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A.Qnsrm&Co.Charter€d Accountants Since 1953
RAK Ceramics (Bangladesh) Ltd.
Auditors' Report and Consolidated financial statements
As at and for the vear ended 31 December 2017
A member fim of Emst & Young Global Limited
EY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
A.QnsEM&Co.Chartered Accountants
IndePendent Auditors' RePort
to the Shareholders ofRAK Ceramics (Bangladesh) Ltd.
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of RAK Ceramics (Bangladesh) Ltd. which comprise the
consolidated statement of financial position as at 3 I December 2077 , and the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equrty and consolidated statement of cash flows for the yem then
ended, and a summary of significant accounting policies and other explanatory information
Management's Responsibili8 for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with Bangladesh Financial Reporting Standards (BFRS) and for such internal control as management determines is
necessary to enable the prcparation of financial statements that are free from material misstatement, whether due to fraud or
e1Tor.
Auditors' ResPonsibilitY
our responsibility is to express an opinion on these consolidated financial statements based on our audit We conducted our audit
in accordance with Bangladesh Standards on Auditing (BSA). Those standards requke that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatemenl.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements'
The procedures selected OeperrA on the auditors' judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or eror. In making those risk assessments, the auditor considers internal control
relevant to the entity,s preparation and fair presentation ofthe financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's intemal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made bv manasement, as well as eva'luat'ins the overallnresentationofthefinancia'l statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion'
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of RAK
Ceramics (Bangladesh) Ltd. as at 3l December 2017 andits financial performance and its cash flows for the year then ended in
accordance with Bangladesh Financial Reportine Standards (BFRS)'
Other matter
The financial statements oftwo subsidiaries ofRAK Ceramics (Bangladesh) Ltd. are audited by another auditor who expressed an
unmodified opinion on those financial statements on 28 January 2018'
Report on other legal and regulatory requirements
In accordance with the Companies Act 1994 and Securities and Exchange Rules 1987, we also report the following:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the
purpose of our audit and made due verification thereof; '
(b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our
examination of those books;
(c) the consolidated statement of financial position and the consolidated statement of profit or loss and other comprehensive
income dealt with by the report are in agreement with the books of accounts; and
Since 1953
Gulshan Pink CitySuites # 01-03, Level :7 , Plot # 15, Road # 103Gulshan Avenue, Dhaka - 1212, Bangladesh
Phone : 880-2-8881824-6Fax : 880-2-8881822E-mail : aqasem@aqcbd.com
(A. Qasem & Co.)Chartered Accountants
EY
(d) the expenditure incurred was for the purposes of the Company's busrness'
Dated,28 January 2018
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more ofthe independent member firms of Ernst & Young Global Limited
Building a betterworking world
A.Qesrm&Co.Charterad Accountants Since 1953
AssetsProperty, plant and equipmentInvestment property
Intangible assets
Capital work-in-progressTrade and other receivables
Total non-current assets
lnventories
Trade and other receivables
Loan to disposed subsidiaryAdvances, deposits and prepayments
Advance income tax
Cash and cash equivalents
Total current assets
Total assets
EquitvShare capitalShare premium
Retained earnings
Equity attributable to equity holders ofthe companyNon-controlling interests
Totrl equity
LiabilitiesBorrowings
Defened tax liability
Total non-current liabilities
Employees benefi ts payable
BorrowingsTrade and other payables
Accrued expenses
Provision for income taxTotal current liabilitiesTotal liabilitiesTotal equity ald liabilities
The accompanying notes are an integral part of these financial
RAK Ceramics (Bangladesh) Ltd.
Consolidated statement of frnancial positionas at 3l December 2017
Notes
4
5
6
7
10
3,394,940,284 3,s00,77s,2s870t,68t,877 504,343,755
5,429,027 6,740,15941,4t5,7t9 28,726,285
2016
Taka2017
Taka
t4 3,536,93t,4t0t,473 ,647 ,979t,445,455,970
6,4s6,03s,3s9
1,524
6,456,036,883
3,368,s06,1 10
1,473,647,9791,269,570,793
6,t11,724,8821,501
6,111,726,383
60r,200,t32t28,416,223
t715
359,163,292178.8 13.760
537,977,052 729,616,355
16 - 3,458,78317 548,162,038 566,254,99918 573,706,4t6 590,472,t14t9 447,661,843 269,520,037
20 3,227,80s,t10 2,886,541,5904,797,335,407 4,316,247,5235,335,312,459 5,045,963,979
__! | J 9 1,3 49; A_ ___!y s7,s9 0,261_
Company Secretary
As per our report of same date
(A Qasem & Co.)
Chartered Accountants
--_'{
' Managing flt$tor
Dated,28 January 2018
A member firm of Ernst & Youne Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited
- 74,025,0004,143,466,907 4,114,610,457
9 2,533,703,266 2,527,s07,042l0 590,423,877 618,841,5568 - 201,898,00011 309,772,083 406,247,968
t2 2,83t,624,003 2,485,84t,75913 t,382,359,206 802,643,479
7,647,882,435 7,042,979,804
11,791,349,342 11,157,590,261
RAK Ceramics @angladesh) Ltd.
Consolidated profit or loss and other comprehensive incomefor the year ended 31 December 2017
2017
Sales
Cost of sales
Gross profit
Other income
Administrative expenses
Marketing and selling expenses
Profit from operating activities
Finance income
Finance expenses
Net finance income
Profit before contribution to workers'profit participation and welfare fund
Contribution to workers'profit participation and welfare fund
Profit before income tax,/
Income tax expense /Current taxDeferred tax
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Profit attributable to:
Equity holders of the company
Non-controlling interests
Profit after tax for the year
Basic earnings per share (Par value TK 10)
The accompanying notes are an integral part of these financial
23
24
25
26
27
28
29
15
(346,te0,2r0)ll (302,7e8
537)ll (s2.60s.
(396,587,747) (355,403,678)
1,018,012,122 915,254,771
1,019,012,122 915,254,771
r,018,01 1,699
423
915,254,299
472
2.8833
1,018,012,122 915,254,771
2.59
Company Secretary
As per out report of same date
(A Qasem & Co.)Chartered AccountantsDated, 28 January 2018
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited
A.Qnsrttt&Co.Since 1953
2016Notes Taka Taka
2t 7,067,872,487 5,661,411,57822 (4,2st,220,093) (3,252,0s4,966)
2,816,652,394 2,409,356,612
12,392,92r ll 3,10e,360(378,r10,155)ll Gss,404,446)
944\ll 006.362^t3s(1,2ss,752,178) (1,0s8,6s7,22r)1,560,900,216 1,350,699,391
22,r6s,853 ll 21,029.885
10t.024.93 40.014"661
(78,8s9,083) (18,984,776)
1,482,041,133 1,331,714,615
(67,441,264) (61,056,166)
1,414,599,869 1,270,659,449
A.Qnsrm&Co.Chartered Accountants Since 1953
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A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
A.Qnsru&Co.Chartered Accountants Since 1953
RAK Ceramics (Bangladesh) Ltd.
Consolidated statement of cash flowsfor the year ended 31 December 2017
7,198,545,493 5,601,413,958(5,025,320,3s4) (4,235,590,594)
2,173,225,139 1,365,923,364
8,791,396 3,356,834(345,782,243) (266,034,e73)
1,836,234,292 L,103,145,225
(32e,063,241) (585,844,016)
- 707,15074,025,000 86,710,000
9,429,742 15,105,005
10,557,999 2,020,000
(6,92s,4s8) (12,401,s43)
200 250
Q41,975,758) (493,703,154\
(41,426,174) (42,s54,701)(267,565,020) 174,301,262
(35,815,064) (203,400,043)(66e,7 3 6,1 48_) (rri,,lzi,,x13)
(400) (500)(\014,542,806) (908,365,112)
579,715,727 Q99,923,041)802,643,479 1,101,566,520
1,392,359,206 802,643,479
A member firm of Ernst & Youne Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
2016
Taka2017
TakaCash flows from operating activities
Cash receipts from customers
Cash payments to suppliers and employees
Cash generated from operating activities
Interest received from bank deposit
Income tax paidNet cosh fow from operaring activities
Cash flows from investing activities
Acquisition of property, plant and equipmentSale ofproperty, plant and equipment
Disposal proceeds of associate
Interest received from FDRIncome from rentalIntangible assets
Dividend received
Net cash used in investing activities
Cash flows from financing activities
Finance charges
AvaiV(repal,rnent) of term loan
Avail/(repayment) of short-term loan
Dividend paidUnclaimed share application refirndAdjustment related with non-controlling interestNet cash ased inJinancing activitiesNet increase(decrease) in cash and cash equivalentsCash and cash equivalents as at 01 JanuaryCash and cash equivalents as at 31 December
l.
