Boston Properties
Annual Report 2014

Plain-text annual report

Annual Report 2014 | 1 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. 2 | Annual Report 2014 ANNUAL REPORT 2014 BEXIMCO PHARMACEUTICALS LIMITED Annual Report 2014 | 1 Mission We are committed to enhancing human health and wellbeing 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 defi ne 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 benefi t 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 2014 Contents Our Story Who We Are The Board of Directors Management Committee Executive Committee Key Events in History Managing Director’s Statement How We Performed in 2014 What We Offer Our Manufacturing Capabilities Our Global Regulatory Approvals Our People Research and Development Spreading Our Wings What We Do for the Society Corporate Events Post Balance Sheet Developments Notice of Annual General Meeting Chairman’s Statement Directors’ Report to the Shareholders 05 08 09 09 10 13 15 16 19 21 23 29 31 33 38 41 43 44 46 Certifi cate on Compliance of Corporate Governance Guidelines 55 Report on the Activities of the Audit Committee Shareholders’ Meeting Value Added Statement Graphical View of Selected Growth Indicators Independent Auditors’ Report Statement of Financial Position Statement of Profi t or Loss and Other Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Proxy Form and Attendance Slip 56 58 60 61 62 63 64 65 66 67 Annual Report 2014 | 3 3000 People 500 Products 35 Years 50 Countries Our Story 4 | Annual Report 2014 Who We Are Celebrating 35 years of health & wellbeing Incorporated in 1976, Beximco Pharma started its operation by importing products from global MNCs like Bayer AG, Germany and Upjohn Inc., USA and selling them in the local market. In 1980 the Company began manufacturing these products under licensing arrangement. From that humble beginning, Beximco Pharma has grown from strength to strength, and today it has become a leading manufacturer and exporter of medicines in Bangladesh. Company’s manufacturing facilities have been accredited by the major global regulatory bodies, and it has expanded its geographic footprint across all the continents. In its long journey of 35 years, the Company remains committed to make a difference in the lives of people by providing high quality medicines at affordable cost. We know good health is priceless and that’s why we always strive to provide our patients with high quality and affordable medicines Annual Report 2014 | 5 Who We Are | Annual Report 2014 | 5 Annual Report 2014 | 5 6 | Annual Report 2014 We continually strive to provide access to safe, effective and affordable medicines. Over the last 35 years of operation, our motto has remained the same: ensure health and wellbeing of the people. Annual Report 2014 | 7 Annual Report 2014 | 7 The Board of Directors Salman F Rahman Vice Chairman A S F Rahman Chairman Nazmul Hassan MP Managing Director Osman Kaiser Chowdhury Director Abu Bakar Siddiqur Rahman Director Iqbal Ahmed Director Dr. Abdur Rahman Khan Independent Director Shah Monjurul Hoque Independent Director Company Secretary Mohammad Asad Ullah, FCS Executive Director 8 | Annual Report 2014 | The Board of Directors 8 | Annual Report 2014 Management Committee Nazmul Hassan MP Managing Director Osman Kaiser Chowdhury Member of the Board of Directors Ali Nawaz Chief Financial Offi cer Rabbur Reza Chief Operating Offi cer Afsar Uddin Ahmed Director, Commercial Lutfur Rahman Director, Manufacturing Zakaria Seraj Chowdhury Director, International Marketing A R M Zahidur Rahman Executive Director, Production Shamim Momtaz Executive Director, Manufacturing Jamal Ahmed Choudhury Executive Director, Accounts & Finance Rizvi Ul Kabir Executive Director, Sales Mohd. Tahir Siddique Executive Director, Quality 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 Offi cer Chief Financial Offi cer Director, Commercial Management Committee | Annual Report 2014 | 9 Annual Report 2014 | 9 Key Events in History 10 | Annual Report 2014 | Key Events in History 10 | Annual Report 2014 2014 Received GMP accreditation from Taiwan Food & Drug Administration (TFDA) and “Health Canada” as the fi rst Bangladeshi company; First Bangladeshi company to export to Romania 2013 First Bangladeshi company to export ophthalmic products to Europe 2012 First Bangladeshi company to launch Salbutamol HFA inhaler (Azmasol®) in Singapore 2011 Received GMP accreditation from AGES, Austria (for European Union); only pharmaceutical company to win ‘National Export Trophy (Gold)’ for the fourth time 2010 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 2006 Launched CFC free HFA inhalers for the fi rst 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 2008 to First Bangladeshi company 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 2003 First company anti-retroviral Bangladesh to introduce in (ARV) drugs 1993 Russia became destination for formulation products the fi rst export 1992 Export operations started with APIs 1985 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 2014 | 11 12 | Annual Report 2014 Nazmul Hassan MP Managing Director Managing Director’s Statement Dear Shareholders, In 2014 we have consolidated our position with sales turnover of BDT 11,206.9 million posting a growth of 6.8% over 2013. In its 35 years of operation, Beximco Pharma has been consistently delivering on its promise of performance. From the humble beginning as a small distributor of medicines from global MNCs, today it has become a leading exporter of medicines in the country. The company has achieved this by staying focused on creating value for all its customers and shareholders. Despite political turbulence and headwinds, Bangladesh’s economy continued to grow above 6%, largely due to agricultural expansion, modest growth in apparel export, remittance from abroad and record foreign exchange reserve. The Bangladesh Pharma market is currently valued at more than $1.5 billion which is clearly dominated by local manufacturers. Ninety eight percent of country’s demand is met by local production; all the top 10 companies are local who have consistently occupied nearly 70% of the market share. Political unrest in the country, which started in late 2013 and continued till first quarter of 2014, seriously disrupted our business activities. Despite all the challenges, we were able to register a growth of 9% in domestic formulation business. In the year we added 28 new products to our portfolio, 3 of which were launched for the first time in the country. Our in-house R&D efforts also saw the introduction of oral soluble film, a unique drug delivery system, for the first time in Bangladesh. Key to all our efforts has always been to offer the best possible solutions to our patients and to make them affordable. In the highly competitive market, we have maintained our strong position in key therapeutic segments like analgesics, respiratory, and anti-diabetic categories with excellent growth rate in each segment. We have also performed well with our gastrointestinal and cardiovascular range. Our planned investment in upgrading our facility and expanding capacity continued throughout the year to maintain a sound platform towards sustainable growth. We have also taken up a major project of expansion and upgradation along with relocation of some of our existing units to the new site, just opposite to our current site. As a generic drug company with global aspirations, our major focus remains on research and development for bringing high quality, differentiated products. Our R & D team has been continually working on diverse delivery systems, as well as regulatory filings in different markets. With increasing developmental work on complex generics and regulatory submissions, a new state of the art pharma R & D Centre is being built at our Tongi facility. The global pharmaceutical market is showing signs of recovery with total spending reaching $1 trillion in 2014, an increase of 7 per cent over the previous year, according to IMS. This impressive rise is driven mainly by high prices and uptake for several breakthrough cancer and hepatitis C drugs entering the market in developed countries. By 2018, this spending is expected to rise to $1.3 trillion due to new breakthrough therapies. The year 2014 also saw approval of 44 new drugs in world market, making it the best year for pharmaceutical innovation since 1996. On the other hand, global generic drugs market currently stands at more than $250 billion, with consistent double digit growth, driven by increasing demand both in developed and emerging economies. The opportunities in generic drugs are increasing day by day with increasing government pressure around the world to cut healthcare costs. The country has tremendous opportunities for pharma export, particularly for value added generics in regulated markets. In 2015 alone, patented drugs worth $60 billion are going off patent which opens up opportunities for generic manufacturers around the world. Bangladesh could be ideally positioned to gain from generic drug opportunities with its cost advantages and skilled manpower as India and China are losing cost advantages owing to rapid increase in wages in these countries. We have strengthened our presence in several Asian and African countries and we are actively evaluating opportunities to extend our geographic footprint by replicating our successful model in other emerging markets. Although our current export turnover is still low and contributes little to the overall sales, we strongly believe there is ample opportunity to expand our export business. In the year we have made 55 registrations in 15 countries Managing Director’s Statement | Annual Report 2014 | 13 Annual Report 2014 | 13 As our vision statement encapsulates - we aspire to be among the most admired companies in the region, and that is only possible with your continued support and trust. My sincere gratitude to all the shareholders of the company for being with us in our journey. I would also like to extend my thanks to each and every employee of Beximco Pharma for their dedication and hard work and I want them to take on new challenges for the eventual benefit of the company. I’m sure together we will continue to deliver strong results and accomplish our long term goals. Nazmul Hassan MP Managing Director and entered the new markets of Romania and Uganda. We have also submitted 3 ANDAs with US FDA and registered two products in 7 EU countries. Our continued focus on regulatory approvals earned us GMP clearance from TFDA and Health Canada – both first-time for a Bangladeshi company. As the first Bangladeshi company, we also commenced export of medicines to Australia following our foray into several EU countries. We also received marketing authorization from UK MHRA for a product. I am also delighted to inform you that, in January 2015, Beximco Pharma became the first Bangladeshi pharma company to successfully complete US FDA inspection. This is a major milestone for the Bangladesh pharma industry as this will give us the tremendous impetus to build presence in US and other regulated markets and thus helping the country emerge as a true generic drug hub. Bangladesh continues to remain a role model for Millennium Development Goals (MDGs) achievement. The country has made remarkable progress in areas such as reducing poverty and the prevalence of underweight children, increasing enrolment at primary schools, lowering the infant mortality rate and maternal mortality ratio, improving immunization coverage and reducing the incidence of communicable diseases. This is indeed a great achievement for the country and we believe our company and the pharma industry will continue to play a very important role in promoting access to affordable healthcare. I have spent more than 25 years in this company. I am often asked why I chose to work for Beximco Pharma and spend my entire career at this company. For me, I always believe working in healthcare or a pharmaceutical company is an honor and a privilege. To carry out the work with responsibility and care, I couldn’t think of any better place than Beximco Pharma. This has been an amazing experience to work with the wonderful and talented people who have also given me the opportunity to grow as a person while serving the society at large. I always feel proud to be able to lead a company which continues to make a difference by providing newer, better solutions for the patients and making them affordable. Putting patients at the heart of our business has always remained our guiding principle. Our mission is to ensure health and wellbeing of the people by providing affordable medicines. We always strive to align our initiatives to our objectives and as we continue to grow they are clearly directed towards value creation for our shareholders. 