Boston Properties
Annual Report 2016

Plain-text annual report

Annual Report 2015-16 Annual Report 2015-16 | 1 Exporting Health to U.S.A.Made in BangladeshANNUAL REPORT 2015-16 BEXIMCO PHARMACEUTICALS LIMITED 2 | Annual Report 2015-16 Annual Report 2015-16 | 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 define who we are; they guide us to take decisions and help realize our individual and corporate aspirations. Commitment to quality We adopt industry best practices in all our operations to ensure highest quality standards of our products. Customer satisfaction We are committed to satisfying the needs of our customers, both internal and external. People focus We give high priority on building capabilities of our employees and empower them to realize their full potential. Accountability We encourage transparency in everything we do and strictly adhere to the highest ethical standards. We are accountable for our own actions and responsible for sustaining corporate reputation. Corporate social responsibility We actively take part in initiatives that benefit our society and contribute to the welfare of our people. We take great care in managing our operations with high concern for safety and environment. Contents About the Company The Board of Directors Management Committee Executive Committee Key Events in History Managing Director’s Statement How We Performed What We Offer Our Manufacturing Capabilities Our Global Accreditations Research and Development Awards and Accolades Our People Beyond Borders What We Do for the Society Corporate Events Post Balance Sheet Update Notice of Annual General Meeting Chairman’s Statement Directors’ Report to the Shareholders Corporate Governance Compliance Report 05 06 07 07 09 11 15 17 19 21 23 24 35 39 40 43 46 47 48 50 56 Certificate on Compliance of Corporate Governance Guidelines 59 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 Profit 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 60 62 64 65 66 67 68 69 70 71 2 | Annual Report 2015-16 Annual Report 2015-16 | 3 First Bangladeshi pharma company to export medicine to U.S.A About the Company Beximco Pharma was incorporated in 1976. The company started its operation in 1980, importing products from Bayer, Germany and Upjohn, USA and selling them in the local market, which were later manufactured and distributed 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. Beximco’s manufacturing facilities have been accredited by the leading global regulatory authorities, and medicines manufactured by the company are now being exported to more than 50 countries around the world. In its long journey of more than three decades, the Company has remained committed to ensuring health and wellbeing of the people by providing high quality, affordable medicines. www.beximcopharma.com Certified: 4 | Annual Report 2015-16 About the Company | Annual Report 2015-16 | 5 Annual Report 2015-16 | 5 The Board of Directors Management Committee Nazmul Hassan MP Managing Director Osman Kaiser Chowdhury Member of the Board of Directors Ali Nawaz Chief Financial Officer Rabbur Reza Chief Operating Officer Afsar Uddin Ahmed Director, Commercial Lutfur Rahman Director, Manufacturing Salman F Rahman Vice Chairman A S F Rahman Chairman Zakaria Seraj Chowdhury Director, International Marketing Shamim Momtaz Director, Manufacturing Mohd. Tahir Siddique Director, Quality A R M Zahidur Rahman Executive Director, Production 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 Jamal Ahmed Choudhury Executive Director, Accounts & Finance Rizvi Ul Kabir Executive Director, Sales Prabir Ghose Executive Director, Quality Assurance Executive Committee Osman Kaiser Chowdhury Member of the Board of Directors Nazmul Hassan MP Rabbur Reza Ali Nawaz Afsar Uddin Ahmed Managing Director Chief Operating Officer Chief Financial Officer Director, Commercial 6 | Annual Report 2015-16 | The Board of Directors 6 | Annual Report 2015-16 Management Committee | Annual Report 2015-16 | 7 Annual Report 2015-16 | 7 Key Events in History 2016 2015 2014 - Became the first Bangladeshi company to commence medicine export to USA - First Bangladeshi company to receive product approval from Health Canada - Entered the Gulf pharma market (Kuwait) as the first Bangladeshi company - Won National Export Trophy (Gold) for the record 5th time - First Bangladeshi company to receive GMP approval from the US FDA - Launched generic version of revolutionary hepatitis C drugs Sovaldi® and Harvoni® - Received GMP accreditation from Taiwan Food & Drug Administration (TFDA) and Health Canada as the first Bangladeshi company - First Bangladeshi company to export medicine to Australia and Romania - First Bangladeshi company to export ophthalmic products to Europe 2013 2012 2011 - Received GMP accreditation from AGES, Austria (for European Union) - First Bangladeshi company to launch Salbutamol HFA inhaler (Azmasol®) in Singapore 2010 2009 2008 2006 2005 2003 1993 1992 1985 1983 1980 1976 - The only pharmaceutical company in Bangladesh to enter the US market through acquisition of an Abbreviated New Drug Application (ANDA) - First Bangladeshi company to receive GMP approval from ANVISA, Brazil - First Bangladeshi company to receive GMP accreditation from Therapeutic Goods Administration (TGA), Australia, and Gulf Central Committee for Drug Registration, for GCC states - Technology transfer arrangement to manufacture Roche’s ARV drug Saquinavir - Launched CFC free HFA inhalers for the first time in Bangladesh - Only company in Bangladesh to get listed on the Alternative Investment Market (AIM) of London Stock Exchange (LSE) through issuance of GDRs - First company to introduce anti-retroviral (ARV) drugs in Bangladesh - Russia became the first export destination for formulation products - Export operations started with APIs - Listed on Dhaka Stock Exchange - Launched its own formulation brands - Started manufacturing products of Bayer AG, Germany and Upjohn Inc., USA, under license agreements - Company incorporated Words of appreciation from the US Ambassador to Bangladesh Her Excellency Marcia Stephens Bloom Bernicat Thank you so much for letting us visit the future of Bangladesh! Congratulations to Beximco for launching Carvedilol into the U.S. market today. We also laud the vision, the standards and the innovations you are bringing to the pharmaceutical industry, to the U.S. and to the world. The United States of America is proud to be the partner of Bangladesh in so many vital fields. The Best of Luck to Beximco. 8 | Annual Report 2015-16 Key Events in History | Annual Report 2015-16 | 9 Annual Report 2015-16 | 9 Managing Director’s Statement Dear Shareholders, 2015 was a remarkable year for Beximco Pharma. Further to reporting excellent growth in our domestic and export markets, the company achieved a major milestone by becoming the first Bangladeshi pharmaceutical company to be approved by the US Food and Drug Administration (US FDA). In the same year, we received US FDA approval for carvedilol, a prescription drug to treat hypertension, and commenced export to the US market in August 2016. This was a historic moment for the company, as well for the country’s pharmaceutical industry, as it marked the first shipment of Bangladeshi medicine to the world’s largest pharmaceutical market. In addition, we received the prestigious National Export Trophy (Gold) for the record fifth time for making an outstanding contribution to the country’s export. I am pleased to inform you that in the domestic retail formulation market we have achieved the highest growth among the top five companies (IMS 2015). The company continued to perform well in the first half of 2016. We have remained focused on our strategic and aspirational targets, enabling us to maintain our strong sales growth and achieve these milestone events, and we continue to concentrate on bringing high quality, differentiated products to emerging and developed markets to create value for all our customers and shareholders. Despite uncertainties in the global economy, in 2015 Bangladesh achieved an impressive 6.5 percent growth in GDP and the Asian Development Bank has estimated Bangladesh’s economic growth at record 7.1 percent for the fiscal 2015-16. In addition to exceptional achievements in Millennium Development Goals (MDGs), the country has maintained its economic progress through record foreign exchange reserve, RMG export, remittance inflow, positive country rating and rapid industrialisation. We firmly believe these positive developments will continue to boost business confidence and attract substantial foreign investments in various product and service sectors, including the pharmaceuticals sector. the sector, currently meeting 97% of the country’s demand for medicines. Historically, the industry has maintained healthy double digit growth, which is expected to continue in the coming years and the market is projected to reach Tk 230 billion or approximately $3 billion by the year 2020. The Bangladesh pharmaceutical industry is now better equipped to produce value added and technologically advanced formulations, with leading companies having shown their skills in the areas of biosimilars, insulins, vaccines, oncology etc. Importantly, the country’s much- awaited Active Pharmaceutical Ingredient (API) technology park in Munshiganj is almost complete and is expected to be operational by 2017. This is expected to benefit the industry through backward integration into API and lowering its heavy dependency on import. In the highly competitive pharmaceutical market, we have maintained our strong position in key therapeutic segments such as cardiovascular, respiratory and gastrointestinal, which accounted for almost 50% of the company’s growth in the year. Our cardiovascular, respiratory, pain and diabetes portfolios have performed very well, growing by 30%, 20%, 21% and 35%, respectively. In the 18-month period to June 30, 2016, we launched 32 new products in the domestic market, with several first- time launches in the market. We have successfully introduced generic versions of the revolutionary hepatitis C drugs, Sovaldi and Harvoni, under the brand name Sofovir C and Lesovir C, respectively. Lesovir C was the first generic copy to be launched in the world. These two new direct acting anti-virals (DAAs), both available as oral tablets, have brought a paradigm shift in hepatitis C therapy with more than 95% cure rate and mostly eliminating the need for interferon. Beximco Pharma has made these highly expensive drugs available at the lowest possible price which is more than 99% cheaper compared to the originator brands. The company has received much appreciation in global media for introducing the generic versions providing access to this latest hepatitis C therapy. According to IMS, the Bangladesh pharmaceutical market was valued at more than Tk 130 billion or around $1.6 billion in 2015. Local manufacturers continue to dominate During the same period, a total of 129 products (92 generics) were registered in 38 countries and the company entered 10 new markets, including Indonesia, Australia, Taiwan 10 | Annual Report 2015-16 Managing Director’s Statement | Annual Report 2015-16 | 11 Annual Report 2015-16 | 11 Nazmul Hassan MP Managing Director As a generic drug company with global aspiration, our major focus remains on research and development (R&D) for bringing our high quality and differentiated products to market. Our R&D team has been continually working on diverse delivery systems, as well as regulatory filings in different markets. We have a clear growth strategy, whilst being mindful of the new challenges. We will continue to build on our capabilities and I firmly believe our commitment to quality and focus on people, product and process will propel us forward on our journey. Our experienced management team remains focused on our key strategic priorities to drive sustainable long-term growth and shareholder value. I would like to extend my sincere gratitude to all our employees for their outstanding contribution to the company. I would also like to thank our business partners, investors and customers for their ongoing support. I am confident that by working together and staying focused on our priorities we can realise our aspiration of becoming a global generic drug company. Nazmul Hassan MP Managing Director and Kuwait – the first time a Bangladeshi pharmaceutical company has exported prescription medicines to these latter three countries. The global pharmaceutical market reached $1.06 trillion in 2015, growing by 5% percent over the previous year, according to IMS. The global generic drugs market currently stands at more than $300 billion, with consistent double digit growth, driven by increasing demand both in developed and emerging economies. The IMS projects that total spending on medicines will reach $1.4 trillion by 2020 due to greater patient access to chronic disease treatments and breakthrough innovations in drug therapies. Global spending is forecast to grow at a 4-7% compound annual rate over the next five years. Generics, non-original branded and over-the-counter (OTC) products will account for 88% of total medicine use in pharmerging markets by 2020, and provide the greatest contribution to increased access to medicines in those countries. The IMS report points out that more than 90% of US medicines will be dispensed as generics by 2020. Generic medicines will continue to provide the vast majority of the prescription drug usage in the US, rising from 88% to 91-92% of all prescriptions dispensed by 2020. Overall, spending on medicines in the US will reach $560-590 billion by 2020, a 34% increase in spending over 2015. As mentioned, Beximco Pharma became the first Bangladeshi company approved by the US FDA. This is a major milestone for the company and is in line with our expectation and aspiration towards becoming a global generic drug player. This approval was a result of our successful audit by the US FDA in January 2015, remarkably without issuance of any 483 observation (a 483 form is issued when the US FDA has observations of non-compliance or deviation from Good Manufacturing Practices (GMP). We also received US FDA clearance for carvedilol, a prescription drug for treating hypertension, in the last quarter of 2015 and successfully exported this product in August 2016. To date, we have submitted a total of five Abbreviated New Drug Applications (ANDA) to the US FDA, which are currently under review. Our export sales have seen an impressive 68.3% growth in the year and we have strengthened our presence in several Asian and African countries. We continue to see excellent growth opportunities across our existing markets and we are actively evaluating opportunities to extend our geographic footprint by replicating our successful model in other emerging markets. Breakthrough generics Launched generic versions of breakthrough Hepatitis C drugs Sovaldi (Sofosbuvir) and Harvoni (Sofosbuvir+Ledipasvir). The latter was the fi rst generic copy in the world. 