Boston Properties Annual Report 2019

Plain-text annual report

ANNUAL REPORT 2018-19 Winner Global Generics & Biosimilars Awards 2019 ANNUAL REPORT 2018-19 BEXIMCO PHARMACEUTICALS LIMITED We continually strive to provide access to safe, effective and affordable medicines. Over the last 4 decades of operation, our motto has remained the same: ensuring health and wellbeing of the people. Contents About the Company Corporate Information Mission, Vision and Core Values Journey Towards Excellence Board and Management - The Board of Directors - Audit Committee 05 05 07 08 11 12 Highlights Post Period Highlights Accolades and Awards Chairman’s Statement Management Discussion and Analysis Report of the Directors to the Shareholders 12 Report of the Audit Committee - Nomination and Remuneration Committee - Executive Committee - Directors’ Profile - Executive Committee - Management Committee Our Manufacturing Capabilities Our Global Accreditations What We Offer Global Presence 12 12 13 16 17 18 25 27 28 Report of the Nomination and Remuneration Committee Notes on Corporate Governance Investor Relations Value Added Statement Financial Statements- Consolidated Financial Statements- Beximco Pharma Stand-alone 104 Nuvista Pharma Limited - Directors’ Report to the Shareholders Financial Statements- Nuvista Pharma Limited Research and Development 29 Financial Statements- Beximco Pharma API Limited Our People Environment, Health and Safety What We Do for the Society Corporate Events 30 34 37 40 Notice of Annual General Meeting Annual General Meeting Information Notes Proxy Form and Attendance Slip 46 47 48 52 54 57 73 75 76 78 80 81 139 141 167 176 177 178 179 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 for 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 listed on the AIM of London Stock Exchange. 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 4,500 employees including doctors, pharmacists, engineers, chemists, accountants, business graduates and other white collar professionals. 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, Auchpara, Tongi, Gazipur-1711, 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. AB Bank Ltd. 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 SP Angel Corporate Finance LLP Prince Frederick House 35-39 Maddox Street, London W1S 2PP, United Kingdom Custodian HSBC Level 4, Shanta Western Tower 186 Bir Uttam Mir Shawkat Ali Road Tejgaon Industrial Area Dhaka- 1208, Bangladesh Depositary The Bank of New York Mellon 240 Greenwich Street, 22W New York, NY 10286- USA About the Company and Corporate Information | Annual Report 2018-19 | 5 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. Mission, Vision and Core Values | Annual Report 2018-19 | 7 1976 Company incorporated 1980 Started manufacturing products of Bayer AG, Germany and Upjohn Inc., USA, under license agreements 1983 Launched own formulation brands 1985 Listed on Dhaka Stock Exchange 1993 2003 2005 Commencement of export of formulation products to Russia Introduced anti-retroviral (ARV) drugs as the ﬁrst Bangladeshi company Got listed on the Alternative Investment Market (AIM) of London Stock Exchange (LSE) through issuance of GDRs 2006 Launched CFC free HFA inhalers for the ﬁrst time in Bangladesh 2008 GMP accreditation from TGA, Australia and Gulf Central Committee for Drug Registration, for GCC states as the ﬁrst Bangladeshi company 2013 Commenced export of ophthalmic products to Europe 2014 GMP accreditation from Taiwan Food & Drug Administration (TFDA) and Health Canada Commenced export to Australia and Romania 2015-16 2016-17 2017-18 2018-19 • GMP approval from the Commenced export to the Won the “Scrip U.S. FDA as the ﬁrst Bangladeshi company Launched generic version of revolutionary hepatitis C drugs Sovaldi® and Harvoni® Entered the Gulf pharma market (Kuwait) USA. First overseas collaboration with BioCare Manufacturing Sdn Bhd, Malaysia Won the “Scrip Award” in the category of ‘‘Community Partnership of the Year’’ GMP approval from facility received WHO Malta Medicines Authority Award” in the category of “Best company in an emerging market” Oral solid dosage prequaliﬁcation Acquired 85.22% stake in Nuvista Pharma Limited e c n e l l e c x E s d r a w o T y e n r u o J 8 | Annual Report 2018-19 | Journey Towards Excellence • • • • • • • • • • • 1976 Company incorporated 1980 Started manufacturing products of Bayer AG, Germany and Upjohn Inc., USA, under license agreements 1983 Launched own formulation brands 1985 Listed on Dhaka Stock Exchange 1993 2003 2005 Commencement of export of formulation products to Russia Introduced anti-retroviral (ARV) drugs as the ﬁrst Bangladeshi company Got listed on the Alternative Investment Market (AIM) of London Stock Exchange (LSE) through issuance of GDRs 2006 Launched CFC free HFA inhalers for the ﬁrst time in Bangladesh 2008 GMP accreditation from TGA, Australia and Gulf Central Committee for Drug Registration, for GCC states as the ﬁrst Bangladeshi company 2013 Commenced export of ophthalmic products to Europe 2014 GMP accreditation from Taiwan Food & Drug Administration (TFDA) and Health Canada Commenced export to Australia and Romania 2015-16 2016-17 2017-18 2018-19 GMP approval from the U.S. FDA as the ﬁrst Bangladeshi company Launched generic version of revolutionary hepatitis C drugs Sovaldi® and Harvoni® Entered the Gulf pharma market (Kuwait) Commenced export to the USA. First overseas collaboration with BioCare Manufacturing Sdn Bhd, Malaysia Won the “Scrip Award” in the category of “Best company in an emerging market” Oral solid dosage facility received WHO prequaliﬁcation Acquired 85.22% stake in Nuvista Pharma Limited Won the “Scrip Award” in the category of ‘‘Community Partnership of the Year’’ GMP approval from Malta Medicines Authority Journey Towards Excellence | Annual Report 2018-19 | 9 • • • • • • • • • • • • 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 MP Vice Chairman A S F Rahman Chairman The Board of Directors A S F Rahman Salman F Rahman MP Nazmul Hassan MP Osman Kaiser Chowdhury Abu Bakar Siddiqur Rahman Iqbal Ahmed Dr. Abdur Rahman Khan Shah Monjurul Hoque Mohammad Asad Ullah, FCS Chairman Vice Chairman Managing Director Director Director Director Independent Director Independent Director Company Secretary Audit Committee Dr. Abdur Rahman Khan Shah Monjurul Hoque Osman Kaiser Chowdhury Mohammad Asad Ullah, FCS Chairman Member Member Company Secretary Nomination and Remuneration Committee Shah Monjurul Hoque Iqbal Ahmed Osman Kaiser Chowdhury Mohammad Asad Ullah, FCS Chairman Member Member Company Secretary Executive Committee Osman Kaiser Chowdhury Nazmul Hassan MP Rabbur Reza Mohammad Ali Nawaz Afsar Uddin Ahmed Member of the Board of Directors Managing Director Chief Operating Officer Chief Financial Officer Director, Commercial 12 | Annual Report 2018-19 | The Board of Directors Directors’ Profile Ahmed Sohail Fasihur Rahman Chairman Mr. Ahmed Sohail Fasihur Rahman is the Chairman and founder of Beximco Group. He is a distinguished business personality of the country and has received many awards and accolades for his outstanding contribution to country’s industrial development. Mr. Rahman was instrumental in introducing best-in- class corporate practice in Bangladesh and is widely credited as the architect of Group’s successful global strategy. He graduated with Honours in Physics from the University of Dhaka in 1966, and also studied in the United Kingdom. Mr. Rahman held key positions with many reputed organizations, serving as the Chairman of IFIC Bank Limited, Director of Industrial Promotion & Development Company Limited, Arab Bangladesh Bank Limited, Pubali Bank Limited and Investment Corporation of Bangladesh. He is currently a member of the Board of Governors of North South University Foundation, the first Private Sector University in Bangladesh. Salman Fazlur Rahman MP Vice Chairman Mr. Salman Fazlur Rahman MP is an industrialist, philanthropist and politician of Bangladesh. A Member of Parliament, Mr. Rahman currently serves as the Prime Minister’s Private Industry and Investment Adviser, with the rank and status of a cabinet minister, principally tasked with promoting trade, business and investment in the country. He is best known as the co-founder and vice chairman of the Beximco Group, the country’s largest private conglomerate, comprising of four publicly listed and seventeen privately held companies. He anchored the key initiatives that have helped to build Beximco’s corporate identity at home and abroad, and led the Group into becoming a leading industrial conglomerate in the country. He was the President of SAARC Chamber of Commerce and Industry, Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), Metropolitan Chamber of Commerce and Industry (MCCI), Bangladesh Textile Mills Association, Bangladesh Association of Pharmaceutical Industry and Association of Television Channel Owners (ATCO). Currently, he is the Chairman of the Board of Governors, Bangladesh Enterprise Institute, a leading think tank focusing on the growth of private enterprise in Bangladesh. He is also the Chairman of IFIC Bank Limited, Chairman of the Board of Editors, the Independent, one of the leading English-language newspapers, Chairman of the Independent Television, a popular and influential 24-hour news channel and the Chairman of Abahani Ltd. the nation’s premier sporting club and the Adviser of Bangladesh Association of Pharmaceutical Industries (BAPI). Mr. Rahman has many accolades to his name and he holds a degree from Karachi University. The Board of Directors | Annual Report 2018-19 | 13 Nazmul Hassan MP Managing Director Mr. Nazmul Hassan MP is the Managing Director of Beximco Pharmaceuticals Ltd. and the Chairman of Nuvista Pharma Ltd. He is also the Director of the Board of Bangladesh Antibiotic Industries Limited, Independent Television and Padma Mining and Energy Limited. Mr. Hassan obtained his graduation degree in Public Administration from the University of Dhaka and an MBA degree in Marketing from Institute of Business Administration (IBA). He also received executive education from University of California Los Angeles (UCLA) and Kellogg School of Management, Chicago. Since 2009, Mr. Hassan has been an elected Member of Parliament (MP) of Bangladesh for three consecutive terms. He is also a Member of the Parliamentary Committee for Finance, Sports & Defense. Mr. Hassan is currently the President of Bangladesh Association of Pharmaceutical Industries (BAPI). He is involved with various national and international committees and task force on healthcare and drug policy. Mr. Hassan is the elected President of Bangladesh Cricket Board (BCB) and Asian Cricket Council (ACC), Director of International Cricket Council (ICC) Board and ICC Business Corporation (IBC). He is the President of IBA Alumni Association and a Member of the American Management Association and the Australian Institute of Management. A prominent and highly respected business leader in the country, Mr. Hassan received the prestigious Asia’s Most Influential Leader award at the Asian Brand Summit 2013, Dubai for his outstanding business leadership. Osman Kaiser Chowdhury Director Mr. Osman Kaiser Chowdhury is a member of the Institute of Chartered Accountants of England and Wales and a Fellow member of the Institute of Chartered Accountants of Bangladesh. He is involved with Beximco Group for over 39 years and is currently the Director of Group Finance and Corporate Affairs, Chief Executive Officer of Beximco Power Ltd. and Beximco Engineering Ltd. He has over 13 years’ experience working abroad, including the United Kingdom. Mr. Chowdhury is a member of the Board of Directors of a number of listed and non-listed Companies including Bangladesh Export Import Company Ltd., Beximco Synthetics Ltd., Shinepukur Ceramics Ltd and Beximco Securities Ltd. Abu Bakar Siddiqur Rahman Director Mr. Abu Bakar Siddiqur Rahman holds senior positions at a number of entities within the Beximco Group of companies and has over 47 years business experiences in trading, jute, textiles, pharmaceuticals and other sectors. He has been in the Board of Beximco Pharma since 1993. Mr. Rahman is also a member of the Board of Directors of Bangladesh Export Import Company Limited. 14 | Annual Report 2018-19 | The Board of Directors Iqbal Ahmed Director Mr.Iqbal Ahmed has been with the Beximco Group since 1972 and holds senior positions in a number of entities within the Beximco Group of companies. He received his Bachelor’s Degree in Science from the University of Dhaka in 1966. He has over 47 years business experiences in trading, jute, textile, pharmaceuticals, engineering, IT and other sectors. He has been in the board of Beximco Pharma since 1985. He was the publisher of “The Independent” and the “Muktakantha”an English and a Bengali national daily newspaper respectively, in Bangladesh. Dr. Abdur Rahman Khan Independent Director Dr. Abdur Rahman Khan is a very senior and prominent physician in Bangladesh. He was the Chief Consultant Physician and Professor of Medicine, BIRDEM (Bangladesh Institute of Research and Rehabilitation in Diabetes, Endocrine and Metabolic Disorders) and Chairman, Board of Management of BIRDEM. Mr. Khan is a fellow of the Royal College of Physicians of London and College of Physicians and Surgeons of Bangladesh. He is a Member of National Council of Diabetic Association of Bangladesh, Member of the International Diabetes Federation and an honorary member of the Association of Military Surgeons, USA. He joined Bangladesh Army as a Commissioned Officer in Army Medical Corps and retired as a Major General. He was an Advisor to the Caretaker Government of Bangladesh and previously Vice President of the Red Crescent and Red Cross society of Bangladesh. Shah Monjurul Hoque Independent Director Mr. Shah Monjurul Hoque is a practicing lawyer in the Supreme Court of Bangladesh, both in the High Court Division and Appellate Division. Mr. Hoque is the founder of Hoque & Associates, a law firm in Bangladesh, of which he is the Proprietor (a position equivalent to that of a director). He has held various academic appointments in the field of law and has also acted as legal adviser to a number of corporate clients in Bangladesh and as the enlisted lawyer of several Bangladeshi banks. Company Secretary Mohammad Asad Ullah Executive Director & Company Secretary Mr. Mohammad Asad Ullah has been working with Beximco Group since 1983. He obtained his Bachelor of Arts and Master of Law degree from Dhaka University. He also holds an MBA with major in Human Resource Management. Mr. Asad Ullah qualified as Chartered Secretary from the Institute of Chartered Secretaries of Bangladesh (ICSB) and is a Fellow Member of the institute. He was four times President of the Institute. He is a widely experienced person with long career in Company Secretarial functions. The Board of Directors | Annual Report 2018-19 | 15 Executive Committee Executive Committee comprises of five members- Mr. Osman Kaiser Chowdhury, Mr. Nazmul Hassan MP, Mr. Rabbur Reza, Mr. Mohammad Ali Nawaz and Mr. Afsar Uddin Ahmed. Mr. Chowdhury and Mr. Hassan are also members of the Board of Directors. Rabbur Reza Chief Operating Officer Mr. Rabbur Reza, the Chief Operating Officer of the Company, has 24 years of experience in pharmaceutical industry, in the areas of sales, marketing and brand management, international business development, operations management, acquisition and partnerships etc. He had previously worked for Biotech and Milton Pharmaceuticals in Australia. He is also serving as the Managing Director of Nuvista Pharma, a subsidiary of Beximco Pharma, since its acquisition. Mr. Reza holds a Bachelor of Pharmacy from Panjab University, India and an MBA from Queensland University of Technology (QUT), Australia. He received executive education in Strategy and Leadership at Harvard Business School, USA and London Business School, UK. He is a fellow of Australian Institute of Management, a member of Pharmaceutical Society of Australia, and also a member of Montreal Protocol’s Medical Technical Options Committee (United Nations Environment Program–UNEP). Mr. Reza received the prestigious “Australian Alumni Excellence Awards 2014” in the category of Business and Leadership. Mohammad Ali Nawaz Chief Financial Officer Mr. Mohammad Ali Nawaz qualified as a CMA from the institute of Cost and Management Accountants of Bangladesh, and is currently a Fellow Member of the Institute. He also obtained an MBA from the Institute of Business Administration, University of Dhaka. After joining as a management trainee in 1990, he worked for different entities within the Beximco group of companies, in varying capacities. He possesses diversified skills and experience in Accounting, Finance, HRM, Project Management, Supply Chain and Operations Management. He attended a number of training courses, seminars and symposiums at home and abroad in various functional areas including organizational leadership. Afsar Uddin Ahmed Director Commercial Mr. Afsar Uddin Ahmed completed his MBA from the Institute of Business Administration (IBA), University of Dhaka, with a major in Marketing. He also received advanced management training at International Management Centre, IIkley College, UK. Mr. Ahmed has worked in and supervised a number of operational areas of BPL including Marketing, Sales, Distribution, Exports, Planning, Procurement, MIS, Business Development, Project Management and API business. Mr. Ahmed also worked as the Country Manager of BPL’s Pakistan operation. He worked for Sanofi-Aventis as Director Marketing of its Bangladesh business overseeing the marketing operations of several business units. 16 | Annual Report 2018-19 | The Board of Directors Management Committee Nazmul Hassan MP Managing Director Osman Kaiser Chowdhury Member of the Board of Directors Rabbur Reza Chief Operating Officer Mohammad 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 Head of Distribution Services & 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 Dr. Selina Akter Executive Director Department of Medical Affairs M A Arshad Bhuiyan Deputy General Manager, HR The Board of Directors | Annual Report 2018-19 | 17 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, insulin, dry powder inhaler, small scale API unit, etc. The site has its own infrastructure to ensure adequate generation and distribution of electricity with an installed capacity of 15 MW. It also contains water purification, effluent treatment, liquid nitrogen and steam generation plant/facilities. There is 125,000 sq ft 5-tier warehouse to accommodate materials and finished products maintaining the GMP compliance. In this year our oral solid dosage facility was approved by the Malta Medicines Authority (European Union). These facilities incorporate modern technological advancements with automated material handling systems and multilevel designs. Machineries and equipments are predominantly of European origin and are capable of manufacturing high tech complex products like bilayer, effervescent, oral thin films, etc. meeting the standard of highly regulated market. The company is now implementing a massive expansion project to build facilities for manufacturing solid, semi solid, liquid, cream and ointments to diversify product portfolio and expand production capacity. A purpose built five storied building with total floor space about 600,000 sq ft has been constructed to accommodate the production facilities. The project will have the capacity to produce 5 billion tablet, capsules, sachets etc., 130 million bottles and 70 million tubes for semi-solid products. 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. 18 | Annual Report 2018-19 | Our Manufacturing Capabilities Expansion Project Our Manufacturing Capabilities | Annual Report 2018-19 | 19 Oral Solid Dosage Facility 20 | Annual Report 2018-19 | Our Manufacturing Capabilities Inhaler Facility Our Manufacturing Capabilities | Annual Report 2018-19 | 21 Ophthalmics Facility 22 | Annual Report 2018-19 | Our Manufacturing Capabilities Insulin Facility Our Manufacturing Capabilities | Annual Report 2018-19 | 23 API Facility 24 | Annual Report 2018-19 | Our Manufacturing Capabilities Our Global Accreditations 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 • Malta Medicines Authority (European Union) • Health Canada • GCC (Gulf) • WHO (World Health Organization). Our Global Accreditations | Annual Report 2018-19 | 25 First Bangladeshi pharma company to export medicine to U.S.A 2017-18 Highlights | Annual Report 2017-18 | 26 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, Atova, Azmasol, Bizoran, 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. What We Offer | Annual Report 2018-19 | 27 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 7 products in the US market. This year Beximco Pharma acquired a portfolio of eight Abbreviated New Drug Applicatons (ANDAs) from Sandoz inc., a division of Novartis. In the year Company saw registration of 50 products in 23 countries. Currently Beximco exports 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. North AMERICA CIS Central ASIA EUROPE Central AMERICA & Caribbean ISLANDS South AMERICA Middle EAST ASIA ASIA ASIA AFRICA AUSTRALIA New ZEALAND 28 | Annual Report 2018-19 | Global Presence 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 on creating 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. North AMERICA CIS Central ASIA EUROPE Central AMERICA & Caribbean ISLANDS South AMERICA Middle EAST ASIA ASIA ASIA AFRICA AUSTRALIA New ZEALAND Research and Development | Annual Report 2018-19 | 29 Our People We always recognize that people are the cornerstone of our success. Our dedicated and highly capable employees, with their collective resolve to excel, have always led us to achieve new milestones. Beximco Pharma currently employs more than 4,500 people. Its strong pool of talents includes professionals like pharmacists, chemists, doctors, microbiologists, engineers and business executives. We seek to provide a safe and secured workplace that inspires people to be the best they can be. We believe our ability to transform ourselves is largely driven through empowering our people and thus we strive to provide each and every of our employees with an environment that instills pride, fosters growth and encourages innovation. 608 Man Hour Overseas Training 2,017 Man Hour Local Training (In-house) 3,428 Man Hour Local Training (External) Training and Development We constantly seek to attract and retain the best talent in the industry and take initiatives to ensure that our people are enabled and inspired to grow individually and professionally along with the Company. Beximco Pharma regularly carries out wide range of training and professional development programs across different functions of the organizations. In the last financial year, we conducted more than 6,000 man-hours of training for our employees in addition to routine training on in-plant GMP Compliance and Selling skills for our field colleagues. 30 | Annual Report 2018-19 | Our People Gender Diversity We pursue equal opportunity policy for all of our employees working throughout the organization. The Company’s employment and recruitment policy does not contain any discriminative provision with respect gender, religion or caste, rather where male and female are found to be equally qualified, female candidate gets the preference. Employment of female workers in the industry is low due to country’s socio-economic and cultural factors. Beximco Pharma has already started a packaging line in the production plant run exclusively by female workers. We have a number of female employees who are working in managerial positions and leadership roles, three of them promoted in the year under review. The number of female in our 16 member Management Committee has risen to three from previous two. Female employment in the Company is gradually rising. Employee Retention The Company has an effective employee retention program which includes employee compensation, recognition and reward system, work-life balance, communication and feedback, effective teamwork etc. The Company also has the best practices in developing workplace culture for its employees. Female Employee 150 130 111 179 2016 2017 2018 2019 Employee Turnover 2 2 2 8 88 8 88 2 2 2 9 99 8 8 8 6 6 6 7 0 4 9 2 3 9 99 2 2 2 7 7 7 0 0 4 1 9 3 Net Turnover 4 44 7 7 7 7 7 7 Joining 3 8 3 Leaving 2016 2017 2018 Our People | Annual Report 2018-19 | 31 Employee Welfare In addition to providing compensation packages competitive to the industry, Beximco Pharma takes on a good number of voluntary initiatives for overall employee welfare. The Company arranges annual picnic, employee family day program, cultural program etc., to strengthen inter-personal bonding. Various inter and intra-company sports events are also organized for physical and mental fitness. Employees at our manufacturing plants and head offices are provided meals almost at no cost. The Company provides education stipends to the meritorious children of our workers; routine health checkup, free of cost doctor’s consultation for self and family members and need based special financial support for medical purposes are also available for them. Annual Iftar 2019 Family Day 2019 Annual Cultural Program Inter-Dept. Volleyball Tournament Annual Picnic, Factory Inter- Department Cricket Tournament 32 | Annual Report 2018-19 | Our People New Knowledge Center being constructed at BPL site, Tongi Environment, Health and Safety We are well aware of our responsibilities to protect our environment and to promote a sustainable eco-friendly operations. We consciously select technology that is friendly to the environment and comply with the environmental codes. Our production process is designed with plant having modern state of art technology. We have created adequate facilities and employed appropriate process to keep the environmental effects of the manufacturing activities to a practicable minimum level. We are also committed to provide a safe and healthy working environment to ensure health and safety of our employees, contractors, visitors and neighbors who may be affected by our operations. We identify and control all foreseeable hazards to life, property or environment. We ensure that gaseous emission and liquid or solid wastes from our operations are minimized, controlled and disposed of by the best practicable means. As a commitment to protect the health and environment, Beximco Pharma has already implemented proper Occupational Health and Industrial Hygiene and Effluent Management System in its manufacturing site. Management of Solid Wastes The solid wastes generated from pharmaceutical operation may have degrading effect on the environment and ecological system. Our solid wastes are managed adequately to comply with the environmental regulations. The entire waste management is handled with the Best Available Technologies (BAT) that include incineration plant, dust control units and scrubber to ensure zero discharge of solid waste that may harm the surrounding ecological system. Beximco has installed one of the largest incinerators having capacity 250kg/ hr. depending on calorific value of the products. Materials are burned in the primary chamber at 8000 C. Gaseous emissions evolved from the chemicals are burned in the secondary chamber at 12000 to 14000 C. Retention time in the second chamber is 2 seconds. Different parameters of the gas finally generated from the incinerator are well within acceptable limit. As per international guideline, the height of the chimney is more than 30 meter. Management of Liquid Wastes and Gaseous Emissions The liquid wastes are produced from the operation of factory. A considerable amount of waste water is generated in factory premises, which are mainly from washing of machineries and utensils, floors empty bottles etc., The other source of liquid waste consists of dissolved and suspended API, excipients, laboratory re-agents; water from cooling tower. Beximco Pharma has proper control on the waste generated from the plant. We have the largest waste water treatment plant at our factory. No toxic wastes water are discharged into the open land or surface water bodies without treatment. About 50% of this water is recycled and used for gardening, car washing and water scrubber of incinerator. Settled sludge is incinerated. The Chemical Oxygen Demand (COD) and Biological Oxygen Demand (BOD) of the released water are well within the national limit. The quality of treated water complies with the requirements of DoE. All equipment are provided with efficient filters in the exhaust to confine dust particles and controlled by Building Automation System (BAS). Also certain areas contain High Efficiency Particulate Aid Filter (HEPA) and proper scrubber for further protection of the environment. The collected dust particles from filters are then incinerated. Gaseous products such as SO2, NO2, NO etc. in the surrounding areas are monitored and kept within normal level. Management of Noise, Odor and Vibration Noise and certain vibrations commonly produced by the electromechanical equipment may affect workers and the environment at the vicinity. The noise requires no mitigation step as the factory is located in a non-residential/commercial area falling under ‘Ga’ area (mixed) as per standard. The machineries are low noise type and hence has very insignificant effect. The working personnel inside the plant are provided with Personal Protective Equipment (PPE). Vibration problems are mitigated as the reactors are located at a proper distance from the boundary level. There is no major odor problem as the factory premises 34 | Annual Report 2018-19 | Environment, Health and Safety are regularly disinfected and scrubbers are installed in the main header of gas emission line. Occupational Health and Safety Measurements and Industrial Hygiene Beximco Pharma is determined to the protection and promotion of employee health and safety. We identify and assess potential exposure to chemical and physical stresses utilizing qualitative and quantitative analysis. Significant risks to chemical and physical stresses are controlled by isolation, engineering control, administrative control and providing protective equipment. EHS aspects are considered before procurement of any equipment. EHS attribute is a part of User Specification Requirement (URS) of all equipment. All machine and moving parts are covered and interlocked through sensors to protect employees from physical injury. Eating, smoking or drinking is not permitted in the manufacturing areas and analytical labs where chemical exposures are possible. Appropriate work uniforms and lab coats are provided where required. We have identified noisy area and provided proper ear protection to the workers working in that area. Proper eye protection is provided to the employees working with chemicals. We also identify, assess and control the factors that may lead to musculoskeletal or other ergonomically related disorders. Automation in most of the areas reduce work stress. Employees are trained on different EHS issues including firefighting, personnel protective equipment, First Aid, material safety data sheet (MSDS). No hot area is present in the factory premise. All working areas including warehouse are temperature controlled. All areas are provided with emergency exit with proper signage. Where ever applicable, flame proof appliances, fire door etc. are used. Partitions are made with PU panel capable to retain fire for a significant time period. All employees undergo pre-employment and annual health check-up organized by the company. Company has contracted physicians specialised in Medicine, Gynecology, Child health etc. These physicians carries out their practices at Tongi area, close to the factory locations. Employees can consult with them free of cost twice in a week. The Company has a sick bay. Employees can take advice from the qualified physicians engaged by the company. Company has also contracted with nearest clinic for handling of emergencies. The Company owns ambulances to send patients to the hospitals and clinics in emergency cases. We provided first aid box to each department of our facility with necessary items. Company conducts mock evacuation drill twice in a year in order to prepare the employees to act properly during any emergency raise. Total area is covered by fire hydrant pump. Standalone fire extinguishers are provided in all areas as per government regulation. Company has its EHS committee comprising of high level management employees. They meet once in every two months to evaluate overall EHS situation and resolve identified issues. BPL conducts EHS audit once in a year. The Company also has a policy on “Environment Health and Safety” which is mandatory for all. Child Labour The Company strictly complies with the codes of Bangladesh Labor Act in all respects including restrictive provisions relating to “Employment of Adolescent”. No Child labor is directly or indirectly employed in any part of the Company. Success Stories Beximco Pharma is committed to inspire, enable, and invest in opportunities that help preserve environment. It’s a matter of great pride that, we were among the first few in the world who proactively converted all the CFC based inhalers to ozone benign HFA formulations. Beximco Pharma received “Occupational Safety and Health (OSH) Good Practice Award 2018” at the National Occupational Safety and Health day celebration on April 28, 2019. We have ISO 14001 (Environment Management System) certification and OHSAS 18001 (Occupational Health and Safety Management) certification for our high standard of compliance. We seek to comply with the relevant environmental laws and regulations applicable in the country. We work with regulatory agencies in the implementation of an effective environmental policy totally in compliance with government regulations. As such all our manufacturing facilities have got the relevant certifications from the Department of Environment. We provide support to various government and non- governmental organizations that work for environment. Beximco Pharma was one of the sponsors of “National Tree Plantation Campaign and Fair 2019”. Environment, Health and Safety | Annual Report 2018-19 | 35 At Beximco Pharma, we strive to do what matters most to the patients: providing high quality, contemporary treatment options and make them affordable. 