Bata a.report 09

Kmw~ xNYL

2 kKrYJuTo§uL

4 ßTJŒJjLr fgq

5 xJiJre xnJr KmùK¬

12 xnJkKfr nJwe

16 kKrYJuTo§uLr k´KfPmhj

21 KjrLãTPhr k´KfPmhj

22 K˙Kfk©

23 uJn-ßuJTxJj KyxJm

24 ATáqAKa kKrmftPjr Kmmre

24 jVh Igt k´mJPyr Kmmre

25 KyxJPmr KaTJxoNy

Contents2 BOARD OF DIRECTORS

4 COMPANY INFORMATION

6 NOTICE OF MEETING

7 PRODUCT DEVELOPMENT & MERCHANDISING

8 MARKETING OPERATIONS

9 MANUFACTURING

10 HUMAN RESOURCES

12 CHAIRMAN'S STATEMENT

16 DIRECTORS' REPORT

21 AUDITORS' REPORT

22 BALANCE SHEET

23 PROFIT AND LOSS ACCOUNT

24 CHANGES IN EQUITY

24 CASH FLOW STATEMENT

25 NOTES TO THE ACCOUNTS

ANNUAL REPORT

2009

Board of Directors

2 3

Mr. Fernando Garcia Restrepo Chairman

Present positionGroup Managing Director, Bata Emerging Markets (WEST)

Previous positionsPresident Director, Bata IndonesiaManaging Director, Bata KenyaManaging Director, Bata IndiaVice President, Wholesale & Marketing, Bata Ltd, Toronto, CanadaManaging Director, Bata Bangladesh

Mr. Rashidul HasanIndependent Director

Current 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 ofBangladeshDirector General, Department of Industries of the Republic of Bangladesh

Mr. Rajeev GopalakrishnanVice Chairman & Managing Director(Appointed on 28 January 2010)

Previous positionsManaging Director, Bata Shoe of Thailand Public Company Limited Vice President, Retail Operations, Bata India LimitedVice President, Wholesale Operations, Bata India LimitedSales / Marketing Manager, Bata Limited, CanadaRetail Manager, Bata India Limited

Mr. Rokanuddin Mahmud Bar-at-lawIndependent Director

Senior Advocate in the Supreme Court and High Court in Bangladesh

Mr. Mike MiddletonDirector

Current PositionCFO, Global Footwear Services Limited, Singapore

Previous positionsDeputy Managing Director & Finance Director, Bata India Ltd.

4 5

FA KmùK¬r oJiqPo \JjJPjJ pJPò ßp, mJaJ xM ßTJŒJjL (mJÄuJPhv) KuKoPac-Fr 38fo mJKwtT xJiJre xnJ KjoúKuKUf TJptJmuLxŒJhPjr \jq @VJoL 24 \Mj 2010 mOy¸KfmJr xTJu 10:30 KoKjPa iJorJA TJrUJjJ, dJTJ~ IjMKÔf yPm:

1. 31 KcPx’r 2009 fJKrPU xoJ¬ mZPrr \jq kKrYJuTmOPªr k´KfPmhj V´ye, KmPmYjJ S IjMPoJhjÇ

2. 31 KcPx’r 2009 fJKrPU xoJ¬ mZPrr \jq KjrLKãf KyxJm FmÄ KjrLãTPhr k´KfPmhj V´ye, KmPmYjJ S IjMPoJhjÇ

3. kKrYJuTmOPªr xMkJKrvTíf unqJÄv ßWJweJÇ

4. kKrYJuTmOPªr KjmtJYjÇ

5. 2010 xJPur \jq KjrLãT KjP~JV FmÄ fÅJPhr kJKrvsKoT KjitJreÇ

kKrYJuTo¥uLr @PhvâPo

ßoJ” yJKxo ßr\JañL, 20 FKk´u 2010 ßTJŒJjL ßxPâaJrL

hsÓmq:

1. 11 ßo 2010 yPò ßrTct ßcaÇ ßp xm ßv~JrPyJflJrPhr jJo CÜ fJKrU kpt∂ ßTJŒJjLr ßv~Jr ßrK\ˆJr KTÄmJ KckK\arLßrK\ˆJPr jKgnáÜ yPm fÅÅJrJA unqJÄPvr \jq ‰mi mPu Veq yPmjÇ

2. FT\j xhxq FA xJiJre xnJ~ CkK˙f gJTPf FmÄ ßnJa k´hJj TrPf kJPrj KTÄmJ fÅJr ˝kPã CkK˙f yPf FmÄ ßnJaKhPf FT\j k´Ké KjP~JV TrPf kJPrjÇ

3. k´Ké lro pgJpgnJPm kNre TPr xnJr KjitJKrf xoP~r 48 W≤J kNPmt ßTJŒJjLr ßrK\ˆJct IKlPx ImvqA \oJ KhPf yPmÇ

4. k´Ké lro xÄPpJ\j TrJ yPuJÇ

mJKwtT xJiJre xnJr KmùK¬ßTJŒJjL ßxPâaJrLßoJ” yJKxo ßr\J

KjrLãTryoJj ryoJj yTYJatJct FTJC≤qJ≤x9, oyJUJuL mJ/F (12 fuJ)dJTJ-1212

IJAj CkPhÓJKm. IJyPoh F¥ ßTJĉx~h AvKf~JT IJyPoh F¥ FPxJKxP~a&xoJKuT u& FPxJKxP~a&x

mqJÄTAˆJjt mqJÄT Ku”cJY& mJÄuJ mqJÄT Ku”FAY Fx Km KxAxuJoL mqJÄT (mJÄuJPhv) Ku”ˆqJ¥Jct YJatJctIV´eL mqJÄT Ku”

lqJÖrL1. añL Kv· FuJTJ

añL, VJ\LkMr2. iJorJA, dJTJ

aqJjJrLiJorJA, dJTJ

ßrK\ˆJct IKlxmJaJ xM ßTJŒJjL (mJÄuJPhv) KuKoPacañL Kv· FuJTJañL, VJ\LkMr

ßv~Jr Ku~JP\ÅJ IKlx6, Km. Km. FKnKjC (3~ fuJ)dJTJ

Company SecretaryMd. Hashim Reza

AuditorsRahman Rahman HuqChartered Accountants9, Mohakhali C/A (11th Floor)Dhaka-1212

Legal AdvisersB. Ahmed & Co.Syed Ishtiaq Ahmed & AssociatesMalik Law Associates

BankersEastern Bank Ltd.Dutch Bangla Bank Ltd.HSBCIslami Bank (Bangladesh) Ltd.Standard CharteredAgrani Bank Ltd.

Factories1. Tongi Industrial Area

Tongi, Gazipur2. Dhamrai, Dhaka

TanneryDhamrai, Dhaka

Registered OfficeBata Shoe Company (Bangladesh) LimitedTongi Industrial AreaTongi, Gazipur

Share Liaison Office6, B. B. Avenue (2nd floor)Dhaka

Compnay InformationßTJŒJjLr fgq

2009 was as very significant year for product development & marketing for Bata Bangladesh. During the yearBata Bangladesh introduced many exclusive new lines of shoes the majority of which were during festivalperiods. These new arrivals were introduced in different Bata brands. Some of them are as follows:

Notice of Annual General Meeting Product Development & Merchandising

6 7

“North Star” is a sports-casual footwear brand for the youth market. Its collectionsare inspired by world trends and young people’s versatility; developingfashionable commercial products. The qualities that identify this brand is itscreativity, design, dynamism, and modernity. The main objective of our “NorthStar” brand is to develop high quality products that follow world trends, adaptingthem to the youth market and showing that it is a brand with fashionable productsat good value.

For all things ingenious, and all things bright, “B.First” represents children at theirmost curious years. Children who are more than willing to pick up, to try and toventure into the world of trial and error, “B.First” challenges and inspires thesestudents to outdo themselves.

In a day, I sit, stand, walk, run, chase, follow, play, study... and I’d most likely needa pair of sturdy-soled, sporty, & padded shoes to see me through it all! That is our“B First” branded shoe for all children out there who go to school & love to be instudy & play all day.

Created in France, “Marie Claire”, epitomises Parisienne style andsophistication. As a brand,”Marie Clarie” encompasses what it is liketo be a woman in charge, a woman who expresses her confidencethrough the clothes and shoes she wears with a tagline “ConfidentFemininity”, Marie Claire provides stylish and chic shoes for thewomen in charge, both while they work in the office, or go out for aparty.

Like a maternal figure, one that’s nurturing and protective, “BataComfit” exudes certain warmth that only a mother can contest to.Unconditionally giving to provide tender loving care, moving with youevery step of the way, “Bata Comfit” as a brand embraces its imageas your loyal safe keeper.

Notice is hereby given that the 38TH ANNUAL GENERAL MEETING of Bata Shoe Co. (Bangladesh) Limitedwill be held at Dhamrai Factory, Dhaka on 24 June 2010, Thursday at 10:30 a.m. to transact the followingbusiness:1. To receive, consider and adopt the Directors’ Report for the year ended 31 December 2009.2. To receive, consider and adopt the audited accounts of the Company and the Auditors’ Report thereon

for the year ended 31 December 2009.3. To declare Dividend as recommended by the Directors.4. To elect Directors.5. To appoint Auditors for the year 2010 and fix their remuneration.

By order of the Board

Md. Hashim RezaTongi, 20 April 2010 Company Secretary

NOTES:1. 11 May 2010 is the RECORD DATE. Shareholders whose names will appear in the share register of the

Company or in the depository register on that date will be eligible to receive dividend as approved in theAGM.

2. A member eligible to attend and vote at the General Meeting is entitled to appoint a proxy to attend themeeting and 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.

4. A Proxy Form is enclosed.

Bata Industrials

Manufacturing

Non Retail

8 9

Non Retail business played a vital role in the company’s total turnover in 2009. Thisbusiness channel includes 5 different divisions namely Dealers Support Program(DSP), Wholesalers, Rural Sales, Department Stores and Industrial & Institutions.The Company discontinued business with low volume dealers and focused on thehigh contribution dealers to minimize business risks and operating expenses. Inaddition, emphasis was given to open new dealers. Around 66 new dealers wereopened last year which contributed around Tk. 74 million in turnover. Currently, thecompany has 512 DSPs and 364 wholesalers running under a sound meaningfulbusiness policy focused on development of good relationship.

