76
welq m~Px Contents2 Board of directors
4 ManageMent teaM
7 coMpany inforMation
9 notice of annual general Meeting
10 retail & Marketing events
11 Manufacturing
12 corporate social responsiBility
13 HuMan resources, product developMent &
MercHandising
14 cHairMan's stateMent
18 directors' report
22 corporate governance
30 coMpliance certificate
31 audit coMMittee report
33 auditors' report
34 stateMent of financial position
35 stateMent of profit or loss and otHer coMpreHensive incoMe
36 stateMent of cHanges in equity
37 stateMent of casH flows
39 notes to tHe financial stateMents
72 forM of proxy
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Board of Directors
4
Mr. rajeev gopalakrishnan (indian national) has been the chairman of
Bata shoe company (Bangladesh) limited since 2014. with a rich
experience of over 26 years in footwear industry, Mr. rajeev has earlier
grasped positions of director - wholesale channels with Bata
international – canada and vice president of retail operations and
wholesale division in Bata india. He was also posted as the Managing
director of Bata thailand and Bata Bangladesh. at present he is holding
the position of president of Bata, south asia. “cMo asia summit” in asia
retail conference in 2015 recognized Mr. rajeev as the ‘retail
professional of the year.
Mr. chitpan kanhasiri (thai national) has been the Managing director and
vice chairman of the company since april 2014. fabulous 14 years
background in shoe innovation and footwear marketing. He has
previously held Marketing Manager position with M/s adda in thailand.
after joining Bata in 2007 he was posted an acting company Manager of
Bata Malaysia and retail & non retail sales Manager of Bata thailand.
Mr. shaibal sinha (indian national) was appointed as director of the
company in 2012. remarkable post-qualification experiences in different
positions in finance across the globe based out of india, singapore,
united kingdom and Middle east. Just before joining Bata, he was
working with reckitt Benckiser. currently, he is the “group operations
finance director” based out of singapore. He is also a member of the
Board of directors of china footwear services, Bata indonesia, Bata
Malaysia, Bata thailand, and Bata srilanka.
3
Mr. rashidul Hasan (Bangladeshi national) has been serving as a director
since 1985 on the Board. as an independent director he is also the
chairman of audit committee. renowned civil servant, retired as director
general, department of industries in 1981. He is the present chairman of
uttara finance & investments ltd., and hold position of an independent
director in reckitt Benckiser Bangladesh and Monno group of
industries. He also engaged in various activities of non-governmental
organizations such as trustee of kumudini welfare trust and a promoter
director of grameen uddog. He was appointed as the Managing director
of industrial promotion development company of Bangladesh (ipdc),
the first joint venture investment and finance company of Bangladesh
with ifc of the world Bank.
Mr. k. M. rezaul Hasanat (Bangladeshi national) has been a director of
the company since 2011. well known member of the business fraternity
and the chairman and ceo of viyellatex group. under his leadership,
viyellatex group came into existence in 2002 and has become one of the
fastest growing business conglomerates in Bangladesh. He owes a credit
to be a pioneer in his industry in implementing numerous green initiatives,
which has led him to be elected president of united nations global
compact Bangladesh network in 2012.
Management Team
4
left to right : Mr. Md. Hashim reza, Mr. omar faisal chowdhury, Mr. lee sin kee, Mr. chitpan kanhasiri, Mr.
Muhammad sohail aslam, Mr. subrata dutta, Mr. carlos arturo Zuluaga sanchez, Mr. a. a. Md. arfanul Hoque,
Mr. tapan Bala.
5
Mr. Muhammad sohail aslam (pakistani national) was appointed as finance
director of the company in 1st June 2014. He started his career with Bata
pakistan in internal audit department. serving an organization with utmost
sincerity and integrity for about 27 years he served in various Bata companies in
different countries. prior to joining in Bata Bangladesh he was the finance director
of Bata Zimbabwe.
Mr. chitpan kanhasiri (thai national) has been the Managing director and vice
chairman of the company since april 2014. fabulous 14 years background in
shoe innovation and footwear marketing. He has previously held Marketing
Manager position with M/s adda in thailand. after joining Bata in 2007 he was
posted an acting company Manager of Bata Malaysia and retail & non retail
sales Manager of Bata thailand.
Mr. subrata dutta (indian national) was appointed as Head of Human resources
of the company in 1st January 2015. He has remarkable 22 years of experience
in Hr management in Bata and other Mncs. He is well versed with Bangla
language. prior to joining in Bata Bangladesh he was the assistant vice president
of Human resources in Bata india.
Mr. lee sin kee (Malaysian national) was appointed the company as retail
Manager in august 2014. prior to joining in Bata Bangladesh he held the position
of Marketing Manager in Bata Malaysia. He has 28 years vast experience in
retailing, branding, and stores development.
Mr. carlos arturo Zuluaga sanchez (colombian national) was joined in Bata
Bangladesh as product development Manager in 01 september 2011. earlier to
joining in Bata Bangladesh he was technical developer of Bata colombia. He has
total 40 years of experience in shoe-line innovation.
6
Mr. a. a. Md. arfanul Hoque (Bangladeshi national) is responsible as assistant
general Manager, Merchandising, effective from 2015. Having more than 10 years
of experience in merchandizing management, he also performed as area Manager
in retail operations of the company. Before to joining in Bata he worked for new
Zealand dairy ltd. altogether he has 17 years of experience in various capacities.
Mr. Md. Hashim reza (Bangladeshi national) was appointed as company
secretary effective from 2005. Beside this position, he is also holding the position
of general Manager - finance. He started his career with Bata Bangladesh as
senior officer in finance and administration department since 1992. altogether he
has 24 years of experience in this company. He is fcMa from the institute of cost
and Management accountants of Bangladesh, and fcs from the institute of
chartered secretaries of Bangladesh.
Mr. tapan Bala (Bangladeshi national) was appointed as Head of internal audit
effective from 2012. prior to his position in Bata Bangladesh, he worked as
Manager - acnaBin chartered accountants, Bangladesh. He has 5 years of
experience in various companies. He is aca from the institute of chartered
accountants of Bangladesh and acMa from the institute of cost and
Management accountants of Bangladesh. He also obtained BBa and MBa, major
in accounting from the university of dhaka, Bangladesh.
Mr. Jalil ahamed chowdhury (Bangladeshi national) was appointed as general
Manager, supply chain, effective from 2016. He worked for the company at his
first spell, as quality assurance Manager. Before joining in Bata Bangladesh he
was Manager - quality els & compliance in avery dennison south asia,
Bangladesh. His total 20 years of job experience in planning and quality
assurance is benefitting the company in supply chain Management.
Mr. omar faisal chowdhury (Bangladeshi national) was appointed as general
Manager, non retail, effective from 2015. He is serving the company for last 13
years. Holding business management degree, he worked as area Manager in retail
operations, Merchandizing Manager, and central distribution Manager.
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Company Secretary
Md. Hashim reza
Auditors
Rahman Rahman Huq
Chartered Accountants
9, Mohakhali C/A (11th Floor)
Dhaka-1212
Corporate Governance
Compliance Auditors
arun & anjan
chartered accountants
House # 558, east kazi para,
kafrul, Mirpur, dhaka-1216
Legal Advisers
amin uddin & associates
Mahbubul Hoque & associates
ameca veritas
Bankers
eastern Bank ltd.
dutch Bangla Bank ltd.
HsBc ltd.
islami Bank (Bangladesh) ltd.
Factories
1. tongi, gazipur
2. dhamrai, dhaka
Registered Office
Bata shoe company (Bangladesh) limited
tongi industrial area
tongi, gazipur
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Notice of Annual General Meeting
9
notice is hereby given that the 44tH annual general Meeting of Bata shoe company (Bangladesh) limited
will be held on Monday, 5 september 2016 at 10:30 a.m. at registered office and factory premises, tongi, gazipur
to transact the following business:
1. to receive, consider and adopt the directors’ report for the year ended 31 december 2015.