A.Qnsru&Co.Chartered Accountants Since 1953
RAK Ceramics (Bangladesh) Ltd.
"i::Tj; ll: fft;:l11Tl.,TT,T:[ff:T fi i;
Reporting entity
RAK Ceramics (Bangladesh) Limited (the Company), formerly RAK Ceramics @angladesh) Pvr. Limited,a UAE-Bangladesh jornt venture company, was incorporated in Bangladesh on 26 November 1998 as aprivate company limited by shares under the Companies Act 1994. The Company was latfl converted froma private limited into a public limited on 10 June 2008 after observance of required formalities as per laws.The name of the Company was thereafter changed to RAK Ceramics @angladesh) Ltd- as per certificateissued by the Registrar of Joint Stock Companies dated 1l February 2009. The address of the Company'sregistered office is RAK Tower, Plot # 1/A, Jasimuddin Avenue, Sector # 3, IJttwa, Dhaka 1230. Thecompany got listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) on 13 June2010.
Nature of business
The Company is engaged in manufacturing and marketing of ceramics tiles, bathroom sets and all types ofsanitary ware. It has started its commercial production on 12 November 2000. The commercial productionof its new sanitary ware plant, expansion unit of ceramics facilities, tiles and sanitary plant was started onl0January2004, I July2004,1 September2007, l April2015 and l7thMay2016respectively.
Description of subsidiaries
RAK Power Pvt. Ltd.
RAK Power Pvt. Ltd. has been incorporated in Bangladesh under the Companies Act l994on 30 June 2005as a private company limited by shares with an authorized capital of Taka 1,000,000,000 divided into10,000,000 ordinary shares ofTaka 100 each. The paid up capital stands at Taka 205,000,000 as at 31December 2017. The Company has gone into operation from I May 2009. The registered office of theCompany is at House # 5, Road # 1/A Sector # 4, IJttara, Dhaka- 1230. The Power Plant is located atVillage : Dhanu4 P.S: Sreepur, District: Gazipur. 57% shares of RAK Power Prt. Ltd. is held by RAKCeramics Ganeladesh) Limited.
The Board of Directors of RAK Ceramics @angladesh) Limited in its meeting held on July 26, 2075 havedecided to further increase the shareholding in RAK Power Prt. Ltd. from 57%o to 99 .99%o through purchaseof881,495 number ofordinary shares ofBDT 100 each in consideration ofBDT 255 per share totalling toBDT 224,781,225 only from all the other shareholders ofRAK Power Prt. Ltd. subject to approval by theshareholders and concemed authorities for the interest ofthe business ofthe Company. The shareholders ofRAK Ceramics (Bangladesh) Limited have approved the same in the EGM dated September 20, 2015.Theeffect of acquisition has been taken place as approved in Board of Directors meeting of RAK Power (Prt.)Ltd on 20 October 2015.
R{K Security and Services Pvt, Limited
RAK Security and Services P\4. Ltd. has been incorporated in Bangladesh under the Companies Act 1994on 2l December 2006 as a private company limited by shares with an authorized capital of Taka1,00,000,000 divided into 1,000,000 ordinary shares ofTaka 100 each. The paid up capital stands at Taka1,000,000 as at 31 December 2017. The Company has gone into operation from I May 2007. Tlne registeredoffice of the Company is at House # 5, Road # 1/A Sector # 4,IJttNa, Dhaka- 1230. 35% shares of RAKSecuriw and Services (P\,1.) Ltd is held by RAK Ceramics (Baneladesh) Limited.
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1.1
1.2
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2.1
A.Qasru&Co.Chartered Accountants Since 1953
The Board of Directors of RAK Ceramics (Bangladesh) Limited in its meeting held on July 26, 2015 havedecided to further increase the shareholding in RAK Security and Services (Pvt.) Ltd. from 35% to 99.00%o
through purchase of6,500 number ofordinary shares ofBDT 100 each in consideration ofBDT 2,875 pershare totalling to BDT 18,687,500 only from all the other shareholders of RAK Security and Services (Pr,t.)Ltd. subject to approval by the shareholders and concemed authorities for the interest ofthe business oftheCompany. The shmeholders of RAK Ceramics @angladesh) Limited have approved the same in the EGMdated September 20, 2015. The effect of acquisition has been taken place as approved in Board of Directorsmeeting of RAK Securitv and Services G!t.) Ltd on 20 October 2015.
Basis of preparation
Statement of compliance
These financial statements have been prepared in accordance with Bangladesh Financial ReportingStandards (BFRS$, the Companies Act 1994 and the Securities and Exchange Rules, I 987.
The title and format of these financial statements follow the requirements of BFRS which are to some extent
different from the requirement of the Companies Act 1994. However, such differences are not material and
in the view of management BFRS titles and format give better presentation to the shareholders.
Authorisation for issue
These financial statements have been authorised for issue by the Board of Directors of the Company on 28
January 2018.
Basis of measurement
These financial statements have been prepared on historical cost basis except for inventories which are
measured at lower ofcost and net realisable value.
f,'unctional and presentational currency
These furancial statements me presented in Bangladesh Taka (Taka/Tk/BDT), which is the functionalctrtrency and presentation currency of the Company. The figlres of financial statements have been rounded
offto the nearest Taka.
Use of estimates and judgements
The preparation of these financial statements in conformity with BFRSs requires management to makejudgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
me recognised in the year in which the estimates are revised and in any future years affected.
ln particulm, information about significant areas of estimation uncertainty and critical judgements inapplying accounting policies that have the most sigrificant effect on the amount recogrrised in the financialstatements are stated in the following notes:
Note 4 Property, plant and equipmentNote 5 lnvestment propertyNote l5 Delerred tax liabilityNote 16 Employees benefitpayableNote 20 Provision for income tax
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2.3
2.4
2.5
2.6
A.Qasru&Co.Chartered Accountants Since 1953
Rbporting period
The financial period of the Company covers one year from I January to 31 December and is followedconsistently.
Going concern
The Company has adequate resources to continue in operation for foreseeable future and hence, thefinancial statements have been prepared on going concem basis. As per management assessment there are
no material uncertainties related to events or conditions which may cast signif,rcant doubt upon theCompany's ability to continue as a going concem.
Signifi cant accounting policies
The accor.rnting policies set out below, which comply with BFRS, have been applied consistently to all yearspresented in these consolidated financial statements, and have been applied consistently by Group entities.
Basis of consolidation
These consolidated financial statements comprise the consolidated financial position and the consolidatedresults ofoperations ofthe Company and its subsidiaries (collectively referred to as "the Group") on a lineby line basis together with the Group's share in the net assets of its equity- accounted investees.
BFRS-l0 "Consolidated Financial Statements" infoduces a new control model that focuses on whether thegroup has power over an investee, exposure or rights to variable retums from its involvement with theinvestee and ability to use its power to affect those retums. An investor has power over an investee when theinvestor has existing rights that gives it the cunent ability to direct the relevant activities that significantlyaffect the investee's retums. Power mises from rights. An investor is exposed, or has rights, to vmiablereturns from its involvement with the investee when the investor's retums from its involvement have thepotential to vary as a result of the investee's performance. An investor controls an investee if the investornot only has the power over the investee and exposure or rights to vmiable retums from its involvement withthe investee, but also has the ability to use its power to affect the investor's return from its involvement withthe investee.
Subsidiaries
Subsidiaries are enterprises controlled by the Group. Control exists when the Group has the power to govemthe financial and operating policies of an entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that me presently exercisable are taken into account. The results of operationsand total assets and liabilities of subsidiary companies are included in the consolidated financial statementson a line-byJine basis and the interest of minority shareholders, if any, in the results and net assets ofsubsidiaries is stated separately. The financial statements of subsidiaries are included in the consolidatedfinancial statements ofthe Group from the date that control commences until the date that control ceases.
Any gains or losses on increase/decrease in non-controlling interest in subsidiaries without a change incontrol, is recognised as a component of equity.
Loss of control
Upon the loss of control, the Group derecogrises the assets and liabilities of the subsidiary, any non-controlling interest and other components of equity related to the subsidiary. Any surplus or deficit arisingon the loss of control is recognised in prof,rt or loss. If the Group retains any interest in the previoussubsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is
accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on thelevel of influence retained.