14 | Annual Report 2014 | Managing Director’s Statement 14 | Annual Report 2014 How We Performed in 2014 Launched 28 products (24 generics) in the domestic market; three of which were launched for the fi rst time in Bangladesh Introduced Oral Soluble Film (OSF) technology with the launch of an antiemetic drug (Ondansetron) Entered two new markets (Romania and Uganda) A total of 55 new registrations done in 15 different countries Became the fi rst Bangladeshi company to receive Good Manufacturing Practice (GMP) approval from the Taiwan Food & Drug Administration (TFDA) and the Canadian regulatory authority (Health Canada); also received approval from BPOM (Indonesian Agency for Drug And Food Control) for the Metered Dose Inhaler (MDI) unit Net sales increased to BDT 11,206.9 million, registering a y-o-y growth rate of 6.8% Net Profi t after tax increased 8.8% to BDT 1,528.3 million EPS rose by 8.64% to BDT 4.15 Beximco Pharma has started exporting to Romania with its multi-vitamin product “Sunvita Gold”. This is for the fi rst time a pharmaceutical company from Bangladesh has launched product in Romania. How We Performed in 2014 | Annual Report 2014 | 15 Annual Report 2014 | 15 What We Offer Beximco Pharma currently produces about 300 generics in more than 500 strengths and dosage forms. It also produces a number of active pharmaceutical ingredients (APIs). Beximco Pharma’s portfolio encompasses various therapeutic categories, including antibiotics, analgesics, respiratory, cardiovascular, central nervous system, dermatology, gastrointestinal etc. The Company has strong capabilities with specialized drug delivery systems that have differentiated itself from others. Many of its brands remain consistent leaders in their respective therapeutic categories and the Company continuously reviews and expands its product portfolio in order to ensure that people have access to newer, better treatment options at affordable cost. In 2014 Beximco Pharma expanded its portfolio with: 24 new generics in a total of 28 presentations across 9 different therapeutic categories. Three products were launched for the first time in Bangladesh. Beximco Pharma, with its well established and balanced portfolio of generics, is able to respond to the needs of physicians, patients, and health care providers, both therapeutically and economically. 16 | Annual Report 2014 16 | Annual Report 2014 | What We Offer New Products of 2014 Annual Report 2014 | 17 18 | Annual Report 2014 Our Manufacturing Capabilities Our main manufacturing site is spread across a 22-acre area located near the capital city, Dhaka, which houses facilities for manufacturing tablets, capsules, intravenous fl uids, liquids, creams, ointments, suppositories, metered dose inhalers, ophthalmic drops, intravenous fl uids and lyophilized injectables. The site has its own utility infrastructure to ensure adequate generation and distribution of electricity with an installed capacity of 10 MW. There are also water purifying and liquid nitrogen generation facilities. Our penicillin API and formulation units are located separately at Kaliakoir, 21 km from Company’s main manufacturing premises at Tongi. Our Manufacturing Capabilities | Annual Report 2014 | 19 Annual Report 2014 | 19 A company’s achievement. A country’s pride. Celebrating the successful completion of the US FDA audit as the first Bangladeshi Pharma Company. 20 | Annual Report 2014 here’s to Our Global Regulatory Approvals Benchmarked to international standards, our manufacturing facilities have been approved by the regulatory authorities of Australia, Europe, Brazil, Canada and Taiwan, among others. Recently Beximco Pharma has become the fi rst Bangladeshi company to successfully complete the US FDA inspection. A company’s achievement. A country’s pride. Celebrating the successful completion of the US FDA audit as the first Bangladeshi Pharma Company. here’s to Our Global Regulatory Approvals | Annual Report 2014 | 21 Annual Report 2014 | 21 Beximco Pharma Introduces Hormone Range Beximco Pharma has recently launched its Hormone range with the introduction of Femzole®(Letrozole), Norestin® (Norethisterone), Tibilon® (Tibolone) and Synroid® (Levothyroxine). Letrozole USP 2.5 mg tablet Norethisterone BP 5 mg tablet Tibolone 2.5 mg tablet Indication: Breast Cancer and Ovulation Induction Indication: Menstrual Dysfunctions Indication: HRT in Post Menopausal Woman Synro d Levothyroxine 50 mcg tablet Indication: Hypothyroidism 22 | Annual Report 2014 Our People our life-blood We recognize that if we want to see our business successful today and sustainable tomorrow, we must invest in our people who are making a difference. Our 3000-strong dedicated workforce–their collective resolve to excel–have always guided us towards newer achievements. We constantly seek to attract and retain the best talent in the industry and always take initiatives to ensure that our people are enabled and motivated. We try to create a culture in which all our employees feel valued, empowered and inspired to grow personally and professionally along with the company. Our ability to transform ourselves is driven by a strong emphasis on employee empowerment at every level. We regularly invest in training and development of our employees, and our Learning and Development Program (LDP) is planned for enhancing skills through focused, professional training in order to create and maintain our competitive edge. We actively encourage equality of opportunity for all our employees and we currently have a good number of female employees working throughout the organization including senior level management. Annual Report 2014 | 23 Our People | Annual Report 2014 | 23 Annual Business Review 2014 A special day long strategic briefi ng session was held in a city hotel to review Beximco Pharma business in the year 2014. Vice Chairman Salman F Rahman, Managing Director Nazmul Hassan MP, Chief Operating Offi cer Rabbur Reza and Executive Director (Sales) Rizvi ul Kabir were present during the strategic sessions. Annual Sales & Marketing Meet Thailand 2014 Beximco Pharma’s Annual Sales & Marketing Meet 2014 was held on December 20 in Phuket, Thailand. The theme for this year was “We Believe We Can. So We Will”. Members from Company’s sales, marketing and other departments as well as the top management attended the event. 8th Annual Finance Conference 8th Annual Finance conference of Accounts & Finance Department was held on 14 February 2015. The focus of this year was ‘Personal Responsibility in Developing Excellence (PRIDE)’. 24 | Annual Report 2014 24 | Annual Report 2014 | Our People Annual Sales & Marketing Conference Cox’s Bazar 2014 Annual Report 2014 | 25 Our People | Annual Report 2014 | 25 Specialized Products We continue to expand our product portfolio and our focus on specialized dosage delivery systems has created strong differentiation. Oral Solid Dosage | Metered Dose Inhaler | Ophthalmic Intravenous Fluid | Liquid and Semisolid | Pre-fi lled Syringe Dry Powder Inhaler | Lyophilized Injectables | Oral Soluble Film 26 | Annual Report 2014 26 | Annual Report 2014 M ADE I NBANGLADESH Annual Report 2014 | 27 Every capsule, every tablet, every drop of suspension, every molecule of every medicine is prepared with care to enhance the quality of life. That’s our humble goal, everyday. More than 50 countries around the world, from the utterly deprived African heartland to the incredibly privileged European elite, from Rangpur to Kuakata, we are humbled by the opportunity to deliver the smiles 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, are discovering the child within trying to explore new frontiers. Here’s to the future. Here’s to life. www.beximcopharma.com 28 | Annual Report 2014 Research and Development key to our sustainable future R&D remains the driving force behind our efforts to transform Beximco into a truly international company. Our product development team continues its strong research orientation in generic formulation development and we have already proven our skills with successful development of specialized, high-tech formulations which are very diffi cult to imitate. In the year we have further expanded our dosage delivery portfolio with Oral Soluble Film (OSF) – a unique drug delivery system to provide drugs in the form of oral fi lm. We became the fi rst company to launch this technology in Bangladesh. Our new state-of-the-art R&D Centre is being built which will facilitate the development of products and processes in line with our R&D strategy. This will provide the company stronger differentiation in terms of effi cient product development, drug delivery sytem expansion, regulatory fi lings etc. We are also pursuing research collaborations with universities and biotech companies both at home and abroad for strengthening our research capability in selected areas. Annual Report 2014 | 29 Annual Report 2014 | 29 Annual Report 2014 | 29 Research and Development | Annual Report 2014 | 29 We are building a global generic drug company focused on providing high quality, affordable generic drugs to patients around the world. 30 | Annual Report 2014 Spreading Our Wings Beximco Pharma has a clear focus on expanding its global footprint. Over the years we have strengthened our presence in many Asian and African countries and our export sales are mainly derived from these semi regulated markets. However, we are increasingly focused on regulated markets for value added generics. At the same time we are actively evaluating opportunities in other emerging markets by replicating our successful operating model in key markets. We are planning to strengthen our distribution and marketing efforts in potential new territories based on surveys and responses. During the year a total of 55 registrations were made in 15 countries, and we entered 2 new markets – Romania and Uganda. At the beginning of 2015, Beximco Pharma started exporting medicines to Australia, and became the fi rst Bangladeshi company to do so. To expand our export business and to capitalize on the generic drug opportunities in overseas markets –we continue to pursue approvals from leading global drug regulatory authorities and in the year we received approvals from the regulatory authorities of Taiwan, Canada, and Indonesia. We have also become the fi rst Bangladeshi pharma company to be audited by the US FDA. The audit took place in January 2015 and it was completed without any 483 observations issued by the US drug regulatory authority- a remarkable feat for any generic drug company. Participation at CPhI Worldwide 2014 The CPhI worldwide, the largest expo for global pharma industry, was held during 7-9 October, 2014 in Paris, France. Beximco Pharma, like the previous years, had a stall for showcasing its products to prospective clients from all over the world. Spreading Our Wings | Annual Report 2014 | 31 Annual Report 2014 | 31 At Beximco Pharma, we strive to do what matters most to patients: provide high quality, contemporary treatment options and make them affordable. 