Boston Properties Annual Report 2013

Plain-text annual report

Annual Report 2013 BEXIMCO PHARMACEUTICALS LIMITED Annual Report 2013 | I It is only when you are healthy, you enjoy fully the joy of life. The joy of emotions and experiences. The journey among friends and families. The miracle we live every day. Life. It is that health we strive to sustain. To nurture. A healthy life for all. II | Annual Report 2013 Annual Report 2013 BEXIMCO PHARMACEUTICALS LIMITED 1 Annual Report 2013 |Mission We are committed to enhancing human health and well being by providing contemporary and affordable medicines, manufactured in full compliance with global quality standards. We continually strive to improve our core capabilities to address the unmet medical needs of the patients and to deliver outstanding results for our shareholders. Vision We will be one of the most trusted, admired and successful pharmaceutical companies in the region with a focus on strengthening research and development capabilities, creating partnerships and building presence across the globe. Core Values Our core values define who we are; they guide us to take decisions and help realize our individual and corporate aspirations. Commitment to quality We adopt industry best practices in all our operations to ensure highest quality standards of our products. Customer satisfaction We are committed to satisfying the needs of our customers, both internal and external. People focus We give high priority on building capabilities of our employees and empower them to realize their full potential. Accountability We encourage transparency in everything we do and strictly adhere to the highest ethical standards. We are accountable for our own actions and responsible for sustaining corporate reputation. Corporate Social Responsibility We actively take part in initiatives that benefit our society and contribute to the welfare of our people. We take great care in managing our operations with high concern for safety and environment. 2 | Annual Report 2013 Contents About the Company Key Milestones Board and Management 2013 Highlights Managing Director’s Statement Manufacturing Capabilities New Products Accolades Global Accreditations Factory Visits Our People Our R&D Capabilities Global Footprint Corporate Social Responsibility Post Balance Sheet Update Notice Chairman’s Statement 05 06 09 13 15 18 26 32 35 36 37 41 43 46 50 51 52 Directors’ Report to the Shareholders 54 Certificate on Compliance of Corporate Governance Guidelines 63 Report on the Activities of the Audit Committee 64 Shareholders’ Meeting Value Added Statement Graphical View of Selected Growth Indicators Independent Auditors’ Report Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Proxy Form and Attendance Slip 66 68 70 71 73 74 69 72 75 Annual Report 2013 | 3 4 | Annual Report 2013 About the Company Beximco Pharmaceuticals Ltd. (Beximco Pharma) is a leading manufacturer of medicines and active pharmaceutical ingredients (APIs) based in Bangladesh. Incorporated in the late 70s, Beximco Pharma began as a distributor, importing products from global MNCs like Bayer, Germany and Upjohn, USA and selling them in the local market, which were later manufactured and distributed under licensing arrangement. Over the years the company has grown from strength to strength and today it has become a leading exporter of medicines in the country winning National Export (Gold) Trophy a record four times. Benchmarked to global standards, Company’s manufacturing facilities have been accredited by the major global regulatory authorities, and it has so far expanded its geographic footprint across all the continents. Beximco Pharma currently has a portfolio of more than 500 products encompassing all major therapeutic categories, and it has successfully differentiated itself by offering technology driven specialized products. With a dedicated workforce of around 3,000 people, the simple principle on which it was founded remains the same: producing high-quality generic drugs and making them affordable to our people. Annual Report 2013 | 5 Key Milestones 6 | Annual Report 2013 2013 2012 2011 2010 First Bangladeshi company to export ophthalmic products to Europe First Bangladeshi company to launch Salbutamol HFA inhaler (Azmasol®) in Singapore from Received GMP accreditation AGES, Austria (for European Union); only pharmaceutical company to win ‘National Export Trophy (Gold)’ for the fourth time The only pharmaceutical company in Bangladesh to enter the US market through acquisition of an Abbreviated New Drug Application (ANDA) 2009 Only Bangladeshi company to receive GMP approval from ANVISA, Brazil 2008 First Bangladeshi company to receive GMP accreditation from Therapeutic Goods Administration (TGA), Australia, and Gulf Central Committee for Drug Registration, for GCC states; Technology transfer arrangement to manufacture Roche’s ARV drug Saquinavir 2006 Launched CFC free HFA inhalers for the first time in Bangladesh 2005 Only company in Bangladesh to be listed on the Alternative Investment Market (AIM) of London Stock Exchange (LSE) through issuance of GDRs 2003 1993 1992 1985 First company anti-retroviral Bangladesh to introduce in (ARV) drugs Russia became destination for formulation products the first export Export operations started with APIs Listed on Dhaka Stock Exchange 1983 Launched own formulation brands 1980 Started manufacturing products of Bayer AG, Germany and Upjohn Inc., USA, under license agreements 1976 Company incorporated Annual Report 2013 | 7 Annual Report 2013 | 7 Here’s to the future, Here’s to life 8 | Annual Report 2013 Salman F Rahman Vice Chairman A S F Rahman Chairman Board and Management Board and Management | Annual Report 2013 | 9 Annual Report 2013 | 9 The Board of Directors A S F Rahman Chairman Salman F Rahman Vice Chairman Nazmul Hassan MP Managing Director Osman Kaiser Chowdhury Director Abu Bakar Siddiqur Rahman Director Iqbal Ahmed Director Mahbubul Alam Independent Director Dr. Abdur Rahman Khan Independent Director 10 | Annual Report 2013 Company Secretary Md. Asad Ullah, FCS Executive Director Management Committee Nazmul Hassan MP Managing Director Osman Kaiser Chowdhury Member of the Board of Directors Rabbur Reza Chief Operating Officer Ali Nawaz Chief Financial Officer Afsar Uddin Ahmed Director, Commercial Zakaria Seraj Chowdhury Director, International Marketing Lutfur Rahman Director, Manufacturing A R M Zahidur Rahman Executive Director, Production Shamim Momtaz Executive Director, Manufacturing Mohd. Tahir Siddique Executive Director, Quality Jamal Ahmed Choudhury Executive Director, Accounts & Finance Prabir Ghose Executive Director, Quality Assurance Executive Committee Osman Kaiser Chowdhury Member of the Board of Directors Nazmul Hassan MP Rabbur Reza Ali Nawaz Afsar Uddin Ahmed Managing Director Chief Operating Officer Chief Financial Officer Director, Commercial Board and Management | Annual Report 2013 | 11 Specialized Products We are committed to providing better access to quality medicines which are affordable because we know good health is priceless 12 | Annual Report 2013 2013 Highlights Revenue Tk. 10.49 bn Gross Profit Tk. 4.84 bn Operating Profit Tk. 2.32 bn Profit Before Tax Tk. 2.09 bn Profit After Tax Tk. 1.40 bn 12.94% 10.24% 5.27% 9.62% 6.47% Earnings Per Share (EPS) Tk. 4.01 6.37% Launched 23 products in the domestic market; 6 of which were launched for the first time in Bangladesh Registered 38 products in 14 different countries; Madagascar, Estonia and Uganda being new to the list Commenced export of two ophthalmic products to Europe (Germany and Austria) for the first time from Bangladesh Obtained marketing authorization for a product in Australia Marketing authorization submission[s] made for one molecule in 5 European countries 3 ANDAs (Abbreviated New Drug Application) filed with US FDA (Food and Drug Administration) 2013 Highlights | Annual Report 2013 | 13 Nazmul Hassan MP Managing Director 14 14 | Annual Report 2013 | Annual Report 2013 Managing Director’s Statement In 2013, we achieved a sales turnover of BDT 10.49 billion with a year-on-year growth of 12.94%. Our domestic business posted a growth of 11.34% while the industry grew by 8.12%. Dear Shareholder, 2013 was an extremely challenging year for the country’s economy. Political turmoils and certain unprecedented events seriously disrupted our business activities. Despite all these uncertainties, however, Bangladesh was able to maintain GDP growth of 6% in the year. Steady growth in exports and growing remittance backed by firm monetary policy boosted the country’s foreign currency reserve to a record high. In 2013, we achieved a sales turnover of BDT 10.49 billion with a year-on-year growth of 12.94%. Our domestic business posted a growth of 11.34% while the industry grew by 8.12%, failing to maintain double digit growth for the first time since 2008. We started the year with a renewed focus on export to regulated markets, and we reached another major milestone in March when we began exporting our own formulations to Germany and Austria. This was the very first time a Bangladeshi pharma company exported sterile ophthalmic products to Europe, known for stringent quality standards. Two ophthalmic products for treating glaucoma namely Latanoprost and a combination of Latanoprost and Timolol, are being exported to these countries with other European countries to follow. We remain focused on entering these markets, as they offer tremendous opportunities for generic drugs, and your company is advantageously positioned to gain from such opportunities with its strong generic drug skills. The Company successfully registered 38 products in 14 different countries including New Zealand, Panama, Gabon, Nigeria, Cambodia, Azerbaijan, Philippines, Myanmar, Sri Lanka, Nepal, Hong Kong, Uganda, Madagascar, EU-Estonia. We entered 3 new markets namely Madagascar, Estonia and Uganda in the said period. Export sales posted an excellent 43% growth over the previous year. In the domestic market we continue to offer a diverse product portfolio and in the year we launched 23 products; six of them (Calorate Tablet, Jointec Max Tablet, Hemofix Tablet, Hemofix FZ Tablet, Citicol Injection and Voligel 30g Tube) were launched for the first time in Bangladesh. We have maintained a strong position in several key therapeutic segments. Our respiratory and cardiovascular categories continued to perform well growing by 11% and 22% respectively; while our multivitamins category posted an impressive 27% growth. Our core strength is reverse engineering and we continue to focus on simplifying manufacturing processes and enhancing cost efficiency. On the technology front, our company embraced a series of positive developments during the year. We have identified specialized drug delivery as a compelling opportunity and we are developing our expertise in exciting new delivery systems like prefilled syringes, lyophilized injectables, metered dose inhalers, dry powder inhalers etc. Our in-house R&D efforts recently saw the introduction of Oral Thin Film (OTF), a highly sophisticated technology platform, another first-time in the country. Our growth prospects remain excellent with these tech-driven products and our aim is to offer these new treatment options and make them affordable to our patients. Managing Director’s Statement | Annual Report 2013 | 15 Going forward we will continue to invest in building our capabilities and focus our strategy in areas where we believe we have ample opportunities to grow. I would like to thank each of our shareholders and all other stakeholders for their continued support and confidence in Beximco Pharma. Nazmul Hassan MP Managing Director Our major focus currently remains the development of international markets and in 2013 we submitted three ANDAs (Abbreviated New Drug Application) with the USFDA. We obtained marketing authorization for a product in Australia while submissions were made for Marketing Authorization of one molecule in five European countries. With our increasing number of global regulatory approvals and competitive advantages in manufacturing, we also actively look for potential contract manufacturing partners from developed markets. We believe, Company’s sustained growth in emerging, as well as developed markets, will allow us to increase export turnover significantly, and we are now well on course in terms of our product line, robust manufacturing and R&D. We are actively evaluating opportunities to extend our geographic reach and replicate our successful operating model in other emerging markets. We always recognize that our people are our most valuable asset, and thus we continue investing in our employees, providing them with high quality training to broaden and consolidate their professional skills. We have devoted considerable resources to help our executives to be the best they can be. In the year a number of comprehensive training programs were arranged both at home and abroad. Our commitment to quality has truly been the cornerstone of our success. Our strategy is to deliver value to our stakeholders by focusing on unmet patient need and providing better and newer treatment options to patients. In all aspects of our business, we place emphasis on maintaining the highest standards of quality, to ensure that our products deliver the maximum potential benefit to patients. This investment has differentiated us from our competitors and helped to drive strong demand for our products. Our company won the prestigious Asia’s Most Promising Brand award at the Asian Brand Summit 2013, held in Dubai. Beximco Pharma ranked among the top 30 from more than 200 emerging brands in Asia and also received the Industry #1 award in the Pharma category. I was honored and selected as one of the top 15 Most Influential Asian Leaders. The Scrip Award is one of the industry’s most prestigious contested awards to highlight the achievements in the pharmaceutical and biotech industry. It was indeed a great recognition for our company to get shortlisted and nominated in the category of Best Management Team of the Year. As a socially responsible company, we have continued investing in several health and education initiatives. Notable among these are our support to Rana Plaza victims, Jaago Foundation, Centre for the Rehabilitation of the Paralysed (CRP), and USAID-led MAMA initiative. 16 | Managing Director’s Statement | Annual Report 2013 Leadership Award Beximco Pharma Managing Director Nazmul Hassan MP has been honored with the highly Beximco Pharma Managing Director Nazmul Hassan MP has been honored with the highly prestigious Asia’s Most Influential Leader Award, in recognition of his visionary leadership prestigious Asia’s Most Influential Leader Award, in recognition of his visionary leadership and outstanding contribution to private sector development and economic growth of the and outstanding contribution to private sector development and economic growth of the country as well as in the region. Mr. Hassan has been selected as one of the top 15 most influential Asian corporate leaders Mr. Hassan has been selected as one of the top 15 most influential Asian corporate leaders and the award was given at a gala ceremony of the Asian Brand & Leadership Summit 2013 and the award was given at a gala ceremony of the Asian Brand & Leadership Summit 2013 held in Dubai during August 26-27, 2013. An initiative of the World Consulting and Research Corporation (WCRC), the Summit brought An initiative of the World Consulting and Research Corporation (WCRC), the Summit brought together the biggest and most promising brands and corporate leaders from across 50 together the biggest and most promising brands and corporate leaders from across 50 industry categories. The entire process of evaluation and selection was done by KPMG, a industry categories. The entire process of evaluation and selection was done by KPMG, a leading global audit and accounting firm, along with an eminent panel of international jury leading global audit and accounting firm, along with an eminent panel of international jury members. Annual Report 2013 | 17 Annual Report 2013 | 17 18 18 | Annual Report 2013 | Annual Report 2013 Manufacturing Capabilities Annual Report 2013 | 19 Annual Report 2013 | 19 One of our core capabilities that will allow the Company to realize aspirations of becoming one of the most trusted, admired and successful Pharma companies in the region is our manufacturing facility which is in line with cGMP. Situated near Dhaka, the capital city of Bangladesh, our manufacturing site extends over an area of 23 acres. This main site houses manufacturing facilities for producing a wide range of pharmaceutical products in different dosage forms and delivery systems such as capsules, tablets, intravenous fluids, metered dose inhalers, sterile ophthalmic drops, pre-filled syringes, dry powder inhalers, injectables, lyophilized products and nebulizer solutions. The bulk drug unit for producing paracetamol is also located within this site while the penicillin API and formulation units are situated at Kaliakoir, a few kilometers from the main site. The salient features of our manufacturing facilities are: • Own utility infrastructure in place • 10MW installed electricity generation capacity • Purified water and liquid nitrogen generation facilities • Plant and machinery sourced predominantly from European manufacturers e.g. Germany, Switzerland, Sweden, Italy, UK etc. • Entire site situated above sea level (10 m) • Highest number of international GMP accreditations in the country in pharma sector. 