12 | Annual Report 2015-16 | Managing Director’s Statement 12 | Annual Report 2015-16 Annual Report 2015-16 | 13 How We Performed in 2015 Achieved sales turnover of BDT 12,965.51 million with a growth of 15.7% over 2014 Launched 23 products in the domestic market; 2 of which were launched for the first time in Bangladesh Launched generic version of revolutionary Hepatitis C drugs Sovaldi® and Harvoni® under the brand names Sofovir-C® and Lesovir-C® respectively; Lesovir-C® being the first generic copy of Harvoni® in the world Napa Extra became the first brand to cross Tk 1 billion mark Export sales registered 68.3% growth over 2014 Entered 5 new markets: Australia, Iraq, Indonesia, Burundi and Costarica Launched Pantoprazole in Australia Registration of 46 products (31 generics) completed in 17 countries Became the first Bangladeshi pharmaceutical company to be approved by the US Food & Drug Administration (US FDA) Received US FDA approval for a prescription drug (carvedilol) for the US market January-June 2016 Introduced 9 new products in the domestic market Entered 5 new markets namely Taiwan, Guatemala, Peru, Gabon and Kuwait Awarded the National Export (Gold) Trophy for a record fifth time Became the first Bangladeshi company to commence medicine export to Taiwan and Kuwait Registration of 83 new products (61 generics) completed in 21 countries Net sales grew by 13.1% to Tk.7,069 million Unveiling the commemorative plaque to mark the First Shipment to U.S.A from left US Ambassador to Bangladesh her excellency Marcia Stephens Bloom Bernicat, Adviser BEXIMCO Group Shayan F. Rahman, Beximco Pharma Managing Director Nazmul Hassan MP 14 | Annual Report 2015-16 | How We Performed in 2015 14 | Annual Report 2015-16 How We Performed in 2015 | Annual Report 2015-16 | 15 Annual Report 2015-16 | 15 What We Offer Beximco Pharma currently produces more than 400 generics in well over 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 sound expertise with specialized and advanced drug delivery systems that have created strong differentiation. 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. The expanding portfolio, including high value, differentiated, and difficult to copy products will continue to drive strong growth in the coming days. We have launched the generic version of revolutionary Hepatitis C drugs Sovaldi® and Harvoni® under the brand names Sofovir C® and Lesovir C® respectively; Lesovir C® was the first generic copy of Harvoni in the world. 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. 16 | Annual Report 2015-16 Annual Report 2015-16 | 17 What We Offer | Annual Report 2015-16 | 17 Our Manufacturing Capabilities Benchmarked to global standards, our state of the manufacturing facilities are spread across a 22-acre area located near the capital city, Dhaka, which houses facilities for manufacturing tablets, capsules, intravenous fluids, liquids, creams, ointments, suppositories, metered dose inhalers, ophthalmic drops, injectables as well as the bulk paracetamol production unit. 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 at a different site at Kaliakoir. Currently a new modern facility is being constructed at Tongi with larger capacity to cater to the growing demand. Dry Powder Inhaler Metered Dose Inhaler Prefilled Syringes Intravenous Fluid Sterile Ophthalmic Lyophilized Injectables 18 | Annual Report 2015-16 Our Manufacturing Capabilities | Annual Report 2015-16 | 19 Annual Report 2015-16 | 19 Our Global Accreditations Benchmarked to international standards, our manufacturing facilities have been approved by the regulatory authorities of USA, Australia, Europe, Brazil and Canada, among others. In 2015, BPL became the first Bangladeshi company approved by the US Food and Drug Administration (US FDA). Beximco Pharma also has the unique distinction as the only Bangladeshi company to get listed on the AIM of London Stock Exchange. 20 | Annual Report 2015-16 Our Global Accreditations | Annual Report 2015-16 | 21 Annual Report 2015-16 | 21 Research and Development As a leading generic drug manufacturer, our key strength lies in our ability to excel in developing generic formulations and technologically complex products. We have already proven our skills with successful development of differentiated formulations such as MDI, DPI, nasal sprays, sterile ophthalmics, lyophilized injectables and so on which are very difficult to imitate. Our new state-of-the-art R&D Centre now facilitates the development of products and processes in line with our R&D strategy keeping in focus better productivity. This will provide the company stronger differentiation in terms of efficient product development, DDS expansion, regulatory filings etc. We are also pursuing research collaboration with universities and biotech companies both at home and abroad for strengthening our capabilities in selected areas. 22 | Annual Report 2015-16 Annual Report 2015-16 | 23 Research and Development | Annual Report 2015-16 | 23 Awards and Accolades National Export (Gold) Trophy ICSB National Award Beximco Pharma received the best corporate governance award at 2nd ICSB National Award-2014. Beximco Pharma secured first position in the pharma and chemical category. Company’s Managing Director Mr. Nazmul Hassan MP received the award from Finance Minister AMA Muhith on November 11, 2015. Most Admired Brand of Asia 2015 Beximco Pharma has been selected as one of the Most Admired Brands of Asia in a gala event held in Singapore on 21 May 2015. This has been a World Consulting & Research Corporation (WCRC) and ibrands360 research initiative – the largest multi- platform brand credible listing involving the most significant brands from Asia that have contributed to the success story of Asian economy. These brands have made it to the top due to their innovative marketing strategies and tremendous brand recall that has contributed significantly to their success. Some of the other participating brands include Samsung, LG, Honda, Hyundai, Petronas, Singtel, Singapore Airline, Panasonic, Cannon, Mitsubishi, Nissan etc. Beximco Pharma was the only brand chosen from Bangladesh. At the same event, Beximco Group Vice Chairman Mr. Salman F Rahman was awarded the prestigious Visionary of the Year Award for his tremendous contribution towards the growth of Bangladesh economy and creating a world class business group Beximco. Prominent personalities like Liew Mun Leong, Chairman Changi Airport, Singapore and Kumar Manglam Birla, Chairman Aditya Birla Group were awarded in this category. Beximco Pharma was awarded the National Export (Gold) Trophy for the year 2011-2012 for highest export in the pharmaceutical sector. The Company won this prestigious award a record five times. Honorable Prime Minister Sheikh Hasina handed over the trophy to Mr. A S F Rahman, Chairman, Beximo Group and Mr. Nazmul Hassan MP, Managing Director, Beximco Pharma in a ceremony held on 28 August 2016. 24 | Annual Report 2015-16 | Awards and Accolades 24 | Annual Report 2015-16 Awards and Accolades | Annual Report 2015-16 | 25 Annual Report 2015-16 | 25 Awards and Accolades | Annual Report 2015-16 | 25 Beximco Pharma Shortlisted for SCRIP Award Beximco Pharma has been shortlisted for the SCRIP award 2016, for the second consecutive year, in the category “Best Company in an Emerging Market”. Companies nominated in this category are those based in emerging markets in Asia, Central and Eastern Europe, Central and South America, the Middle East and Africa. SCRIP Award is among the most prestigious in the pharmaceutical industry which recognizes the successful pharma companies globally. SCRIP nominees for the year, like previous years, in different categories included leading multinational companies like Pfizer, Novartis, Astra Zeneca, Merck, GSK, Hikma, Dr. Reddy’s, Astellas and so on. Beximco is the only company from Bangladesh nominated for a SCRIP award. The company was also nominated for a SCRIP award in 2013 in the category “Best Management Team of the Year 2016”. Beximco Pharmaceuticals Ltd. commenced export of medicine to Kuwait on 16th June, 2016. This is the first time a Bangladeshi pharma company has launched pharmaceutical products in any gulf member country. A launching ceremony to mark the first shipment of consignment to Kuwait was held at factory premises in presence of the Ambassador of Kuwait, His Excellency Mr. Mohammad A.H. Hayat. Vice Chairman of Beximco group Mr. Salman F. Rahman, Beximco Pharma’s Managing Director Mr. Nazmul Hassan MP, Chief Operating Officer Mr. Rabbur Reza and other high officials of the company were also present on this occasion. The Ambassador expressed high satisfaction over the state-of-the-art facilities and quality control practices of Beximco Pharma. Initially two metered dose inhaler products for asthma and respiratory disorder namely Azmasol® (Salbutamol) and Bexitrol®-F (Salbutamol plus Fluticasone) and one blood pressure drug Amdocal (Amlodipine) are being exported to Kuwait. 26 | Annual Report 2015-16 | Awards and Accolades 26 | Annual Report 2015-16 Annual Report 2015-16 | 27 Annual Report 2015-16 | 27 On 4th August 2016, Beximco Pharma scripted a piece of history by becoming the first Bangladeshi pharmaceutical company to export a prescription medicine to U.S.A. Bangladeshi pharmaceutical companies have been exporting medicines to more than 100 countries, but not to the U.S.A. The US FDA is regarded as the most stringent regulatory body in the world and rightfully considered the benchmark for highest international quality standards. We earned the right to export to U.S.A. last year. And we have fulfilled our promise by becoming the first company from Bangladesh to export prescription medicine to U.S.A. proudly Made in Bangladesh. Exporting Health to U.S.A. Made in Bangladesh 28 | Annual Report 2015-16 Annual Report 2015-16 | 29 A company’s achievement A country’s Pride 6 7 2 1 4 3 5 9 8 10 1. Honorable Finance Minister, Health and Family Welfare Minister, the US Ambassador and Beximco top management at the US product launching event 2. Unveiling of the commemorative plaque by the US Ambassador Ms. Marcia Stephens Bloom Bernicat at the Tongi factory 3. The US Ambassador inside the FDA approved manufacturing plant 4. Exchanging greetings with senior officials at the factory 5. A glimpse of the audience at the launching ceremony 6. The US Ambassador showing the Beximco product intended for the US market 7. Managing Director of Beximco Pharma delivering his keynote speech 8. The US Ambassador delivering her speech 9. The US Ambassador with high officials at the factory premises 10. Guests being briefed about the manufacturing operations Celebrating the historic milestone: The first ever shipment of Bangladeshi medicine to U.S.A 30 | Annual Report 2015-16 30 | Annual Report 2015-16 Annual Report 2015-16 | 31 Annual Report 2015-16 | 31 32 | Annual Report 2015-16 US Export Launching Ceremony Annual Report 2015-16 | 33 Our People Beximco Pharma owes its stories of success and accomplishments to 3,500 strong workforce, who have stood by the company through thick and thin. The BPL workforce is charged with the life-force from highly skilled and dedicated professionals. People are our most valuable assets and we always recognize that they are the lifeblood of this company and their collective resolve to excel- will propel us forward to reach new heights. We seek to provide a workplace that inspires people to be the best they can be. Our ability to transform ourselves is driven by a strong emphasis on employee empowerment at every level. 