Boston Properties
Annual Report 2018

Plain-text annual report

A Company’s Achi evement A Country’s Pride 2018 Annual Report | 2017-18 SCRIP Award is among the most prestigious accolades in pharma and biotech industry recognizing the highly successful companies and individuals for their important roles in improving healthcare around the world. Annual Report 2017-18 BEXIMCO PHARMACEUTICALS LIMITED 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 Audit Committee Executive Committee Management Committee Key Events in History Managing Director’s Statement 2017-18 Highlights Post Period Highlights Acquisition of Nuvista Pharma Our Manufacturing Capabilities Expansion Projects What We Offer Global Presence Accolades and Awards Regulatory Approvals Compliance Research and Development 05 08 08 08 09 10 13 15 16 18 20 24 31 32 33 34 36 37 Distribution and Marketing Environment, Health and Safety What We Do for the Society Corporate Events Notice of Annual General Meeting Chairman’s Statement Report of the Directors’ to the Shareholders Report of the Audit Committee Shareholders’ Meeting Value Added Statement Audited Financial Statements- Consolidated Audited Financial Statements- Beximco Pharma 38 39 40 42 45 46 48 60 62 64 65 82 Audited Financial Statements- Nuvista Pharma 110 Proxy Form and Attendance Slip Here’s to the future Here’s to life About the Company Beximco Pharmaceuticals Ltd. is a leading manufacturer and exporter of medicines in Bangladesh. Incorporated in 1976, the company started its operation by importing products from Bayer, Germany and Upjohn, USA and selling them in the local market. In 1980 Beximco began manufacturing of these products under licensing arrangement and launched its own formulation brands in 1983. From that humble beginning, Beximco Pharma has grown from strength to strength, and today it has become an emerging global generic drug company from the region. 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 including the highly regulated markets of USA, Europe, Canada and Australia. The company has won the National Export (Gold) trophy a record 5 times and remains the only company in the country to win the highly prestigious SCRIP Award as the Best Pharma Company in an Emerging Market. It also has the unique distinction as the only Bangladeshi company to get listed on the AIM of London Stock Exchange. In Bangladesh, the company is listed with both Dhaka and Chittagong Stock Exchanges. Beximco Pharma also has a majority stake in Nuvista Pharma (formerly Organon Bangladesh), a leading hormone and steroid manufacturer in the country. The company currently employs more than 4000 employees including doctors, pharmacists, engineers, chemists, accountants, business graduates and other white collar professionals. About the Company | Annual Report 2017-18 | 5 We take it minute by minute, drop by drop, molecule by molecule. The miracle of a pyramid is in the perfection of every stone. The miracle of life is in the health of every cell. At Beximco Pharma, we are tireless at achieving such perfection in every molecule of our medicines. That’s our little contribution to life. Here’s to perfection. Here’s to life. Board and Management Salman F Rahman Vice Chairman A S F Rahman Chairman The Board of Directors A S F Rahman Chairman Salman F Rahman Vice Chairman Nazmul Hassan 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 Audit Committee Mohammad Asad Ullah, FCS Executive Director & Company Secretary Dr. Abdur Rahman Khan Chairman Shah Monjurul Hoque Member Osman Kaiser Chowdhury Member Executive Committee Osman Kaiser Chowdhury Member of the Board of Directors Nazmul Hassan Rabbur Reza Ali Nawaz Afsar Uddin Ahmed Managing Director Chief Operating Officer Chief Financial Officer Director, Commercial 08 | Annual Report 2017-18 | The Board of Directors Management Committee Nazmul Hassan Managing Director Osman Kaiser Chowdhury Member of the Board of Directors Rabbur Reza Chief Operating Officer Ali Nawaz Chief Financial Officer Rizvi Ul Kabir Director, Marketing Afsar Uddin Ahmed Director, Commercial Lutfur Rahman Director, Manufacturing Shamim Momtaz Director, Manufacturing Mohd. Tahir Siddique Director, Quality A R M Zahidur Rahman Director, Production Zakaria Seraj Chowdhury Director, International Marketing Jamal Ahmed Choudhury Executive Director, Accounts & Finance Ms. Roksana Hassan Executive Director, Financial Compliance Audit and Internal Control Prabir Ghose Executive Director, Quality Assurance M A Arshad Bhuiyan Deputy General Manager, HR Management Committee | Annual Report 2017-18 | 09 2008 Received GMP accreditation from Therapeutic Goods Administration (TGA), Australia and Gulf Central Committee for Drug Registration, for GCC states as the first Bangladeshi company 2009 Received GMP approval from ANVISA, Brazil as the first Bangladeshi company 2011 Received GMP accreditation from AGES, Austria (for European Union) 2012 Launched Salbutamol HFA inhaler (Azmasol®) in Singapore 2006 Launched CFC free HFA inhalers for the first time in Bangladesh 2005 Got listed on the Alternative Investment Market (AIM) of London Stock Exchange (LSE) through issuance of GDRs 2003 Introduced anti-retroviral (ARV) drugs as the first Bangladeshi company 1993 Russia became destination for formulation products the first export 1992 Started export operations with APIs 1985 Listed on Dhaka Stock Exchange 1983 Launched own formulation brands 1980 Started manufacturing products of Bayer AG, Germany and Upjohn Inc., USA, under license agreements 1976 Company incorporated Commenced export of ophthalmic products to Europe 2013 2014 - Received GMP accreditation from Taiwan Food & Drug Administration (TFDA) and Health Canada - Exported medicine to Australia and Romania 2015-16 - Received GMP approval from the U.S. FDA as the first Bangladeshi company - Launched generic version of revolutionary hepatitis C drugs Sovaldi® and Harvoni® - Received product approval from Health Canada - Entered the Gulf pharma market (Kuwait) - Won National Export Trophy (Gold) for the record 5th time 2016-17 - Commenced export of medicine to the USA. - Company’s first overseas collaboration with BioCare Manufacturing Sdn Bhd based in Malaysia. - Granted a sub-license by Medicine Patent Pool of the UN to produce Bristol-Myers Squibb’s new hepatitis C drug Daclatasvir. 2017-18 - Won the “Scrip Award” in the category of “Best company in an emerging market” - Company’s oral solid dosage facility received WHO prequalification - Acquired a majority stake in Nuvista Pharma Limited (formerly Organon Bangladesh Limited) y r o t s i H n i s t n e v E y e K 10 | Annual Report 2017-18 | Key Events in History 2008 Received GMP accreditation from Therapeutic Goods Administration (TGA), Australia and Gulf Central Committee for Drug Registration, for GCC states as the first Bangladeshi company 2009 Received GMP approval from ANVISA, Brazil as the first Bangladeshi company 2011 Received GMP accreditation from AGES, Austria (for European Union) 2012 Launched Salbutamol HFA inhaler (Azmasol®) in Singapore 2013 Commenced export of ophthalmic products to Europe 2014 - Received GMP accreditation from Taiwan Food & Drug Administration (TFDA) and Health Canada - Exported medicine to Australia and Romania 2015-16 - Received GMP approval from the U.S. FDA as the first Bangladeshi company - Launched generic version of revolutionary hepatitis C drugs Sovaldi® and Harvoni® - Received product approval from Health Canada - Entered the Gulf pharma market (Kuwait) - Won National Export Trophy (Gold) for the record 5th time 2016-17 - Commenced export of medicine to the USA. - Company’s first overseas collaboration with BioCare Manufacturing Sdn Bhd based in Malaysia. - Granted a sub-license by Medicine Patent Pool of the UN to produce Bristol-Myers Squibb’s new hepatitis C drug Daclatasvir. 2017-18 - Won the “Scrip Award” in the category of “Best company in an emerging market” - Company’s oral solid dosage facility received WHO prequalification - Acquired a majority stake in Nuvista Pharma Limited (formerly Organon Bangladesh Limited) 2006 Launched CFC free HFA inhalers for the first time in Bangladesh 2005 Got listed on the Alternative Investment Market (AIM) of London Stock Exchange (LSE) through issuance of GDRs 2003 Introduced anti-retroviral (ARV) drugs as the first Bangladeshi company 1993 Russia became the first export destination for formulation products 1992 Started export operations with APIs 1985 Listed on Dhaka Stock Exchange 1983 Launched own formulation brands 1980 Started manufacturing products of Bayer AG, Germany and Upjohn Inc., USA, under license agreements 1976 Company incorporated Nazmul Hassan Managing Director Managing Director’s Statement Dear Shareholders, Bangladesh has become one of the fastest growing economies in the world maintaining more than 6% growth over the last decade and an impressive 7% plus growth in the last couple of years. Continued socioeconomic progress has led Bangladesh graduating to developing nation status, and country’s remarkable achievements in healthcare have been lauded globally. The Bangladesh pharmaceutical market continues to register a healthy double digit growth reaching Tk 201.7 billion during 2017-18. Local companies continue to dominate the top 10 list and they account for almost 70% of the market. 2017-18 was a good year for Beximco Pharma, on the back of a strong performance of our key brands. Company performed very well across all therapeutic categories, especially in chronic therapy segment. Key therapeutic areas like cardiovascular, anti-diabetic, respiratory performed exceptionally well, outperforming the market growth. In the acute therapy area, analgesics, antiinfectives and musculoskeletal also saw impressive results. During the period under review the company expanded its portfolio with 16 new products and 5 of them were launched for the first time in Bangladesh. market continues to register a healthy 201.7 billion during 2017-18. Local double digit growth The Bangladeshi pharmaceutical reaching Tk companies continue to dominate the top 10 list and they account for According to the latest global healthcare report “2018 and Beyond: Outlook and Turning Points” from IQVIA, the share of global medicine spending from pharmerging markets (22 developing nations including Bangladesh, India, Pakistan, Russia, Egypt, Philippines, China, Thailand, Mexico, South Africa etc.) has risen sharply from 13% in 2007 to 24% in 2017. This was largely driven by governments’ efforts to expand access to healthcare as well as the substantial investments made by the manufacturers for expanded operations. Bangladesh with the highest CAGR growth (nearly 20%) during 2013-17, is projected to maintain the lead with CAGR around 15% during 2018-22 period among all the pharmerging nations. almost 70% of the market. IQVIA report shows global pharmaceutical market in 2017 was valued at $1.14 trillion growing by around 3.5% over the previous year. On the other hand, global generic drugs market, valued at $350 billion, is growing at a much higher rate. This will continue as there is increasing pressure from governments around the world to contain healthcare cost and also because more and more blockbuster drugs are going off patent every year. This creates huge opportunity for generic drug industry. We always believe Bangladesh can capitalize on the opportunities in generic drug space with its skill, regulatory compliance, quality standards and above all competitiveness. Currently, Bangladesh has the facilities for producing advanced medicines like biosimilars, vaccines, insulins and oncology products alongside active pharmaceuticals ingredients and medical devices. The government has also taken various initiatives to promote the industry and realize its actual export potential. Country’s pharmaceuticals exports fetched $103.46 million in the last fiscal year, up 16.03 percent year-on-year. Our export business posted excellent 37% growth. We have a growing and visible presence in the US market with 6 products approved by the US FDA and 4 of them being exported. We hope US would be one of our largest export markets in terms of value within the next 3-4 years. You would be delighted to know Beximco has won the highly prestigious Scrip Award 2017 in the category of Best Company in an Emerging Market. It’s a global recognition of the company’s considerable progress made in recent times. We will continue to foster partnerships with global MNCs and shall reinforce our efforts to achieve Managing Director’s Statement | Annual Report 2017-18 | 13 our aspiration to become an important and highly admired global generic company. We have completed the first-ever acquisition in the history of Bangladesh pharma industry, taking a majority stake of Bangladesh based hormones and steroids specialist Nuvista Pharma (formerly Organon Bangladesh Limited). Nuvista offers a good strategic fit with Beximco Pharma; almost 70% of their product range does not compete with our portfolio. Hormonal products were one of the growth areas for Beximco as we are focused on strengthening our presence in chronic segment. Nuvista acquisition will definitely help accelerate our business in the coming days. We have completed the first-ever acquisition in the history of Bangladesh pharma industry, taking a majority (formerly and steroids specialist Nuvista Pharma stake of Bangladesh based hormones We have continued making investment in expanding capacity, including the ‘Unit III’ oral solids, semi-solids and liquids at Tongi site. This large scale facility is now expected to be operational by the end of 2019. Once operational the Unit III facility will have an annual capacity of about 5 billion solid-dose tablets, capsules and sachets; 70 million semi-solid units, including creams, ointments, liquid sachets and lotions; and 130 million large- and small-volume bottles of liquid formulations. Our state-of-the-art human insulin facility is now ready and commercial launch is expected by Q1 of 2019. The metered dose inhaler expansion project involving single stage operation is completed while second line of single capsule DPI is nearing completion. We are also preparing for biosimilar launch in the near future in collaboration with global partner. Bangladesh Organon Limited). Beximco Pharma has completed its technology transfer to Malaysia based BioCare Manufacturing in establishing the first metered dose inhaler facility in Malaysia under the government’s Economic Transformation Program. The facility, located at Malaysia’s Seri Iskandar pharmaceuticals park, is now fully operational. By now we have secured accreditations from almost all major global regulatory authorities and in this year our Unit II oral solid dosage (OSD) facility got WHO prequalification status. Prequalification is a United Nation’s program provided by WHO to assess the quality, safety and efficacy of medicinal products procured by the international agencies. This will largely enable us participate in international tenders by global agencies. Going forward we will continue to invest in building our capabilities and focus our strategy in areas where we believe we have ample opportunities to grow. I would like to take this opportunity to thank each of our employees, shareholders and stakeholders for the continued support and confidence on the company and its management. Nazmul Hassan Managing Director 14 | Annual Report 2017-18 | Managing Director’s Statement Completed the acquisition of a majority stake in Nuvista Pharma Limited Won the prestigious Scrip Award 2017 in the category of ‘Best Company in an Emerging Market’ Oral solid dosage (Unit II) received the WHO prequalification Became the first Bangladeshi pharmaceutical company to commence export to Canada Launched 16 products in the domestic market; Five of which were launched for the first time in Bangladesh Completed 46 registrations of 38 products in 22 countries Entered three (03) new countries- Botswana, Zambia and Uzbekistan Commenced export of Sotalol Hydrochloride (80 mg, 120 mg and 160mg) and Methocarbamol (500mg and 700mg) to the US market • • • • • • • •  Completed the acquisition of a majority stake in Nuvista Pharma Limited Won the prestigious Scrip Award 2017 in the category of ‘Best Company in an Emerging Market’ Oral solid dosage (Unit II) received the WHO prequalification Became the first Bangladeshi pharmaceutical company to commence export to Canada Launched 16 products in the domestic market; Five of which were launched for the first time in Bangladesh Completed 46 registrations of 38 products in 22 countries Entered three (03) new countries- Botswana, Zambia and Uzbekistan Botswana, Zambia and Uzbekistan Botswana, Zambia and Uzbekistan Botswana, Zambia and Uzbekistan Botswana, Zambia and Uzbekistan Botswana, Zambia and Uzbekistan Commenced export of Sotalol Hydrochloride (80 mg, 120 mg and 160mg) and Methocarbamol (500mg and 700mg) to the US market s t h g i l i h g H 8 1 - 7 1 0 2 2017-18 Highlights | Annual Report 2017-18 | 15 • • • • • • • • s t h g i l i h g H d o i r e P t s o P • Received US FDA approval for Nadolol tablets and Sotalol AF tablets • Launched fourth product, Metformin Hydrochloride (500mg and 750mg), an anti-diabetic, extended release drug to the US market • Won the SCRIP Award 2018 in the category of "Community Partnership of the Year" • Awarded Superbrand 2018-19, as the only pharma company in the country 2018 Products launched 1st time in Bangladesh 16 | Annual Report 2017-18 | Post Period Highlights Knowledge Center Work in progress Beximco Pharma Acquires Nuvista Pharma Beximco Pharma completed the acquisition of a majority shareholding in Nuvista Pharma, a pharma company specializing in hormones and steroid drugs. This is the first acquisition in the history of country’s pharma industry and to mark this occasion a brief ceremony was held at Radisson Blu Dhaka Water Garden in presence of the Industries Minister Amir Hossain Amu MP, high officials from different government bodies, banks, pharma industry, drug regulatory authority and senior officials from Beximco Pharma and Nuvista. Mr. Amu praised about the pharma industry’s rapid progress and its important contribution to country’s economic development hoping such initiatives would open up new opportunities of growth for the pharma industry. 18 | Annual Report 2017-18 | Beximco Pharma acquires Nuvista Pharma Beximco Pharma acquires Nuvista Pharma | Annual Report 2017-18 | 19 Our Manufacturing Capabilities Tongi Site Company’s main manufacturing site at Tongi, Gazipur, is spread over an area of 23 acres which houses a number of self- contained production units including oral solids, metered dose inhalers, intravenous fluids, liquids, ointments, creams, suppositories, ophthalmic drops, injectables, prefilled syringes, nebulizer solutions etc. The site has its own infrastructure to ensure adequate generation and distribution of electricity with an installed capacity of 15 MW. In addition, the site contains water purification, effluent treatment, liquid nitrogen and steam generation, and 125,000 sq ft 5-tier GMP compliant warehouses. The state-of-the-art oral solid dosage facility has been audited and approved by the US FDA. This facility incorporates modern technological advancements with automated material handling systems and multilevel designs to enable gravity feed between processing stages. It provides larger capacity and a stronger platform to manufacture value added generics for highly regulated markets, and also offering the company as an attractive contract manufacturing partner. The company is now implementing a massive expansion project to diversify product portfolio and expand production capacity. A purpose built five storied building with total floor space of approx. 536500 sq ft has been constructed to accommodate the production facilities. Kaliakoir Site The Kaliakoir plant contains manufacturing facilities for penicillin products, both formulation and active pharmaceutical ingredients (APIs). In compliance with cGMP regulations, the penicillin production is carried out at this facility which is few miles away from the Tongi site. All the plants are highly automated with equipment sourced from reputed suppliers based in Germany, USA, UK, Switzerland, China, India etc. Oral Solid Dosage 20 | Annual Report 2017-18 | Our Manufacturing Capabilities Intravenous Fluids Ophthalmics, LYO & Pre-filled Syringes Our Manufacturing Capabilities | Annual Report 2017-18 | 21 Our Manufacturing Capabilities | Annual Report 2017-18 | 21 Metered Dose Inhaler & Dry Powder Inhaler Insulin Facilities & R&D Centre 22 | Annual Report 2017-18 | Our Manufacturing Capabilities Warehouse API Unit-I Our Manufacturing Capabilities | Annual Report 2017-18 | 23 Expansion Projects 24 | Annual Report 2017-18 | Expansion Projects Beximco’s ongoing mega expansion projects include ‘Unit III’ oral solids, semi-solids and liquids facilitis worth $128 million in Tongi. We continue to make major investment in this large scale facility which is expected to be completed by Q3 2019. Once operational the Unit III facility will have an annual capacity of about 5 billion solid-dose tablets, capsules and sachets; 70 million semi-solid units, including creams, ointments, liquid sachets and lotions; and 130 million large- and small-volume bottles of liquid formulations. Our state-of-the-art human insulin facility, in collaboration with a European partner, is now ready for commercial operations. The facility will produce 3 million vials and cartridges. Single stage MDI and multidose DPI projects are progressing well while new nasal spray unit is completed and now undergoing qualifications. Expansion Projects | Annual Report 2017-18 | 25 Ongoing Expansion 26 | Annual Report 2017-18 | Expansion Projects Expansion Projects Work in progress Expansion Projects | Annual Report 2017-18 | 27 Unit III • New facility for oral solid dosage, liquid and semi-solid products • Total area 536500 sq ft • Annual production capacities will be as follows: - OSD- approx. 5 billion (tablets, capsules, sachets, etc.) - Liquids- approx. 130 million bottles (large and small vol. bottles) - Semi-solids- approx. 70 million (creams, ointments, liquid sachets, lotions, etc.) 28 | Annual Report 2017-18 | Expansion Projects Human Insulin facility • State-of-the-art facility in collaboration with European company • Production capacity: 3 million vials and cartridges Inhaler Expansion • Metered Dose Inhaler (pMDI) – Installing single stage line (2 million capacity) • Single Dose Dry Powder Inhaler (sDPI) – Second line for single capsule based inhaler • Multi-dose Dry Powder Inhaler (mDPI) – A new multi-dose dry powder inhaler (similar device to GSK’s Seretide® Accuhaler) Expansion Projects | Annual Report 2017-18 | 29 Nasal Spray Unit • Completed in 2018 • Annual Capacity: 2.5 million bottles API Facility • New API unit II: Project to produce high value APIs is progressing well 30 | Annual Report 2017-18 | Expansion Projects ® Maxhaler® Each blister dose contains Salmeterol 50 µg (as Salmeterol Xinofolate) and Fluticasone Propionate BP 250 µg 60 Blisters Dry Powder Inhaler Use only as directed by a registered physician ® Maxhaler is a registered trademark of Beximco Pharmaceuticals Ltd. TONGI, BANG L A D E S H What We Offer Beximco Pharma currently produces more than 300 generics available in well over 500 presentations and also produces a number of active pharmaceutical ingredients (APIs). Beximco Pharma’s portfolio encompasses various therapeutic categories namely antibiotics, analgesics, anti-diabetics, respiratory, cardiovascular, central nervous system, dermatology, gastrointestinal etc. The company has sound expertise with specialized and advanced drug delivery systems such as metered dose inhalers, dry powder inhalers, nasal sprays, sterile ophthalmics, lyophilized injectables, oral thin films, suppositories etc. that have provided strong differentiation for the company. 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. Napa, Napa Extra, Neofloxin, Neoceptin R, Atova, Azmasol, Amdocal, Tofen etc. have been household names with strong brand equity. The expanding portfolio, including high value, differentiated, and difficult to copy products, will continue to drive strong growth in the coming days. Company also focusses on strengthening API portfolio and its pipeline includes a number of patented, high value products. ® Maxhaler® Each blister dose contains Salmeterol 50 µg (as Salmeterol Xinofolate) and Fluticasone Propionate BP 250 µg 60 Blisters Dry Powder Inhaler Use only as directed by a registered physician ® Maxhaler is a registered trademark of Beximco Pharmaceuticals Ltd. TONGI, BANG L A D E S H What We Offer | Annual Report 2017-18 | 31 North AMERICA EUROPE CIS Central ASIA Middle EAST ASIA AFRICA ASIA ASIA Central AMERICA & Caribbean ISLANDS South AMERICA AUSTRALIA New ZEALAND Global Presence Commencing export operations with the sales of APIs to Hong Kong in 1992 and finished formulation in 1993, BPL has emerged as a leading exporter of pharmaceuticals in the country. It remains the only company in the country to export medicines to USA, which is the world’s largest and most stringent pharma market. Since receiving US FDA approval in 2015, the company has so far received approval for 6 products in the US market and 4 of them have been already launched. In the year company saw registration of 46 products in 22 countries and entered three new countries- Botswana, Zambia and Uzbekistan. Currently Beximco exports over 270 generic drugs to more than 50 countries across all the continents. The company now has a strategic focus to build and strengthen presence in the regulated markets for value added generics and has a rich pipeline of products for the same. The company has a sound track record of partnerships and alliances with leading global MNCs namely GSK, Sandoz, Novartis, Pharmacia and Upjohn, Bayer Inc. etc. Beximco Pharma, as the only Bangladeshi company, has been granted a sub-license by Medicine Patent Pool (MPP) of the UN to produce Bristol-Myers Squibb’s new hepatitis C drug Daclatasvir. 