20 20 | Annual Report 2013 | Annual Report 2013 | New Products Launched | New Products Launched Oral Solid dosage facility The technological incorporates contemporary advancements with automated material handling systems and multilevel designs to enable gravity feed between various processing stages. This facility houses a total of five lines with an annual capacity to produce 5 billion tablets on a single shift basis. Metered Dose Inhaler The MDI units have been designed with the technical collaboration from Pamasol, Switzerland; which now have an annual production capacity of 20 million canisters. Ophthalmic Beximco Pharma’s ophthalmic facility has been accredited by the regulatory authorities of the EU and Australia and the Company has differentiated itself by maintaining global quality standards. Intravenous Fluid Our Intravenous (IV) fluid unit is ISO 9001: 2010 certified and was designed in collaboration with Pharmaplan, a sister concern of Fresenius AG of Germany. Rigorously maintained sterile manufacturing conditions in a Class 100 clean room and a series of fully automated manufacturing facility including robotics ensure the highest standards of quality and purity. Manufacturing Capabilities | Annual Report 2013 | 21 Liquid and Semisolid Beximco Pharma has a broad range of liquid formulations including syrups and semisolid dosage forms such as creams and ointments. At present the capacity of the liquid dosage facility is 37 million units per annum and the Company has embarked on an expansion program along with further upgrading the existing unit in order to meet the growing demand. Pre-filled Syringe Our high precision PFS line employs sophisticated technology and the entire filling operation is done under laminar flow in a Class 100 environment to provide absolute sterile conditions. Dry Powder Inhaler Beximco Pharma offers dry powder inhaler in innovative patient-friendly packaging. We use Alu-Alu blister pack and HPMC capsule shell to ensure maximum protection against moisture. Our unique and simple Bexihaler device, imported from Europe, and consisting of 8 pins, ensures optimum dose delivery. Lyophilized Injectables Within a short span of time, Beximco Pharma has emerged as an important player in Lyophilized Injectables market with its high quality lyophilized PPIs and other formulations. 22 | Annual Report 2013 | Manufacturing Capabilities Beximco Pharma produces 500+ products in different dosage forms covering broad therapeutic categories. These include antibiotics, gastro-intestinals, respiratory, analgesics, cardiovascular, anti- diabetics and many others. A portfolio of 500+ products Annual Report 2013 | 23 Annual Report 2013 | 23 24 24 | Annual Report 2013 | Annual Report 2013 Diversifying Value with New Products Our success is driven by great science which has consistently delivered meaningful advancements for patients over existing therapies. In 2013, we launched 20 new generics in 23 different dosage forms and strengths that greatly contributed to our growth. Annual Report 2013 | 25 Annual Report 2013 | 25 New Products Adafil® Tadalafil 10 mg and 20 mg Tablet Adafil® contains Tadalafil which is a potent, selective, reversible inhibitor of cyclic Guanosine Monophosphate specific Phosphodiesterase type 5 (PDE5). Adafil® is indicated in erectile dysfunction (ED). Arlin® IV Linezolid IV infusion Arlin® contains Linezolid, which is a synthetic antibacterial agent of the oxazolidinone class. There is little chance of developing resistance due to unique mechanism of action, high susceptibility to MRSA, and it is highly effective in bacteremia caused by VRE & MRSA. The drug is well tolerated and is equivalent or superior to vancomycin in its action. Calorate® Calcium Orotate 400 mg Tablet Calorate is a calcium supplement with a functional amino acid chelating ligand - orotic acid. Orotic Acid assists the transport of calcium through cellular membrane structures, thus facilitating the intracellular uptake of calcium, particularly in bone. Calcium Orotate also helps in the maintenance of healthy cartilage. Calorate® is used to prevent or treat low blood calcium levels in people who do not get enough calcium from their diet. 26 | Annual Report 2013 | New Products Calorate® Kit 1 tablet of Ibandronic Acid 150 mg + 60 tablets of Calcium Orotate 400 mg Calorate® kit comprises 1 tablet of Ibandronic Acid 150 mg and 60 tablets of Calcium Orotate 400 mg and is indicated for the treatment and prevention of osteoporosis. Ibandronic acid increases bone mineral density (BMD) and reduces the incidence of vertebral fractures. Citicol® Citicoline 500 mg/4ml IV/IM Injection Citicol® is a psychostimulant/nootropic agent indicated for patients suffering from stroke, age-associated memory impairment (AAMI), head injury, cerebrovascular disorders (disease of the blood vessels supplying the brain). Citicoline is also indicated for cognitive support and support for nerves of the eye. Diapro® 30 MR Gliclazide 30 mg Modified Release Tablet Diapro® MR is a preparation of Gliclazide, a second generation sulfonylurea, which has been developed as modified release tablet. It is indicated for 24-hr sustained glycemic control in type 2 diabetes. The consistent dissolution and release pattern of Diapro® MR is not affected by food or by variation of pH leading to predictable and reproducible blood glucose level over a 24 hr period with an excellent safety profile. The comparative dissolution study performed at R&D of Beximco Pharmaceuticals Ltd has shown that release profile of Diapro® MR perfectly matches that of Innovator’s and also matches its exact performance. New Products | Annual Report 2013 | 27 Feburic® Febuxostat 40 mg Tablet Feburic® tablet is a preparation containing Febuxostat 40 mg in a tablet. It is a type of medicine called xanthine oxidase inhibitor. It is an anti-gout preparation indicated to treat chronic gout and hyperuricaemia. Hemofix® Ferrous ascorbate Tablet Hemofix® tablet contains Ferrous Ascorbate 275 mg equivalent to elemental iron 33 mg. Ferrous ascorbate is a synthetic molecule of Ascorbic Acid and Iron. Ascorbic Acid plays an important role in the movement of plasma iron to storage depots in tissues. Hemofix® is indicated in the treatment of iron deficiency anemia. Hemofix® FZ Ferrous ascorbate + Folic Acid + Zinc Hemofix® FZ is a film coated tablet containing Ferrous Ascorbate equivalent to elemental Iron 48 mg, Folic Acid 0.5 mg & Zinc Sulfate Monohydrate 61.8 mg equivalent to elemental Zinc 22.5 mg. It is indicated on prophylaxis of Iron deficiency especially when an inadequate diet calls for supplementary Zinc and Iron during pregnancy and anemia. Jointec® Max Glucosamine + Diacerin Tablet Jointec® Max is a combination of Diacerein 50 mg and Glucosamine sulfate 750 mg tablet, which is indicated for the treatment of osteoarthritis. Diacerein is a new anti- inflammatory drug, developed specially for the treatment of osteoarthritis. Glucosamine Sulfate is a naturally occurring chemical found in the human body. The dosage form contains more Glucosamine than that found in conventional glucosamine preparations. As a result treatment becomes more cost effective and dosage convenient. 28 | Annual Report 2013 | New Products Lopidam® lopamidol IV Injection 100 ml Lopidam® (lopamidol Injection) is indicated for intrathecal administration as contrast, media in adult neuroradiology including myelography (lumbar, thoracic, cervical, total columnar), and for contrast enhancement of computed tomographic (CECT) cisternography and ventriculography. Lopidam® (lopamidol Injection) is indicated for thoraco-lumbar myelography in children over the age of two years. Metazine® MR Trimetazidine Hydrochloride 35 mg Tablet Metazine® MR is a modified release formulation of Trimetazidine. It is designed to release the Trimetazidine slowly over several hours, thus producing a steady blood level of the medicine throughout the day. Trimetazidine is indicated in adults as add-on therapy for the symptomatic treatment of stable angina pectoris who are inadequately controlled by, or intolerant to, first-line antianginal therapies. Metoprol®- XL Metoprol 50 & 100 mg Tablet Metoprolol Succinate, is a beta1-selective (cardio selective) adrenoceptor blocking agent, for oral administration, available as extended release tablets. Metoprol-XL has been formulated to provide a controlled and predictable release of Metoprolol for once-daily administration. The tablets comprise a multiple unit system containing Metoprolol Succinate in a multitude of controlled release pellets. Each pellet acts as a separate drug delivery unit and is designed to deliver Metoprolol continuously over the dosage interval. Navsol® Irrigating Solution Balanced Salt Solution Navsol® Sterile Irrigating Solution is a sterile physiological balanced salt solution of Sodium Chloride, Potassium Chloride, Calcium Chloride Dihydrate, Magnesium Chloride Hexahydrate, Sodium Acetate Trihydrate and Sodium Citrate Dihydrate. Navsol® is isotonic to the tissues of the eyes and is indicated as irrigation solution during various surgical procedures of the eyes, ears, nose and/or throat. New Products | 29 Annual Report 2013 |Nervalin® Pregabalin 50 & 75 mg Capsule. Nervalin is a modulator of voltage-gated calcium channels, designed to affect neurological transmission in multiple systems. It is specifically indicated for the treatment of neuropathic pain associated with spinal cord injury. It is also indicated for the treatment of neuropathic pain associated with diabetic peripheral neuropathy, post herpetic neuralgia, fibromyalgia, and as an adjunctive therapy for adults with partial onset seizures. Odeson® (Dexamethasone Phosphate 4 mg/ml IV/IM Injection) Odeson® is a preparation of 4 mg/ml Dexamethasone Phosphate Injection. It is indicated in cerebral edema, shock, bronchial asthma, rheumatoid arthritis, severe allergic reactions, inflammatory bowel diseases, certain types of cancer and other inflammatory conditions that require rapid and intense corticosteroid therapy or when treatment by mouth is not possible. Omastin® IV Fluconazole 2mg/5ml Omastin injection is used to treat serious fungal or yeast infections, such as vaginal candidiasis, oropharyngeal candidiasis (thrush, oral thrush), esophageal candidiasis (candida esophagitis), other candida infections (including urinary tract infections, peritonitis [inflammation of the lining of the abdomen or stomach], and infections that may occur in different parts of the body), or fungal (cryptococcal) meningitis. 30 | New Products | Annual Report 2013 Tyclav® Amoxicillin + Clavulanic Acid (375 mg, 625 mg and 1 g) Tablet Tyclav® (375 mg, 625 mg and 1 g tablet) is an extended spectrum antibiotic, consisting of Amoxicillin and the beta-lactamase inhibitor, Clavulanate Potassium. The formulation of Amoxicillin and Clavulanic Acid in Tyclav protects Amoxicillin from degradation by beta-lactamase enzymes and extends the antibiotic spectrum of Amoxicillin more than ever. Tranexil® Tranexamic Acid 500 mg/5ml Injection Tranexil® IV injection is the preparation of Tranexamic Acid (500 mg/ampoule). Tranexil® is a antifibrinolytic agent, effective to reverse the effects of streptokinase or other fibrinolytic activity. It may be used for conditions in which bleeding control is required such as after surgery or injury, recurrent nosebleeds or abnormal vaginal bleeding. Voligel® Diclofenac Sodium 30 gm & 50 gm gel Voligel® is the unique topical preparation of Diclofenac Sodium. It gives instant relief from any kind of muscle & joint pain such as back ache, neck & shoulder pain, joint pain etc. The launching of Voligel® offers patients a new way to treat daily aches with excellent safety. New Products | Annual Report 2013 | 31 Accolades Beximco Pharma - Asia’s Most Promising BrandWWWW Beximco Pharmaceuticals Ltd. won the prestigious Asia’s Most Promising Brand award at the Asian Brand & Leadership Summit 2013 held during 26-27 August, 2013 in Dubai. Beximco Pharma ranked among Top 30 from 200 emerging brands in Asia. It also received Industry’s #1 award in pharma category. Beximco Pharma COO, Mr. Rabbur Reza received the award at a gala ceremony held in Dubai. This was an initiative by World Consulting & Research Corporation (WCRC) where leading global audit and accounting firm KPMG was the process advisor and evaluator along with an eminent panel of international jury members. Professor Malcolm McDonald, one of the world’s foremost marketing gurus, was the Chairman of this jury board. A total of 200 brands were featured across 50 industry categories to form the Most Promising Brands of Asia, bringing to the fore companies that have shown tremendous growth over the last few years. The two-day summit which honored brands and industry leaders in different categories was attended by luminaries of the marketing, advertising and branding spectrum including corporate leaders, marketing communication heads, brand custodians and business professionals across Asia. 32 32 | Annual Report 2013 | Annual Report 2013 | Accolades Beximco Pharma Nominated for Prestigious SCRIP Awards 2013 The SCRIP Award is among the most prestigious awards in the pharmaceutical industry recognizing highly successful global companies. We feel proud to have been shortlisted for the award from among hundreds of pharma companies around the world in the category of “Management Team of the Year”. Our COO, Mr. Rabbur Reza attended the Award Ceremony in UK on November 22 and also handed over the best Contract Research Organisation (CRO) award 2013 to Quintiles. Beximco Pharma sponsored the award in the category of Best CRO of the year. Beximco Pharma Featured in Generics Bulletin Beximco Pharma featured in Generics Bulletin, the world's leading newsletter for the generic pharma industry that is published in London. Accolades | Annual Report 2013 | 33 Millions of smiles made in Bangladesh Here’s to the future, Here’s to life 34 | Annual Report 2013 Global Accreditations access 50+ countries: 4 National Gold Export Trophies (1994-2010) Global Accreditations Benchmarked to international standards, our manufacturing facilities have been already approved by the regulatory authorities of Australia, Europe, Brazil and Columbia, among others. Currently we have the highest number of international accreditations in the country in pharma sector. Beximco Pharma also has the unique distinction as the only Bangladeshi company to get listed on the AIM of London Stock Exchange. Participation at CPhI Worldwide 2013 Beximco Pharma, as in previous years, attended the biggest pharmaceutical expo CPhI Worldwide, held during October 22-24, 2013 in Frankfurt, Germany. BPL had a stall for showcasing its products to prospective clients from all over the world. Global Accreditations | Annual Report 2013 | 35 Annual Report 2013 | 35 Factory Visits Beximco Pharma always welcomes delegations from home & abroad to visit the state-of-the-art manufacturing facilities at Tongi with the aim of attracting new business opportunities. During the year, we had overseas visitors from Germany, Azerbaijan, Australia, Malaysia, Jordan, UK, Nepal, Sri Lanka, Dubai, Tunisia, Canada Peru and Guatemala. Moreover, the Russian ambassador, delegates from UNDP, doctors from different institutes also visited the Beximco Pharma facility. 