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3.1
A.Qesrttt&Co.Chartered Accountants Since 1953
Transactions eliminated on consolidation
Intra-goup balances and transactions, and any unrealised income and expenses arising from intra-grouptransactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising fromtransactions with equity-accounted investees are eliminated against the investrnent to the extent of theGroup's interest in the investee. Unrealised losses me eliminated in the same way as unrealised gains, butonly to the extent that there is no evidence of impairment.
3.2 Financialinstruments
A financial instrument is any confact that gives rise to a financial asset ofone entity and a flnancial liabilityor equity instrument of another entity-
3.2.1 Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are originated. All other financialassets are recognised initially on the trade date, which is the date that the Group becomes a party to the
conffactual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the
risks and rewards of ownership of the financial asset are transferred. Any interest in such fansferredfinancial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group classifies non-derivative financial assets into the following categories: financial assets at fairvalue through profit or loss, heldto-maturity financial assets, loans and receivables and available for-sale
financial assets.
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A.QnsEM&Co.Chartered Accountants Slnce 1953
Financial assets at fair value through profit br loss
A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or isdesignated as such on initial recognition. Financial assets are designated as at fair value through profit orloss if the Group manages such investrnents and makes purchase and sale decisions based on their fair valuein accordance with the Group's documented risk management or investment sffategy- Attributabletransaction costs are recogrised in prof,rt or loss as incurred. Financial assets at fair value through profit orlbss are measured at fair value and changes therein, which takes into account any dividend income, merecomised in the statement of profit or loss and other comprehensive income.
Financial assets designated as at fair value through profit or loss comprise equity securities that otherwisewould have been classified as available for sale.
Held-to-maturity financial assets
If the Group has the positive intent and ability to hold debt securities to matuilty, then such financial assets
are classified as held to maturity. Held-to-matr.rity financial assets are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity financial assets
are measured at amortised cost using the effective interest method, less any impairment losses.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative lurancial assets that are designated as available for sale
or are not classified in any ofthe above categories offinancial assets. Available-for-sale financial assets are
recogrised initiafly at fair value plus any directly attributable transaction costs.
Subsequent to initial recogrition, they are measured at fair value and changes therein, other than impairmentlosses and foreign currency differences on available-for-sale debt instruments, are recognised in othercomprehensive income and presented by the fair value reserve in equity. When an investment isderecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
Available-for-sale financial assets comprise equity securities and debt securities.
Loans and receivables
Loans and receivables me financial assets with fixed or determinable pa).rnents that me not quoted in anactive mmket. Such assets are recognised initially at fair value plus any directly attributable transactioncosts. Subsequent to initial recognition, loans and receivables are measured at amortised cost using theeffective interest method, less any impairment losses.
Non-derivative financial assets comprise investment in associates, loans to associates, trade and otherreceivables and cash and cash equivalents.
Trade and other receivables
Trade and other receivables are financial assets with fixed or determinable pa).rnents that are not quoted inan active mmket. Such assets are recognised initially at fair value plus any directly attributable transactioncosts. Subsequent to initial recognition trade and other receivables are measured at amortised cost using theeffective interest method, less any bad debts provision-
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, cash at bank including short notice deposits and fixeddeposits having maturity of three months or less that are subject to an insignificant risk of changes in theirfair value, and are used by the Group in the management of its short-term commitments.
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
A.Qnsru&Co.Chartered Accountants Slnce 1953
3.2.2 Non-derivative financial liabilities
Financial liabilities me recognised initially on the trade date at which the Group becomes a party to thecontractual provisions of the instrument.
The Company derecognises a financial liability when its conffactual obligations are discharged, cancelled orexpired.
Non-derivative financial liabilities comprise trade and other payables, and interest bearing borrowings.
Trade and other payables
Trade and other payables are recognised initially at fair value less any direcfly attributable transaction costs.
Subsequent to initial recognition, trade and othqr payables are measured at amortised cost using the effectiveinterest method.
Borrowings
Interest-bearing borrowings include short term bank loan. Interest-bearing borrowings are recognised
initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, interest.
bearing borrowings are stated at amortised cost using the effective interest method.
Share capital
Ordinary shares me classified as equlty Incremental costs directly attributable to the issue of ordinaryshares are recognised as a deduction from equity, net of any tax effects. Paid up shme capital represents
total amount contributed by the shareholders and bonus shares issued by the Company to the ordinaryshareholders. Holders ofordinary shares are entitled to receive dividends as declared from time to time and
are entitled to vote at shareholders' meetings, In the event of a winding up of the Company, ordinaryshareholders rank after all other shareholders and creditors and are fillly entitled to any residual proceeds ofliquidation.
Properff, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairmentlosses, if any. Cost includes expenditures that are directly attributable to the acquisition of the property,plant and equipment.
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associatedwith the expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.
An asset is derecognised on disposal or when no future economic benefits are expected from its use andsubsequent disposal. Any gain or loss on disposal ofan item ofproperty, plant and equipment (calculated as
the difference between the net proceeds from disposal and the carrying amount ofthe item) is recogrised as
gain or loss in the statement of comprehensive income.
3.4.1 Depreciation on property, plant and equipment
Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over theestimated useful lives of each component. Capital-work-in-progess and land are not depreciated.Depreciation on addition to fixed assets is charged from the day of their acquisition and charging ofdepreciation on property, plant and equipment ceases from the day on which the deletion thereof takesplace. Depreciation continues to be charged on each item of property, plant and equipment until writtendown value of such fixed asset is reduced to Taka one.
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3.3
3.4
A.Qnsru&Co.chartered Accountants Since 1953
Rates ofdepreciation on various classes ofproperty, plant and equipment are as under:
Category ofproperty, plant and equipment
Factory buildingGeneral buildingHead Office buildingPlant and machineryMobile plantElectrical installationGas pipelineFurniture, fixture and equipment
Office equipmentCommunication equipmentTools and appliancesVehiclesFire fighting equipment
Category of Investment Property
Building
Land is not depreciated as it deemed to have an infinite lif-e.
t2
A member firm of Ernst & Young Global Limited
EY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
Depreciation methods, useful lives and residual values are reviewed at each reporling date and adjusted ifappropriate. Land is not depreciated as it deemed to have an indefinite life.
Investment property
Investment properties are propefties held to earn rentals and/or fbr capital appreciation (including property
under construction for such purposes). Investment properties are measured at cost less accumulated
depreciation and impairment losses, ifany. Cost includes expenditures that are directly attributable to the
acquisition of the investment property. Maintenance, renewals and betterments that enhances the
economic useful life of the investment property or that improve the capacity, quality or reduce
subsequently the operation cost or administration expenses and capitalized by adding it to the related
investment property. Ongoing repairs and maintenance is expensed as incurred.
An investment properly is derecognized upon disposal or when the investment propefty is permanently
withdrawn from use and no future economic benefits are expected tiom the disposal. Any gain or loss
arising on derecognition of the property (calculated as the diflerence between the net disposal proceeds
and the carrying amount of the asset) is included in statement of profit or loss and other comprehensive
income, the period in which the property is derecognised.
3.5.1 Depreciation on investment property
Depreciation charged on the basis of straight line method. Depreciation continues to be charged on each
item of investment propefty until written value of such fixed asset is reduced to Taka one. Depreciation on
addition to fixed assets is charged from the day of their acquisition and charging of depreciation on
investment propefty ceases from the day on which the deletion thereoftakes place.
Rates of depreciation on various classes of investment property are as under:
Rate (%)
2.5-52.s-202.5-55-10
10
10-201 0-20
l0t0-20t0-2010-2010-20
20
3.5
Rate (%)
5
3.6
3.7
A.Qnsru&Co.Chartered Accountants Since 1953
Capital work-in-progress
Capital work in progress is stated at cost less impairment, if any, until the construction is completed. Uponcompletion of construction, the cost of such assets together with the cost directly attributable toconstruction, including capitalised borrowing costs are transferred to the respective class of asset- Nodepreciation is charged on capital work in progress.
Intangible assets
Intangible assets that are acquired by the Group (such as designs and trade marks for manufacture ofceramic tiles and sanitary ware and pharmaceuticals products) and have finite useful lives are measured atcost less accumulated amortisation and accumulated impairment losses, if any.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in thespecific asset to which it relates.
Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives of 2to 3 years from the date that they are available for use.
Amortisation methods, usefirl lives and residual values are reviewed at each reporting date and adjusted ifappropdate.