2. to receive, consider and adopt the audited financial statements of the company and the auditors’ report
thereon for the year ended 31 december 2015.
3. to approve dividends as recommended by the directors.
4. to elect directors.
5. to appoint auditors for the year 2016 and to fix their remuneration.
By order of the Board,
Md. Hashim Reza
tongi, 28 July 2016 company secretary
NOTES:
1. 21 August 2016 is the RECORD DATE. shareholders whose names appearing in the share register of the
company or in the depository register on that date will be eligible to attend at the agM.
2. a member eligible to attend and vote at the general Meeting is entitled to appoint a proxy to attend the
meeting and vote on his/her behalf.
3. as per Bangladesh securities and exchange commission directive no. sec/srMic/2011/1240/445 dated 27
april 2016 we have converted our earlier declared final 105% cash dividend into 2nd interim dividend in our
last 227th Board Meeting dated 19 May 2016 and duly dispatched to the shareholders. therefore, no any final
cash dividend for the year 2015.
4. in compliance with the Bangladesh securities and exchange commission’s circular no. sec/cMrrcd/
2009-193/154 dated 24 october 2013, any Gift/Gift Coupon/Food Box shall not be given at the 44th AGM.
10
Retail
in 2015 our retail channel sold 9.9 million pairs of shoes and turnover tk. 5.66
billion which is 5% growth against last year. to achieve this outstanding growth
in spite of countrywide political unrest, company took different initiatives like
aggressive marketing programmes, product innovation, market expansion,
human resource development, operational efficiency etc.
in expansion program, company opened 7 new stores. in addition we
renovated 12 potential stores in 2015. the new stores generated additional
turnover of tk. 102 million. More than 800 new lines was introduced before the
biggest festival eid-ul-fitre, which created sensation among our valued
customers.
Marketing events
in 2015, we have done plenty of marketing events to highlight our brand image and to increase sell. Bata
Bangladesh introduced many exclusive new lines of shoes the majority of which comes during festival periods.
these new arrivals were introduced in different Bata brands.
the crucial initiatives of Bata Bangladesh is to introduce the
online sell & loyalty program named ‘Bata club’. from now
onwards each & every customer can purchase shoes or any
other Bata products easily from home using
www.batabd.com. we are offering free home delivery to the
customers. so, Bata products is now on your figure touch.
Bata club loyalty program is the first loyalty program in
footwear industry of Bangladesh offered by Bata Bangladesh
to its loyal customers. the program is a reward program that
gives a customer advanced access to products, special
coupons/voucher, gifts or free merchandise. customers
register their personal information with Bata Bangladesh and
are given a unique identifier (mobile number). Bata Bangladesh ltd launched its loyalty program named "Bata
club" on september 15, 2015. today the program is functioning in our top 200 stores all over Bangladesh with
more than 450,000 member base.
11
Manufacturing
Bata Industrials
in our manufacturing operations we undertook some further restructuring in line
with company objectives at the beginning of the year. as a result, our production
facilities at tongi and dhamrai remained fully loaded throughout the period to
meet the demand of higher value products in particular pu sole footwear. these
facilities produced 26.6 million pairs of shoes.
as number one shoe brand at footwear sector in Bangladesh, Bata has
received the award as the leading footwear company in the country. every
year Bangladesh Brand forum organizes this prestigious event and different
national & Multi-national companies participate in this event. Bata
Bangladesh has participated in the event along with other footwear brands of
the country as nominees. for the last three years, Bata Bangladesh has
continuously received this prestigious award which is the new record for any
footwear company in the country.
Mr. chitpan kanhasiri, Managing director of Bata shoe company
(Bangladesh) ltd. received the award on behalf of Bata shoe company
(Bangladesh) ltd. in front of invited guests and media personnel. other high
officials of Bata Bangladesh were also present on the occasion.
as one of the largest manufacturers of safety shoes, Bata plays a major role in
safeguarding the health of the world’s workers. from the heavy duty work boots to elegant
and sporty footwear, Bata industrial has a wide range of shoes for every vocation, where
safety counts. the brand’s exclusive features include; shock absorbing tunnel system,
tritech plus anti-slip soles, Bata cool comfort linings and integrated tpu toe caps.
Harnessing its global expertise, Bata industrial provides the highest level of protection
while keeping the wearer’s feet cool and comfortable while on the job.
12
Corporate Social Responsibility
BCP-BANGLADESH, SCHOLARSHIP FOR EMPLOYEE'S CHILDREN
under Bata children’s program Bata Bangladesh arranged a scholarship
program. in this program they gave away scholarship to the children of
permanent unionized employees of tongi and dhamrai who did
outstanding result on their secondary examination.
VITAMIN A PLUS CAMPAIGN-2015, BCP BANGLADESH
under Bata children’s program Bata Bangladesh participated “vitamin a
plus campaign” organized by Health and family welfare Ministry of
Bangladesh government. vitamin a plus campaign began across the
country in a bid to prevent childhood blindness and reduce child
mortality.
BCP-Bangladesh, Art Competition & Health Check up program
Bata children’s program Bangladesh organized a day long program at
Bata dhamrai plant.
a colorful art competition, Health checkup and factory visit at dhamrai
plant attended by underprivileged children with the support of Bcp
volunteers. Bcp volunteers gave their full support to make the program
successful. Bcp-Bangladesh also donated a bookshelf with books on
various categories and toys for the library of the school.
BCP BANGLADESH-HEALTH CHECKUP & SHOE DONATION
PROGRAM
Bata children’s program Bangladesh organized a day long program on
10th september, 2015 at Bata tongi plant.
Bcp-Bangladesh arranged a primary Health check up & distribute
medicine for underprivileged children. Bcp volunteers gave their full
support to make the program successful. Bcp-Bangladesh also donated
school shoes, socks and toiletries item to those children. children
received refreshment after the program.
Mr. rajeev gopalakrishnan, chairman, Mr. chitpan kanhasiri, company
Manager and Mr. Muhammad sohail aslam, finance director attended
the program.
Bata Bangladesh CSR portfolio includes Bata Children Programme. Your company feels for the community of thecountry. Under the CSR programme your company donated shoes for unprivileged children, given scholarship formeritorious children of the employees and blood donation program for children suffering from diseases like leukaemia,dengue etc in the year 2015.
13
Human Resources
emphasis has always been given to personnel development since this
is an essential requirement for the company’s progress. a total 260
number of our employees participated in various training courses in
2015. to promote team spirit, integrity and employee relations, your
company organised an annual picnic and inter - departmental cricket
competitions during the year. we also continued to award “employee
of the Month” certificates which provided due recognition to deserving
employees. as of 31st december 2015, a total of 1723 people were
employed by your company.
Product Development & Merchandising
Bata Comfit
Bata comfit promises unmatched comfort to its customers. through anatomically
designed footwear, soft uppers and footbeds featuring latest cushioning technologies, the
brand delivers comfort like no other. Bata comfit leverages chic, contemporary designs
with its patented comfort technology to ensure the wearer stays relaxed and stylish all day
long.
Weinbrenner
Built to suit the true outdoor explorers, weinbrenner embodies the essence of nature,
exploration and leisure. weinbrenner features heavy duty materials combined with rugged
outsoles to ensure it withstands even the harshest challenges of nature. as a brand, it
holds loyal to its unbroken and unshaken “no nonsense” and “for real” reputation,
something that echoes with the true blue explorers it caters to.
Bubblegummers
stylish and colorful shoes for active kids. an international brand, specializing in children’s
footwear, clothes and accessories, which is constantly innovating new designs and
enhancing the quality of its products. Bubblegummers specializes in fun, fashionable
footwear with an emphasis attention to the needs of the growing feet of the little stars.