For retaining market leadership, the companyfocuses on appropriate show design and productdevelopment, to meet the needs of the market. Incommunication with partners, the company organizeda national Road Show of new products and receivedsuggestions from customers to develop the rightproducts and services.

The company has established a new business channelunder brand “Bata Industrials” to serve the industrial growth.In January 2009, the company launched Bata Industrialsshoes and received very encouraging feedback fromdifferent industrial groups who focus on quality and safetysuch as petrochemicals, food Industries, machineries,automobile parts, electrical equipments etc. It is anticipatedthat this new business will add approximately Tk. 5 million ofturnover in 2009.

The company operates two manufacturing facilities – one in Tongi and the other in Dhamrai. With a productioncapacity of 110,000 pairs of shoes daily, the company also has a modern tannery facility with an output of 5million square feet of leather annually. In 2009 company produced over 26 million pairs. Currently companycontinues producing quality & fashionable shoes to respond to customers’ demand.

Marketing OperationsRetail

“Power” is the sports & athletic- leisure shoe brand of “Bata” it hasgot products that has been specially designed for activity likerunning, training, outdoor, soccer & lifestyle. No other sports brandcan give you the value for money like “Power”. These shoes helpyou to perform comfortably any particular outdoor activity.

In 2009 our Retail Channel sold 8.6 million pairs of shoes 104% growth against2008 and turnover Tk. 3.2 billion which is 114% growth against last year. To achievethis outstanding growth in spite of global recession, company took differentinitiatives like product innovation, aggressive marketing programmes, marketexpansion, human resource development, operational efficiency, team work etc.

In expansion program, company opened 23 new stores including the largest Batashoe store in Asia (11,000 sq ft) at Bashundhara City Mall, Dhaka and 3 exclusiveHush Puppies stores. In addition we renovated 29 potential stores in 2009. Thenew stores generated additional turnover of Tk. 252 million. 250 new lines wereintroduced before the biggest festival Eid-ul-Fitre, which created sensation amongour valued customers.

Human Resources

10 11

TEAM BUILDING WORKSHOP

As a part of Team Building activities, Bata Shoe Company(Bangladesh) Ltd. and the International Labor Organization(ILO) organized a day long Team Building Workshop onNovember 07, 2009. Resource persons from Sri Lanka andBangladesh conducted the workshop where 25 managers ofBata Bangladesh participated. The main objective of theworkshop was to bring synergy between the departments toachieve accelerated business goals by identifyingmeasurable business targets.

FIRE FIGHTING TRAINING PROGRAMME

To create awareness about fire accidents, the companyorganizes comprehensive training on fire fighting on aregular basis. The course covers fire fighting methods,evacuation procedures, introduction to fire fightingequipments and physical demonstration.

STOREMANCO

With a view to improve management and operational skills ofStore Managers, a number of STOREMANCO have beenorganized in 2009. The course covers - Duties &Responsibilities of Store Managers, Product Knowledge,Marketing, Distribution & Customers’ Claim, Books ofAccounts, Remittance, Store Audit, Effective Utilization ofPoint of Sales (POS), Staff Productivity Analysis, StoreProfile and Customer Service.

12 13

‘Bh Cu Klfr'Ç IJorJ \JfL~ KâPTa hPur TîKgÄ ¸¿r FmÄßhvmqJkL ßZPu S ßoP~Phr yqJ¥mu aájtJPo≤ Fr IJP~J\jImqJyf ßrPUKZÇ

IJkjJPhr ßTJŒJjLr kPeqr èeVf oJPjr Cjú~Pjr \jqßTJŒJjLr KmKnjú KckJatPoP≤r oPiq 4 x¬Jy mqJkL ßTJ~JKuKaTjPaPˆr IJP~J\j TPrÇ FA k´KfPpJKVfJr CP¨vq KZukPeqr èeVf oJj mOK≠, C&kJhj UrY ToJPjJ, C&kJhjuãqoJ©J I\tj, xo~of kPeqr xrmrJy KjKÁf TPr kPeqrèeJèePT FTKa xÄÛíKfPf kKref TPr xKÿKufnJPm TJ\TrJr FTKa InqJx VPz ßfJuJÇ TotL S xyPpJVLPhr TJP\CÆM≠ TrJr \jq ßTJŒJjL FA k´KfPpJKVfJ~ IÄvV´yeTJrLKm\~LPhr kMrÛOf TPrÇ

IJkjJPhr ßTJŒJjL 2009 xJPu ßhPvr \JfL~ ßTJwJVJPr1,195 KoKu~j aJTJ k´hJj TPrPZÇ pJ kNPmtr mZPrr fáujJ~vfTrJ 8 nJV ßmvLÇ IJkjJPhr ßTJŒJjL YJozJ S kJhMTJrKv· ßxÖPr ßhPvr xPmtJó Tr k´hJjTJrL k´KfÔJj KyxJPmkNmtmftL mZPrr jqJ~ F mZrS xMjJo ImqJyf rJUPf xãoyP~PZÇ

2009 xJPu IJkjJPhr ßTJŒJjL mJÄuJ xMkJr msqJ¥ KuKoPacFr TJZ ßgPT xMkJr msqJ¥ kMrÛJr ßkP~PZ ßpaJ msqJK¥Ä FrßãP© IÛJr kMrÛJr KyPxPm Veq y~Ç xMkJr msqJ¥ yPóZ FTaJIJ∂t\JKfT UqJKf xŒjú Tfítkã pJrJ pMÜrJP\q 1994 xJußgPT pJ©J Êr∆ TPrÇ FaJ FTaJ ˝JiLj k´KfÔJj pJrJ kOKgmLmqJkL msqJK¥Ä Fr ßãP© Cjú~Pjr \jq TJ\ TrPZÇ mJaJKmvõkKrKYf msqJ¥ KyPxPm KYKuPf, ßYT KrkJmKuT FmÄ nJrPfFA xMkJr msqJ¥ kMrÛJr ßkP~PZÇ xMkJr msqJ¥ kMrÛJr I\tPjrlPu mJaJ msqJP¥r xTu èjJèj ßpoj C&kJhj, Kmfre,ßpJVJPpJV, UMYrJ KmâJ~j, ßâfJ xJiJrPer V´yePpJVqfJxyIjqJjq èeJèe mOK≠ ßkP~PZÇ

IJPoKrTJr KoKxVJPj yJxkJKkx TftOT IJP~JK\f IJ∂t\JKfTnJPm TáTár KY©JÄTj k´KfPpJKVfJr IJP~J\Pj mJaJ mJÄuJPhvIÄvV´ye TPrÇ xmtPoJa 74 \j k´KfPpJVLr oPiq IJkjJPhrßTJŒJjL k´go kMrÛJr xy IJPrJS 2Ka kMrÛJr I\tj TPrÇ FZJzJ IJkjJPhr ßTJŒJjL xmtPv´Ô mÉ\JKfT ßTJŒJjL 2008kMrÛJr I\tj TPrÇ

PTJŒJjLr TPktJPra xJoJK\T hJ~m≠fJr IÄv KyPxPm mJaJv´LkMPr FTKa IiotL~ FmÄ IrJ\QjKfT k´KfÔJj KvÊ kuäLkäJxFr hKrhs KvÊPhr FmÄ mOKav CPoj FPxJKxP~vj IJP~JK\f

Dream" and several brand promotions for "North Star","Marie Claire”, "Power", "Bengali New Year (Boishakhi)"promotion, "Be Surprised", "Monsoon", "Eid-ul-Fitre""Puja". We have also continued to sponsor theBangladesh National Cricket team as their “OfficialClothing” sponsor and the nationwide Bata SchoolHandball Tournament for boys and girls.

To strengthen the quality of products your company alsoorganised a quality contest among the departments for4 weeks. The contest aimed at improving qualityawareness, reducing product cost, achieving productiontargets, ensuring timely delivery, promoting quality as aculture and developing the habit of working as a team.To motivate the employees and associates each winingteam received prizes from the company.

Your company has contributed Tk. 1,195 million to thecountry’s National Exchequer for the year 2009 which is8% more than the previous year. Your companycontinues to be highest tax payer in leather andfootwear sector in the country as in previous years.

During 2009 your company was awarded theSuperbrand Award, popularly known as the Oscar ofBranding from Bangla Superbrands Limited.Superbrands is acclaimed as a highly reputedinternational authority on branding since its launch in1994 in United Kingdom. It is an independentorganization that promotes the discipline of brandingacross the globe. Bata being a global brand, has alsowon Superbrand awards in Chile, Czech Republic &India. Winning the Superbrand award proves Bata'sexcellence in all aspects of branding (Production,Distribution, Communication, Retailing, CustomerAcceptance etc.).

Bata Bangladesh participated in the Global Dog ArtCompetition organised by Hush Puppies International inMichigan, U.S.A. recently. Out of 74 contestants theentries from your company won the 1st place (Best inshow) award along with two other awards. Yourcompany also received an award for “Best MultinationalCompany in 2008”.

