375,027,081

Receivables from institutional sale

accounts receivable 18,943,582 38,303,982

provision for doubtful debts (note 8.1) (13,220) -

18,930,362 38,303,982

56 57

34. Financial risk management

the management has overall responsibility for the establishment and oversight of the company's risk managementframework. the company's risk management policies are established to identify and analyse the risks faced by thecompany, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. risk managementpolicies, procedures and systems are reviewed regularly to reflect changes in market conditions and the company'sactivities. this note presents information about the company's exposure to each of the following risks, the company'sobjectives, policies and processes for measuring and managing risk, and the company's management of capital. thecompany has exposure to the following risks from its use of financial instruments.

● credit risk● liquidity risk● market risk

34.1 Credit risk

credit risk is the risk of a financial loss to the company if a customer or counterparty to a financial instrument fails tomeet its contractual obligations, and arises principally from the company's receivables from dealers, institutional andexport 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 leatheretc.

the maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statementof financial position.

a) Exposure to credit risk

the carrying amount of financial assets represents the maximum credit exposure. the maximum exposure to creditrisk at the reporting date was:

2014 2013Taka Taka

trade receivable export customers - non Bso companies 1,458,871 14,961,782 export customers - Bso companies 8,053,327 5,928,296 receivables from dealers 446,760,746 375,027,081 receivables from institutional sale 18,943,582 38,303,981

475,216,526 434,221,140

others receivable 1,229,285 1,436,093 security and other deposits 485,239,534 441,512,792 cash and cash equivalents 292,396,800 257,439,710

1,254,082,145 1,134,609,735

the maximum exposure to credit risk for accounts receivable as at 31 december by geographic regions was:

domestic 465,704,328 413,331,062 asia 8,053,327 15,660,570 australia 1,458,871 4,644,602 south america - 584,906