Patapata
colorful, funky and carefree. there’s a certain energy that comes from being outside on a
sun-splashed day in a world alight with promise. whether you’re vacationing in the
beaches of st.Martin’s or just puttering around the house, patapata is like a little holiday
for your feet. vibrant and fun, with distinctive designs that lets one express their playful
side.
14
mfvcwZi fvlY 2015 chairman's statement 2015
Rajeev Gopalakrishnanchairman
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dear shareholders,
on behalf of the Board of directors of the company, it is my
privilege and honour to welcome you to the 44th annual
general Meeting and present to you the company’s
performance together with the financial statements and
auditors’ report thereon, for the year ended 31 december
2015.
you would recall that last quarter of 2014 was a turbulent
period, with frequent and prolonged strikes, impact of which
was triggered down until first quarter 2015. despite all of
these, endeavour of the management of your company was
to achieve significant growth in the rest of the period to make
2015 an other successful year. the company did relatively
better in both of its retail and non-retail segment and overall
results were driven in shape of 6% revenue growth,
strengthening the brand portfolio and improved 120% profit
before tax. this has materialized only due to successfully
managing cost management and productivity initiatives
across the operations of the company.
retail channel underwent both phases of consolidation and
expansion. 48 smaller stores which did not generate the
required returns were closed. at the same time, three big
format profitable stores were opened or expanded. sixteen
strategic stores were renovated and upgraded to reflect the
improved image of the company, resulting 5% growth in
business volume during the period under review.
non retail sales channel (nrsd); business grew by
approximately 7%. after engagement of many more local
players especially in plastic and thongs categories and
abundant supply of low price shoes from across border
countries, now-a-days wholesale market is very volatile,
competitive and credit driven. your management is well aware
how to overcome this situation. initiatives in this regard are in
place such as introduction of new merchandize in plastic,
thongs and pu categories at a very competitive price.
with a focus on maintaining our leadership in the footwear
industry in terms of customer’s service, customer’s
satisfaction and quality product, in last quarter of 2015 your
company lunched “e commerce” online buying facility to
meet the future marketing demand. we are confident that in
the coming period company will be benefited more from this
marketing channel. further, to recognize the brand loyalty of
15
gv‡K©wUs P¨v‡bj †_‡K AviI A‡bK †ewk DcK…Z n‡e| Dciš‘, Avgv‡`ieª¨v‡Ûi Dci AvbyMZ¨ _vKvq m¤§vwbZ MÖvnK‡`i ^xK…wZ mi~c Avgiv "evUvK¬ve jq¨vwjwU †cÖvMªvg" Pvjy K‡iwQ| 2015 Gi †k‡l G K¬v‡ei m`m¨msL¨v 200,000 ( yB j¶) Qvwo‡q †M‡Q| GB †cÖvMÖvgwU‡Z Avgv‡`im¤§vwbZ MÖvnK‡`i Zv‡`i µ‡qi wecix‡Z c‡q›U AR©b Kivi PgrKvimyy‡hvM cÖ`vb Kiv n‡q‡Q Ges GB c‡q›U Zv‡`i fwel¨Z µ‡qi †¶‡Îme©vwaK Qvo Avi †ivgvÂKi cyi¯‹vi cÖvw߇Z mnqZv Ki‡e| G eQi Avgv‡`i Drcv`b e¨e ’vcbvq †Kv¤úvwbi m‡½ m½wZc~Y©© AviIwKQz cybM©V‡bi KvR nv‡Z †bIqv nq| hvi d‡j Avgv‡`i U½x Ges avgivBKviLvbv mviv eQi evRv‡ii Pvwn`v c~i‡Y m¤ú~‡b©iƒ‡c mg_© n‡q‡Q| GBKviLvbv yÕ‡Uv‡Z mviv eQ‡i cÖvq 26.6 wgwjqb †Rvov RyZv Drcvw`Zn‡q‡Q| ZvQvov †QvU †QvU mn‡hvMx e¨emvwqK BDwbU (associate
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upper), ’vbxq mieivnKvix †_‡K cÖ ‘ZK…Z RyZv †Kv¤úvwbi cÖvÁbxwZgvjv Abyhvqx †Kv¤úvwbi mv‡_ ’vbxq m¤úª`vq‡K GK‡Î hy³ K‡i‡QGes G‡Z Zv‡`i A‡b‡Ki Kg©ms ’v‡bi my‡hvM K‡i w`‡q‡Q| cv yKv wk‡í KwVb cÖwZ‡hvwMZv _vKv m‡Ë¡I †Kv¤úvwbi e¨e ’vcbviD‡Ïk¨ wQj evRv‡i †Kv¤úvwbi me©vwaK gv‡K©U †kqvi mgybœZ ivLv, bZzbbZzb cb¨ D™¢veb, bZzb bZzb ÷vBj I wWRvB‡b Ges MÖvnK †mevq kx‡l©_vKv| evRv‡i Avgv‡`i †bZ…Z¡ mymsnZ Kiv, ch©vß weµq Ges wewfbœeª¨vÛmgy‡ni mv‡_ †µZv‡`i cwiPq Kwi‡q †`Iqvi Rb¨ eQi Ry‡o wewfbœcÖPvi gva¨g I weµq †K› ªmg~‡n e¨vcK cÖPiYv Pvjv‡bv nq| Avcbviv wbðqB AeMZ Av‡Qb †h, Avcbv‡`i †Kv¤úvwb‡Z GKwUKvh©Kix PjwZ g~jab e¨e ’vcbv c×wZ Pvjy i‡q‡Q hvi mvnv‡h¨ mKjm¤úwË I `vqmg~n wbqwgZfv‡e wbqš¿b Kiv nq| GeQ‡i wWjvi‡`i †`bvicwigvb weMZ eQ‡ii Zzjbvq GKUz †ewk| weMZ eQ‡ii Zzjbvq GeQ‡iwWjvi‡`i KvQ †_‡K cyiv‡bv cvIbv Av`v‡q D‡jøL‡hvM¨ cwigv‡b DbœwZn‡q‡Q hw`I GL‡bv Zv Kvg¨ ch©v‡q Av‡mwb| e¨e ’vcbv KZ…©c¶†Kv¤úvwbi Zvij¨ Ae ’vi w`‡K bRi ivL‡Q, Avi mZK©Zvi mv‡_ Zve¨envi wbwðZ Ki‡Q| †kqvi†nvìvi‡`i jf¨vsk cwi‡kva, fwel¨‡ZKvuPvgvj µ‡q myweav, m¤ú` AvniY, fwel¨r wewb‡qv‡Mi Rb¨ Pvwn`v Ie¨emvwqK cÖwZØÜx‡`i cvëv cÖwZ‡hvwMZv †gvKv‡ejvi Rb¨ m¤ú`msi¶b Kiv cÖ‡qvRb| cwiPvjKgÛjx mš‘ó GB Rb¨ †h, eQi †k‡l Kv‡ivwbKU †Kv¤úvwbi ¯í†gqv`x ev `xN©‡gqv`x ‡Kvb Avw_©K †`bv †bB|Avcbv‡`i cwiPvjKgÛjx I e¨e ’vcbv KZ©„c¶mn AvšÍR©vwZK wb‡ ©wkKv¯xK…wZ †`q †h, hyw³msMZ SuywK e¨e ’vcbv Abykxjb I Af¨šÍixb wbqš¿b†kqvi‡nvìvi‡`i wewb‡qv‡Mi I †Kv¤úvwbi m¤ú‡`i i¶vKeP wn‡m‡eKvR Ki‡e| †Kv¤úvwb †h mKj SzuwKi m¤§~Lxb n‡”Q Zv †gvKv‡ejvi Rb¨wbw ©ó SzuwK kbv³KiY, h_vh_ g~j¨vqb I Zvrch©c~Y© ch©‡eÿ‡bi gva¨‡g†Kv¤úvwb GKwU Pjgvb cÖwµqv Ae¨vnZ †i‡L‡Q| eQi †k‡l GB mecÖwµqv bxwi¶v KwgwUi gva¨‡g cwiPvjKgÛjx KZ©„K ch©v‡jvwPZ nq|Avgv‡`i cÖwZkÖæwZ I fvj K‡c©v‡iU AvPiY †Kv¤úvwb‡K gvb eRvq †i‡Le¨emv cwiPvjbvq evowZ kw³ †RvMv‡e e‡j wek¦vm Kwi| †Kv¤úvwb Kg©¶gZv I AMªMwZi Dci wfwË K‡i 2015 mv‡ji Rb¨Avcbv‡`i cwiPvjKgÛjx bM` 105% jf¨vsk mycvwik K‡i‡Qb| cÖ_gAšÍe©©Zx©Kvjxb jf¨vsk 215% mn 2015 mv‡ji †gvU jf¨vs‡ki cwigvb320%| Avcbv‡`i †Kv¤úvwb Pvgov I cv yKv wk‡í weMZ eQ‡ii g‡Zv GeQ‡iI†`‡ki m‡e©v”P Ki cÖ`vbKvix cÖwZôvb wnmv‡e Zvi mybvg Ae¨vnZ†i‡L‡Q| Avcbv‡`i †Kv¤úvwb 2015 mv‡j †`‡ki RvZxq †KvlvMv‡i2,103 wgwjqb UvKv cÖ`vb K‡i‡Q| †Kv¤úvwb Zvi Kg©KZ©v-Kg©Pvix‡`i †ckvMZ g‡bvbœq‡bi Dci h‡_ó ¸iyZ¡cÖ`vb K‡i _v‡K| GiB avivevwnKZvq 2015 mv‡j 260 Rb Kg©x‡Kwewfbœ cÖwk¶b Kg©m~wP‡Z AskMÖnb Kiv‡bvi gva¨‡g cÖwkwÿZ K‡i‡Q|†ckv`vwiZ¡ wUg w¯úwiU, PvwiwÎK „pZv (integrity) Ges cvi¯úwiK
our valued customer’s Bata club “loyalty programme” is also
in place. till end 2015 the membership of this club has arose
up to 200,000. this programme is providing excellent
opportunity to our valued customer’s to earn more points to
avail maximum discount and exciting prizes on future
shopping.
in our manufacturing operations we under took some further
restructuring in line with company objectives. as a result our