36 | Annual Report 2013 | Factory Visits Our People At Beximco we give top priority to the learning and development of our people because we recognize that they are our most valuable asset. Currently there are about 3,000 employees working at Beximco Pharma and its strong pool of talent includes professionals like pharmacists, chemists, doctors, engineers, microbiologists, and business graduates. To ensure that our people are enabled, and remain responsive to a rapidly changing world, we continue to provide them with high quality training to broaden and enrich their professional skills. Throughout the year we arranged a good number of training programs for our employees both at home and abroad with internationally renowned speakers and trainers. These include comprehensive training on KPI, KRA and corporate objectives of each department, special training on business creativity, strategic thinking, etc. As we look ahead to the future possibilities, our focus remains on building leadership skills at different levels, which is crucial for Company’s future growth. The Company also provides libraries and on-line resources for the employees to encourage self-development. Our People | Annual Report 2013 | 37 Training 2013 38 | Annual Report 2013 | Our People Finance Conference 2013 Our People | Annual Report 2013 | 39 Annual Sales and Marketing Meet 2013 40 | Annual Report 2013 | Our People Our R&D Capabilities R&D is key to success for any pharma company and we have given top priority in building and strengthening our capabilities to excel in formulating technologically complex products. Our formulation R&D team develops a wide range of generic products including difficult to copy formulations in defined specialty areas. We have successfully developed multi-layer tablet, sustained release formulation, dispersible tablet, CFC-free inhalers, prefilled syringes, lyophilized injectables, sterile ophthalmics, oral thin films etc. Our team provided a robust product flow with 23 products in the year, and 6 of them were launched for the first time in the country. Currently we have a number of products in the pipeline for submission in the regulated markets. Our research and development activities are closely focused on market needs and driven by technological progress. A new, state-of-the-art research lab is being set up to facilitate the development of innovative and difficult products with a focus to create unique market opportunities. Annual Report 2013 | 41 here’s to life Exporting Care to the world. A Bangladeshi company touching lives globally. More than 50 countries across 4 continents. From the utterly deprived African heartland to the highly privileged European elite, we are humbled by the opportunity to bring the smile of good health to humanity across colors, creed and communities. A string of 4 Export Gold Trophies, an array of international accreditations, and a sea to travel lying open in front – we at Beximco Pharma constantly strive to explore new frontiers. Here’s to the future. Here’s to life. 4 National Gold Export Trophies (1994-2010) 42 | Annual Report 2013 Global Footprint 38 products registered in 14 countries and entered 3 new markets. As we are expanding our global footprint, our position in many Asian and African countries is now stronger than ever while our focus remains high on the regulated markets of the USA and EU for value added generics. Our export business registered an excellent growth of 43% over the previous year. We have successfully filed 3 ANDAs (Abbreviated New Drug Application) with the US FDA (Food and Drug Administration) and also made submission for Marketing Authorization in several EU countries. During the year we registered 38 products in 14 countries, and became the first Bangladeshi company to enter the European market with ophthalmic products. The company has a clear strategy to capitalize on generic drug opportunities and it continues to expand its pipeline for submission in overseas markets . At the moment, we have highest number of international accreditations among local companies. Beximco Pharma Enters EU Pharmaceutical Market Beximco Pharmaceuticals Limited has commenced export of medicines to Europe. This was the very first time a local pharmaceutical company started exporting ophthalmic products to Europe. Currently two ophthalmic products are being exported to Germany and Austria. Global Footprint | Annual Report 2013 | 43 Asia Singapore Hong Kong Cambodia Nepal Sri Lanka Philippines Thailand Bhutan Macau Malaysia Afghanistan Azerbaijan Vietnam Africa Kenya Ghana Somalia Nigeria Benin Liberia South Africa Ethiopia Mauritius Mozambique Nicaragua Sudan Burundi Uganda Lesotho Middle East Yemen Jordan Europe Austria Germany Latin & Central America Chile Belize El Salvador Colombia Surinam Caribbean Jamaica Netherlands Antilles Pacific Island Fiji Papua New Guinea Solomon Island Kiribati Tonga Samoa 44 | Annual Report 2013 Working with healthcare professionals is essential to understand the need of patients and our relationship with doctors is based on sound science and focused on offering benefits to patients. Beximco has successfully established its brand value within the medical community. The company seeks to further reinforce its relationship with all stakeholders in the healthcare value chain providing value added, academic services. Strong Relationships Annual Report 2013 | 45 Corporate Social Responsibility Corporate social responsibility (CSR) is an integral part of Beximco Pharma’s business. CSR has been incorporated as one of the core values of the organization and the company actively takes part in initiatives that benefit the society and contribute to the welfare of the people. Our firm commitment to building a healthier tomorrow is largely based on our CSR activities and we always strive to integrate those to our business strategies. We work together with non-profit organizations, international development agencies, and various healthcare institutes to improve people’s lives through research, information, and advocacy. As BPL writes its success story as an emerging generic drug company in the region, it realizes that responsibility towards all its stakeholders increases in tandem. Some of our CSR activities in this year are described below. Mobile Alliance for Maternal Action (MAMA) We continued extending our support to Mobile Alliance for Ma- ternal Action (MAMA) in Bangladesh, as its founding corporate partner. The United States Agency for International Development (USAID) catalyzed the creation of a public-private coalition in Ban- gladesh to support the execution of the service which aims to reach 5,00,000 pregnant women and new mothers within three years. Under the brand name ‘Aponjon’ this delivers life-saving health messages to Bangladeshi women and their families us- ing mobile phones. The Ministry of Health and Family Welfare (MoHFW) and Access to Information (A2I) Program at the Prime Minister’s Office are official partners of the initiative while Global partners include Johnson & Johnson and United Nations Founda- tion, among others. Extending Support to Jaago Foundation Jaago Foundation, the largest youth based volunteer organization in Bangladesh with more than 10,000 volunteers, aims to bring about substantial improvement in the lives of disadvantaged people with special emphasis on their literacy and nourishment. Jaago runs a number of schools to provide free education to the children in slum areas, besides running awareness campaigns on youth leadership, and other important social, environmental and health issues. Beximco Pharma provided both cash and in-kind supports to Jaago’s various health and education initiatives. 46 | Annual Report 2013 Support to Rana Plaza Victims CRP (Centre for the Rehabilitation of the Paralysed) Bangladesh has been actively providing full support for the victims of Rana Plaza disaster from the very beginning. More than 1,000 people have died and more than 600 injured in this tragedy. Beximco Pharma extended its support for the treatment of Rana Plaza victims and handed over a cheque of Tk 3.7 lac and donated large quantities of medicine to Valerie Taylor, Founder, CRP, Savar on 25 July at BPL’s Head Office. Free Medicines for UN Health Camps Beximco Pharma helps the UN mission in different countries through providing free medicines for running health camps. In the year Beximco Pharma provided all the medicines free of cost for the health camp organized by the UN peace keeping mission in the Congo. Sponsoring Friendly Cricket Match to Promote Maternal and Newborn Health Mushfiqur Rahim, the Captain of Bangladesh’s national cricket team, who is also a Brand Ambassador of USAID-supported Maternal and Newborn Health program in Bangladesh, played a cricket match on April 4, 2013 with local cricketers in Sylhet to raise fund and increase awareness about maternal health. Beximco Pharma sponsored the cricket match as a part of its corporate social responsibility. The raised funds will be used by Save the Children for treating mothers in rural areas who have experienced health problems. (“Ma Moni”) Corporate Social Responsibility | Annual Report 2013 | 47 Sponsoring National Campaign on Healthy Living “Alchemy” is a nationwide healthy living campaign launched on March 6, 2013 to promote physical and mental wellbeing of people. Alchemy is being promoted by campaign specialists, health experts, trainers, and role models in Bangladesh. Beximco Pharma is one of the key sponsors of this unique initiative in Bangladesh. World Heart Day 2013 Beximco Pharma celebrated the World Heart Day 2013 (September 29), a global awareness day, which aims to promote preventative measures that reduce the risk of cardiovascular diseases. On this occasion, Beximco Pharma together with Volunteer for Bangladesh (volunteer wing of Jaago Foundation) and BD Cyclists (biggest cyclist group in the country) arranged different programs to promote this year’s theme ‘Take the road to a healthy heart’ which included distribution of awareness leaflets, a health camp, a TV program with leading cardiologists, cycle rally, marathon walk etc. Independent TV was the media partner for the events. World Osteoporosis Day 2013 Beximco Pharma celebrated the World Osteoporosis Day with a number of programs under this year’s global theme “Strong women make stronger women”. Beximco Pharma, for the first time in the country, organized a special bone health check-up to measure Bone Mineral Density (BMD) in order to instantly detect osteoporosis. BPL also arranged free health camp at jogger’s park in the city, distributing awareness leaflets among people and organizing discussions with doctors in various medical institutes. The company handed over medicines and WOD campaign materials to CRP founder Ms. Valerie Taylor on this occasion. A colorful horse rally in the city was also arranged to promote awareness about bone health. 48 | Annual Report 2013 World Diabetes Day 2013 On the occasion of World Diabetes day 2013, Beximco Pharma arranged a number of awareness programs in different areas of capital city which included free diabetes check, providing leaflets, guide books etc. in association with Bangladesh Diabetic Samity. Universal Children’s Day 2013 Jaago Foundation celebrated the Universal Children’s Day (UCD) 2013 on November 30 at Banani playground. This annual event aims to promote children’s rights and their equal access to education. Beximco Pharma was a sponsor of the daylong UCD carnival and also arranged free health camp on this occasion. Free Health Camps 2013 Corporate Social Responsibility | Annual Report 2013 | 49 Annual Report 2013 | 49 Post Balance Sheet Update • Launched 13 new products during the first quarter of 2014 • Mucomist DT (N- Acetylcysteine) dispersible tablet was launched for the first time in Bangladesh. Onsat OSF (Ondansetron) was launched using oral soluble film (OSF) technology for the first time in the country • 12 products registered in different overseas markets, including Columbia and Costa Rica 50 | Annual Report 2013 Notice BEXIMCO PHARMACEUTICALS LIMITED 17, Dhanmondi R/A, Road No. 2, Dhaka-1205 Notice of the thirty- eighth annual general meeting Notice is hereby given that the Thirty-Eighth Annual General Meeting of the Shareholders of Beximco Pharmaceuticals Limited will be held on Saturday, the 21st June, 2014 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur to transact the following business: AGENDA 1. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended 31st December, 2013 together with reports of the Auditors and the Directors thereon. 2. To declare 10% Cash and 5% Stock Dividend. 3. To elect Directors. 4. To confirm the re-appointment of Managing Director. 5. To approve the appointment of Independent Directors. 6. To appoint Auditors for the year 2014 and to fix their remuneration. 7. To transact any other business of the Company with the permission of the Chair. By order of the Board, Dated : 8 May, 2014 NOTES: (MOHAMMAD ASAD ULLAH, FCS) Executive Director & Company Secretary (1) The Record Date of the Company shall be on 18 May, 2014. (2) The Shareholders whose names will appear in the Share Register of the Company or in the Depository Register on the record date i.e. 18 May, 2014, will be entitled to attend at the Annual General Meeting and to receive the dividend. (3) A member entitled to attend and vote at the General Meeting may appoint a Proxy to attend and vote in his/her stead. The Proxy Form, duly stamped, must be deposited at the Registered Office of the Company, not later than 48 hours before the time fixed for the meeting. (4) Admission to the meeting room will be strictly on production of the attendance slip sent with the Notice as well as verification of signature of Member(s) and/or Proxy-holder(s). (5) No gift or benefit in cash or kind shall be paid to the holders of equity securities in terms of Clause (c) of the Notification No.SEC/ SRMI/2000-953/1950 dated 24 October 2000 for attending the AGM of the Company. Notice | Annual Report 2013 | 51 Chairman’s Statement 52 I Annual Report 2013 I Chairman’s Statement Chairman’s Statement | Annual Report 2013 | 53 Directors’ Report to the Shareholders Dear Shareholders, On behalf of the Board of Directors of Beximco Pharmaceuticals Limited, I welcome you all to the 38th Annual General Meeting (AGM) of Beximco Pharmaceuticals Limited, I am pleased to place before you the Directors’ Report and the Audited Accounts of the company for the year ended December 31, 2013 along with the report of the auditors thereon. 1. Operating Performance 1.1 Business Outlook- A General Overview The Bangladesh economy against all odds remained positive with GDP growing at 6% in 2013. Moderate growth in export and robust foreign remittances surpassed the fall in agricultural and service sector contributions to GDP and helped to achieve this growth despite the weakening of a number of other key macro-economic fundamentals. The inﬂ ation rate remained more or less stable, point to point inﬂ ation being reported at 7.35% in December 2013 as against 7.14% in December 2012. Strong inﬂ ow of remittances coupled with decline in payment for import including capital machinery resulted in a record high foreign exchange reserve that crossed USD 18 billion. This in turn helped the appreciation of the taka against all major currencies and speciﬁ cally the US dollar. The political crisis, predominantly centering on the national election, persisted throughout 2013 and reached its worst at the end of the year, disrupting overall business activities. Turbulence caused by frequent strikes and blockades swept throughout the economy particularly hitting the supply-chain of the country which in turn hampered production and dampened the demand for goods and services. With political unrest in the backdrop, the pharmaceutical industry in Bangladesh like many other sectors experienced lower than expected growth in 2013. For the ﬁ rst time since 2008 the industry failed to achieve double digit growth and attained 8.12% sales growth in domestic market (IMS, Q4 Report) as against 11.91% in 2012 and over 23% both in 2011 and 2010. However, 2014 has seen some normalcy return to the overall environment of the country with the holding of the election at the beginning of the year. We hope the situation will remain calm and conducive for business growth. 1.2 Sales and Proﬁ tability Net sales revenue in 2013 has grown by 12.94% to reach at Taka 10,490.1 million as against Tk. 9,289.1 million of 2012. Domestic sales continued to remain as the key driver with 94% of the total revenue coming from the domestic market. We achieved an appreciable 11.34% growth in domestic sales as compared to 8.12% of industry average. In 2013 we have further reinforced our domestic base and have been successful in retaining and expanding our market share in all of our key therapeutic segments. During 2013, Proﬁ t before tax increased by 9.62% compared to that of last year to reach at Taka 2,093.6 million. Proﬁ t after tax also increased by 6.47% to reach Taka 1,404.8 million. Gross proﬁ t declined by 1.13% in 2013; 46.12% as against 47.25% of prior year due to rise in cost of materials and notable increase in the research and development expense incurred in connection with development of new product formulations for domestic as well as for the overseas markets. However, relative appreciation of Taka against dollar and improved sales mix coupled with changes in prices of certain 54 I Annual Report 2013 I Directors’ Report to the Shareholders products have helped to minimize the effect of increase in the cost of material and overhead thus containing the gross proﬁ t erosion at this minimal level. We continued to explore new export destinations for our products with 38 new products registered in 14 different countries. Our effort to increase export and diversify into new markets has resulted export growth of 42.79% in 2013 to Taka 671 million as against Taka 470 million of 2012. During the year we have commenced exports to Europe (Germany and Austria) with two eye drops for the ﬁ rst time from Bangladesh, obtained marketing authorization for a product in Australia and made submission for Marketing Authorization of one molecule in ﬁ ve European countries. Additionally, we submitted three ANDAs (Abbreviated New Drug Application) with USFDA during this period. 2. Proﬁ t and its Appropriation The Directors take pleasure in reporting the ﬁ nancial results of the Company for the year ended 31 December, 2013 and recommend the appropriation as mentioned below: Net Proﬁ t after Tax Adjustment for depreciation on re-valued assets Proﬁ t brought forward from previous years Proﬁ t Available for Appropriation Proposed Dividend Stock Dividend Cash Dividend Proﬁ t Carried Forward Taka in Thousand 2013 2012 1,404,763 1,319,389 18,235 20,719 6,244,222 5,361,073 7,667,220 6,701,181 (175,167) (350,335) (456,959) - 7,141,718 6,244,222 3. Dividend The Board of Directors is pleased to recommend 10% Cash Dividend i.e. Tk. 1 per share and 5% Stock Dividend i.e. 5 shares for every 100 shares held for the year 2013 for onward approval in the Annual General Meeting. 