475,216,526 434,221,140

2014

58 59

As

at 3

1 D

ecem

ber

201

3

nom

inal

inte

rest

con

trac

tual

w

ithin

6 m

onth

s w

ithin

6-1

2 c

arry

ing

amou

ntm

atur

ity p

erio

dra

teca

sh fl

ows

or le

ssm

onth

s

taka

taka

taka

taka

Acc

ou

nts

pay

able

Cre

dit

ors

fo

r g

oo

ds

pay

able

to lo

cal s

uppl

iers

450,

535,

227

June

201

4n

/a

450,

535,

227

450,

535,

227

-

pay

able

to B

so

com

pani

es10

,417

,995

Ju

ne 2

014

n/a

10

,417

,995

10

,417

,995

-

460,

953,

222

460,

953,

222

460,

953,

222

-

Cre

dit

ors

fo

r ex

pen

ses

pay

able

to lo

cal s

uppl

iers

43,9

45,0

78

June

201

4n

/a

43,9

45,0

78

43,9

45,0

78

-

pay

able

to B

so

com

pani

es39

9,67

9,81

5 d

ecem

ber

2014

n

/a

399,

679,

815

231,

883,

195

167,

796,

620

443,

624,

893

443,

624,

893

275,

828,

273

167,

796,

620

Cre

dit

ors

fo

r o

ther

fin

ance

per

sona

l acc

ount

s of

em

ploy

ees

and

agen

ts77

,488

,548

Ju

ne 2

014

8.5%

77,4

88,5

48

7,40

2,50

7 70

,086

,041

s

ecur

ity a

nd o

ther

dep

osits

24,7

94,5

00

June

201

4n

/a

24,7

94,5

00

24,7

94,5

00

-

tax

dedu

cted

at s

ourc

e60

,933

,617

Ju

ne 2

014

n/a

60

,933

,617

60

,933

,617

-

va

t de

duct

ed a

t sou

rce

5,31

8,41

8 Ju

ne 2

014

n/a

5,

318,

418

5,31

8,41

8 -

s

alar

y an

d w

ages

pay

able

20,4

69,0

98

June

201

4n

/a

20,4

69,0

98

20,4

69,0

98

-

oth

ers

liabi

litie

s14

,660

,866

Ju

ne 2

014

n/a

14

,660

,866

14

,660

,866

-

203,

665,

047

203,

665,

047

133,

579,

006

70,0

86,0

41

Acc

rued

lia

bili

ties

B

onus

77,1

90,0

00

June

201

4n

/a

77,1

90,0

00

77,1

90,0

00

-

util

ity9,

320,

000

June

201

4n

/a

9,32

0,00

0 9,

320,

000

-

lega

l & a

udit

fee

1,68

1,50

0 Ju

ne 2

014

n/a

1,

681,

500

1,68

1,50

0 -

r

oyal

ty16

,222

,717

Ju

ne 2

014

n/a

16

,222

,717

-

16

,222

,717

Jo

int v

entu

re c

omm

issi

on9,

953,

699

June

201

4n

/a

9,95

3,69

9 9,

953,

699

-

oth

er a

ccru

ed li

abili

ties

261,

553,

868

dec

embe

r 20

14

n/a

26

1,55

3,86

8 13

4,16

8,97

5 12

7,38

4,89

3

375,

921,

784

375,

921,

784

232,

314,

174

143,

607,

610

Un

clai

med

div

iden

d64

,347

,270

d

ecem

ber

2014

n

/a

64,3

47,2

70

39,0

00,0

00

25,3

47,2

70

exp

osur

e to

liqu

idity

ris

k in

res

pect

of t

he c

ompa

ny's

fina

ncia

l sta

tem

ents

at 3

1 d

ecem

ber

2013

doe

s no

t var

y si

gnifi

cant

ly fr

om a

bove

.

34.2

Liq

uid

ity

risk

liqu

idity

ris

k is

the

risk

that

the

com

pany

will

not

be

able

to m

eet i

ts fi

nanc

ial o

blig

atio

ns a

s th

ey fa

ll du

e. t

he c

ompa

ny's

app

roac

h to

man

agin

g liq

uidi

ty (

cash

and

cas

h eq

uiva

lent

s)is

to e

nsur

e, a

s fa

r as

pos

sibl

e, th

at it

will

alw

ays

have

suf

ficie

nt li

quid

ity to

mee

t its

liab

ilitie

s w

hen

due,

und

er b

oth

norm

al a

nd s

tres

sed

cond

ition

s, w

ithou

t inc

urrin

g un

acce

ptab

lelo

sses

or

riski

ng d

amag

e to

the

com

pany

's r

eput

atio

n. t

ypic

ally

, th

e co

mpa

ny e

nsur

es t

hat

it ha

s su

ffici

ent

cash

and

cas

h eq

uiva

lent

s to

mee

t ex

pect

ed o

pera

tiona

l ex

pens

es,

incl

udin

g fin

anci

al o

blig

atio

ns th

roug

h pr

epar

atio

n of

the

cash

flow

fore

cast

, bas

ed o

n tim

e lin

e of

pay

men

t of f

inan

cial

obl

igat

ions

and

acc

ordi

ngly

arr

ange

for

suffi

cien

t liq

uidi

ty/fu

ndto

mak

e th

e ex

pect

ed p

aym

ents

with

in d

ue d

ates

. m

oreo

ver,

the

com

pany

has

sho

rt t

erm

cre

dit

faci

litie

s w

ith s

ched

uled

com

mer

cial

ban

ks t

o en

sure

pay

men

t of

obl

igat

ion

in t

heev

ent t

hat t

here

is in

suffi

cien

t cas

h to

mak

e th

e re

quire

d pa

ymen

t. t

he r

equi

rem

ent i

s de

term

ined

in a

dvan

ce th

roug

h ca

sh fl

ow p

roje

ctio

ns a

nd c

redi

t lin

es w

ith b

anks

are

neg

otia

ted

acco

rdin

gly.

the

follo

win

g ar

e th

e co

ntra

ctua

l mat

uriti

es o

f fin

anci

al li

abili

ties:

As

at 3

1 D

ecem

ber

201

4

nom

inal

inte

rest

con

trac

tual

w

ithin

6 m

onth

s w

ithin

6-1

2 c

arry

ing

amou

ntm

atur

ity p

erio

dra

teca

sh fl

ows

or le

ssm

onth

s

taka

taka

taka

taka

Acc

ou

nts

pay

able

Cre

dit

ors

fo

r g

oo

ds

pay

able

to lo

cal s

uppl

iers

508,

452,

080

June

201

5n

/a

508,

452,

080

508,

452,

080

-

pay

able

to B

so

com

pani

es17

,623

,868

Ju

ne 2

015

n/a

17

,623

,868

17

,623

,868

-

526,

075,

948

526,

075,

948

526,

075,

948

-

Cre

dit

ors

fo

r ex

pen

ses

pay

able

to lo

cal s

uppl

iers

74,9

52,5

45

June

201

5n

/a

74,9

52,5

45

74,9

52,5

45

-

pay

able

to B

so

com

pani

es27

1,84

7,89

8 d

ecem

ber

2015

n

/a

271,

847,

898

244,

225,

548

27,6

22,3

50

346,

800,

443

346,

800,

443

319,

178,

093

27,6

22,3

50

Cre

dit

ors

fo

r o

ther

fin

ance

per

sona

l acc

ount

s of

em

ploy

ees

and

agen

ts78

,983

,164

Ju

ne 2

015

8.5%

78,9

83,1

64

1,53

8,67

5 77

,444

,489

s

ecur

ity a

nd o

ther

dep

osits

25,5

44,5

00

June

201

5n

/a

25,5

44,5

00

25,5

44,5

00

-

tax

dedu

cted

at s

ourc

e47

,441

,190

Ju

ne 2

015

n/a

47

,441

,190

47

,441

,190

-

va

t de

duct

ed a

t sou

rce

2,97

2,80

6 Ju

ne 2

015

n/a

2,

972,

806

2,97

2,80

6 -

s

alar

y an

d w

ages

pay

able

21,3

21,7

32

June

201

5n

/a

21,3

21,7

32

21,3

21,7

32

-

oth

ers

liabi

litie

s21

,236

,548

Ju

ne 2

015

n/a

21

,236

,548

21

,236

,548

-

197,

499,

940

197,

499,

940

120,

055,

451

77,4

44,4

89

Acc

rued

lia

bili

ties

B

onus

63,2

80,0

00

June

201

5n

/a

63,2

80,0

00

63,2

80,0

00

-

util

ity10

,958

,000

Ju

ne 2

015

n/a

10

,958

,000

10

,958

,000

-

le

gal &

aud

it fe

e2,

418,

050

June

201

5n

/a

2,41

8,05

0 2,

418,

050

-

roy

alty

23,0

43,0

28

June

201

5n

/a

23,0

43,0

28

4,62

9,57

1 18

,413

,457

Jo

int v

entu

re c

omm

issi

on8,

453,

726

June

201

5n

/a

8,45

3,72

6 8,

453,

726

-

oth

er a

ccru

ed li

abili

ties

274,

613,

140

dec

embe

r 20

15

n/a

27

4,61

3,14

0 68

,029

,136

20

6,58

4,00

4

382,

765,

944

382,

765,

944

157,

768,

483

224,

997,

461

Un

clai

med

div

iden

d68

,717

,138

d

ecem

ber

2015

n

/a68

,717

,138

42

,000

,000

26

,717

,138

exp

osur

e to

liqu

idity

ris

k in

res

pect

of t

he c

ompa

ny's

fina

ncia

l sta

tem

ents

at 3

1 d

ecem

ber

2014

doe

s no

t var

y si

gnifi

cant

ly fr

om a

bove

.