32 | Annual Report 2014 What We Do for the Society As we grow, we continually strive to meet the needs and expectations of our stakeholders and society as a whole. We strongly believe we can only be successful if we create value not just for the company but also for the society we live in. That’s why CSR has been incorporated as one of our core values which remains an integral part of our strategic commitment, and we are always guided by strong ethical values to operate responsibly within broader social and economic context. Some of our CSR activities during the year are described below. Donation to CRP Mr. Salman F Rahman, Vice Chairman of Beximco Group, along with other senior offi cials, visited the Centre for the Rehabilitation for the Paralysed (CRP) in Savar on October 20 and donated large quantities of medicines and made cash contribution to CRP founder Ms. Valerie Taylor. During the visit he was briefed about the overall activities of CRP, especially the rehabilitation programs for the Rana Plaza victims. Then CRP management showed him around the CRP premises where Mr. Rahman interacted with patients undergoing treatments in different units. Support to Professor K S Rabbani for Developing Low Cost Mechanical Prosthetic Hand As a part of its CSR commitment, Beximco Pharma extended fi nancial grants to Professor K S Rabbani, Chairperson, Department of Biomedical Physics & Technology, Dhaka University in his project of developing low cost mechanical prosthetic hand. Beximco Pharma COO Mr. Rabbur Reza handed over the cheque to Professor Rabbani in a small ceremony held in the head offi ce on March 13, 2014. This small support from Beximco will help provide prosthetic hands at a minimal cost to thousands of amputees. Sponsoring ‘Spreading Care’ Beximco Pharma sponsored ‘Spreading Care’ a unique day long program to honour the contribution of nursing professionals nationwide. On February 14, 2014 volunteers from Jaago Foundation distributed fl owers and cards to the nurses in major hospitals as a token of respect and love for this noble profession. Medical Camp Beximco Pharma sponsored medical camp at Rayerbazar with free medicines on March 15 which was organized by Active Citizens (Durjoy), an NGO associated with Democracy Watch. What We Do for the Society | Annual Report 2014 | 33 Annual Report 2014 | 33 World Environment Day Beximco Pharma celebrated World Environment Day 2014 with the volunteering wing of Jaago Foundation on June 5. The day was observed with 3 different programs organized nationwide namely– Riding Green a bicycle rally, March for Green a tree plantation program and Green Message a wall painting program– all to raise awareness about environment and for taking positive action to preserve it. More than 5000 volunteers participated in these programs where Beximco Pharma was a major sponsor. Universal Children’s Day Jaago Foundation, the largest youth based volunteer organization in Bangladesh organised nationwide programs on November 20 in observance of Universal Children’s Day. More than 10,000 volunteers across the country participated to create awareness about children’s right to education with the theme “Invest in Education”. A day long free health camp was run by Beximco Pharma on this occasion. (AScoN) 13th Asian Spinal Cord Network Conference 2014 Beximco Pharma was a major sponsor of the 13th Asian Spinal Cord Network (ASCoN) conference held during 27- 29 November 2014 at BRAC CDM, Savar, This year’s theme was “Living life to the full” and the event was hosted by CRP. Mohammed Nasim MP, Honorable Minister, Ministry of Health and Family Welfare, was present as the chief guest. More than 60 delegates from 15 different countries attended the conference which highlighted the recent advances in rehabilitation for the spinal cord injury patients through scientific papers, poster presentations, workshops, exhibition etc. Beximco Pharma ahad a pavilion in this event. Victory Day Golf Tournament Beximco Pharma sponsored the ‘2nd Beximco Pharma Victory Day Golf Tournament 2014’ held at Comilla Cantonment, Mainamati. Inaugurated by GOC of the 33rd Infantry Division Major General Zahidur Rahman PSC, the tournament was participated by more than a hundred golfers from Mainamati, Kurmitola, Savar, Bhatiari, Army Golf club and several other clubs of the country. 34 | Annual Report 2014 | What We Do for the Society 34 | Annual Report 2014 World Osteoporosis Day Beximco Pharma celebrated the World Osteoporosis Day on October 20 with a number of programs under this year’s global theme “Real men build strength from within”. Major activities included free health camp at jogger’s park in the city, distributing awareness leaflets among people, organizing discussions with doctors in various medical institutes, a special bone health check-up to measure Bone Mineral Density (BMD) etc. World Heart Day Beximco Pharma celebrated the World Heart Day on September 29, which is a global awareness day, aiming to promote preventive measures that reduce the risk of cardiovascular diseases. On this occasion, BPL arranged different programs which included distribution of awareness leaflets, arranging health camp, organizing clinical meetings with leading cardiologists in the country and so on. World Diabetes Day On November 14, Beximco Pharma arranged a number of awareness programs including free diabetes check- up, providing leaflets, guide books etc. in association with Bangladesh Diabetic Samity. World COPD Day Beximco Pharma celebrated the World COPD Day 2014 (November 19) under the year’s global theme “It’s Not Too Late” aiming to promote preventive measures against chronic obstructive pulmonary disease (COPD) and to improve COPD care across the country. Beximco Pharma’s programs included ‘Happy Breath’ campaign, distribution of awareness leaflets, and seminars. World Asthma Day World Asthma Day was observed on May 06 worldwide. Asthma Association Bangladesh organized a grand program to observe the day in partnership with Beximco Pharma. What We Do for the Society | Annual Report 2014 | 35 Annual Report 2014 | 35 Our Relationships Beximco Pharma has a long and successful track record of partnership and alliances with research based multinational companies. These partnerships, leveraging our strengths, contribute signifi cantly to the success of our strategy and ensure sustainable growth of the company. Beximco Pharma always looks forward to long and mutually benefi cial partnerships, both from companies and research organizations, that can produce positive results for both. The company has successfully built a strong brand value within the medical community and its medicines are trusted by physicians and patients in the domestic as well as overseas markets. Beximco Pharma seeks to strengthen its relationship with all the major stakeholders within the healthcare value chain, and it clearly differentiates from others by providing value added, academic services to the medical community. 36 | Annual Report 2014 36 | Annual Report 2014 Beximco Group Vice Chairman featured in NHK Japan NHK Japan (Japan Broadcasting Corporation) is the national broadcasting entity in Japan, globally known for its high quality TV programs and documentary. NHK has recently chosen Beximco Group Vice Chairman Mr. Salman F Rahman for their highly acclaimed documentary series “The Asian Entrepreneur”. The 45-minute special documentary, already aired several times in Japan and globally, highlights the success stories of Mr. Salman Rahman and his outstanding contribution to country’s economic development. The documentary also shows how Beximco Pharma has emerged over the years. Annual Report 2014 | 37 Annual Report 2014 | 37 Corporate Events US Ambassador visits Beximco Pharma The US Ambassador to Bangladesh, His Excellency Dan W. Mozena, visited the state-of-the-art manufacturing facilities of Beximco Pharmaceuticals Ltd. at Tongi on November 4, 2014. He was accompanied by Daniel Keen, Economic Commercial Offi cer and other offi cials of the Embassy. US Ambassador was welcomed at the plant premises by company’s managing director Nazmul Hassan, MP. Other senior offi cials from the Company were present on this occasion. After visiting the facilities, Dan Mozena and the delegation expressed high satisfaction over the world class operation and quality control practices of Beximco Pharma. Beximco Pharma starts exporting medicines to Australia Beximco Pharma has made a foray into Australian pharma market with the launch of Pantoprazole, a drug for treating gastrointestinal disorder. This is for the fi rst time pharmaceutical product from Bangladesh is being exported to Australia. To mark this auspicious occasion, and to celebrate this milestone achievement, a brief ceremony was held at the company’s factory premises in presence of the Australian High Commissioner to Bangladesh, His Excellency Greg Wilcock. He was accompanied by Minhaz Chowdhury, Country Manager, Australian Trade Commission. Beximco Pharma Chief Operating Offi cer Rabbur Reza received the delegation at the factory premises. Senior offi cials from the Company as well as representatives from Singapore Airlines and Capital Logistics were present on this occasion. 38 | Annual Report 2014 38 | Annual Report 2014 | Corporate Events Intelligence 16 May, 2014 www.scripintelligence.com Annual Report 2014 | 39 Annual Report 2014 | 39 Our individual and collective experiences allow us to better understand the needs of our patients and further our work to improve health and wellbeing of our people. 40 | Annual Report 2014 Post Balance Sheet Developments 7 new products launched in Q1; 1 of them being first time in Bangladesh Achieved 16% sales growth in Q1-2015 over Q1-2014 Entered 5 new markets Registered 16 products in 7 countries Post Balance Sheet Developments | Annual Report 2014 | 41 Annual Report 2014 | 41 In Memory of... Mahbubul Alam Independent Director Mohammad Abul Qasem Director Mr. Mahbubul Alam, Independent Director of Beximco Pharmaceuticals Ltd., passed away on 6th June, 2014. He was 78. He was also the Chairman of the Audit Committee. A the caretaker government, Mr. Alam also served as the editor of The Independent for 18 years. He left behind his wife and three daughters. former adviser to Mr. M A Qasem, Founding Director of Beximco group, died on April 19, 2014. He was 85. Mr. Qasem joined Beximco Group in 1974 and served there till his death. He held senior positions in a number of entities within the Beximco Group. He is survived by his wife, three sons, and a daughter. The Board of Directors and all the employees of Beximco Pharma recall with appreciation and gratitude the contribution they have made for the company during their lifetime. 42 | Annual Report 2014 42 | Annual Report 2014 Notice of Annual General Meeting BEXIMCO PHARMACEUTICALS LIMITED 17, Dhanmondi R/A, Road No. 2, Dhaka-1205 Notice of the thirty- ninth annual general meeting Notice is hereby given that the Thirty-Ninth Annual General Meeting of the Shareholders of Beximco Pharmaceuticals Limited will be held on Saturday, the 13th June, 2015 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, 2014 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 approve the appointment of Independent Director. 5. To appoint Auditors for the year 2015 and to fix their remuneration. 6. To transact any other business of the Company with the permission of the Chair. By order of the Board, Dated : 11 May, 2015 NOTES: (MOHAMMAD ASAD ULLAH, FCS) Executive Director & Company Secretary (1) The Record Date of the Company shall be on 21 May, 2015. (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. 21 May, 2015, 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) Members are requested to update particulars of their Bank Account, change of address (if any) and 12 digit Taxpayer’s Identification Number (E-TIN) through their respective Depository Participant. (6) 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 of Annual General Meeting | Annual Report 2014 | 43 Annual Report 2014 | 43 Chairman’s Statement Dear Shareholders, It is great pleasure to welcome you all to the thirty-ninth annual general meeting of Beximco Pharmaceuticals Limited. In 2014 the Company crossed Taka 10 billion mark in domestic sales for the first time in its history. This is a proud achievement for all of us. Despite political turmoil, especially in the first quarter of 2014, the Company managed to achieve 9% growth in the domestic market. With our continued focus on research and development to strengthen the product portfolio, strategic priority on export business and investment to enhance our manufacturing, marketing and supply chain capabilities, the Company continues to progress in the right direction to deliver sustainable returns for the shareholders. In my last report, I mentioned that we needed to make investment in building manufacturing facilities to further diversify our portfolio and increase capacity to meet the growing demands. Moreover, some of our manufacturing facilities built in the late 80s need up- gradation, replacement and expansion. You will be happy to note that the Company is now implementing a number of projects worth Taka 1,000 crore over the period of 2014-17. The projects include creating facilities for a number of new therapeutic categories and relocation, expansion and up-gradation of some of our old facilities. The projects are to be financed using the Company’s own funds as well as through the use of external debt. We have already made a significant amount of investment in this regard from our own sources. We have signed a loan agreement for US $ 51.559 million with BHF Bank, Germany to partly finance the plant and machinery to be procured for the projects. We believe, once implemented, these projects will help secure Company’s current and future growth. 