Under the Corporate Social Responsibilities (CSR)programme your company provided shoes to the poorstudents of ‘Shishu Polli Plus’, (translated as ChildrensVillage Plus) a non-religious, non-political organization

xnJkKfr nJwe Chairman's Statement

Fernando Garcia RestrepoChairman

Kk´~ ßv~JPyJflJrmOª

ßTJŒJjLr kKrYJuTo¥uLr kã ßgPT IJKo 31 KcPx’r 2009xJPur xoJ¬ mZPrr ßTJŒJjLr mJKwtT KyxJm S KjrLãTPhrk´KfPmhjxy kKrYJuTo¥uLr k´KfPmhj IJkjJPhr KjTaCk˙Jkj TrPf ßkPr xÿJKjfPmJi TrKZÇ

KmvõmqJkL IgtQjKfT oªJr TJrPe 2009 xJPu ßhPvr k´mOK≠mJiJV´˙ y~Ç pJr TJrPe ßnJÜJrJ kJhMTJr kKrmPft k´iJjßnJVqkeq âP~r ßãP© ßmvL oPjJKjPmv TPrjÇ fJZJzJSßhvmqJkL KmhMq& WJaKfr TJrPe IJoJPhr C&kJhj mqJyf yP~PZFmÄ Kmâ~ ßTªsèPuJS ImqJyf nJPm ßUJuJ rJUJ Ix÷m yP~CPbKZuÇ

Ffh&xP•ôS FA k´KfTáu kKrK˙Kfr oPiq IJkjJPhr ßTJŒJjL2009 xJPu CPuäUPpJVq k´mOK≠ I\tj TrPf xão yP~PZÇ FmZPr IJkjJPhr ßTJŒJjL Tr kNmt IJ~ TPrPZ 630 KoKu~jaJTJ pJ 2008 xJPur fáujJ~ 10 KoKu~j aJTJ ßmvLÇ 2009xJPu IJkjJPhr ßTJŒJjLr Kmâ~ KZu 4,995 KoKu~j aJTJ pJ2008 xJPur fáujJ~ vfTrJ 8 nJV ßmvLÇ

IJorJ mJ\JPrr oJ^JKr FmÄ Có PvseLr ßâfJPhr mJ\JrxŒsxJrPer k´PYÓJ k´KfKj~f ImqJyf ßrPUKZÇ F mZPr IJorJKmvõKmUqJf xM msqJ¥ ‘yJxkJKkx&' Fr KfjKa Kmâ~ ßTªs ˙JkjTPrKZÇ xJrJ ßhPv èr∆fôkNet ˙JjèKuPf IJkjJPhr ßTJŒJjLrßoJa 257Ka UMYrJ Kmâ~ ßTªs IJPZÇ UMYrJ Kmâ~ YqJPjPurxJPg xJPg IJoJPhr vKÜvJuL kJATJrL YqJPjuS rP~PZÇIJorJ 2009 xJPu 66Ka KcuJr Kmâ~ ßTªs UMPuKZÇ mftoJPjxJrJ ßhv mqJkL 13Ka KcPkJr IiLPj IJoJPhr k´J~ 1000KaKcuJr Kmâ~ ßTªs rP~PZÇ

F mZPr IJorJ KmKnjú k´YJrjJoNuT TJ\ TPrKZÇ ßpoj ‘mqJTaá Ûáu', ‘Km lJˆt', ‘TJuJr ACr Kcso' FmÄ ‘jgt ˆJr',‘ßoKrPTî~Jr', ‘kJS~Jr', ‘mJÄuJ jmmwt', ‘Km xJrk´JA\', ‘oMjxMj',

Dear Shareholders

On behalf of the Board of Directors of the Company, it ismy privilege and honour to present to you the Directors’Report together with the Annual Accounts and Auditors’Report thereon, for the year ended 31 December 2009.

In the face of the challenges posed by the globaleconomic recession the growth in the country wassignificantly affected in 2009. As a result consumersconcentrated more on essential consumable itemsinstead of footwear. Moreover electricity shortagethroughout the country has interrupted our productionand it was also difficult to keep our outlets openthroughout the business hours.

Despite these adverse conditions, your company,however, continued to achieve commendable growthduring 2009. During the year your company achievedtotal profit before tax of Tk.630 million, an increase ofTk. 10 million against 2008. In 2009 your companyachieved a turnover of Tk. 4,995 million representinggrowth of 8 % against 2008.

We have continued to expand our market shareespecially in the medium to upper end of the market.During the year we opened three outlets of the worldfamous shoe brand “Hush Puppies”. We have 257 retailoutlets which are strategically located in different partsof the country. In addition to the retail chain we have aformidable network of dealer outlets. We opened 66dealer stores in 2009. We now have near to 1,000dealer outlets serviced by 13 depots throughoutBangladesh.

During the year we organised various promotionalactivities like "Back to School", "B.first” Colour Your

14 15

FjMq~Ju Kˆsa KYuPcsj kJKatPf xMKmiJ mKûf KvÊPhr \MfJ k´hJjTPrÇ

F mZr IJorJ IJkjJPhr ßTJŒJjLr ßoJa 555 \j TotLPTk´Kvãe k´hJPjr mqm˙J TKrÇ pJr oPiq 32 \jPT Inq∂rLeFmÄ 7 \jPT IJ∂t\JKfT k´Kvãe k´hJj TrJ y~Ç IJorJTJrUJjJr TotYJrLPhr oPiq TJP\r IJV´y mOK≠r uPãq k´KfoJPxßxrJ TotL xJKatKlPTa k´hJj ImqJyf ßrPUKZÇ

2009 xJPu IJkjJPhr ßTJŒJjL 62 \j TotLPT kMrÛíf TPrpJrJ iJrJmJKyTnJPm 25 mZr F ßTJŒJjLPf TotrfIJPZjÇ mJaJ AorJK\Ä oJPTtPar ßk´KxPc≤ \\t TJmtJyJu FAIjMÔJPj CkK˙f KZPuj FmÄ pJrJ kMrÛíf yP~PZj fJPhr TPbJrkKrv´o S KjPmKhf k´JPer \jq KfKj ná~xL k´vÄxJ TPrjÇ KfKjxTuPT mJaJ~ fJPhr oNuqmJj ImhJPjr \jq ijqmJh ùJkjTPrjÇ

2009 xJPur 30ßv KcPx’r dJTJ ˆT FTPYP† IJkjJPhrßTJŒJjLr k´KfKa 10 aJTJr ßv~Jr 528.30 aJTJ~ FmÄY¢V´Jo ˆT FéPYP† 522.90 aJTJ~ ßTjJ ßmYJ y~Ç

IJkjJPhr kKrYJuTo¥uL ßTJŒJjLr K˙KfvLu IJKgtT Im˙JrxJPg xJo†xq ßrPU unqJÄv ßWJweJr AòJ mqÜ TPrPZÇkKrYJuTo¥uL ßv~Jr k´Kf 11.50 aJTJ KyxJPm I∂mtfLtunqJÄv k´hJj TPrPZjÇ FmÄ ßv~Jr k´Kf 10.50 aJTJ KyxJPmYNzJ∂ unqJÄvxy Pv~Jr k´Kf xPmtJPoJa 22 aJTJ KyxJPm 31KcPx’r 2009 xJPur \jq unqJÄv mJKwtT xJiJre xnJ~IjMPoJhPjr \jq xMkJKrv TPrPZjÇ

ßTJŒJjLr IJKatPTux& Im FPxJKxP~vj IjMxJPr mqm˙JkjJkKrYJuT Ko. rJK\n ßVJkJuJTíÌJe ZJzJ IjqJjq xTukKrYJuT IJ\PTr FA mJKwtT xJiJre xnJ~ Imxr V´ye TPrjFmÄ kMj”KjmtJYPjr ßpJVq KmiJ~ k´JgtL yPujÇ

kKrPvPw IJKo kKrYJuTo¥uLr kã ßgPT ßTJŒJjLr k´KfImqJyf xJyJpq S xyPpJKVfJ k´hJPjr \jq IJoJPhr xÿJKjfßv~JrPyJflJrmOª, ßâfJxJiJre, xrmrJyTJrL, TotYJrLmOª FmÄVek´\JfπL mJÄuJPhv xrTJPrr KjTa TífùfJ k´TJv SijqmJh ùJkj TrKZÇ

lJjtJPªJ VJKxt~J ßrxPasPkJßY~JroqJj20 FKk´u 2010

based in Sreepur and to under privilege children at theAnnual Street Children’s Party, organized by the BWA(British Women’s Association).

During the year your company trained 555 employeesvia 32 domestic training courses and 10 employeesattended 7 overseas training programmes. We havecontinued to award “Employee of the Month” certificatesand provide recognition to bolster the spirits of theworkforce in the factories.

In 2009 your company presented awards to 62employees who have completed 25 years of service inthis company. Jorge Carbajal, President Bata EmergingMarket attended the ceremony and praised all theaward recipients for their loyalty and hard work. He alsothanked everyone for their valuable contribution to Bata.

Your company’s share, with a face value of Tk. 10 eachwas traded at Tk. 528.30 on the Dhaka Stock ExchangeLtd. and Tk. 522.90 on the Chittagong Stock ExchangeLtd. respectively on 30 December 2009.

Your Board continues its intention to recommend thepayment of dividends commensurate with themaintenance of a stable financial position of thecompany. The Board has, therefore, proposed forapproval at the Annual General Meeting the payment ofa final dividend of Tk 10.50 per share which, togetherwith an interim dividend of Tk. 11.50 per share paid on16 November 2009, will make a total dividend ofTk.22.00 per share for the financial year ended 31December 2009.

In accordance with the Articles of Association of theCompany all the directors, except the ManagingDirector, Mr. Rajeev Gopalakrishnan, will retire at theAnnual General Meeting and, being eligible, offerthemselves for re-election.

In conclusion, on behalf of the Board of Directors, Iwould like to express our appreciation to you, ourshareholders, as well as to our valued customers,suppliers, employees and the Government of thePeople’s Republic of Bangladesh for the support andcooperation extended to the Company.