both factories at tongi and dhamrai remained fully loaded
throughout the period to meet the market demand. these
factories produced around 26.6 million pairs. further, supply
of ready uppers from small aBus and assembled shoes from
local suppliers remained the prudent policy of the company,
which involved the local community to provide them with jobs.
in spite of harder competition in footwear industry, objective
of the management is to maximize the market share and
continued to be the leader in product innovation, new style
and design and customer service. to achieve all this an
aggressive media campaigns and in-store promotions were
also conducted at various occasions to support our
leadership position, stimulate sales during peak selling
periods and provide support for our branded programmes.
the company has effective working capital management
systems in place whereby all assets and liabilities are
projected on regular basis. receivables from dealers
remained slightly on higher side. though the settlement of
overdue amounts from dealers showed a remarkable
improvement but it was still short of ideal. Management also
monitored the liquidity position of the company closely
ensure careful utilization of liquid resources. the trade-off
among dividend pay out to shareholders, cost advantage on
future raw material purchases and accumulation of resources
for future investment to meet demand and counter
competition. the Board is satisfied that there are no short or
long term financial constraints at the close of the period.
your Board of directors and management along with the
global guidelines recognises the importance of sound risk
management practices and internal controls to safeguard
shareholder’s investment and the company’s assets. the
company has in place on ongoing process for identifying,
evaluating, monitoring and managing significant risk faced by
the company. this process is reviewed by the Board via audit
committee. the company standards of Business conduct
reinforce our commitment to good corporate behaviour.
Based on the performance, the directors of your company
recommended divided of taka 10.5 (105%) per share for the
year ended december 31, 2015. therefore, the total pay-out
for the year including interim dividend of taka 21.5 (215%)
would be taka 32.0 (320%).
your company continues to be highest tax payer in the leather
and footwear sector in the country. in 2015 your company
contributed tk 2,103 million to the country’s national
exchequer.
emphasis has always been given to personnel development
since this is an essential requirement for the company’s
progress. a total 260 number of our employees participated in
various training courses in 2015. to promote team spirit,
integrity and employee relations, your company organised an
annual picnic and inter - departmental cricket competitions
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ivRxf †MvcvjvK…òvb†Pqvig¨vb28 GwcÖj 2016
during the year. we also continued to award “employee of the
Month” certificates which provided due recognition to
deserving employees. as of 31st december 2015, a total of
1723 people were employed by your company.
during the year, management and labour relations were very
cordial showing full harmony. a three year agreement, which
was expired on June 30th 2015, has been renegotiated
successfully for the next three year’s i.e. up to June 30th
2018. this renewal had provided increased benefits and
higher income to our unionized staff. i hope that the
management and c.B.a. will maintain a satisfactory
relationship to achieve better results for the benefit of all
concerned.
Mis team of our company took an initiative and deployed in
house 24x7 connectivity system whereby all the key
information is available to the management both from
marketing as well as manufacturing operations for timely
decisions. this project is also recognized at global level and
nominated as winner award for 2015.
Bata Bangladesh csr portfolio includes Bata children
programme. your company feels for the community of the
country. under the csr programme your company donated
shoes for unprivileged children, given scholarship for
meritorious children of the employees and blood donation
program for children suffering from diseases like leukaemia,
dengue etc in the year 2015.
in 2015 your company presented awards to 363 employees
who have completed 25 years of service in this company.
rajeev gopalakrishnan, president Bata emerging Market
attended the ceremony and praised all the award recipients
for their loyalty and hard work. He also thanked everyone for
their valuable contribution to Bata.
your company’s shares of a nominal value of tk. 10.00 were
traded at tk. 1,317.70 on the dhaka stock exchange and tk.
1,348.00 on the chittagong stock exchange respectively on
31 december 2015.
in accordance with the articles of association of the company,
all the directors, except the Managing director, chitpan
kanhasiri, retire at the annual general Meeting and, being
eligible offer themselves for re-election.
as we move forward, we are certain to face competitions and
challenges due to ever changing economic and marketing
conditions. Based on our strengths we are confident to
overcome successfully all the challenges in future.
in conclusion, on behalf of the Board of directors, i would like
to express my appreciation to you, our shareholders, as well
as to our valued customers, suppliers, dealers, employees
and the government of the people’s republic of Bangladesh
for the support and cooperation extended to the company.
Rajeev Gopalakrishnan
chairman
28 april 2016
16
1517
your directors have pleasure in submitting their report and audited financial statements of the company for
the year ended 31 december 2015 along with the preceding five years as follows:
Industry Outlook
the footwear sector in the country witnessed a moderate growth during the year. the growth is expected to
remain the same level next year. the company attained a growth of 6% during the current year. it is expected
that the growth trend will continue under the prevailing market conditions.
Cost of Sales & Profit Margin
the overall costs of raw materials remain stable internationally. so, the cost of sales has decreased
satisfactorily in 2015 as compared to net turnover due to strict control over the consumption of raw materials
and other cost of production. consequently the gross profit has increased over that of 2014.