44 I Annual Report 2014 I Chairman’s Statement As stated in the Managing Director’s Statement and Directors’ Report, your Company has achieved GMP clearance from Health Canada and Taiwan FDA, both first-time for a Bangladeshi company. The Company also successfully completed US FDA inspection in January 2015, without any 483 observations. In the first quarter of 2015, we commenced export to Australia which is again a milestone achievement for the Bangladesh pharma industry. We believe that export of generic medicines has high potential for growth and our reputation as a manufacturer of high quality medicine and reliable supplier will help us further expand our footprint in the global market. Our Board of Directors has seen some changes during the year. It is with deep regret I inform you that one of our Independent Directors Mr. Mahbubul Alam passed away on 6th June, 2014. Mr. Alam was also the Chairman of the Audit Committee. As mentioned in my last report, Mr. Mohammad Abul Qasem- one of the founding directors of Beximco Group also passed away on April 19, 2014. On behalf of the Board of Directors I would like to express my sincere appreciation and gratitude for their valued contribution to the Company. Their experience and guidance will be greatly missed. On a positive note, I am pleased to welcome Mr. Shah Monjurul Hoque who has joined the Board as an Independent Director. He will also serve as a member of the Audit Committee. 2015 also began with political turmoil hampering normal business activities. However, there are visible signs of recovery and we hope the situation in the country will remain peaceful in the coming days. Our focus as always will be on achieving the targets we have set for the year and striving to exceed them. We also hope to reach new milestones during the year. I would like to conclude my statement by conveying my personal appreciation to all our shareholders for their continued support at all times and special thanks to all our employees for their dedication and hard work that have made Beximco Pharma what it is today. Thank You, A S F Rahman Chairman Chairman’s Statement I Annual Report 2014 I 45 Directors’ Report to the Shareholders Dear Shareholders, Welcome you all to the 39th Annual General Meeting (AGM) of Beximco Pharmaceuticals Limited. It is my privilege to place before you the Directors’ Report and the Audited Accounts of the company for the year ended December 31, 2014 along with the report of the auditors thereon. 1. Operating Performance 1.1 Business Outlook- A General Overview The Bangladesh economy after struggling in the beginning of 2014, mostly due to the political disturbances, recovered well and grew at 6% plus. Gains made in agriculture, services, foreign trade and remittances helped achieve this growth despite the fact that industrial growth slumped in 2014. Inflation based on Consumer Price Index declined from 7.6% in January 2014 to 6.99% in December 2014 with a fall in food prices being the primary factor. Strong export growth and inward remittance from abroad helped to push the foreign exchange reserve to a record US $ 22 billion. The exemptions on pharmaceutical product patents granted to the least developed countries are set to expire by end of 2015. In February this year, the LDCs led by Bangladesh, applied for extension of the exemption period till their graduation from the LDC status. It should be noted here that, WTO-TRIPs council in 2013 granted extension of the general exemptions to the LDCs for protecting IP rights for a period of 8 years till July 1, 2021. The issue of granting exemption on pharmaceutical products patent is likely to be extended as well. In absence of any significant changes in the government policy on public spending for healthcare, growth in demand for pharmaceutical products will continue to be driven mostly by increased private spending backed up by the country’s steady economic growth and increased health awareness of the people. Additionally, Bangladesh has established a strong base for manufacturing pharmaceutical products and the industry has earned reputation as manufacturer of quality medicine. Thus there is opportunity for the companies to achieve accelerated growth through exports. The reemergence of political instability remains a risk to maintaining growth going forwards. 1.2 Sales and Profitability The domestic sales of the Company in 2014, for the first time crossed ten billion mark to reach at Tk. 10,706.4 million by the end of the year. This is an appreciable 9.0% growth over Tk. 9,819.4 million in 2013. Domestic sales continued to be the major contributor to revenue with 95.5% of sales being made in our local market. We achieved growth in all key therapeutic segments. The revenue from export sales in 2014 was Tk. 500.4 million. This is lower than Tk. 671.3 million exports in 2013. The decline is mainly due to the fact that sales in 2013 comprised of few international tenders in addition to regular market sales. In 2015 we are expecting export to rebound. During the year, we entered into two new markets- namely Romania and Uganda and made 55 new registrations in 15 countries. In the first quarter of 2015, we commenced export to Australia making another milestone not only for Beximco Pharma but for the industry as a whole. 46 I Annual Report 2014 I Directors’ Report to the Shareholders Gross profit of the company rose to Tk. 5,104.2 million in 2014 an increase of 5.5% compared to previous year. The gross profit as percentage of sales remain more or less stable- 45.5% as against 46.1% in 2013; the declining is due to higher depreciation charge and increased overhead cost. Profit after tax also increased to Tk. 1,528.3 million in 2014, compared to Tk. 1,404.8 million in 2013 marking a rise of 8.8%. 1.3 Global Accreditations During 2014 the the company received GMP approval from Taiwan Food & Drug Administration (TFDA) and Canadian regulatory authority “Health Canada” – both ‘first time’ for a Bangladeshi Company. We also received approval from BPOM (Indonesian agency) for our MDI unit. In the first quarter of 2015, we successfully completed the United States Food and Drug Administration (US FDA) audit without any 483 observation. A 483 form is issued when the US FDA has observation of non-compliance or deviation from its current Good Manufacturing Practices (cGMP). This is undoubtedly an important milestone for any pharmaceutical company in the emerging markets. 2. Profit and its Appropriation The Directors take pleasure in reporting the financial results of the Company for the year ended 31 December, 2014 and recommend the appropriation as below: Net Profit after Tax Adjustment for depreciation of revalued assets Profit brought forward from previous years Profit available for appropriation Proposed Dividend Stock Dividend Cash Dividend Profit Carried Forward 3. Dividend Taka in Thousand 2013 1,404,763 18,235 6,244,222 7,667,220 (175,167) (350,335) 7,141,718 2014 1,528,298 16,061 7,141,718 8,686,077 (183,926) (367,852) 8,134,299 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 2014 for onward approval in the Annual General Meeting. 4. Directors 4.1 Appointment of Independent Director We are pleased to announce that Mr. Shah Monjurul Hoque has joined the Board in November 2014 as Independent Director subject to the approval of shareholders in the 39th Annual General Meeting of the Company. Mr. Monjurul Hoque, is a practicing lawyer in the Supreme Court of Bangladesh, both in the High Court Division and Appellate Division. He is the founder of Hoque & Associates, a law firm in Bangladesh, of which he is the Proprietor. Mr. Hoque has held various academic appointments in the field of law and has also acted as legal adviser to a number of corporate clients in Bangladesh and as the enlisted lawyer of several Bangladeshi banks. Directors’ Report to the Shareholders I Annual Report 2014 I 47 4.2 Death Mr. Mahbubul Alam a Non-Executive Independent Director and Mr. Mohammad Abul Qasem Director of the Board passed away during the year. The Board of Directors recalls with appreciation and gratitude their contribution as directors towards the development of Beximco Pharmaceuticals Ltd. 4.3 Retirement and Re-election Mr. A.S.F Rahman and Mr. Salman F 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. Mr. A.S.F Rahman is the Chairman and founder of Beximco Group. He is a distinguished business personality of the country and has received many awards and accolades for his outstanding contribution to country’s industrial development. Mr. Rahman was instrumental in introducing best-in-class corporate practice in Bangladesh and is widely credited as the architect of Group’s successful global strategy. He graduated with Honours in Physics from the University of Dhaka in 1966, and also studied in the United Kingdom. Mr. Rahman held a number of key positions with many reputed organizations including as the Chairman of IFIC Bank Limited, Director of Industrial Promotion & Development Company, Director of Arab Bangladesh Bank Limited, Director of Pubali Bank Limited and Director of the Investment Corporation of Bangladesh. Besides being Chairman of Beximco Pharmaceutical Limited, Mr. A.S.F Rahman is also the Chairman of other three Listed Companies of Beximco Group; Bangladesh Export Import Company Limited, Beximco Synthetics Limited and Shinepukur Ceramics Limited. Mr. Salman F Rahman is a renowned businessman of the country and is widely acclaimed for his contribution to the development of private sector. He anchored the key initiatives that have helped build Beximco’s corporate identity, and led the Group into becoming a leading industrial conglomerate in the country. He has held key positions in many business and industry associations which include President of Bangladesh Association of Pharmaceutical Industries, President of Bangladesh Association of Publicly Listed Companies, President of the Federation of Bangladesh Chambers of Commerce and Industry, President of SAARC Chamber of Commerce & Industry, President of the Metropolitan Chamber of Commerce & Industry, President of the Bangladesh Textile Mills Association, Chairman of Abahani Limited, a prominent sporting club in Bangladesh, and Chairman of the Board of Editors of “The Independent” an English daily newspaper in Bangladesh. Currently Mr. Salman F Rahman holds directorial position in other four publicly listed companies. He is the Vice-Chairman of Bangladesh Export Import Company Limited, Beximco Synthetics Limited and Shinepukur Ceramics Limited and Chairman of IFIC Bank Ltd. Mr. Rahman has many accolades to his name and he holds a degree from Karachi University. 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-eighth Annual General Meeting of the Company has carried out the audit for the year ended 31 December 2014. 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 office for the year 2015. 48 I Annual Report 2014 I Directors’ Report to the Shareholders 6. Audit Committee Due to death of Mr. Mahbubul Alam, Chairman of the Audit Committee, the Board reconstituted the Audit Committee as follows: Dr. Abdur Rahman Khan Osman Kaiser Chowdhury, FCA Shah Monjurul Hoque 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 financial 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 flow 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 financial statements except those referred to in the financial 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 financial statements. e. Internal Control System is sound in design and has been effectively implemented and monitored. f. There is no significant doubt about the ability of the Company to continue as a going concern. 8. Certification by the Managing Director and Chief Financial Officer Managing Director (Chief Executive Officer) and the Chief Financial Officer have certified to the Board that they have reviewed the Financial Statements for the year 2014 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 I Annual Report 2014 I 49 9. Key Operating and Financial Data The summarized key operating and financial data for 2014 and immediately preceding four years are presented below : Taka in Thousand Particulars 2014 2013 2012 2011 2010 Authorized Capital Paid Up Capital Total Sales Export Sales Gross Profit Profit before Tax Net Profit Fixed Assets (Gross) Shareholders’ Equity 9,100,000 3,678,516 11,206,886 500,469 5,104,191 2,109,556 1,528,298 25,818,728 20,920,185 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 9,100,000 9,100,000 2,098,065 2,517,678 3,046,390 6,490,847 7,890,242 9,289,115 330,541 390,315 470,116 3,173,207 3,786,533 4,389,401 1,361,532 1,677,849 1,909,829 1,319,389 1,051,649 1,198,525 20,316,639 19,289,344 18,191,956 18,408,162 17,128,128 15,974,086 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 Investors Account Sponsors, General Public & Other Institutions 5% 10% 57 4.15 58.70 14.14 89,913 68 882 88,963 5% 10% 56 3.82 47.20 12.36 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 4.18 135.10 32.32 93,371 57 899 92,415 Number of Employees 3,063 2,897 2,748 2,670 2,507 10. Board Meetings and Attendance Fifteen 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 Iqbal Ahmed Mahbubul Alam Shah Monjurul Hoque 15 14 15 5 1 Salman F Rahman Osman Kaiser Chowdhury A B Siddiqur Rahman Dr. Abdur Rahman Khan 15 15 14 11 50 I Annual Report 2014 I Directors’ Report to the Shareholders 11. The Pattern of Shareholding Name-wise details Number of Shares held i) ii) 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 and Finance Company Ltd. Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and their Spouses and Minor Children: A S F Rahman, Chairman Salman F Rahman, Vice-Chairman Nazmul Hassan MP, Managing Director and CEO Company Secretary, Spouse and Minor Children Chief Financial Officer, Spouse and Minor Children Head of Internal Audit, Spouse and Minor Children iii) Executives iv) Shareholders holding 10% or more voting interest in the Company 20,402,347 2,630,325 8,530,825 796,083 1,042,672 7,469,709 7,487,196 12,087 - - - - - 12. Corporate Governance Compliance Report In accordance with the requirement of the Securities and Exchange Commission Notification 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 2014 I 51 Corporate Governance Compliance Report Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission’s Notification No. SEC/ CMRRCD/2006-158/134/ Admin/44 dated 07 August, 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969: (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/officer of any stock exchange Not being shareholder/director/officer 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 firm 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 Qualification 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,defining 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 Profit and Net Profit 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 financial results deteriorate after going for IPO, RPO, Right Offer, Direct Listing, etc. √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ - √ √ √ √ √ - √ - - 52 I Annual Report 2014 I Directors’ Report to the Shareholders Appointment of an Independent Director is placed for approval by the Shareholders in this AGM - N/A Company Operates in a Single Product Segment - - - N/A N/A N/A Condition No. Title 1.5 (ix) 1.5 (x) Explanation about significant 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 financial 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 Significant deviations from last year’s operating results Summary of key operating/financial 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 specific 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 defining 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 financial 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 “financially literate” and at least one to have accounting/financial experience Vacancy in Audit Committee making the number lower than 3 to be filled 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 financial reporting process Monitor choice of accounting policies and principles Compliance Status (“√” in appropriate Column) Complied Complied Not Complied Remarks (if any) - N/A No remuneration was paid to any Director during 2014 except Managing Director for serving as Chief Executive and the Independent Directors for their attendance in Meetings. - - N/A N/A - √ √ √ √ √ √ √ - √ - √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Directors’ Report to the Shareholders I Annual Report 2014 I 53 Condition No. Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) 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 financial statements Review the quarterly and half yearly financial statements Review the adequacy of internal audit function Review statement of significant 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 conflicts 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 firm 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 financial 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 certificate 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 √ √ √ √ √ √ √ - √ - - - - - √ √ √ √ √ √ √ √ √ - - - - - √ √ √ √ √ 54 I Annual Report 2014 I Directors’ Report to the Shareholders - N/A - - - - - - - - - - N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A S. Abdur Rashid FCS BCom (Hons), MBS (Finance & Banking), MBA (Finance), PGDHRM, AIPM Chartered Secretary in Practice Private Practice Certificate No.: 003 Mobile # 01726-533655, 01976533655, 01193095297 E-mail : sarashid12000@yahoo.com SARashid & Associates (Chartered Secretaries) Noakhali Tower (10th Floor, 11-F) 55/B Purana Paltan, Dhaka-1000, Bangladesh E-mail : sarashidnasso@gmail.com Certificate on Compliance of Corporate Governance Guidelines [Issued under Condition # 7(i) of Corporate Governance Guidelines of BSEC vide Notification 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 2014. Such compliance is the responsibility of the Company as stipulated in the above mentioned notification 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 financial statements or future viability of the Company. According to the information and explanations provided to me by the Company, I hereby certify that all the conditions of the Corporate Governance Guidelines have been complied with by the Company. S. Abdur Rashid FCS Dhaka, 14 May, 2015 Certificate on Compliance of Corporate Governance Guidelines I Annual Report 2014 I 55 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 Audit Committee as per its terms of reference thoroughly reviewed quarterly, half-yearly and annual financial statements of the company prior to their submission to the board of directors for approval. The committee in its meeting held on April 21, 2015 reviewed the Annual Financial Statements for the year 2014. The draft audited accounts along with the report of the auditors were placed before the committee. The Chief Financial Officer briefed the committee on the financial performance of the company. Detailed discussions on the financial statements were held with the representatives of the management of the company. As part of the review, the committee also thoroughly examined the related party transactions that occurred during 2014. The committee was fully satisfied 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 financial statements. No material audit observation that warrants the Board’s attention was noted. The Committee therefore, authorized for onward submission of the Audited Financial Statements to the Board for approval. In addition, the committee held three other meetings wherein the quarterly and half-yearly financial reports of the company were reviewed prior to their onward submission to the board for approval. In each of the cases the committee held detailed discussion with the senior management on various aspects of the financial statements to ensure accuracy, consistency and compliance of the reports in all material respects. Additionally, the committee in 2014 also reviewed the Audited Financial Statements for the year 2013 prior to their submission 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 2015 subject to the approval by the shareholders in the 39th Annual General Meeting. Death of Committee Member The Chair of the Committee Mr. Mahbubul Alam who joined only in March 13, 2014 passed away on June 6, 2014. Mr. Alam was a senior public Administrator & a media personality. The members of the audit committee expressed deep condolence at the sad demise and recalled with appreciation the valuable contribution of Mr. Alam towards development and growth of the company. Reconstitution of the Audit Committee Mr. Shah Monjurul Hoque a practicing lawyer of the supreme court of Bangladesh has been appointed as Non-Executive independent Director 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 has also appointed Mr. Hoque as a member of the audit committee. 56 I Annual Report 2014 I Report on the Activities of The Audit Committee Following his appointment, the audit committee was reconstituted as follows: Dr. Abdur Rahman Khan Shah Monjurul Hoque Independent Director Independent Director Osman Kaiser Chowdhury Director Mohammad Asad Ullah Executive Director and Company Secretary Chairman Member Member Secretary Other Reviews and Activities During 2014 the committee also assessed and examined risk management process and internal control policies of the company. The financial reporting process and the related compliance and disclosure issues also came up as matters of periodic review by the committee. The senior management of the company on invitation attended various meetings of the audit committee to apprise the members on various issues. The committee noted no material deviations or non-compliance or adverse audit findings that warrants for board or shareholders’ attention during the period under review. Dr. Abdur Rahman Khan Chairman Audit Committee 21 May, 2015 Report on the Activities of The Audit Committee I Annual Report 2014 I 57 Shareholders’ Meeting The 38th Annual General Meeting (AGM) of the shareholders of Beximco Pharmaceuticals Limited was held on June 21, 2014 at Beximco Industrial Park, Saravo, 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 10% cash and 5% stock dividend for the year 2013. Performane of the company in 2013 as well as future strategies were briefly discussed in the meeting. At the end of the meetting Chaiman expressed his appreciation towards shareholders for their interest in the company and their continued support. 58 I Annual Report 2014 I Shareholders’ Meeting Audit Committee Meeting 38th Annual General Meeting Shareholders’ Meeting I Annual Report 2014 I 59 Value Added Statement For the Year Ended 31 December 2014 Value Added : Sales & Other Income Bought-in-Materials & Services Applications : Retained by the Company Salaries and Benefits to Employees Interest to Lenders Dividend to Shareholders Duties & Taxes to Govt. Exchequer Taka in thousand Tk. % 13,531,721 (6,139,596) 7,392,125 100 1,886,105 1,548,362 724,315 551,778 2,681,565 26 21 10 7 36 7,392,125 100 60 I Annual Report 2014 I Value Added Statement Graphical View of Selected Growth Indicators Graphical View of Selected Growth Indicators I Annual Report 2014 I 61 Independent Auditors’ Report To The Shareholders of Beximco Pharmaceuticals Limited Report on the Financial Statements We have audited the accompanying financial statements of Beximco Pharmaceuticals Limited, which comprise the Statement of Financial Position as at 31 December 2014, the Statements of Profit or Loss and Other Comprehensive Income, Changes in Equity and Cash Flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial 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 financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2014, and of its financial performance and its cash flows 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 verification thereof; (b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of these books; (c) the Statement of Financial Position (Balance Sheet) and Statement of Profit or Loss and Other Comprehensive Income (Profit 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 27 April, 2015 M.J. Abedin & Co. Chartered Accountants 62 I Annual Report 2014 I Independent Auditors’ Report Beximco Pharmaceuticals Limited Statement of Financial Position As at 31 December 2014 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 Notes 4(a) 3.3 & 5 6(a) 7 8 9 10 11 12 13 14 4(b) 6(c) Non-Current Liabilities Long Term Borrowings-Net off Current Maturity (Secured) 15 16 Liability for Gratuity and WPPF & Welfare Funds 17 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 18 19 20 21 22 Amount in Taka 2014 2013 20,634,246,854 20,393,278,737 235,208,190 5,759,927 8,366,279,107 2,493,657,338 554,183,898 1,397,498,648 1,223,673,153 2,475,026,831 222,239,239 18,567,329,474 18,364,313,070 198,223,509 4,792,895 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 29,000,525,961 27,470,751,802 20,920,185,325 3,678,516,520 5,269,474,690 1,689,636,958 294,950,950 1,299,220,315 2,308,651 8,686,077,241 3,372,593,206 901,709,327 741,522,518 1,729,361,361 4,707,747,430 3,153,121,293 663,838,072 357,710,839 164,283,115 454,720 368,339,391 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 TOTAL EQUITY AND LIABILITIES 29,000,525,961 27,470,751,802 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 27 April, 2015 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 27 April, 2015 Ali Nawaz Chief Financial Officer Per our report of even date. M. J. Abedin & Co. Chartered Accountants Statement of Financial Position I Annual Report 2014 I 63 Beximco Pharmaceuticals Limited Statement of Profit or Loss and Other Comprehensive Income For the Year ended 31 December 2014 Notes 2014 2013 Amount in Taka Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Administrative