34 | Annual Report 2015-16 Annual Report 2015-16 | 35 Our People | Annual Report 2015-16 | 35 Annual Sales & Marketing Conference, Cox’s Bazar 2015 Annual Sales & Marketing Strategic Briefing, Singapore 2015 Annual Finance Conference 36 | Annual Report 2015-16 | Our People 36 | Annual Report 2015-16 Our People | Annual Report 2015-16 | 31 Annual Report 2015-16 | 37 EXPORT MARKETS Europe Austria Germany Romania Turkey Latin & Central America Chile Belize El Salvador Colombia Surinam Nicaragua Costa Rica Caribbean Jamaica Netherlands Antilles USA Asia Singapore Hong Kong Cambodia Nepal Sri Lanka Philippines Thailand Bhutan Macau Malaysia Indonesia Afghanistan Azerbaijan Vietnam Middle East Yemen Jordan Iraq Kuwait Africa Kenya Ghana Somalia Nigeria Benin Liberia South Africa Ethiopia Mauritius Mozambique Sudan Burundi Uganda Lesotho Tanzania Pacific Island Fiji Papua New Guinea Solomon Island Kiribati Tonga Samoa Australia U.S.A CARIBBEAN EUROPE ASIA MIDDLE EAST AFRICA LATIN & CENTRAL AMERICA PACIFIC ISLAND AUSTRALIA Beyond Borders Beximco Pharma is a leading exporter of medicines in Bangladesh and the company has so far expanded its geographic footprint to more than 50 countries. With our visible and growing presence in regional markets of Asia and Africa, over the years we have built the reputation of a quality generic manufacturer. We are now geared up to build presence in regulated markets of Australia, EU and USA. We continue to see excellent growth opportunities across our existing markets and we are actively working to develop our presence in other emerging markets. To expand our export business and to capitalize on the generic drug opportunities in overseas markets– we continue to pursue approvals from leading drug regulatory authorities. US FDA approval of our facility followed by carvedilol approval will open up new opportunities for the company. 38 | Annual Report 2015-16 Annual Report 2015-16 | 39 Beyond Borders | Annual Report 2015-16 | 39 What We Do for the Society Corporate social responsibility (CSR) has been 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. 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. We invest in supporting the communities where we operate and doing so we achieve sustainability and growth by improving the health and wellbeing of the people. Some of our major CSR activities carried out in 2015 are: Support to Biomedical Device Development BPL extended financial support to Professor K S Rabbani, Chairperson, Department of Biomedical Physics & Technology, Dhaka University in his project of developing low cost mechanical prosthetic hand. This small support from Beximco helps provide improved version of prosthetic hands at a minimal cost to thousands of amputees who cannot afford them due to high cost of the imported ones. In October, low cost portable ECG machines developed by Professor K S Rabbani were distributed to rural doctors to promote use of the machine in emergency cases. Beximco Pharma fully sponsored these machines as a part of its initiative to promote locally developed medical devices. World Environment Day Like previous years, Beximco Pharma celebrated the World Environment Day 2015 on June 5 in association with Volunteer for Bangladesh (VBD), the youth wing of Jaago Foundation. The theme for this year was “16 Crore Dreams, One Planet, Consume with Care.’’ There was a series of events held nationwide which included intensive social media awareness, workshop among school students on the importance of environment and nature, a conversation with the DCC Mayor and a national cycle rally. Universal Children’s Day Beximco Pharma, together with the Jaago Foundation, the Universal Children’s Day 2015 under observed the tagline “Quality Education for All” which is the #4 Sustainable Development Goal (SDG) declared by the UN, This signature campaign of Jaago Foundation included digital marketing, roundtable discussion, talk shows in TV, workshops, press conference, cultural activities, carnivals and street activities - all to raise awareness about children’s rights and education. Free Health Camp Beximco Pharma continued its support with free medicines for various health programs that included free medical camps of UN Mission at Congo, medicines for Biswa Ijtema etc. Working Students’ Day Beximco Pharma was a sponsor of the UCEP Bangladesh’s annual event Working Students Day held on December 15. Around 2000 underprivileged students, who are being provided technical education free of cost by UCEP, celebrated the day through art competition, cultural program, sports, exhibition and other programs. Iftar with Jaago Foundation Students Beximco Pharma’s Managing Director Nazmul Hassan MP attended Jaago Annual Iftar on June 29, 2016. He spent time with the under privileged students and sponsors of Jaago Foundation school. Beximco Pharma is a long time supporter and sponsor of various Jaago initiatives. ICAAP Conference Beximco Pharma was the key sponsor of the 12th International Congress on AIDS in Asia and the Pacific (ICAAP) held in Dhaka during March 12-14, 2016. ICAAP is the largest forum on AIDS in the region. Hon’ble President of Bangladesh Mr. Abdul Hamid inaugurated the program which was attended by hundreds of international visitors, scientists and policymakers. Honorable Health Minister Mr. Mohammed Nasim, MP visited Beximco Pharma stall and praised about company’s role in providing affordable medicines for all. Pulmocon Beximco Pharma in association with Bangladesh Lung Foundation organized 4th international conference on Lung Health (PULMOCON 2015) during November 18-19, 2015 at Krishibid Institution Bangladesh (KIB). A large number of doctors and foreign speakers participated in the conference. International Summit on Environment Beximco Pharma was the Health Partner of the International Summit on Environment “Green Inspiration 2016” which was organized by Notre Dam College in association with the Ministry of Environment during February 12-13, 2016. 40 | Annual Report 2015-16 | What We Do for The Society 40 | Annual Report 2015-16 What We Do for The Society | Annual Report 2015-16 | 41 Annual Report 2015-16 | 41 Group Art Exhibition Beximco Pharma extended support to a group of 13 emerging female artists in promoting their creative work. Week-long art exhibition was held on February 09-15, 2016 at Zainul Gallery, Faculty of Fine Art, DU inaugurated by prominent artist Prof. Samarjit Roy Chowdhury. International Women’s Day Beximco Pharma celebrated International Women’s Day with a number of programs held on March 08, 2015 at Millon Hall, BSMMU with 600 Gynaecologists of Bangladesh. World Diabetes Day Beximco Pharma in association with Bangladesh Diabetes Association (BADA) celebrated World Diabetes Day 2015 under this year’s theme “Healthy Living and Diabetes”. On this occasion, Beximco Pharma arranged a number of awareness programs in different areas of capital city which includes free diabetes check, providing leaflets, guide books etc. World Osteoporosis Day The World Osteoporosis Day was observed on October 20 throughout the nation. On this occasion, Beximco Pharma arranged an array of events including free health camp, consultation on osteoporosis, Bone Mineral Density (BMD) camps to raise awareness about osteoporosis. 3rd BPL MGCC Golf Tournament Beximco Pharma sponsored 3rd BPL MGCC Golf Tournament which took place at Moinamoti Golf and Country Club (MGCC), Comilla Cantonment during 2nd week of November, 2015. Corporate Events Celebration of US FDA Approval The celebration program on the occasion of Beximco Pharma’s US FDA approval was held on 19th October in the factory and Managing Director Mr. Nazmul Hassan, MP and other senior members of the company attended the program. Inauguration of Annual Sports Mr. Nazmul Hassan, MP inaugurated the Factory Annual Sports 2015 program on 19th October, and spent time with all the staffs and employees. Annual Cultural Program Management of Beximco Pharma attended the Annual Cultural Program organized by Beximco Sramik-O- Karmachari Union on 10 April, 2015 at Factory Complex. Participation at CPhI Worldwide 2015 CPhI Worldwide was held during October 13-15, 2015 in Madrid, Spain. Beximco Pharma, like previous years, attended the biggest pharmaceutical event with a stall for showcasing its products to prospective clients from all over the world. Participation at CPhI China 2015 CpHI China is a major exhibition for the global pharma industry, especially for API sourcing which was held during 24-26 June in Shanghai. 42 | Annual Report 2015-16 | What We Do for The Society 42 | Annual Report 2015-16 Corporate Events | Annual Report 2015-16 | 43 Annual Report 2015-16 | 43 Celebration of International Women's Day 2016 Beximco Pharma celebrated International Women's Day 2016 on March 8 with Wasfia Nazreen. She spent the afternoon with Beximco’s female employees and had a lively session sharing her experience with them. Winner of National Geographic Emerging Explorer award, she is the first Bangladeshi to have reached the summit of the highest mountains of each of the seven continents, popularly known as the Seven Summits. Motivational Session 44 | Annual Report 2015-16 | Corporate Events We are building a global generic drug company focused on providing high quality, affordable generic drugs to patients around the world. 44 | Annual Report 2015-16 Corporate Events | Annual Report 2015-16 | 45 Annual Report 2015-16 | 45 A day-long motivational session, conducted by a renowned motivational trainer from India,was attended by the employees of Beximco Pharma. Post Balance Sheet Update • Became the first Bangladeshi pharmaceutical company to commence export of pharmaceutical products to the US - Exported Carvedilol, a prescription drug for treating hypertension • Completed first product registration in Canada - Another first for a Bangladeshi pharmaceutical company • Commenced export to Zimbabwe • Successful regulatory audit by the Nigerian regulatory authority (NAFDAC) • Two ophthalmic products registered in Australia Notice of Annual General Meeting BEXIMCO PHARMACEUTICALS LIMITED 17, Dhanmondi R/A, Road No. 2, Dhaka-1205 Notice of the 40th Annual General Meeting Notice is hereby given that the 40th Annual General Meeting of the Shareholders of Beximco Pharmaceuticals Limited will be held on Saturday, November 19, 2016 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur to transact the following business: 1. To receive, consider and adopt the Audited Financial Statements of the Company for the period of 18 months ended on June 30, 2016 together with reports of the Auditors and the Directors thereon; AGENDA 2. To declare/approve 5% final Cash Dividend, 5% Stock Dividend and 10% Cash Dividend (already paid as interim dividend) for the period of 18 months ended on June 30, 2016; 3. To elect Directors; 4. To approve the audit fee for the period of six months-January 1, 2016 to June 30, 2016; to appoint Auditors for the year 2016-2017 and to fix their remuneration; 5. To adopt changes in Accounting year of the Company from January-December to July-June pursuant to the provision of the Finance Act 2015; 6. To transact any other business of the Company with the permission of the Chair. By order of the Board, (MOHAMMAD ASAD ULLAH, FCS) Executive Director & Company Secretary Dated: 18 October, 2016 Notes: (1) The Record Date of the Company for entitlement of 5% Final Cash dividend shall be November 1, 2016. The Shareholders whose names will appear in the Share Register of the Company or in the Depository Register on the record date i.e. November 1, 2016 will be entitled to receive the 5% final cash dividend. (2) 5% Stock Dividend will be entitled by the Shareholders whose names appeared in the Share Register of the Company or in the Depository Register on the earlier declared record date ie. May 12, 2016. (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. 