32 | Annual Report 2017-18 | Global Presence 32 | Annual Report 2016-17 | What We Offer Accolades and Awards Beximco Pharma Wins Best Company in an Emerging Market at the Annual Scrip Awards 2017 North AMERICA EUROPE CIS Central ASIA Middle EAST ASIA AFRICA ASIA ASIA Central AMERICA & Caribbean ISLANDS South AMERICA AUSTRALIA New ZEALAND Beximco Pharma has won the prestigious Scrip Award in the category of ’Best Company in an Emerging Market’ at the 13th Annual Scrip Awards ceremony held in London on 29 November 2017. Mr. Rabbur Reza, Chief Operating Officer of Beximco Pharma, accepted the award on behalf of the company. This is the first time a Bangladeshi company has won this global award. Beximco Pharma Winner of Superbrands Award 2018-2020 Accolades and Awards | Annual Report 2017-18 | 33 Regulatory Approvals Benchmarked to the highest global regulatory standards, Beximco Pharma’s manufacturing facilities have been audited and approved by the following global agencies: U.S. FDA Therapeutic Goods Administration (TGA), Australia AGES (European Union) Health Canada GCC (Gulf) • WHO (World Health Organization) CPhI Worldwide 2018 Beximco Pharma team led by the COO Mr. Rabbur Reza attended the world’s largest pharma expo CPhI Worldwide held in Madrid, Spain 2018. BPL, like previous years, had a stall in this mega event to showcase its products and competitive capabilities. 34 | Annual Report 2017-18 | Regulatory Approvals • • • • • First Bangladeshi pharma company to export medicine to U.S.A Certified: US FDA  TGA Australia  AGES Austria  Health Canada  WHO  Compliance Beximco Pharma, being approved by the leading global regulatory authorities including the US FDA, TGA, AGES etc., strictly operates in compliance with current Good Manufacturing Practices (cGMP). It maintains strict quality control procedures at every step starting from sourcing of raw materials to dispatching of finished products. The Company is committed to continuous improvement of its Quality Management System by measuring key performance indicators (KPI).The Company runs its manufacturing and quality control operations following its Quality Management Systems to ensure a right first time (RFT) approach and strive to ensure the quality, safety and availability of products by performing risk assessments throughout the Supply Chain. Beximco Pharma has two separate world class Quality Control laboratories managed by senior QC Professionals. The Quality control facilities are well equipped with modern & sophisticated equipment like High Performance Liquid Chromatography (HPLC), Ultra Performance Liquid Chromatography (UPLC), Total Organic Carbon Analyzer(TOC), Potentiometric Titrator, Disintegration Tester, Ultraviolet (UV) Spectrophotometer, Fourier Transform Infrared Spectrophotometer (FTIR), Atomic Absorption Spectrophotometer, Refractrometer, Dissolution Tester etc to ensure the highest quality of its products. 36 | Annual Report 2017-18 | Compliance Research and Development Our research and development activities are closely focused on market needs and driven by technological progress. As an emerging global generic drug company, our key strength lies in our ability to excel in developing technologically complex and differentiated products. Our state-of-the-art R&D lab facilitates the development of innovative and difficult products with a focus to create unique market opportunities. We have given top priority in building and strengthening our capabilities to excel in formulating technologically complex products such as multi-layer tablet, sustained release formulation, dispersible tablet, metered dose inhalers, dry powder inhalers, prefilled syringes, lyophilized injectables, sterile ophthalmics, oral thin films etc. We are also pursuing research collaboration with universities and biotech companies both at home and abroad for strengthening our capabilities in selected areas. Research and Development | Annual Report 2017-18 | 37 Distribution and Marketing Beximco Pharma’s products are distributed to all the major medical institutions in Bangladesh and to approximately 55,000 retail outlets (pharmacies), via a distribution network operated exclusively for the Company on an arm’s length basis by a related Company, I&I Services Limited. The same channels of distribution apply to all products; only the extent of distribution varies (like super urban, extra urban and rural market distribution) depending on the products’ market characteristics. For the export market, Beximco Pharma has several distribution agreements in place with reputed distributors. With regard to transport, BPL’s products are generally moved by road throughout Bangladesh – predominantly between the factories and the 33 regional distribution depots. For export, air transport is used, especially for small volume/high value products. Alternatively, goods destined for export are transported to Bangladesh’s major port at Chittagong, which is situated some 250 kilometers from the capital. In the domestic market the Company sells directly to retail outlets (pharmacies) and major medical institutions on demand. The sales team is organized by geographical territories named by region and supervised by a Regional Sales Executive in each region. Within Bangladesh, the Company’s marketing strategy includes maintaining strong relationship with the medical community. Beximco Pharma provides value added services to the doctors, such as the publication of a quarterly medical newsletter, collaborative clinical research and the organization or hosting of regular seminars and symposia on various medical topics. In addition, Beximco Pharma’s market intelligence operations track the prescription pattern of doctors in the country, which allows the Company to conduct promotional campaigns effectively. 38 | Annual Report 2017-18 | Distribution and Marketing Environment, Health and Safety We are committed to providing a safe working environment for all the employees, and our EHS (Environment, Health and Safety) program is based on a framework of consistent standards. We take great care in preserving the environment and our initiatives are directed towards practically minimizing emissions and wastes from our manufacturing operations. We were among the first few in the world who proactively converted all the CFC based inhalers to ozone benign HFA formulations. Beximco has proper control on the waste generated from the plant. We have the biggest treatment plant in Bangladesh to treat wastewater. Solid waste is incinerated in incinerator. Dusts generated during production are collected in central dust collector. Other wastes like glass, paper, foil, film etc. are recycled. Beximco is committed to the protection and promotion of employee health. We identify and assess potential exposure to chemical and physical stresses utilizing qualitative and quantitative analysis. Appropriate work uniforms, lab coats and protective equipment are provided where required. All employees are trained on personal hygiene and they undergo complete annual health check-up. The company conducts EHS audit every year and runs training on general safety, fire fighting, emergency evacuation etc. Beximco encourages the use of recycled consumables and energy efficient equipment and technology, and promotes its green initiatives through adequate plantation around manufacturing units. Environment, Health and Safety | Annual Report 2017-18 | 39 What We Do for the Society Corporate social responsibility (CSR) at Beximco Pharma stems from the ideology of providing sustainable value to the society. 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 underprivileged of the society 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 2017-18 were: Support to Rohingya Refugees Beximco Group Vice-Chairman Mr. Salman F Rahman and Managing Director of Beximco Pharma Mr. Nazmul Hassan MP inaugurated free medical camp for Rohingya refugees at Balukhali of Ukhia in Cox’s Bazar. Beximco Pharma will continue to provide this humanitarian assistance as long as they stay in these refugee shelters. Flood Relief Beximco Pharma stood beside the victims of devastating flood that affected millions across the country. National Youth Summit 2018 Beximco Pharma was a proud sponsor of National Youth Summit 2018, the largest youth summit in the country, held during 7-10 February in Cox’s Bazar. The mega event was attended by hundreds of youth leaders and youth icons from all parts of the country while corporate leaders, policy makers, MPs, entrepreneurs, and renowned personalities in the country spoke on youth leadership during the 4-day summit. 40 | Annual Report 2017-18 | What We Do for the Society Free Health Camp BPL arranged 'Free Health Camp' by renowned Orthopedics at Tongipara, Gopalgonj on the occasion of 98th birth anniversary of Father of the Nation, Bangabandhu Sheikh Mujibur Rahman 62nd Annual Science Festival 2018 Beximco pharma was a the key sponsor of 62nd Annual Science Festival 2018 which has been offering a big platform for the students to come up with innovative science ideas for the last 60 years. The festival was organized by Scintilla Science Club of St Joseph School during March 16-19, 2018. to initiatives 7th Kibria International Print Fair 2018 Beximco Pharma, as a responsible corporation, extends support that promote and celebrate Bangladeshi arts and culture. BPL was the proud sponsor of 7th Kibria International Print Fair 2018, held during February 15-17, at Zainul Gallery, Faculty of Fine Art, DU. Cultural Affairs Minister Asaduzzaman Noor inaugurated the fair while renowned artist Rafiqun Nabi attended the event as special guest. Eminent and young printmakers from various institutes and organisations from Bangladesh, India and Spain exhibited their works at the event. 5th Leadership Summit 2018 5th Leadership Summit 2018, organized by Bangladesh Brand Forum, was held on April 07 at Le Meridien, Dhaka. Beximco Group was the key sponsor of this event while Beximco Pharma sponsored the Wall Street Journal Bestseller Book "Open Source Leadership" by Rajeev Peshawaria. This book was distributed to all the participants of the summit. What We Do for the Society | Annual Report 2017-18 | 41 Corporate Events Contribution to Worker’s Welfare Foundation Fund A part of Beximco Pharmaceuticals Ltd profit was handed over to the Bangladesh Workers’ Welfare Foundation Fund by Mr. Rabbur Reza to the Honorable State Minister, Ministry of Labor and Employment. Annual Cultural Program Management of Beximco Pharma attended the Annual Cultural Program – 2018 organized by Beximco Sramik-o- Karmachari Union on March 02, 2018 at Factory Complex. In this event, management of BPL handed over prize money, insignia, certificates, stipend money, to the meritorious children of factory’s permanent staffs as a part of CSR. Inter- Department Cricket Tournament 2018 With a view to promote sports and fitness among employees, the Inter-Department cricket Tournament of BPL was arranged on March 23, 2018. Inter-Department Volleyball Tournament With the view to promote sports and fitness among employees, the BPL Inter-Dept. Volleyball Tournament was held on 13 October, 2017. Annual Factory Picnic 2018 Annual Picnic of factory was held on January 26, 2018, at Shilpi Kunjo, Chandra, Gazipur. 42 | Annual Report 2017-18 | Corporate Events Annual Sales & Marketing Conference, 2017-18 Annual Finance Conference, 2017-18 Corporate Events | Annual Report 2017-18 | 43 Strategic Briefing Managing Director of Beximco Pharma Nazmul Hassan, Chief Operating Officer Rabbur Reza and Director of Marketing Rizvi Ul Kabir with Marketing and Sales team took part in the companys strategic discussion held in Istanbul, Turkey. Forecast Meeting FY 2018-19 ‘Forecast Meeting’ for the financial year 2018-19 was held on April 26, 2018 in Kolkata, India. Managing Director of Beximco Pharma Nazmul Hassan, with Marketing and Sales team took part in the day long discussion. 44 | Annual Report 2017-18 | Corporate Events Notice of Annual General Meeting BEXIMCO PHARMACEUTICALS LIMITED 17, Dhanmondi R/A, Road No. 2, Dhaka-1205 NOTICE OF THE FORTY-SECOND ANNUAL GENERAL MEETING Notice is hereby given that the Forty-second Annual General Meeting of the Shareholders of Beximco Pharmaceuticals Limited will be held on Saturday, the 22nd December, 2018 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur to transact the following business: AGENDA 1. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended on 30th June, 2018 together with reports of the Auditors and the Directors thereon. 2. To declare 12.5% Cash Dividend. 3. To elect Directors. 4. To appoint Auditors for the year 2018-2019 and to fix their remuneration. 5. To appoint Corporate Governance Compliance Auditor for the year 2018-2019 and to fix remuneration. By order of the Board, Dated: November 29, 2018 (MOHAMMAD ASAD ULLAH, FCS) Executive Director & Company Secretary NOTES: (1) The Shareholders whose names appeared in the Share Register of the Company or in the Depository Register on the record date i.e. 26 November, 2018, will be entitled to attend at the Annual General Meeting and to receive the dividend. (2) 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. (3) 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). (4) No gift or benefit in cash or kind shall be paid to the holders of equity securities in terms of Clause (c) of the Notification No.SEC/SRMI/2000-953/1950 dated 24 October 2000 for attending the AGM of the Company. Notice of Annual General Meeting | Annual Report 2017-18 | 45 Chairman’s Statement policy offers some Incentive packages attractive to the API industry. We have taken initiative to set up an exclusive API manufacturing facility in the dedicated API Industrial Park developed by the government to avail the growth opportunities. As I reported last year, we are making significant investments in manufacturing facilities to build and expand capacity to secure sustainable growth. You will find in this report, several such projects are now in progress. We completed manufacturing of validation batches in our human insulin facility and have rescheduled the commercial launch of Insulin by the first quarter of 2019 that misses the initial target due to practical reasons. Our largest expansion project (Unit III) to manufacture oral solid, liquid and semi- solid products is now expected to be completed by end of the third quarter instead of the earlier estimate of first quarter of 2019. We keep on driving our strategies to expand our share in the domestic market and achieve export-led accelerated growth in the longer term. We are mindful of the challenges ahead to become one of the most admired and successful companies in the region. Our success so far has given us a solid foothold to further move forward our ambition and I remain confident that we are taking the appropriate actions to grow and deliver results for our shareholders. Members of the Board of Directors have extended their unceasing co-operation throughout the year. I convey my heartfelt gratitude to them. Employees of the Company deserve special recognition for their devoted services. I acknowledge the support and co-operation we have received from our bankers, suppliers, doctors’ community, healthcare professionals, the regulatory bodies, government agencies and every other person with whom we have interacted in the conduct of our business., Finally, I am grateful to you-our valued shareholders, for your continued confidence in us. Thanking you Dear Shareholders, I am delighted to share that for the tenth consecutive year, the Company is reporting growth in sales and profit. As I look back in 2007 which was a difficult year for the Company, we noted a 3% negative growth in sales at Tk. 3,597.0 million. Our domestic sales revenue in that year was Tk. 3,474.2 million while the export was a meager Tk. 122.8 million. But we turned around in the immediate next year and from there on, continuing the growth momentum doubled our sale every five years. As we report today, our consolidated domestic and export sales revenue stands at Tk. 16,239.7 and Tk. 1,477.0 million, respectively. This is undeniably an achievement that deserves appreciation. The report of the Directors and the Financial Statements annexed thereto provides details of the operating and financial performance of the Company and you will find that the Company is moving towards the right direction. This year we acquired Nuvista Pharma -our first ever acquisition, setting a new milestone for the Pharmaceutical Industry of the country. This strategic acquisition will further reinforce our position in the domestic market and accelerate growth. Although Nuvista’s financials for the three-month post-acquisition period shows a loss of Tk. 23.3 million, I am confident that re-organized Nuvista under its competent new management will turn to be a worthy investment. Government has declared Active Pharmaceutical Ingredient (API) and Lab Regent Production and Export Policy to promote local production of API substituting import. The A S F Rahman Chairman 46 | Annual Report 2017-18 | Chairman’s Statement m¤§vwbZ ‡kqvi‡nvìvie„›`, Avwg AZ¨šÍ Avb‡›`i mv‡_ Rvbvw”Q †h, †Kv¤úvbx Zvi µgvMZ Dbœq‡bi aviv Ae¨vnZ †i‡L G eQiI weµq I gybvdv Lv‡Z cÖe„w× AR©‡b mÿg n‡q‡Q| G wb‡q Awew”Qbœ `kg ev‡ii g‡Zv Avgiv weµq I gybvdvi cÖe„w× m¤^wjZ cÖwZ‡e`b Avcbv‡`i mvg‡b Dc¯’vcb KiwQ| wcQ‡b ZvKv‡j Avgiv †`L‡Z cvB 2007 mv‡j Avgv‡`i weµq wQj 3,597 wgwjqb UvKv hv c~e©eZx eQ‡ii Zzjbvq 3% Kg| †m eQi Avgv‡`i Af¨šÍixY weµq wQj 3,474.2 wgwjqb UvKv Ges ißvwb wQj gvÎ 122.8 wgwjqb UvKv| wKš‘ cieZx© eQ‡i Avgiv Ny‡i `uvovB Ges ZLb †_‡K µ‡gvbœq‡bi wbiew”Qbœ aviv Ae¨vnZ †i‡L cÖwZ cuvP eQ‡i Avgiv Avgv‡`i weµq wظY Ki‡Z mÿg nB| GiB avivevwnKZvq eZ©gv‡b Avgv‡`i Af¨šÍixY I ißvwb weµ‡qi cwigvY `uvwo‡q‡Q h_vµ‡g 16,239.7 wgwjqb I 1,477.0 wgwjqb UvKv| GwU wbtm‡›`‡n cÖksmvi `vex iv‡L| G eQi Avgiv bywf¯Ív dvgv© AwaMÖnY K‡iwQ| GwU Avgv‡`i cÖ_g †Kvb AwaMÖnY Ges evsjv‡`‡ki dvgv©wmDwUK¨vjm BÛvwóªi Rb¨ bZzb GK gvBjdjK| GB †KŠkjMZ AwaMÖnY Af¨šÍixY evRv‡i Avgv‡`i Ae¯’vb‡K AviI kw³kvjx Ki‡e| hw`I Kb‡mvwj‡W‡UW Avw_©K cÖwZ‡e`b Abymv‡i AwaMÖnY cieZx© wZb gvm mg‡q bywf¯Ívi Avw_©K ÿwZi cwigvY 23.3 wgwjqb UvKv, Avwg wbwðZ †h cybM©wVZ bywf¯Ív Zvi bZzb `ÿ e¨e¯’vcbvi Aax‡b GKwU jvfRbK cÖwZôv‡b cwiYZ n‡e| G wc AvB Gi ¯’vbxq Drcv`b DrmvwnZKiY Gi gva¨‡g Avg`vwb wbf©iZv Kgv‡bvi Rb¨ miKvi G wc AvB Ges j¨ve wi-G‡R›U Drcv`b I ißvwb bxwZgvjv †NvlYv K‡i‡Q| GB bxwZgvjvq GwcAvB wk‡íi Rb¨ AvKl©Yxq wKQz cÖ‡Yv`bvi cÖ¯Íve Kiv n‡q‡Q| Avgiv miKvi KZ…©K ¯’vwcZ G wc AvB BÛvwóªqvj cv‡K© GKwU ¯^Zš¿ GwcAvB Drcv`b AeKvVv‡gv ¯’vc‡bi D‡`¨vM wb‡qwQ hv Avgv‡`i e¨emv Dbœq‡bi mnvqK n‡e| MZ eQ‡ii cÖwZ‡e`‡b Avwg Avcbv‡`i Rvwb‡qwQjvg †h †UKmB cÖe„w× AR©‡bi j‡ÿ¨ Drcv`b AeKvVv‡gv wbgv©Y Ges m¤úªmviY Kivi Rb¨ Avgiv D‡jøL‡hvM¨ cwigvb wewb‡qvM KiwQ| G eQ‡ii evwl©K cÖwZ‡e`‡b G ai‡bi wKQz Pjgvb cÖK‡íi D‡jøL i‡q‡Q| Avgv‡`i Bbmywjb cÖK‡í ‡Pqvig¨v‡bi cÖwZ‡e`b f¨vwj‡Wkb e¨v‡Pi Drcv`b m¤úbœ n‡q‡Q Ges Avgiv Avkv KiwQ 2019 mv‡ji cÖ_g cÖvwšÍ‡K Avgiv Bbmywjb evRv‡i Qvo‡Z mÿg ne| ev¯Íem¤§Z wewfbœ Kvi‡Y Gi evwYwR¨K Drcv`b wKQzUv wejw¤^Z n‡q‡Q| Iivj mwjW, ‡mwg mwjW Ges wjKzBW cÖWv± Drcv`‡bi j‡ÿ¨ M„nxZ Avgv‡`i me©e„nr m¤úªmviY cÖKí BDwbU-3 Gi KvR 2019 mv‡ji Z…Zxq cÖvwšÍ‡K mgvß n‡e e‡j Avgiv Avkv KiwQ| c~e©eZx© cÖv°jb Abyhvqx GB cÖKíwU 2019 mv‡ji cÖ_g cÖvwšÍ‡K †kl nIqvi K_v wQj| Af¨šÍixY evRvi `Lj`vwiZ¡ m¤úªmviY Ges `xN©‡gqv‡` ißvbxLvZ †_‡K Avq evwo‡q †Kv¤úvwbi cÖe„w× Z¡ivwš^Z Kivi j‡ÿ¨ Avgiv Avgv‡`i Kvh©µg Pvwj‡q hvw”Q| †ew·g‡Kv dvgv©‡K Avgiv G A‡ji me‡P‡q cÖkswmZ Ges mdj †Kv¤úvwb wn‡m‡e cÖwZwôZ Ki‡Z PvB| GB jÿ¨ AR©‡bi †ÿ‡Î †h mg¯Í P¨v‡jÄ i‡q‡Q Avgiv †m e¨vcv‡i m‡PZb| Avgv‡`i AwR©Z mvdj¨ Avgv‡`i‡K AbycÖvwYZ K‡i| Avwg `„pfv‡e wek¦vm Kwi †Kv¤úvwbi cÖe„w×i aviv‡K Ae¨vnZ †i‡L ‡kqvi‡nvìvi‡`i Kvw•LZ mydj cÖ`v‡bi Rb¨ Avgiv mwVK c‡_B G¸w”Q| cwiPvjbv cl©‡`i m`m¨e„›` mviv eQi a‡i Zv‡`i Aweivg mn‡hvwMZv Ae¨vnZ †i‡L‡Qb| Zv‡`i cÖwZ Avwg Avgvi AvšÍwiK K…ZÁZv cÖKvk KiwQ| †Kv¤úvbxi Kg©xe„›` Zv‡`i wb‡ew`Z †mevi Rb¨ we‡kl ¯^xK…wZi `vwe iv‡L| Avgiv Avgv‡`i e¨vsKvi, mieivnKvix, wPwKrmKe„›`, †ckv`vi ¯^v¯’¨‡mev Kgx©, wbqš¿K ms¯’v, wewfbœ miKvix ms¯’v Ges Avgv‡`i e¨emv cwiPvjbvi mv‡_ m¤cwK©Z cÖ‡Z¨‡Ki KvQ †_‡K cÖvß mnvqZv I mn‡hvwMZvi K_v AvšÍwiKfv‡e ¯^xKvi KiwQ| cwi‡k‡l, Avgv‡`i Dci Ae¨vnZ Av¯’v ivLvi Rb¨ Avwg, Avgv‡`i m¤§vwbZ †kqvi‡nvìvie„›`‡K AvšÍwiKfv‡e K…ZÁv Rvbvw”Q| ab¨ev`v‡šÍ GGmGd ingvb ‡Pqvig¨vb Chairman’s Statement | Annual Report 2017-18 | 47 Report of the Directors to the Shareholders I am pleased to place before you the Directors’ Report and the Audited Accounts of the company for the year ended 30 June, 2018 along with the report of the auditors thereon. Economic Overview  Bangladesh macroeconomic report portrays a positive performance with impressive GDP growth, per capita income and steady inflation. Exceeding the initial target, Bangladesh achieved the highest-ever 7.86% GDP growth in the last fiscal year (2017-18). Industrial, Service and Agriculture sectors which increased by 12.06 percent, 6.39 percent and 4.19 percent respectively, contributed to the GDP growth. The per capita income has improved by 8.75 percent to $1,751 in the FY 2017-18. Inflation rate below 6% though remained under control, the domestic currency against its principal foreign currency US Dollar declined by 4% on point-to-point basis. There have been no disruptive political activities throughout the period. The political stability coupled with a remarkable performance of the economy helped sustain the continued growth of the pharmaceuticals sector. The lending interest rates of the commercial banks have somewhat declined yielding to the appeal of the business community and directives from the central bank but remains at double digit level. This is predicted to have positive impact on investment.  Government has declared Pharmaceuticals including their raw materials as the “Product of the Year” 2018 recognizing the importance of the pharmaceuticals sector in the country’s economy. Following this, a policy gazette titled “National Policy on API (Active Pharmaceutical Ingredients) and Laboratory Reagents production and Export” was passed in May 2018 to encourage local manufacture of APIs as a backward linkage to cater to the requirement of the domestic pharmaceutical formulations companies and to reduce dependence on import. The policy offers several fiscal and non-fiscal incentive measures including tax holidays, exemptions from Value Added Tax, 20% cash incentives for export, a liberal credit policy, priority in government procurement etc. among others. Different authorities and agencies involved will now develop operating procedures to implement the policy which is expected to take time. Additionally, the Government has declared 10% cash incentives for export of pharmaceutical along with specific other products for the fiscal year 2018-19. The exporters of medicine subject to certain conditions will get 10% of the value of export in cash from the government. The Pharmaceutical Industry of the country will be benefited from the supportive policies of the government.  Review of Operations The Company for the first time is reporting consolidated financial statements due to its recent acquisition of the majority stake of Nuvista Pharma. We completed the acquisition deal on April 2, 2018 and as such the consolidated financial statements include Nuvista’s operating results for the post-acquisition period of three months only.  I am happy to inform that besides achieving sales and profit targets, the Company in 2017-18 has well progressed to achieve its operational targets setting several milestones and thus strengthened its strategic positioning.  I would like to highlight the following for your consideration and informed judgments;  Acquisition of Nuvista Pharma  As you already know, Beximco Pharmaceuticals Limited has acquired 85.22% stake in Nuvista Pharma Limited, a leading pharmaceuticals company in Bangladesh specializing in hormones and steroid drugs. This is the first ever acquisition of the Company and the country’s pharmaceutical industry. Nuvista, formerly Organon (Bangladesh) Ltd., was a subsidiary of Netherlands based Organon International. It was sold to the Bangladeshi management in 2006.Nuvista has been operating in Bangladesh since 1964, with a local manufacturing facility at Tongi, Dhaka. Immediately after the acquisition, the Board of Directors of Nuvista was reconstructed. The four-member Nuvista Board now comprises three nominees from Beximco Pharma and one member from the Ministry of Industries of Government of Bangladesh who holds 12.92 percent of the paid up capital of the company. Mr. Nazmul Hassan, Managing Director and 48 | Annual Report 2017-18 | Report of the Directors to the Shareholders Mr. Rabbur Reza, Chief Operating Officer of Beximco Pharma have been appointed as Chairman and Managing Director respectively, of Nuvista Pharma. In a competitive domestic market, the acquisition of Nuvista is a good strategic fit for the Company as their strong position in hormones and steroids, with a unique portfolio of 50 generic products, complements Beximco Pharma’s existing product range. We are now concentrating on integration and re-alignment of Nuvista’s business and operating models for accelerated growth.  