Fernando Garcia RestrepoChairman20 April 2010

Your Directors have pleasure in submitting their Report and Audited Accounts of the Company for the yearended 31 December 2009 along with the preceding three years below:

FINANCIAL RESULTS 2009 2008 2007 2006TAKA TAKA TAKA TAKA

Net Profit before tax 629,692,445 619,634,702 493,927,273 408,248,059Provision for tax 180,286,000 170,219,000 169,078,000 131,226,000Net profit after tax 449,406,445 449,415,702 324,849,273 277,022,059Unappropriated profit, brought forward 724,748,075 575,292,171 571,417,361 499,595,302

Over tax provision transferred forfinalization of assessment (1981 to 1994) – – 21,025,537 –Undistributed dividend reserved – 1,000,202 – –Profit available for appropriation 1,174,154,520 1,025,708,075 917,292,171 776,617,361

From which the Directors recommended the following appropriations:

Final dividend paid (previous year) 143,640,000 143,640,000 143,640,000 27,360,000Interim dividend paid (current year) 157,320,000 157,320,000 198,360,000 177,840,000

300,960,000 300,960,000 342,000,000 205,200,000Unappropriated profit carried forward 873,194,520 724,748,075 575,292,171 571,417,361

DIVIDEND

For the year ended 31 December 2009 the Board of Directors recommended an interim dividend of Tk. 11.50per share amounting to Tk 157,320,000 and now recommends a final dividend of Tk.10.50 per share amountingto Tk. 143,640,000, thus making a total dividend of Tk. 22.00 per share amounting to Tk. 300,960,000.

DIRECTORS

The Directors retiring as per Article 104 of the Company’s Articles of Association are Mr. Fernando GarciaRestrepo, Mr. Mike Middleton, Mr. Rashidul Hasan and Mr. Rokanuddin Mahmud and being eligible offerthemselves for re-election.

AUDITORS

Rahman Rahman Huq, Chartered Accountants, retire and being eligible offer themselves for re - appointmentas auditors of the Company.

The Directors also report that:u The Financial Statements of the company present a true and fair view of the company’s state of

affairs, the result of its operations, cash flows and changes in equity.u Proper books of accounts as required by law have been maintained.u Appropriate accounting policies have been followed in formulating the Financial Statements and

accounting estimates are reasonable and prudent.u The Financial Statements which were prepared in accordance with Bangladesh Accounting

Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) also comply with theCompanies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws andregulations.

u Internal control system is sound in design and effectively implemented and monitored.u There are no significant doubts on the company’s ability to continue as a going concern.u The deviation from the operating result of last year is reported in the details to the accounts.u Board Meeting, Audit Committee Meeting, Shareholdings and the Compliance report as per

Securities and Exchange Commission’s Notification are enclosed herewith as Annexure-I andAnnexure-II respectively.

On behalf of the Board

Rajeev GopalakrishnanManaging Director

Directors' Report Statutory Information on the Financial Statements

16 17

Annexure - IThe information regarding Board Meetings, Audit Committee and Shareholding Position of the Company for theyear 2009 are mentioned below in Compliance with Securities and Exchange Commission’s NotificationNo.SEC/CMRRCD/2006-158/Admin/02-08 dated 20 February 2006.

Board MeetingsThe Board met four times during the year 2009. The Company Secretary and the Chief Financial Officer werealso present in the Meetings. The attendance by each Director is mentioned below:

Name of Director No. of AttendanceMr. Fernando Garcia Restrepo 1 Meeting Mr. Mike Middleton 2 MeetingsMr. Rashidul Hasan 4 MeetingsMr. Rokanuddin Mahmud 1 MeetingMr. J D Hearns 4 Meetings (retired on 28 January 2010)Mr. Rajeev Gopalakrishnan – (appointed on 28 January 2010)

Audit Committee MeetingThe Audit Committee is a sub-committee of the Board. All members of the Audit Committee were appointed bythe Board of Directors among their members. They met once during the year 2009. Except for Mr. FernandoGarcia Restrepo and Mr. Rokanuddin Mahmud all the members were present in the meeting of the committee.The Company Secretary was as the Secretary of the Committee. The Audit Committee comprise of:

Mr. Fernando Garcia Restrepo – ChairmanMr. Rajeev Gopalakrishnan – Member (appointed on 28 January 2010)Mr. Mike Middleton – Member Mr. Rashidul Hasan – Member as Independent DirectorMr. Rokanuddin Mahmud – Member as Independent DirectorMr. J D Hearns – Member (retired on 28 January 2010)

ShareholdingsThe name of the Shareholders along with the position of their shares are listed below:

NAME OF SHAREHOLDER SHARES HELD % OF HOLDINGi) Parent/subsidiary/associate/related parties:

u Bafin (Nederland) B.V. 9,576,000 70.00ii) Directors

u Mr. Rashidul Hasan 64 –iii) Executives (Head of Functions) Nil Niliv) Shareholders, who holds 10% or more. Nil Niliv) Other Shareholders, who holds less than 10%

u Other Non Resident (Institutions) 1,343,320 9.82u Institutions (Local) 822,854 6.02u Individuals 1,937,762 14.16Total 13,680,000 100.00

1.1 Board’s Size (not less than 5 and notmore than 20 members) √

1.2(i) Independent non-shareholder Directornumber (At least one tenth(1/10) of totalnumber of Directors) √

1.2(ii) Appointed independent Director (s) byelected directors √

1.3 Individual Chairman of the Board and ChiefExecutive and their roles and responsibilities √

1.4 The Directors’ Report to the Shareholders:1.4(a) Fairness of Financial Statements √1.4(b) Maintenance of proper books of accounts √1.4(c) Adoption of appropriate accounting

policies and estimates √1.4(d) Compliance with International Accounting

Standards √1.4(e) Soundness of internal control system √1.4(f) Ability to continue as a going concern √1.4(g) Significant deviations from last year √1.4(h) Presentation of last three years key

operating and financial data √1.4(i) Declaration of dividend √1.4(j) Details of Board Meeting and attendance √1.4(k) Shareholding pattern √2.1 Appointment of Company Secretary (CS),

Chief Financial Officer (CFO) and Head ofAudit (HOA) and define their respectiveroles responsibilities and duties. √

2.2 Attendance of Company Secretary andChief Financial Officer at the Board Meeting √

3.0 Audit Committee:3.1(i) Constitution of Audit Committee √

18 19

Annexure – IIStatus of Compliance with the conditions imposed by the Securities & Exchange Commission’s Notification No.SEC/CMRRCD/2006-158/Admn/02-08, dated 20 February 2006

(Report under Condition No. 5.00)

Compliance Status ExplanationCondition Not for non

No. Title Complied Complied compliancewith the

condition

20 21

Auditors' Report to the Shareholders ofBata Shoe Company (Bangladesh) Limited

We have audited the accompanying balance sheet of Bata Shoe Company (Bangladesh) Limited as at 31December 2009 and the related profit and loss account, statement of changes in equity and cash flow statementfor the year then ended, and a summary of significant accounting policies and explanatory notes. Thepreparation of these financial statements is the responsibility of the company's management. Our responsibilityis to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards requirethat we plan and perform the audit to obtain reasonable assurance whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements, prepared in accordance with Bangladesh Accounting Standards (BAS)and Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company'saffairs as at 31 December 2009 and of the results of its operations and its cash flows for the year then endedand comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable lawsand regulations.

We also report that:

(a) we have obtained all the information and explanations which to the best of our knowledge and beliefwere necessary for the purposes 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 itappeared from our examination of those books;

(c) the company's balance sheet and profit and loss account dealt with by the report are in agreement withthe books of account; and

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

Dhaka, 20 April 2010 Rahman Rahman HuqChartered Accountants

3.1(ii) Constitution of Committee with Boardmember including one independent Director √

3.2(iii) Filling of casual vacancy in committee N/A3.2(i) Chairman of Committee √3.2(ii) Professional qualification and experience

of the Chairman of the Committee. √3.3.1(i) Reporting to the Board of Directors √3.3.1(ii) (a) Reporting of conflict of interest to

Board of Directors √3.3.1(ii) (b) Reporting of any fraud or irregularity or defect

in the internal control system N/A3.3.1(ii) (c) Reporting of infringement of laws, including

securities related laws, rules and regulations. N/A3.3.1(ii)(d) Reporting any other matter to the

Board of Directors √3.3.2 Reporting of the qualified point to the

Commission N/A3.4 Reporting of activities to the shareholders

and General Investors N/A4.00 External/Statutory Auditors:4.00(i) Non-engagement in appraisal or valuation √4.00(ii) Non engagement in designing of financial

information system √4.00(iii) Non-engagement in bookkeeping or other

services related to the accounting records orfinancial statement √

4.00(iv) Non engagement in broker dealer services √4.00(v) Non engagement in actuarial services √4.00(vi) Non engagement in Internal Audit services √4.00(vii) Non engagement in any other services √

Compliance Status ExplanationCondition Not for non

No. Title Complied Complied compliancewith the

condition

Bata Shoe Company (Bangladesh) LimitedBalance Sheet as at 31 December 2009

Bata Shoe Company (Bangladesh) LimitedProfit and Loss Account for the year ended 31 December 2009

22 23

Notes 2009 2008Taka Taka

AssetsProperty, plant and equipment 4 508,297,292 457,967,888 Capital work in progress 5 13,860,671 -Investment in subsidiary 6 19,970,000 -Deferred tax assets 7 16,000,000 12,286,000 Total non-current assets 558,127,963 470,253,888

Inventories 8 1,433,325,407 1,460,138,433 Accounts receivable 9 100,987,926 79,493,676 Advances, deposits and prepayments 10 278,455,551 210,086,869 Cash and cash equivalents 11 352,067,178 263,407,792 Total current assets 2,164,836,062 2,013,126,770 Total assets 2,722,964,025 2,483,380,658

EquityShare capital 12 136,800,000 136,800,000 Reserves and surplus 13 983,687,323 835,240,878 Total equity 1,120,487,323 972,040,878

LiabilitiesDeferred liability 14 131,959,233 127,064,575 Total non-current liabilities 131,959,233 127,064,575

Creditors for goods 15 278,984,626 387,613,341 Creditors for expenses 16 518,429,047 353,562,172 Creditors for other finance 17 173,433,804 129,715,417 Provision for tax 18 454,922,477 432,674,318 Unclaimed dividend 44,747,515 80,709,957 Total current liabilities 1,470,517,469 1,384,275,205 Total liabilities 1,602,476,702 1,511,339,780 Total equity and liabilities 2,722,964,025 2,483,380,658

The annexed notes 1 to 36 form an integral part of these financial statements.Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.

Rajeev Gopalakrishnan Rashidul Hasan Md. Hashim RezaManaging Director Director Company Secretary

As per our report of same date.