46 | Annual Report 2015-16 46 | Annual Report 2015-16 | Post Balance Sheet Update Annual Report 2015-16 | 47 Notice of Annual General Meeting | Annual Report 2015-16 | 47 Chairman’s Statement attention to quality have helped us earn the trust within the generic drug industry. At the end of 2015, the World Trade Organization TRIPS Council extended a waiver that allows exemption to the least developed countries from applying and enforcing IP rights on pharmaceutical products until January 1, 2033. This is positive news for generic pharmaceutical companies like us as it provides an extended opportunity to develop and launch generic versions of patented products. Our ongoing expansion project to enable us to diversify our portfolio, expand our production capacity and upgrade a number of our existing units with the intention of securing the Company’s current and future growth is progressing as planned and is expected to be completed by the end of 2017. As previously announced, the plant and machinery to be procured for the project is partially being financed under an overseas loan agreement with BHF Bank, Germany. Additionally, we have initiated a project to implement Oracle Enterprise Resource Planning (ERP) solutions across the organisation. Once implemented, we believe this will help improve operational efficiency and productivity in the Company. A business is only as good as its people. We at Beximco Pharma believe that our employees are the backbone of the organisation. Our employees’ constant hard work, dedication, skill and knowledge continue to propel the Company forward and we remain committed to our focus on people. Development of human resources is of utmost importance to us and, as such, we continue to invest in training and development program to equip our employees with the knowledge and skills necessary to take the organization to the next level. In conclusion, I would like to convey my sincerest gratitude and appreciation to all our stakeholders who have contributed in making Beximco Pharma what it is today and especially to our shareholders for their ongoing support. Dear Shareholders, On behalf of my fellow board members and everyone from the Beximco Pharma family, I welcome you all to the 40th Annual General Meeting of the Company. In line with the new regulatory provision of the Finance Act 2015 and as announced by the Company in May 2016, Beximco Pharma is required to change its accounting year from January-December to July-June. Unlike other years, we are therefore reporting for a period of 18 months ending on June 30, 2016 to accommodate first time adoption of this change. I am pleased to report continued progress throughout the reporting period. The Company maintained its strong growth and achieved a 13.2% increase in sales in 2015 in the domestic market. The export business did exceptionally well in achieving a 68.3% increase over the previous year. This sales growth momentum continued for the reported first half of 2016. In addition to registering impressive growth in sales and profit, we have made progress, as planned, in key operational areas by expanding the product portfolio, registering products in overseas markets and obtaining product and plant certifications. In 2015, we achieved a major milestone by becoming the first Bangladeshi pharmaceutical company to be approved by the US Food and Drug Administration (US FDA). Subsequently, in August 2016, we commenced export to the US market, making history for the Bangladesh pharmaceutical industry. Additionally, during the period under review, we initiated export to Australia and the Gulf country, Kuwait, among others. In recognition of our commendable performance in export of pharmaceutical products, we were awarded the National Export (Gold) Trophy for the record fifth time. Our international accreditations and Thank You, A S F RAHMAN Chairman 48 I Annual Report 2015-16 l Chairman’s Statement Annual Report 2015-16 I 49 Directors’ Report to the Shareholders 2. Operating Performance 2.1. Domestic and Export Sales January-December 2015 Dear Shareholders, January-June 2016 (Six Months) During January-December 2015, the company achieved net sales of Taka 12,965.51 million, registering an impressive 15.7% growth over the prior period. Domestic sales (the key driver of our growth), registered an encouraging 13.2% increase over the previous period. In 2015, 23 new products (two of them introduced for the first time in the Bangladeshi pharma market) were added to our portfolio. In addition to our domestic sales, the company achieved remarkable growth in export sales. Our revenue from export in 2015 amounted to Tk. 842.3 million, a steep 68.3% up over Taka 500.5 million in 2014. Export now accounts for 6.5% of our total revenue as against 4.5% in 2014. We registered 46 products in 17 countries and entered into five new markets. On behalf of the Board of Directors of Beximco Pharmaceuticals Limited I am pleased to place before you the Directors’ Report and Audited Accounts of the company along with the report of the auditors thereon. Following a change made through the Finance Act 2015, the accounting year of companies, excluding banks, insurance and non- banking financial institutions (NBFIs), will commence on 1 July and conclude on 30 June. For first time adoption of this change, Beximco Pharma’s reporting period has been extended to June 30, 2016, in accordance with the directives of the Bangladesh Securities and Exchange Commission. Accordingly, we present the audited accounts for the period of 18 months from January 1, 2015 to June 30, 2016. 1. Business Outlook- A General Overview After the political turbulence in the first quarter of 2015 that seriously disrupted Bangladesh’s production and distribution system, political calm returned to prevail for rest of the year. Despite the initial setback, Bangladesh’s economy continued to maintain its steady growth with GDP growing at 6.5% in 2015. The macroeconomic indicators remained positive; moderate inflation at 6.2%, lower import payments due to slump in global oil prices, strong forex reserve reaching ever high at 27.5 billion, moderate growth in export and robust domestic demand contributed to the achievement of the growth. Fairly stable economic growth over the years led graduation of the country from low income to “lower middle income” status as per the World Bank classification. The first half of 2016 passed without any significant political disruptions affecting the business. The majority of forecasts see a stable future outlook with economy expected to be growing between 6.7% and 7%. On November 6, 2015, the WTO-TRIPS Council granted the least developed countries (LDCs) exemptions from pharmaceutical patent until at least January 1, 2033. This is an extension of the previously granted exemption which was scheduled to expire on December 31, 2015. In February 2015, the LDCs led by Bangladesh applied for extension of the waiver period till their graduation from the LDC status. Bangladesh, which has already developed a solid pharmaceutical manufacturing capability, can further capitalise on the opportunities created through the waiver. Recently, there has been a significant change in the pay structure for the government employees resulting in an increase of almost 100% of their current pay. The drastic change in the salary of the public sector employees will have bearing on the private sector for upward revision of salary of their workforce. The implementation of the new Value Added Tax and Supplementary Duty Act 2012, which was due to replace the existing 1991 law effective from July 1, 2016 has been deferred. This will now be effective from July 1, 2017. The detailed rules to supplement the act are, however, yet to be made publicly available. The act is expected to have simplified operating procedures as compared to the current one. No significant change in the VAT regulation for pharmaceutical products is foreseen. Net sales during January-June 2016 grew by 13.1% to reach at Taka 7,069.0 million. Sales in the domestic market increased by 13.6%, while export increased by 5.3%. During this period, nine new products have been introduced in the domestic market and 83 products have been registered overseas. We commenced exports to five new markets, including Kuwait and Taiwan. 2.2. Profitability January-December 2015 Further to attaining robust growth in sales, we also achieved our profit target. Pre-tax profit of the Company increased by 10.8% to reach at Tk. 2,337.1 million compared with Tk. 2,109.6 million in 2014. The company earned post- tax profit of Tk. 1,954.3 million, which is 27.9% higher than the previous year mainly due to the deferred tax benefit from the lower corporate tax rate. Improved product mix, relatively stable domestic currency against the US Dollar and lower domestic inflation helped not only to maintain but also to slightly improve our gross profit margin to 46.3% from 45.6%. January-June 2016 (Six Months) Pre and post-tax profit for the six month amounted to Tk. 1,320.7 million and 993.8 million, respectively. The pre-tax profit recorded an increase of 20.8% as compared to the same six month (un-audited) period of the prior year. EPS stood at Tk. 2.57. 2.3. Global Accreditation Beximco Pharma became the first Bangladeshi company to receive US FDA accreditation which is a major milestone not only for us but also for the industry as a whole. Moreover, Beximco Pharma received approval for a prescription medicine to be manufactured in Bangladesh for the US market. Following this approval, in August 2016, we commenced export to the US market making history for the Bangladeshi pharmaceutical industry. We feel proud that our manufacturing facilities are also approved by the leading regulatory authorities of Australia, Europe, Brazil and Canada, among others. 3. Change in Accounting Year As mentioned, the Finance Act 2015 passed by the Bangladesh parliament requires companies, excluding banks, insurance and NBFIs to follow July-June as their financial year. This change in the reporting period is effective from July 1, 2016. Consequent to the provision of the Finance Act, we need to adopt an accounting year that will commence from July 1 and conclude on June 30. To comply with the regulation, we propose that effective from July 1, 2016 our accounting year will be a 12-month period starting from July 1 and ending June 30 instead of January 1 to December 31. 50 I Annual Report 2015-16 l Directors’ Report to the Shareholders Directors’ Report to the Shareholders l Annual Report 2015-16 I 51 4. Profit and its Appropriation 7. Auditors We report the financial results of the Company for the 18 month period ending on 30 June 2016 and recommend the appropriation as below: January 1, 2015 to June 30, 2016 (18 months) Taka in Thousand January 1, 2014 to December 31, 2014 (12 Months) 2,948,054 20,402 8,134,299 11,102,755 (193,122) (386,244) (193,122) 10,330,267 1,528,298 16,061 7,141,718 8,686,077 (183,926) - (367,852) 8,134,299 Net Profit after Tax Adjustment for Depreciation of Revalued Assets Profit brought Forward from Previous Year Profit Available for Appropriation Proposed Dividend: Stock Dividend Cash Dividend (Interim) Cash Dividend (Final) Profit Carried Forward 5. Dividend As previously annouced, on 20 April 2016, the Board of Directors considered and approved the audited accounts for the 12 months period ending on 31 December 2015. The Board of Directors recommended 10% cash dividend i.e. Taka 1 per share and 5% stock dividend i.e. 5 shares for every 100 shares held for the year 2015 for onward approval in the Annual General Meeting (AGM), scheduled on 4 June 2016. Subsequently, following the directives from the BSEC, it was decided to hold AGM with 18 month accounts from January 2015 to June 2016 to accommodate the first adoption of the change in the accounting year. Accordingly, another audit was carried out for the period of the six months ended 30 June 2016 and a consolidated 18 months accounts was placed to the Board of Directors in their meeting held on 6 October 2016. After considering the 18 months accounts, the Board recommended 5% cash (Tk. 0.50 per share) as final dividend in addition to 5% stock dividend (5 shares for every 100 shares held) and 10% cash (Tk. 1.00 per share) dividend already paid as an interim dividend. 6. Retirement and Re-election of Directors 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 39th Annual General Meeting of the Company has carried out the audit for the year ended 31 December 2015. Due to the special requirement, as mentioned earlier, to prepare the 18 month audited accounts for approval in the AGM, M. J. Abedin & Co., Chartered Accountants, National Plaza, 109, Bir Uttam C.R. Datta Road, Dhaka-1205 was appointed to carry out audit for the period 1 January 2016 to 30 June 2016 at an agreed fee of Tk. 700,000. 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 2016-17. 8. 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. 9. Risks and Concerns The pharmaceutical industry, like any other business industry, is exposed to political, economic, social, technological, environmental and legal risks in addition to the financial risks embedded in any business transaction. The management is fully aware of the risks and follows standard procedure for appropriate management of the risk. Depending on the nature, strategic decisions are taken to avoid, reduce, transfer or accommodating the risks arising in the business management process. A further detail on various financial risks has been discussed in Note 47 of the financial statements. Mr. Osman Kaiser Chowdhury and Mr. Iqbal Ahmed, 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. 10. Related Party Transaction Both Mr. Osman Kaiser Chowdhury and Mr. Iqbal Ahmed are long term directors in the Board. Mr. Chowdhury has been with the Company since 1991. He is a member of the Institute of Chartered Accountants of England and Wales and a Fellow of the Institute of Chartered Accountants of Bangladesh. He has over 13 years’ experience working abroad, including the United Kingdom. Mr. Iqbal Ahmed has been in the Board since 1985 and holds senior positions in a number of entities within the Beximco Group of companies. He received his Bachelor’s Degree in Science from the University of Dhaka in 1966. Previously he was the publisher of “The Independent” an English daily newspaper in Bangladesh and the “Muktakantha”, a Bengali national daily newspaper. Related party transactions are carried out on arm’s length basis. Audit committee while reviewing the financial statements periodically carries out in-depth analysis of the transactions involving related parties. Note 34 of the financial statements provides details of the transactions with the related party. 11. 