2014

60 61

b) Interest rate riskthe interest bearing financial instrument for the company is the short term deposit (std) account maintained by the companywith its commercial banks. these are highly liquid and very short term deposits with nominal interest rate. interest rate fluctuationfor 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 areas follows:

2014 2013

carrying amount fair value carrying amount fair value Taka Taka Taka Taka

Receivables, cash & cash equivalent

trade receivable, net 475,216,526 475,216,526 434,221,140 434,221,140 other receivables 1,229,285 1,229,285 1,436,093 1,436,093 cash and cash equivalents 292,396,800 292,396,800 257,439,710 257,439,710

Available for sale financial assets

security deposits 485,239,534 485,239,534 441,512,793 441,512,793

Liabilities carried at amortised costs

creditors for goods 526,075,948 526,075,948 460,953,222 460,953,222 creditors for expenses 346,800,443 346,800,443 443,624,893 443,624,893 creditors for other finance 262,185,527 262,185,527 273,340,267 273,340,267 accrued expenses 382,765,944 382,765,944 375,921,784 375,921,784

35. Segment reporting

the company has two operating segments, domestic and unallocated, which are the company's strategic divisions. theyare managed separately because they require different technology and marketing strategies. for each of the strategicdivisions, 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 reportablesegments:

Domestic this segment is mainly engaged in manufacturing and marketing of leather, rubber, plastic and canvasfootwear, hosiery and accessories in domestic market.

2014 2013

particulars reportable business segment reportable business segment

domestic unallocated total domestic unallocated total

Taka ‘000 Taka ‘000 Taka ‘000 Taka ‘000 Taka ‘000 Taka ‘000

Revenue 7,987,119 89,876 8,076,995 7,791,975 87,000 7,878,975

cost of sales (4,884,620) (60,867) (4,945,487) (4,852,040) (5,722) (4,857,762)

Gross profit 3,102,499 29,009 3,131,508 2,939,935 81,278 3,021,213

exchange gain/(loss) - 6,887 6,887 - 4,351 4,351

other income - 20,222 20,222 - 18,425 18,425

administrative, selling and distribution exp. (1,546,326) (549,692) (2,096,018) (1,321,424) (515,896) (1,837,320)

Reportable segment result 1,556,173 (493,574) 1,062,599 1,618,511 (411,842) 1,206,669

Segment assets and liabilitiesthe necessary information regarding assets and liabilities of operating segments are not separable and individually identifiablefor this purpose. for this reason the assets and liabilities of the respective segments have not been presented here.

34.3 Market riskmarket risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect thecompany's income or the value of its holdings of financial instruments. the objective of market risk management is tomanage and control market risk exposures within acceptable parameters.

a) Currency risk/foreign exchange rate riskthe company is exposed to currency risk on sales and purchases with foreign customers and suppliers including BataGroup (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 riskthe company's exposure to foreign currency risk was as follows based on notional amounts:

As at 31 December 2014 As at 31 December 2013usd sGd eur usd sGd eur

Foreign currency denominated assets

accounts receivable 123,592 - - 274,750 - - cash at bank

islamic Bank Bangladesh limited - - - 54,706 - - eastern Bank limited 22,225 - - 162,660 - - HsBc 15,129 - - 33,920 - - total 160,946 - - 526,036 - -

Foreign currency denominated liabilities

trade and other payables for expenses (2,443,418) (1,890,000) (86,667) (4,330,133) (1,663,200) (66,000)total (2,443,418) (1,890,000) (86,667) (4,330,133) (1,663,200) (66,000)net exposure (2,282,472) (1,890,000) (86,667) (3,804,097) (1,663,200) (66,000)

payable to other entities represents payable for Global footwear service fees, it fees etc.

exposure to currency risk as at 31 december 2014 in respect of the financial statements does not vary from above. thecompany has a foreign exchange gain amounting to tk. 6,886,918 during the year ended 31 december 2014.