Leased assets
Leases in terms of which the Group assumes substantially all of the risks and rewards of ownership meclassified as f,mance leases. On initial recognition, the leased asset is measured at an amount equal to thelower of its fair value and the present value of the minimum lease payrnents. Subsequent to initialrecognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Lease payments
In respect offinance lease, lease palments are apportioned between finance charges and reduction ofleaseliability so as to achieve a constant rate ofinterest on the remaining balance ofliability. Finance charges are
reflected in profit or loss.
Operating leases pa;,rnents are recogrised as an expense in profit or loss on a straight-line basis over theterm of the lease. Lease incentives received are recognised as an integral part ofthe total lease expense, overthe term ofthe lease.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on theweighted average cost principle, and includes expenditure incurred in acquiring the inventories, productionor conversion costs, and other costs incurred in bringrng them to their eisting location and condition. In thecase of manufactured inventories and work in progress, cost includes an appropriate share of productionoverheads based on normal operating capacity. Raw materials in transit are valued at cost.
Net realisable value (\IRV) is the estimated selling price in the ordinary course of business, less estimatedcost of completion and any estimated costs necdssmy to make the sale.
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
3.9
t3
A.Qnsru&Co.Since 1953
3,10 Impairment
Non-derivative fi nancial assets
Financial assets not classified as at fair value through profit or loss, are assessed at each reporting date todetermine whether there is objective evidence that it is impaired. A financial asset is impaired if objectiveevidence indicates that a loss event has occurrbd after the initial recognition of the asset, and that the lossevent had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Non-financial assets
The carrying amount of the non-financial assets, other than inventories are reviewed at each reporting dateto determine whether there is any indication of impairment. If any such indication exists then the assets'
recoverable amounts me estimated. For intangible assets that have indefinite lives, recoverable amount isestimated at each reporting date. An impairment loss is recogrised if the carrying amount of an asset or itscash generating unit (CGU) exceeds its estimated recoverable amount.
Calculation of recoverable amount
The recoverable amount of an asset is the $eater of its value in use and its fair value less costs to sell. Inassessing value in use, the estimated future cash flows are discounted to thek present value using a pre-taxdiscount rate that reflects the current market assessment of the time value of money and risk specific to the
asset. For an asset that does not generate significantly independent cash inflows, the recoverable amount isdetermined for the cash generating unit (CGU) to which the asset belongs.
Recognition of impairment
Impairment losses are recognised in profit or loss. Impairment losses in respect of CGUs are allocated frstto reduced the carrying amount of any goodwill allocated to the CGU and then to reduce the carryingamount of other assets in the CGU on a pro-rata basis.
Reversal of impairment
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed the carrying amount that would have beendetermined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.11 Emplovees' benefit schemes
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 respectivedeeds.
Defined contribution plan (Provident fund)
Defined contribution plan is a post emplolment benefit plan under which the Company provides benefits toone or more employees. The recognised Employees Provident Fund is considered as defined contributionplan as it meets the recognition criteria specified for this purpose. All permanent employees contribute 10
percent of their basic salary to the provident fimd and the Company also makes equal contribution to thefund. These are administered by the Board of Trustees. The conffibutions are invested separately from thecompany's assets.
Contribution to defined contribution plan is recognised as an expense when an employee has rendered
services to the Company. The legal and constructive obligation is limited to the amount it agrees tocontribute to the fund.
A member firm of Ernst & Young Global LimitedEY refers to the Slobal organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
t4
A.Qffiu&Co.Chartered Accountants Since 1953
Defined benefit plan (Gratuity)
A defined benefit plan is a post-emplol,rnent benefit plan other than a defined contribution plan. TheCompany's net obligation in respect of defined benefit plans is calculated separately for each plan byestimating the amount of future benefit that employees have eamed in retum for their service in the currentand prior periods.
Permanent employees are entitled to gatuity on the basis of his latest basic salary for a completed year ofservice or for service for a period of more than six months, salary of minimum 30 days, or salary of 45 days
for a continuous service for more than ten years, it shall be in addition to any palment of compensation orpayment of any wage or allowance in lieu of notice due to termination of services of a worker on differentgrounds. The expected cost ofthis benefit is included in respective annual statement ofprofit or loss andother comprehensive income over the period of emplolnnent.
3-12 Workers' Profit Participation Fund and Welfare Fund (WPPF)
The Company provides 5% of its net prolit before tax after charging such expense as WPPF in accordance
with "The Bangladesh Labour (Amendment) Act 2013".
3.13 Provisions
Provisions are recognised on the reporting date if. as a result ofpast events, the Company has a present legal
or consfuctive obligation that can be estimated reliably, and it is probable that an outflow of economicbenefits will be required to settle the obligation.
3.14 Revenue recognition
Revenue is measured at fair value of consideration received or receivable. Revenue from sale of goods isrecognised when the company has transferred significant risk and rewards of ownership of the goods to thebuyer and the revenue and costs incurred to effect the hansaction can be measured reliably in compliancewith the requirements of Bangladesh Accounting Standard (BAS)-18 "Revenue".
Revenue represents excluding of sample sales to dealers and customer dwing the year.
3.15 Finance income and expenses
Finance income comprises interest income on fixed deposits, Short Notice Deposit (SND) and amounts duefrom related parties. lnterest income is recognized in profit or loss as it accrues, using the effective interestrate method.
Finance costs comprises interest expense on overdraft, LTR, term loan, short term borrowings and financelease. All finance expenses are recognised in the statement of comprehensive income.
Borrowing costs that are not directly attributable to the acquisition, construction or production of aqualifuing asset are recognised in profit or loss using the effective interest method.
Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as
either finance income or fmance cost depending on whether foreign currency movements are in a net gain ornet loss position.
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
15
A.Qnsrm&Co.Chartered Accountants Since 1953
3.16 Foreign currency
Transactions in foreign currencies are translated to Taka at the foreign exchange rates prevailing on thedate of transaction. All monetary assets and liabilities denominated in foreign curencies at reporting dateare translated to Taka at the rates of exchange prevailing on that date. Resulting exchange differencesarising on the settlement of monetary items or on translating monetary items at the end of the reportingperiod are recognised in the statement of profit or loss and other comprehensive income as per BangladeshAccounting Standard (BAS)-21 "The Effects of Changes in Foreign Exchange Rates".
3.17 Taxation
Income tax expenses represents current tax and deferred tax. Income tax expense is recognised in thestatement of profit or loss and other comprehensive income except to the extent that it relates to itemsrecognised directly in equity, in which case it is recognised in equity.
Current tax:
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted orsubstantially enacted at the reporting date, and any adjustment to tax payable in respect of previous year.
Provisions for corporate income tax is made following the rate applicable for companies as per Finance\ct2017.
Deferred tax:
Deferred tax has been recognised in accordance with Bangladesh Accounting Standard (BAS) 12.
Deferred tax is provided using the liability method for temporary differences between the carrying amountof assets and liabilities for financial reporting purposes and the amount used for taxation purpose.
Deferred tax is determined at the effective income tax rate prevailing at the reporting date.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differencesto the extent that it is probable that future taxable profits will be available against which they can be
utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is nolonger probable that the related tax benefit will be realised.
3.18 Earning per share
The Company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for itsordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholdersof the Company with the weighted average number of ordinary shares outstanding during the year,
adjusted for the effect of change in number of shares for bonus issue. Diluted EPS is detemined byadjusting the profit or loss attributable to ordinary shareholders and the weighted average number ofordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution ofEPS is not applicable for these financial statements as there was no dilutive potential ordinary shares
durins the relevant years.
16
A member firm of Ernst & Young Global Limited
EY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
A.Qnseu&Co.Chartered Accountants Since 1953
3.19 Determination and presentation of operating segment
Details of product-wise segment reporting as required by BFRS-S operating segments is followed.
3.20 Contingencies
Contingent liability
Contingent liability is a possible obligation that arises fiom past events and whose existence will be
confirmed only by the occurrence or non-occurence of one or more uncertain future events not whollywithin the control of the entity.
Contingent liability should not be recognised in the financial statements, but may require disclosure. Aprovision should be recognised in the year in which the recogrrition criteria ofprovision have been met.
Contingent asset
Contingent asset is a possible asset that arises from past events and whose existence will be confirmed onlyby the occurrence or non-occrurence of one or more uncertain future events not wholly within the control ofthe entity.
A contingent asset must not be recognised. Onty when the realisation of the related economic benefits isvirtually certain should recogrrition take place provided that it can be measured reliably because, at thatpoint, the asset is no longer contingent.