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 period 1 January 2015 to 30 June 2016 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 52 I Annual Report 2015-16 l Directors’ Report to the Shareholders Directors’ Report to the Shareholders l Annual Report 2015-16 I 53 12. Key Operating and Financial Data 13. Board Meetings and Attendance The summarized key operating and financial data for 2015-16 and immediately preceding four years are presented below: Sixteen Board Meetings were held during the period under review. 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 Dr. Abdur Rahman Khan 16 16 16 16 Salman F Rahman Osman Kaiser Chowdhury A B Siddiqur Rahman Shah Monjurul Hoque 16 16 16 16 On behalf of the Board A S F Rahman Chairman Particulars As on June 30, 2016 December 31, 2015 December 31, 2014 December 31, 2013 December 31, 2012 December 31, 2011 Taka in Thousand Authorized Capital Paid Up Capital Shareholders’ Equity Fixed Assets (gross) 9,100,000 3,862,442 23,059,412 28,756,326 9,100,000 3,862,442 22,478,627 28,325,506 9,100,000 3,678,516 20,920,185 25,818,728 9,100,000 3,503,349 19,775,552 23,051,128 9,100,000 3,046,390 18,408,162 20,316,639 9,100,000 2,517,678 17,128,128 19,289,344 Net Assets Value (NAV) per share- Taka Market Price Per Share- Taka Number of Shareholders Foreign Investors ICB including Investors Account Sponsors, General Public & Others 60 83.50 67,679 83 878 66,718 58 84.10 74,655 82 879 73,694 57 58.70 89,913 68 882 88,963 56 47.20 92,831 68 880 91,883 60 55.90 86,290 66 898 85,326 68 93.60 88,697 58 896 87,743 Number of Employees 3,515 3,339 3,063 2,897 2,748 2,670 Particulars For the period / Year 2015 (12 Months) 2014 (12 Months) 2013 (12 Months) 2012 (12 Months) 2011 (12 Months) Taka in Thousand 12,965,507 842,339 6,000,339 2,337,130 1,954,285 11,206,886 500,469 5,104,191 2,109,556 1,528,298 10,490,699 671,289 4,838,800 2,093,594 1,404,763 9,289,115 470,116 4,389,401 1,909,829 1,319,389 7,890,242 390,315 3,786,533 1,677,849 1,198,525 Jan 2015 – Jun 2016 (18 Months) 20,034,503 1,228,353 9,234,185 3,657,838 2,948,054 5% 15% 7.63 - - - 5.06 16.62 5% 10% 3.96 14.82 5% 10% 3.82 12.36 15% - 3.77 14.83 21% - 3.93 23.82 Total Sales Export Sales Gross Profit Profit before Tax Net Profit Dividend: Stock Cash EPS/Restated EPS-Tk. Price Earnings Ratio (Times) 54 I Annual Report 2015-16 l Directors’ Report to the Shareholders Directors’ Report to the Shareholders l Annual Report 2015-16 I 55 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. √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ - √ √ √ √ √ - √ - - - 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 Not Complied Remarks (if any) - N/A No remuneration was paid to any Director during the period under review except Managing Director for serving as Chief Executive and the Independent Directors for their attendance in Meetings. - - N/A N/A - √ √ √ √ √ √ √ - √ - √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ 56 I Annual Report 2015-16 l Corporate Governance Compliance Report Corporate Governance Compliance Report l Annual Report 2015-16 I 57 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 √ √ √ √ √ √ √ - √ - - - - - √ √ √ √ √ √ √ √ √ - - - - - √ √ √ √ √ - N/A - - - - - - - - - - N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 58 I Annual Report 2015-16 l Corporate Governance Compliance Report Certificate on Compliance of Corporate Governance Guidelines l Annual Report l 59 Annual Report 2015-16 I 59 External Auditor The Committee reviewed the independence, objectivity and expertise of the independent auditors and based on the review made recommendation to the board for reappointment of existing auditors M/S M J Abedin & Company, Chartered Accountants for the year 2016-17 subject to the approval by the shareholders in the 40th Annual General Meeting. Other Reviews and Activities The senior management of the company from time to time attended various meetings of the audit committee on invitation to apprise the members of the committee on various issues. During the period under review the committee in its meetings monitored and reviewed the work of the internal audit team. Assessment and evaluation of internal control policy were made to ensure that the company employs a sound system of internal control including internal financial control. The committee among other periodically reviewed the financial reporting process of the company and the related disclosures. 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 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 during the period January 2015 to June 2016. Reviewing the Financial Statements The Terms of Reference (TOR) of the Audit Committee has been established based on the guidelines prescribed by the Bangladesh Securities and Exchange Commission which includes but not restricted to overseeing the financial reporting process, monitoring accounting policies and principles, monitoring internal control risk management procedures, reviewing the statement of significant related party transactions, reviewing potential conflict of interests etc. As per the Terms of Reference, the committee in its meeting held on April 17, 2016 reviewed the Annual Financial Statements for the year 2015. During the meeting the Chief Financial Officer presented the annual accounts along with the independent auditors report to the committee and briefed the committee regarding the financial performance of the Company. The committee after review decided to forward the audited accounts to the board for their approval. However, as per a new government regulation companies other than Bank, Insurance and Non-Banking Financial Institutions are required to maintain July-June as their financial year. Pursuant to this, Bangladesh Securities and Exchange Commission (BSEC) subsequently issued guidelines for companies with respect to the first time adoption of the change in the financial year. In accordance with the BSEC guidelines, BPL is required to prepare and publish audited accounts covering 18 months period i.e. January 1, 2015 to June 30, 2016. Accordingly the accounts for the period January - June 2016 were subsequently audited and combined 18 months audited accounts along with the report of the auditor were prepared and submitted to the audit committee for review. The Audit Committee in its meeting held on September 28, 2016 reviewed the Financial Statements and the report of the auditor for the 18 months period ending on June 30, 2016. The audit committee also had detailed discussion with the members of the accounts and finance department on various aspect of the financial statements and accounts. The committee in detail looked into the compliance of the disclosure requirements set by the BSEC for the special reporting that covers longer than usual accounting period. The committee also reviewed the financial reporting process, discussed the adequacy of the internal control processes in place to prevent errors and fraudulent activities and thoroughly scrutinized the related party transactions carried out during the year. The committee was fully satisfied that the related party transactions were made on an arm length basis in the normal course of business and the transactions have been adequately disclosed in the financial statements. The independent auditors’ report also did not contain any material audit observation that warranted the boards’ attention. The committee being satisfied, authorized for onward submission of the Audited Financial Statements to the Board for approval. Additionally, in 2015 the committee held four meetings - on 21st April to consider the draft annual accounts of 2014; on 11 May to examine the 1st quarter report; on 13th July to review the half yearly report; and on 19th October to examine the 3rd quarter report. In each case the committee held detailed discussion with senior management on various aspects of the financial statements to ensure accuracy, consistency and compliance of the reports in all material aspects. The committee also scrutinized the related party transactions and found that all related party transactions were made on an arm’s length basis. 60 I Annual Report 2015-16 l Report on the Activities of The Audit Committee Report on the Activities of The Audit Committee l Annual Report 2015-16 I 61 Shareholders’ Meeting The 39th Annual General Meeting (AGM) of the shareholders of Beximco Pharmaceuticals Limited was held on June 13, 2015 at Beximco Industrial Park, Saravo, Kashimpur, Gazipur. Mr. Salman F Rahman, Vice 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 2014. Performane of the company in 2014 as well as future strategies were briefly discussed in the meeting. At the end of the meeting Chaiman expressed his appreciation towards shareholders for their interest in the company and their continued support. Audit Committee Meeting 62 I Annual Report 2015-16 l Shareholders’ Meeting Shareholders’ Meeting l Annual Report 2015-16 I 63 39th Annual General Meeting Value Added Statement For 18 Month Period Ended June 30, 2016 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. % 23,737,402 (11,024,315) 12,713,087 100 3,293,717 2,812,773 1,030,182 772,488 4,803,927 26 22 8 6 38 12,713,087 100 Graphical View of Selected Growth Indicators Taka in million 64 I Annual Report 2015-16 l Value Added Statement Graphical View of Selected Growth Indicators l Annual Report 2015-16 I 65 Independent Auditors’ Report To The Shareholders of Beximco Pharmaceuticals Limited Beximco Pharmaceuticals Limited Statement of Financial Position As at June 30, 2016 Report on the Financial Statements We have audited the accompanying financial statements of Beximco Pharmaceuticals Limited, which comprises the Statement of Financial Position as at 30 June 2016, the Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period from 01 January 2015 to 30 June 2016 (18 months) then ended and a summary of significant accounting policies and other relevant explanatory notes. 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), and Bangladesh Accounting Standards (BASs), 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 30 June 2016, and of its financial performance and its cash flows for the period of 18 months 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. Other matter Financial Statements of the Company for the year ended 31 December 2015 and period ended 30 June 2016 have separately been audited by us. Now the Company is required to follow accounting year as July to June as per Finance Act 2015. For this purpose, separately audited financial statements have been compiled as per directives of The Bangladesh Securities and Exchange Commission (BSEC). 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. Notes June 30, 2016 December 31, 2014 Amount in Taka ASSETS Non-Current Assets Property, Plant and Equipment- Carrying Value Intangible Assets Investment in Shares 4 (a) 3.3 & 5 6 (a) 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 7 8 9 10 11 12 13 14 4(b) 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 (a) 19 20 21 22 22,620,900,165 22,235,892,802 380,260,529 4,746,834 8,528,007,810 2,770,331,675 614,606,112 1,680,606,796 1,802,304,185 1,439,037,813 221,121,229 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 31,148,907,975 29,000,525,961 23,059,412,409 3,862,442,340 5,269,474,690 1,689,636,958 294,950,950 1,225,100,042 1,295,558 10,716,511,871 5,106,928,058 2,366,006,599 984,198,459 1,756,723,000 2,982,567,508 1,109,644,270 920,388,531 453,828,612 151,086,775 385,507 347,233,813 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 TOTAL EQUITY AND LIABILITIES 31,148,907,975 29,000,525,961 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 6 October, 2016 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Dhaka 6 October, 2016 M.J. Abedin & Co. Chartered Accountants Dhaka 6 October, 2016 Per our report of even date. M. J. Abedin & Co. Chartered Accountants 66 I Audit Report 2015-16 l Independent Auditors’ Report Statement of Financial Position l Audit Report 2015-16 I 67 Beximco Pharmaceuticals Limited Statement of Profit or Loss and Other Comprehensive Income For 18 Months Period ended 30th June 2016 Beximco Pharmaceuticals Limited Statement of Changes in Equity For 18 Months Period ended January 1, 2015 - June 30, 2016 Amount in Taka 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 3,678,516,520 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 Notes January 2015 - June 2016 (18 Months) January - June 2016 (6 Months) January - December 2015 (12 Months) January - December 2014 (12 Months) 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 Income / (Expense) Profit after Tax for the Period Other Comprehensive Income - Fair Value Gain / (Loss) on Investment in Listed Shares Total Comprehensive Income for the Period Earnings Per Share (EPS) / Adjusted EPS 23 24 27 28 29 30 31 32 6 (c) 33 20,034,502,592 (10,800,317,358) 9,234,185,234 7,068,995,719 (3,835,149,654) 3,233,846,065 12,965,506,873 (6,965,167,704) 6,000,339,169 11,206,885,677 (6,102,694,323) 5,104,191,354 (4,775,931,931) (689,337,921) (4,086,594,010) 4,458,253,303 (1,626,871,236) (240,980,804) (1,385,890,432) 1,606,974,829 (3,149,060,695) (448,357,117) (2,700,703,578) 2,851,278,474 (2,686,014,518) (398,762,237) (2,287,252,281) 2,418,176,836 412,658,923 (1,030,182,401) 3,840,729,825 100,980,597 (321,212,167) 1,386,743,259 311,678,326 (708,970,234) 2,453,986,566 521,171,647 (724,314,963) 2,215,033,520 (182,891,896) (66,035,393) (116,856,503) (105,477,787) 