Sales Performance  During the period under discussion the Company attained consolidated net sales of Tk. 17,716.7 million as against Tk. 15,508.8 million representing significant 14.2% overall growth. The current period however, includes three month’s sales of the subsidiary Nuvisata Pharma which was not there in the prior period.  Beximco Pharma standalone analysis reveals that the domestic market sales grew by an impressive 10.2% to reach at Tk. 15,903.8 million as compared to Tk. 14,430.3 million of the preceding year. Our winning sales management strategies resulted expected growth in all our key therapeutic segments. Consequent to our consistent effort to expand international penetration, the export revenue increased to Tk. 1477.0 million registering an inspiring 37% rise over comparable previous period. Export now makes up 8.5% of our overall sales. During the year, we completed 46 registrations of 38 products in 22 countries; started export to Canada setting another milestone as the first Bangladeshi Company; and entered three other overseas markets- Botswana, Zambia and Uzbekistan. Since export of our first product- Carvedilol in August 2016, we have as of date, received approval of six products from the US Food and Drug Administration and commenced export of four products in the US market.  Profitability  Along with sales the Company maintained its profit growth. The consolidated pre-tax profit stands at Tk. 3,361.3 million as against Tk. 2,891.5 million earned in 2016-17 representing 16.3% YoY increase (16.4% on standalone basis). Gross margin as a percentage of sales improved despite depreciation of Taka against dollar, due to leveraging effect of increased sales volume. The operating expenses remained contained at 24.0% (23.8% on a standalone basis) of sales as against 24.1% of the prior period. The consolidated net profit rose by 13.7% (14.92% standalone basis) to Tk. 2,532.7 million as against Tk. 2,226.7 million. Credit Rating In August 2018, Credit Rating Information and Services Limited (CRISL)- the country’s leading Credit Rating company having Joint Venture with JCR-VIS Credit Rating Company Limited, Pakistan, has assigned AA+(Pronounced as Double A plus) rating in the long term and ST-1 rating in the short term to Beximco Pharmaceuticals Limited. Amendments to Memorandum and Articles of Associations  The board of Directors has decided to amend certain clauses of Memorandum and Articles of Association of the Company. An Extra-ordinary General Meeting has been convened for this purpose. Amendments to the MoA and AoA are required to accommodate the changing business needs and make them time befitting. Formation of Beximco Pharma API Limited  We reported last year that Beximco Pharma has got the allotment of two plots measuring 654 decimals in the API Industrial Park at Munshiganj, exclusively built to accommodate API manufacturing facilities. In the meantime, Government has declared API and Lab Reagent Production and Export policy to promote API manufacturing sector aiming to reduce dependence on import. As mentioned in the earlier section of this report, a package of incentives has been proposed in the said policy. Subsequent to the date of Financial Position, the Company has formed an entity named Beximco Pharma API Limited with a paid up capital of Tk. 20 million divided into 2 million shares of Tk. 10 each. The proposed Beximco Pharma API limited is a 100% subsidiary of Beximco Pharmaceuticals Limited. Since Bangladesh Company law does not permit formation of single ownership company, we have allotted a nominal 10 shares to an individual to comply with the regulatory requirement.  Report of the Directors to the Shareholders | Annual Report 2017-18 | 49 Determining Nuvista’s Fair Values at Acquisition  The Company engaged PricewaterhouseCoopers Bangladesh Pvt. Ltd. to provide estimates of the Fair Value of assets as per criteria set out in Bangladesh Financial Reporting Standard 3 (BFRS 3). Management has considered the report of the said independent firm in allocating the total consideration paid for the acquisition among various classes of acquired assets in compliance to the requirement of IFRS/BFRS 3. Note 3.6 of the annexed consolidated financial statements provides further details on the valuation.   Profit and Its Appropriation Net Profit After Tax Adjustment for depreciation of Revalued Assets From brought forward from previous year Profit Available for Appropriation Proposed Dividend: Cash Dividend Profit Carried Forward Dividend Beximco Pharmaceuticals Limited Consolidated 2017-18 2,558,971 10,383 12,061,774 14,631,128 (506,945) 14,124,183 2016-17 2,226,695 11,757 10,330,267 12,568,719 2017-18 2,532,654 10,383 12,061,774 14,604,811 (506,945) 12,061,774 (506,945) 14,097,866 The Board of Directors recommends 12.50% Cash Dividend i.e. Tk. 1.25 per share for the year ended 30 June, 2018 for onward approval in the Annual General Meeting. Retirement and Re-election of Directors Mr. Salman F Rahman 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. Salman F Rahman is co-founder of the Beximco Group. He is a renowned businessman of the country and is widely acclaimed for his contribution to the development of private sector. He anchored the key initiatives that have helped build Beximco’s corporate identity, and led the Group into becoming a leading industrial conglomerate in the country. Besides being the Vice Chairman of Beximco Group of companies, he has held key positions in many business and industry associations which include President of the Federation of Bangladesh Chambers of Commerce and Industry, President of SAARC Chamber of Commerce & Industry, President of the Metropolitan Chamber of Commerce & Industry, President of the Bangladesh Textile Mills Association, among others. Currently he is the Chairman of the Board of Editors of “The Independent” an English daily newspaper in Bangladesh and Chairman of Abahani Limited, a prominent sporting club in Bangladesh. He was the President of Bangladesh Association of Pharmaceutical Industries and Bangladesh Association of Publicly Listed Companies. Mr. Rahman has many accolades to his name. Mr. Iqbal Ahmed is the member of the Board of Directors in a number of entities within the Beximco Group of companies including Beximco Limited, Shinepukur Ceramics Limited, Beximco Synthetics Limited. He received his Bachelor’s Degree in Science from the University of Dhaka in 1966. Mr. Ahmed was the publisher of “The Independent” an English daily newspaper in Bangladesh. 50 | Annual Report 2017-18 | Report of the Directors to the Shareholders Auditors The existing Auditors, M. J. Abedin & Co., Chartered Accountants, National Plaza, 109, Bir Uttam C. R. Datta Road, Dhaka-1205 who were appointed as Auditors of the Company in the 41st Annual General Meeting of the Company has carried out the audit for the year ended 30 June 2018. 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 2018-19. The board after due consideration of the proposal made by the Audit Committee recommends for reappointment of M. J. Abedin & Co., Chartered Accountants as auditors for the year 2018-19. Statement of Directors on Financial Reports Directors are pleased to report the following: 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. Proper books of accounts of the Company have been maintained. 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. 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. Internal Control System is sound in design and has been effectively implemented and monitored. There is no significant doubt about the ability of the Company to continue as a going concern. Risks and Concerns Enterprises are not free from risks that might arise both from internal and external fronts. Like any other business or industry, Beximco Pharmaceuticals operating in a dynamic and competitive market, is also exposed to risks that may affect its business. The growth of pharmaceutical Industry in Bangladesh is predominantly driven by individual private spending which depends on the economic advancement and consequent increase in the purchasing power of the people. Any decline in economic growth could, as for any other industry, impact the future demand for pharmaceuticals. Bangladesh however, maintained a steady economic progress over the years with substantial uplift in all socio-economic indexes and it is anticipated that the trend will continue in the immediate future years. Bangladesh has set its goal to turn into a middle income country by 2021. Improvement in the standard of living, education and increased health awareness reinforced by added purchasing power is expected to trigger the demand for healthcare products in the coming years. The Company operates in a competitive domestic market. Retention and expansion of the existing market share of different therapeutics categories and addition of new products in line with the changing demand of the market are the key to achieve the desired revenue and profit targets. Beximco Pharmaceuticals has talented marketing and sales team with the proven record of success. Its strong R & D team is unrelentingly focused on development and improvement of product, process and technology to match the evolving needs.  The Company like other pharmaceutical companies of the country is dependent on import for its APIs. Any substantial increase in prices in the international market may affect future profitability. Beximco Pharma buys its raw materials from Report of the Directors to the Shareholders | Annual Report 2017-18 | 51 • • • • • • different sources across the world at competitive prices. The Company is not reliant on any single supplier for its materials and therefore reduces the individual supplier’s influence on procurement prices. Likewise, its customer base is also well diversified. Uncertainties emanating from significant changes in the pharmaceutical policy and regulations, tax regime along with unforeseen political instability may also threaten the growth potential of the pharmaceutical sector. Periodic appraisal of risks embedded in the operating activities of the business and deciding on the mitigating measures are part of the routine responsibilities of the senior management of the Company. Management Committee which comprises different functional heads of the Company meets on a monthly basis to discuss operational issues, performance and progress. Depending on the risk, it takes strategic decisions to avoid, reduce, transfer or accommodate the risks arising in the business management process. Additionally, Company’s investment decisions go through proper due diligence and decisions are made after appropriate consideration of the related risks and the Company’s acceptable risk appetite. The Company intends to earn competitive returns at acceptable risk levels. Related Party Transaction Related party transactions are carried out on an arm’s length basis. Audit committee while reviewing the financial statements periodically carries out in-depth analysis of the transactions involving related parties. Note 39 of the financial statements provides details of the transactions with the related party. Certification by the Managing Director and Chief Financial Officer The 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 July 2017 to 30 June 2018 and to the best of their knowledge and belief: 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 There is no statement which is materially untrue or misleading and there is no omission of facts in such statements No transaction has been entered into by the Company which are fraudulent, illegal or in violation of the Company’s code of conduct. Key Operating and Financial Data The summarized key operating and financial data for 2017-18 and immediately preceding five years is provided as Annexure-1 Board Meetings and Attendance Twelve Board meetings were held during the year under review. The attendance records of the Directors are as follows: Directors A S F Rahman Nazmul Hassan Iqbal Ahmed Dr. Abdur Rahman Khan Number of meetings attended Directors Number of meetings attended 9 12 11 10 Salman F Rahman Osman Kaiser Chowdhury A B Siddiqur Rahman Shah Monjurul Hoque 12 12 12 10 52 | Annual Report 2017-18 | Report of the Directors to the Shareholders • • • The Pattern of Shareholding Name-wise details Parent/Subsidiary/Associate Companies and Other Related Parties : Beximco Holdings Ltd. Bangladesh Export Import Company Ltd. New Dacca Industries Ltd. Beximco Engineering Ltd. National Investment & Finance Company Ltd. Shares held 22,634,287 2,899,933 9,405,234 877,460 1,169,545 Directors, CEO, Company Secretary, CFO, Head of Internal Audit and their Spouses and Minor Children: A S F Rahman, Chairman Salman F Rahman, Vice Chairman Nazmul Hassan, Managing Director Company Secretary, Spouse and Minor Children Chief Financial Officer, Spouse and Minor Children Head of Internal Audit, Spouse and Minor Children Executives Shareholders holding 10% or more voting interest in the Company 8,235,353 8,254,632 13,325 - - - - - Corporate Governance Compliance Report In accordance with the requirement of the Securities and Exchange Commission Notification No SEC/CMRRCD/2006-158/134/ Admin/44, Report on “Corporate Governance Compliance” is provided as Annexure - 2. On behalf of the Board A S F Rahman Chairman Report of the Directors to the Shareholders | Annual Report 2017-18 | 53 Annexure-1 Key Operating and Financial Data As on June30, 2018 (Consolidated) June 30, 2017 June 30, 2016 December 31, 2014 December 31, 2013 December 31, 2012 Taka in Thousand Authorized Capital Paid up Capital 9,100,000 9,100,000 9,100,000 9,100,000 9,100,000 9,100,000 4,055,564 4,055,564 3,862,442 3,678,516 3,503,349 3,046,390 Shareholders’ Equity 27,351,837 25,072,426 23,059,412 20,920,185 19,775,552 18,408,162 Fixed Assets (Gross) 39,081,675 31,692,789 28,756,326 25,818,728 23,051,128 20,316,639 Net Assets Value (NAV) Per Share -Taka Market Price Per Share (at end of the year) Number of shareholders Foreign Investors ICB including ICB Investors Account Sponsors, General Public & Other Institutions 67 93.9 62 113 60 57 56 60 83.50 58.70 47.20 55.90 57,982 62,741 67,679 89,913 92,831 86,290 90 879 92 874 83 878 68 882 68 880 66 898 57,013 61,775 66,718 88,963 91,883 85,326 Number of employees 4,256 3,833 3,515 3,063 2,897 2,748 For the Period / Year July 2017 to June 2018 (Consolidated) July 2016 to June 2017 July 2015 to June 2016 Jan-Dec 2014 Jan-Dec 2013 Jan-Dec 2012 17,716,717 15,508,777 13,785,325 11,206,886 10,490,699 9,289,115 1,476,978 8,285,979 3,361,334 2,532,654 1,078,472 861,653 500,469 671,289 470,116 7,184,882 6,408,857 5,104,191 4,838,800 4,389,401 2,891,482 2,564,267 2,109,556 2,093,594 1,909,829 2,226,695 1,938,894 1,528,298 1,404,763 1,319,389 Taka in Thousand - 12.5% 6.25 15.02 - 12.5% 5.49 20.58 5%* 15%* 4.78 17.47 5% 10% 3.96 14.82 5% 10% 3.82 12.36 15% - 3.77 14.83 Total Sales Export Sales Gross Profit Profit Before Tax Net Profit Dividend: Stock Cash EPS/Restated EPS Price Earning Ratio (Time) *Declared considering accounts for 18 months period. 54 | Annual Report 2017-18 | Report of the Directors to the Shareholders Graphical View of Selected Growth Indicators Taka in million Shareholders' Equity Total Sales 27,352 25,072 23,059 20,920 19,776 18,408 17,717 15,509 13,785 11,207 10,491 9,289 June 30 2018 (Consolidated) June 30 2017 June 30 2016 December 31 2014 December 31 2013 December 31 2012 July 2017 to June 2018 (Consolidated) July 2016 to June 2017 July 2015 to June 2016 Jan-Dec 2014 Jan-Dec 2013 Jan-Dec 2012 Export Sales 1,477 Net Profit 1,078 862 671 500 470 2,533 2,227 1,939 1,528 1,405 1,319 July 2017 to June 2018 (Consolidated) July 2016 to June 2017 July 2015 to June 2016 Jan-Dec 2014 Jan-Dec 2013 Jan-Dec 2012 July 2017 to June 2018 (Consolidated) July 2016 to June 2017 July 2015 to June 2016 Jan-Dec 2014 Jan-Dec 2013 Jan-Dec 2012 Report of the Directors to the Shareholders | Annual Report 2017-18 | 55 Annexure-2 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. √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ - √ √ √ √ √ - √ - - 56 | Annual Report 2017-18 | Report of the Directors to the Shareholders - N/A Company Operates in a Single Product Segment - - - N/A N/A N/A Condition No. Title 1.5 (ix) 1.5 (x) Explanation about significant variance between Quarterly Financial performance and Annual Financial Statements Remuneration to directors including Independent Directors 1.5 (xi) 1.5 (xii) 1.5 (xiii) 1.5 (xiv) 1.5 (xv) 1.5 (xvi) 1.5 (xvii) 1.5 (xviii) 1.5 (xix) 1.5 (xx) 1.5 (xxi) 1.5 (xxi) (a) 1.5 (xxi) (b) 1.5 (xxi) (c) 1.5 (xxi) (d) 1.5 (xxii) 1.5 (xxii) (a) 1.5 (xxii) (b) 1.5 (xxii) (c) 2 2.1 2.2 3 3 (i) 3 (ii) 3(iii) 3.1 3.1 (i) 3.1 (ii) 3.1 (iii) 3.1(iv) 3.1(v) 3.1(vi) 3.2 3.2 (i) 3.2 (ii) 3.3 3.3 (i) 3.3 (ii) Fair presentation in financial statements Maintaining proper books of accounts Consistent application of appropriate accounting policies, and accounting estimates being reasonable and prudent Following applicable IAS/BAS/IFRS/BFRS, and adequate disclosure for any departure there-from, if any Soundness and monitoring of internal control system Statement regarding ability to continue as going concern Significant deviations from last year’s operating results Summary of key operating/financial data of last 5 years Reason for non declaration of Dividend Number of Board meetings and attendance of directors Pattern of shareholding (along with name wise details) Parent/Subsidiary/Associate Companies & related parties Directors, CEO, CS, CFO, HOIA, their spouses & children Executives (Top 5 salaried employees other than above) Shareholders holding 10% or more voting interest Appointment/re-appointment of a director A brief resume of the director Nature of his/her expertise in specific functional areas Names of companies in which he/she holds directorship and the membership of committees of the board CFO, Head of Internal Audit and CS Appointment of a CFO, a Head of Internal Audit and a CS and defining their roles, responsibilities & duties Attendance of CFO and CS in the meetings of the Board Audit Committee Having Audit Committee as a sub-committee of the BOD Audit Committee to assist the BOD in ensuring fairness of financial statements and a good monitoring system Audit Committee being responsible to the BOD; duties of Audit Committee to be clearly set forth in writing Constitution of the Audit Committee Audit Committee to be composed of at least 3 members Audit Committee members to be appointed by BOD and at least one Independent Director to be included Audit Committee members to be “financially literate” and at least one to have accounting/financial experience Vacancy in Audit Committee making the number lower than 3 to be filled up immediately and within 1 month The CS to act as the secretary of the Audit Committee No quorum in Audit Committee meeting without one Independent Director Chairman of the Audit Committee Chairman to be an Independent Director, selected by the BOD Chairman of audit committee to remain present in AGM Role of Audit Committee Oversee the financial reporting process Monitor choice of accounting policies and principles Compliance Status (“√” in appropriate Column) Complied Complied Not Complied Remarks (if any) - N/A No remuneration was paid to any Director during the period under review except Managing Director for serving as Chief Executive and Directors including Independent Directors for their attendance in Meetings. - N/A - √ √ √ √ √ √ √ √ √ - √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Report of the Directors to the Shareholders | Annual Report 2017-18 | 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 √ √ √ √ √ √ √ - √ - - - - - √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ 58 | Annual Report 2017-18 | Report of the Directors to the Shareholders - N/A - - - - - N/A N/A N/A N/A N/A Annexure-3 Annexure-3 Certificate on Compliance of Corporate Governance Guidelines Report | Annual Report 2017-18 | 59 Report of the Audit Committee The principal purpose of the Audit Committee is to assist the Board in effective fulfillment of its oversight responsibilities. The Committee has distinct terms of reference (TOR) developed conforming to the Code of Corporate Governance issued by the Bangladesh Securities and Exchange Commission which includes but not confined to overseeing the financial reporting process, monitoring accounting policies and principles, evaluating internal control risk management practices, reviewing the statement of significant related party transactions, assessing potential conflict of interests, etc. This report outlines the activities conducted by the Audit Committee throughout the year. The Committee The Audit Committee comprises three members of the Board- two of them are Independent Directors. Dr. Abdur Rahman Khan- an Independent Director is the present Chair while Mr. Mohammad Asad Ullah, FCS is the ex-officio secretary. The Committee held four meetings during the review period.  The membership of the Audit Committee together with their attendance at the meeting is given below: Membership Designation Position in the Committee Attendance in Meeting Dr. Abdur Rahman Khan Shah Monjurul Hoque Osman Kaiser Chowdhury Mohammad Asad Ullah, FCS Independent Director Independent Director Director Executive Director & Company Secretary Review of Financial Statements Chairman Member Member Secretary 4/4 4/4 4/4 4/4 The Audit Committee in its meeting held on 23 October 2018 reviewed along with management, the Financial Statements and the report of the auditor for the year ending on June 30, 2018. During the meeting the Chief Financial Officer presented the annual accounts along with the independent auditors report to the committee. CFO briefed the Committee that the Company for the first time is presenting consolidated financial statements due to its recent acquisition of the majority stake of Nuvista Pharma which as per International Accounting Standard is to be dealt with as a subsidiary. The committee in detail looked into the compliance of the disclosure provisions as per IFRS/IAS/BFRS and other regulatory authorities including BSEC. They further discussed the financial reporting process and the adequacy of the internal control in place to prevent errors and fraudulent activities. The Committee carefully examined the related party transactions carried out between different associated  companies including the subsidiary. The committee was well satisfied that the related party transactions were made on an arm’s length basis in the normal course of business and the transactions have been appropriately disclosed in the financial statements. The independent auditors’ report also did not contain any material audit observation that called for the boards’ consideration. The committee being satisfied authorized for onward submission of the Audited Financial Statements to the Board for approval. Additionally, during the year the Committee met three other occasions to review among others, the Interim Un-audited Financial Statements issued by the company at quarter ends. In each instance, the committee held detailed discussions with senior management on different aspects of the financial statements to ensure accuracy, consistency and compliance of the reports in all material aspects. The committee also considered the related party transactions and found that all related party transactions were made on an arm’s length basis. In reliance to the reviews and considerations of the Audit Committee the Board in each case approved the Financial Statements including the Annual Audited Financial Statements for release to the shareholders. 60 | Annual Report 2017-18 | Report of the Audit Committee External Auditor The Committee assessed the independence, objectivity and expertise of the independent auditors engaged to carry out the Audit for the year 2017-18. Based on the evaluation the Committee has proposed the Board to re-engage existing auditors M/S M J Abedin & Company, Chartered Accountants, for the year 2018-19 which shall be subject to the approval of the shareholders in the Annual General Meeting. Discussion on Revised Code of Corporate Governance BSEC on 3 June 2018 issued a revised Code of Corporate Governance for the listed companies which shall be effective from 31 December 2018. The Secretary made a presentation before the Committee on the changes in the amended code from the existing guidelines. The revised Code requires among others forming  a Nomination and Remuneration Committee with terms of reference specified therein. The Committee had a thorough discussion on the issues and provided necessary directives to the management to take appropriate measures for their compliance. The Committee forwarded its recommendation to the Board to set up a Nomination and Remuneration Committee in compliance to the updated codes. Dr. Abdur Rahman Khan Chairman Report of the Audit Committee | Annual Report 2017-18 | 61 Shareholders’ Meeting The 41st Annual General Meeting of the shareholders of Beximco Pharmaceuticals Limited was held on December 23, 2017 at Beximco Industrial Park, Saravo, Kashimpur, Gazipur. Mr. Salman F Rahman, Vice Chairman of the Company presided over the meeting. Performance of the company as well as future strategies were briefly discussed in the meeting. All resolutions put before the shareholders were duly passed including the agenda of paying 12. 