3.21 Statement of cash flows
Statement of cash flows is prepared under direct method in accordance with Bangladesh AccountingStandmd (BAS)-7 "Statement of cashflows" as required by the Securities and Exchange Rules, 1987.
3.22 Events after the reporting period
Events after the reporting period that provide additional information about the Company's position at thereporting date me reflected in the financial statements. Material events after the reporting period that are notadiusting events are disclosed by way ofnote-
3.23 Comparatives and reclassification
Comparative information have been disclosed in respect of 2016 for all numerical information in thefinancial statements and also the narrative and descriptive information when it is relevant for understandingof the current year's fmancial statements.
To facilitate comparison, certain relevant, balances pertaining to the previous year have beenrearranged/reclassified whenever considered necessary to confirm to current year's presentation.
A member firm of Ernst & Young clobal LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited
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2016Taka
2017
Taka
4.1 Depreciation charged on the basis ofthe purpose ofuse
Cost of sales (Note 22)
Administrative expenses (Note 4.2)
Marketing & selling expenses (Note 25)
4.2 Administrativeexpenses
379,753,825 354,673,598
44,987,283 3s,844,361
2,027,549 2,027,549
426,768,657 392,485,508
Depreciation on propefty, plant & equipment (Note 24) 36,121,760 35,622,443
Depreciation on investment property (Note 24) 8,865,523 221,91844,987,283 35,844,361
4.3 Disposal of property, plant and equipment
2017
Particulars Original costAccumulateddepreciation
Book value Receipt against
sales/insurance
Profit/(loss) on
disposal
No Disoosal
Taka Taka Taka Taka Taka
Total
2016
ParticularsOriginal
cost
Accumulated
depreciation
Book
value
Receipt against
sales/insurance
Profit/(loss) on
disposal
VehicleOffice eouioment
Taka
1,682,494
1t2.730
Taka
1,547,643
7 5.27 5
Taka
I 34,85 1
37.455
Taka
687,050
20. I 00
Taka
552,199(17,35s)
Iotal 1,795,224 r,622,918 172,306 707,150 534,844
20
A member firm of Ernst & Young Global Limited
EY refers to the global organlzation, and/or one or more of the independent member firms of Ernst & Young Global Limited
A.QnsEM&Co.Chartered Accountants Since 1953
6,740,159 6,683,9ss6,92s,4s8 12,401,543
13,665,617 19,08s,498
5,587,852 12,345,339
2,648,738
5,429,027 6,740,159
5,587,852 t2.345.3395,587,852 12,345,339
2016Taka
2017
Taka
6.1
Intangible assets
Balance as at 1 JanuaryAdd: Addition during the year
Less: Amortisation during the year (Note-6.1)
Less: Adjustment during the year
Balance as at 31 December
Amortisation charged on the basis ofthe purpose ofuse
Administrative expenses (Note - 24)
Capital Work-in-Progress
Balance as at I JanuaryAdd: Addition during the year
Less: Transfer to property, plant and equipment and IP during the year (note 7.1)Impairment loss on capital equipment during the year
Balance as at 31 December
t,545,379,71028,099,014
t,s73,478,7241,528,441,226
16.311,214
41,415,719 28,726,285
28,726,284444,202,680472,928,964431,513,245
7.1 Items transferred from capital work in progress to property, plant and equipment
Office buildingFactory buildingPlant and machinery
Others
Loan to disposed subsidiary
Julphar Bangladesh Ltd. (Erstwhile RAK Pharmaceuticals Pvt. Ltd.)
Inventories
Raw materials
Less : Provision for obsolescence made during the year
Stores and consumables spares
Finished goods
Work-in-processGoods-in-transit
207,433,930
53,235,483170,12s,8t7
718.015
431,513,245
t,098,231,281 r,082,968,2r9
237,2t9,1s4
1,2s6.s99,87t
34,622,201
-_J,sxA4r226_
201,898,000
201,898,000
i_*,ryffi]655,088,51 I 83t,012,396
t69,8s8,236 t29,410,652
-_ 2,5fi! B effi_ __2,527_,507,0A_
502,342,028
108,183,2 10
387,942,404
96,173,37 |
21
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
A.QnsEM&Co.Chartered Accountants Since 1953
2016Taka
2017Taka
t0 Trade and other receivables
Non current :
Receivable against disposal of investment
Current :
Trade receivables (Note 10.1)
Accrued interest (Note 10.2)
Accruedrental income
Receivable against disposal of investment
Trade receivables
Receivables from local sales
Receivables from export sales
Accrued interest
Interest accrued on FDR
Advance, deposit and prepayments
Advances:EmployeesLand advance and others
Suppliers against material and services
Security and other deposits:
Titas gas
Myrnensingh Palli Bidyut Samity-2VAT and supplementary duty (note I 1. 1)
Deposit with income tax authorityDeposit with VAT authorityOther deposits
Prepalrnents:House rentInsurance and others
5t3,977,334513,9',77,334
4,778,0s42,070,000
69,598,489
590,423,877
__Jl,o25,ooo_
s48,029,728
548,029,728
2,336,7t4380,000
68,095,1 14
618,841,556
l0.l
10.2
11
5r2,343,t98 548,029,728
1,634,136
_____s1321J,331_ _____s48 W J n_
4,778,054
4,778,054
2,336,7t42,336,714
l- D-Tdd lf rTTdolI Lsqz.szs ll 36 776.888 I
I sr.s ro.+oq | | zzs,osz,gil |
93.465,744 261.877,329
I- 3e,6%Jsoll-22262-.6001I r.sss.ooo I I r.e5s.ooo II as ozs.ooa Il 36.23r.0% I
I re.oss-oss ll rz.rss.ess I
I enes+all Ts3ooorlI r.+ss.ssr ll r,+qr.ssr I
129,639,670 86,656,202
[-jjr3sJe5l- yn6mI t r,ozs,qtq ll +s,s:z,qoo I
86,666,669 57,714.437
309,772,083 406,247,968
22
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more ofthe independent member firms of Ernst & Young Global Limited
2017
Taka
11.1 Supplementary duty and VAT
Balance as at 1 January
Add: Treasury deposit for SD and VAT purpose
Rebate of input VAT
Less: SD and VAT on sales
Payable- SD and VAT
Balance as at 31 December
Advance Income Tax
Balance as at 1 JanuaryAdd: Paid during the year
Less: Adjusted during the year
Balance as at 31 December (12. I )
Payment for the year
Income vearYew 2077Year 2016Yem 2015
Year 2074Yem 2013
Year 2072Year 201 1
Year 2010
Year 2009
Year 2008
Year 2007
Yem 2006
36,231,093
l,s 13,000,000
346,947,267
1.896.178.360
12
1,843,007,696
t0,092,5971,853,100,292
___43,078,066._
2,485,841,7593s0,708,934
4,926,690
__2-,4!W_
1,416,418,729
471,266
1,416,889,99s
36,231,093
2,219,806,786266,034,973
2,485,841,759
t2.l
285,614,513291,375,845t87 ,267,28529s,379,428
392,118,319
334,263,453
328,701,317
265,s32,626
218,091,876
85,378,847
t24,813,16123.087.333
22s,6rc,;24187,267,285
295,379,428
392,118,319
336,319,884
328,082,711
265,684,491
218,091,876
85,378i,847
124,813,161
23,087,3332,831,624,003
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
2,485,841,759
A.Qnsrttt&Co.chartered Accountants Since 1953
2016Taka
58,015,290
1,12 1,800,000
273,305,798
1.453,121,088
A.Qasrm&Co.Chartered Accountants Since 1953
2016Taka
2017
Taka
lJ Cash and cash equivalents
Cash in hand
Cash at banks
HSBC (cunent account -001-013432-01 1,001-107580-01 1,001-096015-01 l, 001-096007-01 1 - BDTStandard Chartered Bad< (current account - 01-6162940-01,01-3767272-01 - BDT)Brac Bank Ltd. (curent account - 1 53030 173 1248001 - BDT)Citibank N.A. (cunent account - CrO 10000 I 2002620 I 8 - BDT)Dutch Bangla Bank Ltd. (cunent accowt - 117-110-12733,117-110-4311, 117.110.23474 -BDT)HSBC (ERQ account - 001-013432-047 - USD)Standard Chartered Ba* (ERQ - 42-6162940-01 - USD)Standard Chartered Bank (Margin money account)United Commercial Bank (SND account - 0831301000000164 BDT)Eastem Bank Ltd. (SND account - I I 3 I 350237146 - BDT)EXIM Bank (SND account - 01513 10003 1 877 - BDT)Standard Chartered Bank (SND account - 02-37 67272-0 I - BDT)Dutch Bangla Bank Ltd. (SND account - 117-120-589,117-120-330,11"1-120.2550 - BDT)BRAC Bank (SND - 1513101731248001 - BDT)Prime Bank Ltd. (SND - 12531010022563 -BDT)Dhaka Bank Ltd (SND - 102.150.274- BDT))Commercial Bank ofCeylon (CD-2817000776 - BDT.)Dhaka Bank Ltd (CD - 2041000000193 1 8- BDT)Commercial Bank of Ceylon (SND-2 817 0007 7 7 - BDT .)Meghra Bank Ltd. (SND 1 1 12-13500000004 - BDT)
IPO bank account
Citibank N.A. (RAK-IPO Central Account - c010001200262022 -BDT)Citibank N.A. (RAK-IPO-NRB Subscnption - G0100001200262042 - USD)Citibank N.A. (RAK-IPO-NRB Subscription - G01 00001200262026 - EURO)Citibaxk N.A. (RAK-IPO-NRB Subscription - G0100001200262034 - cBP)
Dividend bank accountBRAC Bank (Cunent - 1510201731248001 - BDT) - 2010BRAC Bank (Cunent - 1513201731248001 - BDT) - 201 1
SCB (Cunent - 02-6162940-02-BDT) - 2012SCB (Cunent - 02-6162940-03- BDT) - 2013SCB (Cunent - 02-6162940-04-BDT) - 2014SCB (Cunent - 02-6162940-05- BDT) - 2015SCB (Cunent - 02-6162940-06-BDT) - 2016
lnvestment in Fixed Deposit Receipt (FDR)HSBCSCB
Brac Bank Ltd.Dutch Bangla Bank Ltd.Eastem Bark Ltd.Dhaka Bank Ltd.Meghna Bank Ltd.