3,657,837,929 1,320,707,866 2,337,130,063 2,109,555,733 (709,784,075) (736,140,227) 26,356,152 2,948,053,854 (326,938,528) (310,173,315) (16,765,213) 993,769,338 (382,845,547) (425,966,912) 43,121,365 1,954,284,516 (581,258,160) (436,782,844) (144,475,316) 1,528,297,573 (1,013,093) 2,947,040,761 (661,955) 993,107,383 (351,138) 1,953,933,378 967,032 1,529,264,605 7.63 2.57 5.06 3.96 Number of Shares used to compute EPS 386,244,234 386,244,234 386,244,234 386,244,234 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 6 October, 2016 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. - 183,925,820 Balance as on January 01, 2015 Total Comprehensive Income for the period : Profit for the Period Other Comprehensive Income/(Loss) Transactions with the Shareholders: Cash Dividend- 2014 & 2015 (Interim) Stock Dividend for 2014 Adjustment for Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets Balance as on June 30, 2016 Number of Shares Net Asset Value (NAV) Per Share Balance as on January 01, 2014 Total Comprehensive Income for the period : 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 January - December 2014 - - - - - - - - - - - - - - (1,013,093) - 2,948,053,854 2,948,053,854 - (1,013,093) - - - (754,095,886) - (183,925,820) (754,095,886) - - - (20,402,482) - 20,402,482 - (53,717,791) - - (53,717,791) 3,862,442,340 5,269,474,690 1,689,636,958 294,950,950 1,225,100,042 1,295,558 10,716,511,871 23,059,412,409 386,244,234 59.70 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 - - - - - - - - - - - - - - - 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 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 6 October, 2016 and signed for and on behalf of the Board : Dhaka 6 October, 2016 M. J. Abedin & Co. Chartered Accountants Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 6 October, 2016 Ali Nawaz Chief Financial Officer Per our report of even date. M. J. Abedin & Co. Chartered Accountants 68 I Audit Report 2015-16 l Statement of Profit or Loss and Other Comprehensive Income Statement of Changes in Equity l Audit Report 2015-16 I 69 Beximco Pharmaceuticals Limited Statement of Cash Flows For 18 Months Period ended 30th June 2016 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 Dividend Received Decrease in Short Term Investment Net Cash Used in Investing Activities Cash Flows from Financing Activities : Net Increase /(Decrease) in Long Term Borrowings- Note 18 (c) Net Increase/(Decrease) in Short Term Borrowings- Note 18 (c) Dividend Paid Net Cash Generated from Financing Activities Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Period Cash and Cash Equivalents at End of Period January 2015 - June 2016 (18 Months) Amount in Taka January - December 2014 (12 Months) 19,756,621,890 (15,204,763,705) 4,551,858,185 11,085,037,894 (8,240,584,352) 2,844,453,542 (1,030,182,401) 404,847,333 (757,245,805) 3,169,277,312 (2,975,250,144) (165,351,713) 9,583,953 1,427,955 1,035,989,018 (2,093,600,931) 55,519,429 (378,148,721) (754,165,099) (1,076,794,391) (1,118,010) 222,239,239 221,121,229 (724,314,963) 489,970,647 (394,128,824) 2,215,980,402 (2,778,797,453) (56,321,506) 7,615,792 1,427,955 551,356,330 (2,274,718,882) (340,756,861) 376,855,168 (350,853,554) (314,755,247) (373,493,727) 595,732,966 222,239,239 Net Operating Cash Flow Per Share 8.21 6.02 Number of Shares used to compute Net Operating Cash Flow Per Share 386,244,234 367,851,652 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on 6 October, 2016 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka 6 October, 2016 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 period ended 30 June 2016 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, Therapeutic Nutrition Products 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 the 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 period ended 30 June 2016 ; (b) a Statement of Profit or Loss and Other Comprehensive Income for the period 01 January 2015 to 30 June 2016 (18 months); (c) a Statement of Changes in Equity for the period 01 January 2015 to 30 June 2016 (18 months); (d) a Statement of Cash Flows for the period 01 January 2015 to 30 June 2016 (18 months); and (e) notes, comprising summary of significant accounting policies and explanatory information. 2.4 Reporting Period & Comparative Information The financial statements have been prepared for 18 (eighteen) months (from 1st January 2015 to 30th June 2016) as per directive of Bangladesh Securities and Exchange Commission (BSEC) to facilitate the adoption of reporting period of July to June in place of existing reporting period of calendar year (January to December) in compliance to the requirement of the National Board of Revenue (NBR) to follow uniform financial year. Therefore, the financial statements for the period of 18 months (01.01.2015 to 30.06.2016) are not entirely comparable with the comparative of 12 months (01.01.2014 to 31.12.2014). 70 I Audit Report 2015-16 l Statement of Cash Flows Notes to the Financial Statements l Audit Report 2015-16 I 71 2.5 Authorisation for issue The financial statements have been authorised for issue by the Board of Directors 6 October, 2016. 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 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, others 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. 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. 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. Revenue from sales is exclusive of VAT. 3.5.1(a) Accounts Receivable 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% 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 3.6 Financial Liability Financial liabilities are recognized initially on the transaction date at which the company becomes a party to the contractual provisions of the liability. The company derecognizes a 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. 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. 72 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 73 (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 3.8 Inventories Inventories are carried at the lower of cost and net realizable value as prescribed by IAS 2: Inventories. Cost is determined on weighted average cost basis. The cost of inventories comprises of expenditure incurred in the normal course of business in bringing the inventories to their present location and condition. Net realizable value is based on estimated selling price less any further costs expected to be incurred to make the sale. Provisions A provision is recognized in the statement of 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 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 period, 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 25%. 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. Interest Income Interest income is recognized on accrual basis. Borrowing Cost Borrowing costs are recognized as expenses in the period in which they are incurred unless capitalization of such is allowed under IAS 23: Borrowing Costs. Employee 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: 3.10 3.11 3.12 (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. (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 3.14 Share Premium The Share Premium shall be utilized in accordance with the provisions of the Companies Act, 1994 and as per direction of the Securities and Exchange Commission in this respect. Proposed Dividend The amount of proposed dividend is not accounted for but disclosed in the notes to the accounts in accordance with the requirements of the International Accounting Standard (IAS) 1: Presentation of Financial Statements. Also the proposed dividend is not considered as liability in accordance with the requirement 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. The Board of Directors in its meeting held on 20 April 2016 while considering the audited accounts for the year ended on 31st December 2015 recommended 10% cash and 5% stock dividend subject to approval of the shareholders in the Annual General Meeting scheduled on 4 June 2016. Subsequent to that, the Bangladesh Securities and Exchange Commission issued directive to hold Annual General Meeting with 18 months Accounts for first time adoption of the changes in the Accounting Year as required by the Finance Act 2015. Accordingly the Annual General Meeting of the Company was deferred and the cash dividend proposed was paid to the shareholders as Interim Dividend. Therefore, the 10% cash dividend which was already paid has been accounted for in the accounts being reported. The 5% stock dividend and 5% final cash dividend as recommended by the board in its meeting held on October 6, 2016 while approving the 18 months audited accounts for the period ended on June 30, 2016 has not been accounted for as per policy. 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 period. 74 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 75 Current Period (January 2015 to June 2016) 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 Current Period (January 2015 to June 2016), the total number of shares including the said bonus shares has been considered as the Weighted Average Number of Shares outstanding during the Current Period (January 2015 to June 2016). Earlier Year (2014) 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 (2014), and accordingly, in calculating the adjusted EPS of 2014, the total number of shares including the subsequent bonus issued in 2015 has been considered as the Weighted Average number of Shares outstanding during the year 2014. 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 period as there was no scope for dilution during the period under review. 3.16 Foreign Currency Transactions Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction date. 4 (a) Property, Plant and Equipment As on June 30, 2016 Particulars Cost At January 01, 2015 Additions- January 2015 to June 2016 Transferred in & Capitalized Disposal during the period Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Total Amount in Taka 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 - - - 154,933,066 147,151,810 - 499,981,926 257,977,765 (7,057,699) 37,334,604 107,098,489 118,553,280 3,298,860 (9,716,371) 254,013 (16,946,545) (3,931,886) - 917,901,365 408,682,448 (37,652,501) Cost at June 30, 2016 3,343,741,442 6,712,175,196 11,324,017,693 217,643,441 700,012,107 502,149,436 22,799,739,315 Accumulated Depreciation At January 01, 2015 Depreciation Charged- January 2015 to June 2016 Adjustment for Assets disposed off Accumulated Depreciation at June 30, 2016 Net Book Value June 30, 2016 - 1,216,063,103 3,582,516,866 79,383,211 292,067,629 255,418,950 5,425,449,759 - - 241,207,131 - 735,361,153 (6,520,549) 18,344,246 92,584,435 (2,531,542) (11,988,652) 36,711,350 1,124,208,315 (29,224,737) (8,183,994) - 1,457,270,234 4,311,357,470 85,738,805 382,120,522 283,946,306 6,520,433,337 3,343,741,442 5,254,904,962 7,012,660,223 131,904,636 317,891,585 218,203,130 16,279,305,978 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. Capital Work in Progress Carrying Value as on June 30, 2016 5,956,586,824 22,235,892,802 3.17 3.18 Statement of Cash Flows The Statement of Cash Flow has been prepared in accordance with the requirements of IAS 7: Statement of Cash Flows. The cash generated from operating activities has been reported using the Direct Method as prescribed by the Securities and Exchange Rules, 1987 and as the benchmark treatment of IAS 7, whereby major classes of gross cash receipts and gross cash payments from operating activities are disclosed. Events after Reporting Period Events after the reporting period that provide additional information about the company’s position at the date of Statement of Financial Position or those that indicate that the going concern assumption is not appropriate are reflected in the financial statements. Events after reporting period that are not adjusting events are disclosed in the notes when material. Assets include leasehold assets of Tk. 1,277,737,554 at cost and Tk.1,053,077,850 at carrying value. As on December 31, 2014 Particulars Cost At January 01, 2014 Addition During the Year Transferred in & Capitalized Disposal during the year As on 31 December 2014 Accumulated Depreciation At January 01, 2014 Depreciation for the year Adjustment for Assets disposed off As on 31 December, 2014 Net Book Value December 31, 2014 Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Total 3,302,882,482 40,858,960 - - 3,343,741,442 6,370,758,420 39,331,900 - - 6,410,090,320 10,034,644,242 111,420,014 427,051,445 - 10,573,115,701 173,333,992 24,240,377 - (573,000) 197,001,369 548,077,240 59,392,132 - (10,623,868) 596,845,504 358,363,316 31,650,351 - - 390,013,667 20,788,059,692 306,893,734 427,051,445 (11,196,868) 21,510,808,003 - - - - 1,052,546,636 163,516,467 - 1,216,063,103 3,090,128,096 492,388,770 - 3,582,516,866 69,430,902 10,375,309 (423,000) 79,383,211 237,436,147 61,346,435 (6,714,953) 292,067,629 237,273,060 18,145,890 - 255,418,950 4,686,814,841 745,772,871 (7,137,953) 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 Capital Work in Progress Carrying Value as on December 31, 2014 4,307,920,493 20,393,278,737 76 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 77 Capital Work in Progress is arrived at as follows : Opening Balance at beginning of the