Expenses Selling, Marketing and Distribution Expenses Profit from Operations Other Income Finance Cost Profit Before Contribution to WPPF & Welfare Funds Contribution to WPPF & Welfare Funds Profit Before Tax Income Tax Expenses Current Tax Deferred Tax Profit after Tax for the Year Other Comprehensive Income - Fair Value Gain on Investment in Listed Shares Total Comprehensive Income for the Year 23 24 27 28 29 30 31 32 6(c) 11,206,885,677 10,490,699,094 (6,102,694,323) 5,104,191,354 (2,686,014,518) (398,762,237) (2,287,252,281) 2,418,176,836 521,171,647 (724,314,963) 2,215,033,520 (5,651,898,878) 4,838,800,216 (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 (105,477,787) (104,679,709) 2,109,555,733 2,093,594,171 (581,258,160) (436,782,844) (144,475,316) 1,528,297,573 967,032 1,529,264,605 (688,831,391) (324,415,546) (364,415,845) 1,404,762,780 1,341,619 1,406,104,399 Earnings Per Share (EPS) / Adjusted EPS (2013) 33 4.15 3.82 Number of Shares used to compute EPS 367,851,652 367,851,652 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 27 April, 2015 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Per our report of even date. M. J. Abedin & Co. Chartered Accountants Dhaka 27 April, 2015 64 I Annual Report 2014 I Statement of Profit or Loss and Other Comprehensive Income Beximco Pharmaceuticals Limited Statement of Changes in Equity For the Year ended 31 December 2014 Share Capital Share Excess of Issue Capital Premium Price over Face Reserve on Merger Value of GDRs Revaluation Surplus Fair Value Gain on Investment Amount in Taka Retained Earnings Total 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, 2014 Total Comprehensive Income for 2014: Profit for the year Other Comprehensive Income Transactions with the Shareholders: Cash Dividend for 2013 Stock Dividend for 2013 Adjustment for Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets Balance as on December 31, 2014 Number of Shares Net Asset Value (NAV) Per Share - 175,167,450 - - - - For the Year ended 31 December 2013 - - - - - - - - - - - - - - - - - - - 1,528,297,573 1,528,297,573 967,032 - 967,032 - - - (350,334,907) - (175,167,450) (350,334,907) - - (16,061,652) - 16,061,652 - - (34,296,838) - - (34,296,838) 3,678,516,520 5,269,474,690 1,689,636,958 294,950,950 1,299,220,315 2,308,651 8,686,077,241 20,920,185,325 367,851,652 56.87 Balance as on January 01, 2013 Total Comprehensive Income for 2013: Profit 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 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 - - - - - - - - - - - - - - 1,404,762,780 1,404,762,780 1,341,619 - 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 19,775,552,465 350,334,907 56.45 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 27 April, 2015 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Per our report of even date. Dhaka 27 April, 2015 M. J. Abedin & Co. Chartered Accountants Statement of Changes in Equity I Annual Report 2014 I 65 Beximco Pharmaceuticals Limited Statement of Cash Flows For the Year ended 31 December 2014 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 Decrease/(Increase) in Short Term Investment Net Cash Used in Investing Activities Cash Flows from Financing Activities : Net Decrease in Long Term Borrowings Net Increase in Short Term Borrowings Dividend Paid Net Cash Generated from Financing Activities Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year Amount in Taka 2014 2013 11,086,465,849 (8,240,584,352) 2,845,881,497 (724,314,963) 489,970,647 (394,128,824) 2,217,408,357 (2,778,797,453) (56,321,506) 7,615,792 551,356,330 (2,276,146,837) (340,756,861) 376,855,168 (350,853,554) (314,755,247) (373,493,727) 595,732,966 222,239,239 10,407,897,987 (7,880,610,113) 2,527,287,874 (636,587,090) 512,424,678 (272,794,704) 2,130,330,758 (2,739,061,076) (25,370,921) 5,401,817 (339,784,835) (3,098,815,015) (228,030,079) 1,239,316,207 (47,581) 1,011,238,547 42,754,290 552,978,676 595,732,966 Net Operating Cash Flow Per Share 6.03 6.08 Number of Shares used to compute Net Operating Cash Flow Per Share 367,851,652 350,334,907 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 27 April, 2015 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 27 April, 2015 66 I Annual Report 2014 I Statement of Cash Flows Ali Nawaz Chief Financial Officer 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 2014 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 fluids 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 office 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 fluids 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 financial 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 flow statement being prepared on cash basis. 2.2 Statement of Compliance The financial 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). 2.3 Presentation of Financial Statements The presentation of these financial statements is in accordance with the guidelines provided by IAS 1: Presentation of Financial Statements. The financial statements comprises of: (a) a Statement of Financial Position as at the end of the year 2014 ; (b) a Statement of Profit or Loss and Other Comprehensive Income for the year 2014; (c) a Statement of Changes in Equity for the year 2014; (d) a Statement of Cash Flows for the year 2014 ; and (e) notes, comprising summary of significant accounting policies and explanatory information. 2.4 Reporting Period The financial statements cover one calendar year from January 01, 2014 to December 31, 2014. 2.5 Authorisation for issue The financial statements have been authorised for issue by the Board of Directors on 27 April, 2015. 2.6 Functional and Presentation Currency The financial statements are prepared and presented in Bangladesh Currency (Taka), which is the company’s functional currency. All financial information presented has been rounded off to the nearest Taka except where indicated otherwise. 2.7 Comparative Information Comparative information has been disclosed in respect of the year 2013 for all numerical information in the financial statements and also the narrative and descriptive information where it is relevant for understanding of the current year’s financial statements. Figures for the year 2013 have been re-arranged wherever considered necessary to ensure better comparability with the current year. Notes to the Financial Statements I Annual Report 2014 I 67 2.8 Use of Estimates and Judgments The preparation of financial 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 financial 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 significant effect on the amounts recognized in the financial statements include depreciation, inventory valuation, accrued expenses, other payable and deferred liability for gratuity. 3. Significant Accounting Policies The accounting principles and policies in respect of material items of financial statements set out below have been applied consistently to all periods presented in these financial 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 significant 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 Property, Plant and Equipment 3.2.1 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 Office Equipment 2 %- 10% 5% -15% 10% 20% 10% -15% 3.2.4 Retirements and Disposals On disposal of fixed assets, the cost and accumulated depreciation are eliminated and gain or loss on such disposal is reflected in the income statement, which is determined with reference to the net book value of the assets and net sales proceeds. 3.3 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 fixed assets where the software or site supports a significant business system and the expenditure leads to the creation of a durable asset. Also, the research and development expenditures that are definite to yield benefit to the company are capitalized. 68 I Annual Report 2014 I Notes to the Financial Statements 3.4 Leased Assets In compliance with the IAS 17: Leases, cost of assets acquired under finance 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 finance leases are apportioned between the finance expenses and the reduction of the outstanding liability. 3.5 Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 3.5.1 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 financial 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 financial asset when, and only when the contractual rights or probabilities of receiving the cash flows from the asset expire or it transfer the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risk and rewards of ownership of the financial 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, firstly against any provision available and then to the profit and loss account. Subsequent recoveries of amounts previously provided for are credited to the profit 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 insignificant 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 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 financial 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. 3.6 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 flows of that asset, that can be estimated reliably. Objective evidence that financial 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 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 profit 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 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. Notes to the Financial Statements I Annual Report 2014 I 69 3.8 Provisions A provision is recognized in the statement of financial position when the company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits 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 financial 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 Profit or Loss and other Comprehensive Income and accounted for in accordance with the requirements of IAS 12 : Income Tax. 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 qualifies 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 financial reporting purpose and its tax base, and accordingly, deferred tax income/expenses has been considered to determine net profit after tax and earnings per shares (EPS). A deferred tax asset is recognized to the extent that it is probable that future taxable profit 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 benefit will be realized. 3.10 Interest Income Interest income is recognized on accrual basis. 3.11 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. 3.12 Employee Benefits The company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds. The company has accounted for and disclosed employee benefits in compliance with the provisions of IAS 19: Employee Benefits. The cost of employee benefits is charged off as revenue expenditure in the period to which the contributions relate. The company’s employee benefits include the following: (a) Defined Contribution Plan (Provident Fund) The company has a registered provident fund scheme (Defined 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 defined 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. (b) Defined Benefit Plan (Gratuity) This represents unfunded gratuity scheme for its permanent employees. Employees are entitled to gratuity benefit after completion of minimum five years of service in the company. Though no valuation was done to quantify actuarial liabilities as per the IAS 19 : Employee Benefits, such valuation in not likely to yield a result significantly different from the current provision. 70 I Annual Report 2014 I Notes to the Financial Statements (c) Short-term employee benefits Short-term employee benefits include salaries, bonuses, leave encashment, etc. Obligations for such benefits are measured on an undiscounted basis and are expensed as the related service is provided. (d) Contribution to Workers’ Profit Participation and Welfare Funds This represents 5% of net profit before tax contributed by the company as per provisions of the Bangladesh Labor (amendment) Act 2013 and is payable to workers as defined in the said law. (e) Insurance Scheme Employees of the company are covered under insurance schemes. 3.13 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. 3.14 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 (2014) The Bonus Shares issued during the year 2014 were treated as if they always had been in issue. Hence, in computing the Basic EPS of 2014, the total number of shares including the said bonus shares has been considered as the Weighted Average Number of Shares outstanding during the year 2014. Earlier Year (2013) 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 (2013), and accordingly, in calculating the adjusted EPS of 2013, the total number of shares including the subsequent bonus issued in 2014 has been considered as the Weighted Average number of Shares outstanding during the year 2013. 