Total
9,880,543
40,412,746
66,626,s93
15,162,084
142,3026,549,288
973,8_13
rrq.itrt,038,t42
8 1,82 1,359
356,70320,282,604
6.55s.;s443,154,459
733,879,731 240,039,659
5,631"704
25,409,026
t17,911,77457,502,367
172,812
1,628,ts79,438,932
975,788306,739
33,s72,2143s,308,039
t14,7614s4,397
261,903,04715R 15s
53,513,417
52,825,646,? srq
8,470
39.297.802
126,594 126,5886,654,092 6,674,919
2,454,3893,919,501
1 53,608
2,453,275
3,941,453
153,603
2,618,43t2,204,4s93,837,331
16,734,192
4,977,932
3,847,536
2,627,8312,222,4t83,899,024
16,697,585
5,082,074
4,082,7954,3 83,884
38,603,76s 34,611,727
16,827,834 30,674,5s1762,080 762,080
I 50,000,000
25,000,000 480,000,000300,000,000
I 00,000,000s oo0 000
597,s89,914 511,436,631
- t]srrdli-@
24
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & youne Global Limited
A.Qesrm&Co.Chartered Accountants Since 1953
2017 2016
Taka Taka
6,000,000,000 6,000,000,000
3,536,931,410 3,368,506,110
2016
l4 Share Capital
Authorised :
600,000,000 ordinary shares ofTaka l0/- each
Issued, subscribed, called and paid up :
353,693,141 ordinary shares ofTaka 10/- each
Percentage of shareholdings :
RAK Ceramics PJSC, UAES.A.K. Ekamuzzaman
HH Sheikh Saud Bin Saqr A1 QassimiSheikh Omer Bin Saqr Al QassimiSheikh Ahmad Bin Humaid al QassimiHamad Abdulla AI Muttawa
Dr. Khater Massaad
Abdallah Massaad
Manoj Uttamrao AhireGeneral Public
Less than 500 shares
501 to 5,000 shares
5001 to 10,000 shares
10,001 to 20,000 shares
20,001 to 30,000 shares
30,001 to 40,000 shares
40,001 to 50,000 shares
50,001 to 100,000 shares
100,001 to 1,000,000 shares
Over 1,000,000 shares
0.00 290
0.00 2900.00 2900.00 140
Taka
71.67 2.414.100.210
132,1 19,850
280
280
280140
140
140
140
2017
%
68.13
3.92
0.00
3.92
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Taka
2,409,805.220
138,725,830
140
oa
0.00 140
0.00 140
Classification of shareholders by hotding
Shareholder's range
2'7.95 988,398,930 24.41 822,284,650
L0q.00 3,536,931,410 100.00 3,368,506,110:::
Number of shareholders Number of shares
2017
24,431
8,673
9t6
134
72
,4284
89
20t6
26,718
8,021
618
2016
s,617,564
tl,426,4204,593,9s8
4,505,626
2,463,0t2t,774,201
t,760,460
5,479,79s
18,732,649
20t7
s,260,532
13,964,830
6,687,868
475 308 6,676,203
99 3.318,356
50 2,550,406
38 1,903,394
80 s,708,527
63 23,843,323
ll 283,779,702 280,496,92634,926 36,005 353,693,141 336,850,611: :
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited
25
2017
Taka2016Taka
15 Deferred tax liabilities
Balance as at 1 January
Less : Deferred tax (income/expensesBalance as at 31 December
16 Employees benefits payable
Provident fundGratuity fund
Balance as at 1 JanuaryAdd: Provision made during the year
Less: Pa),rnents made to fund during the yearBalance as at 3 I December
Balance as at 1 JanuaryAdd: Provision made during the year
Less: Payments made to fund during the year
Balance as at 31 December
l7 Borrowings
Non-current:Term loanCurrent portion ofterm loan
Cment:Bank overdraftsShort-tem borrowingsCurrent portion ofterm loan
Balance as at 31 December
362,7083,096,075
2017
Provident fundTaka
362,70854,249,20154,611,90954,61t,909
Gratuitv fundTaka
3,096,075
TotalTaka
3,458,78335,231,317 89,480,51838,327,392 92,939,30138,327,392 92,939,301
2016Provident fund Gratuitv fund Total
Taka Taka Taka
3,292,467 22,931,668 26,224,13s50,299,846 34,732,847 8s"032,69353,592,313 s7,664,515 111,2s6,828s3,229,605 54,568,440 107,798,04s
_____362108_ ____1,0e!pE______11!UqL
632,827,493 861,151,969(273,664,201) (2se,9s1,837)3s9,163,292 601,200,132
t8,244,25s 29,663,693256,253,582 276,639,469273,664,201 259,9st,837548,162,038 s66,254,999----milr$ j0---II6ZZss,r3r-
26
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & youne Global Limited
A.Qesrm&Co.Chartered Accountants Since 1953
128,416,223 75,811,194
50,397,s37 s2,60s,029178,813,760 128,4t6,223
_______________i= __-__1llszgl_
A.Qnsrttt&Co.Chartered Accountants Since 1953
Borrowings by maturity
At 3l December 2017
17.2 Facilities details
Name oflJank
lacrlrtresOverdraft
< I year l-2 years 2-5 years Total
Bank overdrafts 18,244,255 18,244,255Short-tem borrowings 256,253,582 256,253,592Tem loan 273,664,201 271,747,942 87,415,349 632,827,493
___:1$192{1!_ _-2rJI 4?2a_ ___!111!t!2_ ___291i4t19_
At 3l December 20'16 < 1 year 1-2 years 2-5 years Total
Barkoverdrafts 29,663,693 29,663,693Short-term bonowings 276,639,469 2i6,639,469Term loan 259,951,837 259,951,837 341,248,296 861,151,969
___s66,2s!,ee2_ _22251,837_ _:4ry482e!_ _!l!24!!111_
SCBShort term loan 378,000,000
Overdraft 30,000,000
HSBC Shortterm loan 550,000,000
Long tem loan 1,366,872,000
Dutch Overdraft
Bansla- : - Short tem loan-tJafl( Ltd.