5% final cash dividend for the year ended 30 June, 2017 and considering and approving the proposed acquisition of majority Shareholdings of Nuvista Pharma Limited as per the terms of the MoU authorized by the Board. At the end of the meeting Vice Chairman expressed his appreciation towards shareholders for their interest in the company and their continued support. 62 | Annual Report 2017-18 | Shareholders’ Meeting Audit Committee Shareholders’ Meeting | Annual Report 2017-18 | 63 Value Added Statement For the Year Ended June, 2018 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. % 20,688,842 (9,791,900) 10,896,942 2,907,677 2,649,774 540,283 506,946 4,292,262 10,896,942 100 27 24 5 5 39 100 39% 5% 5% 24% 27% Retained by the Company Salaries and Benefits to Employees Interest to Lenders Dividend to Shareholders Duties & Taxes to Govt. Exchequer 64 | Annual Report 2017-18 | Value Added Statement  Audited Financial Statements-Consolidated Beximco Pharmaceuticals Ltd and its Subsidiary Consolidated Audited Financial Statements For the Year Ended June 30, 2018 Independent Auditors’ Report To The Shareholders of Beximco Pharmaceuticals Limited and its Subsidiary Report on the Financial Statements We have audited the accompanying consolidated financial statements of Beximco Pharmaceuticals Limited, which comprises the Consolidated Statement of Financial Position as at 30 June 2018, the Consolidated Statement of Profit or Loss and other Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows for the year from 01 July 2017 to 30 June 2018 then ended and a summary of significant accounting policies and other relevant explanatory notes. The Financial statements of the same period of the subsidiary Nuvista Pharma Limited was audited by A. Qasem & Co. Chartered Accountants, who through their report dated 13 October 2018 expressed an unmodified opinion on those statements. 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 consolidated financial statements give a true and fair view of the financial position of the Company as at 30 June 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1994 and the Securities and Exchange Rules 1987, we report that: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; (b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of these books; (c) the Consolidated Statement of Financial Position ( Balance Sheet) and Consolidated Statement of Profit or Loss and other Comprehensive Income (Profit and Loss Account) dealt with by the report are in agreement with the books of account; and (d) the expenditure incurred was for the purposes of the company’s business. Dhaka M. J. Abedin & Co. October 25, 2018 Chartered Accountants 66 | Annual Report 2017-18 | Audited Financial Statements-Consolidated Beximco Pharmaceuticals Limited and its Subsidiary Consolidated Statement of Financial Position As at June 30, 2018 Notes Amount in Taka ASSETS Non-Current Assets Property, Plant and Equipment- Carrying Value Intangible Assets Goodwill Investment in Shares Other Non-current Assets Current Assets Inventories Spares & Supplies Accounts Receivable Loans, Advances and Deposits Advance Income Tax Short Term Investment Cash and Cash Equivalents TOTAL ASSETS SHAREHOLDERS’ EQUITY AND LIABILITIES Equity Attributable to the Owners of the Company Issued Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Unrealized Gain/(Loss) Retained Earnings Non-Controlling Interest TOTAL EQUITY Non-Current Liabilities Long Term Borrowings-Net of Current Maturity Liability for Gratuity and WPPF & Welfare Funds Deferred Tax Liability Current Liabilities and Provisions Short Term Borrowings Long Term Borrowings-Current Maturity Creditors and Other Payables Accrued Expenses Dividend Payable Income Tax Payable TOTAL EQUITY AND LIABILITIES The Notes are an integral part of the Financial Statements. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 32,394,686,712 30,524,692,707 1,280,695,416 546,691,213 36,507,658 6,099,718 11,344,199,700 5,058,847,681 663,911,096 2,761,509,393 2,094,229,902 32,568,508 339,397,174 393,735,946 43,738,886,412 27,081,962,616 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,159,277,845 4,356,762 14,608,700,961 269,874,176 27,351,836,792 7,368,863,860 4,017,425,267 1,324,166,498 2,027,272,095 9,018,185,760 5,600,826,635 1,568,989,745 991,712,907 418,476,895 4,763,126 433,416,452 43,738,886,412 Approved and authorized for issue by the Board of Directors on October 25, 2018 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Dhaka October 25, 2018 Per our report of even date. M. J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited and its Subsidiary Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year ended June 30, 2018 Notes 23 24 27 28 29 30 31 Net Revenue Cost of Goods Sold Gross Profit Operating Expenses Administrative Expenses Selling, Marketing and Distribution Expenses Profit from Operations Other Income Finance Cost Profit Before Contribution to WPPF & Welfare Funds Contribution to WPPF & Welfare Funds Profit Before Tax Income Tax Expenses Current Tax Deferred Tax Profit after Tax Profit/(Loss) Attributable to: Owners of the Company Non-controlling interest Other Comprehensive Income - Unrealized Gain/(Loss) Total Comprehensive Income for the Year Total Comprehensive Income Attributable to: Owners of the Company Non-controlling interest Earnings Per Share (EPS) 32 Amount in Taka 17,716,716,855 (9,430,737,431) 8,285,979,424 (4,259,811,440) (618,675,127) (3,641,136,313) 4,026,167,984 43,757,880 (540,283,443) 3,529,642,421 (168,308,290) 3,361,334,131 (828,679,830) (792,620,241) (36,059,589) 2,532,654,301 2,536,543,948 (3,889,647) 2,532,654,301 481,697 2,533,135,998 2,537,025,645 (3,889,647) 2,533,135,998 6.25 The Notes are an integral part of the Financial Statements. Approved and authorized for issue by the Board of Directors on October 25, 2018 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Per our report of even date. Dhaka October 25, 2018 M. J. Abedin & Co. Chartered Accountants 68 | Annual Report 2017-18 | Audited Financial Statements-Consolidated i y r a d i s b u S s t i d n a d e t i m i L s l a c i t u e c a m r a h P o c m i x e B y t i u q E n i s e g n a h C f o t n e m e t a t S d e t a d i l o s n o C 8 1 0 2 , 0 3 e n u J d e d n e r a e Y e h t r o F a k a T n i t n u o m A y t i u q E l a t o T - n o N e l b a t u b i r t t a y t i u q E i d e n a t e R d e z i l a e r n U n o i t a u a v e R l l a t i p a C t s e r e t n I y n a p m o C e h t g n i l l o r t n o C f o s r e n w O e h t o t i s g n n r a E i / n a G ) s s o L ( l s u p r u S r e g r e M n o e v r e s e R e u s s I f o s s e c x E e c a F r e v o e c i r P s R D G f o l e u a V e r a h S i m u m e r P l a t i p a C e r a h S 0 0 9 , 5 2 4 , 2 7 0 , 5 2 - 0 0 9 , 5 2 4 , 2 7 0 , 5 2 9 6 9 , 9 1 7 , 8 6 5 , 2 1 5 6 0 , 5 7 8 , 3 8 1 8 , 3 0 2 , 0 9 1 , 1 0 5 9 , 0 5 9 , 4 9 2 8 5 9 , 6 3 6 , 9 8 6 , 1 0 9 6 , 4 7 4 , 9 6 2 , 5 0 5 4 , 4 6 5 , 5 5 0 , 4 7 1 0 2 , 1 0 y l u J n o s a e c n a a B l 3 2 8 , 3 6 7 , 3 7 2 3 2 8 , 3 6 7 , 3 7 2 - - 1 0 3 , 4 5 6 , 2 3 5 , 2 ) 7 4 6 , 9 8 8 , 3 ( 8 4 9 , 3 4 5 , 6 3 5 , 2 8 4 9 , 3 4 5 , 6 3 5 , 2 - - 7 9 6 , 1 8 4 ) 6 5 5 , 5 4 9 , 6 0 5 ( - ) 3 7 3 , 3 4 5 , 0 2 ( - - - - ) 3 7 3 , 3 4 5 , 0 2 ( - ) 6 5 5 , 5 4 9 , 6 0 5 ( ) 6 5 5 , 5 4 9 , 6 0 5 ( - 0 0 6 , 2 8 3 , 0 1 - - - 7 9 6 , 1 8 4 - 7 9 6 , 1 8 4 - - - - ) 0 0 6 , 2 8 3 , 0 1 ( ) 3 7 3 , 3 4 5 , 0 2 ( - - - - - - - - - - - - - - - - - - - - - - - - : s r e d l o h e r a h S e h t h t i w s n o i t c a s n a r T ) s s o L ( / e m o c n I e v i s n e h e r p m o C r e h t O : e m o c n I e v i s n e h e r p m o C l a t o T r a e Y e h t r o f ) s s o L ( / t fi o r P i y r a d i s b u S f o n o i t i s i u q c A n o i n o i t a c e r p e D r o f t n e m t s u d A j n o x a T d e r r e f e D r o f t n e m t s u d A j s t e s s A l d e u a v e R s t e s s A l d e u a v e R d n e d i v i D h s a C 2 9 7 , 6 3 8 , 1 5 3 , 7 2 6 7 1 , 4 7 8 , 9 6 2 6 1 6 , 2 6 9 , 1 8 0 , 7 2 1 6 9 , 0 0 7 , 8 0 6 , 4 1 2 6 7 , 6 5 3 , 4 5 4 8 , 7 7 2 , 9 5 1 , 1 0 5 9 , 0 5 9 , 4 9 2 8 5 9 , 6 3 6 , 9 8 6 , 1 0 9 6 , 4 7 4 , 9 6 2 , 5 0 5 4 , 4 6 5 , 5 5 0 , 4 8 1 0 2 , 0 3 e n u J n o s a e c n a a B l 8 7 . 6 6 ) 3 3 - e t o N ( e r a h S r e P ) V A N ( l e u a V t e s s A t e N r e c fi f O l i a c n a n F i z a w a N i l A i f e h C n a s s a H l u m z a N r o t c e r i D g n g a n a M i n a m h a R F n a m a S l n a m r i a h C e c V i : d r a o B e h t f o f l a h e b n o d n a r o f d e n g i s d n a 8 1 0 2 , 5 2 r e b o t c O n o s r o t c e r i D f o d r a o B e h t y b e u s s i r o f d e z i r o h t u a d n a d e v o r p p A . e t a d n e v e f o t r o p e r r u o r e P . o C & n d e b A i . J . M s t n a t n u o c c A d e r e t r a h C 8 1 0 2 , 5 2 r e b o t c O a k a h D . s t n e m e t a t S l i a c n a n F i e h t f o t r a p l a r g e t n i n a e r a s e t o N e h T Audited Financial Statements-Consolidated | Annual Report 2017-18 | 69 Beximco Pharmaceuticals Limited and its Subsidiary Consolidated Statement of Cash Flows For the Year ended June 30, 2018 Cash Flows from Operating Activities : Notes Amount in Taka 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 Acquisition of Subsidiary 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 in Long Term Borrowings Net Increase in Short Term Borrowings Dividend Paid Net Cash Generated from Financing Activities Increase in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year Net Operating Cash Flow Per Share 17,195,399,333 (14,113,012,465) 3,082,386,868 (536,570,775) 54,928,425 (781,630,595) 1,819,113,923 (4,951,352,340) (106,921,036) (2,125,186,000) 14,114,722 1,504,092 547,179,732 (6,620,660,830) 1,859,021,877 3,546,896,539 (502,757,959) 4,903,160,457 101,613,550 292,122,396 393,735,946 4.49 35 14 34 The Notes are an integral part of the Financial Statements. Approved and authorized for issue by the Board of Directors on October 25, 2018 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 25, 2018 70 | Annual Report 2017-18 | Audited Financial Statements-Consolidated Ali Nawaz Chief Financial Officer Per our report of even date. M. J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Ltd. and its Subsidiary Notes to the Financial Statements As at and for the year ended June 30, 2018 1. The Reporting Entity 1.1. Status of 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. Acquisition of Subsidiary On April 2, 2018 Beximco Pharmaceuticals Ltd. completed acquisition of majority shares (85.22%) of Nuvista Pharma Limited (NPL) - a non-listed public limited company manufacturing pharmaceutical products. Through this acquisition, BPL has become the immediate and ultimate parent company and as of date NPL remains the sole subsidiary of BPL. 1.3. Nature of Business BPL is engaged in manufacturing and marketing of a wide range of generic pharmaceutical formulation products, life-saving intravenous fluids, therapeutic nutrition products and Active Pharmaceutical Ingredients (APIs). Products of the company are sold in domestic and international markets. NPL is also engaged in producing various pharmaceutical products including oral contraceptives, hormone, steroid, anti-histamine, anti-fibrinolytic, anti-infective, cardiac, gastrointestinal, musculoskeletal, respiratory, vitamin & mineral supplement and women’s health products. Both BPL and NPL provides contract manufacturing services. 2. Basis of Preparation of Financial Statements 2.1. 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). 2.2. Basis of Measurement The financial statements have been prepared on Historical Cost basis except for certain Property, Plant and Equipment measured at revalued amount (revaluation carried out in 2008). The Tangible and Intangible Assets and Liabilities of the acquired subsidiary has been reported at their fair values at the date of acquisition. Basis of determination of the fair values has been explained in the notes on accounting policies. Investment in Shares of listed companies have been valued at the year- end quoted prices. Cash flow statement has been prepared on cash basis. 2.3. Reporting Period Financial year of both Beximco Pharmaceuticals Limited (BPL) and its subsidiary Nuvista Pharma Limited (NPL) begins on July 1 and ends on June 30. However, BPL acquired NPL on April 2, 2018 and as such consolidated financial statements covers full year (July 1, 2017 to June 30, 2018) for BPL and three months (April 2, 2018 to June 30, 2018) period for NPL. 2.4. Comparative Information The current reporting being the first year of acquisition of the subsidiary, no comparable prior period information is relevant for reporting in the consolidated financial statements. Audited Financial Statements-Consolidated | Annual Report 2017-18 | 71 3. Significant Accounting Policies 3.1. Basis of Consolidation The financial statements of the subsidiary Nuvista Pharma Limited has been consolidated with those of Beximco Pharmaceuticals Limited in accordance with IFRS/BFRS 10: Consolidated Financial Statements. The Company acquired 85.22% shares of the issued paid up capital of Nuvista Pharma Limited. This ownership interest is adequate enough to establish control over NPL and thus BPL meets the conditions as stated in IFRS/BFRS 10: Consolidated Financial Statements to consider NPL as a subsidiary. Consolidation has been done for the period since the date at which the Company obtained control over the subsidiary through completion of the acquisition deal. 3.2. Inter-Company Transactions Assets, Liabilities, Equity, Income, Expenses and Cash Flows arising out of transactions between the Company and the subsidiary have been eliminated in full in the Consolidated Financial Statements. 3.3. Non-Controlling Interests (NCIs) Non-Controlling Interests (NCIs) at the date of acquisition has been measured at fair value of the net assets of the acquired company in proportion to the shares of the entitled holders. Profit or Loss and Other Comprehensive Income subsequent to the acquisition, has been allocated to the Owners of the Company and to the NCIs and also disclosed in the financial statements. 3.4. Purchase Consideration The Company acquired the shares of Nuvista Pharma Limited for cash which consisted of the total negotiated price for the acquisition less any adjustments made as per condition precedence set out in the terms of agreement. The net amount paid or payable, has been accounted for as the Purchase Consideration for the acquisition. This also includes the shares transfer fee paid to the Registrar of Joint Stock Companies and Firms. 3.5. Valuation of Goodwill Goodwill has been determined in accordance with IFRS/BFRS 3: Business Combination. This represents the excess of the aggregate of Purchase Consideration and the acquisition-date fair value of NCI’s share in the net assets over the acquisition-date fair value of the net assets of the subsidiary. 3.6. Basis of Estimation of Fair Values at Acquisition The Company engaged PricewaterhouseCoopers Bangladesh Pvt. Ltd. to provide estimates of the Fair Value for the tangible assets and identified intangible assets as per criteria set out in International Financial Reporting Standards and Bangladesh Financial Reporting Standards 3 (IFRS/BFRS 3: Business Combination). Management has considered the report of the said independent firm in allocating the total consideration paid for the acquisition among various classes of acquired assets in compliance of the requirement of IFRS/BFRS 3. Tangible fixed assets other than land were valued using the depreciated replacement cost method. Depreciated replacement costs reflect adjustments for physical deterioration as well as functional and economic obsolescence. Land was valued at prevailing market price taking into consideration factors like location, size and industrial or other use, availability of infrastructure etc., among others. The intangible assets relating to Developed Products has been valued using the Multi-period Excess Earning Method while the Trade Name/Trademark has been valued following Relief-from Royalty approach. The fair value of inventories are determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale. 3.7. Acquisition related Costs All advisory, accounting, valuation, legal or other professional/consulting fees and general administrative costs related to the acquisition of business has been accounted for as expense. 72 | Annual Report 2017-18 | Audited Financial Statements-Consolidated 4. Property Plant and Equipment Particulars Land Building and Plant, Other Machinery and Equipment Constructions Furniture and Fixtures Transport and Vehicle Office Equipment Amount in Taka Total Cost Opening/Acquisition Date Balance Additions Acquisition Date Fair Value Adjustment of Subsidiary’s Assets Disposal during the Year 3,619,350,155 - 7,037,804,285 13,133,864,081 269,672,548 22,239,265 155,457,707 3,463,060 960,330,806 155,989,774 537,364,295 25,558,386,170 367,369,650 30,219,844 448,479,441 - 67,524,731 - 105,565,171 (32,991,791) - - - - (45,718,653) (490,560) 621,569,343 (79,201,004) Cost at June 30, 2018 4,067,829,596 7,108,792,076 13,361,895,168 291,911,813 1,070,601,927 567,093,579 26,468,124,159 Accumulated Depreciation Opening/Acquisition Date Balance Depreciation Charged Adjustment for Assets disposed off Accumulated Depreciation at June 30, 2018 - 1,664,333,450 162,282,667 - - - 5,178,994,005 519,464,247 (31,078,661) 112,592,339 13,935,986 - 542,833,310 73,085,485 (30,236,317) 318,073,803 32,946,807 (244,365) 7,816,826,907 801,715,192 (61,559,343) - 1,826,616,117 5,667,379,591 126,528,325 585,682,478 350,776,245 8,556,982,756 Net Book Value June 30, 2018 4,067,829,596 5,282,175,959 7,694,515,577 165,383,488 484,919,449 216,317,334 17,911,141,403 Capital Work in Progress Carrying Value as on June 30, 2018 5. Intangible Assets (a)This is arrived at as follows: Balance as at July 1, 2017 Addition during the Year Acquisition date fair value of Intangibles Less amortized during the year Balance as at June 30, 2018 (b)This consists of as follows: Product Development, Developed Products, Licensing and Marketing Rights Trade names and Trademarks ERP Project 6. Goodwill (a) Value of Goodwill is arrived at as follows: Purchase Consideration* Share of Non-controlling Interest at the date of acquisition - Note 16 (b) Less: Acquisition date Fair Value of Identifiable Net Assets 12,613,551,304 30,524,692,707 Amount in Taka 462,968,347 106,921,036 755,000,000 1,324,889,383 (44,193,967) 1,280,695,416 1,079,247,566 54,000,000 147,447,850 1,280,695,416 2,125,186,000 273,763,823 2,398,949,823 (1,852,258,610) 546,691,213 *Purchase Consideration includes share transfer fee of Taka 31,136,000 paid to the Registrar of Joint Stock Companies and Firms. Audited Financial Statements-Consolidated | Annual Report 2017-18 | 73  (b) Further to Notes 3.6 - Acquisition date Fair Value of Identifiable Net Assets is arrived at as follows: Assets: Land Building & Other Construction Plant, Machinery and Equipments Furniture & Fixture Office Equipment Transport & Vehicle Capital Work in Progress Developed Products Trade Names and Trademarks Other Assets Total Assets (A) Less Liabilities: Long Term Loan Deferred liability - Gratuity Payable Deferred tax liabilities Current liabilities Total Liabilities (B) Fair Value of Identifiable Net Assets (A-B) 7. Investment in Shares (a)Investment Details (Taka) (i) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) (iii) Biocare Manufacturing SDN.BHD. , Malaysia- note (e) (b) Number of Shares: (i) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) (iii) Biocare Manufacturing SDN.BHD., Malaysia- note (e) Amount in Taka 724,088,154 270,298,219 795,191,413 22,769,014 7,034,990 83,342,293 17,505,125 701,000,000 54,000,000 541,854,735 3,217,083,943 195,457,741 149,421,538 118,003,165 901,942,889 1,364,825,333 1,852,258,610 4,188,358 1,569,450 30,749,850 36,507,658 159,861 571,182 1,500,000 (c) The shares of Bangladesh Export Import Co. Ltd. are listed in Dhaka and Chittagong Stock Exchanges. The market value of each share of Bangladesh Export Import Co. Ltd. on last working day of the year 2017-18 was Tk. 26.20 in both Dhaka and Chittagong Stock Exchanges. (d) Shares of Central Depository Bangladesh Ltd. (CDBL) are not traded. (e) Biocare Manufacturing SDN.BHD., Malaysia: This represents 1,500,000 Ordinary Shares of Malaysian Ringgit (RM) 1 each issued to Beximco Pharmaceuticals Ltd. by BioCare Manufacturing SDN.BHD. (“BioCare”), Malaysia. Beximco Pharmaceuticals Ltd. has been issued 30% of the equity share of the Malaysian based company for providing full technical support to set up a manufacturing facility in Seri Iskandar Pharmaceutical Park, Perak, Malaysia and to produce specialized pharmaceutical products. 8. Other Non-current Assets This represents car loan and other long-term loan given to the employees of the Nuvista Pharma Ltd. 74 | Annual Report 2017-18 | Audited Financial Statements-Consolidated 9. Inventories This consists of as follows : Finished Goods Work in Process Raw Materials Packing Materials Laboratory Chemicals Physician Samples R&D Materials Materials in Transit 10. Spares & Supplies This consists of as follows : Spares & Accessories Stock of Stationery Laboratory Consumables Spares in Transit Literature & Promotional Materials Miscellaneous Item 11. Accounts Receivable Amount in Taka 864,137,218 262,723,223 2,183,474,721 971,119,763 27,979,741 82,714,044 324,655 666,374,316 5,058,847,681 545,032,936 10,936,969 330,437 614,603 106,477,464 518,687 663,911,096 This includes receivable of Tk. 596,463,606 equivalent to US$ 7,190,640 against export sales. Part of the export sales receivables are against Letter of Credit while the rest are unsecured but considered good. Accounts Receivable also includes Tk. 2,011,958,959 due from I & I Services Ltd., who provides distribution service to the Company and a “Related Party”. The maximum amount due from that company during the year was Tk. 2,071,859,759 on 31 May, 2018. 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. 12. 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 Loan to Employees Rent Advance Motor Cycle Raw & Packing Material Prepaid Insurance Overseas Liaison Office Others 162,932,842 219,639,030 19,642,831 50,467,768 17,600,613 108,792,585 133,241,320 27,004,835 120,493,363 13,309,579 180,739,474 735,793,984 202,499,308 32,698,675 69,373,695 2,094,229,902 Audited Financial Statements-Consolidated | Annual Report 2017-18 | 75 (a) 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. (b) Prepaid insurance includes the insurance premium paid to German Export Credit Agency Euler Hermes Aktiengesellschaft, Hamburg for guarantee of the loan which is an integral part of the overseas loan financing agreement with ODDO BHF Aktiengesellshaft, Frankfurt, Germany. Expired portion of the prepaid insurance has been capitalized. 13. Short Term Investment This represents the Company’s temporary investment with Bangladesh Export Import Company Limited (Beximco Ltd.), carrying interest 1% above bank interest rate. This investment is returnable as and when required by the Company. 14. 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 15. Issued Share Capital A. Authorized : 500,000,000 Ordinary Shares of Tk. 10 each 41,000,000 Fully Convertible, 5% 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 316,538,298 Bonus Shares 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 192,159,614 167,102,855 34,473,477 393,735,946 5,000,000,000 4,100,000,000 9,100,000,000 517,757,500 3,165,382,980 59,512,500 312,911,470 4,055,564,450 5,951,250 ordinary shares of Tk. 10 each were issued to the shareholders of Beximco Infusions Ltd. on it’s merger with Beximco Pharmaceuticals Ltd. in 2005. 41,000,000 fully convertible 5% preference shares of Tk. 100 each were issued in 2009. 50% of the preference shares were converted into 16,169,191 ordinary shares of Tk. 10 each on February 1, 2010. The rest 50% were converted into 15,121,956 ordinary shares of Tk. 10 each on May 2, 2010. C. Composition of Shareholding of Ordinary Shares: Sponsors: A S F Rahman Salman F Rahman Other Directors and Associates Public Issue: GDRs- London Stock Exchange (AIM) Foreign Investors’ Shareholdings (DSE/CSE) Institutions (ICB, ICB Investors’ Accounts & Others) Individual Shareholders No. of shares % of Share Capital 8,235,353 8,254,632 36,999,784 53,489,769 90,943,627 74,469,959 119,603,843 67,049,247 352,066,676 405,556,445 2.03 2.04 9.12 13.19 22.42 18.36 29.49 16.54 86.81 100.00 76 | Annual Report 2017-18 | Audited Financial Statements-Consolidated  16. Non-controlling Interest (a) Non-controlling Interest as on June 30, 2018: Non-controlling Interest at the date of acquisition Proportionate profit/(loss) subsequent to acquisition (b) Non-controlling Interest at the date of acquisition is arrived at as follows: Fair value of Identifiable net assets Proportionate holdings of NCIs at acquisition date 17. Long Term Borrowings - Net of Current Maturity (a) This is arrived at as follows : Project Loan - ODDO BHF Aktiengesellshaft, Frankfurt, Germany Obligation Under Finance Leases AB Bank Dhaka Bank Ltd. (b) Obligation Under Finance Leases Gross Finance Lease - minimum lease Liability: Within one year Within two to five years 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 Present Value of Finance Lease liability Amount in Taka 273,763,823 (3,889,647) 269,874,176 1,852,258,610 14.78% 273,763,823 2,809,556,317 280,596,178 759,326,232 167,946,540 4,017,425,267 260,426,903 336,141,714 596,568,617 (114,965,180) 481,603,437 201,007,259 280,596,178 481,603,437 (c) AB Bank This loan is payable in quarterly installments and is secured by paripassu hypothecation along with Janata Bank on all fixed and floating assets of the Company excepting the machineries and equipments financed by ODDO BHF Aktiengesellshaft, Frankfurt, Germany. 