the following significant exchange rates are applied during the year:

exchange rate as at 31 dec 2014 31 dec 2013

taka taka

us dollar 77.26 77.29singapore dollar 58.46 61.22euro (eur) 93.91 106.46

ii) Foreign exchange rate sensitivity analysis for foreign currency expenditures

a strengthening or weakening of the taka, as indicated below, against the usd, sGd and eur at 31 december would haveincreased/(decreased) equity and profit or loss by the amounts shown below. this analysis is based on foreign currencyexchange rate variances that the company considered to be reasonably possible at the reporting date. the analysis assumesthat all other variables, in particular interest rates, remain constant. the analysis is performed on the same basis for 2014, albeitthat the reasonably possible foreign exchange rate variances were different, as indicated below:

strengthening weakeningprofit or loss profit or loss

taka takaAt 31 December 2014

usd (0.04 percent movement) (70,538) 70,538 sGd (4.51 percent movement) (4,983,072) 4,983,072 eur (11.79 percent movement) (959,576) 959,576

At 31 December 2013usd (3 percent movement) (8,820,560) 8,820,560 sGd (6 percent movement) (6,109,266) 6,109,266 eur (1 percent movement) (70,264) 70,264

2014

62 63

38. Capital expenditure and financial commitment

there were no capital expenditure and financial commitments as at 31 december 2014 (2013: nil)

39. Contingent liabilities

there are contingent liabilities on account of unresolved disputed corporate tax assessments and vat claims by theauthority aggregating to tk. 480,314,000 (2013: tk 460,620,000). considering the merits of the cases, it has not beendeemed necessary to make provisions for all such disputed claims.

there is also contingent liability in respect of outstanding letters of credit of tk. 104 million (2013: tk 243 million) and letterof guarantee of tk. 5.7 million (2013: tk 5.7 million).

40. Other 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 17.50 per share of tk 10 each aggregating to tk 239,400,000 which was approved bythe Board of directors at its 220th meeting held on 24 november 2014.

40.3 Events after the reporting period

the Board of directors of Bata, at its 221st meeting held on 27 april 2015, proposed tk 10.50 per share, amounting to atotal of tk 143,640,000 as final dividend for the year ended 31 december 2014, which represents 105% of the paid upcapital. total dividend for the year ended 31 december 2014 including the interim dividend (see note 40.2) thus comes totk 383,040,000 which is 280% of paid up capital. these dividends are subject to final approval by the shareholders at theforthcoming annual General meeting of the company.

36. Related party disclosures

during the year ended 31 december 2014, company entered into a number of transactions with related parties /associated enterprises in the normal course of business. relationship with related parties / associated enterprises,nature of these transactions and amount thereof have been set out below in accordance with the provisions of Bas24: related party disclosures.

36.1 Related party transactions2014 2013

Taka ‘000 Taka ‘000

relationship with company nature of transaction

Holding company dividend payment (241,315) (258,552)

associated companies purchase of goods (328,892) (235,740)

services received (12,349) (9,049)

sale of goods 54,504 38,518

services provided 4,095 1,022

trade mark licence fees (171,167) (167,797)

it fees (9,883) (7,334)

36.2 the company in normal course of business conducts transactions with its related parties. Balances of related partiesat the reporting date have been shown under receivables and payables. the company continues to have a policy,whereby all transactions with related parties and associated undertakings are entered into at arm's length in the lightof commercial terms and conditions.

36.3 Receivables/(payables) with related parties2014 2013


relationship with company nature of transaction

associated companies purchase of goods (17,624) (13,390)

services received (23) -

sale of goods 8,053 1,351

services provided 36 1,337

trade mark licence fees (171,167) (14,567)

it fees (8,094) (632)

37. Operating lease payments disclosure

non-cancellable operating lease rentals are payable as follows:2014 2013


less than one year 466,001 359,200 Between one and five years 3,006,778 1,833,752 more than five years 1,158,562 578,495

4,631,341 2,771,447

65

Bata Shoe Company (Bangladesh) Limitedstatement of profit or loss and other comprehensive income for the year

ended 31 December 2014

64

2014 2013

Manufacturing Trading Total Total

Taka Taka Taka Taka

Revenue 7,012,029,483 1,064,965,554 8,076,995,037 7,878,975,170

cost of goods sold (4,346,514,269) (598,972,280) (4,945,486,549) (4,857,762,141)