period Addition- January 2015 to June 2016 Transferred & Capitalized Building and Other Constructions Plant & Machinery Furniture & Fixture Office Equipment Amount in Taka 30 June, 2016 31 December, 2014 4,307,920,493 2,057,348,779 6,365,269,272 (408,682,448) (147,151,810) (257,977,765) (254,013) (3,298,860) 2,263,068,219 2,471,903,719 4,734,971,938 (427,051,445) - (427,051,445) - - Closing balance at end of period 5,956,586,824 4,307,920,493 4 (b). Revaluation Surplus S.F. Ahmed & Co, Chartered Accountants and Valuers revalued the land, building and plant & machinery of the Company as of 31 December 2008, following “Current cost method”. Such revaluation resulted into a revaluation surplus aggregating Tk. 1,711,174,747. Current balance is arrived at as follows: Opening Balance at beginning of the period Adjustment for depreciation on revalued assets Adjustment for Deferred Tax on revalued assets 5. Intangible Assets This consists of as follows 1,299,220,315 (20,402,482) (53,717,791) 1,225,100,042 1,349,578,805 (16,061,652) (34,296,838) 1,299,220,315 Product development, Licensing and Marketing Rights ERP Project Other Software Balance 01.01.2015 Addition (Jan 2015 - Jun 2016) Amortized (Jan 2015 - Jun 2016) Balance June 30, 2016 230,551,508 - 4,656,682 235,208,190 74,789,570 90,562,143 - 165,351,713 (16,713,018) - (3,586,356) (20,299,374) 288,628,060 90,562,143 1,070,326 380,260,529 6. Investment in Shares (a) Investment Details: (i)) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) 30 June, 2016 31 December, 2014 3,177,384 1,569,450 4,746,834 4,190,477 1,569,450 5,759,927 This is arrived at as follows: Bangladesh Export Import Co. Ltd. Central Depository Bangladesh Ltd. Investment as on January 01, 2015 Fair value gain/(Loss) on investment Investment as on June 30, 2016 4,190,477 (1,013,093) Tk. 3,177,384 (b) Number of Shares: As on January 01, 2015 Stock Dividend for 2014 As on June 30, 2016 115,123 17,268 132,391 1,569,450 - 1,569,450 571,182 - 571,182 (c) Fair Value Gain/(Loss) on Investment Fair market value of 132,391 shares of Bangladesh Export Import Co. Ltd. Less Investment at beginning of the period Fair Value Gain / (Loss) 3,177,384 4,190,477 (1,013,093) (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 period was Tk. 24.00 in Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. Shares of CDBL are not traded. 7. Inventories Amount in Taka This consists of as follows : 30 June, 2016 31 December, 2014 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 639,923,877 194,155,965 792,484,516 459,631,224 338,991 127,674,561 556,122,541 2,770,331,675 633,692,189 171,815,679 637,080,994 424,461,374 550,984 149,875,483 476,180,635 2,493,657,338 495,625,730 11,624,684 107,355,698 614,606,112 399,537,644 11,284,736 143,361,518 554,183,898 This includes receivable of Tk. 107,075,699 equivalent to US$ 1,372,765 as on 30 June 2016 (on 31-12-2014 Tk. 136,834,694 equivalent to US $ 1,763,334) against export sales. This also includes Tk. 1,430,821,670 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 period was Tk. 1,430,821,670 on 30 June, 2016. 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. 78 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 79 10. Loans, Advances and Deposits This is unsecured, considered good and consists of as follows : Clearing & Forwarding VAT Claims Receivable Security Deposit & Earnest Money Lease Deposit Capital Expenditure/ Project Expenses Bank Guarantee Margin Advance against Salary Rent Advance Motor Cycle Raw & Packing Material Prepaid Expenses Overseas Liaison Office Others Amount in Taka 30 June, 2016 31 December, 2014 83,654,786 273,720,987 20,242,657 26,407,411 28,691,017 97,081,087 198,889,697 2,951,066 88,981,864 19,535,002 157,814,961 395,386,302 322,417,705 19,067,068 67,462,575 1,802,304,185 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 (a) The maximum amount due from the employees during the period was Tk. 89,024,168 on 31 May, 2016. (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. (d) Prepaid expense includes Tk. 302,987,514 for Insurance premium paid to German Export Credit Agency Euler Hermes Aktiengesellschaft, Hamburg for gurantee Insurance premium which is an integral part of the overseas loan financing agreement with BHF-Bank Aktiengesellshaft, Frankfurt, Germany. Part of the premium related to the period of construction of the project shall be capitalized while the rest shall be charged to expenses over the tenure of the loan. 11. Short Term Investment This represents the Company’s temporary investment with Bangladesh Export Import Company Limited, 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 Amount in Taka 30 June, 2016 31 December, 2014 2,812,238 3,218,618 186,824,492 31,484,499 221,121,229 190,573,819 28,446,802 222,239,239 13. Issued Share Capital This represents : A. Authorized : 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 297,226,087 Bonus Shares (2014: 278,833,505) 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 Amount in Taka 30 June, 2016 31 December, 2014 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 2,972,260,870 517,757,500 2,788,335,050 59,512,500 312,911,470 3,862,442,340 59,512,500 312,911,470 3,678,516,520 The movement of Ordinary Shares during the Period ended June 30, 2016 is as follows : Number of Shares Amount in Taka Balance as on January 01, 2015 Bonus Shares issued during the period (for 2014) Balance as on June 30, 2016 367,851,652 18,392,582 386,244,234 3,678,516,520 183,925,820 3,862,442,340 C. Composition of Shareholding of Ordinary Shares: 30 June, 2016 31 December, 2014 No. of shares % of Share Capital No. of shares % of Share Capital Sponsors: A S F Rahman Salman F Rahman Associates and Other Directors Foreign Investors ICB & Other Investors Account General Public & Institutions 7,843,194 7,861,555 35,218,844 140,338,026 62,590,222 132,392,393 386,244,234 2.03 2.04 9.12 36.33 16.20 34.28 100 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 46.35 100 D. Distribution Schedule of Ordinary Shares: Range of Holdings In number of shares No. of Shareholders 30 June, 31 Dec, 2014 2016 % of Shareholders 30 June, 31 Dec, 2014 2016 Number of Shares 30 June, 2016 31 Dece, 2014 % of Share Capital 30 June, 31 Dec, 2014 2016 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 50,793 14,375 1,184 613 201 86 82 150 167 28 65,544 75.05% 20,786 21.24% 1.75% 1,753 0.91% 930 0.30% 281 0.13% 128 0.12% 102 0.22% 165 0.25% 191 0.04% 33 2.24% 8,240,906 72.90% 8.41% 30,918,582 23.12% 3.41% 12,555,227 1.95% 3.56% 13,111,006 1.03% 1.88% 6,909,593 0.31% 1.22% 4,498,146 0.14% 1.27% 4,660,402 0.11% 12,172,549 3.31% 0.19% 0.21% 50,601,331 12.36% 13.76% 0.04% 271,391,292 224,183,910 70.26% 60.94% 6,768,689 20,930,046 8,441,882 8,685,273 5,007,247 3,010,665 3,756,886 10,505,997 47,746,257 1.75% 5.42% 2.19% 2.25% 1.30% 0.78% 0.97% 2.72% 80 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 81 Total 67,679 89,913 100% 100% 386,244,234 367,851,652 100% 100% E. Market Price of Ordinary Shares : The shares are listed with Dhaka, Chittagong and AIM of London Stock Exchanges. On 30.06.2016 each share was quoted at Tk. 83.50 (on 31.12.2014 Tk. 58.70) in Dhaka Stock Exchange Ltd.; Tk. 83.00 (on 31.12.2014 Tk. 59.10) in Chittagong Stock Exchange Ltd.; and GBP 0.2937 in London Stock Exchange (on 31.12.2014 GBP 0.1800). F. Option on unissued Ordinary Shares : There was no option on unissued shares as on 30.06.2016. 14. Excess of Issue Price over Face Value of GDRs This represents the issue price of 28,175,750 GDRs at Tk. 2,244,080,670 net off face value of underlying shares against GDRs and GDR issue expenses. 15. Long Term Borrowings - Net off Current Maturity (Secured) This arrived at as follows : (a) Project Loan - Local Banks (b) Project Loan - BHF Bank, Germany (c) Obligation Under Finance Leases (d) AB Bank (a) Project Loan - Local Banks Amount in Taka 30 June, 2016 31 December, 2014 - 469,408,422 412,250,396 1,484,347,781 2,366,006,599 608,901,223 - 292,808,104 - 901,709,327 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 excepting the machineries and equipments financed / to be financed by BHF Bank, Germany. (iii) This Loan, carrying interest at 11.5% to 13% per annum, is repayable in quarterly installments ending by 2017. (b) Project Loan - BHF Bank, Germany This represents part of the foreign currency loan of US $ 51.559 million sanctioned by BHF-Bank Aktiengesellshaft, Frankfurt, Germany to partially finance the machinery and equipment to be procured for expansion and diversification project being implemented by the company. The loan has exclusive first charge by way of hypothecation against the machinery and equipment being procured under the finance. The loan carries interest @ 6 month’s USD LIBOR plus 2.25% per annum. The lender will receive commitment fee @ 0.50% on the undisbursed portion of the loan. (c ) 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 Amount in Taka 30 June, 2016 31 December, 2014 242,977,536 513,274,630 756,252,166 186,760,624 429,486,607 616,247,231 (186,621,695) 569,630,471 (195,948,111) 420,299,120 157,380,075 412,250,396 569,630,471 127,491,016 292,808,104 420,299,120 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 Opening Balance at beginning of the period Provisions during the period Paid during the period Closing balance at end of period (b) Workers Profit Participation and Welfare Fund 17. Deferred Tax Liability This arrived at as follows : Opening Balance at beginning of the period Addition during the period: Deferred Tax on Assets (cost basis)-Note : 32 Deferred Tax on revalued amount Closing balance at end of period Amount in Taka 30 June, 2016 31 December, 2014 337,652,786 128,134,755 465,787,541 (20,560,620) 445,226,921 284,163,669 66,915,861 351,079,530 (13,426,744) 337,652,786 538,971,538 984,198,459 403,869,732 741,522,518 1,729,361,361 1,550,589,207 (26,356,152) 53,717,791 1,756,723,000 144,475,316 34,296,838 1,729,361,361 82 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 83 18. (a) Short Term Borrowings (Secured) This consists of : Janata Bank Ltd. - Cash Credit-Hypothecation Loan AB Bank, Principal Branch Amount in Taka 30 June, 2016 31 December, 2014 1,109,644,270 - 1,109,644,270 1,487,792,991 1,665,328,302 3,153,121,293 (b) Short Term Borrowings from AB Bank, Principal Branch as mentioned above, has subsequently been converted as Long Term loan payable in 18 quarterly installments commencing from September 2016. (c) Conversion of Short term loan into long term being a non-cash event, the net Increase/ Decrease in the Short/Long Term borrowings as reported in the cash flow statement does not include such conversion. 19. Long Term Borrowings-Current Maturity (Secured) This consists of as follows and is payable within next twelve months from the Balance Sheet date : (a) Project Loan - Local Banks (b) Project Loan - BHF Bank, Germany (c) Obligation Under Finance Leases (d) AB Bank 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 period expense 22. Income Tax Payable This is arrived at as follows : Opening Balance Provision for the period Short/(Excess) Provision for previous years AIT & Treasury deposits during the period 444,621,118 41,054,236 157,380,075 277,333,102 920,388,531 536,347,056 - 127,491,016 - 663,838,072 144,676,791 248,809,046 9,097,700 51,245,075 453,828,612 202,020,182 124,323,489 3,618,784 27,748,384 357,710,839 85,051,382 66,035,393 151,086,775 60,155,328 104,127,787 164,283,115 368,339,391 766,053,375 (29,913,148) 1,104,479,618 (757,245,805) 347,233,813 325,685,371 421,487,672 15,295,172 762,468,215 (394,128,824) 368,339,391 23. Net Sales Revenue This consists of as follows : Local Sales Export* Amount in Taka January 2015- June 2016 (18 Months) January-June 2016 (6 Months) January - Dec 2015 (12 Months) January - Dec 2014 (12 Months) 18,806,149,764 6,682,982,389 12,123,167,375 1,228,352,828 842,339,498 386,013,330 20,034,502,592 7,068,995,719 12,965,506,873 10,706,417,075 500,468,602 11,206,885,677 *Export equivalent US$ $15,809,891 $4,948,889 $10,861,002 $6,473,721 Sales represents: Product Category Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Diet Care Products Active Pharmaceutical Ingredients Liquid Nitrogen 24. Cost of Goods Sold This is made-up as follows : Quantity Unit January 2015- June 2016 (18 Months) January- June 2016 (6 Months) January - December 2015 (12 Months) January - December 2014 (12 Months) Million pcs. 5,308.62 1,913.93 3,394.69 2,998.47 Million pcs. Pcs Kg Liter 121.46 16,069 282,789 725,260 45.80 10,157 113,953 241,505 75.66 5,912 168,836 483,755 70.72 - 177,354 475,012 January 2015- June 2016 (18 Months) January- June 2016 (6 Months) January - December 2015 (12 Months) January - December 2014 (12 Months) Amount in Taka 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) 171,815,679 8,002,141,393 3,005,938,728 11,179,895,800 (194,155,965) 10,985,739,835 633,692,189 11,619,432,024 156,136,258 2,822,057,040 1,044,381,707 4,022,575,005 (194,155,965) 3,828,419,040 696,097,273 4,524,516,313 171,815,679 5,180,084,353 1,961,557,021 7,313,457,053 (156,136,258) 7,157,320,795 633,692,189 7,791,012,984 204,755,943 4,498,531,078 1,735,116,121 6,438,403,142 (171,815,679) 6,266,587,463 644,005,694 6,910,593,157 (179,190,789) (639,923,877) (49,442,782) (639,923,877) (129,748,007) (696,097,273) (174,206,645) (633,692,189) 10,800,317,358 