18. Liability for Gratuity and WPPF & Welfare Funds Gratuity Payable Workers Profit Participation and Welfare Fund 19. Short Term Borrowings Janata Bank Ltd. - Cash Credit-Hypothecation Loan Liability for UPAS Letter of Credit Dhaka Bank Ltd The City Bank Ltd. Mutual Trust Bank Ltd. 759,708,531 564,457,967 1,324,166,498 3,897,681,180 1,064,417,066 617,381,902 2,507,475 18,839,012 5,600,826,635 Audited Financial Statements-Consolidated | Annual Report 2017-18 | 77 20. Long Term Borrowings - Current Maturity This consists of as follows : Project Loan - ODDO BHF Aktiengesellshaft, Frankfurt, Germany Obligation Under Finance Leases AB Bank Dhaka Bank Ltd. 21. Creditors and Other Payables Goods & Services Provident Fund Advance Against Sales Others 22. Accrued Expenses This is unsecured, falling due within one year and consists of as follows : For Expenses Workers’ Profit Participation and Welfare Funds - current year’s expense (net off interim payments) 23. Net Revenue Domestic Sales Export Toll Income 24. Cost of Goods Sold This is made-up as follows : Work-in-Process - Opening /at the date of acquisition Materials Consumed (Note: 25) Factory Overhead (Note: 26) Total Manufacturing Cost Work-in-Process (Closing) Cost of Goods Manufactured Finished Goods - Opening /at the date of acquisition Finished Goods available Cost of Physician Sample transferred to Sample Stock Finished Goods (Closing) 25. Materials Consumed This is made-up as follows : Opening Stock Purchase Closing Stock 78 | Annual Report 2017-18 | Audited Financial Statements-Consolidated Amount in Taka 852,470,599 201,007,259 400,341,697 115,170,190 1,568,989,745 621,334,927 188,151,262 43,576,730 138,649,988 991,712,907 251,493,606 166,983,289 418,476,895 16,237,454,376 1,476,977,889 2,284,590 17,716,716,855 155,553,707 7,236,638,335 2,554,986,926 9,947,178,968 (262,723,223) 9,684,455,745 803,975,989 10,488,431,734 (193,557,085) (864,137,218) 9,430,737,431 1,920,966,484 8,498,246,076 (3,182,574,225) 7,236,638,335 26. Factory Overhead Salary & Allowances Repairs and Maintenance Insurance Premium Municipal Tax & Land Revenue Advertisement Registration & Renewals Travelling & Conveyance Entertainment Research and Development Printing & Stationery Telephone, Internet & Postage Toll Expense Electricity, Gas & Water Training & Conference Plant Certification and Regulatory Approvals Depreciation Other Expenses 27. Administrative Expenses Salary & Allowances Rent Repairs and Maintenance Registration & Renewals Travelling & Conveyance Entertainment Printing & Stationery Audit Fee Local Authority Taxes Insurance Premium Bank Charges Telephone, Internet & Postage Electricity, Gas & Water Legal & Consultancy Business Acquisition Cost Company Secretarial, Regulatory Fee and AGM Expense Advertisement Training & Conference Depreciation Board Meeting Attendance Fee Other Expenses Amount in Taka 904,509,549 216,587,905 22,801,790 4,508,685 196,960 13,724,885 9,764,755 1,821,636 222,652,875 22,091,508 9,211,158 207,961,293 144,124,432 4,961,417 26,780,147 720,995,025 22,292,906 2,554,986,926 314,685,553 13,754,553 49,638,421 8,507,108 26,470,642 6,829,212 6,021,432 1,628,750 913,142 153,958 33,534 6,245,040 13,246,325 8,659,820 12,619,081 32,250,219 413,705 10,279,328 28,060,048 603,564 77,661,692 618,675,127 Audited Financial Statements-Consolidated | Annual Report 2017-18 | 79 28. Selling, Marketing and Distribution Expenses 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 Sales & Market Promotion Expenses Pharmacovigilance  Literature/News Letter Registration & Renewals Export Insurance, Freight and C&F Expenses Distribution Commission Delivery Expense Depreciation & Amortization Other Expenses 29. Other Income Interest Income Dividend Income Royalty Income Technology Transfer Income - Biocare Manufacturing SDN. BHD., Malaysia Income From sale of Product Dossier Distribution Commission Exchange Rate Fluctuation Gain / (Loss) Sale of Miscellaneous Item Profit/(Loss) on Sale of Fixed Assets 30. Finance Cost Interest on Working Capital Loan Interest on Long Term Loan* Interest on Lease Finance Interest on Loan from PF, WPPF & Welfare Fund Other Bank Charges Amount in Taka 1,262,270,771 78,267,019 8,958,993 440,145,550 53,419,672 40,877,932 20,542,289 9,364,325 49,081,984 100,398,454 32,264,432 263,875,222 428,361,958 10,893,311 128,243,083 55,008,186 120,383,504 234,392,430 179,142,387 96,854,086 28,390,725 3,641,136,313 54,928,425 1,504,092 6,093,728 18,145,620 4,959,000 4,266,424 (42,662,242) 49,772 (3,526,939) 43,757,880 378,949,336 (10,909,700) 73,787,122 85,080,425 13,376,260 540,283,443 *Net of interest rebate received as per the terms of the sanction letter of the loan for the timely repayment of all the installments. 31. Income Tax Expenses This consists of as follows : (a) Current Tax (b) Deferred Tax Expense 80 | Annual Report 2017-18 | Audited Financial Statements-Consolidated 792,620,241 36,059,589 828,679,830 32. Earnings Per Share (EPS) (a) Earnings attributable to the Owners of the Company (b) Weighted average number of Shares outstanding during the year Earnings Per Share (EPS) 33. Net Asset Value (NAV) Per Share Total Assets Less Total Liabilities Less Non-controlling Interest Equity Attributable to the Owners of the Company Number of Shares at Financial Position date Net Asset Value (NAV) Per Share 34. Net Operating Cash Flow Per Share (NOCFPS) Net Cash Generated from Operating Activities Number of Shares at Financial Position date Net Operating Cash Flow Per Share (NOCFPS) 35. Reconciliation of Net Profit with Cash Flows from Operating Activities Profit after Tax Adjustment to reconcile net profit to net cash provided by operating activities : (a) Non-cash Expenses : Depreciation Amortization Gratuity & WPPF Technology Transfer Income - Biocare Manufacturing SDN. BHD., Malaysia Exchange rate fluctuation loss on Bank Loan in Foreign Currency Deferred Tax (b) Non-operating Items Dividend Income Loss on sale of Fixed Assets (c) Changes in working Capital (Increase)/Decrease in Inventories (Increase)/Decrease in Spares and Supplies (Increase)/Decrease in Accounts Receivable (Increase) in Loans, Advances & Deposits Increase/(Decrease) in Creditors and Other Payables Increase/(Decrease) in Accrued Expenses Increase/(Decrease) in Income Tax Payable Net cash Generated from Operating Activities Salman F Rahman Vice Chairman Dhaka October 25, 2018 Amount in Taka 2,536,543,948 405,556,445 6.25 43,738,886,412 (16,387,049,620) (269,874,176) 27,081,962,616 405,556,445 66.78 1,819,113,923 405,556,445 4.49 2,532,654,301 970,984,130 801,715,192 44,193,967 57,650,531 (18,145,620) 49,510,471 36,059,589 2,022,847 (1,504,092) 3,526,939 (1,686,547,355) (1,192,022,631) (18,678,378) (566,040,570) (365,849,712) 403,748,186 41,306,104 10,989,646 1,819,113,923 Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Audited Financial Statements-Consolidated | Annual Report 2017-18 | 81 Audited Financial Statements-Beximco Pharma Beximco Pharmaceuticals Limited Audited Financial Statements For the Year Ended June 30, 2018 Independent Auditors’ Report To The Shareholders of Beximco Pharmaceuticals Limited Report on the Financial Statements We have audited the accompanying financial statements of Beximco Pharmaceuticals Limited, which comprises the Statement of Financial Position as at June 30 2018, the Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year from 01 July 2017 to June 30 2018 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 June 30 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1994 and the Securities and Exchange Rules 1987, we report that: (a) (b) 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; 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 the expenditure incurred was for the purposes of the company’s business. (d) Dhaka M. J. Abedin & Co. October 25, 2018 Chartered Accountants Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 83 Beximco Pharmaceuticals Limited Statement of Financial Position As at June 30, 2018 ASSETS Non-Current Assets Property, Plant and Equipment- Carrying Value Intangible Assets Investment in Subsidiary Investment in Shares Current Assets Inventories Spares & Supplies Accounts Receivable Loans, Advances and Deposits Short Term Investment Cash and Cash Equivalents TOTAL ASSETS EQUITY AND LIABILITIES Shareholders’ Equity Issued Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Unrealized Gain/(Loss) Retained Earnings Non-Current Liabilities Long Term Borrowings-Net of Current Maturity Liability for Gratuity and WPPF & Welfare Funds Deferred Tax Liability Current Liabilities and Provisions Short Term Borrowings Long Term Borrowings-Current Maturity Creditors and Other Payables Accrued Expenses Dividend Payable Income Tax Payable TOTAL EQUITY AND LIABILITIES Notes June 30, 2018 4 (a) 5 6 7 8 9 10 11 12 13 14 15 4(b) 16 17 18 19 20 21 22 23 31,332,493,872 28,645,104,798 525,695,416 2,125,186,000 36,507,658 10,832,521,567 4,665,449,461 654,781,270 2,736,944,147 2,066,840,961 339,397,174 369,108,554 42,165,015,439 27,104,389,931 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,159,277,845 4,356,762 14,631,128,276 6,963,764,382 3,849,478,727 1,224,462,270 1,889,823,385 8,096,861,126 4,962,098,246 1,453,819,555 939,538,235 303,447,824 4,540,814 433,416,452 42,165,015,439 Amount in Taka June 30, 2017 24,953,316,701 24,472,468,013 462,968,347 - 17,880,341 9,130,816,169 3,468,089,061 636,102,892 2,167,339,867 1,697,679,418 886,576,906 275,028,025 34,084,132,870 25,072,425,900 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,190,203,818 3,875,065 12,568,719,969 5,605,667,422 2,635,907,025 1,117,094,429 1,852,665,968 3,406,039,548 1,485,432,660 715,790,200 538,163,779 245,375,014 353,217 420,924,678 34,084,132,870 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 25, 2018 and signed for and on behalf of the Board: Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Per our report of even date. Dhaka October 25, 2018 84 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma M. J. Abedin & Co. Chartered Accountant Beximco Pharmaceuticals Limited Statement of Profit or Loss and Other Comprehensive Income For the Year ended June 30, 2018 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 Year Other Comprehensive Income - Unrealized Gain/(Loss) Total Comprehensive Income for the Year Earnings Per Share (EPS) Notes 24 25 28 29 30 31 32 33 34 35 July 2017 - June 2018 Amount in Taka July 2016 - June 2017 17,380,728,001 15,508,776,972 (9,255,504,681) 8,125,223,320 (4,143,623,455) (595,185,629) (3,548,437,826) 3,981,599,865 64,973,584 (512,099,369) 3,534,474,080 (8,323,895,349) 7,184,881,623 (3,736,675,551) (522,396,449) (3,214,279,102) 3,448,206,072 144,852,831 (557,003,162) 3,036,055,741 (168,308,290) (144,574,083) 3,366,165,790 2,891,481,658 (807,194,527) (790,580,483) (16,614,044) 2,558,971,263 481,697 2,559,452,960 (664,786,534) (591,982,589) (72,803,945) 2,226,695,124 2,579,507 2,229,274,631 6.31 5.49 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 25, 2018 and signed for and on behalf of the Board: Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 25, 2018 Ali Nawaz Chief Financial Officer Per our report of even date. M. J. Abedin & Co. Chartered Accountant Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 85 Beximco Pharmaceuticals Limited Statement of Changes in Equity For the Year ended June 30, 2018 Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Unrealized Gain/ (Loss) Amount in Taka Retained Earnings Total Balance as on July 01, 2017 Total Comprehensive Income for the Year: Profit for the Year Other Comprehensive Income Transactions with Shareholders: Cash Dividend Adjustment for Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets Balance as on June 30, 2018 the 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,190,203,818 3,875,065 12,568,719,969 25,072,425,900 - - - - - - - - - - - - - - - - - - - 481,697 2,558,971,263 - 2,558,971,263 481,697 - (506,945,556) (506,945,556) - (10,382,600) - 10,382,600 - (20,543,373) 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,159,277,845 4,356,762 14,631,128,276 27,104,389,931 (20,543,373) - - - - - - Net Asset Value (NAV) Per Share (Note- 36) 66.83 For the Year ended June 30, 2017 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 Balance as on July 01, 2016 Total Comprehensive Income for the Year: Profit for the Year Other Comprehensive Income Transactions with the Shareholders: 5% Final Cash Dividend (January 2015 to June 2016) 5% Stock Dividend (January 2015 to June 2016) Adjustment for Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets Balance as on June 30, 2017 - - - 193,122,110 - - - - - - - - - - - - - - - - - - 2,579,507 2,226,695,124 - 2,226,695,124 2,579,507 - - - (193,122,117) (193,122,117) - (193,122,110) - - - (11,757,201) - 11,757,201 (23,139,023) 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,190,203,818 3,875,065 12,568,719,969 25,072,425,900 (23,139,023) - - - - - - Net Asset Value (NAV) Per Share (Note- 36) 61.82 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 25, 2018 and signed for and on behalf of the Board: Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Per our report of even date. Dhaka October 25, 2018 M. J. Abedin & Co. Chartered Accountant 86 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma Beximco Pharmaceuticals Limited Statement of Cash Flows For the Year ended June 30, 2018 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 Investment in Subsidiary 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 Net Increase/(Decrease) in Short Term Borrowings Dividend Paid Net Cash Generated from Financing Activities Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year Net Operating Cash Flow Per Share * Restated Amount in Taka July 2016 - June 2017 15,028,477,642 (11,726,003,260) 3,302,474,382 (557,003,162) 161,110,825 (518,291,724) 2,388,290,321 (3,016,391,390) (108,998,404) - 22,059,127 1,427,955 552,460,907 (2,549,441,805) 32,424,297 375,788,390 (193,154,407) 215,058,280 53,906,796 221,121,229 275,028,025 Notes July 2017 - June 2018 16,851,875,991 (13,768,549,304) 3,083,326,687 (512,099,369) 54,928,425 (778,088,709) 1,848,067,034 (4,947,915,606) (106,921,036) (2,125,186,000) 1,354,100 1,504,092 547,179,732 (6,629,984,718) 1,902,090,586 3,476,665,586 (502,757,959) 4,875,998,213 94,080,529 275,028,025 369,108,554 38 13 37 4.56 5.89* The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 25, 2018 and signed for and on behalf of the Board: Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 25, 2018 Ali Nawaz Chief Financial Officer Per our report of even date. M. J. Abedin & Co. Chartered Accountant Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 87 Beximco Pharmaceuticals Limited Notes to the Financial Statements As at and for the year ended June 30, 2018 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 year June 30, 2018; (b) a Statement of Profit or Loss and Other Comprehensive Income for the year ended June 30, 2018; (c) a Statement of Changes in Equity for the year ended June 30, 2018; (d) a Statement of Cash Flows for the year ended June 30, 2018; and (e) notes, comprising summary of significant accounting policies and explanatory information. 2.4 Reporting Period and Comparative Information The Financial statements cover 12 months period starting from July 1, 2017 to June 30, 2018. The last audited financial statements were prepared for year ending June 30, 2017. Figures for earlier year have been re-arranged wherever considered necessary to ensure better comparability with the current year. 2.5 Authorisation for issue The financial statements have been authorised for issue by the Board of Directors October 25, 2018. 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. 88 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 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. Revenue from sales is exclusive of VAT. Cash dividend income on investment in shares is recognized on approval of said dividend in the annual general meeting. Stock dividend income (Bonus Shares) is not considered as revenue. 3.2 Property, Plant and Equipment 3.2.1 Recognition and Measurement This has been stated at cost or revalued amount less accumulated depreciation in compliance with the requirements of IAS 16: Property, Plant and Equipment. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes. 3.2.2 Maintenance Activities The company incurs maintenance costs for all its major items of property, plant and equipment. Repair and maintenance costs are charged as expenses when incurred. 3.2.3 Depreciation Depreciation is provided to amortise the cost of the assets after commissioning, over the period of their expected useful lives, in accordance with the provisions of IAS 16: Property, Plant and Equipment. Depreciation is provided at the following rates on reducing balance basis: Building and Other Construction Plant and Machinery Furniture & Fixtures Transport & Vehicle Office Equipment 2% - 10% 5% - 15% 10% 20% 10% - 15% 3.2.4 Retirements and Disposals On disposal of fixed assets, the cost and accumulated depreciation are eliminated and gain or loss on such disposal is reflected in the income statement, which is determined with reference to the net book value of the assets and net sales proceeds. 3.3 Intangible Assets Intangible assets are stated at cost less provisions for amortization and impairments. Licenses, patents, know-how and marketing rights acquired are amortized over their estimated useful lives, using the straight line basis, from the time they are available for use. The cost of acquiring and developing computer software for internal use and internet sites for external use are capitalized as intangible fixed assets where the software or site supports a significant business system and the expenditure leads to the creation of a durable asset. Also, the research and development expenditures that are definite to yield benefit to the company are capitalized. Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 89 3.4 Leased Assets In compliance with the IAS 17: Leases, cost of assets acquired under finance lease along with related obligation has been accounted for as assets and liabilities respectively of the company, and the interest element has been charged as expenses. Lease payments made under finance leases are apportioned between the finance expenses and the reduction of the outstanding liability. 3.5 Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 3.5.1 Financial assets Financial assets of the company include cash and cash equivalents, accounts receivable and other receivables. The company initially recognizes receivable on the date they are originated. All others financial assets are recognized initially on the date at which the company becomes a party to the contractual provisions of the transaction. The company derecognizes a financial asset when, and only when the contractual rights or probabilities of receiving the cash flows from the asset expire or it transfer the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risk and rewards of ownership of the financial asset are transferred. 3.5.1(a) Accounts Receivable Accounts receivable are created at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account aging, previous experience and general economic conditions. When an accounts receivable is determined to be uncollected it is written off, firstly against any provision available and then to the profit and loss account. Subsequent recoveries of amounts previously provided for are credited to the profit and loss account. 3.5.1(b) Cash and Cash Equivalents Cash and cash equivalents include cash in hand, in transit and with banks on current and deposit accounts which are held and available for use by the company without any restriction. There is insignificant risk of change in value of the same 3.5.1(c) Investment in Shares Investment in shares of listed company is valued at a price quoted in the stock exchange at year end. Investment in other shares is valued at cost. 3.5.2 Financial Liability Financial liabilities are recognized initially on the transaction date at which the company becomes a party to the contractual provisions of the liability. The company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. Finance liabilities include payable for expenses, liability for capital expenditure and other current liabilities. 3.6 Impairment (a) Financial Assets Accounts receivable and other receivables are assessed at each reporting date to determine whether there is any objective evidence of impairment. Financial assets are impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset and that the loss event had a negative effects on the estimated future cash flows of that asset, that can be estimated reliably. Objective evidence that financial assets are impaired can include default or delinquency by a debtor, indications that a debtor or issuer will enter bankruptcy etc. (b) Non-Financial Assets An asset is impaired when its carrying amount exceeds its recoverable amount. The company assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Carrying amount of the assets is reduced to its recoverable amount by recognizing an impairment loss if, and only if, the recoverable amount of the asset is less than its carrying amount. Impairment loss is recognized immediately in profit or loss, unless the asset is carried at revalued amount. Any impairment loss of a revalued asset shall be treated as a revaluation decrease. 3.7 Inventories Inventories are carried at the lower of cost and net realizable value as prescribed by IAS 2: Inventories. Cost is determined on weighted average cost basis. The cost of inventories comprises of expenditure incurred in the normal course of business in bringing the inventories to their present location and condition. Net realizable value is based on estimated selling price less any further costs expected to be incurred to make the sale. 90 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 3.8 Provisions A provision is recognized in the statement of financial position when the company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provision is ordinarily measured at the best estimate of the expenditure required to settle the present obligation at the date of statement of financial position. Where the effect of time value of money is material, the amount of provision is measured at the present value of the expenditures expected to be required to settle the obligation. 3.9 Income Tax Expense Income tax expense comprises of current and deferred tax. Income tax expense is recognized in the Statement of Profit or Loss and Other Comprehensive Income and accounted for in accordance with the requirements of IAS 12: Income Taxes. Current Tax Current tax is the expected tax payable on the taxable income for the year, and any adjustment to tax payable in respect of previous years. The company qualifies as a “Publicly Traded Company”; hence the applicable Tax Rate is 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. 3.10 Interest Income Interest income is recognized on accrual basis. 3.11 Borrowing Cost Borrowing costs are recognized as expenses in the period in which they are incurred unless capitalization of such is allowed under IAS 23: Borrowing Costs. 3.12 Employee Benefits The company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds. The company has accounted for and disclosed employee benefits in compliance with the provisions of IAS 19: Employee Benefits. The cost of employee benefits is charged off as revenue expenditure in the period to which the contributions relate. The company’s employee benefits include the following: (a) Defined Contribution Plan (Provident Fund) The company has a registered provident fund scheme (Defined Contribution Plan) for employees of the company eligible to be members of the fund in accordance with the rules of the provident fund constituted under an irrevocable trust. All permanent employees contribute 10% of their basic salary to the provident fund and the company also makes equal contribution. The company recognizes contribution to defined contribution plan as an expense when an employee has rendered services in exchange for such contribution. The legal and constructive obligation is limited to the amount it agrees to contribute to the fund. (b) Defined Benefit Plan (Gratuity) This represents unfunded gratuity scheme for its permanent employees. Though no valuation was done to quantify actuarial liabilities as per the IAS 19: Employee Benefits, such valuation is 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. Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 91 (d) Contribution to Workers’ Profit Participation and Welfare Funds This represents 5% of net profit before tax contributed by the company as per provisions of the Bangladesh Labor (amendment) Act 2013 and is payable to workers as defined in the said law. (e) Insurance Scheme Employees of the company are covered under insurance schemes. 3.13 Share Premium The Share Premium shall be utilized in accordance with the provisions of the Companies Act, 1994 and as per direction of the Securities and Exchange Commission in this respect. 