Commerci Overdrafta] Bank of
Short tem loant evton
25,000,000
125,000,000
2s,000,000
300,000,000
Trade and other payables
Trade payables
Payable to local suppliers
Payable to foreign suppliers
Payable to seruice proliderPayabletoC&Fagent
Other payables
Tax deducted at source
VAT deducted at source
Dividend Payable
Unclaimed share applicationAdvance fiom customer against sales
Securily deposit payable
Payable to employee for tradeProvisionat liabilities - material & services
[-iii-ossr6r I I- ,oszlsJ?ol| :oo,:rs.zqo ll ra:.soo.+ss I
I teSzt,nz ll so,re+.+as I
I q.sro,q:: ll ro.zs:.zso I
440,907,s66 449,599,420
a-::n4r.4or]f r-5-rn2oelI to,ass.osq ll s.qsa.zss II v.ss+.zos ll ::.ssq.rso II zo.sss.t ro l l zo srs r re I
I zz,rso,sro ll *,2:r.ons I
I r,ozq.aoz I I r.o:s.z:+ II zzo.qesll I
I rs zzn.soe ll so.zqq.qq: I
132,798,850 t40,872,69s
___ s71! 06/)S_ ___2!,472}1!_
Limit
50,000,000
Utilisation
t73,969,702
82,283,880
632,827,493
18,244,255
Maturity
Revolving
180/360 days
from B,{- date
Revolving
180/360 days
from 8,4- date
5 years
Revolving
180/360 days
from B,& date
Revolving
180/360 daysfrom B,/L date
Repayment
From compmy'sown soulce
From company's
owll source
From company's
om source
From company'som source
Security - STLI ) Letter ofcomfort,2) Hypothecation
over plant &machinery onpam - passu
basis with other
lenders.
3) Hypothecation
over stock &book debts on apani - passu
basis with otherlenders.
4) Demardoromissoru note.
Security - LTL
1) Land,
2) Plant andmachinery oftheexpansion plant.
2017Trk
2016Taka
l8
27
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Globaj Limited
2017
Taka2016Taka
[9 Accrued expenses
Power and gas
Staffcost
Audit fees
Professional charges
Interest on loans
Telephone
Provision for freight
Managing Director's remuneration (Note 19.1)
Worker's profit participation and welfare fund (Note 19.2)
Royalty and technical know-how fees (I.lote 19.3)
Others
19.1 Managing Directorrs remuneration
Balance as at 1 January
Add: Provision made during the year
Less: Paid to Managing Director during the yearBalance as at 3 1 December
19.2 Workerrs profit participation and welfare fund
Balance as at 1 January
Add: Contribution made to the fund during the yea.r
Less: Palment made from the fund duing the yearBalance as at 3 1 December
19.3 Provision for royalty and technical know-how fees
Balance as at I January
Add: Provision made during the year
Less: Tax provision on disallowance ofroyalty paid for the yei ZOOI
Balance as at 3 I December
20 ProYision for income Tax
Balance as at 1 January
Add: Provision made for the year
Less: Adjustment for completed assessment
Less: Provision release during the yearBalance as at 31 December Q.{ote 20. l)
20.1 Provision for income Tax
Income vearYear 2017Year 2016Yer 2015Year 2014Year 2013Yeu 2012
Year 201 I
Year 2010
Year 2009
Year 2008
Yeu 2007
23,498,627
41,406,844
1,232,250
463,250
1,495,042)10 a)1
tt,774,67040,911,795
61,056,166
83,946,396
3,464,070
___?e,sz0,ott_
34,075,485
40,9t1,79574,987,280
40,911,795 34,075,485
191,8s2,419I 5,000,00083,946,396
2,886,541,s90 2,s83,742,941346,190,2t0 302,798,649
3,232,731,800 2,886,541,590
4,e26,690322?p0sJ t0 2,sc"s4r
"sr0
346,089,883302,798,649 302,798,649323 ,397 ,728 323 ,397 ,728381,57t,248 381,571,248364,979,858 364,979,858339,211,366 34t,267,796326,68s,21s 328,376,284
348,96s,691 3s0,044,556266,823,984 266,823,984
147 .117,914 147 ,117,91480,163,573 80,163,573
3,227,805,1t0 2,886,541,s90
28
A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited
A.Qesrttt&Co.Chartered Accountants Since 1953
40,240,928
86,556,724
1,532,250
455,840
9,561,366
228,743
45,725,t77
67,441,264
191,852,419
4,067,132
___347_561.8/3_
40,91',t,795
45,725,177
86,636972
45,725,177 40,911,795
61,056,t66 54,064,400
67 ,441 ,264 61 ,056 ,166128,497,430 115,t20,s6661,056,166 54,064,400
____9:!J 261_ ____gl9s6, 161
83,946,396 2,399"388107,906,023 96,547,008
191,852,419 98,946,396
Sales
Gross sales (Local)
Gross sales (Export)
Total Sales
Less: SupplementaryDuty
VATNet sales
Cost of sales
Materials consumed:
Opening stock as at I January
Add: Purchase during the year
Less: Closing stock as at 3l December
Manufacturing overhead:
Direct labour (Note 22.1.1)Direct expenses:
Power and gas
Repairs and indirect materials (Note 22.1.2)Rental charges
Moulds and punches
Depreciation
Royalty and technical know-hodassistance fees (22
Other production overhead Q.{ote 22.1.4)Movement in stock
22.1,1 Direct labour
Salary and wages
Overtime
Bonus
Incentive
Temporary labour wages
Gratuity
Employer's contribution to provident fundLeave encashment
Group life insurance
22.1.2 Repairs and indirect materials
Stores, spares, repair and maintenance
Packing expenses
1.3)
23,161,80t379,753,825
107,906,023
65,719,709
40,264,443
82,667
94,908,877
24,707,415
18,016,490
4,222,s95
16,012,4t1
354,613,598
8 1,547,008
66,079.8t8
34,404,958
3,8t7,61682,877,430
22,873,3t4t4,709,574
75,t73
(t67,995,667) (47,0t9,979)
__! 2s1 220 $e3_ ___1 2s2,0 s!25!_
315,97t,s61 244,761,00839,409,677 39,468,500
2,493,692 1,986,172
540,077,417 444,973,745
424,775,429 379,775,144389,339,788 309,s97,2188L4,115,217 699,372,362
A member firm of Ernst & Young Global LimitedEY refers to the Blobal organization, and/or one or more of the independent member firms of Ernst & young clobal Limited
A.Qnsrm&Co.Chartered Accountants Since 1953
2017 2016Taka Taka
8,926,9t3,551 7,086,463.91512,952,284 14,869,100
8,939,865,835 7,101,333,015693,440,t70 505,43 1,618
1,178,553,178 934,489,819
__J_,0 67,87 2,487_ _Uq4!,s?q_
831,012,396 847,867,9942,060,243,5t3 t,498,488,t422,891,255,909 2,346,356,t366s5,088,511 831,012,396
2,236,167,398 1,515,343,740
540,077,4t7 444,973,745
251,403,727 130,098,593
814,t15,2t7 689,372,362
910,643 1,033,670
22.1.3 Royalty and technical know-how/assistance fees
Royalty and technical know-hoWassistance fees
Less : Tar provision on disallowance of royalty paid for the year 2009
22.1.4 Other production overhead
Hotel fare and expenses for technician
Demurrage
Insurance
Hiring charges and transportation
Impairment loss on capital equipment
Provision for obsolescence ofraw material
Other expenses
0ther income
Dividend income
Miscellaneous income
Rental income
Profit on sale of fixed assets
Administrative expenses
Staffcost (note-24.1)
Annual General Meeting expenses
Telephone and postage
Office repair and maintenance (note 24.2)
Registration and renewal
Security and guard expenses
Electricity, gas and water
Depreciation on property, plant and equipment (note - 4.2)
Depreciation on investment property (4.2)
Amortisation
Legal and professional fees
Vehicle repair and maintenance
Rent, rate and tarBad debts
CSR expenses
Managing Director's remuneration (note-24.3)
Technical consultancy and others
A.QnsEM&Co.Chartered Accountants Since 1953
2017 2016Taka Taka
107,906,023 96,s47,008- 15,000,000
107,906,023 81,547,008
13,281,623 5,532,692
_____ 6s{e! 0e_ ___66,0?%q!_
6,906,1067,287,420
r5,534,319
22,710,2-41
200
144,722
12,247,999
4,763,388t,644,495
16,262,644
7,686,577
16,311,214
13,878,807
23
250t7 4,266
2,400,000
- 534,844
12,392,921 3,109,360
24
165,890,015
13,225,385
5,261,10s15,501,487
1,565,286
12,973,032
6,278,993
36,121,760
8,865,523
5,587,8528,359,r52
12,333,797
6,129,273
5,500,000
45,725,t77
t56,832,063
1s.445,361
5,873,788
6,357,274
1,064,355
11,826,93s
7,882,910
3s,622,443221,918
12,345,339
8,678,487
11,354,916
5,512,554357,846
5,742,270
40,gfi,79528,792,318 29,374,192
378,110,155 355,404,446
30
A member firm of Ernst & Young Global Limited
EY refers to the global organization, and/or one or more o{ the independent member firms of Ernst & Young Global Limited
A.Qlsrm&Co.Chartered Accountants Since 1953
2017 2016
Taka Taka
tt7,630,92815,797,510
792,382
8,266,289
6,585,677
4,202,563
878,275
5,374,2t11,553,998
2,580,064
t,787,0_05
105,028,514
14,438,616
3,16 1,893
7,983,3s3
3,873,t452t0,439587,102
7,230,364
2,392,'174
9,969,236
1,429,061
88,280
24.1 Staffcost
Salary and wages
Bonus
Incentive
Gratuity
Employer's contribution to provident fundLeave encashment
Group lile insurance
Canteen and conveyance expenses
Staffuniform expenses
Travelling expenses
Medical expenses
Accommodation expenses
Other employee benefit
24.2 OIIice repair and maintenance
Repairs office equipment
Office maintenance
24.3 ManagingDirector'sremuneration
Provision made during the year
Markefing and selling expenses
Staff cost (note-25. 1)
Advertisement
Freight and transportation
Performance rebates (note-25.2)Business promotion
Depreciation
Discount
Travel, entertainment and otlers
Staff cost
Salary and wages
Bonus
Incentive
Gratuity
Employer's contribution to provident fundLeave Encashment
Group life insuranceConveyance and tbod expenses
44t,tt3 439,286165,890,015 156,932,063
1,892,313
13,609,174 6,022,88215,501,487 6,357,27 4
334,392
Managing Director's remuneration represents provision made 3% of net profit before tax of RAK Ceramics (Bangladesh) Ltd
45,725,177
45,725,177
39,792,097
5,0s8,868
270,993,192
374,200,36646,776,857
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2017 2016Taka Taka
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32 Segment reporting
The company has three reportable segments which offer different products and services ald re mmaged separately because they require differenttechnology and marketing strategles. The following summary describes the operations ofeach segrnent:
Ceramics & Sanitary Ware: Engages in mmufacturing md maketing of ceramics tiles, bathroom sets md all types of sanitary wre.