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 financial 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. 3.17 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. 3.18 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 reflected in the financial statements. Events after reporting period that are not adjusting events are disclosed in the notes when material. Notes to the Financial Statements I Annual Report 2014 I 71 4 (a). Property, Plant and Equipment As on December 31, 2014 Amount in Taka Particulars Cost At January 01, 2014 Additions during the year Transferred & Capitalized Disposal during the year Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Total 3,302,882,482 6,370,758,420 10,034,644,242 111,420,014 39,331,900 427,051,445 - - - 40,858,960 - - 173,333,992 548,077,240 358,363,316 20,788,059,692 306,893,734 24,240,377 59,392,132 427,051,445 - (11,196,868) 31,650,351 - - (10,623,868) (573,000) - Cost at December 31, 2014 3,343,741,442 6,410,090,320 10,573,115,701 197,001,369 596,845,504 390,013,667 21,510,808,003 Accumulated Depreciation At January 01, 2014 Depreciation during the Year Adjustment for Assets disposed off Accumulated Depreciation at December 31, 2014 Net Book Value December 31, 2014 Capital Work in Progress - 1,052,546,636 163,516,467 - 3,090,128,096 492,388,770 69,430,902 237,436,147 237,273,060 4,686,814,841 745,772,871 10,375,309 61,346,435 18,145,890 - - - (423,000) (6,714,953) - (7,137,953) - 1,216,063,103 3,582,516,866 79,383,211 292,067,629 255,418,950 5,425,449,759 3,343,741,442 5,194,027,217 6,990,598,835 117,618,158 304,777,875 134,594,717 16,085,358,244 4,307,920,493 20,393,278,737 Carrying Value as on December 31, 2014 Assets include lease hold assets of Tk. 1,118,197,222 at cost and Tk.1,024,142,612 at carrying value. As on December 31, 2013 Particulars Cost At January 01, 2013 Additions during the year Transferred & Capitalized Disposal during the year Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Total 3,302,101,973 780,509 - - 6,333,171,363 13,549,431 24,037,626 - 7,393,575,590 309,357,824 2,333,797,946 (2,087,118) 157,600,585 15,883,407 - (150,000) 458,376,716 92,035,614 - (2,335,090) 329,522,045 28,841,271 - - 17,974,348,272 460,448,056 2,357,835,572 (4,572,208) Cost at December 31, 2013 3,302,882,482 6,370,758,420 10,034,644,242 173,333,992 548,077,240 358,363,316 20,788,059,692 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 - - - 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 72 I Annual Report 2014 I Notes to the Financial Statements 2,263,068,219 18,364,313,070 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 Balance as on December 31 4 (b). Revaluation Surplus Amount in Taka 2014 2013 2,263,068,219 2,471,903,719 4,734,971,938 (427,051,445) - (427,051,445) 2,342,290,771 2,278,613,020 4,620,903,791 (2,357,835,572) (24,037,626) (2,333,797,946) 4,307,920,493 2,263,068,219 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 1,349,578,805 (16,061,652) (34,296,838) 1,299,220,315 1,406,527,880 (18,235,282) (38,713,793) 1,349,578,805 5. Intangible Assets This consists of as follows: Product development, Licensing and Marketing Rights Software 6. Investment in Shares (a) Investment Details: (i) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) This is arrived at as follows: Balance 01-01-2014 Addition 2014 Amortized in 2014 Balance 31-12-2014 189,856,528 8,366,981 198,223,509 51,836,992 4,484,514 56,321,506 (11,142,012) (8,194,813) (19,336,825) 230,551,508 4,656,682 235,208,190 2014 2013 4,190,477 1,569,450 5,759,927 3,223,445 1,569,450 4,792,895 Bangladesh Export Import Co. Ltd. Central Depository Bangladesh Ltd. Investment as on January 01, 2014 Fair value gain on investment Investment as on December 31, 2014 3,223,445 967,032 Tk. 4,190,477 1,569,450 - 1,569,450 (b) Number of Shares: As on January 01, 2014 Stock Dividend for 2013 As on December 31, 2014 100,107 15,016 115,123 571,182 - 571,182 Notes to the Financial Statements I Annual Report 2014 I 73 (c) Fair value gain on investment Amount in Taka Fair market value of 115,123 shares (including 15,016 shares received as stock dividend for the year 2013) of Bangladesh Export Import Co. Ltd. at Tk. 36.40 per share Less Investment at beginning of the year Fair Value Gain Balance as on January 01, 2014 Balance as on December 31, 2014 4,190,477 3,223,445 967,032 1,341,619 2,308,651 (d) 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. 36.40 in Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. Shares of CDBL are not traded. 7. Inventories This consists of as follows : 2014 2013 Finished Goods Work in Process Raw Materials Packing Materials Laboratory Chemicals Physician Samples Materials in Transit 8. Spares & Supplies This consists of as follows : Spares & Accessories Stock of Stationery Literature & Promotional Materials 9. Accounts Receivable 633,692,189 171,815,679 637,080,994 424,461,374 550,984 149,875,483 476,180,635 2,493,657,338 644,005,694 204,755,943 787,194,854 440,279,801 800,984 92,234,008 242,610,702 2,411,881,986 399,537,644 11,284,736 143,361,518 554,183,898 318,538,085 9,829,034 104,985,288 433,352,407 This includes receivable of Tk. 136,834,694 equivalent to US $ 1,763,334 (on 31-12-2013 Tk. 158,658,136 equivalent to US $ 2,049,754) against export sales. This also includes Tk. 1,118,478,352 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. 1,171,257,041on 30-11-2014. The receivables on account of Export sales are fully secured against Letter of Credit while the others are unsecured but considered good. No amount was due from the directors, managing agent, managers and other officers of the company and any of them severally or jointly with any other person. 74 I Annual Report 2014 I Notes to the Financial Statements 10. Loans, Advances and Deposits This is unsecured, considered good and consists of as follows : Amount in Taka 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 Office Others 2014 2013 54,354,123 217,516,529 14,620,213 27,652,694 21,812,942 50,029,753 132,711,063 1,257,096 55,699,183 9,716,674 124,010,046 422,209,729 21,116,922 15,032,617 55,933,569 1,223,673,153 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 (a) The maximum amount due from the employees during the year was Tk. 56,071,933 on 31 October, 2014. (b) No amount was due from the directors, managing agent, managers and other officers 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. 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 : 3,218,618 3,474,616 190,573,819 28,446,802 222,239,239 85,680,218 506,578,132 595,732,966 500,000,000 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 278,833,505 Bonus Shares (2013: 261,316,760) 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 2,788,335,050 59,512,500 312,911,470 3,678,516,520 517,757,500 2,613,167,600 59,512,500 312,911,470 3,503,349,070 Notes to the Financial Statements I Annual Report 2014 I 75 The movement of Ordinary Shares during the year 2014 is as follows : Number of Shares Amount in Taka Balance as on January 01, 2014 Bonus Shares issued during the year 2014 (for 2013) Balance as on December 31, 2014 350,334,907 17,516,745 367,851,652 3,503,349,070 175,167,450 3,678,516,520 C. Composition of Shareholding of Ordinary Shares: Sponsors: A S F Rahman Salman F Rahman Associates and Other Directors Foreign Investors ICB & Other Investors Account General Public & Institutions 2014 2013 No. of shares % of Share Capital No. of shares % of Share Capital 7,469,709 7,487,196 33,414,339 93,038,941 55,940,961 170,500,506 367,851,652 2.03 2.04 9.08 25.29 15.21 46.35 7,114,009 7,130,663 34,020,550 85,094,612 41,994,537 174,980,536 100 350,334,907 2.03 2.04 9.71 24.29 11.98 49.95 100 D. Distribution Schedule of Ordinary Shares: Range of Holdings In number of shares No. of Shareholders % of Shareholders Number of Shares % of Share Capital 2014 2013 2014 2013 2014 2013 2014 2013 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 65,544 20,786 1,753 930 281 128 102 165 191 33 68,939 72.90% 21,066 23.12% 1.95% 1,509 1.03% 674 0.31% 187 0.14% 101 0.11% 55 0.19% 94 0.21% 166 0.04% 40 2.52% 8,836,043 74.26% 8.49% 29,757,275 22.69% 2.98% 10,448,670 1.63% 2.67% 9,334,640 0.73% 1.29% 4,535,749 0.20% 1.01% 3,520,388 0.11% 0.70% 2,457,436 0.06% 6,548,929 1.87% 0.10% 49,278,664 13.76% 14.07% 0.18% 0.04% 224,183,910 225,617,113 60.94% 64.40% 8,240,906 30,918,582 12,555,227 13,111,006 6,909,593 4,498,146 4,660,402 12,172,549 50,601,331 2.24% 8.41% 3.41% 3.56% 1.88% 1.22% 1.27% 3.31% Total 89,913 92,831 100% 100% 367,851,652 350,334,907 100% 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. 58.70 (in 2013 Tk. 47.20) in Dhaka Stock Exchange Ltd., Tk. 59.10 (in 2013 Tk. 47.00) in Chittagong Stock Exchange Ltd., and GBP 0.1800 in London Stock Exchange (in 2013 GBP 0.1375). F. Option on unissued Ordinary shares : There was no option on unissued shares as on 31-12-2014. 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. 76 I Annual Report 2014 I Notes to the Financial Statements 15. Long Term Borrowing - Net off Current Maturity (Secured) This is arrived at as follows : (a) Project Loan (b) Obligation Under Finance Leases (a) Project Loan Amount in Taka 2014 2013 608,901,223 292,808,104 901,709,327 1,001,325,040 150,075,662 1,151,400,702 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 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. (b ) Obligation Under Finance Leases Gross Finance Lease - minimum lease Liability: Within one year After one year Total Less future finance charges on finance lease liability Present Value of Finance Lease liability This consists of as follows: Within one year Within two to five years Total Present Value of Finance Lease liability 186,760,624 429,486,607 616,247,231 (195,948,111) 420,299,120 152,206,085 220,923,094 373,129,179 (120,839,679) 252,289,500 127,491,016 292,808,104 420,299,120 102,213,838 150,075,662 252,289,500 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 Profit 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 Profit Participation and Welfare Funds 284,163,669 66,915,861 351,079,530 (13,426,744) 337,652,786 403,869,732 741,522,518 223,962,507 68,652,000 292,614,507 (8,450,838) 284,163,669 326,464,481 610,628,150 Notes to the Financial Statements I Annual Report 2014 I 77 17. Deferred Tax Liability This is 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 - OD & LAC Noor Islamic Bank, Dubai - Commodity Murabaha Facility Amount in Taka 2014 2013 1,550,589,207 1,147,459,569 144,475,316 34,296,838 1,729,361,361 364,415,845 38,713,793 1,550,589,207 1,487,792,991 1,665,328,302 - 3,153,121,293 1,219,126,718 775,639,407 781,500,000 2,776,266,125 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 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’ Profit Participation and Welfare Funds - current year’s expense (net off interim payments). 22. Income Tax Payable This is arrived at as follows : Balance on January 01 Provision for the year Short Provision for earlier years AIT & Treasury deposits during the year 78 I Annual Report 2014 I Notes to the Financial Statements 536,347,056 127,491,016 663,838,072 652,689,720 102,213,838 754,903,558 202,020,182 124,323,489 3,618,784 27,748,384 357,710,839 123,397,754 254,356,090 915,874 4,500,835 383,170,553 60,155,328 104,127,787 38,282,595 103,299,709 164,283,115 141,582,304 325,685,371 421,487,672 15,295,172 762,468,215 (394,128,824) 368,339,391 274,064,529 305,845,595 18,569,951 598,480,075 (272,794,704) 325,685,371 Amount in Taka 2014 2013 10,706,417,075 500,468,602 11,206,885,677 9,819,409,651 671,289,443 10,490,699,094 23. Net Sales Revenue This consists of as follows : Local Sales Export Sales equivalent US $ 6,473,721 (in 2013 US $ 8,614,393) Sales represents: Quantity Product Category Unit 2014 2013 Tablet, Capsule, Suppository & DPI Million pcs. 2,998.47 3,173.13 Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Million pcs. Active Pharmaceutical Ingredients Liquid Nitrogen Kg Liter 70.72 66.75 177,354 170,516 475,012 387,153 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) Item wise quantity and value of Finished Goods Stock are as follows : Stock as January 01, 2014 Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Active Pharmaceutical Ingredients Stock as December 31, 2014 Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Active Pharmaceutical Ingredients 204,755,943 4,498,531,078 1,735,116,121 6,438,403,142 246,214,085 4,257,643,464 1,493,080,956 5,996,938,505 (171,815,679) 6,266,587,463 (204,755,943) 5,792,182,562 644,005,694 6,910,593,157 629,828,725 6,422,011,287 (174,206,645) (633,692,189) 6,102,694,323 (126,106,715) (644,005,694) 5,651,898,878 Unit Quantity Value (Tk.) Million pcs. 518.83 394,979,619 Million pcs. Kg 6.69 1,867 243,292,676 5,733,399 644,005,694 Million pcs. 426.64 389,211,055 Million pcs. Kg 6.78 2,450 236,895,019 7,586,115 633,692,189 Notes to the Financial Statements I Annual Report 2014 I 79 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 Electricity, Gas & Water Training & Conference Plant Certification and Regulatory Approvals Depreciation Other Expenses Amount in Taka 2014 2013 1,228,275,639 4,332,348,791 (1,062,093,352) 4,498,531,078 1,289,156,749 4,196,762,354 (1,228,275,639) 4,257,643,464 500,724,043 104,500,367 12,514,466 2,021,257 60,222 10,631,435 5,242,079 1,231,794 146,720,695 13,914,877 5,787,905 121,321,879 75,773,777 5,046,880 46,683,540 674,924,448 8,016,457 1,735,116,121 451,123,633 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 1,493,080,956 a) Salary and allowances include Company’s Contribution to provident fund of Tk. 9,619,537 (in 2013 Tk. 8,531,034). (b) The value of imported stores and spares consumed is Tk. 67,012,977 is included in repairs & maintenance. This also includes maintenance of office, premises, vehicles, building, machinery, equipment and other infrastructures. (c) Other expenses does not include any item exceeding 1% of total revenue. 