Dhaka, 20 April 2010 Rahman Rahman HuqChartered Accountants

Rajeev Gopalakrishnan Rashidul Hasan Md. Hashim RezaManaging Director Director Company Secretary

As per our report of same date.

Dhaka, 20 April 2010 Rahman Rahman HuqChartered Accountants

Notes 2009 2008Taka Taka

Revenue 19 4,995,356,942 4,623,312,077 Cost of goods sold 20 (3,237,854,140) (3,030,618,923)Gross profit 1,757,502,802 1,592,693,154 Other income 21 7,103,518 7,241,407 Administration, selling and distribution expenses 22 (1,108,521,211) (951,660,940)Profit from operating activities 656,085,109 648,273,621 Finance income 23 10,669,463 9,016,498 Finance expenses 24 (3,920,419) (5,043,064)Profit before contribution to workers' profit participation fund 662,834,153 652,247,055 Contribution to workers' profit participation fund (33,141,708) (32,612,353)Profit before tax 629,692,445 619,634,702 Tax expense:

Current tax 18 184,000,000 180,000,000 Deferred tax 7 (3,714,000) (9,781,000)

180,286,000 170,219,000 Profit after tax for the year 449,406,445 449,415,702

Basic earnings per share (par value Tk 10) 31 32.85 32.85

Profit after tax from manufacturing and trading has been shown in attached Exhibit - I.

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.

The annexed notes 1 to 36 form an integral part of these financial statements.

Bata Shoe Company (Bangladesh) LimitedNotes to the Financial Statements as at and for the year ended 31 December 2009

24 25

Bata Shoe Company (Bangladesh) LimitedStatement of Changes in Equity for the year ended 31 December 2009

Reserves and surplusNon-

Reserve on distributable Unappro-Share revaluation special General priated

Particulars capital of land reserve reserve profit Total Total

Taka Taka Taka Taka Taka Taka Taka Balance as at 1 January 2008 136,800,000 60,631,183 998,620 48,863,000 575,292,171 685,784,974 822,584,974 Final dividend of 2007 - - - - (143,640,000) (143,640,000) (143,640,000)Profit for the year - - - - 449,415,702 449,415,702 449,415,702 Interim dividend of 2008 - - - - (157,320,000) (157,320,000) (157,320,000)Unclaimed dividend 1,000,202 1,000,202 1,000,202

Balance as at 31 December 2008 136,800,000 60,631,183 998,620 48,863,000 724,748,075 835,240,878 972,040,878 Final dividend of 2008 - - - - (143,640,000) (143,640,000) (143,640,000)Profit for the year - - - - 449,406,445 449,406,445 449,406,445 Interim dividend of 2009 - - - - (157,320,000) (157,320,000) (157,320,000)

Balance as at 31 December 2009 136,800,000 60,631,183 998,620 48,863,000 873,194,520 983,687,323 1,120,487,323

Bata Shoe Company (Bangladesh) LimitedCash Flow Statement for the year ended 31 December 2009

2009 2008Taka Taka

Cash flows from operating activitiesCash receipts from customers 4,975,613,305 5,254,387,256 Cash paid to suppliers and employees (4,260,313,181) (4,743,663,211)Cash generated from operating activities 715,300,124 510,724,045 Interest paid (3,920,419) (5,043,064)Income tax paid (176,623,158) (151,522,192)Net cash from operating activities 534,756,547 354,158,789

Cash flows from investing activitiesInterest received 10,655,115 8,979,530 Proceed from sales of property, plant and equipment 4,140,332 1,719,912 Acquisition of property, plant and equipment (123,970,165) (92,122,169)Net cash used in investing activities (109,174,718) (81,422,727)

Cash flows from financing activitiesRepayment of finance lease - (226,328)Dividend paid (336,922,443) (309,215,569)Net cash used in financing activities (336,922,443) (309,441,897)

Net cash increase/(decrease) in cash and cash equivalents 88,659,386 (36,705,835)

Cash and cash equivalents as at 1 January 263,407,792 300,113,627

Cash and cash equivalents as at 31 December (Note 11) 352,067,178 263,407,792

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.

1. Reporting entityBata Shoe Company (Bangladesh) Limited (the "company") is a listed company limited by shares and wasincorporated in Bangladesh in 1972 under the Companies Act 1913. The address of the registered office of thecompany is Tongi, Gazipur, Bangladesh. The company is one of the operating companies of worldwide Bata ShoeOrganization (BSO). The shares in the company are mostly held by Baffin (Netherlands) B.V. The financial period ofthe company 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 as well as finished leather. Manufacturing plants of the company are situated at Tongi andDhamrai.

2. Basis of preparation

2.1 Statement of complianceThese financial statements have been prepared in accordance with Bangladesh Accounting Standards (BAS) andBangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules1987 and other applicable laws and regulations.

The financial statements were approved by the Board of Directors on 20 April 2010.

2.2 Basis of measurementThese financial statements have been prepared on the historical cost basis except revaluation of land at Tongi madein 1979.

2.3 Functional and presentational currencyThese financial statements are presented in Bangladesh Taka (Taka/Tk), which is the company's functional currency.All financial information have been rounded off to the nearest Taka except the information presented in revenue innote 19 and related party transactions in note 33 have been rounded off to the nearest thousand Taka.

2.4 Use of estimates and judgmentsThe preparation of financial statements requires management to make judgments, estimates and assumptions thataffect 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. Revision to accounting estimates arerecognised in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgement in applying accounting policiesthat have the most significant effect on the amounts recognised in the financial statements is included in the followingnotes:

Note 3.3 InventoriesNote 3.5 Bad debts provisionNote 7 Deferred tax assetsNote 14 Deferred liabilityNote 18 Provision for taxNote 35 Contingent liabilities

2.5 Going concernThe company has adequate resources to continue in operation for the foreseeable future. For this reason thedirectors continue to adopt going concern basis in preparing the financial statements. The current resources of thecompany provide sufficient fund to meet the present requirements of the existing business.

26 27

3. Significant accounting policiesThe accounting policies set out below have been applied consistently to all periods presented in these financialstatements.

3.1 Foreign currencyForeign currencies are translated into Taka at the rates prevailing on the transaction date. Monetary assets andliabilities are translated at the rates prevailing at the balance sheet date. Non-monetary assets and liabilities arereported using the exchange rate prevailing at the date of transaction. Differences arising on conversion are chargedor credited to the profit and loss account.

3.2 Property, plant and equipment

3.2.1 Recognition and measurementItems of property, plant and equipment excluding land are measured at cost less accumulated depreciation andaccumulated impairment losses. Land is measured at revalued amount.

Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the location andcondition necessary for it to be capable of operating in the intended manner. The cost of self construed asset includedthe cost of material and direct labour, any other cost directly attributable to bringing the assets to a working conditionfor their intended use.

3.2.2 Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of theitem if it is probable that the future economic benefits embodied within the part will flow to the company and its costcan be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-dayservicing of property, plant and equipment are recognised in profit or loss as incurred.

3.2.3 DepreciationNo depreciation is charged on land and capital work in progress. Depreciation is charged on all other items ofproperty, plant and equipment of Tongi factory on reducing balance method while straight line method is followed inrespect of Dhamrai factory. The rates of depreciation are as follows:

Tongi DhamraiBuilding - Factory 20% 2.5%

- General 10% 2.5%Plant and machinery 15% 7.5%Motor vehicles 20% 20%Furniture, fixtures and equipment 10% 10%

3.2.4 Leased assets Leases in terms of which the company assumes substantially all the risks and rewards of ownership are classifiedas finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fairvalue and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accountedfor in accordance with the accounting policy applicable to that asset. Other leases are operating leases and theleased assets are not recognised on the company's balance sheet.

3.2.5 Capital work in progressProperty, plant and equipment that is being under construction/acquisition is accounted for as capital work inprogress until construction/acquisition is complete and measured at cost.

3.3 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.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs ofcompletion and selling expenses.

3.4 ImpairmentThe carrying amounts of the assets, other than inventories and deferred tax assets are reviewed at each reportingdate to determine whether there is any indication of impairment. If any such indication exists then the recoverableamount of the asset is estimated. Impairment losses, if any, are recognised in profit and loss account.

3.5 Accounts receivableAccounts receivables are initially recognised at cost which is the fair value of the consideration given in return. Afterinitial recognition these are carried at cost less impairment losses due to uncollectibility of any amount sorecognised.

Provision for doubtful debts is made based on the company policy. Bad debts are written off on consideration of thestatus of individual debtors.

3.6 Cash and cash equivalentsCash and cash equivalents comprise cash on hand, cash in transit and cash at bank including fixed deposits havingmaturity of three months or less which are available for use by company without any restriction.

3.7 Share capitalPaid 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.

3.8 Employee benefitThe 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.

The company also maintains three contributory provident funds for its permanent employees categorised asmanagers, officers and supervisors and workers. These are administered by the Board of Trustees

A funded management pension fund is also in operation. Actuarial valuation of the gratuity fund is carried out by aprofessional actuary.

3.9 ProvisionsA provision is recognized 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.

3.10 TaxIncome tax expense comprises current and deferred taxes. Income tax expense is recognised in the profit and lossaccount.

28 29

3.10.1 Current taxIncome tax expense is recognised in profit and loss account. Current tax is the expected tax payable on the taxableincome for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment totax payable in respect of previous years. The Company qualifies as a "Publicly Traded Company"; hence theapplicable tax rate is 27.50 %. It enjoys 10% rebate on income tax payable so calculated for declaring dividend morethan 20% of paid up capital.

3.10.2 Deferred taxDeferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financialreporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that areexpected to be applied to the temporary differences when they are reversed, based on the laws that have beenenacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legallyenforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same taxauthority on the same taxable entity.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available againstwhich temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reducedto the extent that it is no longer probable that the related tax benefit will be realised.

3.11 RevenueRevenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returnsand allowances, Value Added Tax and trade discount.