4. Directors 4.1 Appointment of Independent Directors We are pleased to announce that Mr. Mahbubul Alam and Dr. Abdur Rahman Khan have joined the Board in March 2014 as Independent Directors. Mr. Mahbubul Alam is a retired senior public administrator and prominent media personality. He was the editor of The Independent and served as the Chairman of Newspaper Owners Association of Bangladesh (NOAB). He is a former Advisor (Cabinet Minister) to the Caretaker Government of Bangladesh. He also served as Press Minister at the Embassy of Bangladesh in Washington D.C. with the rank and the status of an Ambassador. He was the press counselor at the Bangladesh High Commission in London and the Ambassador of Bangladesh in Bhutan. He was also the Director General, External Publicity Wing and Spokesman for the Ministry of Foreign Affairs, Dhaka. He received an M.A. in Political Science from University of Dhaka and also received training in journalism and commonwealth relations as a fellow of commonwealth press union. Directors’ Report to the Shareholders I Annual Report 2013 | 55 Dr. Abdur Rahman Khan is a very senior and prominent physician in Bangladesh. He is the Chief Consultant Physician and Professor of Medicine, BIRDEM; Chairman, Board of Management of BIRDEM and Member of National Council of Diabetic Association of Bangladesh. He is a fellow of the Royal College of Physicians of London and a fellow of the College of Physicians and Surgeons of Bangladesh. He is also a member of the International Diabetes Federation and an honorary member of the Association of Military Surgeons, USA. He joined the Bangladesh Army as a Commissioned Ofﬁ cer in Army medical Corps and retired as a Major General. He was an Advisor to the Caretaker Government of Bangladesh and previously Vice President of the Red Crescent and Red Cross society of Bangladesh. He also holds a Bachelor of Medicine and Bachelor of Surgery (MBBS) (Calcutta) and is a Member of the Royal College of Physicians (MRCP) (London and Glasgow). 4.2. Death and Resignation Mohammad Abul Qasem and Dr. Abdul Alim Khan two members of our Board have passed way during this time. The Board of Directors recalls with appreciation and gratitude their contribution towards the establishment and growth of Beximco Pharmaceuticals Ltd. Barrister Faheemul Huq, a Director of the Board, has tendered his resignation on personal grounds. Mr. Huq’s resignation was accepted by the Board on 13th March, 2014. We are thankful to Mr. Huq for his valuable contribution and guidance during his tenure with the Company. 4.3. Retirement and Re-election Mr. Osman Kaiser Chowdhury and Mr. Abu Bakar Siddiqur Rahman, Directors of the Company retire by rotation as per Articles 126 and 127 of the Articles of Association of the Company and being eligible offer themselves for re-election. Both Mr. Osman Kaiser Chowdhury and Mr. Abu Bakar Siddiqur Rahman are long term directors in the Board. Mr. Chowdhury has been with the Company since 1991. He is a member of the Institute of Chartered Accountants of England and Wales and a Fellow of the Institute of Chartered Accountants of Bangladesh. He has over 13 years’ experience working abroad, including the United Kingdom. Mr. Siddiqur Rahman has been in the Board since 1993. He holds senior positions at a number of entities within the Beximco Group of companies. As per provision of Companies Act 1994, Mr. Nazmul Hassan was appointed as Managing Director of the Company for a period of 5 years which expired on 7th May 2014. The Board has re-appointed him as Managing Director of the Company for another 5 years w.e.f. May 7, 2014 to May 6, 2019, subject to the conﬁ rmation by the shareholders in this Annual General Meeting. Mr. Hassan is also the Managing Director of Shinepukur Ceramics Ltd., and Director of different companies of Beximco group. He is the current President of Bangladesh Cricket Board and also an elected Member of the National Parliament of Bangladesh and a member of parliamentary standing committee for Health and Agriculture. Mr. Hassan obtained Bachelors degree in Public Administration, an MBA degree from the University of Dhaka and Executive Education in Marketing & Strategy at University of California, Los Angeles & North Western University, Chicago, USA. Mr. Nazmul Hassan was awarded prestigious Asia’s Most Inﬂ uential Leader at the Asian Brand Summit 2013, Dubai for his outstanding business leadership. Mr. Hassan is currently the Advisor to Bangladesh Association of Pharmaceutical Industries (BAPI) where he had served as the Secretary General for four consecutive terms. He has been on various national and international committees and task force on healthcare and drugs policy, including Consultant to Commonwealth Secretariat in London, UK. He is considered an expert on issues related to Drug Policy, Intellectual Property Rights, TRIPs etc. 5. Auditors The existing Auditors, M. J. Abedin & Co., Chartered Accountants, National Plaza, 109, Bir Uttam C. R. Datta Road, Dhaka-1205 who were appointed as Auditors of the Company in the Thirty-seventh Annual General Meeting of the Company has carried out the audit for the year ended 31 December 2013. M. J. Abedin & Co., Chartered Accountants, National Plaza, 109, Bir Uttam C.R. Datta Road, Dhaka-1205, the Auditors of the Company retires at this meeting and has expressed their willingness to continue in ofﬁ ce for the year 2014. 56 I Annual Report 2013 I Directors’ Report to the Shareholders 6. Audit Committee Due to resignation of Barrister Faheemul Huq and death of Dr. Abdul Alim Khan, Chairman and Member of the Audit Committee respectively, the Board reconstituted the Audit Committee as follows: Mahbubul Alam Osman Kaiser Chowdhury, FCA Dr. Abdur Rahman Khan Mohammad Asad Ullah, FCS Chairman Member Member Secretary The details of the activities of the Audit Committee have been provided in the “Audit Committee Report”. 7. Statement of Directors on Financial Reports Directors are pleased to report that: a. The ﬁ nancial statements together with the notes thereon have been drawn up in conformity with the Companies Act, 1994 and Securities and Exchange Rules, 1987. These statements present fairly the Company’s state of affairs, the result of its operations, cash ﬂ ow and changes in equity. b. Proper books of accounts of the Company have been maintained. c. Appropriate accounting policies have been consistently applied in preparation of the ﬁ nancial statements except those referred to in the ﬁ nancial statements and that the accounting estimates are based on reasonable and prudent judgment. d. The International Accounting Standards (IASs)/ Bangladesh Accounting Standards (BASs)/International Financial Reporting Standards (IFRSs)/Bangladesh Financial Reporting Standards (BFRSs), as applicable in Bangladesh, have been followed in preparation of the ﬁ nancial statements. e. Internal Control System is sound in design and has been effectively implemented and monitored. f. There is no signiﬁ cant doubt about the ability of the Company to continue as a going concern. Directors also report that the Managing Director (Chief Executive Ofﬁ cer) and the Chief Financial Ofﬁ cer have certiﬁ ed to the Board that they have reviewed the Financial Statements for the year 2013 and to the best of their knowledge and belief: a. The Financial Statements present a true and fair view of the affairs of the Company and are in compliance with existing accounting standards and applicable laws b. There is no statement which is materially untrue or misleading and there is no omission of facts in such statements c. No transaction has been entered into by the Company which are fraudulent, illegal or in violation of the Company’s code of conduct. Directors’ Report to the Shareholders | Annual Report 2013 | 57 8. Key Operating and Financial Data The summarized key operating and ﬁ nancial data for 2013 and immediately preceding four years are presented below: Taka in Thousand Particulars 2013 2012 2011 2010 2009 Authorized Capital Paid up Capital Total Sales Export Sales Gross Proﬁ t Proﬁ t Before Tax Net Proﬁ t Fixed Assets (Gross) Shareholders’ Equity 9,100,000 3,503,349 10,490,699 671,289 4,838,800 2,093,594 1,404,763 23,051,128 19,775,552 9,100,000 3,046,390 9,289,115 470,116 4,389,401 1,909,829 1,319,389 20,316,639 18,408,162 9,100,000 9100000 9,100,000 1,511,493 2,098,065 2,517,678 4,868,255 6,490,847 7,890,242 272,126 330,541 390,315 2,302,048 3,173,207 3,786,533 867,467 1,361,532 1,677,849 1,198,525 624,740 1,051,649 19,289,344 18,191,956 15,621,366 17,128,128 15,974,086 10,885,707 Dividend : Stock Cash Net Assets Value (NAV) Per Share EPS / Restated EPS Market Price Per Share (at end of the year) Price Earning Ratio (Times) Number of shareholders Foreign Investors ICB including ICB Investors Account Sponsors, General Public & Other Institutions 5% 10% 56 4.01 47.20 11.77 92,831 68 880 91,883 15% - 60 3.77 55.90 14.83 86,290 66 898 85,326 21% - 68 3.93 93.60 23.82 88,697 58 896 87,743 20% - 79 4.18 135.1 32.32 93,371 57 899 92,415 15% - 72 3.50 155.8 44.51 80,189 54 890 79,245 Number of employees 2,897 2,748 2,670 2,507 2,511 9. Board Meetings and Attendance Fourteen Board Meetings were held during the year. The attendance records of the Directors are as follows: Directors Number of Meetings Attended Directors Number of Meetings Attended A S F Rahman Nazmul Hassan MP M. A. Qasem Dr. Abdul Alim Khan A. B. Siddiqur Rahman 14 14 14 3 14 Salman F Rahman Iqbal Ahmed Osman Kaiser Chowdhury Barrister Faheemul Huq 14 13 13 5 58 I Annual Report 2013 I Directors’ Report to the Shareholders 10. The Pattern of Shareholding Name-wise details Number of Shares held i) Parent/Subsidiary/Associate Companies and Other Related Parties : Beximco Holdings Ltd. Bangladesh Export Import Company Ltd. New Dacca Industries Ltd. Beximco Engineering Ltd. National Investment & Finance Company Ltd. (ii) Directors, Chief Executive Ofﬁ cer, Company Secretary, Chief Financial Ofﬁ cer, Head of Internal Audit and their Spouses and Minor Children: 19,430,807 2,505,072 9,159,867 1,920,270 993,022 A S F Rahman, Chairman Salman F Rahman, Vice Chairman Nazmul Hassan MP, Managing Director & CEO Company Secretary, Spouse and Minor Children Chief Financial Ofﬁ cer, Spouse and Minor Children Head of Internal Audit, Spouse and Minor Children 7,114,009 7,130,663 11,512 - - - (iii) Executives - (iv) Shareholders holding 10% or more voting interest in the Company: - 11. Corporate Governance Compliance Report In accordance with the requirement of the Securities and Exchange Commission Notiﬁ cation No SEC/CMRRCD/2006-158/134/ Admin/44, Report on “Corporate Governance Compliance” is annexed. On behalf of the Board A S F Rahman Chairman Directors’ Report to the Shareholders I Annual Report 2013 I 59 Corporate Governance Compliance Report Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission’s Notiﬁ cation No. SEC/ CMRRCD/2006-158/134/ Admin/44 dated 07 August, 2013 issued under section 2CC of the Securities and Exchange Ordinance, 1969: (Report under Condition No. 7.00) Condition No. Title Compliance Status (“√”in appropriate column) Complied Not Complied Remarks (If any) 1 1.1 1.2 1.2 (i) 1.2 (ii) (a) 1.2 (ii) (b) 1.2 (ii) (c) 1.2 (ii) (d) 1.2 (ii) (e) 1.2 (ii) (f) 1.2 (ii) (g) 1.2 (ii) (h) 1.2 (ii) (i) 1.2 (iii) 1.2 (iv) 1.2 (v) 1.2 (vi) 1.3 1.3 (i) 1.3 (ii) 1.3 (iii) 1.4 1.5 1.5 (i) 1.5 (ii) 1.5 (iii) 1.5 (iv) 1.5 (v) 1.5 (vi) 1.5 (vii) 1.5 (viii) BOARD OF DIRECTORS (BOD) Board’s Size [number of Board members to be 5 – 20] Independent Directors (ID) Number of Independent Directors [at least 1/5] Holding no share or holding less than 1% shares Not being a sponsor and connected with any sponsor or director or shareholder holding 1% or more shares Not having any pecuniary or otherwise relationship with the company or its subsidiary/associated companies Not being member/director/ofﬁ cer of any stock exchange Not being shareholder/director/ofﬁ cer of any member of stock exchange or intermediary of capital market Not being partner/executive at present or during the preceding 3 years of the company’s statutory audit ﬁ rm Not being an ID in more than 3 listed companies Not convicted as defaulter in any loan of a bank or NBFI Not convicted for a criminal offence To be appointed by BOD and approved in the AGM The post cannot remain vacant for more than 90 days Laying down of code of conduct of Board members and recording of annual compliance of the code Tenure of Independent Director Qualiﬁ cation of Independent Director Being knowledgeable, having integrity, ability to ensure compliance with laws and make meaningful contribution Being a Business Leader/ Corporate Leader/ Bureaucrat/ University Teacher (Economics/Business/Law)/CA/CMA/CS having 12 years of management/professional experience Prior approval of the Commission in special cases Appointment of Chairman and CEO, deﬁ ning their roles Inclusions in Director’s Report to Shareholders Industry outlook and possible future developments Segment-wise or product-wise performance Risks and concerns Discussion on COGS, Gross Proﬁ t and Net Proﬁ t Margins Discussion on continuity of Extra-Ordinary gain or loss Basis for and a statement of related party transactions Utilization of proceeds from issuing instruments Explanation, if the ﬁ nancial results deteriorate after going for IPO, RPO, Right Offer, Direct Listing, etc. √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ - √ √ √ √ √ - √ - - 60 | Annual Report 2013 | Directors’ Report to the Shareholders two of Appointment of Directors Shareholders in this AGM is placed the Independent the for approval by - N/A Company Operates in a Single Product Segment- Pharmaceuticals. However, in relevant cases market segment performance has been analyzed. - - - N/A N/A N/A Condition No. Title 1.5 (ix) 1.5 (x) Explanation about signiﬁ cant variance between Quarterly Financial performance and Annual Financial Statements Remuneration to directors including Independent Directors 1.5 (xi) 1.5 (xii) 1.5 (xiii) 1.5 (xiv) 1.5 (xv) 1.5 (xvi) 1.5 (xvii) 1.5 (xviii) 1.5 (xix) 1.5 (xx) 1.5 (xxi) 1.5 (xxi) (a) 1.5 (xxi) (b) 1.5 (xxi) (c) 1.5 (xxi) (d) 1.5 (xxii) 1.5 (xxii) (a) 1.5 (xxii) (b) 1.5 (xxii) (c) 2 2.1 2.2 3 3 (i) 3 (ii) 3 (iii) 3.1 3.1 (i) 3.1 (ii) 3.1 (iii) 3.1 (iv) 3.1 (v) 3.1 (vi) 3.2 3.2 (i) 3.2 (ii) 3.3 3.3 (i) 3.3 (ii) Fair presentation in ﬁ nancial statements Maintaining proper books of accounts Consistent application of appropriate accounting policies, and accounting estimates being reasonable and prudent Following applicable IAS/BAS/IFRS/BFRS, and adequate disclosure for any departure there-from, if any Soundness and monitoring of internal control system Statement regarding ability to continue as going concern Signiﬁ cant deviations from last year’s operating results Summary of key operating/ﬁ nancial data of last 5 years Reason for non declaration of Dividend Number of Board meetings and attendance of directors Pattern of shareholding (along with name wise details) Parent/Subsidiary/Associate Companies & related parties Directors, CEO, CS, CFO, HOIA, their spouses & children Executives (Top 5 salaried employees other than above) Shareholders holding 10% or more voting interest Appointment/re-appointment of a director A brief resume of the director Nature of his/her expertise in speciﬁ c functional areas Names of companies in which he/she holds directorship and the membership of committees of the board CFO, Head of Internal Audit and CS Appointment of a CFO, a Head of Internal Audit and a CS and deﬁ ning their roles, responsibilities & duties Attendance of CFO and CS in the meetings of the Board Audit Committee Having Audit Committee as a sub-committee of the BOD Audit Committee to assist the BOD in ensuring fairness of ﬁ nancial statements and a good monitoring system Audit Committee being responsible to the BOD; duties of Audit Committee to be clearly set forth in writing Constitution of the Audit Committee Audit Committee to be composed of at least 3 members Audit Committee members to be appointed by BOD and at least one Independent Director to be included Audit Committee members to be “ﬁ nancially literate” and at least one to have accounting/ﬁ nancial experience Vacancy in Audit Committee making the number lower than 3 to be ﬁ lled up immediately and within 1 month The CS to act as the secretary of the Audit Committee No quorum in Audit Committee meeting without one Independent Director Chairman of the Audit Committee Chairman to be an Independent Director, selected by the BOD Chairman of audit committee to remain present in AGM Role of Audit Committee Oversee the ﬁ nancial reporting process Monitor choice of accounting policies and principles Compliance Status (“√”in appropriate column) Complied Not Complied Remarks (If any) - - N/A No remuneration were paid to any Director during 2013 except Managing Director for serving as Chief Executive and the Independent Directors for their attendance in Meetings. - - N/A N/A √ √ √ √ √ √ √ - √ - √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ - - N/A √ √ √ √ √ √ Directors’ Report to the Shareholders I Annual Report 2013 I 61 Condition No. Title Compliance Status (“√”in appropriate column) Complied Not Complied Remarks (If any) - N/A - - - - - - - - - - N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3.3 (iii) 3.3 (iv) 3.3 (v) 3.3 (vi) 3.3 (vii) 3.3 (viii) 3.3 (ix) 3.3 (x) 3.4 3.4.1 3.4.1 (i) 3.4.1 (ii) (a) 3.4.1 (ii) (b) 3.4.1 (ii) (c) 3.4.1 (ii) (d) 3.4.2 3.5 4 4.00 (i) 4.00 (ii) 4.00 (iii) 4.00 (iv) 4.00 (v) 4.00 (vi) 4.00 (vii) 4.00 (viii) 5 5 (i) 5 (ii) 5 (iii) 5 (iv) 5 (v) 6 6 (i) (a) 6 (i) (b) 6 (ii) 7 7 (i) 7 (ii) Monitor Internal Control Risk management process Oversee hiring and performance of external auditors Review the annual ﬁ nancial statements Review the quarterly and half yearly ﬁ nancial statements Review the adequacy of internal audit function Review statement of signiﬁ cant related party transactions Review Letters issued by statutory auditors Review disclosures/statements/declarations about uses of funds raised through IPO/RPO/Rights Issue Reporting of the Audit Committee Reporting to the Board of Directors Reporting on the activities of Audit Committee Reporting on conﬂ icts of interests Reporting on suspected/presumed fraud or irregularity or material defect in the internal control system Reporting on suspected infringement of laws Reporting on any other matter to disclose immediately Reporting to BSEC Reporting to the Shareholders and General Investors External / Statutory Auditors Non-engagement in appraisal/valuation/fairness