3,835,149,654 6,965,167,704 6,102,694,323 84 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 85 Item wise quantity and value of Finished Goods Stock are as follows : Stock as January 01, 2015 Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Active Pharmaceutical Ingredients Unit Million pcs. Million pcs. Kg Quantity 426.64 Value (Tk.) 389,211,055 6.78 2,450 236,895,019 7,586,115 633,692,189 Stock as June 30, 2016 Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Active Pharmaceutical Ingredients Diet Care Products Million pcs. 370.24 351,741,050 Million pcs. Kg Pcs 6.85 7,029 30,535 257,318,388 18,650,439 12,214,000 639,923,877 25. Materials Consumed This is made-up as follows : Opening Stock Purchase Closing Stock 26. Factory Overhead January 2015- June 2016 (18 Months) 1,062,093,352 8,192,502,772 (1,252,454,731) 8,002,141,393 January- June 2016 (6 Months) January - December 2015 (12 Months) 1,374,684,313 2,699,827,458 (1,252,454,731) 2,822,057,040 1,062,093,352 5,492,675,314 (1,374,684,313) 5,180,084,353 Amount in Taka January - December 2014 (12 Months) 1,228,275,639 4,332,348,791 (1,062,093,352) 4,498,531,078 This consists of as follows : Salary & Allowances Repairs and Maintenance Insurance Premium Municipal Tax & Land Revenue Advertisement Registration & Renewal Travelling & Conveyance Entertainment Research and Development Printing & Stationery Telephone, Internet & Postage Toll Expense / (Income) Electricity, Gas & Water Training & Conference Plant Certification and Regulatory Approvals Depreciation Other Expenses 923,333,723 247,729,698 22,309,704 4,240,806 51,116 18,495,348 10,070,405 2,128,395 261,058,042 23,889,555 11,335,263 255,228,012 133,536,151 8,900,920 44,128,992 1,017,408,525 22,094,073 3,005,938,728 328,819,767 87,928,385 9,166,206 2,085,977 25,558 6,208,730 3,876,566 742,403 83,158,366 7,742,008 3,506,239 91,229,382 51,034,264 1,072,225 14,296,005 345,415,972 8,073,654 1,044,381,707 594,513,956 159,801,313 13,143,498 2,154,829 25,558 12,286,618 6,193,839 1,385,992 177,899,676 16,147,547 7,829,024 163,998,630 82,501,887 7,828,695 29,832,987 671,992,553 14,020,419 1,961,557,021 500,724,043 104,500,367 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 (a) Salary and allowances include an amount of Tk.17,859,896 being Company’s Contribution to provident fund for the period January 2015 to June 2016. (b) The value of imported stores and spares consumed during January 2015 to June 2016 Tk.138,743,197 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. 86 I Audit Report 2015-16 l Notes to the Financial Statements 27. Administrative Expenses This consists of as follows : January 2015- June 2016 (18 Months) January- June 2016 (6 Months) January - December 2015 (12 Months) January - December 2014 (12 Months) Amount in Taka Salary & Allowances Rent Repairs and Maintenance Registration & Renewals Travelling & Conveyance Entertainment Printing & Stationery Audit Fee Telephone, Internet & Postage Electricity, Gas & Water Legal & Consultancy Company Secretarial, Regulatory- Fee and AGM Expense Advertisement Training & Conference Depreciation Remuneration to Independent Directors Other Expenses 342,562,459 15,223,160 55,605,625 5,135,570 34,405,438 7,288,932 6,315,776 2,100,000 7,915,115 16,274,881 9,730,579 53,230,398 180,296 14,694,117 39,347,290 580,000 78,748,285 689,337,921 120,449,116 4,984,300 18,551,667 1,764,573 11,831,723 2,377,334 2,311,214 700,000 2,580,651 5,404,326 3,825,488 14,036,401 107,606 4,791,483 13,358,628 260,000 33,646,294 240,980,804 222,113,343 10,238,860 37,053,958 3,370,997 22,573,715 4,911,598 4,004,562 1,400,000 5,334,464 10,870,555 5,905,091 39,193,997 72,690 9,902,634 25,988,662 320,000 45,101,991 448,357,117 193,314,218 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 (a) Salary and allowances include an amount of Tk. 8,489,904 being Company’s Contribution to provident fund for the period January 2015 to June 2016. . (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 and Audit Committee 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 1,363,985,413 69,104,942 9,477,978 551,506,091 46,440,194 48,418,106 20,177,209 11,372,077 57,798,871 81,919,508 24,655,215 258,105,667 589,159,506 179,138,483 52,596,752 63,647,883 543,786,599 87,751,874 27,551,642 4,086,594,010 452,028,002 27,790,444 2,899,223 177,257,116 16,523,966 17,825,606 7,312,050 4,266,008 21,599,701 18,835,250 8,178,450 92,822,945 197,766,282 69,074,607 12,926,705 18,050,363 203,307,856 28,786,561 8,639,297 1,385,890,432 911,957,411 41,314,498 6,578,755 374,248,975 29,916,228 30,592,500 12,865,159 7,106,069 36,199,170 63,084,258 16,476,765 165,282,722 391,393,224 110,063,876 39,670,047 45,597,520 340,478,743 58,965,313 18,912,345 2,700,703,578 748,845,866 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 (a) Salary and allowances include an amount of Tk. 32,629,498 being Company’s Contribution to provident fund for the period January 2015 to June 2016. (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 despatch expense. Notes to the Financial Statements l Audit Report 2015-16 I 87 Amount in Taka 34. Related Party Disclosures 29. Other Income This is arrived at as follows : January 2015- June 2016 (18 Months) January- June 2016 (6 Months) January - December 2015 (12 Months) January - December 2014 (12 Months) Interest on FDR & Short term Investment Dividend Income Royalty Exchange Rate Fluctuation Gain / (Loss) Profit on Sale of Fixed Assets (Note 35) 404,847,333 1,427,955 10,634,016 (5,406,570) 1,156,189 412,658,923 100,525,928 - - 379,817 74,852 100,980,597 304,321,405 1,427,955 10,634,016 (5,786,387) 1,081,337 311,678,326 489,970,647 1,427,955 24,763,177 1,452,991 3,556,877 521,171,647 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 588,417,111 152,835,514 149,565,303 166,656,402 35,067,043 71,030,756 421,760,709 117,768,471 78,534,547 98,800,975 40,563,498 1,030,182,401 37,698,000 10,759,966 321,212,167 61,102,975 29,803,532 708,970,234 391,510,508 175,227,715 64,812,955 71,225,739 21,538,046 724,314,963 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 January 2015- June 2016 (18 Months) January- June 2016 (6 Months) January - December 2015 (12 Months) Amount in Taka January - December 2014 (12 Months) (i) Tax provision for current period (ii) Short/(Excess) Provision for earlier year 766,053,375 (29,913,148) 736,140,227 310,173,315 - 310,173,315 455,880,060 (29,913,148) 425,966,912 421,487,672 15,295,172 436,782,844 (a) Earnings attributable to the Ordinary Shareholders Tk. 2,948,053,854 993,769,338 1,954,284,516 1,528,297,573 (b) Weighted average number of Ordinary Shares outstanding during the period (Note 3.15) Nos. Earnings Per Share (EPS) / 386,244,234 386,244,234 386,244,234 386,244,234 Adjusted EPS Tk. 7.63 2.57 5.06 3.96 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. (b) Bangladesh Export Import Co. Ltd. Short Term Investment & Interest there on Local Delivery Distribution Commission Nature of Transactions Value of Transaction Balance at Period End 1,430,821,670 - 1,439,037,813 21,290,407,357 322,248,539 1,035,989,018 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 period ended 30 June 2016: Particulars of Assets Cost Accumulated Depreciation Written Down Value Sales Price Profit / (Loss) Mode of Disposal Name of Parties 409,247 Office Equipment Plant & Machinery 665,000 Furniture & Fixture 16,946,545 11,988,652 4,957,893 4,929,870 2,531,542 1,400,344 3,579,836 Transport & Vehicle Tk. 37,652,501 29,224,737 8,427,764 9,583,953 8,183,994 1,532,377 537,150 6,520,549 9,716,371 7,057,699 3,931,886 (1,123,130) Negotiation Various Individuals Various Individuals Various Individuals Various Individuals 127,850 Negotiation (28,023) Negotiation 2,179,492 Negotiation 1,156,189 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 : Remuneration Gratuity Contribution to Provident Fund Bonus Medical Others Amount in Taka January 2015- June 2016 (18 Months) 295,224,430 10,779,325 12,831,690 30,545,000 6,311,696 32,899,347 388,591,488 (b) The above includes salary, allowances, and perquisites amounting Tk. 47,917,879 paid to the Managing Director. (c) This also includes Tk. 580,000 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 Item Unit Production Capacity Actual Production Capacity Utilization Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Million Pcs Million Pcs 2015 (12 months) 2014 (12 months) 2015 (12 months) 2014 (12 months) 2015 2014 4,160.90 4,052.70 3,664.47 3,265.76 88.07% 80.58% 94.46 94.03 75.90 72.37 80.35% 76.96% Production does not include goods manufactured under contract manufacturing arrangement from third parties manufacturing sites. (b) Deferred Tax Expense / (Income) 33. Earnings Per Share (EPS) (26,356,152) 709,784,075 16,765,213 326,938,528 (43,121,365) 382,845,547 144,475,316 581,258,160 rendered. 37. Production Capacity and Utilization 88 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 89 38. Capital Expenditure Commitment 46. Events after The Reporting Period Company’s committed capital expenditure relating to the procurement of Machinery and Equipment as on June 30, 2016 is US$ 1,706,236. 39. Finance Lease Commitment On October 6, 2016 the Directors recommended 5% cash dividend (i.e. Tk. 0.5 per share) in addition to 10% cash dividend (i.e Tk. 1.00 per share) and 5% Stock dividend (i.e. 5 shares for every 100 shares held) recommended on April 20, 2016. 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. At 30 June 2016, the company has annual commitment under finance leases as set out below : 47. Financial Risk Management Leases expiring within 1 year Leases expiring within 2-5 years (inclusive) 40. Claim not Acknowledged as Debt 157,380,075 412,250,396 569,630,471 Tk. There is no claim against the company not acknowledged as debt as on 30 June 2016. 41. Un-availed Credit Facilities The company has an un-availed foreign currency loan of US $ 44.988 million sanctioned by BHF-Bank Aktiengesellshaft, Frankfurt, Germany to partially finance the machinery and equipment to be procured for expansion and diversification project being implemented by the company. The loan shall have to be availed latest by July 2017 as per approval of Bangladesh Investment Development Authority. However, the company has approached for extension of the same up to March 2018. 42. Payments Made in Foreign Currency : Import of Machinery, Equipments & Spares Import of Raw & Packing Material Regulatory Fees & Other Expenses 15,775,833 58,323,719 11,304,585 Foreign Currency (Equivalent US$) Taka 1,243,943,838 4,594,289,751 883,443,526 No other expenses including royalty, technical expert and professional advisory fee, interest, etc. was incurred or paid in foreign currencies except as stated above. 43. Foreign Exchange Earned / Received : (a) Collection from Export Sales of US$ 16,200,450 (b) Royalty US$ 320,005 (c) Loan from BHF Bank, Germany US$ 6,571,052 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. 150,788,789 against disputed income tax claims for the year 1999, 2007, 2008 and 2010. 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. 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 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 30 June 2016 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 6 October, 2016 Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer 90 I Audit Report 2015-16 l Notes to the Financial Statements Notes to the Financial Statements l Audit Report 2015-16 I 91 # 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 40th Annual General Meeting of the Company to be held on Saturday, the 19th November, 2016 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 November, 2016. Signed by the said in presence of ___________ ___________ ___________ ___________ ___________ ___________________ ___________________ (Signature of the Proxy) Revenue Stamp Tk. 20.00 ____________________ __ Signature of the Shareholder(s) Dated: ___________ ___ Register Folio / BOID No. : ___________ ___________ ___________ ___________ __ ____________________ (Signature of the Witness) Dated: __________________ Note: A member entitled to attend and vote at the Annual General Meeting may appoint a Proxy to attend and vote in his/her stead. The Proxy Form, duly stamped, must be deposited at the Registered 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 40th Annual General Meeting being held on 19th November, 2016 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 friend or children accompanying with honourable Shareholder or Proxy cannot be allowed into the meeting. 2. Please present this slip at the reception desk. Audit Report 2015-16 I 93 ______________________ Signature(s) of Shareholder(s) 92 I Audit Report 2015-16 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 Corporate Headquarters 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 Legal Advisor Rafique-ul Huq Barrister-at-Law 47/1 Purana Paltan Dhaka-1000, Bangladesh Auditors 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 33 Creechurch Lane London EC3A 5EB Custodian HSBC Anchor Tower, 1/1-B, Sonargaon Road Dhaka- 1205, Bangladesh Depository Bank The Bank of New York Mellon 101 Barclay Street 22 W-New York, NY 10286- USA www.beximcopharma.com Follow us Like us Watch BEXIMCO PHARMACEUTICALS LIMITED 48 | Annual Report 2015-16 Annual Report 2015-16 | 49 

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