3.14 Proposed Dividend The amount of proposed dividend 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. 3.15 Earnings per Share (EPS) This has been calculated in compliance with the requirements of IAS 33: Earnings Per Share by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the year. Diluted Earnings per Share No diluted EPS is required to be calculated for the year as there was no scope for dilution during the year under review. 3.16 Foreign Currency Transactions Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction date. The monetary assets and liabilities, if any, denominated in foreign currencies at the financial position date are translated at the applicable rates of exchanges ruling at that date. Exchange differences are charged off as revenue expenditure in compliance with the provisions of IAS 21: The Effects of Changes in Foreign Exchange Rates. 3.17 Statement of Cash Flows The Statement of Cash Flow has been prepared in accordance with the requirements of IAS 7: Statement of Cash Flows. The cash generated from operating activities has been reported using the Direct Method as prescribed by the Securities and Exchange Rules, 1987 and as the benchmark treatment of IAS 7, whereby major classes of gross cash receipts and gross cash payments from operating activities are disclosed. 3.18 Events after The 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. 92 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 4 (a). Property, Plant and Equipment As on June 30, 2018 Amount in Taka Particulars Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Total Cost At July 01, 2017 Additions Disposal during the Year 3,343,741,442 - - 6,791,103,860 3,463,060 - 12,032,024,319 153,477,707 (30,979,553) 225,416,905 22,149,265 - 773,503,897 155,989,774 (3,345,000) 514,935,182 27,304,510 - 23,680,725,605 362,384,316 (34,324,553) Cost at June 30, 2018 3,343,741,442 6,794,566,920 12,154,522,473 247,566,170 926,148,671 542,239,692 24,008,785,368 Accumulated Depreciation At July 01, 2017 Depreciation Charged Adjustment for Assets disposed off Accumulated Depreciation at June 30, 2018 - - - 1,620,406,516 160,153,048 - 4,766,780,484 501,033,877 (29,066,434) 91,105,709 13,431,120 - 439,348,695 66,773,574 (3,057,667) 302,679,677 31,686,750 - 7,220,321,081 773,078,369 (32,124,101) - 1,780,559,564 5,238,747,927 104,536,829 503,064,602 334,366,427 7,961,275,349 Net Book Value June 30, 2018 3,343,741,442 5,014,007,356 6,915,774,546 143,029,341 423,084,069 207,873,265 16,047,510,019 Capital Work in Progress 12,597,594,779 Carrying Value as on June 30, 2018 28,645,104,798 Assets include leasehold assets of Tk. 1,259,514,081 at cost and Tk. 933,624,639 at carrying value. As on June 30, 2017 Particulars Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Total Cost At July 01, 2016 Additions Transferred in & Capitalized Disposal during the Year 3,343,741,442 - - - 6,712,175,196 17,398,437 61,530,227 - 11,324,017,693 272,763,088 481,524,220 (46,280,682) 217,643,441 17,467,673 - (9,694,209) 700,012,107 81,215,320 - (7,723,530) 502,149,436 29,015,760 - (16,230,014) 22,799,739,315 417,860,278 543,054,447 (79,928,435) Cost at June 30, 2017 3,343,741,442 6,791,103,860 12,032,024,319 225,416,905 773,503,897 514,935,182 23,680,725,605 Accumulated Depreciation At July 01, 2016 Depreciation Charged Adjustment for Assets disposed off Accumulated Depreciation at June 30, 2017 - - - 1,457,270,234 163,136,282 - 4,311,357,470 484,468,330 (29,045,316) 85,738,805 12,982,614 (7,615,710) 382,120,522 63,234,970 (6,006,797) 283,946,306 32,138,964 (13,405,593) 6,520,433,337 755,961,160 (56,073,416) - 1,620,406,516 4,766,780,484 91,105,709 439,348,695 302,679,677 7,220,321,081 Net Book Value June 30, 2017 3,343,741,442 5,170,697,344 7,265,243,835 134,311,196 334,155,202 212,255,505 16,460,404,524 Capital Work in Progress 8,012,063,489 Carrying Value as on June 30, 2017 24,472,468,013 Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 93 Capital Work in Progress is arrived at as follows: Amount in Taka June 30, 2017 June 30, 2018 Opening Balance Addition during the year Transferred & Capitalized Building and Other Constructions Plant & Machinery Closing balance at end of year 4 (b). Revaluation Surplus 8,012,063,489 4,585,531,290 12,597,594,779 - - - 5,956,586,824 2,598,531,112 8,555,117,936 (543,054,447) (61,530,227) (481,524,220) 12,597,594,779 8,012,063,489 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 Adjustment for depreciation on revalued assets Adjustment for Deferred Tax on revalued assets 5. Intangible Assets 1,190,203,818 (10,382,600) (20,543,373) 1,159,277,845 1,225,100,042 (11,757,201) (23,139,023) 1,190,203,818 Particulars Product development, Licensing and Marketing Rights ERP Project Total Cost As on July 01, 2017 Addition During the year As on June 30, 2018 Amortization As on July 01, 2017 Amortized During the year As on June 30, 2018 Balance as on June 30, 2018 6. Investment in Subsidiary 432,821,781 77,166,836 509,988,617 87,547,084 44,193,967 131,741,051 378,247,566 117,693,650 29,754,200 147,447,850 - - - 147,447,850 550,515,431 106,921,036 657,436,467 87,547,084 44,193,967 131,741,051 525,695,416 (a) The Company acquired 10,013,474 shares of Nuvista Pharma Ltd (NPL) representing 85.22% of the Paid Up Capital of NPL. The acquisition was completed on April 2, 2018. The investment in subsidiary represents the Purchase Consideration paid for the aforesaid acquisition and includes an amount of Tk. 31,136,000 paid as share transfer fee to the Registrar of Joint Stock Companies and Firms. (b) As per the audited financial statements of Nuvista Pharma Ltd the accumulated profit (Retained Earnings) of NPL after deduction of net loss of Tk. 94,729,874 incurred for the year ended June 30, 2018 stands at Tk. 133,936,896. This has been carried forward to the next year’s account of the said subsidiary and has not been dealt within or for the purpose of preparation of this financial statements. 94 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 7. Investment in Shares (a) Investment Details (Taka) : (i) Bangladesh Export Import Co. Ltd. (Note-c) (ii) Central Depository Bangladesh Ltd. (CDBL) (iii) Biocare Manufacturing SDN.BHD. , Malaysia-Note (e) (b) Number of Shares: Balance July 01, 2017 Addition/ Adjustment during the Year Balance June 30, 2018 5,130,791 1,569,450 11,180,100 17,880,341 New Investment Unrealized Gain/(Loss) (942,433) - 1,424,130 481,697 - - 18,145,620 18,145,620 4,188,358 1,569,450 30,749,850 36,507,658 Balance July 01, 2017 Addition/ Adjustment during the Year Stock Dividend New Issue Balance June 30, 2018 (i) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) (iii) Biocare Manufacturing SDN.BHD. , Malaysia-Note (e) 152,249 571,182 600,000 7,612 - - - - 900,000 159,861 571,182 1,500,000 (c) The shares of Bangladesh Export Import Co. Ltd. are listed in Dhaka and Chittagong Stock Exchanges. The market value of each share of Bangladesh Export Import Co. Ltd. on last working day of the year 2017-18 was Tk. 26.20 (In 2016-17 Tk. 33.70) in both Dhaka and Chittagong Stock Exchanges. The amount of Tk.942,433 represents fair value loss. (d) Shares of Central Depository Bangladesh Ltd. (CDBL) are not traded. (e) Biocare Manufacturing SDN.BHD., Malaysia: This represents 1,500,000 Ordinary Shares of Malaysian Ringit (RM) 1 each issued to Beximco Pharmaceuticals Ltd. by BioCare Manufacturing Sdn Bhd (“BioCare”), Malaysia. Beximco Pharmaceuticals Ltd. has been issued 30% of the equity share of the Malaysian based company for providing full technical support to set up a manufactiring facility in Seri Iskandar Pharmaceutical Park, Perak, Malaysia and to produce specialized pharmaceutical products. The amount of Tk.1,424,130 represents exchange fluctuation gain. 8. Inventories Amount in Taka This consists of as follows : June 30, 2018 June 30, 2017 Finished Goods Work in Process Raw Materials Packing Materials Laboratory Chemicals Physician Samples R & D Materials Materials in Transit 9. Spares & Supplies This consists of as follows : Spares & Accessories Stock of Stationery Literature & Promotional Materials 744,138,733 205,169,517 2,040,109,375 939,299,203 4,001,948 82,714,044 324,655 649,691,986 4,665,449,461 648,654,846 110,263,528 1,078,181,712 666,980,097 464,291 93,819,210 - 869,725,377 3,468,089,061 537,366,837 10,936,969 106,477,464 654,781,270 521,797,051 8,784,791 105,521,050 636,102,892 Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 95 10. Accounts Receivable This includes receivable of Tk. 596,463,606 equivalent to US$ 7,190,640 as on June 30 2018 (on 30-06-2017 Tk. 289,820,128 equivalent to US$ 3,618,229) against export sales. Part of the export sales receivables are against Letter of Credit while the rest are unsecured but considered good. Accounts Receivable also includes Tk. 2,011,958,959 due from I & I Services Ltd., who provides distribution service to the Company and a “Related Party”. The maximum amount due from that company during the year was Tk. 2,071,859,759 on 31 May, 2018. 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. 11. Loans, Advances and Deposits Amount in Taka This is unsecured, considered good and consists of as follows : June 30, 2018 June 30, 2017 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 Insurance Overseas Liaison Office Others 162,932,842 188,082,567 19,642,831 47,836,614 17,600,613 108,792,585 131,833,344 27,004,835 116,813,989 11,608,729 180,739,474 735,793,984 197,698,816 32,698,675 87,761,063 2,066,840,961 95,439,989 210,808,752 19,221,466 45,208,648 18,069,093 110,361,635 122,591,882 8,487,574 101,975,696 14,821,748 166,342,342 469,339,126 221,417,599 24,780,081 68,813,787 1,697,679,418 (a) The maximum amount due from the employees during the year was Tk. 119,172,863 on 31 January 2018. (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) Prepaid Insurance includes the insurance premium paid to German Export Credit Agency Euler Hermes Aktiengesellschaft, Ham burg for guarantee of the loan which is an integral part of the overseas loan financing agreement with ODDO BHF Aktiengesellshaft, Frankfurt, Germany. Expired portion of the prepaid insurance has been capitalized. 12. Short Term Investment This represents the Company’s temporary investment with Bangladesh Export Import Company Limited (Beximco Ltd.), carrying interest 1% above bank interest rate. This investment is returnable as and when required by the Company. 13. 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 June 30, 2018 Amount in Taka June 30, 2017 191,916,333 107,253,933 142,718,744 34,473,477 369,108,554 134,814,500 32,959,592 275,028,025 96 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 14. Issued Share Capital Amount in Taka A. Authorized : June 30, 2018 June 30, 2017 500,000,000 Ordinary Shares of Tk. 10 each 41,000,000 Fully Convertible, 5% 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 316,538,298 Bonus Shares of Tk. 10 each 5,951,250 Shares of Tk. 10 each issued in Exchange of Shares of Beximco Infusions Ltd. 31,291,147 Shares issued on conversion of Preference Shares 5,000,000,000 4,100,000,000 9,100,000,000 5,000,000,000 4,100,000,000 9,100,000,000 517,757,500 3,165,382,980 59,512,500 312,911,470 4,055,564,450 517,757,500 3,165,382,980 59,512,500 312,911,470 4,055,564,450 5,951,250 Ordinary Shares of Tk. 10 each were issued to the shareholders of Beximco Infusions Ltd on it’s merger with Beximco Pharmaceuticals Ltd. in 2005. 41,000,000 fully convertible 5% preference shares of Tk. 100 each were issued in 2009. 50% of the preference shares were converted into 16,169,191 ordinary shares of Tk. 10 each on February 1, 2010. The rest 50% were converted into 15,121,956 ordinary shares of Tk. 10 each on May 2, 2010. C. Composition of Shareholding of Ordinary Shares: June 30, 2018 No. of shares % of Share Capital June 30, 2017 No. of shares % of Share Capital Sponsors: A S F Rahman Salman F Rahman Other Directors and Associates Public Issue: GDRs- London Stock Exchange (AIM) Foreign Investors’ Shareholdings (DSE/CSE) Institutions (ICB, ICB Investors’ Accounts & Others) Individual Share Holders D. Distribution Schedule of Ordinary Shares: Range of Holdings In number of shares No. of Shareholders June 30, 2018 43,579 12,360 969 478 147 72 60 116 163 38 June 30, 2017 46,907 13,387 1,132 576 183 84 82 166 183 41 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 8,235,353 8,254,632 36,999,784 53,489,769 2.03 2.04 9.12 13.19 8,235,353 8,254,632 36,979,784 53,469,769 90,943,627 22.42 90,943,627 74,469,959 18.36 77,141,361 119,603,843 67,049,247 352,066,676 405,556,445 29.49 16.54 86.81 100 98,140,873 85,860,815 352,086,676 405,556,445 2.03 2.04 9.12 13.19 22.42 19.02 24.20 21.17 86.81 100 % of Shareholders June 30, 2018 75.16% 21.32% 1.67% 0.82% 0.25% 0.12% 0.10% 0.20% 0.28% 0.07% Number of Shares June 30, June 30, June 30, 2018 2017 2017 74.76% 6,030,643 6,389,847 21.34% 18,111,978 19,743,510 6,952,640 1.80% 8,165,206 6,834,127 0.92% 8,339,317 3,629,536 0.29% 4,615,416 2,493,725 0.13% 2,954,786 2,724,479 0.13% 3,772,353 0.26% 8,267,895 12,083,693 53,639,190 0.29% 48,891,611 0.07% 301,619,811 285,853,127 % of Share Capital June 30, 2018 1.49% 4.47% 1.71% 1.69% 0.89% 0.61% 0.67% 2.04% 12.06% 74.37% June 30, 2017 1.58% 4.87% 2.01% 2.06% 1.14% 0.73% 0.93% 2.98% 13.23% 70.47% Total 57,982 62,741 100% 100% 405,556,445 405,556,445 100% 100% Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 97  E. Market Price of Ordinary Shares: The shares are listed in Dhaka and Chittagong Stock Exchanges of Bangladesh and GDRs in AIM of London Stock Exchange. Prices of each Share/ GDR on the last working day of the year were: June 30 , 2018 June 30 , 2017 Dhaka Chittagong AIM Tk. Tk. GBP 93.90 94.70 0.510 113.00 113.00 0.605 F. Option on unissued Ordinary Shares: There is no option on unissued shares as on 30.06.2018. 15. 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. 16. Long Term Borrowings - Net of Current Maturity (a) This is arrived at as follows : Project Loan - ODDO BHF Aktiengesellshaft, Frankfurt, Germany Obligation Under Finance Leases AB Bank (b) Project Loan - ODDO BHF Aktiengesellshaft, Frankfurt, Germany June 30, 2018 2,809,556,317 280,596,178 759,326,232 3,849,478,727 Amount in Taka June 30, 2017 1,167,114,340 350,296,702 1,118,495,983 2,635,907,025 This represents part of the foreign currency loan of US $ 51.559 million sanctioned by ODDO BHF 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. It carries interest @ 6 month’s USD LIBOR plus 2.25% per annum. (c) Obligation Under Finance Leases Gross Finance Lease - minimum lease Liability: Within one year Within two to five years 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 Present Value of Finance Lease liability June 30, 2018 June 30, 2017 260,426,903 336,141,714 596,568,617 (114,965,180) 481,603,437 201,007,259 280,596,178 481,603,437 238,426,406 413,213,083 651,639,489 (132,529,673) 519,109,816 168,813,114 350,296,702 519,109,816 (d) AB Bank This loan is payable in quarterly installments and is secured by paripassu hypothication along with Janata Bank on all fixed and floating assets of the Company excepting the machineries and equipments financed by ODDO BHF Aktiengesellshaft, Frankfurt, Germany. 98 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 17. 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 Provisions during the year Paid during the year Closing balance at end of the Year (b) Workers Profit Participation and Welfare Fund 18. Deferred Tax Liability Opening Balance Addition during the Year : Deferred Tax on Assets (cost basis)-Note : 33 (b) Deferred Tax on revalued amount Closing Balance at end of the Year 19. Short Term Borrowings Janata Bank Ltd. - Cash Credit-Hypothecation Loan Liability for UPAS Letter of Credit Amount in Taka June 30, 2018 June 30, 2017 529,565,300 155,686,017 685,251,317 (25,247,014) 660,004,303 445,226,921 100,578,000 545,804,921 (16,239,621) 529,565,300 564,457,967 1,224,462,270 587,529,129 1,117,094,429 1,852,665,968 1,756,723,000 16,614,044 20,543,373 1,889,823,385 72,803,945 23,139,023 1,852,665,968 3,897,681,180 1,064,417,066 4,962,098,246 1,239,757,995 245,674,665 1,485,432,660 20. Long Term Borrowings-Current Maturity This consists of as follows and is payable within next twelve months from the Balance Sheet date: Project Loan - Local Banks Project Loan - ODDO BHF Aktiengesellshaft, Frankfurt, Germany Obligation Under Finance Leases AB Bank 21. Creditors and Other Payables Goods & Services Provident Fund Advance Against Sales Others - 852,470,599 201,007,259 400,341,697 1,453,819,555 569,160,255 188,151,262 43,576,730 138,649,988 939,538,235 96,418,429 84,706,841 168,813,114 365,851,816 715,790,200 140,880,215 275,950,713 57,922,126 63,410,725 538,163,779 Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 99 22. Accrued Expenses This is unsecured, falling due within one year and consists of as follows: For Expenses Workers’ Profit Participation and Welfare Funds - current year’s expense (net off interim payments) 23. Income Tax Payable Opening Balance Provision for the year Short / (Excess) Provision for previous year AIT & Treasury deposits during the year 24. Net Sales Revenue This consists of as follows : Domestic Export * Amount in Taka June 30, 2018 June 30, 2017 136,464,535 166,983,289 102,140,931 143,234,083 303,447,824 245,375,014 420,924,678 790,580,483 - 1,211,505,161 (778,088,709) 433,416,452 347,233,813 627,764,437 (35,781,848) 939,216,402 (518,291,724) 420,924,678 Amount in Taka July 2017 - June 2018 July 2016 - June 2017 15,903,750,112 1,476,977,889 17,380,728,001 14,430,304,971 1,078,472,001 15,508,776,972 * Equivalent US Dollar 17,953,810 for 2017-18 as against US Dollar 13,672,099 for 2016-17. 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 Quantity Unit Million pcs. Million pcs. Pcs Kg Liter July 2017 - June 2018 July 2016 - June 2017 4,520.25 97.08 21,566 141,374 437,986 4,008.10 87.65 36,193 177,737 388,917 100 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 25. Cost of Goods Sold This is made-up as follows : Work-in-Process (Opening) Materials Consumed (Note: 26) Factory Overhead (Note: 27) Total Manufacturing Cost Work-in-Process (Closing) Cost of Goods Manufactured Finished Goods (Opening) Finished Goods available Cost of Physician Sample transferred to Sample Stock Finished Goods (Closing) Item wise quantity and value of Finished Goods Stock are as follows: Stock as June 30, 2018 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 Stock as June 30, 2017 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 Unit Million pcs. Million pcs. Kg Pcs Unit Million pcs. Million pcs. Kg Pcs 26. Materials Consumed This is made-up as follows: Opening Stock Purchase Closing Stock Amount in Taka July 2017 - June 2018 July 2016 - June 2017 110,263,528 7,174,927,962 2,462,809,815 9,748,001,305 (205,169,517) 9,542,831,788 648,654,846 10,191,486,634 (191,843,220) (744,138,733) 9,255,504,681 194,155,965 6,126,293,944 2,287,126,449 8,607,576,358 (110,263,528) 8,497,312,830 639,923,877 9,137,236,707 (164,686,512) (648,654,846) 8,323,895,349 Quantity 419.50 7.20 9,592 4,918 Quantity 372.34 6.80 11,336 4,094 Value (Tk.) 438,495,650 276,721,452 26,362,126 2,559,505 744,138,733 Value (Tk.) 359,671,620 258,260,476 28,958,108 1,764,642 648,654,846 July 2017 - June 2018 July 2016 - June 2017 1,745,626,100 8,412,712,388 (2,983,410,526) 7,174,927,962 1,252,454,731 6,619,465,313 (1,745,626,100) 6,126,293,944 Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 101 27. Factory Overhead Salary & Allowances Repairs and Maintenance Insurance Premium Municipal Tax & Land Revenue Advertisement Registration & Renewals Travelling & Conveyance Entertainment Research and Development Printing & Stationery Telephone, Internet & Postage Toll Expense Electricity, Gas & Water Training & Conference Plant Certification and Regulatory Approvals Depreciation Other Expenses Amount in Taka July 2017 - June 2018 July 2016 - June 2017 861,570,554 204,042,376 22,183,717 2,508,685 196,960 13,724,885 9,364,755 1,799,806 216,131,607 22,062,770 9,211,158 211,932,071 135,414,774 4,961,417 26,780,147 699,635,924 21,288,209 2,462,809,815 723,627,956 189,600,074 18,389,627 3,003,485 74,602 11,136,097 7,337,312 1,622,407 236,318,682 20,824,317 8,054,456 201,710,308 129,746,397 6,230,654 24,852,026 684,144,850 20,453,199 2,287,126,449 (a) Salary and allowances include Company’s Contribution to provident fund amounting to Tk. 15,775,182. (b) Repairs and maintenance includes maintenance of office, premises, vehicles, building, equipment and other infrastructures. Also included therein imported stores and spares that has been consumed during the year. (c) Other expenses does not include any item exceeding 1% of total revenue. 28. Administrative Expenses Salary & Allowances Rent Repairs and Maintenance Registration & Renewals Travelling & Conveyance Entertainment Printing & Stationery Audit Fee Telephone, Internet & Postage Electricity, Gas & Water Legal & Consultancy Business Acquisition Cost Company Secretarial, Regulatory Fee and AGM Expense Advertisement Training & Conference Depreciation Board Meeting Attendance Fee Other Expenses 299,668,418 11,320,578 48,306,306 8,507,108 26,412,385 6,605,694 5,965,303 1,600,000 6,036,768 12,688,120 8,104,405 12,619,081 32,250,219 413,705 9,504,679 27,057,743 468,564 77,656,553 595,185,629 268,697,454 10,340,260 44,592,453 4,749,077 24,757,331 5,588,149 4,333,150 1,500,000 5,747,696 11,520,307 7,499,601 - 35,852,501 318,031 7,038,537 26,458,640 268,338 63,134,924 522,396,449 102 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma (a) Salary and allowances include Company’s Contribution to provident fund amounting to Tk. 6,887,331. (b) Repairs and maintenance includes maintenance of office, premises, vehicles, building, equipment and other infrastructures. (c) Remuneration is paid to the Directors for attending Board and Audit Committee Meetings. 29. Selling, Marketing and Distribution Expenses Amount in Taka 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 Sales & Market Promotion Expenses Pharmacovigilance  Literature/News Letter Registration & Renewals Export Insurance, Freight and C&F Expenses Distribution Commission Delivery Expense Depreciation & Amortization Other Expenses July 2017 - June 2018 July 2016 - June 2017 1,212,995,091 77,134,110 8,301,461 424,569,958 53,216,266 40,282,407 17,357,357 9,364,325 48,764,784 96,624,078 30,946,509 261,921,844 421,085,672 10,893,311 128,227,175 54,760,086 120,383,504 234,392,430 179,142,387 90,578,669 27,496,402 3,548,437,826 1,072,107,395 70,979,649 7,877,136 399,446,059 46,529,440 35,775,940 15,623,145 9,046,220 43,233,034 88,446,315 23,542,254 254,732,956 408,729,153 11,585,795 132,709,374 51,017,650 55,435,614 218,636,233 172,852,703 71,648,256 24,324,781 3,214,279,102 (a) Salary and allowances include Company’s Contribution to provident fund amounting to Tk. 28,035,404. (b) Distribution commission on local sales of Formulation and IV Fluid products were paid to I & I Services Ltd., a “ Related Party”. (c) Repairs and maintenance includes maintenance of office, premises, vehicles, building, equipment and other infrastructures. (d) Sample expense includes VAT on sample and related dispatch expenses. 30. Other Income Interest Income Dividend Income Royalty Technology Transfer Income* Income From sale of Product Dossier Distribution Commission Exchange Rate Fluctuation Gain / (Loss) ** Profit/(Loss) on Sale of Fixed Assets (Note 40) 54,928,425 1,504,092 6,093,728 18,145,620 4,959,000 22,851,313 (42,662,242) (846,352) 64,973,584 161,110,825 1,427,955 - 10,554,000 - - (26,444,057) (1,795,892) 144,852,831 * Equity shares were issued by Biocare Manufacturing SDN. BHD. Malaysia against transfer of technologies. **This is arrived after netting off exchange rate fluctuation loss amounting Tk. 49,510,471 on account of outstanding foreign currency loan from ODDO BHF Aktiengesellshaft, Frankfurt, Germany translated at exchange rate prevailing on Financial Position date. Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 103 31. Finance Cost 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 July 2017 - June 2018 361,626,873 (21,183,793) 73,199,604 85,080,425 13,376,260 512,099,369 Amount in Taka July 2016 - June 2017 303,316,773 13,904,256 111,145,912 107,554,563 21,081,658 557,003,162 * Net of Interest rebate received as per the terms of the Sanction letter of the loan for the timely repayment of all the installments. 32. 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). 