opinions Non-engagement in designing & implementation of FIS Non-engagement in Book Keeping or accounting Non-engagement in Broker-Dealer services Non-engagement in Actuarial services Non-engagement in Internal Audit services Non-engagement in services determined by Audit Committee Possessing no share by any partner or employee of the external audit ﬁ rm during the tenure of assignment Subsidiary Company Composition of BOD to be similar to holding company One ID to be in both holding and subsidiary company Minutes of Board meetings of subsidiary company to be placed at following Board meeting of holding company Minutes of respective Board meeting of holding company to state that affairs of subsidiary company be reviewed Audit Committee of holding company to review ﬁ nancial statements / investments of subsidiary company Duties of CEO and CFO To certify that they have reviewed Financial Statements which contain no untrue or misleading statement or omit no material fact To certify that the statements present a true and fair view of affairs and are in compliance with accounting standards and applicable laws To certify that no transaction is fraudulent, illegal or violation of company’s code of conduct Reporting and Compliance of Corporate Governance Obtaining certiﬁ cate regarding compliance and sending it to shareholders along with the Annual Report To state, in accordance with annexure, in directors’ report whether the conditions has been complied with √ √ √ √ √ √ √ - √ - - - - - √ √ √ √ √ √ √ √ √ - - - - - √ √ √ √ √ 62 | Annual Report 2013 | Directors’ Report to the Shareholders SARashid & Associates (Chartered Secretaries) CRP Bhaban (11th Floor), Plot-A/5, Block-A Mirpur-14, Dhaka-1216, Bangladesh E-mail : sarashid12000@yahoo.com Certiﬁ cate on Compliance of Corporate Governance Guidelines [Issued under Condition # 7(i) of Corporate Governance Guidelines of BSEC vide Notiﬁ cation No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012] I have reviewed the Compliance of Conditions of the Corporate Governance Guidelines by Beximco Pharmaceuticals Limited (“the Company”) for the year ended 31 December 2013. Such compliance is the responsibility of the Company as stipulated in the above mentioned notiﬁ cation issued by Bangladesh Securities and Exchange Commission (“BSEC”). I have conducted my review in a manner that has provided me a reasonable basis for evaluating the compliances and expressing my opinion thereon. This review has been limited to the measures adopted by the Company in ensuring such compliances and this has not been for expression of opinion on the ﬁ nancial statements or future viability of the Company. According to the information and explanations provided to me by the Company, I hereby certify that the Company has complied with all the conditions of aforesaid Corporate Governance Guidelines of BSEC. S. Abdur Rashid FCS Dhaka, 08 May, 2014 Certificate on Compliance of Corporate Governance Guidelines I Annual Report 2013 I 63 Report on the Activities of The Audit Committee Dear Shareholders, I am pleased to present the report of the Audit Committee of Beximco Pharmaceuticals Limited in pursuance with the Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC). This report is a brief on the activities performed by the Audit Committee. Reviewing the Financial Statements: The committee held its ﬁ rst meeting on April 20, 2013 to review along with the management the Annual Financial Statements of the Company for the year 2012 and to authorize onward submission of the same to the Board for their approval. The Committee thoroughly reviewed the Annual Financial Statements of the company including detailed examination of the related party transactions for the year 2012. The Annual Financial Statements of the Company was then authorized for onward submission to the Board for approval. The next meeting of the Committee was held on May 12, 2013 prior to the release of the Unaudited First quarter Financial Statements of the Company for the year 2013. The committee reviewed the ﬁ nancial progress during the ﬁ rst quarter and examined in detail the reported numbers. Being satisﬁ ed the committee unanimously agreed to recommend to the Board for approval of the 1st quarter ﬁ nancial statements. The third meeting of 2013 was held in July 28, to review the Unaudited Half Yearly Financial Statements of the company. The Chief Financial Ofﬁ cer of the company made a presentation on the ﬁ nancial performance of the company during the ﬁ rst half of 2013. The committee after due review of the ﬁ nancial statements recommended the Board to approve issuance of the ﬁ nancial statements to the shareholders of the company. The fourth meeting of the Committee was held on 23 October, prior to the release of the Unaudited Third Quarter Financial Statements of the company. The detailed review of the ﬁ nancial statements was held and the committee recommended the Board for approval of the ﬁ nancial statements for release to the shareholders. The ﬁ fth meeting of the committee was held on 24 April 2014 to review along with management the annual ﬁ nancial statement of the company for the year ending on 31 December 2013. The draft ﬁ nancial statements along with detailed explanatory notes were placed before the committee. Detailed discussions on the ﬁ nancial statements were held with the representative of the management of the Company. No material audit observation that warrants for Board’s attention was noted. As part of review of the annual accounts of the company the committee also thoroughly examined the related party transactions that occurred during 2013. The committee was fully satisﬁ ed that the transactions between the related parties were held in the normal course of business and on arm’s length basis and adequate disclosure to that effect has been made in the ﬁ nancial statements. The Committee therefore, authorized for onward submission of the Audited Financial Statements to the Board for approval. External Auditor The Committee considered and made recommendation to the Board on the appointment and remuneration of the existing auditors M/S M J Abedin & Company, Chartered Accountants for the year 2014 subject to the approval by the shareholders in the 38th Annual General Meeting. 64 | Annual Report 2013 | Report on the Activities of The Audit Committee Death of Committee Member Dr. Abdul Alim Khan, a director of the company and a member of the Audit Committee expired on 29 September 2013. The members of the audit committee expressed deep condolence at the sad demise and recalled with appreciation the valuable contribution of Mr. Khan during his long tenure with the company. Reconstitution of the Audit Committee Barrister Faheemul Huq a Non-Executive Independent Director of the Company and Chairman of the Audit Committee resigned from the Board on personal ground. The Board appointed Mr. Abdur Rahman Khan a prominent professor of medicine and myself as Non- Executive independent Directors in the Board for an initial period of three years subject to the approval of the shareholders in the Annual General Meeting. The Board of Directors at the same time appointed me Chairman and Mr. Abdur Rahman Khan a member of the audit committee. Other Reviews and Activities The senior management of the company time to time on invitation attended various meetings of the audit committee to apprise the members of the committee on various issues. During the 2013 the audit committee also reviewed and monitored various work of the internal audit team. Assessment and evaluation of internal control policy were made to ensure that the company employs a sound system of internal control including internal ﬁ nancial control. The committee amongst others periodically reviewed the ﬁ nancial reporting process of the company and the related disclosures. Appropriate review was also made on the compliance of various rules regulations, policies and procedures. The committee noted no material deviations or non-compliance or adverse audit ﬁ nding that warrant for Board or shareholders’ attention during the period under review. Mahbubul Alam Chairman Audit Committee Report on the Activities of The Audit Committee I Annual Report 2013 I 65 Shareholders’ Meeting The thirty seventh Annual General Meeting (AGM) of the shareholders of Beximco Pharmaceuticals Limited was held on June 29, 2013 at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur. Mr. A S F Rahman, Chairman of the Company presided over the meeting. All resolutions put before the shareholders were duly passed including the agenda of paying a 15% stock dividend for the year 2012. Performance of the Company in 2012 as well as future strategies was brieﬂ y discussed in the meeting. At the end of the meeting the Chairman expressed his appreciation towards shareholders for their interest in the Company and their continued support. 66 I Annual Report 2013 I Shareholders’ Meeting Shareholders’ Meeting | Annual Report 2013 | 67 Value Added Statement For the Year Ended 31 December 2013 Value Added : Sales & Other Income Bought-in-Materials & Services Applications : Retained by the Company Salaries and Beneﬁ ts to Employees Interest to Lenders Dividend to Shareholders Duties & Taxes to Govt. Exchequer Taka in thousand Tk. % 12,655,911 (5,925,855) 6,730,056 100 1,834,884 1,432,326 636,587 525,502 2,300,757 27 21 9 8 35 6,730,056 100 68 I Annual Report 2013 I Value Added Statement Graphical View of Selected Growth Indicators Graphical View of Selected Growth Indicators | Annual Report 2013 | 69 Independent Auditors’ Report To The Shareholders of Beximco Pharmaceuticals Limited Report on the Financial Statements We have audited the accompanying ﬁ nancial statements of Beximco Pharmaceuticals Limited, which comprise the Statement of Financial Position as at 31 December 2013, the Statements of Comprehensive Income, Changes in Equity and Cash Flows for the year then ended, and notes, comprising a summary of signiﬁ cant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these ﬁ nancial statements in accordance with International Financial Reporting Standards (IFRSs), Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations, and for such internal control as management determines is necessary to enable the preparation of ﬁ nancial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these ﬁ nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA) and Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the ﬁ nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ﬁ nancial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the ﬁ nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the ﬁ nancial statements in order to design audit procedure that are appropriate in the circumstance, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the ﬁ nancial statements. We believe that the audit evidence we have obtained is sufﬁ cient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the ﬁ nancial statements give a true and fair view of the ﬁ nancial position of the Company as at 31 December 2013, and of its ﬁ nancial performance and its cash ﬂ ows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1994 and the Securities and Exchange Rules 1987, we report that: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due veriﬁ cation thereof; (b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of these books; (c) the Statement of Financial Position ( Balance Sheet) and Statement of Comprehensive Income (Proﬁ t and Loss Account) dealt with by the report are in agreement with the books of account; and (d) the expenditure incurred was for the purposes of the company’s business. Dhaka 29 April, 2014 M.J. Abedin & Co. Chartered Accountants 70 I Annual Report 2013 I Independent Auditors’ Report Beximco Pharmaceuticals Limited Statement of Financial Position As at 31 December 2013 ASSETS Non-Current Assets Property, Plant and Equipment- Carrying Value Intangible Assets Investment in Shares Current Assets Inventories Spares & Supplies Accounts Receivable Loans, Advances and Deposits Short Term Investment Cash and Cash Equivalents TOTAL ASSETS EQUITY AND LIABILITIES Shareholders’ Equity Issued Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Fair Value Gain on Investment Retained Earnings Non-Current Liabilities Long Term Borrowings-Net off Current Maturity (Secured) Liability for Gratuity and WPPF & Welfare Funds Deferred Tax Liability Current Liabilities and Provisions Short Term Borrowings (Secured) Long Term Borrowings-Current Maturity (Secured) Creditors and Other Payables Accrued Expenses Dividend Payable Income Tax Payable Notes 2013 2012 Amount in Taka 4 (a) 3.3 & 5 6 18,567,329,474 18,364,313,070 198,223,509 4,792,895 16,392,388,639 16,201,858,216 187,079,147 3,451,276 7 8 9 10 11 12 13 14 4(b) 6 15 16 17 18 19 20 21 22 8,903,422,328 2,411,881,986 433,352,407 1,249,434,697 1,186,637,111 3,026,383,161 595,732,966 8,197,421,953 2,433,987,981 396,175,790 1,162,404,807 965,276,373 2,686,598,326 552,978,676 27,470,751,802 24,589,810,592 19,775,552,465 3,503,349,070 5,269,474,690 1,689,636,958 294,950,950 1,349,578,805 1,341,619 7,667,220,373 3,312,618,059 1,151,400,702 610,628,150 1,550,589,207 4,382,581,278 2,776,266,125 754,903,558 383,170,553 141,582,304 973,367 325,685,371 18,408,161,859 3,046,390,500 5,269,474,690 1,689,636,958 294,950,950 1,406,527,880 - 6,701,180,881 3,116,703,964 1,469,621,611 499,622,784 1,147,459,569 3,064,944,769 1,526,449,918 664,712,728 470,097,685 128,598,961 1,020,948 274,064,529 TOTAL EQUITY AND LIABILITIES 27,470,751,802 24,589,810,592 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 29 April, 2014 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 29 April, 2014 Ali Nawaz Chief Financial Ofﬁ cer Per our report of even date. M. J. Abedin & Co. Chartered Accountants Statement of Financial Position | Annual Report 2013 | 71 Beximco Pharmaceuticals Limited Statement of Comprehensive Income For the Year ended 31 December 2013 Net Sales Revenue Cost of Goods Sold Gross Proﬁ t Operating Expenses Administrative Expenses Selling, Marketing and Distribution Expenses Proﬁ t from Operations Other Income Finance Cost Proﬁ t Before Contribution to WPPF & Welfare Funds Contribution to WPPF & Welfare Funds Proﬁ t Before Tax Income Tax Expenses Current Tax Deferred Tax Proﬁ t after Tax for the Year Other Comprehensive Income - Fair Value Gain on Investment in Listed Shares Total Comprehensive Income for the Year Earnings Per Share (EPS) / Adjusted EPS (2012) Number of Shares used to compute EPS Notes 2013 2012 Amount in Taka 23 24 27 28 29 30 31 32 6 33 10,490,699,094 9,289,115,284 (5,651,898,878) 4,838,800,216 (4,899,713,857) 4,389,401,427 (2,514,527,446) (375,565,912) (2,138,961,534) 2,324,272,770 510,588,200 (636,587,090) 2,198,273,880 (2,181,521,867) (332,225,347) (1,849,296,520) 2,207,879,560 442,847,713 (645,406,575) 2,005,320,698 (104,679,709) (95,491,462) 2,093,594,171 1,909,829,236 (688,831,391) (324,415,546) (364,415,845) 1,404,762,780 (590,439,908) (445,712,907) (144,727,001) 1,319,389,328 1,341,619 1,406,104,399 - 1,319,389,328 4.01 3.77 350,334,907 350,334,907 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 29 April, 2014 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 29 April, 2014 72 I Annual Report 2013 I Statement of Comprehensive Income Ali Nawaz Chief Financial Ofﬁ cer Per our report of even date. M. J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited Statement of Changes in Equity For the Year ended 31 December 2013 Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Fair Value Gain on Investment Retained Earnings Total Amount in Taka 3,046,390,500 5,269,474,690 1,689,636,958 294,950,950 1,406,527,880 - 6,701,180,881 18,408,161,859 - - - - - - - 456,958,570 - - - - - - - - - - - - - 1,341,619 1,404,762,780 - 1,404,762,780 1,341,619 - - (456,958,570) - (18,235,282) - 18,235,282 - - - (38,713,793) - - (38,713,793) 3,503,349,070 5,269,474,690 1,689,636,958 294,950,950 1,349,578,805 1,341,619 7,667,220,373 19,775,552,465 Balance as on January 01, 2013 Total Comprehensive Income for 2013: Proﬁ t for the year Other Comprehensive Income Transactions with the Shareholders: Stock Dividend for 2012 Adjustment for Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets Balance as on December 31, 2013 Number of Shares Net Asset Value (NAV) Per Share The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 29 April, 2014 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 29 April, 2014 350,334,907 56.45 Ali Nawaz Chief Financial Ofﬁ cer Per our report of even date. M. J. Abedin & Co. Chartered Accountants Statement of Changes in Equity | Annual Report 2013 | 73 Beximco Pharmaceuticals Limited Statement of Cash Flows For the Year ended 31 December 2013 Cash Flows from Operating Activities : Receipts from Customers and Others Payments to Suppliers and Employees Cash Generated from Operations Interest Paid Interest Received Income Tax Paid Net Cash Generated from Operating Activities Cash Flows from Investing Activities : Acquisition of Property, Plant and Equipment Intangible Assets Disposal of Property, Plant and Equipment Short Term Investment Net Cash Used in Investing Activities Cash Flows from Financing Activities : Net Decrease in Long Term Borrowings Net Increase / (Decrease) in Short Term Borrowings Dividend Paid Net Cash Generated from Financing Activities Increase in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year 2013 Amount in Taka 2012 10,407,897,987 (7,880,610,113) 2,527,287,874 9,107,836,251 (6,855,119,972) 2,252,716,279 (636,587,090) 512,424,678 (272,794,704) 2,130,330,758 (645,406,575) 437,201,038 (187,130,672) 1,857,380,070 (2,739,061,076) (25,370,921) 5,401,817 (339,784,835) (3,098,815,015) (1,033,862,245) (65,272,280) 4,730,688 (493,174,766) (1,587,578,603) (228,030,079) 1,239,316,207 (47,581) 1,011,238,547 (119,484,493) (115,766,090) (340,504) (235,591,087) 42,754,290 552,978,676 595,732,966 34,210,380 518,768,296 552,978,676 Net Operating Cash Flow Per Share 6.08 6.10 Number of Shares used to compute Net Operating Cash Flow Per Share 350,334,907 304,639,050 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 29 April, 2014 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 29 April, 2014 74 I Annual Report 2013 I Statement of Cash Flows Ali Nawaz Chief Financial Ofﬁ cer Per our report of even date. M. J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited Notes to the Financial Statements As at and for the year ended 31 December 2013 1. Reporting Entity 1.1 About the company Beximco Pharmaceuticals Limited (BPL/ the Company) was incorporated as a public limited company in Bangladesh in 1976. It commenced its manufacturing operation in 1980. The company was listed with Dhaka Stock Exchange in 1985 and with Chittagong Stock Exchange on its debut in 1995. In 2005, BPL took over Beximco Infusions Ltd., a listed company of the Beximco Group engaged in manufacturing and marketing of intravenous ﬂ uids and got enlisted with the Alternative Investment Market (AIM) of the London Stock Exchange through issuance of Global Depository Receipts (GDRs). Shares of the Company are traded in Dhaka and Chittagong Stock Exchanges of Bangladesh and its GDRs in AIM of the London Stock Exchange. The registered ofﬁ ce of the company is located at House No. 17, Road No. 2, Dhanmondi R/A, Dhaka. The industrial units are located at Tongi and Kaliakoir of Gazipur district – vicinities close to the capital city Dhaka. 