Gross profit 2,665,515,214 465,993,274 3,131,508,488 3,021,213,029

other income 20,221,586 - 20,221,586 18,424,860

administration, selling and distribution expenses (1,784,130,291) (311,887,438) (2,096,017,729) (1,837,320,706)

Profit from operating activities 901,606,509 154,105,836 1,055,712,345 1,202,317,183

finance income 17,648,371 3,085,147 20,733,518 17,713,317

finance expenses (4,214,308) (736,712) (4,951,020) (6,047,801)

contribution to wppf (45,602,820) (7,971,922) (53,574,742) (60,699,135)

Profit before income tax 869,437,752 148,482,349 1,017,920,101 1,153,283,564

tax expense:

current tax 314,159,660 16,840,340 331,000,000 338,000,000

deferred tax (13,750,000) (13,750,000) 2,200,000

300,409,660 16,840,340 317,250,000 340,200,000

Profit after tax for the year 569,028,092 131,642,009 700,670,101 813,083,564

Exhibit - I

66

2014cÖw· dig

AbyMÖn K‡i D‡jøL Kiæb†kqvi‡nvìv‡ii dwjI / weI bs †kqvi msL¨v

Dcw ’wZ

Avwg/Avgiv GZØviv 25 Ryb 2015 e„n¯úwZevi mKvj 10:30Uvq avgivB KviLvbv, XvKvq AbywôZe¨ evUv my †Kv¤úvwb(evsjv‡`k) wjwg‡UW-Gi †ZZvwjøkZg evwl©K mvaviY mfvq Avgvi/Avgv‡ì Dcw ’wZ wjwce× Kijvg|

†kqvi‡nvìv‡ii bvg¯vÿi

cÖwZwbwai bvg¯vÿi

†kqvi‡nvìv‡ii dwjI / weI bsmfvK‡ÿ cÖ‡e‡ki c~‡e© Dcw ’wZ cÎLvbv cÖ`k©‡bi Aby‡iva Kiv hv‡”Q|

Avwg/Avgiv

wVKvbv

evUv my †Kv¤úvwb (evsjv‡`k) wjwg‡UW-Gi †kqvi‡nvìvi wnmv‡e

Rbve /†eMg †KAvgvi/ Avgv‡ì cÖwZwbwa wnmv‡e AvMvgx 25 Ryb 2015 e„n¯úwZevi AbywôZe¨ †Kv¤úvwbi †ZZvwjøkZg evwl©K mvaviY mfvq GesGi gyjZex †NvwlZ mfvq Avgvi/ Avgv‡ì c‡ÿ Dcw ’Z _vKvi Ges †fvU cÖ`vb Kivi Rb¨ wbhy³ Kijvg|

¯vÿ¨ wnmv‡e AvR 2015 Zvwi‡L Avwg / Avgiv GB `wj‡j mÁv‡b ¯vÿi Kijvg|

†kqvi‡nvìv‡ii ¯vÿi cÖwZwbwai ¯vÿi

ZvwiL mvÿxi ¯vÿi

20.00UvKvi ivR¯ wU‡KU

(†Kv¤úvwb‡Z msiwÿZ †kqvi‡nvìv‡ii ¯vÿi Aek¨B wgj‡Z n‡e|)

67

68 37

form of proxy

please quote

Shareholder's Folio / BO No. No. of Shares held

ATTENDANCE

i/we hereby record my/our presence at the 43rd annual General meeting of Bata Shoe Company

(Bangladesh) Limited at dhamrai factory, dhaka on thursday 25 June 2015 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.

i/we

of

being shareholder(s) of BATA SHOE COMPANY (BANGLADESH) LIMITED, entitled to vote hereby appointmr./ms.as my/our proxy to attend and vote for me/us and on my/our behalf at the 43rd annual General meeting of thecompany to be held on thursday 25 June 2015 and any adjournment thereof and poll that may be taken inconsequenced thereof.

as witness my/our hand this day of 2015

signature of shareholder (s) signature of proxy

date signature of witness

revenue stampof tk. 20.00

(signature of shareholder (s) must be in accordance with specimen signature with the company.)

Bata A.Report-08.qxd

Documents