Key Operating & Financial Information
your directors have pleasure in submitting the key operating and financial data of the company for the year
ended 31 december 2015 along with the preceding five years below:
Financial results 2015 2014 2013 2012 2011 2010
Taka Taka Taka Taka Taka Taka
000 000 000 000 000 000
net profit before tax 1,207069 1,017,920 1,153,284 971,389 793,620 742,971
provision for tax 375,324 317,250 340,200 299,473 213,003 199,000
Net profit after tax 831,745 700,670 813,084 671,916 580,617 543,971
un-appropriated profit brought forward 2,323,731 2,009,391 1,606,707 313,782 1,075,166 873,194
earlier year tax adjustment - (3,240) - - - -
loss on BB export winding up - - - (2,791) - -
Profit available for appropriation 3,155,476 2,706,771 2,414,792 1,982,907 1,655,782 1,417,166
From which the Directors recommended the following appropriations:
final dividend paid (previous year) 143,640 143,640 143,640 143,640 143,640 143,640
interim dividend paid (current year) 294,120 239,400 264,760 232,560 198,360 198,360
Total dividend 437,760 383.040 410,400 376,200 342,000 342,000
Un-appropriated profit carried forward 2,717,716 2,323,731 2,004,391 1,606,707 1,313,782 1,075,166
Dividend
the Board of directors in its 226th Meeting held on 28 april 2016 proposed tk 10.50 per share amounting to tk.
143,640,000 as final dividend. But due to Bsec directive no. sec/srMic/2011/1240/445 dated 27 april 2016
the Board of director in its 227th Meeting held on 19 May 2016 converted the final dividend as 2nd interim
dividend for the year ended 31 december 2015, which represents 105% of paid up capital. dividend for the year
2015 including the 1st interim dividend tk. 21.50 per share amounting to tk. 294,120,000 thus making a total
dividend of tk. 32.00 per share amounting to tk. 437,760,000 which represents 320% of paid up capital.
Directors Proposed for Re-Election
the directors retiring as per article 104 of the company’s articles of association are Mr. rajeev gopalakrishnan,
Mr. shaibal sinha, Mr. rashidul Hasan and Mr. k M rezaul Hasanat and being eligible offer themselves for
re-election.
Directors' Report 2015
18
Audit Committee Meeting
the audit committee is a sub-committee of the Board. all members of the audit committee were appointed by
the Board of directors from amongst the members. they met twice during the year 2015. the company
secretary was the secretary of the committee. the audit committee is comprised of:
Mr. rashidul Hasan – chairman as independent director
Mr. rajeev gopalakrishnan – Member
Mr. chitpan kanhasiri – Member
Mr. shaibal sinha – Member
Mr. k M rezaul Hasanat – Member
Reports on Activities of the Audit Committee
the audit committee has performed regularly the following activities:
◆ oversee the financial reporting.
◆ Monitoring the choice of accounting policies, principles, internal control and risk management process.
◆ oversee performance of statutory auditors.
◆ reviewing the annual financial statements before submission to the Board for approval.
◆ reviewing the statement of significant related party transactions.
The System of Internal Control
the Board of directors assures the shareholders that the company has a robust risk management process to
ensure that the system of internal control is sound in design and has been effectively implemented and
monitored. although it is possible that all risks to the business are not known at present, the company takes
reasonable steps to identify material risks that may hamper business results and systematically reviews these
risks in light of the changing internal and external environment in order to assess that the controls in place are
adequate to address these risks.
Directors’ Declaration as to Financial Statements
as part of preparation and presentation of the financial statements, the directors also report that:
a) the financial statements prepared by the Management of the company present a true and fair view of
company’s state of affairs, the result of its operations, cash flows and changes in equity.
b) proper books of accounts of the company have been maintained as required by law.
c) appropriate accounting policies have been consistently applied in preparation of the financial statements
and the accounting estimates are based on reasonable and prudent judgment.
d) the financial statements were prepared in accordance with Bangladesh accounting standards (Bas) and
Bangladesh financial reporting standards (Bfrs) as applicable in Bangladesh and there has not been any
departure there from.
e) the Managing director and cfo have certified to the Board that:
19
20
i) they have reviewed the financial statements and believe:
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 together present a 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 their knowledge and belief, no transactions entered into by the company
during the year which are fraudulent, illegal or in violation of the company’s codes of conduct.
Auditors
rahman rahman Huq (kpMg) chartered accountants, have offered their willingness to be re- appointed as
statutory auditors of the company. the Board recommends their appointment for the year 2016 and to continue
till the next annual general Meeting.
on behalf of the Board of directors,
Chitpan Kanhasiri
Managing director
28 July 2016
21
Pattern of Shareholdings Annexure - 1
names of the shareholders along with their position of the shares are listed below:
Names of the shareholders Number of % holding
share held
i) parent/subsidiary/associate/related parties:
◆ Bafin nederland (B.v.) 9,576,000 70.00
ii) directors/ceo/cs/cfo/audit Head and their
spouses and minor children
◆ Mr. rashidul Hasan 64 0.00
iii) executives (Head of functions) nil nil
iv) shareholders, who hold 10% or more nil nil
v) others shareholders, who hold less than 10%
◆ non-resident shareholders 1,346,641 9.84
◆ local shareholders 2,757,295 20.16
Total 13,680,000 100.00
Board Meetings
the Board met 5 (five) times during the year 2015. the company secretary and finance director were also presentin the Board meetings. the attendance by each director is stated below:
Present Directors Name No. of Attendance
Mr. rajeev gopalakrishnan 5 meetings
Mr. chitpan kanhasiri 5 meetings
Mr. shaibal sinha 5 meetings
Mr. rashidul Hasan 5 meetings
Mr. k M rezaul Hasanat 2 meetings
22
Annexure
Status of compliance with the conditions imposed by the Bangladesh Securities and ExchangeCommission's Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 Issued under
section 2CC of the Securities and Exchange Ordinance, 1969:
SEC Checklist: (Report under Condition No.7)
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)TitleCondition
No.
1.0
1.1
1.2
(i)
(ii) a)
(ii) b)
(ii) c)
(ii) d)
(ii) e)
(ii) f)
(ii) g)
(ii) h)
(ii) i)
(iii)
√
√
√
√
√
√
√
√
√
√
√
√
At least one fifth (1/5) of the total number of directors inthe company’s board shall be independent directors.
Who either does not hold any share or holds less than1% shares to the total paid-up shares of the company;
Who is not a sponsor of the company and is notconnected with the companies any sponsor or directoror shareholder who holds one percent (1%) or moreshare of the total paid-up shares of the company on thebasis of family relationship.
Who does not have any other relationship whetherpecuniary or otherwise, with the company or itssubsidiary/ associated companies or its subsidiary/associated companies.
Who is not a member, director or officer of any stockexchange?
Who is not a shareholder, director or officer of anymember of stock exchange or an intermediary of thecapital market.
Who is not a partner or an executive or was not apartner or an executive during the preceding 3 (three)years of the concerned company’s statutory audit firm.
Who shall not be an independent director in more than3 (three) listed companies.
Who has not been convicted by a court of competentjurisdiction as a defaulter in payment of any loan to abank or a Non-Bank Financial Institution (NBFI).
Who has not been convicted for a criminal offenceinvolving moral turpitude.
The independent director(s) shall be appointed by theboard of directors and approved by the shareholders inthe Annual General Meeting (AGM).
Board of Directors
Board’s Size
The number of Board Directors should not be less than 5 (five)and more than 20 (twenty)
Independent Directors
23
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)
1.3
1.4
1.5
(iv)
(v)
(vi)
(i)
(ii)
(iii)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
NotApplicable
√
√
√
√
NotApplicable
√
√
√√
√
NotApplicable
√
No suchvacancy
created 2015
No suchgain/lossoccurred
Presented inthe Financial
Statement
The post of independent director(s) can not remainvacant for more than 90 (ninety) days.