1.2 Nature of Business The company is engaged in manufacturing and marketing of generic pharmaceuticals formulation products including life saving intravenous ﬂ uids and Active Pharmaceutical Ingredients (APIs). Products of the company are sold in domestic and international markets. The company also provides contract manufacturing services. 2. Basis of Preparation of Financial Statements 2.1 Basis of Measurement The ﬁ nancial statements have been prepared on Historical Cost Basis except land, building and plant & machinery being revalued on 31 December 2008, investment in shares of listed company being valued at year end quoted price and the cash ﬂ ow statement being prepared on cash basis. Statement of Compliance The ﬁ nancial statements have been prepared in compliance with the requirements of the Companies Act, 1994, the Securities & Exchange Rules 1987, the Listing Regulations of Dhaka and Chittagong Stock Exchanges and other relevant local laws as applicable and in accordance with the International Financial Reporting Standards (IFRSs), and Bangladesh Financial Reporting Standards (BFRSs). Presentation of Financial Statements The presentation of these ﬁ nancial statements is in accordance with the guidelines provided by IAS 1: Presentation of Financial Statements. The ﬁ nancial statements comprises of: (a) a Statement of Financial Position as at the end of the year 2013; (b) a Statement of Comprehensive Income for the year 2013; (c) a Statement of Changes in Equity for the year 2013; (d) a Statement of Cash Flows for the year 2013; and (e) notes, comprising summary of signiﬁ cant accounting policies and explanatory information. Reporting Period The ﬁ nancial statements cover one calendar year from January 01, 2013 to December 31, 2013. Authorisation for issue The ﬁ nancial statements have been authorised for issue by the Board of Directors on April 29, 2014. Functional and Presentation Currency The ﬁ nancial statements are prepared and presented in Bangladesh Currency (Taka), which is the company’s functional currency. All ﬁ nancial information presented has been rounded off to the nearest Taka except where indicated otherwise. 2.2 2.3 2.4 2.5 2.6 Notes to the Financial Statements | Annual Report 2013 | 75 2.7 2.8 Comparative Information Comparative information has been disclosed in respect of the year 2012 for all numerical information in the ﬁ nancial statements and also the narrative and descriptive information where it is relevant for understanding of the current year’s ﬁ nancial statements. Figures for the year 2012 have been re-arranged wherever considered necessary to ensure better comparability with the current year. Use of Estimates and Judgments The preparation of ﬁ nancial statements in conformity with the IFRSs including IASs require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and for contingent assets and liabilities that require disclosure, during and at the date of the ﬁ nancial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision of accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. In particular, the key areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most signiﬁ cant effect on the amounts recognized in the ﬁ nancial statements include depreciation, inventory valuation, accrued expenses, other payable and deferred liability for gratuity. 3. Signiﬁ cant Accounting Policies The accounting principles and policies in respect of material items of ﬁ nancial statements set out below have been applied consistently to all periods presented in these ﬁ nancial statements. 3.1 Revenue Recognition In compliance with the requirements of IAS 18: Revenue, revenue receipts from customers against sales is recognized when products are dispatched to customers, that is, when the signiﬁ cant risk and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Revenue from sales is exclusive of VAT. Cash dividend income on investment in shares is recognized on approval of said dividend in the annual general meeting. Stock dividend income (Bonus Shares) is not considered as revenue. 3.2 3.2.1 Property, Plant and Equipment Recognition and Measurement This has been stated at cost or revalued amount less accumulated depreciation in compliance with the requirements of IAS 16: Property, Plant and Equipment. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes. 3.2.2 Maintenance Activities The company incurs maintenance costs for all its major items of property, plant and equipment. Repair and maintenance costs are charged as expenses when incurred. 3.2.3 Depreciation Depreciation is provided to amortise the cost of the assets after commissioning, over the period of their expected useful lives, in accordance with the provisions of IAS 16: Property, Plant and Equipment. Depreciation is provided at the following rates on reducing balance basis: Building and Other Construction Plant and Machinery Furniture & Fixtures Transport & Vehicle Ofﬁ ce Equipment 2 %- 10% 5% -15% 10% 20% 10% -15% 3.2.4 Retirements and Disposals On disposal of ﬁ xed assets, the cost and accumulated depreciation are eliminated and gain or loss on such disposal is reﬂ ected in the income statement, which is determined with reference to the net book value of the assets and net sales proceeds. 76 I Annual Report 2013 I Notes to the Financial Statements 3.3 3.4 3.5 3.5.1 Intangible Assets Intangible assets are stated at cost less provisions for amortization and impairments. Licenses, patents, know-how and marketing rights acquired are amortized over their estimated useful lives, using the straight line basis, from the time they are available for use. The cost of acquiring and developing computer software for internal use and internet sites for external use are capitalized as intangible ﬁ xed assets where the software or site supports a signiﬁ cant business system and the expenditure leads to the creation of a durable asset. Also, the research and development expenditures that are deﬁ nite to yield beneﬁ t to the company are capitalized. Leased Assets In compliance with the IAS 17: Leases, cost of assets acquired under ﬁ nance lease along with related obligation has been accounted for as assets and liabilities respectively of the company, and the interest element has been charged as expenses. Lease payments made under ﬁ nance leases are apportioned between the ﬁ nance expenses and the reduction of the outstanding liability. Financial Instruments A ﬁ nancial instrument is any contract that gives rise to a ﬁ nancial asset of one entity and a ﬁ nancial liability or equity instrument of another entity. Financial assets Financial assets of the company include cash and cash equivalents, accounts receivable and other receivables. The company initially recognizes receivable on the date they are originated. All others ﬁ nancial assets are recognized initially on the date at which the company becomes a party to the contractual provisions of the transaction. The company derecognizes a ﬁ nancial asset when, and only when the contractual rights or probabilities of receiving the cash ﬂ ows from the asset expire or it transfer the rights to receive the contractual cash ﬂ ows on the ﬁ nancial asset in a transaction in which substantially all the risk and rewards of ownership of the ﬁ nancial asset are transferred. 3.5.1(a) Accounts Receivable Accounts receivable are created at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account aging, previous experience and general economic conditions. When an accounts receivable is determined to be uncollected it is written off, ﬁ rstly against any provision available and then to the proﬁ t and loss account. Subsequent recoveries of amounts previously provided for are credited to the proﬁ t and loss account. 3.5.1(b) Cash and Cash Equivalents Cash and cash equivalents include cash in hand, in transit and with banks on current and deposit accounts which are held and available for use by the company without any restriction. There is insigniﬁ cant risk of change in value of the same. 3.5.1(c) Investment in Shares Investment in shares of listed company is valued at a price quoted in the stock exchange at year end. Investment in other shares is valued at cost. 3.5.2 3.6 Financial Liability Financial liabilities are recognized initially on the transaction date at which the company becomes a party to the contractual provisions of the liability. The company derecognizes a ﬁ nancial liability when its contractual obligations are discharged or cancelled or expire. Finance liabilities include payable for expenses, liability for capital expenditure and other current liabilities. Impairment (a) Financial Assets Accounts receivable and other receivables are assessed at each reporting date to determine whether there is any objective evidence of impairment. Financial assets are impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset and that the loss event had a negative effects on the estimated future cash ﬂ ows of that asset, that can be estimated reliably. Objective evidence that ﬁ nancial assets are impaired can include default or delinquency by a debtor, indications that a debtor or issuer will enter bankruptcy etc. (b) Non-Financial Assets An asset is impaired when its carrying amount exceeds its recoverable amount. The company assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. The recoverable amount of an asset is the higher of its fair value less costs to sell and its Notes to the Financial Statements | Annual Report 2013 | 77 value in use. Carrying amount of the assets is reduced to its recoverable amount by recognizing an impairment loss if, and only if, the recoverable amount of the asset is less than its carrying amount. Impairment loss is recognized immediately in proﬁ t or loss, unless the asset is carried at revalued amount. Any impairment loss of a revalued asset shall be treated as a revaluation decrease. 3.7 3.8 Inventories Inventories are carried at the lower of cost and net realizable value as prescribed by IAS 2: Inventories. Cost is determined on weighted average cost basis. The cost of inventories comprises of expenditure incurred in the normal course of business in bringing the inventories to their present location and condition. Net realizable value is based on estimated selling price less any further costs expected to be incurred to make the sale. Provisions A provision is recognized in the statement of ﬁ nancial position when the company has a legal or constructive obligation as a result of a past event, it is probable that an outﬂ ow of economic beneﬁ ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provision is ordinarily measured at the best estimate of the expenditure required to settle the present obligation at the date of statement of ﬁ nancial position. Where the effect of time value of money is material, the amount of provision is measured at the present value of the expenditures expected to be required to settle the obligation. 3.9 Income Tax Expense Income tax expense comprises of current and deferred tax. Income tax expense is recognized in the Statement of Comprehensive Income and accounted for in accordance with the requirements of IAS 12 : Income Tax. 3.10 3.11 3.12 Current Tax Current tax is the expected tax payable on the taxable income for the year, and any adjustment to tax payable in respect of previous years. The company qualiﬁ es as a “Publicly Traded Company”; hence the applicable Tax Rate is 27.50%. Deferred Tax The company has recognized deferred tax using balance sheet method in compliance with the provisions of IAS 12: Income Taxes. The company’s policy of recognition of deferred tax assets/ liabilities is based on temporary differences (Taxable or deductible) between the carrying amount (Book value) of assets and liabilities for ﬁ nancial reporting purpose and its tax base, and accordingly, deferred tax income/expenses has been considered to determine net proﬁ t after tax and earnings per shares (EPS). A deferred tax asset is recognized to the extent that it is probable that future taxable proﬁ t will be available, against which temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax beneﬁ t will be realized. Interest Income Interest income is recognized on accrual basis. Borrowing Cost Borrowing costs are recognized as expenses in the period in which they are incurred unless capitalization of such is allowed under IAS 23 : Borrowing Costs. Employee Beneﬁ ts The company maintains both deﬁ ned contribution plan and deﬁ ned beneﬁ t plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds. The company has accounted for and disclosed employee beneﬁ ts in compliance with the provisions of IAS 19: Employee Beneﬁ ts. The cost of employee beneﬁ ts is charged off as revenue expenditure in the period to which the contributions relate. The company’s employee beneﬁ ts include the following: (a) Deﬁ ned Contribution Plan (Provident Fund) The company has a registered provident fund scheme (Deﬁ ned Contribution Plan) for employees of the company eligible to be members of the fund in accordance with the rules of the provident fund constituted under an irrevocable trust. All permanent employees contribute 10% of their basic salary to the provident fund and the company also makes equal contribution. The company recognizes contribution to deﬁ ned contribution plan as an expense when an employee has rendered services in exchange for such contribution. The legal and constructive obligation is limited to the amount it agrees to contribute to the fund. 78 I Annual Report 2013 I Notes to the Financial Statements (b) Deﬁ ned Beneﬁ t Plan (Gratuity) This represents unfunded gratuity scheme for its permanent employees. Employees are entitled to gratuity beneﬁ t after completion of minimum ﬁ ve years of service in the company. The gratuity is calculated on the latest applicable basic pay and is payable at the rate of one month basic pay for every completed year of service. Though no valuation was done to quantify actuarial liabilities as per the IAS 19 : Employee Beneﬁ ts, such valuation in not likely to yield a result signiﬁ cantly different from the current provision. (c) Short-term employee beneﬁ ts Short-term employee beneﬁ ts include salaries, bonuses, leave encashment, etc. Obligations for such beneﬁ ts are measured on an undiscounted basis and are expensed as the related service is provided. (d) Contribution to Workers’ Proﬁ t Participation and Welfare Funds This represents 5% of net proﬁ t before tax contributed by the company as per provisions of the Bangladesh Labor (amendment) Act 2013 and is payable to workers as deﬁ ned in the said law. (e) Insurance Scheme Employees of the company are covered under insurance schemes. 3.13 3.14 Share Premium The Share Premium shall be utilized in accordance with the provisions of the Companies Act, 1994 and as per direction of the Securities and Exchange Commission in this respect. Proposed Dividend The amount of proposed dividend has not been accounted for but disclosed in the notes to the accounts in accordance with the requirements of International Accounting Standard (IAS) 1: Presentation of Financial Statements. Also, the proposed dividend has not been considered as “Liability” in accordance with the requirements of International Accounting Standard (IAS) 10: Events After The Reporting Period, because no obligation exists at the time of approval of accounts and recommendation of dividend by the Board of Directors. 