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 CSR activities and in 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 2018-19 were: Community Care Program Promoting Education Education for Underprivileged Children and Students Beximco Pharma and DSM Nutritional Products, Switzerland have joined forces through a partnership with the Center for Human Nutrition and the Sight & Life Global Nutrition Research Institute at the Johns Hopkins University Bloomberg School of Public Health and the JiVitA Maternal and Child Research Institute of the Johns Hopkins University-Bangladesh, Gaibandha with the goal to support community nutrition and health research intended to test, discover, inform and guide policies that can lift the health burden of micronutrient deficiencies among women, infants and children in impoverished regions of rural Bangladesh and South Asia. Driven by shared values in public health and a commitment to contribute resources that can promote equity, both companies work hand-in-hand with each other and with the Johns Hopkins team to manufacture, bottle, test and deliver tens of millions of micronutrient supplements for the JiVitA Research Institute. the Scrip Award for Beximco Pharma was awarded “Community Partnership of the Year” at the 14th Annual Scrip Awards ceremony held in London on 28 November 2018 for its decade long work with DSM and Johns Hopkins University to improve nutrition in rural Bangladesh. Other nominees in this category were AstraZeneca, IQVIA India, and Oxford PharmaGenesis. Beximco Pharma has been sponsoring 3 Computer Literacy Centers (CLCs) in partnership with Computer Literacy Program (CLP), USA and its implementation partner in Bangladesh- Dnet. The main objective is to the promote computer learning and the underprivileged students of Bangladesh. Beximco currently sponsors 3 CLCs in two different districts. technology among information Computer Literacy Program (CLP) is the pioneer, an award winning non-formal model, and under this initiative, students in rural schools receive hands-on computer literacy training free of charge. Since 2004, Dnet has established 263 CLC centers in 55 districts and trained over 700 teachers (16% female) to transform students in digital literate. Through this program more than 100,000 students (49% female) successfully completed basic course on computer literacy. Beximco’s partnership with Dnet and CLP will help create computer learning opportunities for underprivileged students in rural areas and villages. What We Do for the Society | Annual Report 2018-19 | 37 Eradicating Hunger, Poverty and Malnutrition Support to Spreeha Bangladesh Foundation Supporting Preventive Healthcare Nationwide Vitamin D Screening Beximco Pharma extended support to Spreeha Bangladesh Foundation through donation of medicines. Mr. Rabbur Reza, Chief Operating Officer, Beximco Pharma handed over the medicines, as a part of its CSR initiatives, to Mr. Tazin Shadid, Founder and CEO of Spreeha Bangladesh. Spreeha Bangladesh Foundation is a Bangladesh based social enterprise working closely with underprivileged communities since 2008 and provides services under the categories of healthcare, education, skills training and outreach programs. Support to Shuchona Foundation Beximco Pharma has conducted 3 Vitamin D Screening programs in Bogra, Khulna and Rangpur. More than 1000 doctors from different parts of the country participated in these programs. AO Trauma Workshop Beximco Pharma was the scientific partner of AO Trauma workshop held during September 14-16 and October 26-28. Encouraging Environment Sustainability National Tree Plantation Campaign and Fair Beximco Pharma continued to provide support to Shuchona Foundation which is a not-for-profit advocacy, research and capacity-building organization specializing in Neuro- Developmental Disorders (NDDs) and mental health. Beximco Pharma was one of the sponsors of "National Tree Plantation Campaign and Fair 2019" held on June 20, 2019 at Bangabandhu International Conference Centre (BICC). 38 | Annual Report 2018-19 | What We Do for the Society Inspiring Leadership and skill development National Youth Assembly 2019 Beximco Pharma was a sponsor of the National Youth Assembly 2019, the largest youth assembly in the country, held during March 9-12, 2019 in Cox’s Bazar. The mega event was attended by over 35,000 volunteers and youth icons from all parts of the country while corporate leaders, policy makers, MPs, entrepreneurs, and renowned personalities from the country spoke on youth leadership during the summit. 6th Laboratorians National Science Festival 2019 Beximco Pharma was one of the key sponsors of "6th Laboratorians National Science Festival 2019" which offers a big platform for students to come up with innovative ideas. The festival was organized by Science Club of the laboratorians (S.C.L) of Government Laboratory High School, Dhaka during March 14-16, 2019. Art Exhibition of Female Artists 8th Kibria International Print Fair 2019 Promoting Art and Culture Beximco Pharma was a sponsor of 'Colours', an art exhibition of 8 emerging female artists of the country. Pre-eminent artist Monirul Islam and Professor Abul Barq Alvi were present at the opening of the exhibition on March 08, 2019. Beximco Pharma extended support to promote and celebrate Bangladeshi arts and culture. BPL was the proud sponsor of 8th Kibria International Print Fair 2019, held during February 15-17, 2019 at Zainul Gallery, Faculty of Fine Arts, DU. Eminent and young printmakers from various institutes and organisations exhibited their works at the event. What We Do for the Society | Annual Report 2018-19 | 39 Corporate Events Beximco Pharma Launches Human Insulin (Gensulin®) and GensuPen On May 03, 2019 Beximco Pharmaceuticals Ltd. achieved another milestone by launching clinically proven high quality European Insulin "Gensulin" and Automated Ergonomic Insulin Injecting device "GensuPen2" 40 | Annual Report 2018-19 | Corporate Events Beximco Pharma Launches Human Insulin (Gensulin®) and GensuPen Corporate Events | Annual Report 2018-19 | 41 Forecast Meeting 2019-20 in Kolkata, India Annual Sales & Marketing Conference 2018-19 at Cox’s Bazar Annual Finance Conference at Cox’s Bazar 42 | Annual Report 2018-19 | Corporate Events Beximco Pharma Stall at CPhI Worldwide 2019, Frankfurt, Germany Plant Visits Delegates from Turkey Senior Military Delegations from Zimbabwe National Defense University Corporate Events | Annual Report 2018-19 | 43 Visit by Ambassador of Uzbekistan Visitors from Bangladesh Armed Forces Division Visitors from Bangladesh Air Force Visits by Students from Brac University 44 | Annual Report 2018-19 | Corporate Events 2018-19 Highlights 46 | Annual Report 2018-19 | Highlights • Launched a total of 20 new products, including - Recombinant human insulin (Gensulin), together with the insulin pen (Gensupen), in collaboration with Polish biotech company, Bioton S.A. - Four products from subsidiary, Nuvista Pharma, in the domestic market • Completed 77 registrations for 50 products in 23 countries • Acquired eight ANDAs from Sandoz Inc. for the US market Received US Food and Drug Administration (FDA) approval for two • cardiovascular drugs (Nadolol and Sotalol AF) and an anti-allergy drug (Cyproheptadine) • Launched Metformin Hydrochloride (500mg and 750mg), an anti-diabetic, extended release drug in the US market • Successfully completed EU GMP audits by German and Malta Regulatory authorities • Commenced export to the UAE • Received WHO Prequaliﬁcation for Lamivudine 300 mg tablet, an antiviral product • Received approval from the National Board of Revenue, Bangladesh as Authorised Economic Operator (AEO), a privilege given to selected companies for fast custom clearance in import and export • Won the Scrip Award for "Community Partnership of the Year", which recognises pharma and biotech companies for the way in which they contribute to the wider community • Launched a total of 20 new products, including - Recombinant human insulin (Gensulin), together with the insulin pen (Gensupen), in collaboration with Polish biotech company, Bioton S.A. - Four products from subsidiary, Nuvista Pharma, in the domestic market • Completed 77 registrations for 50 products in 23 countries Acquired eight ANDAs from Sandoz Inc. for the US market Received US Food and Drug Administration (FDA) approval for two cardiovascular drugs (Nadolol and Sotalol AF) and an anti-allergy drug • • (Cyproheptadine) • Launched Metformin Hydrochloride (500mg and 750mg), an anti-diabetic, extended release drug in the US market • Successfully completed EU GMP audits by German and Malta Regulatory authorities • Commenced export to the UAE • Received WHO Prequaliﬁcation for Lamivudine 300 mg tablet, an antiviral product • Received approval from the National Board of Revenue, Bangladesh as Authorised Economic Operator (AEO), a privilege given to selected companies for fast custom clearance in import and export • Won the Scrip Award for "Community Partnership of the Year", which recognises pharma and biotech companies for the way in which they contribute to the wider community Post Period Highlights • Launched Maxhaler mDPI for the ﬁrst time in Bangladesh, which is the generic version of GSK's Seretide Accuhaler • Launched ﬁfth product, Nadolol, a cardiovascular drug, in the US market • Won Bangladesh's "National productivity and quality excellence award 2018", a recognition of outstanding contribution in increasing productivity and excellence in product quality • Received "Global Generics & Biosimilars Awards 2019" in the category of Company of the Year, Asia Paciﬁc, which recognises the efforts made by global generics and biosimilars sectors, to make affordable medicines available to more patients across the globe Post Period Highlights | Annual Report 2018-19 | 47 Accolades and Awards Scrip Awards for “Community Partnership of the Year” Scrip Awards for “Community Partnership of the Year” Scrip Awards for “Community Partnership of the Year” Scrip Awards for “Community Partnership of the Year” Beximco Pharma has won the Scrip Award for “Community Partnership of the Year” at the 14th Annual Scrip Awards ceremony held in London on 28 November 2018. The Community Partnership of the Year award is designed to acknowledge the numerous ways in which pharma and biotech companies give back to the wider community. Beximco Pharma was awarded for its decade long work with DSM and Johns Hopkins University to improve nutrition in rural Bangladesh. Other nominees in this category were AstraZeneca, IQVIA India, and Oxford Pharma Genesis. 48 | Annual Report 2018-19 | Accolades and Awards Accolades and Awards | Annual Report 2017-18 | 48 Global Generics & Biosimilars Awards 2019 Company of the Year, Asia Pacific Beximco Pharma has been recognized as the Company of the Year, Asia Pacific at the Global Generics & Biosimilars Awards 2019, held in Frankfurt, Germany, on 5 November 2019. The Company has won the award in this category after competing with global peers namely Aurobindo, MSN Laboratories, Piramal Pharma Solutions and Shanghai Henlius Biotech. Beximco Pharma COO, Mr. Rabbur Reza received the award on behalf of the Company. The Global Generics & Biosimilars Awards are amongst the most coveted recognitions in the pharmaceutical industry, that recognize the efforts made by global generics and biosimilar companies, to make affordable medicines available to more patients across the globe. Accolades and Awards | Annual Report 2018-19 | 49 National Productivity and Quality Excellence Award-2018 Beximco Pharmaceuticals Limited was awarded National Productivity and Quality Excellence Award-2018 by the Ministry of Industries in recognition of outstanding contribution in increasing productivity and excellence in product quality. Beximco Pharma secured first position under the category of Large Industry (Chemical). Industries Minister Nurul Majid Mahmud Humayun handed over the award in a ceremony held in Dhaka. Bangladesh Business Innovation Award 2019 Bangladesh Business Innovation Award 2019, an initiative of Bangladesh Brand Forum to promote and acknowledge innovation in the country, has recognized 19 best innovations out of 250 entries in a grand award gala on the 12th of October, 2019. Beximco Pharma was awarded in the category of Best Innovation in Healthcare for its pioneering role in introducing multidose dry powder inhaler, Maxhaler, in Bangladesh. National Occupational Health & Safety award 2018 Beximco Pharma won the “Health and Safety Award 2018” at the National Occupational Health & Safety Day celebration held on April 28, 2019. Mr. Shamim Momtaz, Director, Manufacturing (T-2) received the award on behalf of the company. 50 | Annual Report 2018-19 | Accolades and Awards Chairman’s Statement A S F Rahman Chairman Dear Shareholders, Beximco Pharma concluded another year of excellent performance. We continued our growth momentum, meeting sales and profit targets and achieving remarkable success in consistent pursuit of our strategic objectives. We expanded our domestic market at a pace ahead of the industry, accelerated growth in our export business, consolidated overseas markets, enriched and diversified our product portfolio, enhanced our manufacturing capabilities and made significant progress with our R&D initiatives. As testament to this success, we received a number of awards from national and international organizations for our achievement in diversified fields including innovation, productivity and community services. We became Company of the Year, Asia Pacific, winning Global Generics and Biosimilar Award 2019. All these acknowledgements demonstrate our commitment to achieving excellence in the complete continuum of our business operations. 52 | Annual Report 2018-19 | Chairman’s Statement In April 2018, we completed a milestone event through the acquisition of Nuvista Pharma to supplement our organic growth in the domestic market. During the year, we successfully completed the integration of Nuvista to fully realize synergies, restructured its business and operating models to make them aligned to Beximco Pharma’s winning strategies, introduced standardized operating policies and procedure and implemented several strategic initiatives to further expand and grow this important new subsidiary. We have already seen the benefit of our efforts and I remain confident of Nuvista’s success as it continues to add further value to our business. This year the Board has constituted a Nomination and Remuneration Committee. Advocate Shah Monjurul Hoque, an Independent Director, has been appointed as Chairman of the Committee. The Committee will have a significant role in assisting the Board in the nomination and selection of directors and adopting a policy driven approach to determine remuneration of the Board and top level executives. I continue to be immensely impressed with the dedication, commitment and skills of our people. It is their efforts that drive the business forward, delivering an excellent performance and strong growth across our business. I thankfully acknowledge their contribution to the company. We are also grateful to our shareholders for extending, at all times, their invaluable support to the company, enabling the business to be in the robust position it is in today. The success we have achieved is only possible because of the collective efforts of all concerned. I hope 2019-20 will continue to be another good year for Beximco Pharma. I remain confident that we are taking the right actions to continue to grow the business and deliver value for our shareholders. Thank you for your continued trust in us. Thanking you A S F Rahman Chairman ‡Pqvig¨v‡bi cÖwZ‡e`b m¤§vwbZ †kqvi‡nvìvie„›`, ‡ew·g‡Kv dvgv©wmDwUK¨vjm Zvi µgvMZ Dbœq‡bi aviv Ae¨vnZ †i‡L AviI GKwU eQi mvd‡j¨i mv‡_ mgvß K‡i‡Q| weµq I gybvdvi cÖe„w×i gva¨‡g Avw_©K †KŠkjMZ jÿ¨gvÎv AR©‡bi cvkvcvwk Avgv‡`i e¨emvwqK cwiKíbv ev¯Íevq‡bi †ÿ‡ÎI Avgiv Kvw•LZ AMÖMwZ mvab K‡iwQ| Af¨šÍixY evRv‡i Avgv‡`i Ae¯’vb AviI my`„p n‡q‡Q| G eQi Avgiv †h weµq cÖe„w× AR©b K‡iwQ dvgv©wmDwUK¨vjm wkíLv‡Zi mvwe©K cÖe„w×i nvi †_‡K Zv GwM‡q| AvšÍRv©wZK evRv‡i Avgv‡`i Ae¯’vb AviI mymsnZ n‡q‡Q Ges ißvbx D‡jøL‡hvM¨ nv‡i e„w× †c‡q‡Q| Avgiv Avgv‡`i cY¨ m¤¢vi‡K AviI mg„× K‡iwQ, Drcv`b mÿgZv e„w× K‡iwQ Ges M‡elYv I Dbœqb Kvh©µg‡K AviI †Rvi`vi Ki‡Z mÿg n‡qwQ| c‡Y¨i bZzbZ¡, Drcv`bkxjZv e„w×, mgvR‡mev BZ¨vw` wewfbœ †ÿ‡Î Avgv‡`i mvd‡j¨i ¯^xK…wZ wnmv‡e Avgiv G eQi †ek K‡qKwU RvZxq I AvšÍ©RvwZK cyi¯‹vi jvf K‡iwQ| G Qvov “Global Generics and Biosimilar Award-2019” Gi Asia Pacific AÂj K¨vUvMwi‡Z Avgiv Company of the Year wnmv‡e ¯^xK…wZ AR©b K‡iwQ| G cyi¯‹vimg~n g~jZ Avgv‡`i e¨emvwqK Kvh©µ‡gi mKj ‡ÿ‡Î avivevwnK Dbœqb I µgvMZ DrK‡l©iB ¯^xK…wZ enb K‡i| Af¨šÍixY evRv‡i Avgv‡`i `Lj`vwiZ¡ e„w×i gva¨‡g `ªæZZi weµq cÖe„w× AR©‡bi j‡ÿ¨ Avgiv 2018 mv‡ji GwcÖ‡j bywf¯Ív dvgv©‡K AwaMÖnY Kwi| G eQi Avgiv mvd‡j¨i mv‡_ wewfbœ Kvh©µ‡gi GwKf‚ZKiY m¤úbœ K‡iwQ| Avgiv bywf¯Ív dvgv©i evwYwR¨K I e¨emvwqK g‡Wj‡K mvgÄm¨Ki‡Yi gva¨‡g †ew·g‡Kv dvgv©i cixwÿZ I mdj †KŠk‡ji mv‡_ mgwš^Z K‡iwQ, wewfbœ Kvh© cwiPvjb bxwZgvjv cÖYqb K‡iwQ Ges e¨emv‡qi mvwe©K Dbœqb I cÖe„w×i Rb¨ †KŠkjMZ bxwZgvjv ev¯Íevqb ïiæ K‡iwQ| B‡Zvg‡a¨ Avgiv Gi mydj †c‡Z ïiæ K‡iwQ| Avgvi `„p wek¦vm bywf¯Ív dvgv© µgvMZ Dbœqb cÖe„w×i gva¨‡g Avgv‡`i e¨emv‡q AwaKZi g~j¨ ms‡hvR‡b ¸iæZ¡c~Y© f‚wgKv ivL‡e| Av‡jvP¨ eQ‡i †Kv¤úvbxi cwiPvjbv cl©` Nomination and Remuneration KwgwU bv‡g GKwU bZzb KwgwU MVb K‡i‡Qb| †Kv¤úvbxi BwÛ‡cb‡W›U WvB‡i±i Rbve kvn& gÄyiæj nK‡K KwgwUi †Pqvig¨vb wnmv‡e wb‡qvM cÖ`vb Kiv n‡q‡Q| GB KwgwU cwiPvjK Ges D”P c`¯’ Kg©KZv©‡`i wb‡qvM bxwZgvjv Ges cvwikÖwgK wbav©i‡Y cwiPvjbv cl©`‡K mnvqZv cÖ`vb Ki‡e| ‡Kv¤úvbxi mvwe©K AMÖMwZ‡Z Avgv‡`i wb‡ew`ZcÖvY Kgx©evwnbxi Ae`vb Ab¯^xKvh©| Zv‡`i AvbyMZ¨, KZ©e¨, wbôv I `ÿZvi Kvi‡YB †Kv¤úvbxi Kvw•LZ mvdj¨ I AMÖMwZ DË‡ivËi e„w× cv‡”Q| Avwg AvšÍwiKfv‡e Zv‡`i‡K ab¨ev` Rvbvw”Q| Avgv‡`i m¤§vwbZ †kqvi‡nvìvie„›` †Kv¤úvbxi mKj D‡`¨v‡M Zv‡`i mvwe©K mg_©b I mn‡hvwMZv Ae¨vnZ †i‡L‡Qb| Zv‡`i mvwe©K mn‡hvwMZvi Kvi‡YB †Kv¤úvbx AvR‡Ki Ae¯’v‡b †cuŠQv‡Z mÿg n‡q‡Q| G Rb¨ Avwg mK‡ji cÖwZ Avgvi K…ZÁZv Ávcb KiwQ| Avwg Avkvev`x 2019-20 eQiwUI Avgv‡`i Rb¨ fvj n‡e| Avwg wbwðZ †h, Avgiv mwVK c‡_B i‡qwQ Ges Avgv‡`i M„nxZ c`‡ÿcmg~n †Kv¤úvbxi e¨emvwqK mvdj¨ mywbwðZ Ki‡e Ges †kqvi‡nvìvi‡`i m¤ú` e„w×‡Z f‚wgKv ivL‡e| Avgv‡`i Dci Av¯’v ivLvi Rb¨ mevB‡K AmsL¨ ab¨ev`| G Gm Gd ingvb ‡Pqvig¨vb Chairman’s Statement | Annual Report 2018-19 | 53 Management Discussion and Analysis spending on medicines reached $1.2 trillion in 2018 and is set to exceed $1.5 trillion by 2023. In the next five years, more than $100 billion worth of originator drugs will be coming off patent and the biosimilar market will be nearly three times larger than what it is today, with several key blockbuster biologics losing their patent protection. This creates immense opportunities for generic manufacturers, which Beximco Pharma can benefit from if we can properly utilize our competitive advantages. The country’s pharma sector has huge export potential and the government has taken various initiatives to support the industry in realizing this potential. Pharma export from the country increased by 25.60% to $130 million in 2018-19, which was $103.46 million in the previous year. Although our pharma industry has made commendable progress over the years, still we are almost entirely dependent on the import of pharmaceutical raw materials or APIs. Generic drug manufacturers around the world, including India, are heavily dependent on APIs and intermediates from China. Since 2018, hundreds of bulk drug factories in China have been shut down due to new environmental regulations. This led to shortage of API supply globally and a surge in API prices across different categories pushing up the cost of pharma production. The Bangladesh pharma industry has also been hit by this disruption in API supply. As a part of the government’s initiative to further develop the pharmaceutical sector through backward integration, an attractive incentive package has been declared for the domestic manufacture of APIs. A 10% cash incentive is already being offered to formulation exporters. The development of relevant infrastructure in the country’s much awaited API Industrial Park is in progress and companies who have been allotted plots, are preparing to set up manufacturing facilities. Domestic API production would make the pharma sector more competitive and help it sustain beyond TRIPS regime. Operating and Financial Performance Continued Double Digit Revenue Growth Our consolidated revenue in the domestic market increased by an overall 25.1% to reach at Tk. 20,314 million in 2018-19 compared to Tk. 16,240 million for the year 2017-18. BPL’s Nazmul Hassan MP Managing Director Industry Overview Bangladesh is now home to one of the fastest growing economies in the world with consistent growth in GDP and per capita income and remarkable achievements in other socio-economic indicators. According to IQVIA audited data, the Bangladesh pharma market has maintained its double digit growth, 10.64% in 2018-19, with total sales reaching Tk. 223 (US $ 2.62) billion. Improved access to healthcare facilities, health awareness of people, increasing coverage of rural areas, and higher purchasing power have largely contributed to this growth. With continued economic progress and exceptional achievements in healthcare, Bangladesh is projected to maintain this positive momentum in the coming years. The global generics industry is also growing rapidly and this will continue to expand as countries around the world are promoting the use of generics. As per the IQVIA report, global 54 | Annual Report 2018-19 | Management Discussion and Analysis revenue on a standalone basis, grew by 17.3% as compared to 10.2% in the prior period. Our constant strategic focus on key therapeutic segments, particularly improving product mix across the rapidly growing areas, contributed to this growth. The first time full year consolidation of our subsidiary, Nuvista Pharma, further supplemented the accelerated growth in the domestic market. While we are reinforcing our US position, we are also finalizing the acquisition of two marketing approvals in the United Kingdom, a fast-track precursor to enter into this regulated market. We received WHO prequalification for Lamivudine 300 mg tablet, an antiviral product and completed European Union Good Manufacturing Practice (GMP) Audits by German and Malta Regulatory Authorities during the year. We secured a robust 69% growth in export largely driven by our sales in the US market. Revenue from export stands at Tk. 2,502 million as against Tk. 1,477 million of preceding year. Export now accounts for 11% of our revenue. It is a matter of pride that Beximco Pharma remains the sole Bangladeshi company exporting pharmaceutical products to world’s most stringent and regulated market, the United States. This is yet another testament to our manufacturing excellence and adherence to strict quality policies. Strengthened Product Portfolio We introduced 20 products, including four from our subsidiary Nuvista Pharma, in the domestic market to expand and strengthen our existing product portfolio. The year saw a strong performance from our leading brands across key therapeutic areas with cardiovascular, respiratory and anti- diabetic posting impressive growth. Our newly launched products cover 11 therapeutic segments, which includes hormones, oral contraceptives, ophthalmic, and cardiovascular to name a few. Importantly, we launched recombinant human insulin (Gensulin), together with the insulin pen (Gensupen), in collaboration with Polish biotech company, Bioton S.A, which is a leading global player in human insulin. Reinforcing International Market Positions The Company completed 77 registrations of 50 Products in 23 countries to further broaden and consolidate our export markets. In February 2019, we acquired 8 ANDAs from Sandoz, USA, taking our US portfolio to 15 including 7 in-house ANDAs. There is no doubt our growing presence as a reliable manufacturer of quality generics has increased our potential for further growth in the regulated markets including the USA. We commenced export of Metformin Hydrochloride (500mg and 750mg), an anti-diabetic, extended release product to the US market; received US Food and Drug Administration (FDA) approval for two cardiovascular drugs (Nadolol and Sotalol AF) and an anti-allergy drug (Cyproheptadine). In July 2019, we shipped Nadolol, our fifth product to the US market. Profit Growth in Line with Revenue The Company saw an increase in both pre- and after-tax profit consistent with robust growth in sales revenue. Profit before tax increased by 17.4% over the last year to reach at Tk. 3,946 million; profit after tax also grew by 20% to reach Tk. 3,040 million. You will find five years’ comparative financial performance in the attachment to the Directors’ Report. National and International Recognitions Being in the knowledge based industry we know innovation is the key to drive differentiation and stay ahead in the competition. We won the Bangladesh Business Innovation Award 2019 in the category of Best Innovation in Health Care. This is a recognition of our consistent effort to enrich our portfolio with differentiated products. We also won Bangladesh’s National Productivity and Quality Excellence Award 2018 in recognition of outstanding contribution to high productivity and excellence in product quality. We strive to make a positive impact on the lives of people through our Corporate Social Responsibility initiatives and that includes our program with globally renowned institutes. It was a huge honor to win the ‘Community Partnership of the Year’ at the Scrip Awards, presented in London in November 2018. The Community Partnership Award recognizes pharma and biotech companies for the way in which they contribute to the wider community. Beximco Pharma and DSM Nutritional Products were awarded for their partnership with the Johns Hopkins University in supporting community nutrition and health research in rural Bangladesh and South Asia. In November 2019, we won the Global Generics & Biosimilars Awards 2019 in the category of Company of the Year, Asia Pacific, which recognises the efforts made by global generics and biosimilars sectors, to make affordable medicines available to more patients across the globe. Management Discussion and Analysis | Annual Report 2018-19 | 55 focused on achieving accelerated growth in the longer term through consolidation of our export business. A robust product pipeline is crucial for sustained growth in this highly competitive generics landscape, and, keeping that in mind, we make consistent investments in R&D with special focus on developing specialized, hi-tech delivery systems. We are stepping into new areas such as complex generics, biosimilars and oncology. We have given special focus on strengthening our API capabilities; two