Revenue from sale of goods is recognised when the significant risks and rewards of ownership has been transferredto the buyer, the company has no managerial involvement of ownership for the goods, the amount of the revenueand the cost of the transaction can be measured reliably, and it is probable that the economic benefit associated withthe transactions will flow to the company.

3.12 Duty drawbackDuty drawback claimed on export sales are adjusted against cost of imported raw materials.

3.13 Sales proceed from wastage, scrap etc.Sale of empty dram 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.

3.14 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.

3.15 Finance income and expenseFinance income comprises interest income on funds invested, interest on shop managers account held with thecompany and foreign exchange gain on translation of foreign currency. Interest income is recognised on accrualbasis.

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 profit and loss account.

3.16 Earnings per shareThe company presents basic earnings per share (EPS) data for its ordinary shares.Basic EPS is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weightedaverage number of ordinary shares outstanding during the year.

3.17 Events after the reporting periodEvents after the reporting period that provide additional information about the company's position at the reportingdate are reflected in the financial statements. Events after the reporting period that are not adjusting events aredisclosed in the notes when material.

4. Property, plant and equipmentCost/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 2009 the year the year 2009 2009 the year transfers 2009 2009 Taka Taka Taka Taka Taka Taka Taka Taka Taka

Land (increased by Tk 60,631,183 byrevaluation in 1979) 86,057,856 - - 86,057,856 - - - - 86,057,856

Building 248,260,456 19,916,638 - 268,177,094 139,838,274 9,822,588 - 149,660,862 118,516,232

Plant and machinery 573,893,788 17,736,318 (37,422,435) 554,207,671 472,029,796 16,387,327 (34,249,194) 454,167,929 100,039,742

Motor vehicles 22,540,651 1,400,000 (3,860,400) 20,080,251 11,917,151 2,103,794 (2,355,869) 11,665,076 8,415,175

Furniture, fixtures and equipment 270,092,240 71,056,538 (6,587,055) 334,561,723 119,091,882 25,889,830 (5,688,276) 139,293,436 195,268,287

1,200,844,991 110,109,494 (47,869,890) 1,263,084,595 742,877,103 54,203,539 (42,293,339) 754,787,303 508,297,292

2008 1,129,898,886 93,191,138 (22,245,033) 1,200,844,991 713,798,026 49,748,412 (20,669,335) 742,877,103 457,967,888

Building includes properties at 24 Bangabandhu Avenue, Dhaka which were purchased in 1985 from the Government of Bangladesh at acost of Tk 5,344,417. Sale deed is yet to be executed.4.1 Depreciation charged to:

2009 2008 Taka Taka

Cost of goods sold (Note 20.1) 20,450,664 20,087,639 Administration, selling and distribution expenses (Note 22) 33,752,875 29,660,773

54,203,539 49,748,412 4.2 Disposal of property, plant and equipment

Original Accumulated Book Sale Mode ofParticulars cost depreciation value value disposal Purchaser

Taka Taka Taka TakaMachinery 37,422,435 34,249,194 3,173,241 1,768,378 Auction Various partiesComputer 65,000 25,082 39,918 65,000 Ins. ClaimFurniture, fixturesand equipment 277,300 119,930 157,370 133,642 Auction M.A. Matin, GulshanTime clock forattendance 150,000 57,881 92,119 86,000 Ins. ClaimMotor vehicles:

Dhaka Metro GA 17-1935 1,796,000 1,207,014 588,986 435,000 Negotiation Qader Dhaka Metro Kha 12-3850 1,115,000 401,400 713,600 535,963 Negotiation Fazli Ali Dhaka Metro Kha 11-9254 949,400 747,455 201,945 189,620 Negotiation B. Chowdhury

Shop furniture andequipment 5,708,105 5,155,951 552,154 614,679 Auction Various partiesShop furniture 386,650 329,432 57,218 312,050 Ins. Claim

47,869,890 42,293,339 5,576,551 4,140,332

4.3 CIF value of capital assetsThere were no capital assets imported during 2009 under CIF basis. However, import of capital assets during 2009 underC&F basis was as follows:Capital assets Foreign currency Local currency

USD Taka Plant and machinery 214,082 15,100,326

15,100,326

30 31

2009 2008Taka Taka

5. Capital work in progressExpenses in connection with import of machinery:

Air blown injection machine 16,629 -Steam radiator 8,361 -Injection moulding machine 39,255 -

Expenses in connection with gas generator equipment 250,000 -

Expenses in connection with construction of CDC Dhamrai building 13,546,426 -13,860,671 -

6. Investment in subsidiaryOn 19 November 2009 the Company subscribed an amount of Tk 19,970,000 for 199,700 shares of Tk 100 each ofits newly incorporated wholly owned subsidiary BB Export Limited. This subsidiary was incorporated in Bangladeshand did not commence its operation till 31 December 2009.

7. Deferred tax assetsDeferred tax assets recognized in accordance with the provisions of BAS 12, Income taxes, is arrived at as follows:

Balance as at 1 January 12,286,000 2,505,000 Addition/(reduction) during the year 3,714,000 9,781,000 Balance as at 31 December 16,000,000 12,286,000

Carrying Taxable/amount on (deductible)

balance sheet temporarydate Tax base differenceTaka Taka Taka

As at 31 December 2009Property, plant and equipment (excluding land and certain motor vehicles) 420,454,951 315,932,419 104,522,532

Provision for staff gratuity (net of payment) (131,959,233) - (131,959,233)Provision for bad and doubtful debts (36,174,716) - (36,174,716)

Net deductible temporary difference (63,611,417)

Deferred tax assets (a) 16,000,000

As at 31 December 2008Property, plant and equipment (excluding land and certain motor vehicles) 369,605,827 256,571,908 113,033,919

Provision for staff gratuity (net of payment) (127,064,575) - (127,064,575)Provision for bad and doubtful debts (35,611,243) - (35,611,243)

Net deductible temporary difference (49,641,899)

Deferred tax assets (b) 12,286,000

Deferred tax credit (a-b) 3,714,000

2009 2008Taka Taka

8. InventoriesRaw materials 282,406,473 317,112,970 Raw materials in transit 28,922,384 15,088,375 Work in process 88,710,604 74,989,549 Finished goods 1,033,285,946 1,052,947,539

1,433,325,407 1,460,138,433

9. Accounts receivableTrade (unsecured) - considered good :

Export customers - BSO companies - 1,362,048 Export customers - Non BSO companies 8,659,308 8,823,283 Receivables from depots 58,596,776 49,666,541 Receivables from institutional sale 31,399,966 17,421,638

98,656,050 77,273,510 Others (unsecured) - considered good :

Insurance claims 1,229,210 1,826,440 VAT claims 108,480 46,336 Claim receivable on import 339,664 -Duty drawback claim receivable 654,522 347,390

2,331,876 2,220,166 100,987,926 79,493,676

Accounts receivable as at 31 December 2009 as shown above has been arrived at after deducting provision fordoubtful debts of Tk. 16,467,870 which was arrived at as follows:

Taka TakaBalance as at 1 January 18,106,773 21,749,888 Provision made during the year - 778,598 Bad debt written off during the year - (79,854)Provision reversed during the year (1,638,903) (4,341,859)Balance as at 31 December 16,467,870 18,106,773

Accounts receivable are aged as below:2009 2008

Below Over Below Oversix months six months six months six months

Taka Taka Taka Taka

Export customers - BSO companies - - 1,362,048 - Export customers - Non BSO companies 8,659,308 - 8,823,283 - Receivables from depots 58,596,776 - 49,666,541 - Receivables from institutional sale 31,399,966 - 17,421,638 - Insurance claims 1,229,210 - 1,826,440 - VAT claims 108,480 - 46,336 - Claim receivable on import 339,664 - -Duty draw back claim receivable 654,522 - 262,952 -

100,987,926 - 79,409,238 -

32 33

2009 2008Taka Taka

10. Advances, deposits and prepaymentsAdvances (considered good) to :

Landlords against rent 64,592,330 42,439,851 Agents and employees 599,592 614,737 Suppliers against materials and services 1,844,729 1,271,577

67,036,651 44,326,165 Advances (considered doubtful) to:

Agents and employees 20,577,126 17,532,594 Less: Provision against advances to agents and employees 19,706,846 17,504,470

870,280 28,124 67,906,931 44,354,289

Advance income tax 87,221,219 72,390,175 Security and other deposits 123,327,401 93,342,405

278,455,551 210,086,869 Provision against advances to agents and employees represents the following:Balance as at 1 January 17,504,470 16,319,903 Provision made during the year 2,571,501 1,184,567 Bad debts written off during the year (369,125) -Balance as at 31 December 19,706,846 17,504,470

Ageing of advances are as follows:2009 2008

Below Over Below Oversix months six months six months six months

Taka Taka Taka TakaAdvances to:

Landlord against rent 31,495,164 33,097,166 6,976,970 35,462,881 Agents and employees 599,592 - 614,737 - Suppliers against materials and services 1,844,729 - 1,271,577 -

33,939,485 33,097,166 8,863,284 35,462,881

2009 2008Taka Taka

11. Cash and cash equivalentsCash balances:

On hand 574,865 242,597

In transit:From stores 38,687,463 27,738,640 From depots 15,123,381 49,967,060 From institutions 1,177,007 5,228,630

Balances with banks in:Current accounts (48,603,002) 10,993,167Short term deposits 345,107,464 169,237,698

296,504,462 180,230,865 352,067,178 263,407,792

The current accounts include book overdrafts from Eastern Bank Limited and HSBC for Tk 85,892,508 andTk 1,296,359 respectively.

2009 2008Taka Taka

12. Share capitalAuthorised:

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 bonusshares) of Tk 10 each issued for considerationother 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. 528.30 (2008: Tk 320.70) and Tk 522.90 (2008: Tk 325.00) per share at 31 December 2009 respectively.