3.15 Earnings per Share (EPS) This has been calculated in compliance with the requirements of IAS 33: Earnings Per Share by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the year. Current Year (2013) The Bonus Shares issued during the year 2013 were treated as if they always had been in issue. Hence, in computing the Basic EPS of 2013, the total number of shares including the said bonus shares has been considered as the Weighted Average Number of Shares outstanding during the year 2013. Earlier Year (2012) The number of shares outstanding before the bonus issue has been adjusted for the proportionate change in the number of shares outstanding as if the bonus issue had occurred at the beginning of the earliest period reported (2012), and accordingly, in calculating the adjusted EPS of 2012, the total number of shares including the subsequent bonus issued in 2013 has been considered as the Weighted Average number of Shares outstanding during the year 2012. The basis of computation of number of shares as stated above is in line with the provisions of IAS 33: Earning per Share. The logic behind this basis, as stated in the said IAS is that the bonus Shares are issued to the existing shareholders without any consideration, and therefore, the number of shares outstanding is increased without an increase in resources. Diluted Earnings per Share No diluted EPS is required to be calculated for the year as there was no scope for dilution during the year under review. 3.16 Foreign Currency Transactions Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction date. The monetary assets and liabilities, if any, denominated in foreign currencies at the ﬁ nancial position date are translated at the applicable rates of exchanges ruling at that date. Exchange differences are charged off as revenue expenditure in compliance with the provisions of IAS 21: The Effects of Changes in Foreign Exchange Rates. Notes to the Financial Statements | Annual Report 2013 | 79 3.17 3.18 Statement of Cash Flows The Statement of Cash Flow has been prepared in accordance with the requirements of IAS 7: Statement of Cash Flows. The cash generated from operating activities has been reported using the Direct Method as prescribed by the Securities and Exchange Rules, 1987 and as the benchmark treatment of IAS 7, whereby major classes of gross cash receipts and gross cash payments from operating activities are disclosed. Events after Reporting Period Events after the reporting period that provide additional information about the company’s position at the date of Statement of Financial Position or those that indicate that the going concern assumption is not appropriate are reﬂ ected in the ﬁ nancial statements. Events after reporting period that are not adjusting events are disclosed in the notes when material. 4 (a). Property, Plant and Equipment Particulars Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Ofﬁ ce Equipment Total Amount in Taka Cost At January 01, 2013 Additions during the year Transferred & Capitalized Disposal during the year Cost at December 31, 2013 Accumulated Depreciation At January 01, 2013 Depreciation during the year Adjustment for assets disposed off Accumulated Depreciation at December 31 , 2013 Net Book Value December 31, 2013 3,302,101,973 780,509 - - 3,302,882,482 6,333,171,363 13,549,431 24,037,626 - 6,370,758,420 7,393,575,590 309,357,824 2,333,797,946 (2,087,118) 10,034,644,242 157,600,585 15,883,407 - (150,000) 173,333,992 458,376,716 92,035,614 - (2,335,090) 548,077,240 329,522,045 28,841,271 - - 358,363,316 17,974,348,272 460,448,056 2,357,835,572 (4,572,208) 20,788,059,692 - - 883,415,433 169,131,203 2,765,654,219 326,077,583 59,740,937 9,779,965 184,696,202 54,651,369 221,274,036 15,999,024 4,114,780,827 575,639,144 - - (1,603,706) (90,000) (1,911,424) - (3,605,130) - 1,052,546,636 3,090,128,096 69,430,902 237,436,147 237,273,060 4,686,814,841 3,302,882,482 5,318,211,784 6,944,516,146 103,903,090 310,641,093 121,090,256 16,101,244,851 Capital Work in Progress Carrying Value as on December 31, 2013 2,263,068,219 18,364,313,070 Assets include lease hold assets of Tk. 1,018,806,938 at cost and Tk.776,468,607 at carrying value. Capital Work in Progress is arrived at as follows : Balance as on January 01 Addition during the year Transferred & Capitalized Building and Other Constructions Plant & Machinery Ofﬁ ce Equipment Amount in Taka 2013 2012 2,342,290,771 2,278,613,020 4,620,903,791 (2,357,835,572) (24,037,626) (2,333,797,946) - 1,853,876,341 844,005,530 2,697,881,871 (355,591,100) (42,208,332) (313,373,868) (8,900) Balance as on December 31 2,263,068,219 2,342,290,771 80 I Annual Report 2013 I Notes to the Financial Statements 4 (b). Revaluation Surplus S.F. Ahmed & Co, Chartered Accountants and Valuers revalued the land, building and plant & machinery of the Company as of 31 December 2008, following “Current cost method”. Such revaluation resulted into a revaluation surplus aggregating Tk. 1,711,174,747. Current balance is arrived at as follows: Balance as on January 01 Adjustment for depreciation on revalued assets Adjustment for Deferred Tax on revalued assets 5. Intangible Assets This is arrived at as follows : Balance as on January 01 Addition during the year Total Amortized during the year Balance as on December 31 6. Investment in Shares This consists of as follows : Amount in Taka 2013 2012 1,406,527,880 (18,235,282) (38,713,793) 1,349,578,805 1,466,602,600 (20,719,074) (39,355,646) 1,406,527,880 187,079,147 25,370,921 212,450,068 (14,226,559) 198,223,509 135,933,879 65,272,280 201,206,159 (14,127,012) 187,079,147 (a) Bangladesh Export Import Co. Ltd. (b) Central Depository Bangladesh Ltd. (CDBL) Share details: 3,223,445 1,569,450 4,792,895 1,881,826 1,569,450 3,451,276 No. of Shares Amount in Taka (a) Bangladesh Export Import Co. Ltd As on January 01, 2013 Stock Dividend for 2012 Fair Value Gain on Investment - [Note 3.5.1( c )] Total 87,050 13,057 - 100,107 1,881,826 - 1,341,619 3,223,445 (b) Central Depository Bangladesh Ltd. 571,182 1,569,450 (CDBL) [Note 3.5.1( c)] 4,792,895 (c) The shares of Bangladesh Export Import Co. Ltd. are listed in Dhaka and Chittagong Stock Exchanges. The market value of each share of Bangladesh Export Import Co. Ltd. on last working day of the year was Tk. 32.2 in Dhaka Stock Exchange Ltd. and Tk. 32.10 in Chittagong Stock Exchange Ltd. Shares of CDBL are not traded. Notes to the Financial Statements | Annual Report 2013 | 81 7. Inventories This consists of as follows : Finished Goods Work in Process Raw Materials Packing Materials Laboratory Chemicals Physician Samples Raw & Packing Materials in Transit 8. Spares & Supplies This consists of as follows : Spares & Accessories Stock of Stationery Literature & Promotional Materials 9. Accounts Receivable This includes receivable of Tk. 158,658,136 equivalent to US$ 2,049,754 (on 31-12-2012 Tk. 138,233,280 equivalent to US$ 1,727,916) against export sales. This also includes Tk.1,018,513,082 due from I & I Services Ltd., who provides distribution service to the Company and a “Related Party”. The maximum amount due from that company during the year was Tk. 1,051,200,320 on 31-10-2013. No amount was due from the directors, managing agent, managers and other ofﬁ cers of the company and any of them severally or jointly with any other person. 10. Loans, Advances and Deposits This is unsecured, considered good and consists of as follows : Clearing & Forwarding VAT Claims Receivable Security Deposit & Earnest Money Lease Deposit Capital Expenditure/ Project Expenses Bank Guarantee Margin Advance against Salary Rent Advance Motor Cycle Raw & Packing Material Prepaid Expenses Overseas Liaison Ofﬁ ce Others Amount in Taka 2013 2012 644,005,694 204,755,943 787,194,854 440,279,801 800,984 92,234,008 242,610,702 2,411,881,986 629,828,725 246,214,085 832,312,053 455,793,262 1,051,434 65,863,326 202,925,096 2,433,987,981 318,538,085 9,829,034 104,985,288 433,352,407 286,649,212 5,712,885 103,813,693 396,175,790 43,788,956 224,271,781 12,824,382 21,814,251 18,238,318 39,234,247 85,456,445 39,939,537 51,306,101 9,692,064 156,328,603 409,577,706 28,932,441 9,968,983 35,263,296 1,186,637,111 19,350,585 215,793,398 15,735,731 23,151,164 15,262,058 54,725,188 57,125,828 869,546 64,266,534 6,573,135 132,314,896 330,283,008 - - 29,825,302 965,276,373 (a) The maximum amount due from the employees during the year was Tk.63,249,485 on 31-01-2013. (b) No amount was due from the directors, managing agent, managers and other ofﬁ cers of the company and any of them severally or jointly with any other person, except as stated above. (c) No amount was due from any related party. 82 I Annual Report 2013 I Notes to the Financial Statements 11. Short Term Investment This represents the Company’s temporary investment with Bangladesh Export Import Company Limited (Beximco Ltd.), carrying interest 1% above bank interest rate. This investment is returnable as and when required by the Company. 12. Cash and Cash Equivalents This consists of as follows : (a) Cash in Hand (including Imprest Cash) (b) Cash at Bank : (i) Current & FC Account (ii) FDR Account 13. Issued Share Capital This represents : A. Authorized : Amount in Taka 2013 2012 3,474,616 2,540,331 85,680,218 506,578,132 595,732,966 85,034,470 465,403,875 552,978,676 500,000,000 Ordinary Shares of Tk. 10/- each 41,000,000 Fully Convertible, 5% Dividend, Preference Shares of Tk. 100/- each B. Issued, Subscribed and Paid-up : 51,775,750 shares of Tk. 10/- each fully paid-up in cash 261,316,760 Bonus Shares (2012: 215,620,903) of Tk. 10/- each 5,951,250 Shares of Tk. 10/-each issued in Exchange of Shares of Beximco Infusions Ltd. 31,291,147 Shares issued on conversion of Preference Shares 5,000,000,000 4,100,000,000 9,100,000,000 5,000,000,000 4,100,000,000 9,100,000,000 517,757,500 2,613,167,600 59,512,500 312,911,470 3,503,349,070 517,757,500 2,156,209,030 59,512,500 312,911,470 3,046,390,500 The movement of Ordinary Shares during the year 2013 is as follows : Number of Shares Amount in Taka Balance as on January 01, 2013 Bonus Shares issued during the year 2013 (for 2012) Balance as on December 31, 2013 304,639,050 45,695,857 350,334,907 3,046,390,500 456,958,570 3,503,349,070 C. Composition of Shareholding of Ordinary Shares: 2013 2012 Sponsors: A S F Rahman Salman F Rahman Associates and Other Directors Foreign Investors ICB including ICB Investors Account General Public & Institutions No. of shares % No. of shares % 7,114,009 7,130,663 34,020,550 85,094,612 41,994,537 174,980,536 350,334,907 2.03 2.04 9.71 24.29 11.98 49.95 100 6,186,095 6,200,577 30,109,655 71,829,205 40,281,087 150,032,431 304,639,050 2.03 2.04 9.88 23.58 13.22 49.25 100 Notes to the Financial Statements | Annual Report 2013 | 83 D. Distribution Schedule of Ordinary Shares: Range of Holdings In number of shares 1 to 499 500 to 5,000 5,001 to 10,000 10,001 to 20,000 20,001 to 30,000 30,001 to 40,000 40,001 to 50,000 50,001 to 100,000 100,001 to 1,000,000 Over 1,000,000 Total No. of Shareholders % of Shareholders Number of Shares % of Share Capital 2013 2012 2013 2012 2013 2012 2013 2012 68,939 21,066 1,509 674 187 101 55 94 166 40 92,831 65,708 74.26% 18,277 22.69% 1.63% 1,216 0.73% 517 0.20% 156 0.11% 73 0.06% 46 0.10% 99 0.18% 159 0.04% 39 100% 86,290 76.15% 21.18% 1.41% 0.60% 0.18% 0.08% 0.05% 0.12% 0.18% 0.05% 100% 2.52% 8,097,306 8,836,043 8.49% 29,757,275 24,648,855 2.98% 8,417,999 10,448,670 2.67% 7,136,417 9,334,640 1.29% 3,837,480 4,535,749 1.01% 2,525,253 3,520,388 0.70% 2,042,473 2,457,436 6,548,929 1.87% 7,089,661 49,278,664 47,429,395 14.07% 225,617,113 193,414,211 64.40% 100% 350,334,907 304,639,050 2.66% 8.09% 2.76% 2.34% 1.26% 0.83% 0.67% 2.33% 15.57% 63.49% 100% E. Market Price of Ordinary Shares: The shares are listed with Dhaka, Chittagong and London Stock Exchanges. On the last working day of the year, each share was quoted at Tk. 47.20 (in 2012 Tk.55.90) in Dhaka Stock Exchange Ltd., Tk.47.00 (in 2012 Tk. 55.80) in Chittagong Stock Exchange Ltd., and GBP 0.1375 in London Stock Exchange (in 2012 GBP 0.178). F. Option on unissued Ordinary shares : There was no option on unissued shares as on 31-12-2013. 14. Excess of Issue Price over Face Value of GDRs This represents the issue price of 28,175,750 GDRs at Tk. 2,244,080,670 net off face value of underlying shares against GDRs and GDR issue expenses. 15. Long Term Borrowings - Net off Current Maturity (Secured) This arrived at as follows : (a) Project Loan (b ) Obligation Under Finance Leases (a) Project Loan Amount in Taka 2013 2012 1,001,325,040 150,075,662 1,151,400,702 1,336,416,545 133,205,066 1,469,621,611 This loan was sanctioned under the consortium arrangement of Janata Bank Ltd., Sonali Bank Ltd., Agrani Bank Ltd., Rupali Bank Ltd. and United Commercial Bank Ltd. for the US FDA standard oral solid dosage facility of the company. Janata Bank Ltd. is the lead bank to the consortium. This Loan is secured against : (i) First (registered mortgage) charge on paripassu basis with the participating banks on 1,113 decimals of land at Kathaldia, Aushpara, Tongi of Gazipur along with the building and other constructions thereon ; and (ii) First paripassu charge by way of hypothecation on all assets of the company both present and future. (iii) This Loan, carrying interest at 13.00% to 15.50% per annum, is repayable in quarterly installments ending by 2017. 84 I Annual Report 2013 I Notes to the Financial Statements 16. Liability for Gratuity and WPPF & Welfare Funds Liability for gratuity is the amount payable to the permanent employees at the time of separation from the company. The liability for WPPF refers to the undistributed portion of Workers Proﬁ t Participation and Welfare Fund lying with the company. (a) Gratuity Payable Balance as on January 01 Provisions during the year Paid during the year (b) Workers Proﬁ t Participation and Welfare Fund 17. Deferred Tax Liability This arrived at as follows : Balance as on January 01 Addition during the year: Deferred Tax on Assets (cost basis)-Note : 32 Deferred Tax on revalued amount 18. Short Term Borrowings (Secured) This consists of : Janata Bank Ltd. -Cash Credit-Hypothecation Loan AB Bank, Principal Branch - Overdraft Noor Islamic Bank, Dubai - Commodity Murabaha Facility * * This represents US$ 10 million Commodity Murabaha Facility bearing interest @ 6 month’s LIBOR + 4.5% and repayable by September, 2014. 19. Long Term Borrowings-Current Maturity (Secured) This consists of as follows and is payable within next twelve months from the Balance Sheet date : Project Loan Interest & PAD Block Obligation under Finance Leases 20. Creditors and Other Payables This consists of : Goods & Services Provident Fund Advance Against Export Others 21. Accrued Expenses This is unsecured, falling due within one year and consists of as follows : For Expenses Workers’ Proﬁ t Participation and Welfare Funds - current year’s expense (net off interim payments) 2013 223,962,507 68,652,000 292,614,507 (8,450,838) 284,163,669 326,464,481 610,628,150 Amount in Taka 2012 187,501,076 49,207,664 236,708,740 (12,746,233) 223,962,507 275,660,277 499,622,784 1,147,459,569 963,376,922 364,415,845 38,713,793 1,550,589,207 144,727,001 39,355,646 1,147,459,569 1,219,126,718 775,639,407 781,500,000 2,776,266,125 1,526,449,918 - - 1,526,449,918 652,689,720 - 102,213,838 754,903,558 568,588,942 3,792,100 92,331,686 664,712,728 123,397,754 254,356,090 915,874 4,500,835 383,170,553 140,659,520 323,432,697 472,333 5,533,135 470,097,685 38,282,595 103,299,709 33,107,499 95,491,462 141,582,304 128,598,961 Notes to the Financial Statements | Annual Report 2013 | 85 22. Income Tax Payable This is arrived at as follows : Balance on January 01 Provision for the year Short Provision for previous years AIT & Treasury deposits during the year 23. Net Sales Revenue This consists of as follows : Amount in Taka 2013 2012 274,064,529 305,845,595 18,569,951 598,480,075 (272,794,704) 325,685,371 15,482,294 334,871,966 110,840,941 461,195,201 (187,130,672) 274,064,529 Local Sales Export Sales US$ 8,614,393 (in 2012 US$ 5,791,113) 9,819,409,651 671,289,443 10,490,699,094 8,818,999,143 470,116,141 9,289,115,284 Sales represents: Product Category Unit 2013 2012 Quantity Tablet, Capsule, Suppository & DPI Million pcs. 3,173.13 2,981.40 Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Million pcs. 66.75 63.05 Active Pharmaceutical Ingredients Kg 170,516 158,852 Liquid Nitrogen Liter 387,153 236,597 24. Cost of Goods Sold This is made-up as follows : Work-in-Process (Opening) Materials Consumed (Note: 25) Factory Overhead (Note: 26) Total Manufacturing Cost Work-in-Process (Closing) Cost of Goods Manufactured Finished Goods (Opening) Finished Goods available Cost of Physician Sample transferred to Sample Stock Finished Goods (Closing) 86 I Annual Report 2013 I Notes to the Financial Statements 246,214,085 4,257,643,464 1,493,080,956 5,996,938,505 169,345,787 3,831,308,573 1,269,375,857 5,270,030,217 (204,755,943) 5,792,182,562 (246,214,085) 5,023,816,132 629,828,725 6,422,011,287 639,241,751 5,663,057,883 (126,106,715) (644,005,694) 5,651,898,878 (133,515,301) (629,828,725) 4,899,713,857 Item wise quantity and value of Finished Goods Stock are as follows : Stock as January 01, 2013 Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Active Pharmaceutical Ingredients Unit Million pcs. Quantity 527.72 Value (Tk.) 424,313,622 Million pcs. Kg 6.35 1,546 200,971,815 4,543,288 Stock as December 31, 2013 Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Active Pharmaceutical Ingredients 25. Materials Consumed This is made-up as follows : Opening Stock Purchase Closing Stock 26. Factory Overhead This consists of as follows : Salary & Allowances Repairs and Maintenance Insurance Premium Municipal Tax & Land Revenue Advertisement Registration & Renewal Travelling & Conveyance Entertainment Research and Development Printing & Stationery Telephone, Internet & Postage Toll Expense / (Income) - Net Electricity, Gas & Water Training & Conference Plant Certiﬁ cation and Regulatory Approvals Depreciation Other Expenses 629,828,725 Million pcs. 518.83 394,979,619 Million pcs. Kg 6.69 1,867 243,292,676 5,733,399 644,005,694 2013 Amount in Taka 2012 1,289,156,749 4,196,762,354 (1,228,275,639) 4,257,643,464 1,316,611,230 3,803,854,092 (1,289,156,749) 3,831,308,573 451,123,633 91,719,472 15,542,159 1,582,778 23,570 10,397,369 4,627,240 937,973 136,216,539 12,171,521 4,736,650 127,098,536 65,589,318 4,940,526 38,338,641 520,953,425 7,081,606 372,287,293 81,645,875 22,173,473 1,817,215 74,850 19,997,450 3,253,966 872,098 31,065,735 12,280,051 4,038,923 86,795,076 60,986,526 4,162,341 41,286,575 520,837,622 5,800,788 1,493,080,956 1,269,375,857 (a) Salary and allowances include Company’s Contribution to provident fund of Tk. 8,531,034 (in 2012 Tk. 8,002,823). (b) The value of imported stores and spares consumed is Tk. 53,993,111 which is included in repairs & maintenance expense. This also includes maintenance of ofﬁ ce, premises, vehicles, building, machinery, equipment and other infrastructures. (c) Other Expenses does not include any item exceeding 1% of total revenue. Notes to the Financial Statements | Annual Report 2013 | 87 27. Administrative Expenses This consists of as follows : Salary & Allowances Rent Repairs and Maintenance Registration & Renewals Travelling & Conveyance Entertainment Printing & Stationery Audit Fee Telephone, Internet & Postage Electricity, Gas & Water Legal & Consultancy AGM, Company Secretarial and Regulatory Expense Advertisement Training & Conference Depreciation Remuneration to Independent Directors Other Expenses Amount in Taka 2013 2012 177,266,156 9,879,000 28,111,235 7,262,546 18,280,955 3,749,384 2,926,769 1,200,000 4,682,370 10,715,700 13,779,574 41,284,006 19,126 6,590,078 20,147,370 140,000 29,531,643 154,929,932 9,667,400 24,581,182 2,680,277 18,055,645 4,198,442 2,222,786 1,000,000 4,405,177 10,182,415 7,720,328 44,985,864 100,000 5,938,817 20,142,891 - 21,414,191 375,565,912 332,225,347 (a) Salary and allowances include provident fund contribution of Tk.4,899,089 (in 2012 Tk. 4,238,310). (b) Repairs and maintenance includes maintenance of ofﬁ ce, premises, vehicles, building, equipment and other infrastructures. (C) Remuneration is paid to the Independent Directors for attending Board, Audit Committee and Other Meetings. 