of our small-scale units are now operational and producing a few high value, patented APIs. We have taken initiative to set up a large scale API production facility in the API Park to produce a number of APIs to lower dependence on import of these materials. Built over four decades, BPL‘s reputation is founded on its core values, commitment to excellence and efforts to provide improved access to medicines. Quality and compliance are key pillars of our consistent growth story. We are committed to manufacture products, which conform to the highest standards of quality. We are also taking several initiatives to optimize our internal processes to capture all available synergies and improve operational efficiencies. Looking ahead, we are committed to building a promising future by creating value for the patients we serve and for our shareholders. Nazmul Hassan MP Managing Director Beximco Pharma also received approval from the National Board of Revenue, Bangladesh as an Authorised Economic Operator (AEO), a privilege given to selected companies for fast custom clearance in import and export. Credit Rating Credit Rating Information and Services Limited (CRISL), the country’s leading Credit Rating company, has assigned AA+ (higher safety and high credit quality) rating in the long term and ST-1 (strong internal fund generation and outstanding alternative source of fund) rating in the short term to Beximco Pharmaceuticals Limited. Accounting (IFRS)/International Accounting Policies and Estimates Bangladesh has adopted International Financial Reporting Standards Standards (IAS). Beximco Pharma has been consistently applying these standards in preparation of its financial statements. Management has the discretion to decide on the accounting framework and the financial reporting policies within make estimates and provision in preparing those financial statements. The Company’s accounting policies remain consistent with those of the previous year and there has been no changes in the accounting policies that could materially impact the financial statements. The accounting estimates and provisions are based on prudent judgments. Risks related to the Financial Statements The Company has a robust system of internal control and well-designed accounting reporting process. The Company’s functions are manned with accounting and finance adequate experienced professionals. Appropriate policies and procedures, as well as adequate review and control mechanisms are in place in every steps of the financial reporting value chain to avoid, eliminate or reduce the risk of errors, omissions or material mis-statements in the financial reports. Moreover, quarterly and annual public reports are subject to rigorous review by the Board’s audit committee in addition to the annual accounts being audited by independent external auditors. Looking Ahead We have completed a successful and exciting year as we continued to execute our well defined strategic priorities. Our domestic market is the key driver of our growth. Diversification of our product portfolio and expansion of our domestic market share will continue to remain our key strategic priority. Alongside growing in the domestic market, we are equally 56 | Annual Report 2018-19 | Management Discussion and Analysis 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, 2019 along with the report of the auditors thereon. General Economic Overview Bangladesh’s economy in 2018-19 performed exceedingly well with a record high 8.1% increase (Source: Asian Development Bank) in GDP. The share of the industrial sector in the GDP rose to 33.7% with 13% growth over the prior period. The nominal per capita income increased by 9% to $1,909. The inflation rate remained under control at a moderate 6% level. Double digit growth in export earnings, higher remittances, robust private consumptions and massive government spending for infrastructure contributed to economic progress. Government and other international agencies forecast a stable future outlook with economy estimated to be growing by 8% in the fiscal year 2019-20. The Pharmaceuticals sector within the country continues to benefit from the supportive policies of the government and country’s stable economic progress. Demand for pharmaceutical products in Bangladesh is primarily driven by increased individual private spending for health. Bangladesh over the years has made a steady economic progress and it has now set the goal of being 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 pharmaceuticals and other healthcare products and services in the coming years. As reported last year, the government declared various fiscal and non-fiscal incentive to encourage the domestic manufacture of Active Pharmaceuticals Ingredients. An attractive 10% Cash incentive on the FOB value is also available for the export of finished pharmaceuticals products subject to fulfillment of certain conditions. A new VAT Act became effective from July 1, 2019. The Act was originally passed by the parliament a few years back but its implementation was deferred. With regard to the Pharmaceutical industry, the Act does not contain any fundamental changes to the previous one except some automation of the documentations and reporting. Gross Margin and Profitability The Company delivered strong results during 2018-19. Our Consolidated Profit from Operation increased by a significant 25.8% to Tk. 5,066 million. Net Profit before tax increased by 17.4% and after tax by 20.0% to Tk. 3,946 and 3,040 respectively. The table below provides Y-o-Y sales and profit performance: 2018-2019 2017-2018 Growth Million Taka Sales Revenue Gross Profit Operating Profit Pre-Tax Profit Net Profit after Tax 22,816 10,620 5,066 3,946 3,040 17,716 8,286 4,026 3,361 2,533 28.8% 28.1% 25.8% 17.4% 20.0% Consolidated Gross profit margin in 2018-19 slightly declined to 46.6% from 46.8%. The rises in the prices of materials in the international markets, moderate domestic inflation and depreciation of Taka against its principal foreign currency US dollar has raised the cost of goods sold. These have however, been partly neutralized by leverage of higher sales, improved product mix and planned cost management initiatives. All these together helped sustain the overall gross margin at this level. The higher use of working capital credit facilities to support the business growth resulted in an increase in finance costs. Additionally, during the year the Company took a short term Time Loan of Tk. 2,600 million for use towards the payment of imported project materials for various projects under implementation. We repaid Tk. 1,800 million of the borrowings during the post-balance sheet period. The Company has modified its gratuity policy, a long term deferred employee benefit plan, to make it compliant to the changes made through the Labor Act. This required an additional provisioning of Tk. 125 million during the current period to make up the shortfalls in the accumulated gratuity provisions. Despite this, the Company maintained its operating expenses at its current 24% level. Report of the Directors to the Shareholders | Annual Report 2018-19 | 57 Comment on Continuity of Other Income The government has declared 10% cash incentives on the FOB value of finished pharmaceuticals subject to fulfillment of certain conditions. Additionally, we have royalty income from the sale of few selected products in the overseas markets. These are accounted for on an accrual basis and reported as “Other Income”. Both the income are linked to export. While we expect these income to continue in the future periods, the amounts are however, variable on products, markets and other factors. Profit and its Appropriation Particulars Amount in Taka’000 BPL (Stand-alone) 2018-19 2017-18 Net Profit After Tax 3,023,500 2,558,971 Adjustment for depreciation of Revalued Assets 9,175 10,383 Profit Brought Forward 14,124,183 12,061,774 Profit Available for Appropriation Proposed Dividend: Cash Dividend 17,156,858 14,631,128 (608,334) (506,945) Profit Carried Forward 16,548,524 14,124,183 Dividend The Board of Directors recommends a 15.00% Cash Dividend i.e. Tk. 1.50 per share for the year ended 30 June, 2019 for onward approval at the Annual General Meeting. reported to the Board. Based on the nature and extent of the risk, the senior management of the Company takes appropriate mitigating measures to avoid, eliminate or reduce risks at functional, business and corporate level on a regular basis to safeguard the Company’s assets and to protect shareholders’ interests. Changing Economic Conditions Economic advancement and consequent increase in the purchasing power of the people has direct implication on the demand for pharmaceutical products. Any decline in economic growth could, as for any other industry, impact the future demand for pharmaceutical products. 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. Market Risk The Company operates in a competitive domestic market. The domestic market is exposed with over 400 local manufacturers operating in the industry. However, only a small number of these have the potential to compete directly with BPL in its domestic market. BPL continuously expands and diversify its product portfolio and builds competencies to compete with the operators on price and quality both locally and internationally. 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 Pharma has talented marketing and sales team and strong R&D with a proven record of success. During the year, no interim dividend including stock dividend has been declared or paid by the Company. Risks and Concerns Organizations are not free from risks that might arise both from internal and external fronts. Like any other business or industry, Beximco Pharma operating in a dynamic and competitive market is exposed to risks that may affect its business. The senior management of the Company oversees risk management processes on a continual basis. Management of risks involves identification and assessment of risks; setting standard on Company’s risk appetite; and designing, implementing and monitoring policies to appropriately address various financial and non-financial risks. The identified risks, which could potentially affect the achievement of strategic, operational, financial and/or compliance objectives, are Input Prices and Supply Chain Risk As with other pharmaceutical companies of the country, BPL is largely dependent on imported APIs. Any substantial increase in prices in the international market may affect future profitability of the company. To mitigate the risk, Beximco Pharma imports raw materials from multiple sources, both local and international, at competitive prices. The Company is not reliant on any single supplier for its materials and this therefore, reduces the individual supplier’s influence on procurement prices. Most of the suppliers have their local agent and the Company maintains close relationship with them. Moreover, BPL manufactures few of the APIs and has plan to expand the API manufacturing facilities to further strengthen its backward linkage. The Company’s customer base is also well diversified. No 58 | Annual Report 2018-19 | Report of the Directors to the Shareholders single customer or market has significant influence on demand for Company’s products. Product Liability Risk Pharmaceutical products are usually exposed to high quality control risk. Each product is required to be marketed through a stringent compliance procedure. Manufacturing of products require the flexibility to accommodate the changing local and global regulatory needs. Any deviation from the standard may result in serious market reputational damages and might also create a regulatory barrier. Over the years BPL has been recognized locally and globally for quality standards and manufacturing excellence. Our manufacturing facilities are certified by leading global regulatory agencies. As such Beximco Pharma is exposed to less quality control risk. Additionally, the Company has taken adequate insurance cover to minimize the product liability risk. Technology Risk The pharmaceutical industry is a technology and research driven industry. The company’s management values data technological security, automation of operations and therefore advancement continues to invest in state-of-the-art technologies, R&D and laboratory infrastructure to build its manufacturing and innovation capabilities. It maintains close ties with leading global companies and organizations to remain updated on the changes taking place in the industry. industry. The Company the in Regulatory Risk Uncertainties emanating from significant changes in the pharmaceutical policy, regulations, tax regime or other business laws having bearing on pharmaceutical sector may also threaten the growth potential of this business. However, policies of the Government of Bangladesh are supportive to the industry and pose no immediate risk. Rather the government has declared a number of financial and non-financial facilities for the industry to help its growth. Formation of Nomination and Remuneration Committee As per provision of the Corporate Governance Code issued by Bangladesh Securities and Exchange Commission, the Board of Directors constituted a Nomination and Remuneration Committee. Mr. Shah Monjurul Hoque, an Independent Director has been made Chairman of the Committee. The Committee is composed of as follows: Shah Monjurul Hoque Iqbal Ahmed Osman Kaiser Chowdhury Mohammad Asad Ullah : Chairman : Member : Member : Secretary The Board has also approved the terms of reference which includes assisting the Board in the formulation of the nomination criteria setting qualifications, experiences and other attributes for directors, formal policy on determining remuneration for the directors and other top level executives. Retirement and Re-election of Directors Mr. Osman Kaiser Chowdhury and Mr. Abu Bakar Siddiqur Rahman, Directors of the Company retire by rotation as per Articles 126 and 127 of the Articles of Association of the Company and being eligible, offer themselves for re-election. Both Mr. Osman Kaiser Chowdhury and Mr. Abu Bakar Siddiqur Rahman are long term directors in the Board. Detail biodata of the Directors are provided in the Directors’ Profile section of this Annual Report. Re-appointment of Managing Director As per provision of the Company’s Act 1994 Managing Directors are appointed for a period of five years. The tenure of Mr. Nazmul Hassan MP, Managing Director of the Company expired on 7th May 2019. The Board after due evaluation of his performance, has re-appointed him as Managing Director of the Company for another period of 5 years with effect from 7th May 2019 subject to confirmation of the Shareholders in the 43rd Annual General Meeting. The credentials of Mr. Hassan is given in the Directors’ Profile section of this Annual Report. 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 42nd Annual General Meeting of the Company has carried out the audit for the year ended 30 June 2019. 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 2019-20. 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 2019-20. Report of the Directors to the Shareholders | Annual Report 2018-19 | 59 Related Party Disclosure The Company has a number of transactions between its subsidiaries and other related parties. The transactions are carried out on an arm’s length basis. The Audit Committee periodically reviews these transactions. The Full disclosure of all related party transactions are provided in the notes to the accounts. Management Discussion and Analysis Detailed discussion on the Operating and Financial performance of the Company along with other disclosures as required under Corporate Governance Code issued by Bangladesh Securities and Exchange Commission through Notification No BSEC/ CMRRCD/2006-158/207/Admin/80 dated June 3, 2018 has been separately reported by the Managing Director. Remuneration to Directors All the Directors in the Board except the Managing Director are non-executive and receive no remuneration or benefits from the Company other than the Board Meeting attendance fee. The salary and other perquisites paid to the Managing Director for his service has been disclosed in the notes to the accounts. Directors’ Statement 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 and that the accounting estimates are based on reasonable and prudent judgment. • The International Accounting Standards (IASs), International Financial Reporting Standards (IFRSs) have been followed in preparation of the financial statements. • Internal Control System is sound in design and has been effectively implemented and monitored. • Interests of the minority shareholders have been duly protected. • There is no significant doubt about the ability of the Company to continue as a going concern. Declaration by CEO and CFO Declaration by CEO and CFO on the Financial Statement of the Company is attached 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: Name Representation in the Board Attendance in Board meetings A S F Rahman Chairman Salman F Rahman MP Vice Chairman Nazmul Hassan MP Managing Director Osman Kaiser Chowdhury Member Iqbal Ahmed A B Siddiqur Rahman Dr. Abdur Rahman Khan Shah Monjurul Hoque Member Member Independent Director Independent Director 11 7 12 12 12 12 11 11 The Pattern of Shareholding The Shareholding of Directors, CEO, CFO, Company Secretary, Key Executives and their spouses and children are provided as Annexure- 3 the Corporate Governance Compliance Report In accordance with requirement of Bangladesh Securities and Exchange Commission Notification No. BSEC/ CMRRCD/2006-158/207/Admin/80, dated 3 June 2018, Report on “Corporate Governance Compliance” is provided as Annexure - 4 On behalf of the Board Key Operating and Financial Data The summarized key operating and financial data for 2018-2019 and immediately preceding five years is provided in Annexure- 2 A S F Rahman Chairman 60 | Annual Report 2018-19 | Report of the Directors to the Shareholders Annexure- 1 The Board of Directors Beximco Pharmaceuticals Limited Subject: Declaration on Financial Statements for the year ended on 30 June, 2019 Dear Sirs, Pursuant to the condition No. 1(5)(xxvi) imposed vide the Commission’s Notification No. BSEC/CMRRCD/2016-158/207/Admin/80, Dated June 03, 2018 & under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby declare that: 1. The Financial Statements of Beximco Pharmaceuticals Limited for the year ended on 30 June, 2019 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed; 2. The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view; 3. The form and substance of transactions and the Company’s state of affairs have been reasonably and fairly presented in its financial statements; 4. To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records; 5. Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and 6. The management’s use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. In this regard, we also certify that: i. We have reviewed the financial statements for the year ended on 30 June, 2019 and that to the best of our knowledge and belief: a. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; b. These statements collectively present true and fair view of the Company’s affairs and are in compliance with existing accounting standards and applicable laws. ii. There are, to the best of knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board of Directors or its members. Sincerely yours, Nazmul Hassan MP Nazmul Hassan MP Managing Director Mohammad Ali Nawaz Chief Financial Officer Report of the Directors to the Shareholders | Annual Report 2018-19 | 61 Annexure- 2 Key Operating and Financial Data 30 June 2019 30 June 2018 30 June 2017 30 June 2016 Authorized Capital Paid up Capital Shareholders’ Equity Fixed Assets (Gross) 15,000,000 4,055,564 29,864,324 43,454,027 9,100,000 4,055,564 27,351,837 39,081,675 9,100,000 4,055,564 25,072,426 31,692,789 9,100,000 3,862,442 23,059,412 28,756,326 31 Dec 2014 31 Dec 2013 Taka in Thousand 9,100,000 3,503,349 19,775,552 23,051,128 9,100,000 3,678,516 20,920,185 25,818,728 Net Asset Value (NAV) Per Share Tk. Market Price Per Share Price Earnings Ratio (Time) 73 83.50 11.16 67 93.90 15.02 62 113.00 20.58 60 83.50 17.47 57 56 47.20 58.70 12.36 14.82 Number of Shareholders Foreign Investors ICB including ICB Investors Account Sponsors, General Public & Other Institutions 56,177 77 881 57,982 90 879 62,741 92 874 67,679 83 878 89,913 92,831 68 68 882 880 55,219 57,013 61,775 66,718 88,963 91,883 Number of employees 4,523 4,256 3,833 3,515 3,063 2,897 Total Sales Export Sales Gross Profit Profit Before Tax Net Profit July 2018 - June 2019 July 2017 - June 2018 July 2016 - June 2017 July 2015 - June 2016 22,816,630 2,502,633 10,620,343 3,946,065 3,040,403 17,716,717 1,476,978 8,285,979 3,361,334 2,532,654 15,508,777 1,078,472 7,184,882 2,891,482 2,226,695 13,785,325 861,653 6,408,857 2,564,267 1,938,894 Jan 2014 - Dec 2014 Jan 2013 - Dec 2013 Taka in Thousand 10,490,699 671,289 4,838,800 2,093,594 1,404,763 11,206,886 500,469 5,104,191 2,109,556 1,528,298 EPS/Restated EPS- Tk. Net Operating Cash Flow Per Share New Product Launched-numbers 7.48 7.30 20 6.25 4.49 16 5.49 6.49 15 4.78 8.21 21 3.96 3.82 6.08 28 23 6.02 Stock Dividend Cash Dividend *18 months period. - 15.00% - - 12.50% 12.50% 5%* 15%* 5% 10.00% 5% 10.00% 62 | Annual Report 2018-19 | Report of the Directors to the Shareholders Graphical View of Selected Growth Indicators Shareholders’ Equity Shareholders’ Equity Export Sales Export Sales 29,864 27,352 2,502 25,072 23,059 20,920 19,776 Taka in million 1,477 1,078 862 500 671 30 JU NE 2019 30 JU NE 2018 30 JU NE 2017 30 JU NE 2016 31 DEC 2014 31 DEC 2013 JULY 18 - JU JULY 17 - JU JULY 16 - JU NE 19 NE 18 JULY 15 - JU NE 17 JAN 14 - DEC 14 JAN 13 - DEC 13 NE 16 22,817 Total Sales Total Sales 17,717 15,509 13,785 3,040 2,533 Net Proﬁt Net Proﬁt 2,227 1,939 11,207 10,491 1,528 1,405 JULY 18 - JU JULY 17 - JU JULY 16 - JU NE 18 JULY 15 - JU NE 17 NE 16 JAN 14 - DEC 14 JAN 13 - DEC 13 NE 19 JULY 18 - JU JULY 17 - JU JULY 16 - JU NE 18 JULY 15 - JU NE 17 NE 16 JAN 14 - DEC 14 JAN 13 - DEC 13 NE 19 Report of the Directors to the Shareholders | Annual Report 2018-19 | 63 Annexure-3 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 1,189,550 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 - - - - - 64 | Annual Report 2018-19 | Report of the Directors to the Shareholders Annexure-4 Corporate Governance Compliance Report As per condition No. 1(5)(xxvii) Status of compliance with the conditions imposed by the Commissions Notification No. BSEC/CMRRCD/2006-158/207/ Admin/80, dated 3 June 2018 issued under section 2CC of the Securities and Exchange Ordinance, 1969 (Report under Condition No. 9) Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) Condition No. 1 1(1) 1(2) 1(2)(a) Board of Directors (BOD) Board’s Size [number of Board members to be 5 – 20] Independent Directors (ID) Number of Independent Directors [at least 1/5th of the Board members shall be the Independent Directors] 1(2)(b)(i) Holding no share or holding less than 1% shares 1(2)(b)(ii) Not being a sponsor and connected with any sponsor or director or nomonated director or shareholder of the company or any of its associates, sister concerns, subsidiaries, and parents or holding entities who holds 1% or more shares of the total paid-up shares of the Company on the basis of family relationship and his or her family members are also not allowed to hold more than 1% shares of the total paid-up shares of the Company 1(2)(b)(iii) Not an executive of the company in immediately preceding 2 (two) financial years 1(2)(b)(iv) 1(2)(b)(v) 1(2)(b)(vi) 1(2)(b)(vii) Not having any pecuniary or otherwise relationship with the company or its subsidiary/associated companies Not a member or TREC (Trading Right Entitlement Certificate) holder, director or officer of any stock exchange Not a shareholder, director excepting independent director or officer of any member or TREC holder of any stock exchange or an intermediary of the capital market Not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of the company’s statutory audit firm or audit firm engaged in internal audit services or audit firm conducting special audit or professional certifying compliance 1(2)(b)(viii) Not an Independent Director in more than 5 listed companies 1(2)(b)(ix) Not been convicted by a court as defaulter in any loan of a bank or NBFI 1(2)(b)(x) Not been convicted for a criminal offence 1(2)(c) 1(2)(d) 1(2)(e) 1(3) 1(3)(a) To be appointed by BOD and approved by the shareholders in the AGM The post cannot remain vacant for more than 90 days Office tenure of Independent Director Qualification of Independent Director Knowledgeable, having integrity, ability to ensure compliance with relevant laws and make meaningful contribution to the business √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Report of the Directors to the Shareholders | Annual Report 2018-19 | 65 Condition No. Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) 1(3)(b)(i) 1(3)(b)(ii) 1(3)(b)(iii) 1(3)(b)(iv) 1(3)(b)(v) 1(3)(c) 1(3)(d) 1(4) 1(4)(a) 1(4)(b) 1(4)(c) 1(4)(d) 1(4)(e) 1(5) 1(5)(i) Business Leader: Promoter/director of an unlisted company having minimum paid up capital of Tk. 100.00 mil. or any listed company or a member of any national or international chamber of commerce/business association, or Corporate Leader: who is or was a top level executive not lower than CEO/ MD/ AMD/DMD/COO/ CFO/CS or Head of Finance or Accounts or Head of Internal Audit and Compliance or Head of Legal Service or a candidate with equivalent position of an unlisted company having minimum paid up capital of Tk. 100.00 mil. or of a listed company, or Former official of Govt./statutory/autonomous/regulatory body in the position not below 5th Grade of the national pay scale, who has at least educational background of bachelor degree in economics/commerce/business or law, or √ University Teacher having educational background in Economics or Commerce or Business Studies or Law, or Practicing advocate at least in the High Court Division of Bangladesh Supreme Court or a CA/CMA/CFA/CCA/CPA or CS Having at least 10 (ten) years of experiences in any field mentioned in clause (b) Qualification of Independent Directors may be relaxed subject to prior approval of the Commission. N/A Duality of Chairperson of the Board and MD or CEO The positions of the Chairperson of the Board and MD and/or CEO of the company shall be different individuals MD and/or CEO of a liated company shall not hold the same position in another listed company Chairperson shall be a non-executive directors of the company The Board shall clearly define respective roles and responsibilities of the Chairperson and the MD and/or CEO In the absence of the Chairperson of the Board, the remaining members may elect from non-executive directors as Chairperson for that particular Board’s meeting Inclusions in Director’s Report to Shareholders Industry outlook and possible future developments 1(5)(ii) Segment-wise or product-wise performance 1(5)(iii) 1(5)(iv) 1(5)(v) 1(5)(vi) 1(5)(vii) 1(5)(viii) 1(5)(ix) 1(5)(x) 1(5)(xi) 1(5)(xii) 1(5)(xiii) Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment, if any Discussion on COGS, Gross Profit and Net Profit Margins Discussion on continuity of Extra-Ordinary gain or loss A detailed discussion on related party transactions A statement of utilization of proceeds raised through public issues, rights issues and/or any other instruments Explanation, if the financial results deteriorate after going for IPO, RPO, Right Offer, Direct Listing, etc. Explanation about significant variance between Quarterly Financial performance and Annual Financial Statements Remuneration paid to directors including Independent Directors Statement on fair presentation in the financial statements Maintaining proper books of accounts Consistent application of appropriate accounting policies, and accounting estimates being reasonable and prudent 66 | Annual Report 2018-19 | Report of the Directors to the Shareholders Company operates in a single product segment. √ √ √ √ √ √ √ √ √ √ √ N/A N/A N/A √ √ √ √ Condition No. 1(5)(xiv) 1(5)(xv) 1(5)(xvi) Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) IAS/IFRS applied and adequate disclosure made Soundness of internal control system and it’s monitoring A statement that minority shareholders have been protected from abusive actions by, or controlling shareholders acting either directly or indirectly 1(5)(xvii) Statement regarding ability to continue as going concern 1(5)(xviii) Significant deviations from last year’s operating results 1(5)(xix) 1(5)(xx) 1(5)(xxi) Summary of key operating/financial data of last 5 years Reason for non declaration of Dividend Board’s statement on interim bonus share or stock dividend 1(5)(xxii) Number of Board meetings and attendance of directors 1(5)(xxiii) Pattern of shareholding (along with name wise details) 1(5)(xxiii)(a) Parent/Subsidiary/Associate Companies & related parties 1(5)(xxiii)(b) Directors, CEO, CS, CFO, HOIA, their spouses & children 1(5)(xxiii)(c) Executives (Top 5 salaried employees other than above) 1(5)(xxiii)(d) Shareholders holding 10% or more voting interest 1(5)(xxiv) Appointment/re-appointment of a director 1(5)(xxiv)(a) A brief resume of the director 1(5)(xxiv)(b) Nature of his/her expertise in specific functional areas 1(5)(xxiv)(c) Names of companies in which he/she holds directorship and the membership of committees of the board 1(5)(xxv) A Management’s Discussion and Analysis signed by CEO or MD focusing on: 1(5)(xxv)(a) Accounting policies and estimation 1(5)(xxv)(b) Changes in accounting policies and estimation 1(5)(xxv)(c) Comparative analysis of financial performance or results and financial position as well as cash flows for current financial year with immediate preceding five years explaining reasons thereof 1(5)(xxv)(d) Compare such financial performance or results and financial position as well as cash flows with the peer industry scenario 1(5)(xxv)(e) Briefly explain the financial and economic scenario of the country and the globe 1(5)(xxv)(f) 1(5)(xxv)(g) 1(5)(xxvi) 1(5)(xxvii) 1(6) 1(6) 1(7) 1(7)(a) 1(7)(b) Risks and concerns issues related to the financial statements, explaining such risk and concerns mitigation plan of the company Future plan or projection or forecast for company’s operation, performance and financial position Declaration or certification by the CEO and the CFO to the Board as required under condition No. 3(3) shall be disclosed as per Annexure- 1 The report as well as certificate regarding compliance of conditions of this Code as required under condition No. 9 shall be disclosed as per Annexure-5 and Annexure-4. Meetings of the Board of Directors Shall conduct Board meetings and record the minutes of the meetings as per the provisions of the relevant Bangladesh Secretarial Standards (BSS) Code of Conduct for the Chairperson, other Board members and Chief Executive Officer A code of conduct for the Chairperson of the Board based on the recommendation of the Nomination and Remuneration Committee (NRC) at condition No. 6. The code of conduct as shall be posted on the website of the company Disclosed in Annexure- 2 Disclosed in Annexure-2 Disclosed in Annexure- 1 √ √ √ √ √ √ N/A N/A √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Report of the Directors to the Shareholders | Annual Report 2018-19 | 67 Condition No. Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) 2 2(a) 2(b) 2(c) 2(d) 2(e) 3 3(1) 3(1)(a) 3(1)(b) 3(1)(c) 3(1)(d) 3(1)(e) 3(2) 3(3) 3(3)(a) 3(3)(a)(i) 3(3)(a)(ii) 3(3)(b) 3(3)(c) 4 4(i) 4(ii) 5 5(1)(a) 5(1)(b) 5(1)(c) 5(2)(a) 5(2)(b) 5(2)(c) 5(2)(d) 5(2)(e) Governance of Board of Directors of Subsidiary Company Composition of BOD to be similar to holding company One Independent Director 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 Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit and Compliance (HIAC) and Company Secretary (CS) Appointment Appointment of MD or CEO, CS, CFO and a HIAC The positions of the MD or CEO, CS, CFO and HIAC shall be different individuals The MD or CEO, CS, CFO and HIAC of a listed company shall not hold any executive position in any other company at the same time The Board shall clearly define respective roles, responsibilities and duties of the CFO, the HIAC and the CS The MD or CEO, CS, CFO and HIAC shall not be removed from their position without approval of the Board The MD or CEO, CS, CFO and HIAC of the company shall attend the meetings of the Board Duties of MD or CEO and CFO The MD or CEO and CFO shall certify to the Board that they have reviewed financial statements for the year Financial statements do not contain anything which is materially untrue or misleading Financial statements present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws The MD or CEO and CFO shall also certify that there are no transactions entered during the year which are fraudulent, illegal or in violation of the code of conduct The certification of the MD or CEO and CFO shall be disclosed in the Annual Report Board of Directors’ Committee Audit Committee Nomination and Remuneration Committee Audit Committee Having Audit Committee as a sub-committee of the BOD Assist the BOD in ensuring fairness of financial statements and a good monitoring system Duties of Audit Committee clearly set out in writing Audit Committee composition Audit Committee members to be non-executive Members to be “financially literate” and at least one to have 10 years of accounting/financial management experience Vacancy in Audit Committee to be fiiled up immediately or no later than 1 month The CS to act as the secretary of the Audit Committee 68 | Annual Report 2018-19 | Report of the Directors to the Shareholders √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ N/A √ There has been no such vacanacy. Condition No. Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) 5(2)(f) 5(3)(a) 5(3)(b) 5(3)(c) 5(4)(a) 5(4)(b) 5(5) 5(5)(a) 5(5)(b) 5(5)(c) 5(5)(d) 5(5)(e) 5(5)(f) 5(5)(g) 5(5)(h) 5(5)(i) 5(5)(j) 5(5)(k) 5(5)(l) No quorum in Audit Committee meeting without one Independent Director Chairperson to be an Independent Director, selected by the BOD In the absence of the Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting Chairperson of audit committee to remain present in AGM The Audit Committee shall conduct at least its four meetings in a financial year The meeting of the Audit Committee shall be constituted in presence of either two members or two-third of the members of the Committee, whichever is higher, where presence of an Independent Director is a must Role of Audit Committee Oversee the financial reporting process Monitor choice of accounting policies and principles Monitor Internal Audit and Compliance process, including approval of the Internal Audit and Compliance Plan and review of the Internal Audit and Compliance Report Oversee hiring and performance of external auditors Meeting with the external auditors for review of the annual financial statements Review the annual financial statements Review the quarterly and half yearly financial statements Review the adequacy of internal audit function Review the Management’s Discussion and Analysis before disclosing in the Annual Report Review statement of significant related party transactions Review Letter of Internal Control weakness issued by statutory auditors Oversee the determination of audit fees and time required for effective audit and evaluate the performance of external auditors 5(5)(m) Review disclosures/statements/ declarations about uses of funds Raised through IPO/RPO/Rights Issue 5(6)(a) Reporting to the Board of Directors 5(6)(a)(i) Reporting on the activities of Audit Committee 5(6)(a)(ii)(a) Reporting on conflicts of interests 5(6)(a)(ii)(b) Reporting on suspected/presumed fraud or irregularity or material defect in the internal control system 5(6)(a)(ii)(c) Reporting on suspected infringement of laws 5(6)(a)(ii)(d) Reporting on any other matter to disclose immediately 5(6)(b) Reporting to BSEC 5(7) 6 6(1) 6(1)(a) 6(1)(b) 6(1)(c) 6(2) Reporting to the Shareholders and General Investors Nomination and Remuneration Committee (NRC) Responsibility to the Board of Directors Shall have a NRC as a sub-committee of the Board Assists the Board in formulation of the NRC policy The Terms of Reference (ToR) of the NRC shall be clearly set forth in writing Constitution of the NRC √ √ N/A √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ - √ - - - - - √ √ √ √ There has been no such instances Total 4 meetings held in the FY 2018-19. Referred to Report of the Audit Committee. No such IPO/RPO/Right Issue occurred during FY 2018-19. Audit Committee found no such issue or activity. - - - - - - Report of the Directors to the Shareholders | Annual Report 2018-19 | 69 Condition No. Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) No such instance occurred during the period. No such instance found during the period. No such instance happened during the period. 6(2)(a) 6(2)(b) 6(2)(c) 6(2)(d) 6(2)(e) 6(2)(f) 6(2)(g) 6(2)(h) 6(2)(i) 6(3) 6(3)(a) 6(3)(b) 6(3)(c) 6 (4) 6(4)(a) At least three members including an Independent Director All Committee members shall be non-executive directors Members of the Committee shall be nominated and appointed by the Board The Board reserve the authority to remove and appoint any member of the Committee The Board shall fill the vacancy in case of death, resignation, disqualification, or removal of any member The Chairperson of the Committee may appoint external expert for advice or suggestion The company secretary shall act as the secretary of the Committee Quorum of the NRC meeting shall not constitute without attendance of at least an Independent Director No remuneration other than director fees/honorarium for any member Chairperson of the NRC Board shall select 1 (one) member of the NRC to be Chairperson who shall be an ID In the absence of regular Chairperson, the position may elect from the remaining members of the committee Chairperson shall attend the AGM Meeting of the NRC At least one meeting in a financial year 6(4)(b) Any emergency meeting upon request by any member of the NRC 6(4)(c) 6(4)(d) 6(5) 6(5)(a) 6(5)(b) Quorum: Higher of two members or 2/3 of total members including at least one independent director The proceedings of each meeting shall duly be recorded in the minutes and such minutes shall be confirmed in the next meeting of NRC Role of the NRC Shall be independent and responsible or accountable to the Board and to the shareholders NRC shall oversee, among others, the following matters and make report with recommendation to the Board: 6(5)(b)(i) 6(5)(b)(i)(a) Formulation of the nomination criteria and recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the following: The level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate suitable directors 6(5)(b)(i)(b) Clear relationship among remuneration, performance & benchmarks 6(5)(b)(i)(c) Balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals 6(5)(b)(ii) Devising a policy on Board’s diversity 6(5)(b)(iii) Identification of qualification of directors and recommendation for their appointment and removal to the Board 6(5)(b)(iv) Evaluating the performance of independent directors and the Board 6(5)(b)(v) 6(5)(b)(vi) Identifying needs for employees and determine their selection, transfer or replacement and promotion criteria Developing, recommending and reviewing annually the company’s human resources and training policies √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ 70 | Annual Report 2018-19 | Report of the Directors to the Shareholders Condition No. Title Compliance Status (“√” in appropriate Column) Complied Not Complied Remarks (if any) External or statutory auditors are not engaged in any kind of internal issue of the company. The auditors performed no other services except statutory audit. 6(5)(c) 7 7(1)(i) 7(1)(ii) 7(1)(iii) 7(1)(iv) 7(1)(v) 7(1)(vi) Disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its annual report External or Statutory Auditors Non-engagement in appraisal/valuation/fairness opinions Non-engagement in designing & implementation of Financial Information System Non-engagement in Book Keeping or accounting Non-engagement in Broker-Dealer services Non-engagement in Actuarial services Non-engagement in Internal Audit services or special audit services 7(1)(vii) Non-engagement in services determined by Audit Committee 7(1)(viii) Not involved in audit or certification services on compliance of corporate governance 7(1)(ix) Not involved in any other service that creates conflict of interest 7(2) 7(3) 8 8(1) 8(2) 8(3) 9 9(1) 9(2) 9(3) No partner or his/her family or employees of the external audit firms hold any share at least during the tenure of their audit assignment Representative of external auditors shall remain present in the AGM Maintaining a website by the Company An official website linked with the website of the stock exchange Website shall keep functional from the date of listing Shall make available the detailed disclosures on website as required under the listing regulations of the concerned stock exchanges Reporting and Compliance of Corporate Governance Compliance certificate on Corporate Governance Code of the Commission shall be disclosed in the Annual Report The professional who will provide the certificate on compliance of this Corporate Governance Code shall be appointed by the shareholders in the AGM The directors shall state, in accordance with the Annexure-C attached, in the directors’ report whether the company has complied with these conditions or not √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Report of the Directors to the Shareholders | Annual Report 2018-19 | 71 Annexure-5 72 | Annual Report 2018-19 | Report of the Directors to the Shareholders Report of the Audit Committee I am pleased to present the report of the Audit Committee of Beximco Pharmaceuticals Limited in pursuance with the Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC), dated June 03, 2018.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 BSEC which includes but not confined to overseeing the financial reporting process, monitoring accounting policies and principles, evaluating internal control system, reviewing the statement of significant related party transactions, assessing potential conflict of interests and reviewing the financial statements of subsidiary company. This report is a brief on the activities performed by the Audit Committee throughout the year. Review of Financial Statements The Audit Committee in its meeting held on 23 October 2019 reviewed along with management, the financial statements and the report of the auditors of the company and its subsidiaries for the year ending on June 30, 2019. During the meeting Mr. Mohammad Ali Nawaz, the Chief Financial Officer of the Company presented the annual accounts along with the independent auditors report to the committee. Detailed discussions on the financial statements were held with the representatives of the management of the Company. The CFO briefed the Committee that the consolidated as well as standalone financial statements have been prepared in compliance with IFRS/IAS. He appraised the Committee that the accounting policies applied in preparation of the financial statements are consistent with those of the previous financial years and are within the framework of international accounting standards and practices. The Committee reviewed the significant estimates and judgements made in preparation of the accounts and looked into their prudence and justification. They also evaluated the compliance of the financial statements to the disclosure requirements as per IFRS/IAS and other regulatory authorities including BSEC. They further discussed the financial reporting process and the adequacy of the internal control system of the company in place, to prevent errors and fraudulent activities. The Committee carefully examined the related party transactions carried out among 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 as per IAS 24: ‘Related Party Disclosures’. 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 annual 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. Meetings and Attendance The Audit Committee held four meetings to carry out its business under the ToR during the year. The membership of the Audit Committee together with their attendance at the meeting is given below: Report of the Audit Committee | Annual Report 2018-19 | 73 Membership Representation in the Board Position in the Committee Attendance in Meeting Dr. Abdur Rahman Khan Shah Monjurul Hoque Independent Director Independent Director Osman Kaiser Chowdhury, FCA Director Mohammad Asad Ullah, FCS Company Secretary Chairman Member Member Secretary 4/4 4/4 4/4 4/4 External Auditor The Committee assessed the independence, objectivity and expertise of the independent auditors engaged to carry out the audit for the year 2018-19. Based on the evaluation, the Committee proposed the Board to re-engage existing auditors M/S M J Abedin & Company, Chartered Accountants, for the year 2019-20 which shall be subject to the approval of the shareholders in the Annual General Meeting. Other Reviews and Activities During 2018-19 the committee also assessed and examined risk management process, monitored internal audit and compliance process and reviewed the reports thereon. The financial reporting process and the related compliance and disclosure issues also came up as matters of periodic review by the committee. The senior management of the Company on invitation attended various meetings of the audit committee to apprise the members on different issues. The committee noted no material deviations or non-compliance or adverse audit findings that warrants for Board or shareholders’ attention during the year under review. Dr. Abdur Rahman Khan Chairman Audit Committee 74 | Annual Report 2018-19 | Report of the Audit Committee Report of the Nomination and Remuneration Committee I am pleased to present the report of the Nomination and Remuneration Committee (NRC) of Beximco Pharmaceuticals Limited in pursuance with the Corporate Governance Guidelines. NRC is a new Committee constituted on 24 December 2018 as a sub Committee of the Board with specific Terms of Reference (ToR). Since formation, the Committee held one meeting which was attended by all the members of the Committee. The Committee in its meeting discussed in detail the ToR set out by the Board, the role of the Committee and its modus operandi. The Committee decided to review the code of conduct for the Chairman, Board members and the Managing Director of the Company. It was also agreed to review the existing policies of the Company including policy on remuneration for Directors and top level executives. Shah Monjurul Hoque Chairman Nomination and Remuneration Committee Report of the Nomination and Remuneration Committee | Annual Report 2018-19 | 75 Notes on Corporate Governance Beximco Pharma places the greatest emphasis on maintaining the highest standard of corporate governance. As a trustee of all stakeholders of the Company, the Board is fully aware of its responsibilities to the interest of all concerned. We believe good governance is inevitable for the long-term performance and sustainability of the company as well as to protect and enhance the interests of the shareholders and other stakeholders. While the Directors’ report provides details on Company’s compliance to the statutory code of corporate governance, the paragraphs below further explain how corporate governance works at Beximco Pharma. Composition and Diversity of the Board Board of Directors of Beximco Pharma comprise of eight members with two independent directors. All the members of the Board are non-executive excepting the Managing Director who is an ex-officio Director. The Board of Directors is the highest level of authority in the organization structure of of the Company. The primary role of the Board is to ensure effective governance over the performance and affairs of the company. The Board is collectively responsible to the Company’s shareholders for the appropriate conduct and success of the business. The Board meets periodically to oversee the Company’s affairs, gives approval and strategic direction to important business and policy matters. Beximco Pharma’s Board is well diversified in terms of industry experience, management expertise, age, education, professional background etc., to provide appropriate direction to the Company’s management for sustainable development and growth of the Company. Board Committees The Board has set up two important Committees namely, Audit Committee and Remuneration and Nomination Committee (NRC), to assist the Board in certain matters specified in the respective terms of reference of the Committees. Audit Committee consists of three non-executive directors, two of them are Independent Director. Dr. Abdur Rahman Khan an Independent Director of the Board is the Chairman of the Committee. Audit Committee’s primary role is to oversee financial reporting, risk management and internal control process of the business. The Audit Committee submits periodic reports to the Board. The Board has constituted a three member Nomination and remuneration Committee (NRC) with Mr. Advocate Shah Monjurul Hoque, an Independent Director as its Chairman. The primary function NRC is to assist the Board in determination of qualification criteria for the directors, fixation of remuneration and compensation for the Directors and top executives of the Company. Executive Committee Next to the Board, is a five-member Executive Committee (EC) for closer monitoring of business performance and to provide operational guidance. A representative of the Board holds the position of Chairman of the Committee. The Executive Committee meets on a quarterly basis. Its scope of work includes among others, periodic review of business performance, approval of the budget and evaluation of capital expenditure proposals. The Executive Committee also approves the operating organization structure and significant policies and procedures. Executive Committee provide significant inputs to enable the Board to make well-informed decisions. Management Committee The Management Committee comprises operational heads and representatives from the Board and Executive Committee and is chaired by the Managing Director. The Committee meets on a monthly basis. It is responsible for implementing the decisions of the Board and the Executive Committee and supervision of the day to day affairs of the Company. The management Committee acts as a centre of co-ordination across the functions and resolves different operational issues. Appointment, Retirement and Re-election of Directors As per provisions of Bangladesh Company Act, members of the Board of Directors excepting the Independent and Managing Directors are elected by the shareholders in the Annual General Meeting. They are elected for a period of one 76 | Annual Report 2018-19 | Notes on Corporate Governance year and at least one third of the Directors retire by rotation in every Annual General Meeting (AGM). Retiring Directors are however, eligible for re-election and appointment by the shareholders in the AGM. The Managing Director is appointed by the Board but such appointment is to be approved by Shareholders in the AGM. The tenure of managing director is five years which can be renewed unrestricted number of times. The Managing Director shall not be subject to retirement by rotation. Independent Directors are also appointed by the Board and be approved by the shareholders in the AGM. The tenure of office of an independent director is three years, which may be extended for one tenure only. However, a former independent director may be considered for reappointment for another tenure after a time gap of one tenure, i.e., three years from his or her completion of consecutive two terms. Internal Control Beximco Pharma employs a sound system of internal control including financial control which is designed to effectively achieve its business objectives through the best utilization of resources. A good internal control system enhances the reliability and integrity of financial and operational activities and also confirms compliance with laws, regulations and ethical principles. Over the years, Beximco Pharma has successfully implemented a robust internal control system which includes a well-designed management structure, clearly defined responsibilities, delegation of authorities, the establishment of accountability at each segment of the business. Appropriate monitoring and reporting systems are in place to establish accountability and monitor performance at every level. The Company uses ERP tools and different tailor-made software to collect, collate, analyse, interpret and report financial and other non-financial information, in some cases real-time basis. The Company has a separate Internal Audit and Compliance department. They carry out financial and compliance audit across the organizations throughout the year. The department is adequately resourced with experienced personnel. Notes on Corporate Governance | Annual Report 2018-19 | 77 Investor Relations Beximco Pharma has a separate Company Secretarial Department adequately manned with qualified professionals to carry out the regulatory company secretarial functions and to meet the shareholders’ and investors’ requirements and queries. There is also a dedicated team within accounting and finance function to deal with investor related compliance issues. Our Investor Relations team places high priority towards investor queries and complaints. During the year under review, the company has not received any reportable complaints from its shareholders/investors. Communication with Shareholders The shareholders and investors are kept well informed of the Company’s operation and performance through periodic updates of price sensitive information, publications of financial reports, Investors’ meeting with the Company’s top executives and Annual General Meeting (AGM) of the Company. Any price sensitive information are immediately released through the stock exchanges and company’s own website. In applicable cases such information are also published in the print media and online portals. Company unfailingly holds AGM as required by the Company Act, 1994 to inform the shareholders about the overall affairs of the company and to obtain their consent on agenda placed in the meeting. Extra-ordinary General Meeting (EGM) are also held in cases that require calling of such meeting. The board members and senior management of the company remains present in those meetings to answer queries and address any concerns of the shareholders and investors. Beximco Pharma is the only company in Bangladesh listed with Alternative Investment Market (AIM) of London Stock Exchange. In compliance to AIM regulation, the Company has engaged SPARK Advisory Partners Limited as Nominated Advisor (NOMAD), SP Angel Corporate Finance LLP as designated Broker and FTI Consulting LLP as Public Relations agent. Analyst of SP Angel publishes report on the Company for the investors. We are followed by a wide range of institutional investors. The senior management of the company meets large scale GDR investors overseas at least twice a year to update them about the ongoing business of the Company. The fund managers and 78 | Annual Report 2018-19 | Investor Relations analysts at home also holds pre-arranged meeting with our top management to know the present future potentials of the Company. Reporting to the Shareholders The company prepares unaudited financial statements for first, second and third quarters and full year Audited Financial Statements and publishes the summary of the financial statements through newspapers and online portals as required by law. Detailed financial statements are released through the Company’s website. Additionally, the Company prepares Annual Reports that contains detailed operational and financial information along with other statutory disclosures. Company’s Reporting Calendar Financials Financials Financials Q1 November Q2 January Q3 April Full Year Audited Financials October Annual Report December Website Communication The Company has a rich website (www.beximcopharma.com) that contains historical as well latest information about the Company and its operation. The website is well organized to meet information requirement of different stakeholders and updated on regular basis. The company’s corporate website is linked with Dhaka, Chittagong and AIM of London Stock Exchange. In addition to accessing information on the company’s website, investors and other report users are able to contact the company for their information. The contact details are available on the company’s website, in the annual report and in other communications. The 42nd Annual General Meeting of the shareholders of Beximco Pharmaceuticals Limited was held on December 22, 2018 at Beximco Industrial Park, Saravo, Kashimpur, Gazipur. Mr. Osman Kaiser Chowdhury, Director 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% cash dividend for the year ended June 30, 2018. At the end of the meeting Mr. Osman Kaiser Chowdhury expressed his appreciation towards shareholders for their interest in the Company and their continued support. Investor Relations | Annual Report 2018-19 | 79 Value Added Statement For the Year Ended 30 June, 2019 Value Added : Sales & Other Income Bought-in-Materials & Services Appilcations : Retained by the Company Salaries and Beneﬁts to Employees Interest to Lenders Dividend to Shareholders Duties & Taxes to Govt. Exchequer Taka in thousand Tk. % 26,515,562 (12,661,602) 13,853,960 3,453,232 3,557,598 1,029,763 631,835 5,181,532 13,853,960 100 25 26 7 5 37 100 80 | Annual Report 2018-19 | Value Added Statement Financial Statements-Consolidated Beximco Pharmaceuticals Ltd. and Its Subsidiaries Consolidated Audited Financial Statements For the Year Ended June 30, 2019 Independent Auditor’s Report To the Shareholders of Beximco Pharmaceuticals Limited and its Subsidiaries Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Beximco Pharmaceuticals Limited (the “Company”), which comprise the consolidated Statement of Financial Position as at June 30, 2019 and 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 then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. The Financial statements of the same year of the subsidiaries Beximco Pharma API Limited was audited by us and Nuvista Pharma Limited was audited by A. Qasem & Co. Chartered Accountants, who through their report dated August 11, 2019 and October 14, 2019 respectively expressed an unmodified opinion on those statements. In our opinion, the accompanying consolidated financial statements of the Company give a true and fair view of the consolidated financial position of the Company as at June 30, 2019, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Bangladesh, and we have fulfilled our other ethical responsibilities in accordance with these ethical requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Risk Our Response to the Risk Valuation of Property, Plant and Equipment (PPE) The carrying value of the PPE was Tk. 34,056,667,212 as at June 30, 2019. Expenditures are capitalized if they create new assets or enhance the existing assets, and expensed if they relate to repair or maintenance of the assets. Classification of the expenditures involves judgment. The useful lives of PPE items are based on management’s estimates regarding the period during which the assets or its significant components will be used. The estimates are based on historical experience and market practice and take into consideration the physical condition of the assets. The valuation of PPE was identified as a key audit matter due to the significance of this balance to the consolidated financial statements and that there is significant measurement uncertainty involved in this valuation. See Note No. 4 to the consolidated financial statements Our audit included the following procedure: • We assessed whether the accounting policies in relation to the capitalization of expenditures are in compliance with IFRS and found them to be consistent. • We inspected a sample of invoices and L/C documents to determine whether the classification between capital and revenue expenditure was appropriate. • We evaluated whether the useful lives determined and applied by the management were in line with historical experience and the market practice. We checked whether the depreciation of PPE items was commenced timely, by comparing the date of the reclassification from capital work in progress to ready for use, with the date of the act of completion of the work. 82 | Annual Report 2018-19 | Financial Statements-Consolidated Risk Our Response to the Risk Valuation of Inventory The inventory of Tk. 5,924,031,678 as at June 30, 2019 was held at different locations across the country. We verified the appropriateness of management’s assumptions applied in calculating the value of the inventory by: Inventories are carried at the lower of cost and net realizable value. As a result, the management apply judgment in determining the appropriate values for slow-moving or obsolete items. Since the value of Inventory is significant to the consolidated Financial Statements and there is significant measurement uncertainty involved in this valuation, the valuation of inventory was significant to our audit. See Note No. 9 to the consolidated financial statements Evaluating the design and implementation of key inventory controls. Attending inventory counts on sample basis and reconciling the count results to the inventory listing to test the completeness of data. Reviewing the requirement of inventory provisioning and action there upon by the management. Comparing the net realizable value obtained through a detailed review of sales subsequent to the year-end, to the cost price of a sample of inventories. Related party transactions The Company has related party transactions as described in Note No. 36 of the consolidated financial statements. We focused on identification of related parties and disclosure of related party transactions in accordance with relevant accounting standards. Our audit procedures amongst others included the following: Evaluated the design and tested the operating effectiveness of controls over identification and disclosure of related party transactions. Evaluated the transactions among the related parties and tested material accounts balances. Evaluated the disclosures in the consolidated financial statements in compliance with IAS 24. Other Information Management is responsible for the other information. The other information comprises all of the information in the Annual Report other than the consolidated financial statements and our auditors’ report thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on such work we perform, we conclude that there is a material misstatement of this other information, we are required to communicate the matter to those charged with governance. Responsibilities of Management and Those Charged with Governance for the consolidated Financial Statements and Internal Controls Management is responsible for the preparation and fair presentation of the consolidated financial statements of the Company in accordance with IFRSs, 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going Financial Statements-Consolidated | Annual Report 2018-19 | 83 • • • • • • • concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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 internal controls of the Company. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 84 | Annual Report 2018-19 | Financial Statements-Consolidated • Report on other Legal and Regulatory Requirements In accordance with the Companies Act 1994, The Securities and Exchange Rules 1987 and relevant notifications issued by Bangladesh Securities and Exchange Commission, 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 purposes of our audit and made due verification thereof; b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of those books; c) The company’s consolidated Statement of Financial Position (Balance Sheet) and consolidated Statement of Profit or Loss and Other Comprehensive Income (Profit & Loss Account) dealt with by this report are in agreement with the books of accounts and; d) The expenditures incurred and payment made were for the purpose of the company’s business for the year. Dhaka October 28, 2019 M. J. Abedin & Co. Chartered Accountants Financial Statements-Consolidated | Annual Report 2018-19 | 85 Beximco Pharmaceuticals Limited and its Subsidiaries Consolidated Statement of Financial Position As at June 30, 2019 Notes June 30, 2019 ASSETS Non-Current Assets Property, Plant and Equipment- Carrying Value Intangible Assets Goodwill Investment In Associates Other Investment 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 4 5 6 7 8 9 10 11 12 13 14 15 Amount in Taka June 30, 2018 32,394,686,712 30,524,692,707 1,280,695,416 546,691,213 30,749,850 5,757,808 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 35,949,930,818 34,056,667,212 1,334,921,698 546,691,213 - 5,329,379 6,321,316 13,264,161,542 5,924,031,678 726,127,262 3,334,958,905 2,309,503,747 35,681,115 323,364,536 610,494,299 49,214,092,360 29,588,317,284 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,131,853,004 2,504,203 17,144,333,029 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 Non-Controlling Interest 16 276,006,553 269,874,176 TOTAL EQUITY Non-Current Liabilities Long Term Borrowings-Net of Current Maturity Liability for Gratuity and WPPF & Welfare Funds Deferred Tax Liability 29,864,323,837 27,351,836,792 6,603,936,369 2,595,607,792 1,860,904,996 2,147,423,581 7,368,863,860 4,017,425,267 1,324,166,498 2,027,272,095 17 18 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. Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : 12,745,832,154 9,272,501,280 1,616,670,549 1,091,809,722 590,317,150 7,235,215 167,298,238 49,214,092,360 19 20 21 22 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 Salman F Rahman Vice Chairman Dhaka October 28, 2019 Nazmul Hassan Managing Director Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited and its Subsidiaries Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year ended June 30, 2019 Net Revenue Cost of Goods Sold Gross Profit Operating Expenses Administrative Expenses Selling, Marketing and Distribution Expenses Profit from Operations Other Income Finance Cost Share of Loss of Associates 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 Period Total Comprehensive Income Attributable to: Owners of the Company Non-controlling interest Notes 23 24 27 28 29 30 7 31 July 2018 - June 2019 22,816,629,795 (12,196,286,770) 10,620,343,025 Amount in Taka July 2017 - June 2018 17,716,716,855 (9,430,737,431) 8,285,979,424 (5,554,169,458) (4,259,811,440) (752,944,182) (4,801,225,276) (618,675,127) (3,641,136,313) 5,066,173,567 4,026,167,984 139,917,665 (1,029,762,542) (29,325,720) 4,147,002,970 (200,937,234) 3,946,065,736 (905,662,782) (803,760,846) (101,901,936) 3,040,402,954 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 3,033,402,333 7,000,621 3,040,402,954 2,536,543,948 (3,889,647) 2,532,654,301 (1,852,559) 3,038,550,395 481,697 2,533,135,998 3,031,549,774 7,000,621 3,038,550,395 2,537,025,645 (3,889,647) 2,533,135,998 Earnings Per Share (EPS) 32 7.48 6.25 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 28, 2019 Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited and its Subsidiaries Consolidated Statement of Changes in Equity For the Year Ended June 30, 2019 As at June 30, 2019 Amount in Taka Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Unrealized Gain/ (Loss) Retained Earnings Equity attributable to Owners of the Company Non-Con- trolling Interests Total Equity Balance as on July 01, 2018 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 27,081,962,616 269,874,176 27,351,836,792 Total Comprehensive Income: Share Capital Beximco Pharma API Ltd. Profit/(Loss) for the Period Other Comprehensive Income/(Loss) Transactions with the Shareholders: Cash Dividend Adjustment for Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets - - - - - - - - - - 3,033,402,333 3,033,402,333 7,000,621 3,040,402,954 - (1,852,559) - (1,852,559) - (1,852,559) 100 100 (9,175,291) 9,175,291 - - (506,945,556) (506,945,556) (868,344) (507,813,900) - - - - (18,249,550) - - (18,249,550) (18,249,550) Balance as on June 30, 2019 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,131,853,004 2,504,203 17,144,333,029 29,588,317,284 276,006,553 29,864,323,837 Net Asset Value (NAV) Per Share (Note-33) 72.96 As at June 30, 2018 Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Unreaized Gain/ (Loss) Retained Earnings Equity attributable to Owners of the Company Non-Con- trolling Interests Total Equity Balance as on July 01, 2017 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 - 25,072,425,900 Acquisition of Subsidiary Total Comprehensive Income: Profit/(Loss) for the Period Other Comprehensive Income / (Loss) Transactions with the Shareholders: Cash Dividend Adjustment for Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets 273,763,823 273,763,823 - - - - - - - - - - - - - - - - - - - - - - 2,536,543,948 2,536,543,948 (3,889,647) 2,532,654,301 481,697 - 481,697 - 481,697 - (506,945,556) (506,945,556) (506,945,556) - (10,382,600) - (20,543,373) - - 10,382,600 - - - (20,543,373) (20,543,373) Balance as on June 30, 2018 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 27,081,962,616 269,874,176 27,351,836,792 Net Asset Value (NAV) Per Share (Note-33) 66.78 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Dhaka October 28, 2019 Nazmul Hassan Managing Director Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants 88 | Annual Report 2018-19 | Financial Statements-Consolidated Beximco Pharmaceuticals Limited and its Subsidiaries Consolidated Statement of Cash Flows For the Year ended June 30, 2019 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 Notes July 2018- June 2019 Amount in Taka July 2017- June 2018 22,463,550,299 17,195,399,333 (17,434,690,241) (14,113,012,465) 5,028,860,058 (1,032,409,014) 36,457,527 (1,072,991,667) 3,082,386,868 (536,570,775) 54,928,425 (781,630,595) 1,819,113,923 Net Cash Generated from Operating Activities 35 2,959,916,904 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 in Short Term Borrowings Share capital Dividend Paid Net Cash Generated from Financing Activities Increase in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Effect of exchange rate changes on Cash and Cash Equivalents Cash and Cash Equivalents at End of Year Net Operating Cash Flow Per Share The Notes are an integral part of the Financial Statements. (4,416,446,385) (4,951,352,340) (128,619,282) (106,921,036) - (2,125,186,000) 17,540,625 1,491,901 16,032,638 14,114,722 1,504,092 547,179,732 (4,510,000,503) (6,620,660,830) (1,412,334,115) 3,684,312,230 100 (505,351,881) 1,766,626,334 216,542,735 393,735,946 215,618 610,494,299 1,859,021,877 3,546,896,539 - (502,757,959) 4,903,160,457 101,613,550 292,122,396 - 393,735,946 7.30 4.49 14 34 Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 28, 2019 Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants Financial Statements-Consolidated | Annual Report 2018-19 | 89 Beximco Pharmaceuticals Limited and its Subsidiaries Notes to the Financial Statements As at and for the year ended June 30, 2019 1. The Reporting Entity 1.1 About the Company Beximco Pharmaceuticals Limited (BPL/ the Company) was incorporated as a public limited company in Bangladesh in 1976 and commenced its manufacturing operation in 1980. It is a leading manufacturer of pharmaceutical formulations and Active Pharmaceutical Ingredients (APIs). 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 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). In 2018, BPL acquired 85.22% shares of Nuvista Pharma Limited – a non-listed pharmaceutical company in Bangladesh specializing in hormones and steroid drugs and took over control of its management. 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. The manufacturing facilities of the Company are certified by leading global regulatory authorities including United States Food and Drug Administration (USFDA). 1.2 The Subsidiaries Nuvista Pharma Limited (NPL) Nuvista Pharma, formerly Organon (Bangladesh) Ltd., was a subsidiary of Netherlands based Organon International. It was originally incorporated as a private limited company. In 2006 the foreign holding of the company was sold out to Bangladeshi management and was renamed as Nuvista Pharma Limited. The Company through amendments to its memorandum of association in 2011 converted it into a public limited company. In April 2018, Beximco Pharmaceuticals Limited acquired majority shareholdings in Nuvista Pharma Limited (NPL) and through this acquisition BPL has become the immediate and ultimate parent of the company. Beximco Pharma API Limited Beximco Pharma API Limited was formed as a private limited company in December 2017 with a paid up capital of Taka 20 million divided into 2 million shares of Taka 10 each, fully held by BPL. The company intends to set up a facility at API Industrial Park to manufacture Active Pharmaceutical Ingredients (APIs) for domestic and international markets. The company is still in the initial phase of establishment. 1.3 Nature of Business BPL is engaged in manufacturing and marketing of generic pharmaceuticals formulation products covering a wide range of therapeutic categories. It offers products in different dosage forms including Solid, Liquid, Cream and Ointment, Suppositories, Metered Dose Inhaler, Dry Powder Inhaler, Nasal Spray, Sterile, Lyophilized Injectable, Large Volume Intravenous Fluids. Besides formulation products BPL also manufactures Active Pharmaceutical Ingredients (APIs) and renders contract manufacturing services to other companies. Products of the company are sold in domestic and international markets. NPL 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. 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). 90 | Annual Report 2018-19 | Financial Statements-Consolidated 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. 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 Beximco Pharmaceutical Limited (BPL) and its subsidiaries Nuvista Pharma Limited (NPL) and Beximco Pharma API Limited begins on July 1 and ends on June 30. 2.4 Comparative Information Figures for earlier year have been re-arranged wherever considered necessary to ensure better comparability with the current year. 3. Significant Accounting Policies 3.1 Basis of Consolidation The financial statements of the subsidiaries-Nuvista Pharma Limited and Beximco Pharma API Limited, have been consolidated with those of Beximco Pharmaceuticals Limited in accordance with IFRS 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 10: Consolidated Financial Statements to consider NPL as a subsidiary. Beximco Pharma API Limited (BPAL) was formed with a paid up capital of Tk.20,000,000 divided into 2,000,000 shares of Tk.10 each, all of which excepting 10 shares are held by Beximco Pharmaceuticals Ltd (BPL). Beximco Pharma API Ltd thus meets the conditions stated in IFRS 10: Consolidated Financial Statements to consider it as a subsidiary. Beximco Pharma API Limited (BPAL) is being consolidated for the first time in this financial statement since its date of incorporation. 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 Valuation of Goodwill Goodwill has been determined in accordance with IFRS 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. 3.5 Investment in Associates Investment in Associates has been accounted for using the Equity method as per IAS 28: Investment in Associates and Joint Ventures Financial Statements-Consolidated | Annual Report 2018-19 | 91 4. Property Plant and Equipment As on June 30, 2019 Amount in Taka Particulars Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Total Cost Opening July 01, 2018 Additions Transferred in & Capitalized Disposal during the Year Cost at June 30, 2019 Accumulated Depreciation Opening at July 01, 2018 Depreciation Charged Fair Value Depreciation Adjustment for Assets disposed off 4,067,829,596 - - - 7,108,792,076 8,283,847 703,230,227 - 13,361,895,168 1,512,921,753 905,532,878 (21,845,168) 291,911,813 21,230,703 1,252,298 - 1,070,601,927 96,447,490 - (22,146,945) 567,093,579 26,888,067 1,096,397 (102,600) 26,468,124,159 1,665,771,860 1,611,111,800 (44,094,713) 4,067,829,596 7,820,306,150 15,758,504,631 314,394,814 1,144,902,472 594,975,443 29,700,913,106 - - - - 1,826,616,117 159,884,245 2,363,364 - 5,667,379,591 537,243,713 9,652,060 (8,555,677) 126,528,325 16,367,039 - - 585,682,478 107,546,037 - (19,354,938) 350,776,245 35,312,845 - (81,519) 8,556,982,756 856,353,879 12,015,424 (27,992,134) Accumulated Depreciation at June 30, 2019 - 1,988,863,726 6,205,719,687 142,895,364 673,873,577 386,007,571 9,397,359,925 Net Book Value June 30, 2019 4,067,829,596 5,831,442,424 9,552,784,944 171,499,450 471,028,895 208,967,872 20,303,553,181 Capital Work in Progress Carrying Value as on June 30, 2019 Carrying Value as on June 30, 2018 5. Intangible Assets Particulars Cost As on July 01, 2018 Addition During the year As on June 30, 2019 Amortization As on July 01, 2018 Amortized During the year As on June 30, 2019 Balance as on June 30, 2019 Balance as on June 30, 2018 13,753,114,031 34,056,667,212 30,524,692,707 Product development, Licensing and Marketing Rights ERP Project Trade Name & Trade Marks Total 1,210,988,617 108,963,430 147,447,850 19,655,852 54,000,000 - 1,412,436,467 128,619,282 1,319,952,047 167,103,702 54,000,000 1,541,055,749 131,741,051 72,233,000 203,974,051 - - - - 2,160,000 131,741,051 74,393,000 2,160,000 206,134,051 1,115,977,996 167,103,702 51,840,000 1,334,921,698 1,079,247,566 147,447,850 54,000,000 1,280,695,416 92 | Annual Report 2018-19 | Financial Statements-Consolidated 6. Goodwil This is carried forward from the previous year and relates to acquisition of Nuvista Pharma Limited (Note 3.4). There has been no indication of impairment of goodwill during the period. 7. Investment in Associates Balance as on June 30, 2018 Adjustment during the Year Less Share of accumulated loss Balance as on June 30, 2019 As at June 30, 2019 30,749,850 (1,424,130) 29,325,720 (29,325,720) - a. Beximco Pharmaceuticals Ltd. received 1,500,000 Ordinary Shares of Malaysian Ringgit (RM) 1 each representing 30% of the equity share of BioCare Manufacturing Sdn Bhd (“BioCare”), Malaysia. BPL provided full technical support to set up a manufacturing facility in Seri Iskandar Pharmaceutical Park, Perak, Malaysia and to produce specialized pharmaceutical products. BioCare is considered to be an associate of BPL as per IAS 28: Investment in Associates and Joint Ventures. b. Accounting year of BioCare ends on December 31 which is different from the date of preparation of this Consolidated Statement of Financial Positions. BioCare has provided unaudited interim financial statements as of June 30, 2019. Total accumulated loss as on that date stands at RM 7,686,821 equivalent to BDT 155,504,389. An amount of Tk 29,325,720 being part of accumulated loss of BioCare has been accounted for in this consolidated financial statement. Beximco Pharma has not recognized an amount of Tk. 17,325,597 being remaining of the 30% share of accumulated loss of the BioCare following IAS 28: Investment in Associates and Joint Ventures as the company has no obligation for any liability beyond the value of its investment in associates. c. The unrealized exchange fluctuation gain accounted for in previous financial statements has been reversed to arrive at cost value of investment. 8. Other Investments a. Investment Datails (Taka) (i) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) b. Number of Shares: (i) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) Amount in Taka Balance July 01, 2018 Addition/ Adjustment Balance June 30, 2019 Unrealised Gain/(Loss) 4,188,358 1,569,450 5,757,808 (428,429) - (428,429) 3,759,929 1,569,450 5,329,379 Balance July 01, 2018 Addition/ Adjustment Balance June 30, 2019 Stock Dividend 159,861 571,182 7,993 - 167,854 571,182 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 2018-2019 was Tk. 22.40 (2017-2018: Tk.26.20). The amount of Tk. 428,429 represents fair value loss. d. Shares of Central Depository Bangladesh Ltd. are not traded . Financial Statements-Consolidated | Annual Report 2018-19 | 93 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 Amount in Taka June 30, 2019 June 30, 2018 1,255,181,983 455,530,899 864,137,218 262,723,223 2,710,825,646 2,183,474,721 1,098,348,379 971,119,763 44,838,125 85,135,960 12,004,065 27,979,741 82,714,044 324,655 262,166,621 666,374,316 5,924,031,678 5,058,847,681 579,021,056 13,100,977 321,244 783,091 545,032,936 10,936,969 330,437 614,603 132,797,157 106,477,464 103,737 518,687 726,127,262 663,911,096 11. Accounts Receivable This is net off provision for bad debts of Tk. 2,894,595. Accounts receivable includes an amount of Tk. 771,731,426 (equivalent USD 9,214,704 as on June 30, 2019 (June 30, 2018: Tk. 596,463,606, USD 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. 2,335,457,132 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. 2,348,527,632 on May 31, 2019. 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. 94 | Annual Report 2018-19 | Financial Statements-Consolidated 12. Loans, Advances and Deposits This is unsecured, considered good and consists of as follows : Amount in Taka June 30, 2019 June 30, 2018 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 159,119,478 329,321,836 6,320,466 67,972,220 10,821,850 224,723,000 255,058,852 37,773,704 155,890,739 13,420,366 199,755,875 592,000,065 163,840,275 35,318,373 58,166,648 162,932,842 219,639,030 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 2,309,503,747 2,094,229,902 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 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. 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 235,292,449 192,159,614 338,805,413 36,396,437 610,494,299 167,102,855 34,473,477 393,735,946 Financial Statements-Consolidated | Annual Report 2018-19 | 95 15. Issued Share Capital A. Authorized : 1,000,000,000 Ordinary Shares of Tk. 10/- each, (500,000,000 shares in June 2018 ) 50,000,000 fully convertible 5% Preference Shares of Tk. 100/- each,(41,000,000 shares in June 2018 ) 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 June 30, 2019 June 30, 2018 10,000,000,000 5,000,000,000 5,000,000,000 4,100,000,000 15,000,000,000 9,100,000,000 517,757,500 517,757,500 3,165,382,980 3,165,382,980 59,512,500 312,911,470 59,512,500 312,911,470 4,055,564,450 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, 2019 June 30, 2018 No. of shares % of Share Capital No. of shares % of Share Capital 8,235,353 8,254,632 37,019,789 2.03 2.04 9.13 8,235,353 8,254,632 36,999,784 53,509,774 13.19 53,489,769 90,943,627 60,060,586 136,573,957 64,468,501 352,046,671 405,556,445 22.42 14.81 33.68 15.90 86.81 100.00 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 16.53 86.81 100.00 269,874,176 273,763,823 7,000,621 (3,889,647) (868,344) 100 - - 276,006,553 269,874,176 Sponsors: A S F Rahman Salman F Rahman Other Director and Associates Public Issue: GDRs- AIM of London Stock Exchange Foreign Investors’ Shareholdings ( DSE/CSE) Institutions (ICB, ICB Investors Accounts & Others) Individual Shareholders 16. Non-controlling Interest Non-controlling Interest as on June 30, 2019: Non-controlling Interest as on June 30, 2018 (NPL) Proportionate profit/loss (NPL) Less Cash Dividend (NPL) Share Capital Beximco Pharma API Ltd.(API) 96 | Annual Report 2018-19 | Financial Statements-Consolidated 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 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 AB Bank Liability for UPAS Letter of credit Dhaka Bank Ltd The City Bank Ltd. Mutual Trust Bank Ltd. 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 Amount in Taka June 30, 2019 June 30, 2018 1,974,611,879 2,809,556,317 247,375,215 280,596,178 330,410,281 759,326,232 43,210,417 167,946,540 2,595,607,792 4,017,425,267 217,547,491 260,426,903 296,239,401 336,141,714 513,786,892 596,568,617 (100,645,414) (114,965,180) 413,141,478 481,603,437 165,766,263 201,007,259 247,375,215 280,596,178 413,141,478 481,603,437 1,040,022,968 759,708,531 820,882,028 564,457,967 1,860,904,996 1,324,166,498 5,336,101,392 3,897,681,180 2,491,112,625 - 873,810,482 1,064,417,066 571,476,781 617,381,902 - - 2,507,475 18,839,012 9,272,501,280 5,600,826,635 860,104,664 852,470,599 165,766,263 201,007,259 462,991,847 400,341,697 127,807,775 115,170,190 1,616,670,549 1,568,989,745 Financial Statements-Consolidated | Annual Report 2018-19 | 97 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 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 98 | Annual Report 2018-19 | Financial Statements-Consolidated Amount in Taka June 30, 2019 June 30, 2018 573,345,769 621,334,927 403,722,991 188,151,262 23,952,936 43,576,730 90,788,026 138,649,988 1,091,809,722 991,712,907 389,379,916 251,493,606 200,937,234 166,983,289 590,317,150 418,476,895 July 2018- June 2019 July 2017- June 2018 20,300,942,074 16,237,454,376 2,502,632,517 1,476,977,889 13,055,204 2,284,590 22,816,629,795 17,716,716,855 262,723,223 155,553,707 9,840,645,571 7,236,638,335 3,165,298,448 2,554,986,926 13,268,667,242 9,947,178,968 (455,530,899) (262,723,223) 12,813,136,343 9,684,455,745 864,137,218 803,975,989 13,677,273,561 10,488,431,734 (225,804,808) (193,557,085) (1,255,181,983) (864,137,218) 12,196,286,770 9,430,737,431 3,182,574,225 1,920,966,484 10,512,083,496 8,498,246,076 (3,854,012,150) (3,182,574,225) 9,840,645,571 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 Security Expenses 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 Security Expenses Other Expenses Amount in Taka July 2018- June 2019 July 2017- June 2018 1,188,378,116 904,509,549 357,815,843 216,587,905 31,563,027 22,801,790 2,340,256 39,992 12,214,261 13,607,099 2,406,063 4,508,685 196,960 13,724,885 9,764,755 1,821,636 284,160,790 222,652,875 30,586,880 22,091,508 9,563,197 9,211,158 211,045,966 207,961,293 185,846,861 144,124,432 5,847,370 4,961,417 26,970,395 26,780,147 776,720,982 720,995,025 19,223,665 15,870,697 6,967,685 6,422,209 3,165,298,448 2,554,986,926 422,172,373 314,685,553 21,596,203 52,754,516 11,157,571 33,292,606 7,452,594 9,623,113 2,090,000 1,294,203 420,402 14,475 8,389,087 15,238,998 10,931,928 2,876,555 27,156,197 72,068 12,734,287 29,897,226 1,108,950 9,011,269 73,659,561 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 9,619,633 68,042,059 752,944,182 618,675,127 Financial Statements-Consolidated | Annual Report 2018-19 | 99 28. 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 Security Expenses Bad Debts Other Expenses 29. Other Income Interest Income Dividend Income Royalty Technology Transfer Income Income From sale of Product Dossier Distribution Commission Cash Incentive on Export Exchange Rate Fluctuation Gain / (Loss)* Sale of Miscellaneous Item Profit/(Loss) on Sale of Fixed Assets July 2018- June 2019 July 2017- June 2018 1,746,110,649 1,262,270,771 86,475,238 12,924,576 78,267,019 8,958,993 520,316,148 440,145,550 54,522,468 36,718,700 31,583,013 9,779,736 53,419,672 40,877,932 20,542,289 9,364,325 49,463,151 49,081,984 105,829,155 100,398,454 32,048,113 32,264,432 286,686,387 263,875,222 511,507,793 428,361,958 11,394,312 10,893,311 207,829,781 128,243,083 87,161,934 55,008,186 273,539,867 120,383,504 260,673,378 234,392,430 315,948,856 179,142,387 136,144,095 96,854,086 18,179,874 15,870,697 2,894,595 3,493,457 - 12,520,028 4,801,225,276 3,641,136,313 36,457,527 54,928,425 1,491,901 95,941,689 - - - 23,646,180 1,504,092 6,093,728 18,145,620 4,959,000 4,266,424 - (20,010,341) (42,662,242) 952,663 49,772 1,438,046 (3,526,939) 139,917,665 43,757,880 * Exchange rate fluctuation gains has been netted off with the Exchange rate fluctuation losses. An exchange loss of Tk. 25,559,859 has been accounted for the translation of outstanding foreign currency loan from ODDO BHF Aktiengesellshaft, Frankfurt, Germany translated at the exchange rate prevailing on the financial position date. 100 | Annual Report 2018-19 | Financial Statements-Consolidated 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 31. Income Tax Expenses This consists of as follows : (a) Current Tax (b) Deferred Tax Expense 32. Earnings Per Share (EPS) (a) Earnings attributable to the Owners of the Company (b) Weighted average number of Shares outstanding during the year July 2018- June 2019 Amount in Taka July 2017- June 2018 797,139,744 378,949,336 27,718,969 (10,909,700) 60,109,947 128,075,983 16,717,899 73,787,122 85,080,425 13,376,260 1,029,762,542 540,283,443 803,760,846 792,620,241 101,901,936 36,059,589 905,662,782 828,679,830 3,033,402,333 2,536,543,948 405,556,445 405,556,445 Earnings Per Share (EPS) 7.48 6.25 33. Net Asset Value (NAV) Per Share June 30, 2019 June 30, 2018 Total Assets Less Total Liabilities Less Non-controlling Interest Equity Attributable to the Owners of the Company Number of Ordinary 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 Ordinary Shares at Financial Position date Net Operating Cash Flow Per Share (NOCFPS) 49,214,092,360 43,738,886,412 (19,349,768,523) (16,387,049,620) (276,006,553) (269,874,176) 29,588,317,284 27,081,962,616 405,556,445 405,556,445 72.96 66.78 July 2018- June 2019 July 2017- June 2018 2,959,916,904 1,819,113,923 405,556,445 405,556,445 7.30 4.49 Financial Statements-Consolidated | Annual Report 2018-19 | 101 35. Reconciliation of Net Profit with Cash Flows from Operating Activities Amount in Taka July 2018- June 2019 July 2017- June 2018 Profit after Tax 3,040,402,954 2,532,654,301 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 Foreign Currency Bank Loan Deferred Tax (b) Non-operating Items Dividend Income Profit on sale of Fixed Assets Effect of exchange rate changes on Cash and Cash Equivalents Share of Loss of Associates (c) Changes in working Capital (Increase)/Decrease in Inventories (Increase)/Decrease in Spares & Supplies (Increase)/Decrease in Accounts Receivable (Increase)/Decrease in Advance Income Tax (Increase)/Decrease in Loans, Advances & Deposits (Increase)/Decrease in Other Non-current Assets Increase/(Decrease) in Creditors and Other Payables Increase/(Decrease) in Accrued Expenses Increase/(Decrease) in Income Tax Payable 1,606,962,596 970,984,130 868,369,303 801,715,192 74,393,000 536,738,498 44,193,967 57,650,531 - (18,145,620) 25,559,859 101,901,936 49,510,471 36,059,589 26,190,223 (1,481,833) (1,438,046) (215,618) 29,325,720 2,022,847 (1,504,092) 3,526,939 - - (1,713,638,869) (1,686,547,355) (865,183,997) (1,192,022,631) (62,216,166) (18,678,378) (573,449,512) (566,040,570) (3,112,607) - (215,273,845) (365,849,712) (221,598) - 100,096,815 403,748,186 171,840,255 (266,118,214) 41,306,104 10,989,646 Net cash Generated from Operating Activities 2,959,916,904 1,819,113,923 102 | Annual Report 2018-19 | Financial Statements-Consolidated 36. Related Party Disclosures Amount in Taka a) Following transactions were carried out with related parties in the normal course of business on arms length basis: Name of Related Parties (i) I & I Services Ltd. Nature of Transactions Value of Transaction Balance at year end Local Delivery Distribution Commission 22,217,416,177 260,673,378 2,335,457,132 (ii) Bangladesh Export Import Co. Ltd Short Term Investment & Interest there on 16,032,638 323,364,536 b. Related party transaction between the Company and its subsidiaries have been eliminated in the consolidation. c. The Companies are subject to common control from same source. Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Mohammad Ali Nawaz Chief Financial Officer Dhaka October 28, 2019 Financial Statements-Consolidated | Annual Report 2018-19 | 103 Financial Statements-Beximco Pharma Stand-alone Beximco Pharmaceuticals Limited Audited Financial Statements For the Year Ended June 30, 2019 Independent Auditor’s Report To the Shareholders of Beximco Pharmaceuticals Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Beximco Pharmaceuticals Limited (the “Company”), which comprise the Statement of Financial Position as at 30 June 2019 and 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 notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements of the Company give a true and fair view of the financial position of the Company as at 30 June 2019, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Bangladesh, and we have fulfilled our other ethical responsibilities in accordance with these ethical requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Risk Our response to the risk Valuation of Property, Plant and Equipment (PPE) The carrying value of the PPE was Tk. 32,209,440,044 as at 30 June, 2019. Our audit included the following procedure: Expenditures are capitalized if they create new assets or enhance the existing assets, and expensed if they relate to repair or maintenance of the assets. Classification of the expenditures involves judgment. The useful lives of PPE items are based on management’s estimates regarding the period during which the assets or its significant components will be used. The estimates are based on historical experience and market practice and take into consideration the physical condition of the assets. • We assessed whether the accounting policies in relation to the capitalization of expenditures are in compliance with IFRS and found them to be consistent. • We inspected a sample of invoices and L/C documents to determine whether the classification between capital and revenue expenditure was appropriate. •W e evaluated whether the useful lives determined and applied by the management were in line with historical experience and the market practice. The valuation of PPE was identified as a key audit matter due to the significance of this balance to the financial statements and that there is significant measurement uncertainty involved in this valuation. We checked whether the depreciation of PPE items was commenced timely, by comparing the date of the reclassification from capital work in progress to ready for use, with the date of the act of completion of the work. See Note No. 4(a) to the financial statements Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 105 Risk Our Response to the Risk Valuation of Inventory The inventory of Tk. 5,573,549,171 as at 30 June, 2019 was held at different locations across the country. Inventories are carried at the lower of cost and net realizable value. As a result, the management apply judgment in determining the appropriate values for slow-moving or obsolete items. Since the value of Inventory is significant to the Financial Statements and there is significant measurement uncertainty involved in this valuation, the valuation of inventory was significant to our audit. See Note No. 9 to the financial statements. We verified the appropriateness of management’s assumptions applied in calculating the value of the inventory by: • Evaluating the design and implementation of key inventory controls. • Attending inventory counts on sample basis and reconciling the count results to the inventory listing to test the completeness of data. • Reviewing the requirement of inventory provisioning and action there upon by the management. • Comparing the net realizable value obtained through a detailed review of sales subsequent to the year-end, to the cost price of a sample of inventories. Contingent Liabilities The Company is subject to a number of claims and litigations. The amounts of claims are significant and estimates of the amounts of provisions or contingent liabilities are subject to management judgement. These claims and regulatory matters are uncertain in timing of resolutions and amount or consequences. These claims and litigation matters were a key audit matter due to the amounts involved, potential consequences and the inherent difficulty in assessing the outcome. The assessment of whether or not a liability should be recognized involves judgement from management. We obtained an understanding, evaluated the design and tested the operational effectiveness of the company’s key controls over the legal provision and contingency processes. We enquired to those charged with governance to obtain their view on the status of the litigations. We enquired of the company’s internal legal counsel for the litigation and inspected internal notes and reports. We also reviewed formal confirmations in this regard from external counsel. We also validated the completeness and appropriateness of the related disclosures in Note No. 51 of the financial statements. Related party transactions The Company has related party transactions with its subsidiaries and other related parties as described in Note No. 40 of the financial statements. We focused on identification of related parties and disclosure of related party transactions in accordance with relevant accounting standards. Our audit procedures amongst others included the following: • Evaluated the design and tested the operating effectiveness of controls over identification and disclosure of related party transactions. • Evaluated the transactions among the related parties and tested material accounts balances. • Evaluated the disclosures in the financial statements in compliance with IAS 24. Other Information Management is responsible for the other information. The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. 106 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on such work we perform, we conclude that there is a material misstatement of this other information, we are required to communicate the matter to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal Controls Management is responsible for the preparation and fair presentation of the financial statements of the Company in accordance with IFRSs, 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. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit • procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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 internal controls of the Company. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 107 From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other Legal and Regulatory Requirements In accordance with the Companies Act 1994, The Securities and Exchange Rules 1987 and relevant notifications issued by Bangladesh Securities and Exchange Commission, 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 purposes of our audit and made due verification thereof; b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of those books; c) The company’s Statement of Financial Position (Balance sheet) and Statement of Profit or Loss and Other Comprehensive Income (Profit & Loss Account) dealt with by this report are in agreement with the books of accounts and; d) The expenditures incurred and payment made were for the purpose of the company’s business for the year. Dhaka October 28, 2019 M. J. Abedin & Co. Chartered Accountants 108 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone Beximco Pharmaceuticals Limited Statement of Financial Position As at June 30, 2019 ASSETS Non-Current Assets Property, Plant and Equipment- Carrying Value Intangible Assets Investment in Subsidiaries Investment In Associates Other Investment 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, 2019 June 30, 2018 Amount in Taka 4 (a) 5 6 7 8 9 10 11 12 13 14 15 16 4(b) 17 18 19 20 21 22 23 24 34,999,402,741 31,332,493,872 32,209,440,044 610,121,698 2,145,185,900 29,325,720 5,329,379 28,645,104,798 525,695,416 2,125,186,000 30,749,850 5,757,808 12,793,492,489 10,832,521,567 5,573,549,171 715,341,316 3,325,890,597 2,273,040,821 323,364,536 582,306,048 4,665,449,461 654,781,270 2,736,944,147 2,066,840,961 339,397,174 369,108,554 47,792,895,230 42,165,015,439 29,600,843,240 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,131,853,004 2,504,203 17,156,858,985 6,296,204,472 2,544,732,500 1,748,900,794 2,002,571,178 11,895,847,518 8,701,024,499 1,487,254,413 1,037,089,244 496,178,291 7,002,833 167,298,238 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 47,792,895,230 42,165,015,439 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 28, 2019 Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited Statement of Profit or Loss and Other Comprehensive Income For the Year ended June 30, 2019 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 Notes July 2018 - June 2019 Amount in Taka July 2017 - June 2018 25 26 29 30 31 32 21,156,331,039 (11,365,929,686) 9,790,401,353 17,380,728,001 (9,255,504,681) 8,125,223,320 (4,991,627,668) (4,143,623,455) (663,362,904) (595,185,629) (4,328,264,764) (3,548,437,826) 4,798,773,685 3,981,599,865 245,184,534 (938,074,846) 4,105,883,373 64,973,584 (512,099,369) 3,534,474,080 Contribution to WPPF & Welfare Funds 33 (195,518,256) (168,308,290) Profit Before Tax 3,910,365,117 3,366,165,790 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) The Notes are an integral part of the Financial Statements. 34 35 36 (886,864,143) (792,365,900) (94,498,243) (807,194,527) (790,580,483) (16,614,044) 3,023,500,974 2,558,971,263 (1,852,559) 481,697 3,021,648,415 2,559,452,960 7.46 6.31 Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 28, 2019 110 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited Statement of Changes in Equity For the Year ended June 30, 2019 Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Unrealized Gain/ (Loss) Retained Earnings Amount in Taka Total Balance as on July 01, 2018 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 Total Comprehensive Income for the year: Profit for the Year Other Comprehensive Income/(Loss) Transactions with the Shareholders: Cash Dividend Adjustment for the Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets - - - - - - - - - - - - - - - - - - - - (9,175,291) - (18,249,550) - - - (1,852,559) 3,023,500,974 - 3,023,500,974 (1,852,559) - - - (506,945,556) (506,945,556) 9,175,291 - - (18,249,550) Balance as on June 30 ,2019 4,055,564,450 5,269,474,690 1,689,636,958 294,950,950 1,131,853,004 2,504,203 17,156,858,985 29,600,843,240 Net Asset Value (NAV) Per Share (Note-37) 72.99 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) Retained Earnings Total Balance as on July 01, 2017 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 Total Comprehensive Income for the year: Profit for the Year Other Comprehensive Income Transactions with the Shareholders: Cash Dividend Adjustment for the Depreciation on Revalued Assets Adjustment for Deferred Tax on Revalued Assets - - - - - - - - - - - - - - - - - - - - - - - - 481,697 2,558,971,263 - 2,558,971,263 481,697 - (506,945,556) (506,945,556) (10,382,600) (20,543,373) - - 10,382,600 - - (20,543,373) Balance as on June 30, 2018 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 Net Asset Value (NAV) Per Share (Note-37) 66.83 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Dhaka October 28, 2019 Nazmul Hassan Managing Director Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 111 Beximco Pharmaceuticals Limited Statement of Cash Flows For the Year ended June 30, 2019 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 39 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 Effect of exchange rate changes on Cash and Cash Equivalents Cash and Cash Equivalents at End of Year Net Operating Cash Flow Per Share 14 38 Notes July 2018 - June 2019 Amount in Taka 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 20,798,619,790 (16,112,060,651) 4,686,559,139 (938,074,846) 36,457,527 (1,058,484,114) 2,726,457,706 (4,337,220,303) (128,619,282) (19,999,900) 17,267,628 1,491,901 16,032,638 (4,451,047,318) (1,296,871,228) 3,738,926,253 (504,483,537) 1,937,571,488 212,981,876 369,108,554 215,618 582,306,048 6.72 4.56 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the Board of Directors on October 28, 2019 and signed for and on behalf of the Board : Salman F Rahman Vice Chairman Nazmul Hassan Managing Director Dhaka October 28, 2019 112 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone Mohammad Ali Nawaz Chief Financial Officer Per our report of even date M.J. Abedin & Co. Chartered Accountants Beximco Pharmaceuticals Limited Notes to the Financial Statements As at and for the year ended June 30, 2019 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 and commenced its manufacturing operation in 1980. It is a leading manufacturer of pharmaceutical formulations and Active Pharmaceutical Ingredients (APIs). 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 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). In 2018, BPL acquired 85.22% shares of Nuvista Pharma Limited – a non-listed pharmaceutical company in Bangladesh specializing in hormones and steroid drugs and took over control of its management. 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. The manufacturing facilities of the Company are certified by leading global regulatory authorities including United States Food and Drug Administration (USFDA). 1.2. Nature of Business The company is engaged in manufacturing and marketing of generic pharmaceuticals formulation products covering a wide range of therapeutic categories. It offers products in different dosage forms including Solid, Liquid, Cream and Ointment, Suppositories, Metered Dose Inhaler, Dry Powder Inhaler, Nasal Spray, Sterile, Lyophilized Injectable, Large Volume Intravenous Fluids. Besides formulation products BPL also manufactures Active Pharmaceutical Ingredients (APIs) and renders contract manufacturing services to other companies. Products of the company are sold in domestic and international markets. 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). 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, 2019; (b) a Statement of Profit or Loss and Other Comprehensive Income for the year ended June 30, 2019; (c) a Statement of Changes in Equity for the year ended June 30, 2019; (d) a Statement of Cash Flows for the year ended June 30, 2019; 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, 2018 to June 30, 2019. The last audited financial statements were prepared for the year ending June 30, 2018. Figures for earlier year have been re-arranged wherever considered necessary to ensure better comparability with the current year. 2.5. Authorization for issue The financial statements have been authorized for issue by the Board of Directors on October 28, 2019. Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 113 2.6. Functional and Presentation Currency The financial statements are prepared and presented in Bangladesh Currency (Taka), which is the company’s functional currency. All financial information presented has been rounded off to the nearest Taka except where indicated otherwise. 2.7. Use of Estimates and Judgments The preparation of financial statements in conformity with the IFRSs including IASs require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and for contingent assets and liabilities that require disclosure, during and at the date of the financial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision of accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. In particular, the key areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements include depreciation, inventory valuation accrued expenses, others payable, capitalization of assets 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 from Contracts with Customers In compliance with the requirements of IFRS 15: Revenue from Contracts with Customers, 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 sale of goods is measured at the fair value of the consideration received or receivable net of returns and allowances, trade discounts, rebates and Value Added Tax (VAT). 3.2. Property, Plant and Equipment (PP&E) 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 amortize 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 software for internal use are capitalized as intangible fixed assets where the software supports a significant business system and 114 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone the expenditure leads to the creation of a durable asset. Also, the research and development expenditures that are definite to yield benefit to the company are capitalized. 3.4. Leases A new Standard IFRS 16: Leases, has been made effective for the reporting period beginning on or after 1 January 2019. The new standard has introduced a single on-balance sheet lease accounting model for leases and replaces the previously adopted IAS 17: Leases. The Company has been consistently recording its underlying assets acquired under lease arrangement as Assets and the corresponding obligation as Liabilities in the financial statements. Lease payments made are apportioned between the finance expenses and the reduction of outstanding lease liability which are in compliance with IFRS 16, excepting the classification of the leased assets as “Right-of-use assets” in the Statement of Financial Position. The Company has not early adopted IFRS 16 in preparing the financial statements and intends to do so when it becomes effective for the Company. This however, has no material impact on the reported financial statements. 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 3.6.1. 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. 3.6.2. 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. Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 115 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. 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%. However, profit generated from export is subject to a reduced 12.5% tax. Additionally certain other incomes are also liable to a lower rates which can be found in Note: 34 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). In BPL’s case deferred tax arises due to the difference in the carrying amount and the tax base value of the Property, Plant & Equipment and Gratuity provisions. 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. Other Income Dividend 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. Export Incentives Cash Incentives for export are recognized when all conditions as laid done in the relevant incentive scheme including receipt of export remittances are satisfied and the right to claim the incentives are established Royalty Royalty income is accounted for on accrual basis on fulfillment of the terms laid in the agreement between the contracting parties giving BPL the right to claim the Royalty. Toll Income Toll income is recognized when services are delivered and there remains no unfulfilled obligation in connection with the service. 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 excepting those that qualifies for capitalization 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 116 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone of employee benefits is charged off as revenue expenditure in the period to which the contributions relate. The company’s employee benefits include the following: 3.12.1. 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. Employees contribute 10% of their basic salary to the provident along with the Company that makes an 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. 3.12.2. 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. 3.12.3. 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. 3.12.4. 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. 3.12.5. 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. Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 117 4 (a). Property, Plant and Equipment As on June 30, 2019 Particulars Land Building and Other Constructions Plant and Machinery Furniture and Fixtures Transport and Vehicle Office Equipment Amount in Taka Total Cost At July 01, 2018 Additions Transferred in & Capitalized Disposal during the Year 3,343,741,442 - - - 6,794,566,920 - 703,230,227 - 12,154,522,473 1,465,749,248 905,532,878 (21,845,168) 247,566,170 18,622,458 1,252,298 - 926,148,671 88,962,490 - (16,485,538) 542,239,692 25,435,247 1,096,395 - 24,008,785,368 1,598,769,443 1,611,111,798 (38,330,706) Cost at June 30, 2019 3,343,741,442 7,497,797,147 14,503,959,431 267,440,926 998,625,623 568,771,334 27,180,335,903 Accumulated Depreciation At July 01, 2018 Depreciation Charged Adjustment for Assets disposed off Accumulated Depreciation at June 30, 2019 - - - 1,780,559,564 153,597,656 - 5,238,747,927 473,926,803 (8,555,677) 104,536,829 14,302,934 - 503,064,602 84,090,016 (13,851,547) 334,366,427 31,044,166 - 7,961,275,349 756,961,575 (22,407,224) - 1,934,157,220 5,704,119,053 118,839,763 573,303,071 365,410,593 8,695,829,700 Net Book Value June 30, 2019 3,343,741,442 5,563,639,927 8,799,840,378 148,601,163 425,322,552 203,360,741 18,484,506,203 Capital Work in Progress 13,724,933,841 Carrying Value as on June 30, 2019 32,209,440,044 Assets include leasehold assets of Tk. 1,331,967,914 at cost and Tk. 932,076,886 at carrying value. As on June 30, 2018 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 28,645,104,798 118 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone Capital Work in Progress is arrived at as follows : June 30, 2019 Opening Balance Addition during the year Transferred & Capitalized Building and Other Constructions Plant & Machinery Furniture & Fixture Office Equipment 12,597,594,779 2,738,450,860 15,336,045,639 (1,611,111,798) (703,230,227) (905,532,878) (1,252,298) (1,096,395) Amount in Taka June 30, 2018 8,012,063,489 4,585,531,290 12,597,594,779 - - - Closing balance at end of year 13,724,933,841 12,597,594,779 4 (b). Revaluation Surplus S.F. Ahmed & Co, Chartered Accountants and Valuers revalued the land, building and plant & machinery of the Company as of December 31, 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 1,159,277,845 1,190,203,818 (9,175,291) (18,249,550) (10,382,600) (20,543,373) 1,131,853,004 1,159,277,845 5. Intangible Assets Particulars Cost As on July 01, 2018 Addition During the year As on June 30, 2019 Amortization As on July 01, 2018 Amortized During the year As on June 30, 2019 Balance as on June 30, 2019 Balance as on June 30, 2018 Product development, Licensing and Marketing Rights ERP Project Total 509,988,617 108,963,430 618,952,047 131,741,051 44,193,000 175,934,051 443,017,996 378,247,566 147,447,850 19,655,852 167,103,702 - - - 167,103,702 147,447,850 657,436,467 128,619,282 786,055,749 131,741,051 44,193,000 175,934,051 610,121,698 525,695,416 Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 119 6. Investment in Subsidiaries Nuvista Pharma Ltd. Beximco Pharma API Limited June 30, 2019 2,125,186,000 19,999,900 2,145,185,900 Amount In Taka June 30, 2018 2,125,186,000 - 2,125,186,000 (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. 31,336,000 paid as share transfer fee to the Registrar of Joint Stock Companies and Firms. (b) Beximco Pharma API Limited (API) was formed with a paid up capital of Tk. 20,000,000 divided into 2,000,000 shares of Tk. 10 each, all of which excepting 10 shares are held by Beximco Pharmaceuticals Ltd (BPL). To comply with the regulatory requirement a nominal 10 shares has been issued to an individual. (c) Investment in subsidiaries has been accounted for using cost method as per IAS 27.10(a): Separate Financial Statements, in preparing financial statements of the company. 7. Investment in Associates BioCare Manufacturing SDN.BHD. , Malaysia Balance July 01, 2018 30,749,850 Adjustment during the Year (1,424,130) Balance June 30, 2019 29,325,720 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. was 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. BioCare is considered to be an associate of BPL as per IAS 28: Investment in Associates and Joint Ventures. The Company adopted Cost method for the investment as per IAS 27: Separate Financial Statements and therefore unrealized exchange fluctuation gain accounted for in previous financial statements has been reversed to arrive at cost value. 8. Other Investments (a) Investment Details ( Taka): (i) Bangladesh Export Import Co. Ltd. (Note C ) (ii) Central Depository Bangladesh Ltd. (CDBL) (b) Number of Shares: (i) Bangladesh Export Import Co. Ltd. (ii) Central Depository Bangladesh Ltd. (CDBL) Balance July 01, 2018 Addition/ Adjustment Unrealised Gain/ (Loss) 4,188,358 1,569,450 5,757,808 (428,429) - (428,429) Balance July 01, 2018 Addition/ Adjustment Stock Dividend 159,861 571,182 7,993 - Balance June 30, 2019 3,759,929 1,569,450 5,329,379 Balance June 30, 2019 167,854 571,182 (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 the last working day of the year 2018-2019 was Tk. 22.40 (2017-2018: Tk.26.20). The amount of Tk. 428,429 represents fair value loss. (d) Shares of Central Depository Bangladesh Ltd.(CDBL) are not traded. 120 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone 9. Inventories Amount in Taka This consists of as follows : June 30, 2019 June 30, 2018 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 Literature & Promotional Materials 1,155,804,007 420,135,832 2,590,103,665 1,072,840,831 27,356,035 85,135,960 12,004,065 210,168,776 5,573,549,171 744,138,733 205,169,517 2,040,109,375 939,299,203 4,001,948 82,714,044 324,655 649,691,986 4,665,449,461 569,443,182 13,100,977 132,797,157 715,341,316 537,366,837 10,936,969 106,477,464 654,781,270 11. Accounts Receivable This is net of provision for bad debts Tk. 2,193,977. Accounts receivable includes an amount of Tk. 771,731,426 (equivalent USD 9,214,704 as on June 30, 2019 (June 30, 2018: Tk. 596,463,606, USD 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. 2,335,457,132 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. 2,348,527,632 on May 31, 2019. 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. Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 121 12. Loans, Advances and Deposits Amount in Taka This is unsecured, considered good and consists of as follows : June 30, 2019 June 30, 2018 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 159,119,478 306,316,482 6,320,466 62,559,041 10,821,850 224,723,000 253,580,629 37,773,704 152,573,688 13,420,366 199,755,875 592,000,065 160,757,931 35,318,373 57,999,873 162,932,842 188,082,567 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 2,273,040,821 2,066,840,961 (a) The maximum amount due from the employees during the year was Tk. 162,593,348 on April 30, 2019. (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, Hamburg for guarantee of the project 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. 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 June 30, 2019 June 30, 2018 235,175,572 191,916,333 310,734,039 36,396,437 582,306,048 142,718,744 34,473,477 369,108,554 122 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone 15. Issued Share Capital A. Authorized : Ordinary Shares of Tk. 10/- each Fully convertible 5 % Preference Shares of Tk. 100/- each Amount in Taka June 30, 2019 June 30, 2018 No. of Shares Taka No. of Shares Taka 1,000,000,000 50,000,000 10,000,000,000 5,000,000,000 500,000,000 41,000,000 5,000,000,000 4,100,000,000 15,000,000,000 9,100,000,000 During the year the company amended it’s Memorandum and Articles of Association and increased it’s Authorized Share Capital as stated above. 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 June 30, 2019 517,757,500 3,165,382,980 59,512,500 312,911,470 4,055,564,450 June 30, 2018 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 Director and Associates Public Issue: GDRs- AIM of London Stock Exchange Foreign Investors’ Shareholdings (DSE/CSE) Institutions (ICB, ICB Investors Accounts & Others) Individual Share Holders June 30, 2019 June 30, 2018 No. of shares % of Share Capital No. of shares % of Share Capital 8,235,353 8,254,632 37,019,789 2.03 2.04 9.13 8,235,353 8,254,632 36,999,784 53,509,774 13.19 53,489,769 90,943,627 60,060,586 136,573,957 64,468,501 352,046,671 405,556,445 22.42 14.81 33.68 15.91 90,943,627 74,469,959 119,603,843 67,049,247 86.81 352,066,676 100 405,556,445 2.03 2.04 9.12 13.19 22.42 18.36 29.49 16.54 86.81 100 Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 123 D. Distribution Schedule of Ordinary Shares: Range of Holdings In number of shares No. of Shareholders % of Shareholders Number of Shares % of Share Capital June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 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 41,958 12,144 980 469 154 77 70 121 163 41 43,579 12,360 969 478 147 72 60 116 163 38 74.69% 21.62% 1.74% 0.83% 0.27% 0.14% 0.12% 0.22% 0.29% 0.07% 75.16% 21.32% 1.67% 0.82% 0.25% 0.12% 0.10% 0.20% 0.28% 0.07% 5,876,193 17,827,041 7,015,971 6,683,931 3,819,206 2,686,413 3,220,468 8,692,718 51,410,310 298,324,194 6,030,643 18,111,978 6,952,640 6,834,127 3,629,536 2,493,725 2,724,479 8,267,895 48,891,611 301,619,811 Total 56,177 57,982 100% 100% 405,556,445 405,556,445 1.45% 4.40% 1.73% 1.65% 0.94% 0.66% 0.79% 2.14% 12.68% 73.56% 100% 1.49% 4.47% 1.71% 1.69% 0.89% 0.61% 0.67% 2.04% 12.06% 74.37% 100% E. Market Price of Ordinary Shares: The shares are listed in the Dhaka and Chittagong Stock Exchanges of Bangladesh and GDRs in the AIM of London Stock Exchange. Price of each Share/ GDRs on the last working day of the year were: Dhaka Chittagong AIM June 30, 2019 June 30, 2018 Tk. Tk. GBP 83.50 84.30 0.389 93.90 94.70 0.510 F. Option on unissued Ordinary Shares : There is no option on unissued shares as on June 30, 2019. 16. 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. 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 ( b ) Project Loan - ODDO BHF Aktiengesellshaft, Frankfurt, Germany Amount in Taka June 30, 2019 June 30, 2018 1,974,611,879 239,710,340 330,410,281 2,544,732,500 2,809,556,317 280,596,178 759,326,232 3,849,478,727 the This represents part of 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. foreign currency 124 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone ( 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 ( d ) A B Bank Amount in Taka June 30, 2019 June 30, 2018 214,912,775 260,426,903 286,763,966 336,141,714 501,676,741 596,568,617 (97,808,499) (114,965,180) 403,868,242 481,603,437 164,157,902 201,007,259 239,710,340 280,596,178 403,868,242 481,603,437 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 machinery and equipment financed by ODDO BHF Aktiengesellshaft, Frankfurt, Germany. 18. 