Percentage of shareholdings:2009 2008

% Taka % Taka

Bafin (Nederland) B.V. 70.00 95,760,000 70.00 95,760,000 International Finance Corporation 0.03 42,400 0.03 45,400 Other non-resident shareholders 9.79 13,390,800 8.11 11,098,800 Local shareholders 20.18 27,606,800 21.86 29,895,800

100.00 136,800,000 100.00 136,800,000 Classification of shareholders by holding:

Holdings Number of holders % of total holding

2009 2008 2009 2008

Less than 500 shares 6,152 7,040 91.16 6.96 501 to 5,000 shares 525 574 7.78 6.01 5,001 to 10,000 shares 35 28 0.52 1.54 10,001 to 20,000 shares 15 13 0.22 1.43 20,001 to 30,000 shares 6 7 0.09 1.26 30,001 to 40,000 shares 6 7 0.09 1.82 40,001 to 50,000 shares 1 1 0.01 0.32 50,001 to 100,000 shares 4 5 0.06 2.88 100,001 to 1,000,000 shares 4 4 0.06 7.78 Over 1,000,000 shares 1 1 0.01 70.00

6,749 7,680 100.00 100.00

34 35

2009 2008Taka Taka

13. Reserves and surplusReserve on revaluation of land 60,631,183 60,631,183 Non-distributable special reserve (Note 13.1) 998,620 998,620 General reserve 48,863,000 48,863,000 Unappropriated profit (Note 13.2) 873,194,520 724,748,075

983,687,323 835,240,878

13.1 Non-distributable special reserveThis 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

13.2 Unappropriated profitBalance as at 1 January 724,748,075 575,292,171 Profit for the year 449,406,445 449,415,702 Unclaimed dividend reversed - 1,000,202 Interim dividend -2009 (157,320,000) (157,320,000)Final dividend -2008 (143,640,000) (143,640,000)

873,194,520 724,748,075

14. Deferred liabilityDeferred liability represents provision for staff gratuity up to 31 December 2009.

Balance as at 1 January 127,064,575 140,265,275 Add: Provision made during the year 17,149,366 -

144,213,941 140,265,275 Less: Paid during the year 12,254,708 12,159,718

Forfeited during the year - 1,040,982 Balance as at 31 December 131,959,233 127,064,575

15. Creditors for goodsPayable to local suppliers 260,583,634 371,977,702 Payable to BSO companies 18,400,992 15,635,639

278,984,626 387,613,341

16. Creditors for expensesPayable to local suppliers 73,648,500 97,465,769 Payable to BSO companies 208,522,967 97,836,316 Accrued liabilities 236,257,580 158,260,087

518,429,047 353,562,172

2009 2008Taka Taka

17. Creditors for other financeWorkers' profit participation fund 33,141,708 32,612,353 Personal accounts of employees and agents 50,156,293 45,387,915 Security and other deposits 15,160,500 13,105,000 Provident fund 6,626,798 4,873,490 Tax deducted at source 38,401,508 24,226,417 Pension fund 1,323,668 1,481,437 VAT deducted at source 2,778,039 1,347,063 Salary and wages payable 4,907,315 4,717,169 Inter company payable 19,864,000 -Others 1,073,975 1,964,573

173,433,804 129,715,417

18. Provision for taxCurrent year 184,000,000 180,000,000 Earlier years (net of advance tax) 270,922,477 252,674,318

454,922,477 432,674,31819. Revenue

Product category Unit 2009 2008

Quantity Amount Quantity Amountin '000 '000 Taka in '000 '000 Taka

Shoe -Plastic Pair 2,072 266,607 2,526 310,205 Thong Pair 15,044 612,856 16,407 778,304 Rubber and canvas Pair 1,327 446,504 1,387 403,360 Leather Pair 8,754 3,439,060 8,248 2,916,341

Hosiery Pair 2,062 158,116 1,910 119,816

Export -Leather Sft. 135 13,554 228 23,332 Shoes Pair 177 58,660 208 71,954

4,995,357 4,623,312

The above revenue has been arrived as follows:

2009 2008Taka Taka

Gross Revenue Net of VAT 5,149,352,312 4,770,587,928

Less: Sales proceed from wastage, scrap, etc. (8,317,634) (10,744,655)

Wholesale trade discount (145,677,736) (136,531,196)

Net revenue 4,995,356,942 4,623,312,077

36 37

2009 2008Taka Taka

20. Cost of goods soldStock of finished goods as at 1 January 1,052,947,539 832,680,083 Add: Cost of goods manufactured (Note 20.1) 2,587,556,308 2,823,960,512 Finished goods purchased 630,636,238 426,925,867

4,271,140,085 4,083,566,462 Less: Stock of finished goods as at 31 December 1,033,285,945 1,052,947,539

3,237,854,140 3,030,618,923

The opening and closing stocks of goods produced as per category are shown below:Figures in '000 pairs

Closing OpeningCategory stock stockShoe – Plastic 835 685

– Thong 973 995– Rubber and Canvas 482 730– Leather 2,450 2,382

4,740 4,792

2009 2008Taka Taka

20.1 Cost of goods manufacturedCost of materials consumed (Note 20.1.1) 1,961,392,914 2,250,997,792

Direct wages 352,101,234 308,396,404 2,313,494,148 2,559,394,196

Manufacturing overhead :Remuneration to employees 114,222,980 105,662,220 Gas, water and electricity 47,776,047 39,317,259 Repairs and maintenance (Note 20.1.2) 74,843,881 69,613,180 Insurance 3,875,547 7,590,123 Uniform to workers 903,246 700,420 Health and other welfare expenses 13,818,831 12,005,673 Travelling 5,679,643 4,709,471 Postage 384,666 252,616 Freight and transport 1,695,029 1,150,190 Stationery 1,866,587 1,176,304 Entertainment 2,266,094 1,911,842 Depreciation (Note 4.1) 20,450,664 20,087,639

287,783,215 264,176,937 2,601,277,363 2,823,571,133

Difference in work in process :Work in process as at 1 January 74,989,549 75,378,928 Work in process as at 31 December 88,710,604 74,989,549

(13,721,055) 389,379 Cost of goods manufactured 2,587,556,308 2,823,960,512

20.1.1 Cost of materials consumed

Opening stock Purchase Closing stock Consumption

Description Unit Quantity Value C&F value Quantity Value Quantity Value Quantity Value (Taka) (USD) (Taka) (Taka) (Taka)

Imported:

EVA resin Kg 102,325 20,465,000 1,545,468 961,000 107,410,000 77,725 8,549,750 985,600 119,325,250 PVC resin Kg 176,950 18,579,750 1,610,504 1,599,000 111,930,000 150,375 10,526,250 1,625,575 119,983,500 Wet Blue Sft 113,586 11,396,462 576,585 556,684 40,072,641 66,197 4,990,972 604,073 46,478,131

Others - 152,703,462 - - 622,784,024 - 111,488,135 - 663,999,351203,144,674 882,196,665 135,555,107 949,786,232

Local purchase 113,968,296 1,052,807,386 146,851,366 1,019,924,316

Sales proceed from wastage, scrap, etc. - (8,317,634) - (8,317,634)

2009 317,112,970 1,926,686,417 282,406,473 1,961,392,914

2008 333,106,330 2,235,004,432 317,112,970 2,250,997,792

Duty drawback of Tk. 2,306,041 claimed on export sales have been adjusted against cost of raw materials.

20.1.2 Repairs and maintenanceRepairs and maintenance amounting to Tk 74,843,881 includes Tk 34,646,563 (including C&F value of US$ 483,517and EUR 12,008 of imported items) representing cost of spare parts, moulds and accessories consumed.

20.2 Statement of productionProduction capacity in pairs Actual production in pairs

Figures in '000 Figures in '0002009 2008 2009 2008

Tongi 23,431 25,937 19,912 22,732 Dhamrai 6,673 6,943 6,392 6,127

30,104 32,880 26,304 28,859

20.2.1 Production capacity and actual production of each category are given below:Figures in '000 pairs

Installed ActualCategory capacity production

Shoe – Plastic 3,340 2,267 – Thong 18,560 16,468 – Rubber and Canvas 1,531 1,177 – Leather 6,673 6,392

30,104 26,304

2009 2008Taka Taka

21. Other incomeProfit/(loss) on disposal of property, plant and equipment (1,436,219) 144,214 Discount for early payment 8,539,737 6,786,217 General trading - 310,976

7,103,518 7,241,407 Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.

38 39

2009 2008Notes Taka Taka

22. Administration, selling and distribution expenses

Remuneration to employees 360,350,283 310,914,077 Health and other welfare expenses 8,646,380 8,099,188 Travelling expenses 38,975,461 37,014,525 Bank charges 6,551,142 6,083,378 Repairs and maintenance 62,177,793 45,195,519 Stationery 12,286,535 9,363,816 Postage, telegram and telephone 9,595,338 9,960,966 Entertainment expenses 9,977,547 7,269,241 Subscription and donation 6,839,209 1,734,054 Advertisement 20,991,682 24,583,881 Rent, rates and taxes 93,203,114 72,019,226 General charges 22.1 23,040,859 16,279,482 Directors' fees 68,000 78,000 Auditors' fees 418,000 357,500 Legal and other professional fees 22.2 5,128,947 3,915,231 Insurance 2,454,104 3,665,472 Land revenue 431,678 774,358 Freight and transport 44,568,980 40,420,953 Packing expenses 56,997,081 56,222,351 Commission 22.3 123,413,785 106,832,326 Royalty on Hush Puppies brand 22.4 8,655,078 5,158,957 Royalty on Dr. Scholl brand 22.4 2,477,165 2,133,913 Global Footwear Services fees 22.4 32,174,700 32,651,717 Electricity 31,625,199 21,391,215 Trade mark licence fees 22.4 107,215,954 99,880,821 IT fees 6,504,322 -Depreciation 4.1 33,752,875 29,660,773

1,108,521,211 951,660,940

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.

22.1 General chargesGeneral charge represents security service, samples, bad debts, etc. Bad debts represent the following: TakaProvision against advances to agents and employees 2,571,501Provision for bad debts reversed (1,638,903)Bad debts previously write off now recovered (126,136)

806,462 22.2 Legal and other professional fees

Legal and other professional fees include fees of Tk 3,956,813 (2008: Tk 2,147,215) of the statutory audit firm in connectionwith global reporting, tax certification and services regarding assessments/appeals and advisory services.