33. Income Tax Expenses This consists of as follows : (a) Current Tax (i) Tax provision for current Year (Note 3.9) (ii) Short/(Excess) Provision for earlier year (b) Deferred Tax Expense Deferred Tax Expense is arrived at as follows : Property, Plant & Equipment ( Difference in book value & Tax base) Deferred Liability (Gratuity) Temporary Difference Tax Rate Deferred Tax Liability at end of the Year Deferred Tax Liability at beginning of the Year Change in Deferred Tax Liability Deferred Tax on Revaluation Surplus Deferred Tax charged to Profit or Loss and Other Comprehensive Income 34. Other Comprehensive Income/(Loss) Fair Value Gain/(Loss) on Investment in Listed Shares Exchange Rate Fluctuation Gain on Investment in Biocare Manufacturing 35. Earnings Per Share (EPS) 790,580,483 - 790,580,483 16,614,044 807,194,527 8,219,297,841 (660,004,303) 7,559,293,538 25% 1,889,823,385 1,852,665,968 37,157,417 (20,543,373) 16,614,044 627,764,437 (35,781,848) 591,982,589 72,803,945 664,786,534 7,940,229,171 (529,565,300) 7,410,663,871 25% 1,852,665,968 1,756,723,000 95,942,968 (23,139,023) 72,803,945 (942,433) 1,424,130 481,697 1,953,407 626,100 2,579,507 (a) Earnings attributable to the Ordinary Shareholders (b) Weighted average number of Shares outstanding during the year (Note 3.15) Earnings Per Share (EPS) Tk. Tk. 2,558,971,263 2,226,695,124 405,556,445 6.31 405,556,445 5.49 104 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma  36. Net Asset Value (NAV) Per Share Amount in Taka Total Assets Less Total Liabilities Net Assets Number of Shares at Financial Position date Net Asset Value (NAV) Per Share 37. Net Operating Cash Flow Per Share (NOCFPS) Net Cash Generated from Operating Activities Number of Shares at Financial Position date Net Operating Cash Flow Per Share (NOCFPS) *Restated June 30, 2018 June30, 2017 42,165,015,439 (15,060,625,508) 27,104,389,931 405,556,445 66.83 34,084,132,870 (9,011,706,970) 25,072,425,900 405,556,445 61.82 1,848,067,034 405,556,445 4.56 2,388,290,321 405,556,445 5.89* 38. Reconciliation of Net Profit with Cash Flows from Operating Activities Profit after Tax 2,558,971,263 2,226,695,124 Adjustment to reconcile net profit to net cash provided by operating activities : Non-cash Expenses: Depreciation Amortization Gratuity & WPPF Technology Transfer Income -Biocare Manufacturing SDN. BHD., Malaysia Exchange rate fluctuation loss on Bank Loan - Foreign Currency Deferred Tax Non-operating items: Dividend Income Loss on Sale of Fixed Assets Changes in working Capital (Increase)/Decrease in Inventories (Increase)/Decrease in Spares & Supplies (Increase)/Decrease in Accounts Receivable (Increase)/Decrease in Loans, Advances & Deposits Increase/(Decrease) in Creditors and Other Payables Increase/(Decrease) in Accrued Expenses Increase/(Decrease) in Income Tax Payable Net cash Generated from Operating Activities 972,619,072 773,078,369 44,193,967 107,367,841 (18,145,620) 49,510,471 16,614,044 (657,740) (1,504,092) 846,352 (1,682,865,561) (1,197,360,400) (18,678,378) (569,604,280) (369,161,543) 401,374,456 58,072,810 12,491,774 1,848,067,034 1,010,275,459 755,961,160 26,290,586 132,895,970 (10,554,000) 32,877,798 72,803,945 367,937 (1,427,955) 1,795,892 (849,048,199) (697,757,386) (21,496,780) (486,733,071) 104,624,767 84,335,167 94,288,239 73,690,865 2,388,290,321 Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 105 39. Related Party Disclosures Amount in Taka Following transactions were carried out with related parties in the normal course of business on arms length basis: Name of Related Parties (a) I & I Services Ltd. Nature of Transactions Local Delivery Distribution Commission (b) Bangladesh Export Import Co. Ltd. Short Term Investment & Interest there on (C) Nuvista Pharma Ltd. Toll Expense Distribution Commission Income Value of Transaction 19,075,349,798 234,392,430 547,179,732 3,970,778 18,584,888 Balance at year end 2,011,958,959 339,397,174 2,313,836 18,584,888 40. Particulars of Disposal of Property, Plant and Equipment The following assets were disposed off during the year ended June 30, 2018: Particulars of Assets Plant & Machinery Transport & Vehicle Tk. Cost Accumulated Depreciation 29,066,434 3,057,667 32,124,101 30,979,553 3,345,000 34,324,553 Written Down Value 1,913,119 287,333 2,200,452 Sales Price 782,650 571,450 1,354,100 Profit / (Loss) Mode of Disposal Name of Parties (1,130,469) Negotiation Different Individuals 284,117 Negotiation Different Individuals (846,352) 41. 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 Total Amount in Taka July 2017 - June 2018 228,156,894 10,407,588 10,187,070 25,467,675 5,438,661 6,705,192 286,363,080 (b) The above includes salary, allowances, and perquisites amounting Tk.41,244,135 paid to the Managing Director. (c) This also includes Tk. 468,564 paid to Directors including Independent Directors for attending Board and Audit Committee meetings. (d) No amount of money was expended by the company for compensating any member of the board for special services rendered. 42. Production Capacity and Utilization Item Unit Production Capacity Actual Production Capacity Utilization July 17 - June 18 July 16 - June 17 July 17 - June 18 July 16 - June 17 July 17 - June 18 July 16 - June 17 Tablet, Capsule, Suppository & DPI Million Pcs 4,349.64 4,241.14 4,741.32 4,140.72 109.00% 97.63% Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable and Inhaler Million Pcs 94.49 100.71 97.83 87.81 103.53% 87.19% Production does not include goods manufactured under contract manufacturing arrangement from third-party manufacturing sites. 106 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma 43. Capital Expenditure Commitment There was no capital expenditure contracted but not incurred or provided for at June 30, 2018. 44. Finance Lease Commitment At June 30, 2018 the company had annual commitment under finance leases as set out below : Leases expiring within 1 year Leases expiring within 2-5 years (inclusive) Tk. 201,007,259 280,596,178 481,603,437 45. Claim not Acknowledged as Debt There was no claim against the company not acknowledged as debt as on June 30, 2018. 46. Un-availed Credit Facilities There is no credit facilities available to the Company under any contract, other than credit available in the ordinary course of business and not availed of as on June 30, 2018. 47. Payments Made in Foreign Currency Import of Machinery, Equipment & Spares Import of Materials Regulatory Fees, Foreign Currency Loan repayment & Other Expenses 48. Foreign Exchange Earned / Received (a) Collection from Export Sales (b) Loan from ODDO BHF Aktiengesellshaft, Germany (c) Royalty and other Income 49. Commission / Brokerage to selling agent Foreign Currency (Equivalent US$) Taka 21,905,397 53,674,485 12,406,551 1,789,972,659 4,391,116,168 1,023,429,971 Foreign Currency (US$) 14,700,850 33,653,959 133,507 Taka 1,214,290,222 2,820,121,650 11,052,728 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. 50. 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. Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 107 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 guarantee favoring Standard Bank Ltd. Dhanmondi Branch for Beximco Engineering Limited. 51. Events after The Reporting Period (a) The directors recommended 12.5% cash dividend (i.e. Tk. 1.25 per share) for the year 2017-18. The dividend proposal is subject to shareholders’ approval at the forthcoming annual general meeting. (b) A separate entity named Beximco Pharma API Limited has been formed with a paid up capital of Taka 20,000,000 divided into 2,000,000 shares of Tk. 10 each. Beximco Pharmaceuticals Ltd. holds 1,999,990 shares of the total paid up shares of the company. Beximco Pharma API Limited will setup manufacturing facilities in the API Industrial Park (at Gozaria, Munshiganj)- newly established by the government in order to promote API manufacturing in the country. Two plots measuring 3.27 acres land have been alloted in the name of Beximco Pharmaceuticals Ltd. which are now in the process of being transfered in favour of Beximco Pharma API Limited. 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. 52. Financial Risk Management The management of company has overall responsibility for the establishment and oversight of the company’s risk management framework. Risk management policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the company’s activities. The company has exposure to the following risks for its use of financial instruments. Credit risk Liquidity risk Market risk 52.01 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 June 30, 2018 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. 52.02 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. 52.03 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. 108 | Annual Report 2017-18 | Audited Financial Statements-Beximco Pharma  (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 October 25, 2018 Nazmul Hassan Managing Director Ali Nawaz Chief Financial Officer Audited Financial Statements-Beximco Pharma | Annual Report 2017-18 | 109 Audited Financial Statements-Nuvista Pharma Audited Financial Statements Nuvista Pharma Ltd For the Year Ended June 30, 2018 AUDITORS’ REPORT To the shareholders of Nuvista Pharma Limited We have audited the accompanying financial statements of Nuvista Pharma Limited which comprise the statement of financial position as at 30 June 2018 and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other 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 Bangladesh Financial Reporting Standards (BFRSs), 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 the financial statements based on our audit. We conducted our audit in accordance with 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 the auditors’ 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, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, 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 present fairly, in all material respects, the financial position of Nuvista Pharma Limited as at 30 June 2018 and its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRSs), and comply with the Companies Act 1994 and other applicable laws and regulations. We also report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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 those books. (c) The statements of financial position and statement of profit or loss and other comprehensive income dealt with by the report are in agreement with the books of account and returns. Dhaka, 13 October 2018 ___________________ (A. Qasem & Co.) Chartered Accountants Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 111 Nuvista Pharma Limited Statement of Financial Position As at 30 June 2018 ASSETS Non-current assets Property, plant and equipment Capital work-in-progress Loan to employees Current assets Advances, deposits and prepayments Loan to employees Advance income tax net of tax provision Inventories Trade receivables Cash and cash equivalents Total assets EQUITY AND LIABITIES Shareholders’ equity Share capital Reserves and surplus Non-current liabilities Lease obligation - long term portion Long term bank borrowings Deferred liability - gratuity payable Deferred tax liabilities Current liabilities and provisions Lease obligation - current portion Short term bank borrowings Trade payables Liabilities for expenses Other liabilities Total liability Total equity and liabilities Notes 30 June 2018 Taka 30 June 2017 Taka 4 5 6 7 6 8 9 10 11 12 13 14 15 16 17 18 19 20 1,245,065,897 15,956,525 6,099,718 1,267,122,140 42,294,454 3,679,374 32,568,508 402,528,046 26,879,082 24,627,392 532,576,856 1,799,698,996 117,501,600 334,874,560 452,376,160 - 167,946,540 99,704,228 137,448,710 405,099,478 - 753,898,579 54,488,508 100,860,014 32,976,257 942,223,358 1,347,322,836 1,799,698,996 1,316,345,370 10,752,416 9,794,183 1,336,891,969 14,974,627 3,729,656 21,533,188 334,192,418 411,329,751 26,131,694 811,891,334 2,148,783,303 117,501,600 430,784,450 548,286,050 23,341,735 202,210,694 148,114,957 109,160,066 482,827,452 16,521,684 805,974,589 122,743,736 134,755,028 37,674,764 1,117,669,801 1,600,497,253 2,148,783,303 Footnotes: 1. Auditors’ Report - page 1 2. The annexed notes 1 to 34 form an integral part of these finacial statements. Chairman Managing Director Director Dhaka, 13 October 2018 112 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma As per our report of same date ___________________ (A. Qasem & Co.) Chartered Accountants Nuvista Pharma Limited Statement of profit or loss and other comprehensive income For the year ended 30 June 2018 Revenue Cost of goods sold Gross profit General and administration expenses Selling and distribution expenses Profit/(loss) from operations Non-operating income/(expenses) Interest expenses Profit/(loss) before tax and WPPF Contribution to WPPF Profit/(loss) before tax Tax expense Current Deferred Profit/(loss) after tax Other comprehensive income Notes 30 June 2018 Taka 30 June 2017 Taka 21 22 23 24 25 26 8 16 1,319,875,856 1,807,232,987 (666,021,602) (941,807,008) 653,854,254 865,425,979 (120,728,065) (128,474,244) (496,322,557) (524,355,150) 36,803,632 (2,543,380) (92,782,227) (58,521,975) - 212,596,585 1,340,827 (90,276,796) 123,660,616 (5,888,601) (58,521,975) 117,772,015 (7,919,255) (28,288,644) (36,207,899) (94,729,874) - (29,480,645) (25,635,237) (55,115,882) 62,656,133 - Total comprehensive income/(loss) for the year (94,729,874) 62,656,133 Earnings Per Share (EPS) (8.06) 5.33 Footnotes: 1. Auditors’ Report - page 1 2. The annexed notes 1 to 34 form an integral part of these financial statements. Chairman Managing Director Director Dhaka, 13 October 2018 As per our report of same date ___________________ (A. Qasem & Co.) Chartered Accountants Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 113  Nuvista Pharma Limited Statement of changes in equity For the year ended 30 June 2018 Particulars General reserve Share premium Share capital Taka Taka Taka Reserves and surplus Revaluation Pre- reserve incorpora- tion profit Taka Taka Retained earnings Total reserves and surplus Total Taka Taka Taka Balance as at 1 July 2016 58,750,800 7,511,991 30,844,170 243,737 162,337,766 167,939,266 368,876,930 427,627,730 Isssue of share capital Dividend paid Profit after tax for the year ended 30 June 2017 Balance as at 30 June 2017 Number of shares Net assets value per share Balance as at 1 July 2017 Dividend paid Loss after tax for the year ended 30 June 2018 Balance as at 30 June 2018 Number of shares Net assets value per share 58,750,800 (748,613) (748,613) 58,750,800 (748,613) - 117,501,600 - 7,511,991 - 30,844,170 - 243,737 - 162,337,766 62,656,133 229,846,786 62,656,133 430,784,450 62,656,133 548,286,050 11,750,160 46.66 117,501,600 7,511,991 30,844,170 243,737 162,337,766 229,846,786 (1,180,016) 430,784,450 (1,180,016) 548,286,050 (1,180,016) - 117,501,600 - 7,511,991 - 30,844,170 - 243,737 - (94,729,874) 162,337,766 133,936,896 (94,729,874) 334,874,560 (94,729,874) 452,376,160 11,750,160 38.50 Chairman Managing Director Director As per our report of same date Dhaka, 13 October 2018 (A. Qasem & Co.) Chartered Accountants 114 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma  Nuvista Pharma Limited Statement of cash flows For the year ended 30 June 2018 A. Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operation Interest paid Income tax paid Net cash generated from operating activities 30 June 2018 Taka 30 June 2017 Taka 1,704,326,525 (1,421,067,187) 283,259,338 (95,952,969) (18,954,575) 168,351,794 1,593,417,058 (1,446,813,906) 146,603,152 (90,276,796) (17,254,894) 39,071,462 B. Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Net cash used in investing activities (55,549,997) 13,077,500 (42,472,497) (186,753,414) 2,185,252 (184,568,162) C. Cash flows from financing activities Long term bank borrowings Short term bank borrowings Lease finance Dividend paid Share Capital Net cash (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents (A+B+C) Opening cash and cash equivalents Closing cash and cash equivalents (D+E) D. E. F. Net operating cash flow per share Number of shares (34,264,154) (52,076,010) (39,863,419) (1,180,016) - (127,383,599) (1,504,302) 26,131,694 24,627,392 (120,689,044) 241,237,743 (14,544,125) (748,613) 58,750,800 164,006,761 18,510,061 7,621,633 26,131,694 14.33 3.33 11,750,160 11,750,160 Chairman Managing Director Director As per our report of same date Dhaka, 13 October 2018 (A. Qasem & Co.) Chartered Accountants Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 115 Nuvista Pharma Limited Notes to the financial statements As at and for the year ended 30 June 2018 1. Reporting entity 1.1 Nuvista Pharma Limited (“the company”) was originally incorporated as a private limited company in 1973 in Bangladesh as Organon (Bangladesh) Limited under the Companies Act 1913. The company in its extra ordinary general meeting of the shareholders held on 02 November 2006 changed the name of the company from “Organon (Bangladesh) Limited” to “Nuvista Pharma Limited” which was approved by the Registrar of Joint Stock Companies and Firms on 29 November 2006. The company in its extra ordinary general meeting held on 05 May 2011 made some amendments to the Memorandum and Articles of Association with a view to broadening the objects clause of the company (subsequently approved by the High Court on 12 October 2011), converting it into a Public Limited company, increasing its authorized capital, complying with the Companies Act 1994, and eliminating certain redundant provisions in the Articles of Association of the company consequent upon the transfer of Organon International’s shareholding in the Company, which were filed with the Registrar of Joint Stock Companies and Firms, Dhaka. On 2nd April 2018, Beximco Pharmaceuticals Limited (BPL), a public limited company listed with Dhaka Stock Exchange, Chittagong Stock Exchange and London Stock Exchange has acquired majority shareholdings in Nuvista Pharma Limited (NPL) and through this acquisition BPL has become the immediate and ultimate parent of the company. Current shareholding comprises 85.22% by BPL, 12.92% by Government of Bangladesh and rest by other local shareholders. 1.2 The address of the registered office of the company is Plot no. 107/A, Mascot Plaza (8th floor), Sonargaon Janapath, Sector-7, Uttara C/A, Dhaka-1230, Bangladesh. 1.3 The company produces various pharmaceutical products including oral contraceptives, hormone, steroid, anti-histamine, anti- fibrinolytic, anti-infective, cardiac, gastrointestinal, musculoskeletal, respiratory, vitamin & mineral supplement and women’s health products which are sold in the local market. 2. Basis of preparation 2.1 Statement of compliance The financial statements have been prepared in accordance with Bangladesh Accounting Standards (BASs), International Accounting Standards (IASs), Bangladesh Financial Reporting Standards (BFRSs) and International Financial Reporting Standards (IFRSs), the Companies Act 1994 and other applicable laws and regulations. 2.2 Basis of measurement The financial statements have been prepared on the historical cost basis except revaluation of certain property, plant and equipment. 2.3 Functional and presentational currency These financial statements are prepared in Bangladeshi Taka (Taka/Tk.), which is the company’s functional currency. All financial information has been presented in Taka and rounded off to the nearest integer. 2.4 Use of estimates and judgments The preparation of financial statements requires management to make judgment, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an on going basis. 2.5 Going concern The company has adequate resources to continue its operation for the foreseeable future. For this reason the directors continue to adopt going concern basis in preparing the financial statements. The current resources and credit facilities of the company are sufficient to meet the present requirements of its existing business. 116 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma 2.6 Statement of cash flows Statement of cash flows has been prepared in accordance with as per BAS 7: “Statement of cash flows” under direct method. 2.7 Reporting period These financial statements cover one year from 1 July 2017 to 30 June 2018. 3. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. 3.1 Shareholders’ capital - paid-up capital Paid-up capital represents the total amount of shareholders capital that has been paid in full by the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time. 3.2 Lease transactions All lease transactions have been classified based on the extent to which risks and rewards incident to ownership of leased assets lie with the lessor or lessee. According to this classification, all the lease transactions have been identified as finance lease as per BAS 17: “Leases”, based on the substance of the transactions not merely the legal form. Finance lease has been recognised as assets and liabilities in the Statement of financial position at amount equal at the inception of lease to the lower of fair value of leased property and present value of minimum lease payments. The interest rate implicit in the lease has been used to calculate the present value of minimum lease payments. 3.3 Staff gratuity fund The company operates an unfunded gratuity scheme, provision in respect of which is made annually for all eligible employees. Gratuity payable to all eligible employees at the end of each year is determined on the basis of the existing rules and regulations of the company. 3.4 Employees provident fund The company subscribes to a contributory provident fund for its permanent employees which is administered by a Board of Trustees. 3.5 Property, plant and equipment 3.5.1 Recognition and measurement Property, plant and equipment (PPE) is recognised as an asset if it is probable that future economic benefits associated with the asset will flow to the entity and the cost of the item can be measured reliably. Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the assets, bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. 3.5.2 Subsequent costs The costs of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its costs can be measured reliably. The costs of the day to day servicing of property, plant and equipment are recognised in the Statement of profit or loss and other comprehensive income as incurred. 3.5.3 Depreciation Depreciation is recognised in the Statement of profit or loss and other comprehensive income on a straight line basis over the estimated useful lives of each item of property, plant and equipment. Depreciation on property, plant and equipment is charged from the month of acquisition. In case of disposals, depreciation is charged up to the immediate previous month of disposal. No depreciation is charged on leasehold land and capital work-in-progress. Depreciation is calculated and charged on all other property, plant and equipment at the following rates on cost or valuation, considering the estimated useful lives of the assets: Factory building and warehouse Motor cars and vans Plant, machinery and equipment Computer and IT equipment Electric fixtures and fittings Furniture and fittings 2.5% 20%-25% 5% -15% 30% 7% 6% Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 117 Gain or loss on sale of property, plant and equipment is recognised in the Statement of profit or loss and other comprehensive income as per provision of BAS 16: “Property, plant and equipment”. 3.6 Impairment 3.6.1 Recognition The carrying value of the company’s assets, other than inventories, are reviewed at each Statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of the asset or its cash-generating unit exceeds its recoverable amount. Impairment losses, if any, are recognised in the Statement of profit or loss and other comprehensive income. For the assets that have indefinite useful life, the recoverable amount is estimated at each Statement of financial position date. No indication of impairment was observed in the year ending 30 June 2018. 3.6.2 Calculation of recoverable amount The recoverable amount of an asset is the greater of net selling price and value in use. The estimated future cash flows are discounted to their present value using discount rate that reflects the current market assessment of the time value of money and the risk specific to the asset. For an asset that does not generate significantly independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. 3.6.3 Reversal of impairment An impairment loss recognised in prior periods for an asset shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognised for the asset in prior years. There was no reversal of impairment in the year ended 30 June 2018. 3.7 Capital work-in-progress Capital work-in-progress represents the cost incurred for acquisition and/or construction of items of property, plant and equipment that were not ready for use at the year end and these are stated at cost. 3.8 Taxation Tax on the Statement of profit or loss and other comprehensive income for the year comprises current and deferred tax. Tax is recognised in the Statement of profit or loss and other comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. 3.8.1 Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the Statement of financial position date, and any adjustment to tax payable in respect of previous years. 3.8.2 Deferred tax Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are offset if there is a legal enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that is no longer probable that the related tax benefit will be realised. 3.9 Inventories Inventories are valued at the lower of cost and Net Realisable Value (NRV). 118 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma Costs of raw materials, chemicals and packing materials are valued at cost. Costs of semi-finished and work-in-process inventories include cost of materials and allocated manufacturing overhead. Spare parts, laboratory consumables and miscellaneous items are valued at cost. 3.10 Trade receivables Trade receivables at the year end are stated at amounts which are considered realisable. 3.11 Foreign currency 3.11.1 Foreign currency transactions Foreign currency transactions are converted into equivalent Taka at the ruling exchange rates on the respective dates of such transactions and subsequently retranslated using the rate at the date of settlement. 3.11.2 Foreign currency translations Monetary assets and liabilities denominated in foreign currencies have been converted into Taka at the exchange rate ruling at the year end. 3.11.3 Translation gains and losses Foreign exchange difference arising on translation are recognised in the Statement of profit or loss and other comprehensive income. 