The Board shall lay down a code of conduct of all Boardmembers and annual compliance of the code to berecorded.
The tenure of office of an independent director shall befor a period of 3 (three) years, which may be extendedfor 1 (one) term only.
Independent Director shall be a knowledgeableindividual with integrity who is able to ensurecompliance with financial, regulatory and corporate lawsand can make meaningful contribution to business.
The person should be a Business Leader / CorporateLeader / Bureaucrat / University Teacher withEconomics or Business Studies or Law background /Professionals like Chartered Accountants, Cost &Management Accountants, and Chartered Secretaries.The independent director must have at least 12 (twelve)years of corporate management / professionalexperience.
In special cases the above qualifications may berelaxed subject to prior approval of the Commission.
Industry outlook and possible future development in theindustry.
Segment-wise or product-wise performance.
Risks and concerns.
A discussion on Cost of Goods sold, Gross Profit Marginand Net Profit Margin.
Discussion on continuity of any Extra-Ordinary gain orloss.
Basis for related party transactions- a statement of allrelated party transactions should be disclosed in theannual report.
Qualification of Independent Director (ID)
Chairman of the Board and Chief Executive Officer
The positions of the Chairman of the Board and the ChiefExecutive Officer of the companies shall be filled by differentindividuals with defined different roles and responsibilities. TheChairman of the company shall be elected from among thedirectors of the company.
The Directors’ Report to Shareholders
TitleConditionNo.
24
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
(xvii)
(xviii)
(xix)
(xx)
NotApplicable
NotApplicable
NotApplicable
√
√
√
√
√
√
√
Not
Applicable
√
NotApplicable
√
During 2015there were nopublic or rightissue of share
No suchvarianceoccurred
Ability of thecompany tocontinue as
going concern
Utilization of proceeds from public issues, rights issuesand / or through any others instruments.
An explanation if the financial result deteriorate after thecompany goes for Initial Public Offering (IPO), RepeatPublic Offering (RPO), Rights Offer, Direct Listing, etc.
If significant variance occurs between QuarterlyFinancial performance and Annual Financial Statementsthe management shall explain about the variance ontheir Annual Report.
Remuneration to directors including independentdirectors.
The financial statements prepared by the management ofthe issuer company present fairly its state of affairs, theresult of its operations, cash flows and changes in equity.
Proper books of account of the issuer company havebeen maintained.
Appropriate accounting policies have been consistentlyapplied in preparation of the financial statements andthat the accounting estimates are based on reasonableand prudent judgment.
International Accounting Standards (IAS)/ BangladeshAccounting Standards (BAS)/ International FinancialReporting Standards (IFRS)/ Bangladesh FinancialReporting Standards (BFRS), as applicable inBangladesh, have been followed in preparation of thefinancial statements and any departure there-from hasbeen adequately disclosed.
The system of internal control is sound in design andhas been effectively implemented and monitored.
There are no significant doubts upon the issuercompany's ability to continue as a going concern. If theissuer company is not considered to be a goingconcern, the fact along with reasons thereof should bedisclosed.
Significant deviations from the last year’s operatingresults of the issuer company shall be highlighted andthe reasons thereof should be explained.
Key operating and financial data of at least preceding 5(five) years shall be summarized.
If the issuer company has not declared dividend (cashor stock) for the year, the reasons thereof shall be given.
The number of Board meetings held during the year andattendance by each director shall be disclosed.
TitleConditionNo.
25
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)
2.0
2.1
2.2
3.0
3.1
(xxi)
(xxi) a)
(xxi) b)
(xxi) c)
(xxi) d)
(xxii)
(xxii) a)
(xxii) b)
(xxii) c)
(i)
(ii)
(iii)
(i)
√
√
√
√
√√
√
√
√
√
√
√
√
Parent/Subsidiary/Associated Companies and otherrelated parties (name wise details).
Directors, Chief Executive Officer, Company Secretary,Chief Financial Officer, Head of Internal Audit and theirspouses and minor children (name wise details).
Executives (top five salaried employees of the company,other than the Directors, Chief Executive Officer,Company Secretary, Chief Financial Officer and Head ofInternal Audit).
Shareholders holding ten percent (10%) or more votinginterest in the company (name wise details).
The company shall have an Audit Committee as a sub-committee of the Board of Directors.
The Audit Committee shall assist the Board of Directorsin ensuring that the financial statements reflect true andfair view of the state of affairs of the company and inensuring a good monitoring system within the business.
The Audit Committee shall be responsible to the Boardof Directors. The duties of the Audit Committee shall beclearly set forth in writing.
The Audit Committee shall be composed of at least 3(three) members.
A brief resume of the director.
Nature of his/her expertise in specific functional areas.
Names of companies in which the person also holds thedirectorship and the membership of committees of theboard.
The company shall appoint a Chief Financial Officer (CFO), a Headof Internal Audit (Internal Control and Compliance) and a CompanySecretary (CS). The Board of Directors should clearly definerespective roles, responsibilities and duties of the CFO, the Head ofInternal Audit and the CS.
The CFO and the Company Secretary of the companies shallattend the meetings of the Board of Directors.
Audit Committee
TitleConditionNo.
The pattern of shareholdings and name wise details disclosing the aggregate numberof shares:
In case of appointment/re-appointment of a Director the Company shall disclose the followinginformation to the Shareholders:
Chief Financial Officer (CFO), Head of Internal Audit and Company Secretary (CS)
Constitution of the Audit Committee
26
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)
3.2
3.3
(ii)
(iii)
(iv)
(v)
(vi)
(i)
(ii)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
√
√
NotApplicable
√
√
√
√
√
√
√
√
√
√
√
√
√
There was nosuch vacancy
created
The Board of Directors shall appoint members of theAudit Committee who shall be directors of the companyand shall include at least 1 (one) independent director.
All members of the audit committee should be“financially literate” and at least 1 (one) member shallhave accounting or related financial managementexperience.
When the term of service of the Committee membersexpires or there is any circumstance causing anyCommittee member to be unable to hold office untilexpiration of the term of service, thus making thenumber of the Committee members to be lower than theprescribed number of 3 (three) persons, the Board ofDirectors shall appoint the new Committee member(s)to fill up the vacancy(ies) immediately or not later than 1(one) month from the date of vacancy(ies) in theCommittee to ensure continuity of the performance ofwork of the Audit Committee.
The company secretary shall act as the secretary of theCommittee.
The quorum of the Audit Committee meeting shall notconstitute without at least 1 (one) independent director.
The Board of Directors shall select 1 (one) member ofthe Audit Committee to be Chairman of the AuditCommittee, who shall be an independent director.
Chairman of the audit committee shall remain present inthe Annual General Meeting (AGM).
Oversee the financial reporting process.
Monitor choice of accounting policies and principles.
Monitor Internal Control Risk management process.
Oversee hiring and performance of external auditors
Review along with the management, the annualfinancial statements before submission to the board forapproval.
Review along with the management, the quarterly andhalf yearly financial statements before submission to theboard for approval.
Review the adequacy of internal audit function.
Review statement of significant related partytransactions submitted by the management.
Review Management Letters/ Letter of Internal Controlweakness issued by statutory auditors.
TitleConditionNo.
Chairman of the Audit Committee
Role of Audit Committee
27
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)
3.4
3.4.1
3.4.2
3.5
(x)
(i)
(ii)
(ii) a)
(ii) b)
(ii) c)
(ii) d)
NotApplicable
√
NotApplicable
NotApplicable
NotApplicable
NotApplicable
NotApplicable
√
When money is raised through Initial Public Offering(IPO)/Repeat Public Offering (RPO)/Rights Issue thecompany shall disclose to the Audit Committee aboutthe uses/applications of funds by major category(capital expenditure, sales and marketing expenses,working capital, etc), on a quarterly basis, as a part oftheir quarterly declaration of financial results. Further,on an annual basis, the company shall prepare astatement of funds utilized for the purposes other thanthose stated in the offer document/prospectus.