22.3 CommissionRetail 121,559,616 105,821,984 Export 1,854,169 1,010,342

123,413,785 106,832,326

22.4 Royalty on Hush Puppies brand , royalty on Dr. Scholl brand, Global Footwear Services fees and trade mark licencefees of Tk 8,655,078, Tk. 2,477,165, Tk. 32,174,700 and Tk 107,215,954 respectively represent equivalent foreigncurrency of USD 125,664 USD 35,966 SGD 660,000 and USD 1,556,674.24 provided during the year as provisionfor expenses.

2009 2008Taka Taka

23. Finance incomeInterest on:

Fixed deposit 4,226,193 2,230,871 Short term deposit 6,159,715 4,971,087 Personal account 14,348 36,968

Exchange gain 269,207 1,777,572 10,669,463 9,016,498

24. Finance expensesInterest on:

Overdraft 766,401 2,480,692 Lease finance - 8,672 Personal account 3,154,018 2,553,700

3,920,419 5,043,064

25. Emoluments to directorsRemuneration 14,606,145 13,712,148 Bonus 17,465,488 25,136,357 Retirement benefit schemes 1,041,880 972,420 Housing 2,160,000 2,040,000

35,273,513 41,860,925

26. Emoluments to managersRemuneration 81,312,938 70,413,147 Retirement benefit schemes 10,337,137 9,055,757 Housing 9,713,959 9,983,884

101,364,034 89,452,788

27. Contribution to employees' provident fund and pension fundDuring the year 2009 the company contributed the following amounts to the employees' provident fund and pensionfund:

Provident fund :Managers 5,407,206 4,860,340 Officers & supervisors 6,833,091 6,292,238 Workers 9,576,576 9,935,917

21,816,873 21,088,495 Pension fund 5,227,090 5,167,837

27,043,963 26,256,332

28. Profit before taxThis includes profit amounting to Tk 357,346,048 (2008 : Tk 387,266,038) of leather shoe factory and tannery atDhamrai.

40 41

29. Remittance of foreign currency

Amount Amountin foreign in local

Name of party Nature of transaction Currency currency currencyTaka

Bafin (Nederland) B.V. Dividend USD 2,739,243 189,604,800

SSL International PLC Royalty on Dr. Scholl Brand GBP 8,625 1,005,621

Global Footwear Service Footware services fees SGD 445,500 21,793,900 Pte. Ltd, Singapore

Wolverine World Royalty on Hush USD 66,884 4,643,061 Wide Inc., USA Puppies Brand

The figures represent net of tax.

30. Earnings in foreign currency

C&F valueUnit Quantity USD Taka

Export of – Finished leather Sft 135,104 198,529 13,553,601 – Shoes Pair 177,469 858,592 58,660,228

31. Earnings per share

31.1 Basic earnings per share (EPS)

2009 2008Taka Taka

The computation of EPS is given below:Earnings attributable to the ordinary shareholders (net profit after tax) 449,406,445 449,415,702 Weighted average number of ordinary shares outstanding during the year 13,680,000 13,680,000Basic earnings per share (EPS) 32.85 32.85

31.2 Diluted earning per shareNo diluted earnings per share is required to be calculated for the year as there was no scope for dilution during theyear.

32. Number of employeesThe number of employees for the whole year or part thereof who received a total remuneration of Tk 36,000 andabove was 1,510 (2008: 1,519).

33. Related party transactions

Transactions Receivable/Nature of Nature of during (payable) as at

Name of the party relationship transaction the year 31 Dec 2009(Taka '000) (Taka '000)

Bata, Singapore Group company Purchase (259,497) (17,165)Claim 1,678 - Service received (555) (382)

Bata, Czech Group company Service received (105) -

Bata, Sri Lanka Group company Sales (1,362) -

Bata (Malaysia) Berhad Group company Service received (163) - Service given 16 -

Bata, Thailand Group company Purchase (867) - Service received (14) -

P.T. Sepatu Bata, Jakarta Group company Purchase (1,362) (715)Claim 343 340 Service received (139) (139)

Global Footwear Service Group company Service received (32,136) (16,220)Pte. Ltd., Singapore

Bata Brand S.a.r.l., Luxembourg Group company Trade mark (107,216) (207,097)licence fees

Compass S.P.A., Italy Group company Service received 33 -

Euro Footwear Holdings s.a.r.l. Group company Service received (6,573) (6,573)

BB Export Limited Subsidiary company Subscription of shares 19,970,000 19,970,000 Liability for subscription of shares (19,970,000) (19,970,000)

Incorporation expenses 106 106

Key management employee Directors Salary and other (35,274) - benefits

Key employees -do- (101,364) -

Transactions with related companies are priced on arm's length basis and are in the ordinary course of business.

34. Capital expenditure and financial commitmentThere were no capital expenditure and financial commitments as at 31 December 2009 (2008: Nil)

35. Contingent liabilitiesThere are contingent liabilities on account of unresolved disputed corporate tax assessments and VAT claims by theauthority aggregating to Tk. 654,219,000 (2008: Tk 763,492,000). Considering the merits of the cases, it has notbeen deemed necessary to make provisions for all such disputed claims. However, the company has so far madeprovision for Tk 368,852,000 (2008: 335,083,000) against the above contingent liabilities.

There is also contingent liability in respect of outstanding letters of credit of Tk. 103 million and letter of guarantee ofTk. 4.2 million.

36. Events after the reporting periodFor the year 2009 the Board of Directors recommended a final dividend of Tk 10.50 per share amounting toTk 143,640,000 at the board meeting held on 20 April 2010.

Bata Shoe Company (Bangladesh) LimitedProfit and Loss Account for the year ended 31 December 2009 k´Ké lro

Exhibit - I

2009 2008Manufacturing Trading Total Total

Taka Taka Taka Taka

Revenue 4,383,915,615 611,441,327 4,995,356,942 4,623,312,077 Cost of goods sold (2,879,540,111) (358,314,029) (3,237,854,140) (3,030,618,923)Gross profit 1,504,375,504 253,127,298 1,757,502,802 1,592,693,154 Other income 7,103,518 - 7,103,518 7,241,407 Administration, selling anddistribution expenses (948,864,579) (159,656,632) (1,108,521,211) (951,660,940)Profit from operating activities 562,614,443 93,470,666 656,085,109 648,273,621 Finance income 9,132,776 1,536,687 10,669,463 9,016,498 Finance expenses (3,355,774) (564,645) (3,920,419) (5,043,064)Profit before contribution to WPPF 568,391,445 94,442,708 662,834,153 652,247,055 Contribution to WPPF (28,419,573) (4,722,135) (33,141,708) (32,612,353)Profit before tax 539,971,872 89,720,573 629,692,445 619,634,702 Tax expense:

Current tax 175,932,903 8,067,097 184,000,000 180,000,000 Deferred tax (3,714,000) - (3,714,000) (9,781,000)

172,218,903 8,067,097 180,286,000 170,219,000 Profit after tax for the year 367,752,969 81,653,476 449,406,445 449,415,702

IjMV´y TPr CPuäU TÀjßv~JrPyJflJPrr lKuS / KmS jÄ ßv~Jr xÄUqJ

CkK˙Kf

IJKo/IJorJ FfÆJrJ 24 \Mj, 2010 mOy¸KfmJr xTJu 10:30aJ~ iJorJA TJrUJjJ, dJTJ~ IjMKÔfmq mJaJ xM ßTJŒJjL(mJÄuJPhv) KuKoPac-Fr IJaK©vfo mJKwtT xJiJre xnJ~ IJoJr/IJoJPhr CkK˙Kf KuKkm≠ TruJoÇ

ßv~JrPyJflJPrr jJo˝Jãr

k´KfKjKir jJo˝Jãr

ßv~JrPyJflJPrr lKuS / KmS jÄxnJTPã k´PmPvr kNPmt CkK˙Kf k©UJjJ k´hvtPjr IjMPrJi TrJ pJPòÇ

IJKo/IJorJ

KbTJjJ

mJaJ xM ßTJŒJjL (mJÄuJPhv) KuKoPac-Fr ßv~JrPyJflJr KyxJPm

\jJm / ßmVo ßTIJoJr / IJoJPhr k´KfKjKi KyxJPm IJVJoL mOy¸KfmJr, 24 \Mj 2010fJKrPU IjMKÔfmq ßTJŒJjLr IJaK©vfo mJKwtT xJiJrexnJ~ FmÄ Fr oMufmL ßWJKwf xnJ~ IJoJr / IJoJPhr kPã CkK˙f gJTJr FmÄ ßnJa k´hJj TrJr \jq KjpMÜ TruJoÇ

˝Jãq KyxJPm IJ\ 2010 fJKrPU IJKo / IJorJ FA hKuPu xùJPj ˝Jãr TruJoÇ

ßv~JrPyJflJPrr ˝Jãr k´KfKjKir ˝Jãr

fJKrU ˝JãLr ˝Jãr

10.00 aJTJrrJ\˝ KaPTa

(ßTJŒJjLPf xÄrKãf ßv~JrPyJflJPrr ˝Jãr ImvqA KouPf yPmÇ)

Form of ProxyPlease Quote

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

ATTENDANCE

I/We hereby record my/our presence at the 38th Annual General Meeting of Bata Shoe Company(Bangladesh) Limited at Dhamrai Factory, Dhaka on Thursday 24 June, 2010 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) 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 38th Annual General Meeting of theCompany to be held on Thursday 24 June, 2010 and adjournment thereof and the poll that may be taken inconsequence thereof.

As witness my/our hand this day of 2010

Signature of Shareholder (s) Signature of Proxy

Date Signature of Witness

Revenue Stampof Tk. 10.00

(Signature of Shareholder (s) must be in accordance with specimen signature with the Company.)

SHOE COMPANY (BANGLADESH) LIMITEDTONGI, GAZIPUR

TEL: +880-2-9800501-5FAX: +880-2-9800511

E-MAIL: [email protected]

4033 33