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. Further detail is available at Note 3.12 (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 19. Deferred Tax Liability Opening Balance Addition during the Year : Deferred Tax on Assets (cost basis)-Note : 34 (b) Deferred Tax on revalued amount Closing Balance at end of the Year 660,004,303 529,565,300 306,176,739 155,686,017 966,181,042 685,251,317 (32,743,298) (25,247,014) 933,437,744 660,004,303 815,463,050 564,457,967 1,748,900,794 1,224,462,270 1,889,823,385 1,852,665,968 94,498,243 18,249,550 16,614,044 20,543,373 2,002,571,178 1,889,823,385 Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 125 20. Short Term Borrowings Janata Bank Ltd. - Cash Credit-Hypothecation Loan AB Bank Liability for UPAS Letter of credit Amount in Taka June 30, 2019 June 30, 2018 5,336,101,392 3,897,681,180 2,491,112,625 - 873,810,482 1,064,417,066 8,701,024,499 4,962,098,246 (a) Short term borrowings from Janata Bank represents revolving credit facilities renewable annually. The borrowing carries 9% interest. (b) Loan from AB Bank represents the Time Loan taken by the company to settle UPAS/Deferred LC liabilities related to import of various project materials other than machinery and equipment for different projects under implementation. (c) The loan with Janata Bank and AB Bank is secured by paripassu hypothecation of fixed and floating assets of the company excepting the machinery and equipment financed by ODDO BHF Aktiengesellshaft, Frankfurt, Germany. 21. Long Term Borrowings-Current Maturity This consists of as follows and is payable within next twelve months from the Balance Sheet date : Project Loan - ODDO BHF Aktiengesellshaft, Frankfurt, Germany Obligation Under Finance Leases AB Bank 22. Creditors and Other Payables Goods & Services Provident Fund Advance Against Sales Others 23. 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) 860,104,664 852,470,599 164,157,902 201,007,259 462,991,847 400,341,697 1,487,254,413 1,453,819,555 518,625,291 569,160,255 403,722,991 188,151,262 23,952,936 43,576,730 90,788,026 138,649,988 1,037,089,244 939,538,235 300,660,035 136,464,535 195,518,256 166,983,289 496,178,291 303,447,824 126 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone 24. Income Tax Payable Opening Balance Provision for the year Short / (Excess) Provision for previous year AIT & Treasury deposits during the year 25. Net Sales Revenue This consists of as follows : Domestic Export Amount in Taka June 30, 2019 June 30, 2018 433,416,452 420,924,678 809,208,912 790,580,483 (16,843,012) - 1,225,782,352 1,211,505,161 (1,058,484,114) (778,088,709) 167,298,238 433,416,452 July 2018 - June 2019 July 2017 - June 2018 18,653,698,522 15,903,750,112 2,502,632,517 1,476,977,889 21,156,331,039 17,380,728,001 a) Revenue consists of sales of pharmaceutical formulation products of wide range of therapeutic categories in different dosage forms and strengths and Active Pharmaceutical Ingredients (APIs). The quantity sold under different broad categories are as follows: Sales represents: Product Category Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable,Inhaler and Insulin Diet Care Products Active Pharmaceutical Ingredients Liquid Nitrogen Quantity Unit Million pcs. Million pcs. Pcs Kg Liter July 2018 - June 2019 5,778.50 111.96 6,572 163,538 379,012 July 2017 - June 2018 4,520.25 97.08 21,566 141,374 437,986 b) Foreign Currency equivalent of Export was US$ 30,064,573 in 2018-19 as against US$ 17,953,810 in 2017-18. 26. Cost of Goods Sold This is made-up as follows : Work-in-Process (Opening) Materials Consumed (Note: 27) Factory Overhead (Note: 28) 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) 205,169,517 110,263,528 9,461,947,813 7,174,927,962 2,749,978,649 2,462,809,815 12,417,095,979 9,748,001,305 (420,135,832) (205,169,517) 11,996,960,147 9,542,831,788 744,138,733 648,654,846 12,741,098,880 10,191,486,634 (219,365,187) (191,843,220) (1,155,804,007) (744,138,733) 11,365,929,686 9,255,504,681 Item wise quantity and value of Finished Goods Stock are as follows : Stock as June 30, 2019 Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable, Inhaler and Insulin Unit Million pcs. Million pcs. Quantity 601.66 9.81 Active Pharmaceutical Ingredients Kg 9,390 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 Unit Million pcs. Million pcs. Kg Pcs Quantity 419.50 7.20 9,592 4,918 Amount in Taka Value (Tk.) 655,507,429 471,081,153 29,215,425 1,155,804,007 Value (Tk.) 438,495,650 276,721,452 26,362,126 2,559,505 744,138,733 27. Materials Consumed This is made-up as follows : Opening Stock Purchase Closing Stock 28. 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 Security Expenses Other Expenses 128 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone July 2018 - June 2019 July 2017 - June 2018 2,983,410,526 10,168,837,818 1,745,626,100 8,412,712,388 (3,690,300,531) (2,983,410,526) 9,461,947,813 7,174,927,962 1,027,826,755 266,430,909 29,239,356 1,743,735 39,992 12,214,261 10,510,955 1,892,086 259,057,257 28,098,315 9,563,197 217,766,232 145,518,810 5,847,370 26,970,395 685,050,226 19,223,665 2,985,133 861,570,554 204,042,376 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 15,870,697 5,417,512 2,749,978,649 2,462,809,815 (a) Salary and allowances include Company’s Contribution to provident fund amounting to Tk. 19,649,274 . (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. 29. Administrative Expenses Amount in Taka Salary & Allowances Rent Repairs and Maintenance Registration & Renewals Travelling & Conveyance Entertainment Printing & Stationery Audit Fee Telephone, Internet & Postage Electricity, Gas & Water Legal & Consultancy Business Acquisition Cost Company Secretarial, Regulatory Fee and AGM Expense Advertisement Training & Conference Depreciation Board Meeting Attendance Fee Security Expenses Other Expenses July 2018 - June 2019 July 2017 - June 2018 369,071,303 299,668,418 10,998,853 47,635,169 11,157,571 29,680,929 6,875,109 6,145,732 1,700,000 6,637,613 13,282,061 9,670,609 2,876,555 27,156,197 72,068 11,104,287 26,493,655 838,950 9,011,269 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 9,619,633 72,954,974 663,362,904 68,036,920 595,185,629 (a) Salary and allowances include Company’s Contribution to provident fund amounting to Tk. 7,534,461 . (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. (d) Other expenses does not include any item exceeding 1% of total revenue. Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 129 30. 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 Security Expenses Bad Debts Other Expenses July 2018 - June 2019 Amount in Taka July 2017 - June 2018 1,505,566,145 1,212,995,091 82,061,605 9,193,359 456,534,374 53,789,575 35,647,182 21,656,034 9,779,736 49,003,151 98,146,246 30,611,846 277,485,580 450,959,074 11,394,312 188,842,902 86,136,878 273,539,867 260,673,378 315,948,856 89,610,694 18,179,874 2,193,977 1,310,119 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 15,870,697 - 11,625,705 4,328,264,764 3,548,437,826 (a) Salary and allowances include Company’s Contribution to provident fund amounting to Tk. 32,196,434 . (b) Distribution commission relates to I & I Services Ltd., a “ Related Party” for local sales of formulation products. (c) Repairs and maintenance includes maintenance of office, premises, vehicles, building, equipment and other infrastructures. (d) Sample expense includes VAT on sample and related dispatch expense. (e) Other expenses does not include any item exceeding 1% of total revenue. 130 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone 31. Other Income Interest Income Dividend Income Royalty Technology Transfer Income Income From sale of Product Dossier Distribution Commission Cash Incentive on Export Exchange Rate Fluctuation Gain / (Loss) Income from sale of materials Profit/(Loss) on Sale of Fixed Assets (Note 41) July 2018 - June 2019 36,457,527 1,491,901 104,779,694 - - 91,886,707 23,646,180 (20,010,341) 5,588,720 1,344,146 245,184,534 Amount in Taka July 2017 - June 2018 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 a. Taka 8,838,005 of the Royalty income comes from licensing of four of the BPL products given to Nuvista Pharma Limited while the remaining amount is from overseas business. b. The Distribution Commission is received from the subsidiary company Nuvista Pharma Limited for providing delivery of Nuvista’s products using the BPL’s distribution network across the country as per the agreement entered into between the companies on an arm’s length basis. c. In December 2018, Government declared 10% incentives on FOB value of export of finished pharmaceutical formulation products subject to fulfillment of certain conditions. The incentive claimable during the reporting period as per the eligibility criteria has been accrued and accounted for. Further details are available in Note 3.10. d. Exchange rate fluctuation gains has been netted off with the Exchange rate fluctuation losses. An exchange loss of Tk. 25,559,859 has been accounted for the translation of outstanding foreign currency loan from ODDO BHF Aktiengesellshaft, Frankfurt, Germany at the exchange rate prevailing on the financial position date. 32. 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 734,759,832 - 59,643,281 128,075,983 15,595,750 938,074,846 361,626,873 (21,183,793) 73,199,604 85,080,425 13,376,260 512,099,369 33. 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). Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 131 34. 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 July 2018 - June 2019 809,208,912 (16,843,012) 792,365,900 94,498,243 886,864,143 8,943,722,454 (933,437,744) 8,010,284,710 25% 2,002,571,178 1,889,823,385 112,747,793 (18,249,550) 94,498,243 Reconciliation of Effective tax rate Profit before Tax Applicable Tax Effect of lower rate on Export Profit excluding Cash Incentive Effect of lower rate on cash incentive Effect of lower rate on dividend income Effect of permanent disallowances Tax impact of prior year adjustment Others Income Tax Expense 2018-19 Tk. 3,910,365,117 977,591,279 (94,689,032) (3,546,927) (74,595) 42,675,980 (16,843,012) (18,249,550) 886,864,143 % 25.00% -2.42% -0.09% -0.00% 1.09% -0.43% -0.47% 22.68% % 25.00% -1.70% 0.00% -0.00% 1.29% 0.00% -0.61% 23.98% a. Export Profits are subject to 12.5% Tax rate b. 10% Tax deductible at source on the incentives is final tax liability on such income as per the Income Tax regulations c. Dividend Income is taxable @ 20% d. Permanent disallowances relates to excess of sample expenses over the allowable ceilings under Income Tax regulations Amount in Taka July 2017 - June 2018 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 2017-18 Tk. 3,366,165,790 841,541,448 (57,232,893) 0 (75,205) 43,504,550 0 (20,543,373) 807,194,527 35. Other Comprehensive Income - Unrealized Gain/(Loss) Fair Value Gain/(Loss) on Investment in Listed Shares Exchange Rate Fluctuation Gain or loss/adjustment (Note: 7) (428,429) (1,424,130) (1,852,559) (942,433) 1,424,130 481,697 132 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone 36. Earnings Per Share (EPS) July 2018- June 2019 Amount in Taka July 2017- June 2018 (a) Earnings attributable to the Ordinary Shareholders Tk. 3,023,500,974 2,558,971,263 (b) Weighted average number of Shares outstanding during the year (Note 3.15) 405,556,445 405,556,445 Earnings Per Share (EPS) Tk. 7.46 6.31 37. Net Asset Value (NAV) Per Share Total Assets Less Total Liabilities Net Assets Number of Shares at Financial Position date Net Asset Value (NAV) Per Share 38. Net Operating Cash Flow Per Share (NOCFPS) Net Cash Generated from Operating Activities Number of Ordinary Shares at Financial Position date Net Operating Cash Flow Per Share (NOCFPS) June 30, 2019 June 30, 2018 47,792,895,230 42,165,015,439 (18,192,051,990) (15,060,625,508) 29,600,843,240 27,104,389,931 405,556,445 405,556,445 72.99 66.83 July 2018- June 2019 July 2017- June 2018 2,726,457,706 1,848,067,034 405,556,445 405,556,445 6.72 4.56 39. Reconciliation of Net Profit with Cash Flows from Operating Activities Profit after Tax 3,023,500,974 2,558,971,263 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 Foreign Currency Bank Loan Deferred tax Non-operating items: Dividend Income Profit on sale of Fixed Assets Effect of exchange rate changes on Cash and Cash Equivalents 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 1,445,651,201 756,961,575 44,193,000 524,438,524 - 25,559,859 94,498,243 (3,051,665) (1,491,901) (1,344,146) (215,618) 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 - (1,739,642,804) (1,682,865,561) (908,099,710) (60,560,046) (588,946,450) (206,199,860) 97,551,009 192,730,467 (266,118,214) (1,197,360,400) (18,678,378) (569,604,280) (369,161,543) 401,374,456 58,072,810 12,491,774 Net cash Generated from Operating Activities 2,726,457,706 1,848,067,034 Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 133 40. Related Party Disclosures Following transactions were carried out with related parties in the normal course of business on arms length basis: Name of Related Parties (a) I & I Services Ltd. (b) Bangladesh Export Import Co. Ltd (C) Nuvista Pharma Ltd Nature of Transactions Value of Transaction Balance at year end Local Delivery Distribution Commission Short Term Investment & Interest there on Toll Expense Cost of Service Transfer/Purchase of Material Transfer/sales of Material and Assets Distribution Commission Income 22,217,416,177 260,673,378 16,032,638 9,093,735 36,914,574 19,432,198 48,328,432 91,886,707 2,335,457,132 323,364,536 1,767,727 10,628,065 1,493,892 217,748 8,165,323 41. Particulars of Disposal of Property, Plant and Equipment The following assets were disposed off during the year ended June 30, 2019: Particulars of Assets Cost Accumulated Depreciation Written Down Value Sales Price Profit / (Loss) Mode of Disposal Name of Parties Plant & Machinery 21,845,168 8,555,677 13,289,491 11,469,470 (1,820,021) Negotiation Transport & Vehicle 16,485,538 13,851,547 2,633,991 5,798,158 3,164,167 Negotiation Various Individuals Various Individuals Tk. 38,330,706 22,407,224 15,923,482 17,267,628 1,344,146 42. 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 295,078,120 21,193,747 12,661,258 32,476,179 5,971,918 8,085,290 375,466,512 (b) The above includes salary, allowances, and perquisites amounting Tk. 41,367,100 paid to the Managing Director. (c) This also includes Tk. 838,950 paid to Directors including indipendednt Directors for attending Board and Audit Committee meetings. (d) Excepting as stated above (c) no board meeting fee was paid to any directors. (e) No amount of money was expended by the company for compensating any member of the board for special services rendered. 134 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone 43. Production Capacity and Utilization Item Unit Tablet, Capsule, Suppository & DPI Liquid, Cream and Ointment, Suspension, IV Fluid, Amino Acid, Ophthalmic, Nebulizer Solution, Injectable, Inhaler and Insulin Million Pcs Million Pcs Production Capacity Actual Production Capacity Utilization July 18 to June 19 July 17 to June 18 July 18 to June 19 July 17 to June 18 July 18 to June 19 July 17 to June 18 5,560.19 4,349.64 6,125.42 4,741.32 110.17% 109.00% 98.99 94.49 117.28 97.83 118.48% 103.53% Production does not include goods manufactured under contract manufacturing arrangement from third party manufacturing sites. 44. Capital Expenditure Commitment There was no capital expenditure contracted but not incurred or provided for at June 30, 2019. 45. Finance Lease Commitment At June 30, 2019, the company had annual commitment under finance leases as set out below : Leases expiring within 1 year Leases expiring within 2-5 years (inclusive) 164,157,902 239,710,340 403,868,242 46. Claim not Acknowledged as Debt There was no claim against the company not acknowledged as debt as on June 30,2019. 47. 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, 2019. 48. Payments Made in Foreign Currency : Import of Machinery, Equipment’s & Spares Import of Material Regulatory Fees, Foreign Currency Loan repayment & Other Expenses 49. Foreign Exchange Earned / Received : (a) Collection from Export Sales (b) Royalty Income Foreign Currency (Equivalent US$) Taka 17,235,944 1,456,665,927 70,060,442 5,894,863,149 17,202,059 1,453,573,983 Foreign Currency (Equivalent US$) Taka 27,826,915 2,318,045,449 1,148,515 95,941,689 Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 135 50. Commission / Brokerage to selling agent : No commission was incurred or paid to any sales agent nor any brokerage or discount other than conventional trade discount was incurred or paid against sales. 51. 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 these claims. There is also a disputed VAT claim aggregating Tk. 144,113,691 against the company. The Company own the verdict of the Appellate Tribunal in its favor. 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. 52. Events after The Reporting Period (a) The directors recommended 15% cash dividend (i.e. Tk. 1.50 per share) for the year 2018-19. The dividend proposal is subject to shareholders’ approval at the forthcoming Annual General Meeting. (b) The Company repaid Tk. 1,537,026,214 of the Time Loan of AB Bank Limited as reported in note 20. c) Board of Directors of Nuvista Pharma Limited has declared dividend @ 20%,( i.e. Tk. 2.00 per share) for the financial year ended on June 30, 2019. The proposed dividend are subject to approval of the shareholders of NPL in the Annual General meeting scheduled on November 28, 2019. 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. 53. 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 53.01 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, 2019 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. 53.02 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. 136 | Annual Report 2018-19 | Financial Statements-Beximco Pharma Stand-alone 53.03 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. Currency risk The company is exposed to currency risk on export revenues and import of raw material, machineries and equipment. Majority of the company’s foreign currency transactions are denominated in USD. Additionally the Company has foreign currency loan which shall be repaid in foreign currency. However, The Company maintains an Export Retention Quota (ERQ) account in USD where 50% of the export earnings are deposited. This partly contributes to minimize the currency risk associated with payments in foreign currency. Interest rate risk Interest rate risk is the risk that arises due to changes in interest rates on borrowing. An increase in interest rates will result in higher borrowing costs and impact the Company’s profitability. The Company continuously monitors and negotiates viable deals to minimize the interest rate risk. Further, the company tries to remain at a lower level of gearing to minimize the impact of financing costs. With its strong ability to generate cash flows from operating activities, the company tries to pay off its debts on due time to minimize the impact of an increase in interest rates. The company has arrangement with banks to transfer the sales proceeds into its overdraft account on a real time basis through RTGS system to minimize borrowing cost. The foreign currency loan is subject to floating rates of interest. 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 Nazmul Hassan Managing Director Mohammad Ali Nawaz Chief Financial Officer Dhaka October 28, 2019 Financial Statements-Beximco Pharma Stand-alone | Annual Report 2018-19 | 137 Nuvista Pharma Limited NUVISTA PHARMA LIMITED DIRECTORS’ REPORT TO THE SHAREHOLDERS On behalf of the Board of Directors of Nuvista Pharma Limited, I am pleased to present the Directors’ Report and the Audited Financial Statements for the year ended 30 June, 2019 together with the Auditors’ Report thereon. 1. Operating Performance I am happy to inform that we completed a good year with impressive achievement. Our sales increased by a significant 26.5% to reach at Tk. 1,669.4 million as against Tk. 1,319.9 million of previous year. After takeover, we redesigned our sales and marketing strategies, restructured the sales team, extended the distribution network and enriched the product portfolio which helped accomplish the sales growth. During the year under review, we added 8 new products which contributed Tk. 77.3 million in sales. All of our key therapeutic segments registered double digit growth. Along with sales, we attained considerable growth in profit. The Company earned an after-tax net profit of Tk. 89.6 million in 2018-2019 as against a loss of Tk. 94.7 million in 2017-18. The net operating cash flow per share stands at Tk. 19.8 as compared to Tk. 14. 3 of last year. The net assets value per share has also increased to Tk. 46.1 in 2018-2019 from Tk. 38.5 in 2017-2018. 2. Board of Directors The following persons are currently the member of the Board of Directors of the Company: Mr. Nazmul Hassan : Chairman and Director Begum Parag : Nominee Director, Government of Bangladesh Mr. S. M. Rabbur Reza : Managing Director Mr. Mohammad Ali Nawaz : Director Mr. Shah Monjurul Hoque : Independent Director 3. Profit and it’s Appropriation Net Profit/(loss) before tax Provision for tax Net Profit/(loss) after tax Unappropriated profit from previous year Payment of dividend Profit available for appropriation Recommended for appropriation: Proposed dividend Retained Earnings after proposed dividend Year ended 30 June, 2019 108,379,564 (18,798,639) 89,580,925 133,936,896 (868,344) 222,649,477 (23,500,320) 199,149,157 Taka Year ended 30 June, 2018 (58,521,975) (36,207,899) (94,729,874) 229,846,786 (1,180,016) 133,936,896 (868,344) 133,068,552 Nuvista Pharma Limited | Annual Report 2018-19 | 139 4. Dividend The Board of Directors recommends 20% cash dividend i.e. Tk. 2.00 per share for the year ended 30 June 2019 to the Shareholders, subject to the approval of the Shareholders in the AGM of the Company. 5. Retirement and Re-Election of Director The Board appointed Mr. Mohammad Ali Nawaz as Director of the Company in its meeting held on February 8, 2018 and this was subsequently approved by the shareholders in the 44th. AGM held on 25 November, 2018. As per Article 125 and 126 of the Articles of Association of the Company Mr. Mohammad Ali Nawaz retires by rotation and being eligible, offer himself for re-election and is placed for approval by the shareholders in the AGM. 6. Auditors The existing Auditors M/s. A. Qasem & Co., Chartered Accountants, who were appointed as Auditors of the Company in the 44th. AGM of the Company have carried out the audit for the year ended 30 June, 2019. M/s. A. Qasem & Co., Chartered Accountants, the Auditors of the Company retires at this meeting and have expressed their willingness to continue in office for the year ended on 30 June, 2020, subject to the approval of the Shareholders in the 45th. AGM of the Company. The Board recommends for reappointment of M/s. A. Qasem & Co., Chartered Accountants as Auditors of the Company for the year ended on 30 June, 2020. On behalf of the Board, Nazmul Hassan MP Chairman 22 October, 2019 140 | Annual Report 2018-19 | Nuvista Pharma Limited Financial Statements - Nuvista Pharma Limited Nuvista Pharma Limited Auditor’s Report and Financial Statements As at and for the year ended 30 June 2019 Independent auditor’s report To the shareholders of Nuvista Pharma Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Nuvista Pharma Limited (the Company), which comprise the statement of financial position as at 30 June 2019, 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 notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 30 June 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), the Companies Act 1994 and other applicable laws and regulations. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirement that are relevant to our audit of the financial statements in Bangladesh, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs, 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. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 Company’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. 142 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited • • • • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994, we also report the following: (a) we have obtained all the information and explanation 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; and (c) the statement 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. Dhaka, 22 October 2019 A. Qasem & Co. Chartered Accountants Partner: Mohammad Motaleb Hossain Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 143 • Nuvista Pharma Limited Statement of financial position As at 30 June 2019 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 LIABILITIES 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 2019 Taka 30 June 2018 Taka 4 5 6 7 6 8 9 10 11 12 13 14 15 16 17 14 18 19 20 21 1,212,496,913 8,180,190 6,321,316 1,226,998,419 33,145,875 3,317,051 35,681,115 361,268,453 31,341,064 28,152,726 492,906,284 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 1,719,904,703 1,799,698,996 117,501,600 423,587,141 541,088,741 7,664,875 43,210,417 106,585,224 144,852,403 302,312,919 1,608,361 699,284,556 53,587,152 99,996,369 22,026,605 876,503,043 1,178,815,962 1,719,904,703 117,501,600 334,874,560 452,376,160 - 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 Footnotes: 1. Auditors’ Report - page 1 2. The annexed notes 1 to 35 form an integral part of these financial statements. Chairman Managing Director Director Dhaka, 22 October 2019 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 2019 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 30 June 2019 30 June 2018 Notes Taka Taka 22 23 24 25 26 27 8 17 1,669,392,491 (833,024,115) 836,368,376 (88,443,477) (543,485,224) 204,439,675 1,046,563 (91,687,696) 113,798,542 (5,418,978) 108,379,564 (11,394,946) (7,403,693) (18,798,639) 89,580,925 - 1,319,875,856 (666,021,602) 653,854,254 (120,728,065) (496,322,557) 36,803,632 (2,543,380) (92,782,227) (58,521,975) - (58,521,975) (7,919,255) (28,288,644) (36,207,899) (94,729,874) - Total comprehensive income/(loss) for the year 89,580,925 (94,729,874) Earnings Per Share (EPS) Footnotes: 1. Auditors’ Report - page 1 2. The annexed notes 1 to 35 form an integral part of these financial statements. 7.62 -8.06 Chairman Managing Director Director Dhaka, 22 October 2019 As per our report of same date A. Qasem & Co. Chartered Accountants Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 145 Nuvista Pharma Limited Statement of changes in equity For the year ended 30 June 2019 Particulars Reserves and surplus Share capital General reserve Share premium Pre- incorporation profit Revaluation reserve Retained earnings Total reserves and surplus Total Taka Taka Taka Taka Taka Taka Taka Taka Balance as at 1 July 2017 117,501,600 7,511,991 30,844,170 243,737 162,337,766 229,846,786 430,784,450 548,286,050 Dividend paid Loss after tax for the year ended 30 June 2018 - - - - - (94,729,874) (94,729,874) (94,729,874) (1,180,016) (1,180,016) (1,180,016) Balance as at 30 June 2018 117,501,600 7,511,991 30,844,170 243,737 162,337,766 133,936,896 334,874,560 452,376,160 Number of shares Net assets value per share 11,750,160 38.50 Balance as at 1 July 2018 117,501,600 7,511,991 30,844,170 243,737 162,337,766 133,936,896 334,874,560 452,376,160 Dividend paid Profit after tax for the year ended 30 June 2019 - - - - - 89,580,925 89,580,925 89,580,925 (868,344) (868,344) (868,344) Balance as at 30 June 2019 117,501,600 7,511,991 30,844,170 243,737 162,337,766 222,649,477 423,587,141 541,088,741 Number of shares Net assets value per share 11,750,160 46.05 Chairman Managing Director Dhaka, 22 October 2019 Director As per our report of same date A. Qasem & Co. Chartered Accountants 146 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited Nuvista Pharma Limited Statement of cash flows For the year ended 30 June 2019 A. Cash flows from operating activities Cash receipts from customers and others Cash paid to suppliers and employees Cash generated from operation Interest paid Income tax paid Net cash generated from operating activities 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 C. Cash flows from financing activities Long term bank borrowings Short term bank borrowings Lease finance Dividend paid Net cash (used in)/from financing activities D. Net increase/(decrease) in cash and cash equivalents (A+B+C) E. Opening cash and cash equivalents F. Closing cash and cash equivalents (D+E) Net operating cash flow per share Number of shares 30 June 2019 30 June 2018 Taka Taka 1,664,930,509 (1,322,665,115) 342,265,394 (94,334,168) (14,507,553) 233,423,673 (59,226,082) 272,997 (58,953,085) (124,736,123) (54,614,023) 9,273,236 (868,344) (170,945,254) 3,525,334 24,627,392 28,152,726 19.87 11,750,160 1,704,326,525 (1,421,067,187) 283,259,338 (95,952,969) (18,954,575) 168,351,794 (55,549,997) 13,077,500 (42,472,497) (34,264,154) (52,076,010) (39,863,419) (1,180,016) (127,383,599) (1,504,302) 26,131,694 24,627,392 14.33 11,750,160 Chairman Managing Director Director Dhaka, 22 October 2019 As per our report of same date A. Qasem & Co. Chartered Accountants Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 147 Nuvista Pharma Limited Notes to the financial statements As at and for the year ended 30 June 2019 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 AIM of 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 1.3 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. 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 International Financial Reporting Standards (IFRSs), the Companies Act 1994 and other applicable laws and regulations. Initial application of new standards The company has initially applied IFRS 15 (see Note 3.13) and IFRS 9 (see Note 3.10) from 1 July 2018. These two new standards do not have a material effect on the company’s financial statements. Due to the transition methods chosen by the company in applying these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standards. 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. 148 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 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. 2.6 Statement of cash flows Statement of cash flows has been prepared in accordance with as per IAS 7: “Statement of cash flows” under direct method. 2.7 Reporting period These financial statements cover one year from 1 July 2018 to 30 June 2019. 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 IAS 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. Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 149 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% 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 IAS 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 ended 30 June 2019. 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. 150 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 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 2019. 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 include raw materials, raw materials in transit, work-in-process, finished goods and spare parts. These are valued at the lower of cost and net realisable value, with appropriate provisions for obsolete and slow-moving items. Cost is determined using the weighted average method and includes all expenses incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. 3.10 IFRS 9 Financial Instruments IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement. There was no material impact of adopting IFRS 9 on the company’s statement of financial position as at 30 June 2019 and its statement of profit or loss and OCI for the year ended 30 June 2019 and the statement of cash flows for the year then ended. Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 151 IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, FVOCI and FVTPL. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale. IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities. The adoption of IFRS 9 has not had a significant effect on the company’s accounting policies related to financial liabilities. 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 IFRS 15 Revenue from Contracts with Customers IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control–at a point in time or over time–requires judgement. The company has adopted IFRS 15 using the cumulative effect method (without practical expedients), with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 July 2018). Accordingly, the information presented for 2017-18 has not been restated–i.e. it is presented, as previously reported, under IAS 18 and related interpretations. Additionally, the disclosure requirements in IFRS 15 have not generally been applied to comparative information. There was no material impact of adopting IFRS 15 on the Company’s statement of financial position as at 30 June 2019 and its statement of profit or loss and OCI for the year ended 30 June 2019 and the statement of cash flows for the year then ended. 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. 152 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 3.16 Standards adopted but not yet effective-IFRS 16: Leases A new Standard IFRS 16: Leases, has been made effective for the reporting period beginning on or after 1 January 2019. The new standard has introduced a single on-balance sheet lease accounting model for leases and replaces the previously adopted IAS 17: Leases. The Company has been consistently recording its underlying assets acquired under lease arrangement as Assets and the corresponding obligation as Liabilities in the financial statements. Lease payments made are apportioned between the finance expenses and the reduction of outstanding lease liability which are in compliance with IFRS 16, excepting the classification of the leased assets as “Right-of-use assets” in the Statement of Financial Position. The Company has not early adopted IFRS 16 in preparing the financial statements and intends to do so when it becomes effective for the Company. This however, has no material impact on the reported financial statements. 3.17 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. 3.18 General Previous year’s figures have been rearranged/reclassified wherever considered necessary to conform to current year’s presentation. Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 153 4. Property, plant and equipment Particulars Leasehold land Factory building Factory warehouse Plant and machinery Motor vehicles Computer and IT equipment Equipment and electric fixtures and fittings Furniture fittings Total Taka Taka Taka Taka Taka Taka Taka Taka Taka Cost or valuation As at 1 July 2018 Addition/transfer during the year Adjustment/disposal 275,608,713 236,790,594 9,909,831 8,283,847 442,513,098 29,632,908 144,453,256 7,485,000 (5,661,407) 24,853,887 1,452,820 (102,600) 659,294,426 17,539,597 44,345,643 2,608,245 1,837,769,448 67,002,417 (5,764,007) As at 30 June 2019 275,608,713 236,790,594 18,193,678 472,146,006 146,276,849 26,204,107 676,834,023 46,953,888 1,899,007,858 Accumulated depreciation As at 1 July 2018 Charge during the year Adjustment/disposal As at 30 June 2019 Net book value - 42,386,558 5,907,364 3,079,154 379,225 148,312,713 23,005,008 82,617,876 23,456,021 (5,503,391) 16,409,818 4,268,679 (81,519) 277,905,936 40,311,902 21,991,496 2,064,105 592,703,551 99,392,304 (5,584,910) - 48,293,922 3,458,379 171,317,721 100,570,506 20,596,978 318,217,838 24,055,601 686,510,945 As at 30 June 2019 275,608,713 188,496,672 14,735,299 300,828,285 45,706,343 5,607,129 358,616,185 22,898,287 1,212,496,913 As at 30 June 2018 275,608,713 194,404,036 6,830,677 294,200,385 61,835,380 8,444,069 381,388,490 22,354,147 1,245,065,897 4.1 Depreciation charge has been allocated as under Conversion cost included in cost of goods sold (Note 23.3) General and administration expenses (Note 24) Selling and distribution expenses (Note 25) 4.2 Disclosure for revalued assets 30 June 2019 Taka 79,655,332 3,403,571 16,333,401 30 June 2018 Taka 80,838,538 6,735,673 18,316,805 99,392,304 105,891,016 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. 154 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 5. Capital work-in-progress Factory Warehouse Plant and machinery Motor vehicles Furniture Equipment & Electric fixture and fittings Computer and IT equipment Balance as at 30 June 6. Loan to employees As at 1 July 2018 Taka - Addition during the year Transfer to property, plant and equipment Taka Taka 8,283,847 8,283,847 12,877,107 16,755,801 29,632,908 - - 7,485,000 7,485,000 2,608,245 2,608,245 As at 30 June 2019 Taka - - - - 3,079,418 21,740,369 17,539,597 7,280,190 - 2,352,820 1,452,820 15,956,525 59,226,082 67,002,417 900,000 8,180,190 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 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 Balance as at 30 June 30 June 2019 30 June 2018 Taka Taka 8,920,525 717,842 9,638,367 (3,317,051) 6,321,316 1,478,223 - 5,413,179 23,005,354 3,082,344 166,775 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 33,145,875 42,294,454 32,568,508 14,507,553 (11,394,946) 35,681,115 21,533,188 18,954,575 (7,919,255) 32,568,508 Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 155 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. Trade receivables is net off provision for bad debts Tk. 700,618 during 2018-2019. 11. Cash and cash equivalents Cash in hand Cash at banks Eastern Bank Limited The City Bank Limited Mutual Trust Bank Limited Dhaka Bank Limited BRAC Bank Limited IFIC Bank Limited Shimanto Bank Limited Janata Bank Limited National Bank Limited Balance as at 30 June 156 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 30 June 2019 30 June 2018 Taka Taka 99,377,976 35,395,067 120,721,981 17,482,090 25,507,548 51,997,845 119,998,485 57,553,706 143,365,346 23,977,793 31,820,560 16,682,330 350,482,507 393,398,220 9,577,874 321,244 103,737 783,091 10,785,946 7,666,099 330,437 518,687 614,603 9,129,826 361,268,453 402,528,046 4,619,964 26,721,100 31,341,064 6,284,139 20,594,943 26,879,082 81,352 243,281 36,869 111,519 30,395 32,983 63,766 20,445,497 23,850 6,697,164 629,331 28,071,374 28,152,726 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 12. Share capital Authorised 50,000,000 Ordinary shares of Tk. 10 each Issued, subscribed and paid-up 30 June 2019 30 June 2018 Taka Taka 500,000,000 500,000,000 11,579,160 Ordinary shares of Tk. 10 each issued for cash 115,791,600 115,791,600 171,000 Ordinary shares of Tk. 10 each issued for consideration other than cash 1,710,000 1,710,000 11,750,160 117,501,600 117,501,600 Shareholding position Nominal Value(Taka) Percentage of holding (%) 30 June 2019 30 June 2018 30 June 2019 30 June 2018 Beximco Pharmaceuticals Limited Government of Bangladesh Other shareholders (2019:28; 2018:28) 100,134,740 15,186,000 2,180,860 100,134,740 15,186,000 2,180,860 117,501,600 117,501,600 85.22 12.92 1.86 100 85.22 12.92 1.86 100 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 7,511,991 30,844,170 243,737 7,511,991 30,844,170 243,737 162,337,766 162,337,766 222,649,477 133,936,896 423,587,141 334,874,560 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. Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 157 14 Lease obligation Obligation under finance lease has been recognised as liability 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. The total of minimum lease payments at the statement of financial position date and their present value, for each of the following periods are as follows: Minimum lease obligations Present value 30 June 2019 30 June 2018 Taka Taka Taka 2,634,716 1,608,361 9,475,435 7,664,875 12,110,151 9,273,236 - - - 171,018,192 283,116,730 171,018,192 283,116,730 (127,807,775) (115,170,190) 43,210,417 167,946,540 Not later than one year Later than one year and not later than five years 15. Long term bank borrowings Dhaka Bank Limited (Note 15.1) Total long term bank borrowings Less: Current portion (Note 18) Balance as at 30 June 15.1 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. 15.2 Collateral All loans are secured by a registered mortgage on specific factory land and buildings of the company. 15.3 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 issued by Beximco Pharmaceuticals Limited. 158 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 16. 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 17. Deferred tax liabilities Deferred tax liabilities arrived at as follows: Year: 2018-2019 Property, plant and equipment Provision for gratuity (net of payment) Temporary difference Applicable tax rate for items recognised in statement of comprehensive income Applicable tax rate for items recognised in equity Deferred tax Liabilities(a): Deferred tax liabilities on revaluation surplus Net deferred tax liabilities 30 June 2019 30 June 2018 Taka Taka 99,704,228 21,818,144 148,114,957 13,093,910 121,522,372 161,208,867 (14,937,148) (61,504,639) 106,585,224 99,704,228 Carrying amount on statement of financial position date Tax base Taka Taka Taxable/ (deductible) temporary difference Taka 936,888,200 498,289,941 438,598,259 (106,585,224) (106,585,224) 332,013,035 35% 15% (116,204,562) (28,647,841) (144,852,403) Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 159 Year: 2017-2018 Property, plant and equipment Provision for gratuity (net of payment) Temporary difference 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 Carrying amount on statement of financial position date Tax base Taka Taka Taxable/ (deductible) temporary difference Taka 969,457,185 558,893,333 410,563,852 (99,704,228) (99,704,228) 310,859,624 35% 15% (108,800,869) (28,647,841) (137,448,710) Deferred tax recognised in the statement of profit or loss and other comprehensive income in 2018- 19 (a-b) (7,403,693) Deferred tax recognised in the statement of profit or loss and other comprehensive income in 2017-18 (28,288,644) 18. Short term bank borrowings Bank overdrafts Dhaka Bank Limited (Limit Tk. 180,000,000) Short term bank loans The City Bank Limited Mutual Trust Bank Limited Dhaka Bank Limited Current portion of long term loan (Note 15) 30 June 2019 30 June 2018 Taka Taka 86,077,696 86,077,696 161,151,048 161,151,048 - - 2,507,475 18,839,012 485,399,085 456,230,854 485,399,085 477,577,341 127,807,775 115,170,190 699,284,556 753,898,579 Collateral and security given against short-term finance are a part of overall financing arrangement with Dhaka Bank Limited as indicated in note 15. The interest rate is 11.5% -12.5% per annum and is payable on quarterly rests. 160 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 19. Trade payables Trade payables This represents amount due against purchase of raw, chemical and packing materials. 20. Liabilities for expenses Promotional expenses, literature, etc. Leave encashment Audit fees Legal and professional fees Utilities Local travelling Accrued interest Accrued expenses 21. 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 22. Revenue Net sales revenue Toll income Quantitative details of sales Locally manufactured products 30 June 2019 30 June 2018 Taka Taka 53,587,152 53,587,152 54,488,508 54,488,508 61,186,648 4,614,229 482,500 100,000 4,161,182 6,342,383 2,396,834 20,712,593 99,996,369 858,729 2,109,941 5,418,978 2,420 809,848 1,025,940 3,028,774 374,270 - 8,165,323 232,382 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 22,026,605 32,976,257 1,647,243,552 1,300,442,853 22,148,939 19,433,003 1,669,392,491 1,319,875,856 Unit Tabs Caps Quantity Quantity 248,639,734 187,208,876 26,627,792 25,989,669 Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 161 Amps & Suspensions 12,636,917 10,149,157 23. Cost of goods sold Opening stock of finished goods Cost of production (Note 23.1) Cost of goods available for sale Cost of physician sample Closing stock of finished goods 23.1 Cost of production Opening stock of semi-finished and WIP Materials consumed (Note 23.2) Conversion cost (Note 23.3) Closing stock of semi-finished and WIP 23.2 Materials Consumed Opening stock Purchase Closing stock Item wise quantity and value of finished goods stock are as follows : Stock as July 1, 2018 Tabs Caps Amps & Suspensions Stock as June 30, 2019 Tabs Caps Amps & Suspensions Unit pcs. pcs. pcs. Unit pcs. pcs. pcs. 162 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 30 June 2019 30 June 2018 Taka Taka 119,998,485 68,228,503 818,843,227 724,888,476 938,841,712 793,116,979 (6,439,621) (7,096,892) (99,377,976) (119,998,485) 833,024,115 666,021,602 57,553,706 88,832,381 384,286,478 314,317,244 412,398,110 379,292,557 854,238,294 782,442,182 (35,395,067) (57,553,706) 818,843,227 724,888,476 199,163,699 146,325,774 348,834,398 367,155,169 (163,711,619) (199,163,699) 384,286,478 314,317,244 Quantity Value (Tk.) 45,743,691 9,778,283 1,430,023 68,178,896 21,313,752 30,505,837 119,998,485 Quantity Value (Tk.) 36,149,741 6,497,142 1,473,298 57,990,530 16,240,513 25,146,933 23.3 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) 24. General and administration expenses Salaries and allowances Directors’ fees (Note 29) 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 99,377,976 30 June 2019 30 June 2018 Taka Taka 149,373,933 134,687,674 1,849,408 40,328,051 23,074,599 1,372,706 7,582,176 2,323,671 26,067,334 2,115,683 2,373,469 39,384,600 25,103,533 - 3,096,144 1,745,844 1,115,859 513,977 2,858,401 596,521 1,866,869 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 79,655,332 80,838,538 412,398,110 379,292,557 49,263,810 73,890,013 270,000 977,634 10,597,350 2,574,754 1,036,923 577,485 3,059,651 1,751,474 643,358 - 966,473 1,093,223 2,834,023 1,956,937 390,000 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 Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 163 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) 25. Selling and distribution expenses Salaries and allowances Contribution to provident fund Overseas travelling expenses Local travelling expenses Entertainment Samples Promotional expenses Royalty expenses Literature, pad and handouts Distribution commission 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 Meeting and seminars Bad debts General expenses Depreciation (Note 4.1) 164 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited 2,748,550 2,514,497 30 June 2019 30 June 2018 Taka 1,294,203 111,076 420,402 350,000 177,993 1,630,000 - 704,587 3,403,571 Taka 1,476,192 1,494,167 718,178 325,000 1,281,370 1,550,160 863,299 981,882 6,735,673 88,443,477 120,728,065 234,702,614 207,039,026 4,469,662 6,957,103 3,702,016 6,612,503 56,824,671 52,279,018 732,893 9,200,807 55,209,322 8,838,005 18,986,879 91,886,707 5,261,453 2,109,274 3,731,217 9,926,979 1,071,518 1,008,359 1,372,228 2,421,456 460,000 1,025,056 1,436,267 4,413,633 3,230,123 700,618 1,174,979 16,333,401 493,441 8,096,951 50,331,929 - 16,817,775 92,122,035 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 - 1,580,550 18,316,805 26. Non-operating income/(expenses) Gain/(loss) on disposal of property, plant and equipment Rental Income Sale of miscellaneous items 27. Interest expenses Interest on Long term loan Short term finance Finance lease Bank charges 28. Capacity utilisation Amps & Suspensions Tablet Capsule 29. Remuneration and fees to directors Remuneration (included in salaries and allowances) Fees (Note 24) 30. Auditors’ remuneration Statutory audit fees Special audit fees P.F. audit fees WPPF audit fees 543,485,224 496,322,557 30 June 2019 30 June 2018 Taka 93,900 649,800 302,863 Taka (2,656,845) - 113,465 1,046,563 (2,543,380) 27,718,969 62,379,912 466,666 1,122,149 32,695,455 55,468,898 4,617,874 - 91,687,696 92,782,227 Installed capacity Actual production Actual Utilisation Unit Unit 19,822,400 10,062,496 1,322,390,400 248,984,203 56,044,880 22,576,447 % 51% 19% 40% 30 June 2019 30 June 2018 Taka - 270,000 270,000 350,000 - 35,000 35,000 420,000 Taka 35,628,152 390,000 36,018,152 325,000 243,750 35,000 35,000 638,750 Financial Statements - Nuvista Pharma Limited | Annual Report 2018-19 | 165 31. 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 Nature of transactions Value of transaction Balance at year end Toll income Cost of services Transfer/ sales of Materials Transfer/ purchases of Materials and assets 9,093,735 36,914,574 19,432,198 1,767,727 10,628,065 1,493,892 48,328,432 217,748 Distribution commission 91,886,707 8,165,323 Beximco Pharmaceuticals Limited Immediate and ulti- mate parent 32. Payments made in foreign currency Particulars 30 June 2019 30 June 2018 Foreign currency (Equivalent USD) Taka Taka Import of raw, chemicals and packing materials 3,021,018 256,786,558 223,457,810 Import of machinery and spare parts 389,544 33,111,263 13,619,571 289,897,821 237,077,381 33. Contingent liabilities 33.1 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. 33.2 There is additional contingent liabilities in respect of outstanding letters of credit of Tk. 23,451,928 (June 2018: Tk. 20,778,877). 34. 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 1,007 (June 2018: 954). 35. Events after reporting date The Board in its meeting dated 22 October 2019 recommended that cash dividend of 20% i.e. Tk. 2.00 per share, totalling Tk. 23,500,320 be paid for the year 2018-2019. The dividend proposal is subject to shareholders’ approval at the forthcoming annual general meeting. Chairman Managing Director Director 166 | Annual Report 2018-19 | Financial Statements - Nuvista Pharma Limited Financial Statements-Beximco Pharma API Limited Beximco Pharma API Limited Audited Financial Statements For the Year Ended June 30, 2019 Independent Auditors’ Report To the Shareholders of Beximco Pharma API Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Beximco Pharma API Limited, which comprise the statement of financial position as at 30 June 2019, 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 notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at June 30 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), the Companies Act 1994 and other applicable laws and regulations. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance 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), the Companies Act 1994, 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. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decision of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional Skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidences that is sufficient and appropriate to provide a basis for audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidences obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt 168 | Annual Report 2018-19 | Financial Statements-Beximco Pharma API Limited • • • • on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidences obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the business activities of the company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994 and other applicable laws and regulations, we also report that: (a) We have obtained all the information and explanation 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; and (c) The statement of financial (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. Dhaka Date: August 11, 2019 M.J. Abedin & Co. Chartered Accountants Financial Statements-Beximco Pharma API Limited | Annual Report 2018-19 | 169 • • Beximco Pharma API Limited Statement of Financial Position As at June 30, 2019 ASSETS Notes June 30, 2019 June 30, 2018 Amount in Taka Non-current assets Advance against purchase of Land Current assets Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders’ equity Issued Share Capital Retained Earnings Current liabilities Accounts Payable Audit Fees Payable 4 5 20,000,000 20,000,000 - - 35,525 35,525 20,049,365 20,049,365 20,035,525 20,049,365 18,862,199 20,000,000 (1,137,801) 1,173,326 1,133,326 40,000 18,909,192 20,000,000 (1,090,808) 1,140,173 1,120,173 20,000 TOTAL EQUITY AND LIABILITIES 20,035,525 20,049,365 The notes are an integral part of the financial statements. S.M. Rabbur Reza Managing Director Dhaka Date: August 11, 2019 Mohammad Ali Nawaz Director Per our report of even date M.J. Abedin & Co. Chartered Accountants 170 | Annual Report 2018-19 | Financial Statements-Beximco Pharma API Limited Beximco Pharma API Limited Statement of Profit or Loss and Other Comprehensive Income For the year ended June 30, 2019 Revenue Cost of Revenue Gross Operating Profi t/(Loss) Administrative Expenses Profit/(Loss) from Operations Income Tax Expense Net Profit/(Loss) after Tax Other Comprehensive Income Notes 2018-2019 2017-2018 Amount in Taka 6 - - - - - - (46,993) (46,993) - (1,090,808) (1,090,808) - (46,993) (1,090,808) - - Total Comprehensive Income/(Loss) for the year (46,993) (1,090,808) The notes are an integral part of the financial statements. The notes are an integral part of the financial statements. S.M. Rabbur Reza Managing Director Dhaka Date: August 11, 2019 Mohammad Ali Nawaz Director Per our report of even date M.J. Abedin & Co. Chartered Accountants Financial Statements-Beximco Pharma API Limited | Annual Report 2018-19 | 171 Beximco Pharma API Limited Statement of Changes in Equity For the year ended June 30, 2019 Particulars Balance as on July 01,2018 Net Loss for the year Balance as on June 30, 2019 Number of Shares Net Assets value per shares For the Period ended June 30,2018 Particulars Paid-up Share Capital Net Loss for the period Balance as on June 30, 2018 Number of Shares Net Assets value per shares The notes are an integral part of the financial statements. Amount in Taka Share Capital Retained Earnings Total 20,000,000 (1,090,808) 18,909,192 - (46,993) (46,993) 20,000,000 (1,137,801) 18,862,199 2,000,000 9.43 Amount in Taka Share Capital Retained Earnings Total 20,000,000 - 20,000,000 - (1,090,808) (1,090,808) 20,000,000 (1,090,808) 18,909,192 2,000,000 9.45 S.M. Rabbur Reza Managing Director Dhaka Date: August 11, 2019 172 | Annual Report 2018-19 | Financial Statements-Beximco Pharma API Limited Mohammad Ali Nawaz Director Per our report of even date M.J. Abedin & Co. Chartered Accountants Beximco Pharma API Limited Statement of Cash Flows For the year ended June 30, 2019 Cash Flows from Operating Activities: Payments for expenses & others Net Cash Used in Operating Activities Cash Flows from Investing Activities: Advance against purchase of Land Net Cash Used in Investing Activities Cash Flows from Financing Activities: Cash proceeds from issuing shares Net Cash Generated from Financing Activities Increase in Cash and Cash Equivalents Cash and Cash Equivalents at the beginning of the Year Amount in Taka 2018-2019 2017-2018 (13,840) (13,840) 49,365 49,365 (20,000,000) (20,000,000) - - - - (20,013,840) 20,049,365 20,000,000 20,000,000 20,049,365 - Cash and Cash Equivalents at the end of the Year 35,525 20,049,365 The notes are an integral part of the financial statements. S.M. Rabbur Reza Managing Director Dhaka Date: August 11, 2019 Mohammad Ali Nawaz Director Per our report of even date M.J. Abedin & Co. Chartered Accountants Financial Statements-Beximco Pharma API Limited | Annual Report 2018-19 | 173 Beximco Pharma API Limited Notes to the Financial Statements As at and for the year ended June 30, 2019 1. Reporting Entity 1.01 Statutory Background of the Company Beximco Pharma API Limited was incorporated in Bangladesh on December 12, 2017 as a Private Limited Company under the Companies Act, 1994. The Company is a fully-owned subsidiary of Beximco Pharmaceuticals Limited (BPL). 1.02 Nature of Business Activities The company intends to set up a facility at API Industrial Park to manufacture Active Pharmaceutical Ingredients (APIs) for domestic and International markets. However, the Company is still in the initial phase of establishment and has carried out no operational activities. 2. Basis of Preparation 2.01 Basis of Measurement The financial statements have been prepared under historical cost convention which does not take into consideration the effect of inflation. 2.02 Statement of Compliance The financial statements have been prepared in compliance with the requirements of the Companies Act, 1994 and International Financial Reporting Standards (IFRSs), and other relevant and applicable local laws and regulations. 2.03 Presentation of Financial Statements The financial statements comprise of: a) a Statement of Financial Position as at June 30, 2019; b) a Statement of Profit or Loss and other Comprehensive Income for the year ended June 30, 2019; c) a Statement of Changes in Shareholders’ Equity for the year ended June 30, 2019; d) a Statement of Cash Flows for the year ended June 30, 2019 and e) Notes, comprising summary of significant accounting policies and explanatory information. 2.04 Reporting Period Financial Statements of the company cover the period of 12 months from July 01, 2018 to June 30, 2019. 3. 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. 174 | Annual Report 2018-19 | Financial Statements-Beximco Pharma API Limited 4. Cash and Cash Equivalents This represents Cash at Bank with Current Account (IFIC Bank Limited, Dhanmondi Branch) 5. Issued Share Capital A. Authorized: Amount in Taka June 30, 2019 June 30, 2018 35,525 35,525 20,049,365 20,049,365 100,000,000 Ordinary Shares of taka 10 each 1,000,000,000 1,000,000,000 B. Issued and Paid-up: 1,000,000,000 1,000,000,000 2,000,000 Ordinary Shares of taka 10 each paid in cash 20,000,000 20,000,000 C. Composition of Shareholding of Ordinary Shares Beximco Pharmaceuticals Limited S.M. Rabbur Reza 6. Administrative Expenses Legal Expenses Audit Fees Bank Charges S.M. Rabbur Reza Managing Director Dhaka Date: August 11, 2019 20,000,000 20,000,000 No. of Shares % of Shares Capital 1,999,990 10 2,000,000 99.9995 0.0005 100 2018-2019 2017-2018 13,153 20,000 13,840 46,993 1,070,173 20,000 635 1,090,808 Mohammad Ali Nawaz Director Per our report of even date M.J. Abedin & Co. Chartered Accountants Financial Statements-Beximco Pharma API Limited | Annual Report 2018-19 | 175 Notice of Annual General Meeting BEXIMCO PHARMACEUTICALS LIMITED 17, Dhanmondi R/A, Road No. 2, Dhaka-1205 NOTICE OF THE FORTY-THIRD ANNUAL GENERAL MEETING Notice is hereby given that the 43rd Annual General Meeting of the Shareholders of Beximco Pharmaceuticals Limited will be held on Saturday, the 21st December, 2019 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, 2019 together with reports of the Auditors and the Directors thereon. 2. To declare 15% Cash Dividend. 3. To elect Directors. 4. To confirm the re-appointment of Managing Director. 5. To appoint Auditors for the year 2019-20 and to fix their remuneration. 6. To appoint Corporate Governance Compliance Auditor for the year 2019-20 and to fix remuneration. By order of the Board, Dated: November 18, 2019 (MOHAMMAD ASAD ULLAH, FCS) Executive Director & Company Secretary NOTES: (1) The Shareholders whose names will appear in the Share Register of the Company or in the Depository Register on the record date i.e. 25 November, 2019, 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. 176 | Annual Report 2018-19 | Notice of Annual General Meeting Annual General Meeting Information Date: Saturday, the 21st December, 2019 Time: 10.30 a.m. Venue: Beximco Industrial Park, Sarabo, Kashimpur, Gazipur AGM Location Map Beximco Industrial Park Sarabo, Kashimpur, Gazipur NOTES Proxy Form BEXIMCO PHARMACEUTICALS LIMITED 17, DHANMONDI R/A, ROAD NO. 2, DHAKA-1205, BANGLADESH I/We ………………………………………………………..of……………………………………………..………………………………… ………being a member of Beximco Pharmaceuticals Limited hereby appoint Mr./Ms./Miss……………………………………………………… ……………………...............of……………………………………………………………………………………………as my proxy to attend and vote for me on my behalf at the 43rd Annual General Meeting of the Company to be held on Saturday, the 21st December, 2019 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur and at any adjournment thereof. As witness my hand this……………………………..day of December, 2019. Signed by the said in presence………………………………………………………… Revenue Stamp Tk. 20.00 ………………………………….. ……………………………………………….............................. (Signature of Proxy) Signature of Shareholder(s) Dated: ……………………….. Register Folio / BOID No.: ………………………………………………….. …………………………..... (Signature of Witness) Dated: …………………………… Note: A member entitled to attend and vote at the Annual General Meeting may appoint a Proxy to attend and vote in his/her stead. The Proxy Form, duly stamped, must be deposited at the Registered Office of the Company not later than 48 hours before the time fixed for the meeting. Signature Verified ………………………………… Authorised Signatory BEXIMCO PHARMACEUTICALS LIMITED SHAREHOLDERS’ ATTENDANCE SLIP I hereby record my attendance at the 43rd Annual General Meeting being held on 21st December, 2019 at 10.30 a.m. at Beximco Industrial Park, Sarabo, Kashimpur, Gazipur. Name of Member/Proxy………………………………………………………………........................................................................................... BO ID/Register Folio No. ………………............holding of ……….....................................…...ordinary Shares of Beximco Pharmaceuticals Limited. ……………………………………………………. Signature(s) of Shareholder/Proxy N.B. Please present this slip at the reception desk. Children and non-members will not allowed at the AGM. www.beximcopharma.com Follow us Like us Watch BEXIMCO PHARMACEUTICALS LIMITED

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