The Audit Committee shall report on its activities to theBoard of Directors.
Report on conflicts of interests.
Suspected or presumed fraud or irregularity or materialdefect in the internal control system.
Suspected infringement of laws, including securitiesrelated laws, rules and regulations.
Any other matter which shall be disclosed to the Boardof Directors immediately.
The Audit Committee shall immediately report to the Board of Directors on the followingfindings, if any:-
TitleConditionNo.
Reporting of the Audit Committee
Reporting to the Board of Directors
Reporting to the Shareholders and General Investors:
Reporting to the Authorities:
If the Audit Committee has reported to the Board of Directors aboutanything which has material impact on the financial condition andresults of operation and has discussed with the Board of Directorsand the management that any rectification is necessary and if theAudit Committee finds that such rectification has beenunreasonably ignored, the Audit Committee shall report suchfinding to the Commission, upon reporting of such matters to theBoard of Directors for three times or completion of a period of 6(six) months from the date of first reporting to the Board ofDirectors, whichever is earlier
Report on activities carried out by the Audit Committee, includingany report made to the Board of Directors under condition 3.4.1 (ii)above during the year, shall be signed by the Chairman of theAudit Committee and disclosed in the annual report of the issuercompany.
28
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)
4.0
5.0
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(i)
(ii)
(iii)
(iv)
(v)
√
√
√
√
√
√
√
√
√
NotApplicable
NotApplicable
NotApplicable
NotApplicable
NotApplicable
External /Statutory Auditors should not engage in the following services
Subsidiary Company
TitleConditionNo.
Appraisal or valuation services or fairness opinions.
Financial information systems design andimplementation.
Book-keeping or other services related to theaccounting records or financial statements.
Broker-dealer services.
Actuarial services.
Internal audit services.
Any other service that the Audit Committee determines.
No partner or employees of the external audit firms shallpossess any share of the company they audit at leastduring the tenure of their audit assignment of thatcompany.
Audit/certification services on compliance of corporategovernance as required under clause (i) of condition No. 7
Provisions relating to the composition of the Board ofDirectors of the holding company shall be madeapplicable to the composition of the Board of Directorsof the subsidiary company.
At least 1 (one) independent director on the Board ofDirectors of the holding company shall be a director onthe Board of Directors of the subsidiary company.
The minutes of the Board meeting of the subsidiarycompany shall be placed for review at the followingBoard meeting of the holding company.
The minutes of the respective Board meeting of theholding company shall state that they have reviewed theaffairs of the subsidiary company also.
The Audit Committee of the holding company shall alsoreview the financial statements, in particular theinvestments made by the subsidiary company.
29
Compliance Status(Put √ in the
appropriate column)
Not Complied Complied
Remarks(if any)
6.0
7.0
(i)
(i) a)
(i) b)
(ii)
(i)
(ii)
√
√
√
√
√
Duties of Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
The CEO and CFO shall certify to the Board that:-
Reporting and Compliance of Corporate Governance
They have reviewed financial statements for the year and that to the best of their knowledge and belief:
These statements do not contain any materially untruestatement or omit any material fact or containstatements that might be misleading;
These statements together present a true and fair viewof the company’s affairs and are in compliance withexisting accounting standards and applicable laws.
There are, to the best of knowledge and belief, notransactions entered into by the company during theyear which are fraudulent, illegal or violation of thecompany’s code of conduct.
The company shall obtain a certificate from a practicingProfessional Accountant/ Secretary (Chartered Accountant/Cost and Management Accountant/ Chartered Secretary)regarding compliance of conditions of CorporateGovernance Guidelines of the Commission and shall sendthe same to the shareholders along with the Annual Reporton a yearly basis.
The directors of the company shall state in the directors'report whether the company has complied with theseconditions.
TitleConditionNo.
30
Certificate on Compliance with Conditions of Corporate Governance Guidelines
to the Shareholders of Bata Shoe Company (Bangladesh) Limited
(Issued under Condition No. 7 (i) of Corporate Governance Guidelines of “BSEC” vide notification no.
SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012)
We have examined the compliance with conditions of the corporate governance guidelines by Bata Shoe Company
(Bangladesh) Limited (Herein after referred to “the Company”) for the year ended 31 December 2015. These
conditions of corporate governance were issued by the Bangladesh Securities and Exchange Commission (BSEC)
vides its notification no. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 and SEC/CMRRCD/2006-
158/147/Admin/48 dated 21 July 2013.
Those charged with governance and the management of the Company is responsible for complying with the
conditions of corporate governance guidelines were issued by the Bangladesh Securities and Exchange
Commission (BSEC). Those charged with the governance of the Company are also responsible for stating in the
Director's report whether the Company has complied with the conditions of corporate governance guidelines.
Our responsibility is to provide a certificate about whether the Company is in compliance with the said conditions of
corporate governance based on our examination. Our examination for the purpose of issuing this certificate was
limited to the procedures including implementation thereof as adopted by the Company for ensuring the compliance
of the conditions of corporate governance and correct reporting of the status of the compliance on the attached
statement on the basis of evidence gathered and representation received. It is neither an audit nor an expression
of opinion on the financial statement of the Company.
To the best of our information and according to the explanations provided to us by the Company, we certify that, the
Company has complied for the year ended 31 December 2015 with the conditions of corporate governance
stipulated in the above mentioned guidelines issued by BSEC dated 07 August 2012.
Arun Kumer Kundu, FCAManaging PartnerArun & AnjanChartered Accountants
Dated, Dhaka30 April 2016
Arun & AnjanC H A R T E R E D A C C O U N TA N T S
Head Office: House # 33, SHAH ALI TOWER (13th Floor), Karwan Bazar, Dhaka – 1209. Branch office: House# 558 East Kazi para, kafrul, Mirpur, Dhaka-1216. Tel: 9104704, Cell:01819 401724,E-mail: [email protected]
31
Audit Committee Report
The Board of Directors of Bata Shoe Company (Bangladesh) Limited has constituted an Audit Committee to supportthe Board in fulfilling its oversight responsibilities.
The Audit Committee meeting was held twice for the year 2015. The Finance Director, Company Secretary and theHead of Internal Audit were invitees to the Audit Committee meeting.
Purpose of the Audit CommitteeThe role of Audit Committee is to monitor the integrity of the financial statements of the company and review and,when appropriate, make recommendations to the main board on business risks, internal controls and compliance.The Committee satisfies itself by means of suitable steps and appropriate information, that proper and satisfactoryinternal control system are in place to identify and contain business risks and the company’s business is conductedin a proper and financially appropriate manner.
Major Responsibilities of the Audit CommitteeIn 2015, the Audit Committee reviewed its terms of reference in line with requirements of Bangladesh Securities andExchange Commission’s (BSEC) notification on corporate governance. The Committee carried out its duties inaccordance with the terms of reference of the Audit Committee. Some of the major responsibilities of the AuditCommittee are as follows:
• Review the annual, half-yearly and quarterly financial statements and other financial results, and upon itssatisfaction of the review, recommend the same to the Board.
• Review the adequacy and effectiveness of financial reporting process, internal control system, riskmanagement, auditing matters, and the company’s processes for monitoring compliance with laws andregulations and the Codes of Conduct.
• Recommend appointment, termination and determination of audit fees for statutory auditors. Consider thescope of work, and oversee and evaluate the work performed by statutory auditors. Review permitted non-auditservices performed by statutory auditors.
• Exercise its oversight of the work of Internal Audit department of the company. Review the effectiveness ofInternal Audit function including performance, structure, adequacy of resources, and compliance withprofessional standards. Examine audit findings and material weaknesses and monitor implementation of auditaction plans.