28. Selling, Marketing and Distribution Expenses This consists of as follows : Salary & Allowances Rent Repairs and Maintenance Travelling & Conveyance Entertainment Printing & Stationery Telephone, Internet & Postage Electricity, Gas & Water Market Research & New Products Training & Conference Insurance Premium Sample Promotional Expenses Literature/News Letter Registration & Renewals Export Insurance, Freight and C&F Expenses Delivery Expense Depreciation & Amortization Other Expenses 699,256,429 22,457,790 5,559,593 293,119,372 21,939,089 26,237,688 8,985,010 6,191,556 27,872,397 53,463,511 17,460,874 144,655,691 303,056,182 84,480,104 32,613,811 60,743,782 266,173,800 48,764,908 15,929,947 2,138,961,534 599,784,362 19,488,948 4,618,564 260,081,060 20,875,724 22,265,791 8,854,384 5,888,612 24,876,321 48,331,042 18,280,838 119,778,787 268,478,952 78,266,167 6,879,929 36,329,864 240,216,876 48,657,683 17,342,616 1,849,296,520 (a) Salary and allowances include provident fund contribution of Tk. 15,749,142 (in 2012 Tk. 12,805,617). (b) Delivery expense includes distribution service fee for local sales of Formulation and IV Fluid products paid to I & I Services Ltd., a “Related Party”. (c) Repairs and maintenance includes maintenance of ofﬁ ce, premises, vehicles, building, equipment and other infrastructures. 88 I Annual Report 2013 I Notes to the Financial Statements 29. Other Income This is arrived at as follows : Interest on FDR & Short term Investment Dividend Income Royalty Exchange Rate Fluctuation Gain / (Loss)* Proﬁ t on Sale of Fixed Assets (Note 35) * This includes loss of Tk. 10,500,000 arising from conversion of foreign currency loan at prevailing exchange rate on the date of Statement of Financial Position. 30. Finance Cost This is arrived at as follows : Interest on Working Capital Loan Interest on Project / Consortium Loan Interest on Lease Finance Interest on Loan from PF, WPPF & Welfare Fund Other Bank Charges 31. Contribution To WPPF & Welfare Funds This represents statutory contribution by the company as per Bangladesh Labour (amendment) Act 2013. The amount is computed @ 5% of net proﬁ t before tax (but after charging such contribution). 32. Income Tax Expenses This consists of as follows : (a) Current Tax : (i) Tax provision for current year (Note 3.9) (ii) Short provision for earlier year (b) Deferred Tax Expense (Note 3.9) 33. Earnings Per Share (EPS) Amount in Taka 2013 2012 512,424,678 3,141,501 7,785,736 (17,198,454) 4,434,739 510,588,200 437,201,038 456,945 3,499,537 (1,055,025) 2,745,218 442,847,713 256,763,094 219,205,840 51,362,542 81,687,639 27,567,975 636,587,090 252,076,640 235,182,666 48,268,802 77,425,824 32,452,643 645,406,575 305,845,595 18,569,951 324,415,546 334,871,966 110,840,941 445,712,907 364,415,845 688,831,391 144,727,001 590,439,908 (a) Earnings attributable to the Ordinary Shareholders Tk. (b) Weighted average number of Ordinary Shares outstanding during the year Nos. Earnings Per Share (EPS) / Adjusted EPS (2012) Tk. 1,404,762,780 350,334,907 4.01 1,319,389,328 350,334,907 3.77 Notes to the Financial Statements | Annual Report 2013 | 89 34. Related Party Disclosures Following transactions were carried out with related parties in the normal course of business on arms length basis: Name of Related Parties Nature of Transactions (a) I & I Services Ltd. (b) Bangladesh Export Import Co. Ltd. Local Delivery Distribution Service Fee Short Term Investment & Interest there on 460,034,835 3,026,383,161 1,018,513,082 Value of Transaction in 2013 10,777,493,691 172,137,233 Balance at year end The Companies are subject to common control from same source. 35. Particulars of Disposal of Property, Plant and Equipment The following assets were disposed off during the year ended 31 December 2013: Particulars of Assets Cost Plant and Machinery Furniture Transport & Vehicle Tk. 2,087,118 150,000 2,335,090 4,572,208 Accumulated Depreciation 1,603,706 90,000 1,911,424 3,605,130 Written Down Value 483,412 60,000 423,666 967,078 Sales Price 2,505,937 60,000 2,835,880 5,401,817 Proﬁ t / (Loss) 2,022,525 - 2,412,214 4,434,739 Mode of Disposal Negotiation Negotiation Negotiation Name of Parties Various Individuals Various Individuals Various Individuals 36. Payment / Perquisites to Managers and Directors (a) The aggregate amounts paid to/ provided for the Managers and Directors of the company is disclosed below : Remuneration Gratuity Contribution to Provident Fund Bonus Medical Others Total 2013 129,950,600 5,088,500 6,106,200 10,177,000 3,303,706 29,345,360 183,971,366 Amount in Taka 2012 113,343,480 4,393,600 5,175,720 8,787,200 3,229,995 28,736,153 163,666,148 (b) The above includes salary, allowances and perquisites amounting to Tk. 13,818,434 paid to the Managing Director. This also includes Tk. 140,000 paid to the Independent Directors for attending Board, Audit Committee and other meetings. (c) Excepting as stated in (b) above, no board meetting fee was paid to any Directors of the Company. (d) No amount of money was expended by the company for compensating any member of the board for special services rendered. 37. Production Capacity and Utilization Item Unit Production Capacity Actual Production Capacity Utilization Tablet, Capsule, Suppository & DPI Million Pcs 2013 3,973.90 2012 3,890.93 2013 3,287.61 2012 3,096.81 2013 82.73% 2012 79.59% Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Million Pcs 87.62 86.90 68.88 60.75 78.61% 69.91% Production does not include goods manufactured under contract manufacturing arragement from third partys’ manufacturing sites. 90 I Annual Report 2013 I Notes to the Financial Statements 38. Capital Expenditure Commitment There was no capital expenditure contracted but not incurred or provided for at 31-12-2013. 39. Finance Lease Commitment At 31 December 2013, the company had annual commitment under ﬁ nance leases as set out below : Leases expiring within 1 year Leases expiring within 2-5 years (inclusive) 102,213,838 150,075,662 Tk. 252,289,500 40. Claim not Acknowledged as Debt There was no claim against the company not acknowledged as debt as on 31-12-2013. 41. Un-availed Credit Facilities There is no credit facilities available to the company under any contract, not availed of as on 31-12-2013 other than trade credit available in the ordinary course of business. 42. Payments Made in Foreign Currency : Foreign Currency (Equivalent US$) Taka Import of Machinery, Equipments & Spares Import of Raw & Packing Material Regulatory Fees & Other Expenses 4,710,544 32,923,653 3,254,024 368,364,542 2,618,088,893 253,501,312 No other expenses including royalty, technical expert and professional advisory fee, interest, etc. was incurred or paid in foreign currencies except as stated above. 43. Foreign Exchange Earned / Received : (a) Collection from Export Sales of US$ 8,288,577. (b) Commodity Murabaha Facility of US$ 10 million received from Noor Islamic Bank, Dubai. 44. Commission / Brokerage to selling agent : No commission was incurred or paid to any sales agent nor any brokerage or discount other than conventional trade discount was incurred or paid against sales. 45. Contingent Liability The company has a contingent liability aggregating Tk. 101,289,446 against disputed income tax claims for the year 1999, 2007, 2008 and 2010. The company has ﬁ led Income Tax Reference cases with the High Court Division of the Supreme Court against these claims. There is also a disputed VAT claim aggregating Tk. 144,113,691 against the company. The Company own the verdict of the Appellate Tribunal in it’s favour. The concerned authority ﬁ led appeal to the honorable High Court against this verdict. Additionally, there are claims of custom duty aggregating Tk. 22,507,358 against the indemnity bond issued by the company in connection with import of certain plant and machinery. The company has ﬁ led writ petitions against these claims. If any liability arises on disposal of the cases, the company shall provide for such liability in the year of ﬁ nal disposal. Notes to the Financial Statements | Annual Report 2013 | 91 46. Events after The Reporting Period The directors recommended 10% Cash Dividend (i.e. Tk. 1 per share) and 5% Stock Dividend (i.e. 5 shares for every 100 shares held) for the year 2013. The dividend proposal is subject to shareholders’ approval in the forthcoming annual general meeting. Excepting to that, no circumstances have arisen since the date of Statement of Financial Position which would require adjustment to, or disclosure in, the ﬁ nancial statements or notes thereto. 47. Financial Risk Management The management of company has overall responsibility for the establishment and oversight of the company’s risk management framework. Risk management policies, procedures and systems are reviewed regularly to reﬂ ect changes in market conditions and the company’s activities. The company has exposure to the following risks for its use of ﬁ nancial instruments. -Credit risk -Liquidity risk -Market risk 47.01 Credit Risk Credit risk is the risk of a ﬁ nancial loss to the company if a customer or counterparty to a ﬁ nancial instrument fails to meet its contractual obligations and arises principally from the company’s receivables. Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. As at 31 December 2013 substantial part of the receivables are those from its related company and subject to insigniﬁ cant credit risk. Risk exposures from other ﬁ nancial assets. i.e. Cash at bank and other external receivables are nominal. 47.02 Liquidity Risk Liquidity risk is the risk that the company will not be able to meet its ﬁ nancial obligations as they fall due. The company’s approach to managing liquidity ( cash and cash equivalents) is to ensure as far as possible, that it will always have sufﬁ cient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the company’s reputation. Typically, the company ensures that it has sufﬁ cient cash and cash equivalent to meet expected operational expenses including ﬁ nancial obligations through preparation of the cash ﬂ ow forecast with due consideration of time line of payment of the ﬁ nancial obligation and accordingly arrange for sufﬁ cient liquidity/fund to make the expected payment within due date. In extreme stressed conditions the company may get support from the related company in the form of short term ﬁ nancing. 47.03 Market Risk Market risk is the risk that any change in market prices such as foreign exchange rates and interest will affect the company’s income or the value of its holdings ﬁ nancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. (a) Currency risk The company is exposed to currency risk on certain revenues and purchases such as revenue from foreign customers and import of raw material, machineries and equipment. Majority of the company’s foreign currency transactions are denominated in USD and relate to procurement of raw materials, machineries and equipment from abroad. The company have received foreign currency loan which shall be repaid in foreign currency. (b) Interest rate risk Interest rate risk is the risk that arises due to changes in interest rates on borrowing. The foreign currency loan is subject to ﬂ oating rates of interest. Local loans are, however, not signiﬁ cantly affected by ﬂ uctuations in interest rates. The company has not entered into any type of derivative instrument in order to hedge interest rate risk as at the reporting date. Nazmul Hassan Managing Director Ali Nawaz Chief Financial Ofﬁ cer Salman F Rahman Vice Chairman Dhaka 29 April 2014 92 I Annual Report 2013 I Notes to the Financial Statements  BEXIMCO PHARMACEUTICALS LTD. 17 Dhanmondi R/A, Road No. 2, Dhaka-1205, Bangladesh Proxy Form I/We ______________________ ___________ ___________ ___________ of ___________ ___________ ______________ ___________ ___________ ___________ ___________ __being a member of Beximco Pharmaceuticals Ltd. hereby appoint Mr./Ms. ___________ ___________ ___________ ___________ ________of ___________ ___________ ___________ ___________ ___________ ___________ as my/our proxy to attend and vote for me/us on my/our behalf at the 38th Annual General Meeting of the Company to be held on Saturday, the 21st June, 2014 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur and at any adjournment thereof. As witness my/our hand this ___________ __________________ ___________ day of June, 2014. Signed by the said in presence of ___________ ___________ ___________ ___________ ___________ ___________________ ___________________ (Signature of the Proxy) Revenue Stamp Tk. 20.00 ____________________ __ Signature of the Shareholder(s) Dated: ___________ ___ Register Folio / BOID No. : ___________ ___________ ___________ ___________ __ ____________________ (Signature of the Witness) Dated: __________________ Note: A member entitled to attend and vote at the Annual General Meeting may appoint a Proxy to attend and vote in his/her stead. The Proxy Form, duly stamped, must be deposited at the Registered Ofﬁ ce of the Company not later than 48 hours before the time ﬁ xed for the meeting Signature Veriﬁ ed _______________ Authorised Signatory  BEXIMCO PHARMACEUTICALS LTD. SHAREHOLDERS’ ATTENDANCE SLIP I/We hereby record my/our attendance at the 38th Annual General Meeting being held on 21st June, 2014 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kasimpur, Gazipur. Name of Member(s)________________________ _______________________________________________________ Register Folio/BOID No _____________________________________________________________________________ holding of _____________ _________________ ordinary Shares of Beximco Pharmaceuticals Ltd. N.B. 1. Please note that the AGM can only be attended by the honourable shareholder or properly constituted Proxy. Therefore, any friend or children accompanying with honourable Shareholder or Proxy cannot be allowed into the meeting. 2. Please present this slip at the reception desk. ______________________ Signature(s) of Shareholder(s) Corporate Information Operational Headquarters 19 Dhanmondi R/A, Road # 7 Dhaka- 1205, Bangladesh Phone : +880-2-8619151, +880-2-8619091 Fax : +880-2-8613888 E-mail : info@bpl.net Website : www.beximcopharma.com Legal Advisor Rafique-ul Huq Barrister-at-Law 47/1 Purana Paltan Dhaka-1000, Bangladesh Corporate Headquarters Auditors 17 Dhanmondi R/A, Road # 2 Dhaka- 1205, Bangladesh Phone : +880-2-8611891 Fax : +880-2-8613470 E-mail : beximchq@bol-online.com Factory Tongi Unit 126 Kathaldia, Tongi, Gazipur Bangladesh Kaliakoir Unit Plot No. 1070/1083, Mouchak Kaliakoir, Gazipur Bangladesh Stock Exchange Listing Dhaka Stock Exchange Ltd. Chittagong Stock Exchange Ltd. AIM of London Stock Exchange plc (GDRs) Public Relations IMPACT PR Apartment # A-1, House # 17, Road # 4, Gulshan-1, Dhaka-1212, Bangladesh FTI Consulting LLP 200 Aldersgate Aldersgate Street, London EC1A 4HD United Kingdom M. J. Abedin & Co. Chartered Accountants National Plaza (3rd Floor) 109, Bir Uttam C. R. Datta Road Dhaka- 1205, Bangladesh Banker Janata Bank Ltd. Local office 1 Dilkusha C/A Dhaka- 1000, Bangladesh For GDRs Nominated Advisor & Broker Daniel Stewart and Company PLC Becket House 36, Old Jewry London EC 2R 8DD Custodian HSBC Anchor Tower, 1/1-B, Sonargaon Road Dhaka- 1205, Bangladesh Depository Bank The Bank of New York Mellon 101 Barclay Street New York, NY 10286 www.beximcopharma.com Follow us Like us Watch BEXIMCO PHARMACEUTICALS LIMITED

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