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 80 I Annual Report 2014 I Notes to the Financial Statements 193,314,218 10,066,000 30,338,920 3,061,050 19,583,051 4,063,944 3,443,447 1,300,000 4,889,150 10,576,720 5,181,653 39,532,229 58,138 7,467,133 26,102,050 140,000 39,644,534 398,762,237 177,266,156 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 29,531,643 375,565,912 (a) Salary and allowances include provident fund contribution of Tk. 5,059,756 (in 2013 Tk. 4,899,089). (b) Repairs and maintenance includes maintenance of office, 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 Expense Promotional Expenses Literature/News Letter Registration & Renewals Export Insurance, Freight and C&F Expenses Delivery Expense Depreciation & Amortization Other Expenses Amount in Taka 2014 2013 748,845,866 32,948,068 5,719,886 315,983,949 24,724,155 27,433,905 10,021,432 6,900,564 31,046,918 54,556,296 14,527,141 150,637,854 322,661,819 93,314,746 33,079,698 38,333,120 296,368,010 64,083,198 16,065,656 2,287,252,281 699,256,429 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 (a) Salary and allowances include provident fund contribution of Tk. 17,870,356 (in 2013 Tk. 15,749,142). (b) Delivery expense includes distribution commission on local sales of Formulation and IV Fluid products paid to I & I Services Ltd., a “ Related Party”. (c) Repairs and maintenance includes maintenance of office, premises, vehicles, building, equipment and other infrastructures. (d) Sample expense includes VAT on sample and related dispatch expense. 29. Other Income This is arrived at as follows : Interest on FDR & Short term Investment Dividend Income Royalty Exchange Rate Fluctuation Gain / (Loss) Profit on Sale of Fixed Assets (Note 35) 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 489,970,647 1,427,955 24,763,177 1,452,991 3,556,877 521,171,647 512,424,678 3,141,501 7,785,736 (17,198,454) 4,434,739 510,588,200 391,510,508 175,227,715 64,812,955 71,225,739 21,538,046 724,314,963 256,763,094 219,205,840 51,362,542 81,687,639 27,567,975 636,587,090 Notes to the Financial Statements I Annual Report 2014 I 81 31. Contribution To WPPF & Welfare Funds This represents statutory contribution by the company as per Bangladesh Labour Act (amendment) 2013. The amount is computed @ 5% of net profit 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 2014 2013 421,487,672 15,295,172 436,782,844 144,475,316 581,258,160 305,845,595 18,569,951 324,415,546 364,415,845 688,831,391 (a) Earnings attributable to the Ordinary Shareholders (b) Weighted average number of Ordinary Shares outstanding Tk. 1,528,297,573 1,404,762,780 during the year (Note 3.15) Nos. 367,851,652 367,851,652 Earnings Per Share (EPS) / Adjusted EPS (2013) Tk. 4.15 3.82 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 (a) I & I Services Ltd. Nature of Transactions Value of Transaction in 2014 Balance at year end Local Delivery Distribution Commission 11,749,988,365 1,118,478,352 - 180,454,668 (b) Bangladesh Export Import Co. Ltd. Short Term Investment & Interest there on 487,367,615 2,475,026,831 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 2014: Particulars of Assets Cost Accumulated Written Down Sales Price Profit Mode of Name of Parties Depreciation Value Disposal Furniture Transport & Vehicle 573,000 10,623,868 423,000 6,714,953 150,000 - Negotiation Various Individuals 3,908,915 7,465,792 3,556,877 Negotiation Various Individuals 150,000 Tk. 11,196,868 7,137,953 4,058,915 7,615,792 3,556,877 82 I Annual Report 2014 I Notes to the Financial Statements 36. Payment / Perquisites to Managers and Directors (a) The aggregate amounts paid to/provided for the Managers and above of the company is disclosed below : Amount in Taka 2014 2013 Remuneration Gratuity Contribution to Provident Fund Bonus Medical Others Total 143,248,563 5,773,000 6,834,370 11,503,600 4,761,860 30,078,994 202,200,387 129,950,600 5,088,500 6,106,200 10,177,000 3,303,706 29,345,360 183,971,366 (b) The above includes salary, allowances, and perquisites amounting Tk. 14,357,819 paid to the Managing Director. (c) This also includes Tk. 140,000 paid to Independent Directors for attending Board, Audit Committee and other meetings. (d) Excepting as stated above (c) no board meeting fee was paid to any directors. (e) 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 4,052.70 3,973.90 3,265.76 3,287.61 80.58% 82.73% 2014 2013 2014 2013 2014 2013 Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Million Pcs 94.03 87.62 72.30 68.88 76.96% 78.61% Production does not include goods manufactured under contract manufacturing arrangement from third party’s’ manufacturing sites. 38. Capital Expenditure Commitment There was no capital expenditure contracted but not incurred or provided for at 31 December 2014. 39. Finance Lease Commitment At 31 December 2014, the company had annual commitment under finance leases as set out below : Leases expiring within 1 year Leases expiring within 2-5 years (inclusive) 40. Claim not Acknowledged as Debt 127,491,016 292,808,104 Tk. 420,299,120 There was no claim against the company not acknowledged as debt as on 31 December 2014. 41. Un-availed Credit Facilities There is no credit facilities available to the company under any contract, not availed of as on 31 December 2014 other than trade credit available in the ordinary course of business. Notes to the Financial Statements I Annual Report 2014 I 83 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 19,632,001 32,616,240 3,931,702 1,535,222,423 2,559,722,504 304,597,508 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 equivalent US $ 6,760,141 (b) Royalty US $ 175,624 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. 149,032,289 against disputed income tax claims for the year 1999, 2007, 2008, 2010 and 2013. The company has filed Income Tax Reference cases with the High Court Division of the supreme court against this 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 filed 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 filed 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 final disposal. The company also has a contingent liability to the extent of Tk. 148,347,357 for third party corporate gurantee favoring Standard Bank Ltd. Dhanmondi Branch for Beximco Engineering Limited. 46. Events after The Reporting Period (a) The directors recommended 10% cash (i.e. Tk. 1 per share) and 5% Stock dividend (i.e. 5 shares for every 100 shares held) for the year 2014. The dividend proposal is subject to shareholders’ approval at the forthcoming annual general meeting. (b) The Company has entered into a loan agreement with BHF-Bank Aktiengesellahaft, Frankfurt, Germany to borrow up to US $ 51.559 million to partially finance the purchase of new plant & machinery to expand its production facilities. Excepting above, no circumstances have arisen since the date of Statement of Financial Position which would require adjustment to, or disclosure in, the financial 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 reflect changes in market conditions and the company’s activities. The company has exposure to the following risks for its use of financial instruments.          - Credit risk          - Liquidity risk          - Market risk 84 I Annual Report 2014 I Notes to the Financial Statements 47.01 Credit Risk Credit risk is the risk of a financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the company’s receivables. Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. As at 31 December 2014 substantial part of the receivables are those from its related company and subject to insignificant credit risk. Risk exposures from other financial 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 financial 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 sufficient 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 sufficient cash and cash equivalent to meet expected operational expenses including financial obligations through preparation of the cash flow forecast with due consideration of time line of payment of the financial obligation and accordingly arrange for sufficient 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 financing. 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 financial 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 floating rates of interest. Local loans are, however, not significantly affected by fluctuations 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. Salman F Rahman Vice Chairman Dhaka 27 April, 2015 Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Notes to the Financial Statements I Annual Report 2014 I 85 Beximco Pharma’s New Corporate Website Beximco Pharma has launched its website following extensive research, planning and design. The new website gives you a completely diffrent look with user friendly features. www.beximcopharma.com www.beximcopharma.com 86 I Annual Report 2014 I # BEXIMCO PHARMACEUTICALS LIMITED 17 Dhanmondi R/A, Road No. 2, Dhaka-1205, Bangladesh Proxy Form I/We ______________________ ___________ ___________ ___________ of ___________ ___________ ______________ ___________ ___________ ___________ ___________ __being a member of Beximco Pharmaceuticals Limited hereby appoint Mr./Ms. ___________ ___________ ___________ ___________ ________of ___________ ___________ ___________ ___________ ___________ ___________ as my/our proxy to attend and vote for me/us on my/our behalf at the 39th Annual General Meeting of the Company to be held on Saturday, the 13th June, 2015 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, 2015. Signed by the said in presence of ___________ ___________ ___________ ___________ ___________ ___________________ Revenue Stamp Tk. 20.00 ___________________ (Signature of the Proxy) ____________________ __ 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 Office of the Company not later than 48 hours before the time fixed for the meeting. Signature Verified _______________ Authorised Signatory # BEXIMCO PHARMACEUTICALS LIMITED SHAREHOLDERS’ ATTENDANCE SLIP I/We hereby record my/our attendance at the 39th Annual General Meeting being held on 13th June, 2015 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur. Name of Member(s)________________________ _______________________________________________________ Register Folio/BOID No _____________________________________________________________________________ holding of _____________ _________________ ordinary Shares of Beximco Pharmaceuticals Limited N.B. 1. Please note that the AGM can only be attended by the honourable shareholder or properly constituted Proxy. Therefore, any ______________________ Signature(s) of Shareholder(s) friend or children accompanying with honourable Shareholder or Proxy cannot be allowed into the meeting. I Annual Report 2014 I 87 2. Please present this slip at the reception desk. Corporate Information Operational Headquarters 19 Dhanmondi R/A, Road # 7 Dhaka- 1205, Bangladesh Phone : +880-2-58611001 Fax : +880-2-58614601 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 : +880-2-58611891 Fax : +880-2-58613470 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 SPARK Advisory Partners Limited 5 St. John's Lane, EC1M 4BH, LONDON, UK 2 Wellington Place, LS1 4AP, LEEDS, UK Broker Daniel Stewart & Company PLC Becket House, 36 Old Jewry, London EC2R 8DD, UK 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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