@ Set-up power utilities and operate power-generating plahts, transmission system and distribution system md to sell the generated electricpower to any legal entity.
Securitv and services : Engages in providing securiry guard, cleaning services, temite md pest control seruices md set up mmpower technicaltraining.
2017 Business Sesments
Revenue - extemal customers
Revenue - inter segment
Total segment revenue
Cost ofsales- extemal customer
Cost of sales- inter segrrent
Total segment cost of sales
Gross profit
Other income
Dividend income
Rental income
Unwinding gain on receivable (note - 26)
Finmcial income
Financial expenses
Depreciation
Other operating expenses
Segrnent profit before tarIncome tax expense
Defened tax
Non -Controllmg interest
Profit for the year
2016
Revenue - extemal customers
ReYenue - inter segment
Total segment revenue
Cost ofsales- extemal customer
Cost ofsales- inter segment
Total segnent cost of sales
Gross profit
Other income
Diudend income
Rental income
Finmcial income
Financial expenses
Depreciation
Other operating expenses
Segrrent profit before tax
lncome tax expense
Defened tax
Non -Controlling interest
Profit for the year
Ceramic &sanitary ware
Taka
6,968,838"073 2,740,415
6,968,838,073 381,122,602
(3,858,045,015) (244,342,16s)
(47e,514,160) (1,822,317)
(4,337,619,17 5) (246,164,482)
2,631,218,898 134,958,120
- 144,722
83,9',79,600 20,000
1 8,3 18,956
18.507.175 2.013.801
(99,713,95s) (1,226,099)
(401,s03"49r) (18,170,999)
(895,921,895) 8,339,105, 1,348,825,288 126,078,650
(297,112,555) (41,210,074)
(52,058,981) 1,661,444
- 422
- Securitv and InterPower
-
Seiltces sesment
Taka I& Irk
96,293,999 - 7,067,872,487
96,943,333 (47s,32s)20) ________________
193,237,332 (47s,325,520) 7,067,872,487
(148,832,9 13)
(148,832,91 3)
44,404,419
200
r+r,ior(24,883)
(1,0e4,167)(2r,234,916)), lo? I {{
036rJ8r)
0.70
481,396,477
_strv+
(83,999,600)
(6,070,9_51)
Entitv total
Taka
(4,251,220,093)
----------------(4,2s1,220,093)
2,816,652,394
144,722
200
12,247,999
t,503,37520,662,478
(101,024,937)
(426,168,6s7)
(908,817,706)
1,414,599,869
(346,190,210)
(50,397,537)
423
1,018,011,699
Business Sesments
Ceramic &Power
sanitary wareTaka Taka
s,s7'7,443,970 26,937,134
347,049,244
5.5',77.443.970 373.986.318
469,194 239,916
103,489,500 10,000
9,291.,130
18,400,859 2,567 ,214(39,747,963) (256,318)
(374,020,896) (l8,oe3,eoe)(719,181,814) 8,824,166
1,221,123,312 140,991,432(253,189,74s) (45,393,782)
(53,671,s03) 1,066,474- 472
57,030,474 - 5,661,411,578
153,542,632 (443,561,402) 5,661,411,578
SesuatY and
seruices
Taka
)to
6 1,8 12
(i0,380)(370,703)
(19,979,s28)
12,043,207(4,21s,122)
0.38
Intersegment
Tala
(i03,499,500)(6,89 l,1 30)
Entitv total
Taka
709,1 10
2s02,400,000
21,029,885
(40,014,661)
(392,485,508)
(730,337,236)
1,270,658,449(302,798,649)
(52,605,029)
472
915,254,299
(2,906,473,929) (224,380,162) (121,200,876) - (3,252,0s4,966)
(3"355,020,608) (226,286,01s) (121,200,8'76) 4s0,4s2,s32 (3,252,054,966)
2,222,423,362 147,700,363 32,341,756 - 2,409,356,612
39
A member firm of Ernst & Young Global Limited
Ey refers to the global organization, and/or one or more ofthe independent member firms of Ernst & Young Global Limited
A.QnsEM&Co.chartered Accountants Since 1953
2016Taka
1.018.01r,699 91s,254,299
353,693,141353,693,141
353,693,t41 353,693,t4t
2.88 2.59
2017
Taka33 Earnings per share (EPS)
Calculation of eamings per share (EPS) is as under:
Earnings attributable to the ordinary shareholders
Profit attributable to equity holders of the Company
No. of ordinary equity shares
Weighted average no. of equity shares outstanding (Note 33.1)
Earnings per share (EPS) for the year
33.1 Weighted average number of ordinary shares
Outstanding shares
Effect ofissue ofbonus shares for the year 2016
33.2 Diluted earning per share
The weighted average number ofordinary shares outstanding during the year is the number ofordinary shares outstanding at
the beginning of the year, adjusted by the number of ordinary shares issued during the year multiplied by a time-weighting
factor. The time-weighting factor is the number ofdays that the shares are outstanding as a proportion ofthe total number ofdays in the year. The weighted average number ofshares is calculated by assuming that the shares have always been in issue.
This means that they have been issued at the start ofthe year presented as the comparative figures.
2011
336,850,61l16,842,531
2016
336,850,611
16,842,531
353,693,141 353,693,r41
No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during these periods.
34 Contingentliabilities
There are contingent liabilities on account ofunresolved disputed corporate tax assessments and VAT claims by the authority
aggregatingto Tk 668,168,492 (31 Dec 2016: Tk541,950,341). Considering the merits of the cases, it has not been deemed
necessary to make provisions for all such disputed claims.
There is also contingent liability in respect of outstanding letters of credit of Tk 478,87 I, I 46 (3 I Dec 20 I 6: Tk 398,5 I 1,738)
and letterof guarantee of Tk 80,730,767 (31 Dec 2016: Tk 42,310,078).
35 Events after the reporting period
35.1 Declaration of dividend
The Board of Directors of RAK Ceramics (Bangladesh) Limited, in its meeting held on 28 Janruary 2018 recommended l0%stock dividend andl0%, cash dividend (i.e. Tk. I per share ofTk. 10.00 each) for the year ended on 31 December 2017. These
dividends are subject to final approval by the shareholders at the forthcoming 19th Annual General Meeting(AGM) of the
Company.
A member firm of Ernst & Young Global Limited
EY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited
40