3.12 Provisions A provision is recognised in the Statement of financial position when the company has a legal or constructive obligation as a result of past events, and 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. 3.13 Revenue recognition Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and VAT. Revenue is recognised when significant risks 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, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Transfer of risk and rewards occurs for the sale of goods, when the product is delivered to the customers along with dispatch documents and invoices. Toll income is recognised when the products are manufactured and delivered under a toll agreement with a third party. 3.14 Interest expenses Interest expense comprises interest expense on overdraft, import loan, demand loan, finance lease and term loan. All interest expenses are recognised in the Statement of profit or loss and other comprehensive income when it accrues. 3.15 Workers’ Profit Participation Fund (WPPF) The company provides 5% of its net profit before tax after charging such expense as WPPF in accordance with Bangladesh Labour Act 2006. 3.16 Events after the reporting date Events after the reporting date that provide additional information about the company’s position at the reporting date are reflected in the financial statements. Events after the reporting date that are not adjusting events are disclosed in the notes when material. 3.17 General Previous year’s figures have been rearranged/reclassified wherever considered necessary to conform to current year’s presentation. Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 119 l a t o T e r u t i n r u F s g n i t t fi t n e m p u q E i c i r t c e l e d n a d n a s e r u t x fi s g n i t t fi r e t u p m o C T I d n a t n e m p u q e i r o t o M s e l c i h e v d n a t n a P l i y r e n h c a m y r o t c a F e s u o h e r a w y r o t c a F g n d i l i u b d l o h e s a e L d n a l a k a T a k a T a k a T a k a T a k a T a k a T a k a T a k a T a k a T i t n e m p u q e d n a t n a p l , y t r e p o r P . 4 l s r a u c i t r a P , 8 8 8 5 4 3 0 5 , , ) 9 1 7 7 9 9 0 5 ( , , 9 7 2 1 2 4 8 3 8 1 , , - 0 0 0 0 9 , , 3 4 6 5 5 2 4 4 , , 1 4 2 1 6 8 3 1 , , 3 2 4 5 4 4 7 4 6 , , ) 8 3 2 2 1 0 2 ( , , 8 4 4 9 6 7 7 3 8 1 , , , 3 4 6 5 4 3 4 4 , , 6 2 4 4 9 2 9 5 6 , ) 8 4 8 , 5 2 1 , 1 ( ) 3 3 6 , 9 5 8 , 7 4 ( 9 2 8 , 5 9 1 , 6 0 0 3 , 4 5 1 , 8 2 6 9 7 , 7 3 7 2 2 7 , 6 0 3 , 1 6 0 9 , 3 8 7 , 9 1 9 8 5 , 8 5 1 , 4 6 1 2 0 3 , 5 7 7 , 1 4 4 1 3 8 , 9 0 9 , 9 4 9 5 , 0 9 7 , 6 3 2 1 9 9 , 1 0 3 , 4 7 2 n o i t a u a v l r o t s o C 7 1 0 2 y l u J 1 t a s A e h t g n i r u d n o i t i d d A r a e y l a s o p s i d / t n e m t s u d A j 7 8 8 , 3 5 8 , 4 2 6 5 2 , 3 5 4 , 4 4 1 8 9 0 , 3 1 5 , 2 4 4 1 3 8 , 9 0 9 , 9 4 9 5 , 0 9 7 , 6 3 2 3 1 7 , 8 0 6 , 5 7 2 8 1 0 2 e n u J 0 3 t a s A , 9 0 9 5 7 0 2 2 5 , , 3 8 0 6 7 9 9 1 , , 6 1 0 1 9 8 5 0 1 , , ) 4 7 3 3 6 2 5 3 ( , - , 3 1 4 5 1 0 2 , , 1 5 5 3 0 7 2 9 5 , , 6 9 4 1 9 9 1 2 , , 3 2 2 0 3 3 9 3 2 , , 0 4 9 7 8 5 0 4 , , ) 7 2 2 2 1 0 2 ( , , 6 3 9 5 0 9 7 7 2 , 8 7 2 , 3 2 6 , 2 1 0 6 4 , 8 2 9 , 5 8 3 6 2 , 7 0 9 , 4 2 1 8 0 4 , 1 3 8 , 2 4 9 1 , 9 7 4 , 6 3 8 0 2 , 8 3 5 , 4 ) 8 6 6 , 1 5 7 ( 5 9 8 , 8 8 1 , 9 2 ) 9 7 4 , 9 9 4 , 2 3 ( 0 5 4 , 5 0 4 , 3 2 6 4 7 , 7 4 2 4 6 3 , 7 0 9 , 5 8 1 8 , 9 0 4 , 6 1 6 7 8 , 7 1 6 , 2 8 3 1 7 , 2 1 3 , 8 4 1 4 5 1 , 9 7 0 , 3 8 5 5 , 6 8 3 , 2 4 - - n o i t a i c e r p e d d e t a u m u c c A l r a e y e h t g n i r u d e g r a h C 7 1 0 2 y l u J 1 t a s A l a s o p s i d / t n e m t s u d A j 8 1 0 2 e n u J 0 3 t a s A l e u a v k o o b t e N , 7 9 8 5 6 0 5 4 2 1 , , , 7 4 1 4 5 3 2 2 , , 0 9 4 8 8 3 1 8 3 , , 0 7 3 5 4 3 6 1 3 1 , , , 0 6 5 9 7 2 4 2 , , 0 0 2 5 1 1 8 0 4 , 9 6 0 , 4 4 4 , 8 8 2 6 , 0 6 1 , 7 0 8 3 , 5 3 8 , 1 6 9 2 1 , 0 3 2 , 8 7 5 8 3 , 0 0 2 , 4 9 2 9 3 0 , 8 6 8 , 6 1 3 7 7 6 , 0 3 8 , 6 3 2 4 , 8 7 0 , 7 6 3 0 , 4 0 4 , 4 9 1 3 1 7 , 8 0 6 , 5 7 2 8 1 0 2 e n u J 0 3 t a s A 0 0 4 , 1 1 3 , 0 0 2 1 9 9 , 1 0 3 , 4 7 2 7 1 0 2 e n u J 0 3 t a s A 120 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma 4.1 Depreciation charge has been allocated as under: Conversion cost included in cost of goods sold (Note 22.3) 80,838,538 30 June 2018 30 June 2017 Taka Taka 78,811,500 General and administration expenses (Note 23) 6,735,673 Selling and distribution expenses (Note 24) 18,316,805 105,891,016 4,747,821 15,140,240 98,699,561 4.2 Disclosure for revalued assets The leasehold land is stated at revalued amount on the basis of the reports of external surveyor. The surplus on revaluation over the original cost of the assets was credited to revaluation reserve. Land was revalued in 1976 for the first time. The company once again revalued its land, plant and machinery, and equipment at the time of divestment of Organon (Bangladesh) Limited in 2006. The Company’s land was further revalued in 2010. 5. Capital work-in-progress As at 1 July 2017 Taka Addition during the year Taka Transfer to property, plant and equipment Taka Leasehold land Plant and machinery Motor vehicles Electric fixture and fittings Furniture Equipment Computer and IT equipment Balance as at 30 June 6. Loan to employees - 8,985,317 - - - 87,099 1,680,000 10,752,416 1,306,722 4,629,586 28,154,300 847,000 90,000 16,006,560 4,515,829 55,549,997 Car loan General Loan Current portion of loan to employees Balance as at 30 June 7. Advances, deposits and prepayments Advance against operating expenses Rent advance Security deposits Lease deposits VAT Prepaid insurance Others Balance as at 30 June 8. Advance income tax, net of tax provision Balance as at 1 July AIT and treasury deposits during the year Provision for the year Short provision for earlier years Balance as at 30 June 1,306,722 737,796 28,154,300 847,000 90,000 13,014,241 6,195,829 50,345,888 30 June 2018 Taka 7,596,179 2,182,913 9,779,092 (3,679,374) 6,099,718 1,407,976 1,700,850 2,631,154 - 31,556,463 4,800,492 197,519 42,294,454 21,533,188 18,954,575 (7,919,255) - 32,568,508 As at 30 June 2018 Taka - 12,877,107 - - - 3,079,418 - 15,956,525 30 June 2017 Taka 11,287,839 2,236,000 13,523,839 (3,729,656) 9,794,183 1,131,079 4,918,950 2,341,154 1,668,003 122,842 4,670,616 121,983 14,974,627 33,758,939 17,254,894 (17,500,000) (11,980,645) 21,533,188 Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 121 9. Inventories Stocks Finished goods Semi-finished and Work-in-process Raw materials Chemicals Packing materials Materials-in-transit Stores Spare parts Laboratory consumables Miscellaneous items Spares-in-transit Balance as at 30 June 10. Trade receivables Ageing of the trade receivables is as follows: Receivables due over six months Receivables due below six months Balance as at 30 June Above receivables are unsecured and considered good. 11. Cash and cash equivalents Cash in hand Cash at banks Eastern Bank Limited HSBC The City Bank Limited Mutual Trust Bank Limited Dhaka Bank Limited BRAC Bank Limited IFIC Bank Limited Janata Bank Limited National Bank Limited Balance as at 30 June 122 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma 30 June 2018 Taka 30 June 2017 Taka 119,998,485 57,553,706 143,365,346 23,977,793 31,820,560 16,682,330 393,398,220 7,666,099 330,437 518,687 614,603 9,129,826 402,528,046 68,228,503 88,832,381 96,328,190 22,431,222 27,566,362 22,724,278 326,110,936 5,914,939 341,908 1,597,556 227,079 8,081,482 334,192,418 6,284,139 20,594,943 26,879,082 - 411,329,751 411,329,751 243,281 58,797 41,669 - 1,233,878 644,326 194,513 66,992 16,553,213 5,432,489 217,031 24,384,111 24,627,392 353,219 773 26,530 - 43 25,469,869 - - 222,463 26,072,897 26,131,694 12. Share capital Authorised 50,000,000 Ordinary shares of Tk 10 each Issued, subscribed and paid-up 11,579,160 Ordinary shares of Tk 10 each issued for cash 171,000 Ordinary shares of Tk 10 each issued for consideration other than cash 11,750,160 Shareholding position 30 June 2018 Taka 30 June 2017 Taka 500,000,000 500,000,000 115,791,600 115,791,600 1,710,000 117,501,600 1,710,000 117,501,600 Beximco Pharmaceuticals Limited Government of Bangladesh Mr. Akhter Matin Chaudhury Mr. Kanai Lal Saha Mr. Asif Ahmed Mr. Rahbar Alam Anwar Other shareholders (2018:28; 2017:27) Nominal value (Taka) Percentage of holding (%) 30 June 2018 100,134,740 15,186,000 - - - - 2,180,860 117,501,600 30 June2017 - 15,186,000 64,961,380 14,832,290 14,085,620 6,133,450 2,302,860 117,501,600 30 June 2018 85.22 12.92 - - - - 1.86 100 30 June 2017 - 12.92 55.29 12.62 11.99 5.22 1.96 100 12.1 In 2012, the company raised its paid-up capital from Tk. 9,791,800 to Tk. 58,750,800 by issuing 4,895,900 rights share to the existing shareholders on the basis of 5R:1 (i.e. five rights share against one existing share held on the record date). However, the subscription against the rights share (632,750 share of Tk. 10 each) held by the Ministry of Industries, Govt. of Bangladesh was received on 20 June 2013. 12.2 In 2017, the company further raised its paid-up capital from Tk. 58,750,800 to Tk. 117,501,600 by issuing 5,875,080 rights share to the existing shareholders on the basis of 1R:1 (i.e. one rights share against one existing share held on the record date). 13. Reserves and surplus General reserve Share premium (Note 13.1) Pre-incorporation profit Revaluation reserve (Note 13.2) Retained earnings Balance as at 30 June 13.1 Share premium 30 June 2018 Taka 7,511,991 30,844,170 243,737 162,337,766 133,936,896 334,874,560 30 June 2017 Taka 7,511,991 30,844,170 243,737 162,337,766 229,846,786 430,784,450 This represents the amount received on 48,959 ordinary shares @ Tk. 630 each issued in 1997. 13.2 Revaluation reserve This represents revaluation surplus on revaluation of land made during 2006 and 2010. 14. Long term bank borrowings Dhaka Bank Limited (Note 14.1) The City Bank Limited Mutual Trust Bank Limited Total long term bank borrowings Less: Current portion (Note 17) Balance as at 30 June 30 June 2018 Taka 283,116,730 - - 283,116,730 (115,170,190) 167,946,540 30 June 2017 Taka 111,087,949 237,500,000 6,271,470 354,859,419 (152,648,725) 202,210,694 Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 123 14.1 Dhaka Bank Limited All loan liabilities outstanding with Mutual Trust Bank Limited and The City Bank Limited and lease finance liabilities with United Finance Limited were taken over by Dhaka Bank Limited with effect from 29 March 2018. Loan liabilities outstanding with Brac Bank Limited was also taken over by Dhaka Bank Limited with effect from 10 May 2015. This also represents amount outstanding against the term loans taken from Dhaka Bank Limited on various dates for setting up the new Oral Solids facility and equipments at the factory. 14.2 Collateral All loans are secured by a registered mortgage on specific factory land and buildings of the company. 14.3 Security All loans are also secured with respect to the following: a) Registered (1st charge) hypothecation on present and future plant and machinery, equipment, furniture and fixture of the company. b) Registered (1st charge) hypothecation over all stock, book debts and receivables of the company. c) Shares held by Beximco Pharmaceuticals Ltd. are kept under lien with Dhaka Bank Ltd. d) Corporate guarantee to be issued by Beximco Pharmaceuticals Limited on a later date. 15. Deferred liability - gratuity payable Balance as at 1 July Add : Provision made during the year Less: Payments made during the year Balance as at 30 June 16. Deferred tax liabilities Deferred tax liabilities arrived at as follows: 30 June 2018 Taka 30 June 2017 Taka 148,114,957 13,093,910 161,208,867 (61,504,639) 99,704,228 137,844,382 35,841,729 173,686,111 (25,571,154) 148,114,957 Carrying amount on statement of financial position date Tax base Taxable/ (deductible) temporary difference Taka Taka Taka Year: 2017-2018 Property, plant and equipment Provision for gratuity (net of payment) Temporary difference 969,457,185 (99,704,228) 558,893,333 - Applicable tax rate for items recognised in statement of comprehensive income 410,563,852 (99,704,228) 310,859,624 35% Applicable tax rate for items recognised in equity 15% Deferred tax Liabilities (a) (108,800,869) (28,647,841) Deferred tax liabilities on revaluation surplus Net deferred tax liabilities (137,448,710) 124 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma Carrying amount on statement of financial position date Taka Tax base Taxable/ (deductible) temporary difference Taka Taka Year: 2016-2017 Property, plant and equipment Provision for gratuity (net of payment) Temporary difference 1,042,043,379 (148,114,957) 663,893,494 - Applicable tax rate for items recognised in statement of comprehensive income Applicable tax rate for items recognised in equity Deferred tax Liabilities (b) Deferred tax Liabilities on revaluation surplus Net deferred tax liabilities Deferred tax recognised in the statement of profit or loss and other comprehensive income in 2017-2018 (a-b) Deferred tax recognised in the statement of profit or loss and other comprehensive income in 2016-2017 378,149,885 (148,114,957) 230,034,928 35% 15% (80,512,225) (28,647,841) (109,160,066) (28,288,644) (25,635,237) 17. Short term bank borrowings Bank overdrafts Dhaka Bank Limited (Limit Tk. 180,000,000) The City Bank Limited Mutual Trust Bank Limited Short term bank loans The City Bank Limited Mutual Trust Bank Limited Dhaka Bank Limited Current portion of long term loan (Note 14) 30 June 2018 Taka 30 June 2017 Taka 161,151,048 11,432,288 - - 31,302,860 77,461,281 161,151,048 120,196,429 2,507,475 18,839,012 456,230,854 477,577,341 115,170,190 753,898,579 47,922,189 383,335,866 101,871,380 533,129,435 152,648,725 805,974,589 Collateral and security given against short-term finance are a part of overall financing arrangement with Dhaka Bank Limited as indicated in note 14. The interest rate is 9% -12.5% per annum and is payable on quarterly rests. Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 125 18. Trade payables Trade payables 30 June 2018 Taka 54,488,508 54,488,508 30 June 2017 Taka 122,743,736 122,743,736 This represents amount due against purchase of raw, chemical and packing materials. 19. Liabilities for expenses Promotional expenses, literature, etc. Leave encashment Audit fees Legal and professional fees Utilities Local travelling Accrued interest Toll manufacturing cost Accrued expenses 20. Other liabilities Salary and allowances Provident fund dues Workers’ profit participation fund Tax deducted at source VAT deducted at source Tax on salaries Final settlement of staff Corporate social responsibility project Commission payable to ADL Commission payable to BPL Unpaid dividend 21. Revenue Net sales revenue Toll income Quantitative details of sales Locally manufactured products 63,918,269 3,348,532 638,750 324,570 4,820,000 6,000,000 5,043,306 - 16,766,587 100,860,014 945,243 2,056,929 - 1,513,724 746,136 1,247,964 2,279,150 1,305,270 4,074,641 18,584,888 222,312 32,976,257 82,427,795 3,564,414 300,000 725,000 3,918,416 6,000,000 8,214,048 2,945,564 26,659,791 134,755,028 229,689 2,736,376 5,888,601 2,114,205 904,151 4,315,032 5,177,294 8,828,783 7,269,376 - 211,257 37,674,764 30 June 2018 Taka 30 June 2017 Taka 1,300,442,853 19,433,003 1,319,875,856 1,789,773,306 17,459,681 1,807,232,987 Unit Tabs Caps Amps & Suspensions 30 June 2018 Quantity 30 June 2017 Quantity 187,208,876 25,989,669 10,149,157 260,701,456 42,484,568 11,423,344 126 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma 22. Cost of goods sold Opening stock of finished goods Cost of production (Note 22.1) Cost of goods available for sale Cost of physician sample Closing stock of finished goods 22.1 Cost of production Opening stock of semi-finished and WIP Materials consumed (Note 22.2) Conversion cost (Note 22.3) Closing stock of semi-finished and WIP 22.2 Materials Consumed Opening stock Purchase Closing stock Item wise quantity and value of finished goods stock are as follows : Stock as July 1, 2017 Tabs Caps Amps & Suspensions Stock as June 30, 2018 Tabs Caps Amps & Suspensions Unit pcs. pcs. pcs. Unit pcs. pcs. pcs. 30 June 2018 Taka 30 June 2017 Taka 68,228,503 724,888,476 793,116,979 (7,096,892) (119,998,485) 666,021,602 99,652,236 918,678,261 1,018,330,497 (8,294,986) (68,228,503) 941,807,008 88,832,381 314,317,244 379,292,557 782,442,182 (57,553,706) 724,888,476 61,602,087 570,200,927 375,707,628 1,007,510,642 (88,832,381) 918,678,261 146,325,774 367,155,169 (199,163,699) 314,317,244 124,339,224 592,187,477 (146,325,774) 570,200,927 Quantity Value (Tk.) 35,881,662 4,316,127 715,576 45,447,388 9,595,244 13,185,871 68,228,503 Quantity Value (Tk.) 45,743,691 9,778,283 1,430,023 68,178,896 21,313,752 30,505,837 119,998,485 Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 127 22.3 Conversion cost Salaries and allowances Contribution to provident fund Power and fuel Factory supplies Software and hardware support expenses Canteen expenses Insurance Repair and maintenance Security services Toll manufacturing charges Stores materials consumed Product development cost Long service award Overseas travelling expenses Factory staff uniform Printing and stationery Entertainment Vehicle repair, maintenance and running cost Local authority taxes Other expenses Depreciation (Note 4.1) 23. General and administration expenses Salaries and allowances Directors’ fees (Note 28) Contribution to provident fund Office rent Overseas travelling expenses Local travelling expenses Entertainment Vehicle repair, maintenance and running cost Postage, telephone and internet Printing and stationery Advertisement Repairs and maintenance Office supplies Software and hardware support expenses Utilities Canteen expenses Local authority taxes Medical expenses Insurance premium Statutory audit fees Legal and professional expenses Meeting and seminars Bank charges General expenses Depreciation (Note 4.1) 128 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma 30 June 2018 Taka 134,687,674 1,958,417 36,669,889 16,552,550 1,215,860 6,808,872 2,999,015 18,354,691 2,655,011 16,507,781 29,361,448 18,115,904 216,130 3,163,453 1,549,716 950,276 338,593 2,468,713 2,220,120 1,659,906 80,838,538 379,292,557 73,890,013 390,000 2,377,913 9,735,900 2,411,044 977,100 391,656 2,868,339 1,583,087 590,564 234,000 898,909 1,814,488 2,794,163 1,830,471 2,514,497 1,476,192 1,494,167 718,178 325,000 1,281,370 1,550,160 863,299 981,882 6,735,673 30 June 2017 Taka 131,946,261 1,975,193 31,331,568 17,066,675 1,190,967 6,993,454 3,647,449 17,842,261 2,389,384 19,991,312 30,916,155 18,799,587 728,700 3,665,895 1,711,412 1,874,811 189,494 2,585,102 526,541 1,523,907 78,811,500 375,707,628 83,485,562 220,800 2,674,926 9,359,850 3,817,265 1,336,673 616,364 3,054,468 1,240,300 604,519 127,087 673,820 1,383,598 2,696,784 1,566,979 2,266,552 833,250 1,106,523 609,721 300,000 1,514,047 2,538,984 839,885 858,466 4,747,821 120,728,065 128,474,244 22.3 Conversion cost 24. Selling and distribution expenses 23. General and administration expenses 73,890,013 83,485,562 Vehicle repair, maintenance and running cost Software and hardware support expenses Salaries and allowances Contribution to provident fund Power and fuel Factory supplies Canteen expenses Insurance Repair and maintenance Security services Toll manufacturing charges Stores materials consumed Product development cost Long service award Overseas travelling expenses Factory staff uniform Printing and stationery Entertainment Local authority taxes Other expenses Depreciation (Note 4.1) Salaries and allowances Directors’ fees (Note 28) Contribution to provident fund Office rent Overseas travelling expenses Local travelling expenses Entertainment Printing and stationery Advertisement Repairs and maintenance Office supplies Utilities Canteen expenses Local authority taxes Medical expenses Insurance premium Statutory audit fees Legal and professional expenses Meeting and seminars Bank charges General expenses Depreciation (Note 4.1) Vehicle repair, maintenance and running cost Postage, telephone and internet Software and hardware support expenses 30 June 2018 30 June 2017 Taka Taka 134,687,674 131,946,261 1,958,417 36,669,889 16,552,550 1,215,860 6,808,872 2,999,015 18,354,691 2,655,011 16,507,781 29,361,448 18,115,904 216,130 3,163,453 1,549,716 950,276 338,593 2,468,713 2,220,120 1,659,906 80,838,538 379,292,557 390,000 2,377,913 9,735,900 2,411,044 977,100 391,656 2,868,339 1,583,087 590,564 234,000 898,909 1,814,488 2,794,163 1,830,471 2,514,497 1,476,192 1,494,167 718,178 325,000 1,281,370 1,550,160 863,299 981,882 6,735,673 1,975,193 31,331,568 17,066,675 1,190,967 6,993,454 3,647,449 17,842,261 2,389,384 19,991,312 30,916,155 18,799,587 728,700 3,665,895 1,711,412 1,874,811 189,494 2,585,102 526,541 1,523,907 78,811,500 375,707,628 220,800 2,674,926 9,359,850 3,817,265 1,336,673 616,364 3,054,468 1,240,300 604,519 127,087 673,820 1,383,598 2,696,784 1,566,979 2,266,552 833,250 1,106,523 609,721 300,000 1,514,047 2,538,984 839,885 858,466 4,747,821 120,728,065 128,474,244 Salaries and allowances Contribution to provident fund Overseas travelling expenses Local travelling expenses Entertainment Samples Promotional expenses Literature, pad and handouts Conference and workshop Advertisement Vehicle repair, maintenance and running cost Postage, telephone and internet Printing and stationery Books and periodicals Medical expenses Training expenses Prescription survey Registration and renewals Insurance premium Office rent Trade rebate Meeting and seminars Distribution commission General expenses Depreciation (Note 4.1) 25. Non-operating income/(expenses) Gain/(loss) on disposal of property, plant and equipment Sale of miscellaneous items 26. Interest expenses Interest on Long term loan Short term finance Finance lease 27. Capacity utilisation Amps & Suspensions Tablet Capsule 30 June 2018 Taka 207,039,026 3,702,016 6,612,503 52,279,018 493,441 8,096,951 50,331,929 16,817,775 4,662,843 1,794,133 3,559,309 9,490,821 963,632 1,245,934 1,395,300 2,295,924 917,253 613,695 4,557,169 4,560,136 - 2,874,359 92,122,035 1,580,550 18,316,805 496,322,557 30 June 2017 Taka 216,405,540 3,828,922 10,354,213 51,698,120 686,834 9,503,513 51,652,496 15,344,812 7,214,537 1,915,790 2,281,251 8,887,014 1,895,553 1,690,080 1,476,056 3,164,806 3,571,330 772,201 5,551,325 1,825,391 3,260,944 7,097,673 97,809,332 1,327,177 15,140,240 524,355,150 (2,656,845) 113,465 (2,543,380) 1,203,869 136,958 1,340,827 32,695,455 55,468,898 4,617,874 92,782,227 40,292,694 45,012,437 4,971,665 90,276,796 Installed capacity* Unit Actual production Unit Actual Utilisation % 19,822,400 1,322,390,400 56,044,880 12,157,738 172,314,986 30,540,785 61% 13% 54% Audited Financial Statements-Nuvista Pharma | Annual Report 2017-18 | 129 28. Remuneration and fees to directors Remuneration (included in salaries and allowances) Fees (Note 23) 29. Auditors’ remuneration Statutory audit fees Special audit fees P.F. audit fees WPPF audit fees 30 June 2018 Taka 35,628,152 390,000 36,018,152 30 June 2017 Taka 57,043,410 220,800 57,264,210 325,000 243,750 35,000 35,000 638,750 300,000 - 35,000 35,000 370,000 30. Related party disclosures Following transactions were carried out with related parties in the normal course of business on arms length basis: Name of related party Relationship Beximco Pharmaceuticals Limited Immediate and ultimate parent Nature of transactions Toll income Value of transaction 3,970,778 Distribution commission 18,584,888 Balance at year end 2,313,836 18,584,888 31. Payments made in foreign currency: Particulars 30 June 2018 Foreign currency (Equivalent USD) Taka 30 June 2017 Taka Import of raw, chemicals and packing materials Import of machinery and spare parts 2,660,212 162,138 223,457,810 13,619,571 237,077,381 287,182,664 45,756,747 332,939,411 32. Contingent liabilities 32.1 There is a contingent liability of Tk. 75,195,722 in respect of disputed tax claim. This matter has been referred to the High Court for a ruling and is still pending. 32.2 There is additional contingent liabilities in respect of outstanding letters of credit of Tk. 20,778,877 (June 2017: Tk.48,235,423). 33. Number of employees engaged The number of employees engaged for the whole period or part thereof who received a total remuneration of Tk. 36,000 and above were 954 (June 2017: 1061). 34. Events after reporting date The Board in its meeting dated 22 October 2018 recommended that a dividend of 5% i.e. Tk. 0.50 per share, totalling Tk. 868,344 be paid for the year ended 30 June 2018 to all shareholders other than Beximco Pharmaceuticals Limited. Chairman Managing Director Director 130 | Annual Report 2017-18 | Audited Financial Statements-Nuvista Pharma 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 No.1 Aire Street, Leeds, LS1 4PR, UK Broker Northland Capital Partners Limited 40 Gracechurch Street, 2nd Floor London, EC3V 0BT Custodian HSBC Level 4, Shanta Western Tower 186 Bir Uttam Mir Shawkat Ali Road Tejgaon Industrial Area Dhaka- 1208, Bangladesh Depository Bank The Bank of New York Mellon 240 Greenwich Street, 22W New York, NY 10286- USA SCRIP Award is among the most prestigious accolades in pharma and biotech industry recognizing the highly successful companies and individuals for their important roles in improving healthcare around the world. www.beximcopharma.com Follow us Like us Watch BEXIMCO PHARMACEUTICALS LIMITED 

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