Major Activities of the Audit Committee• Reviewed and recommended to the Board the quarterly and annual financial statements for the year ended 31
December, 2015.• Considered and made recommendation to the Board on the appointment and remuneration of external
auditors, Rahman Rahman Haq., Chartered Accountants for the year 2016.• Reviewed the management letter from external auditors for the year 2015 together with management’s
responses to the findings.• Approved the Internal Audit Plan for 2016, monitored progress and effected revisions when necessary.• Discussed Internal Audit reports and findings in detail with auditors and members of management and
monitored the status of implementation of audit action plans and provided guidance to ensure timelycompletion of action plans.
• Reviewed the activities of the compliance function, incidence reporting and actions, and the status ofenforcement of the company’s Codes of Conduct.
• Reviewed the Internal Audit Charter.• Reviewed and received report on the matters as per requirement from the Bangladesh Securities and
Exchange Commission (BSEC).
The above matters are significant recommendations for continuous improvement and therefore duly noted.
Rashidul HasanChairman, Audit Committee
32
Independent auditor's reportto the shareholders of Bata Shoe Company (Bangladesh) Limited
Report on the financial statements
We have audited the accompanying financial statements of Bata Shoe Company (Bangladesh) Limited ("the Company"), whichcomprise the statement of financial position as at 31 December 2015, and the statement of profit or loss and other comprehensiveincome, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significantaccounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with BangladeshFinancial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’spreparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2015,and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial ReportingStandards.
Other matter
The financial statements of the Company as at and for the year ended 31 December 2014 were audited by another auditor whoexpressed an unmodified opinion on those statements on 27 April 2015.
Report on other legal and regulatory requirements
In accordance with the Companies Act 1994 and the Securities and Exchange Rules 1987, 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 thepurpose 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 ourexamination of those books;
c) the statement of financial position and statement of profit or loss and other comprehensive income dealt with by the reportare in agreement with the books of account; and
d) the expenditure incurred was for the purposes of the Company’s business.
Dhaka, 28 April 2016 Rahman Rahman HuqChartered Accountants
33
Bata Shoe Company (Bangladesh) LimitedStatement of financial position
34
31 December 31 December
In Taka Note 2015 2014
Assets
property, plant and equipment 6 1,049,379,561 1,057,472,655
prepayments of rent 10.1 106,368,047 136,911,904
deferred tax assets 7 1,600,000 -
Non-current assets 1,157,347,608 1,194,384,559
inventories 8 2,266,352,009 2,159,099,409
accounts receivable 9 906,907,928 455,472,117
advances, deposits and prepayments 10 554,607,909 565,394,311
cash and cash equivalents 11 351,378,131 292,396,800
Total current assets 4,079,245,977 3,472,362,637
Total assets 5,236,593,585 4,666,747,196
Equity
share capital 12 136,800,000 136,800,000
reserves and surplus 13 2,828,208,424 2,434,223,893
Total equity 2,965,008,424 2,571,023,893
Liabilities
deferred liability 14 177,589,000 162,343,000
deferred tax liabilities 7 - 750,000
Non-current liabilities 177,589,000 163,093,000
creditors for goods 15 430,751,625 526,075,948
creditors for expenses 16 467,139,166 346,800,443
creditors for other finance 17 312,235,403 262,185,527
accrued expenses 18 410,874,941 382,765,944
unclaimed dividend 75,879,187 68,717,138
current tax liabilities 19 397,115,839 346,085,303
Total current liabilities 2,093,996,161 1,932,630,303
Total liabilities 2,271,585,161 2,095,723,303
Total equity and liabilities 5,236,593,585 4,666,747,196
The notes on pages 7 to 40 are an integral part of these financial statements.
Chitpan Kanhasiri Rashidul Hasan Md. Hashim RezaManaging Director Director Company Secretary
& GM Finance
As per our report of same date.
Dhaka, 28 April 2016 Rahman Rahman HuqChartered Accountants
Bata Shoe Company (Bangladesh) LimitedStatement of Profit or Loss and other Comprehensive Income
for the year ended 31 December
35
In Taka Note 2015 2014
revenue 20 8,522,801,619 8,076,995,037
cost of sales 21 (5,094,404,901) (4,945,486,549)
gross profit 3,428,396,718 3,131,508,488
exchange gain 5,239,590 6,886,918
other income 22 8,259,742 20,221,586
administration, selling and distribution expenses 23 (2,195,830,942) (2,096,017,729)
Operating profit 1,246,065,108 1,062,599,263
finance income 24 28,842,956 13,846,600
finance expense 25 (4,309,610) (4,951,020)
Net finance income 24,533,346 8,895,580
profit before contribution to wppf 1,270,598,454 1,071,494,843
contribution to workers' profit participation fund 26 (63,529,923) (53,574,742)
Profit before tax 30 1,207,068,531 1,017,920,101
income tax expense 31 (375,324,000) (317,250,000)
Profit for the year 831,744,531 700,670,101
other comprehensive income - -
Total comprehensive income 831,744,531 700,670,101
Earnings per share: 34.1
Basic & diluted earnings per share (par value tk 10) in taka 60.80 51.22
The notes on pages 7 to 40 are an integral part of these financial statements.
Chitpan Kanhasiri Rashidul Hasan Md. Hashim RezaManaging Director Director Company Secretary
& GM Finance
As per our report of same date.
Dhaka, 28 April 2016 Rahman Rahman HuqChartered Accountants
36
Bat
a S
ho
e C
om
pan
y (B
ang
lad
esh
) L
imit
edS
tate
men
t of
cha
nges
in e
quity
fo
r th
e y
ear
ended 3
1 D
ecem
ber
2015
Sh
are
Res
erve
on
No
n-
Gen
eral
Ret
ain
edTo
tal
cap
ital
reva
luat
ion
dis
trib
uta
ble
rese
rve
earn
ing
seq
uit
yIn
Taka
of
lan
dsp
ecia
l re
serv
e
Bal
ance
at
1 Ja
nu
ary
2015
136,
800,
000
60,6
31,1
83
998,
620
48,8
63,0
00
2,32
3,73
1,09
0 2,
571,
023,
893
Tota
l co
mp
reh
ensi
ve i
nco
me
Pro
fit f
or t
he y
ear
-
-
-
-
831,
744,
531
831,
744,
531
Oth
er c
ompr
ehen
sive
inco
me
-
-
-
-
-
-
Tota
l co
mp
reh
ensi
ve i
nco
me
-
-
-
-
831,
744,
531
831,
744,
531
Tran
sact
ion
wit
h o
wn
ers
Inte
rim d
ivid
end
2015
-
-
-
-
(294
,120
,000
)(2
94,1
20,0
00)
Fin
al d
ivid
end
2014
-
-
-
-
(143
,640
,000
)(1
43,6
40,0
00)
Bal
ance
at
31 D
ecem
ber
201
513
6,80
0,00
0 60
,631
,183
99
8,62
0 48
,863
,000
2,
717,
715,
621
2,96
5,00
8,42
4
for
the
year
end
ed 3
1 D
ecem
ber
2014
Sh
are
Res
erve
on
No
n-
Gen
eral
Ret
ain
edTo
tal
cap
ital
reva
luat
ion
dis
trib
uta
ble
rese
rve
earn
ing
seq
uit
yIn
Taka
of
lan
dsp
ecia
l res
erve
Bal
ance
at
1 Ja
nu
ary
2014
136,
800,
000
60,6
31,1
8399
8,62
0 48
,863
,000
2,
009,
391,
340
2,25
6,68
4,14
3
Tota
l co
mp
reh
ensi
ve i
nco
me
Pro
fit f
or t
he y
ear
-
-
-
-
700,
670,
101
700,
670,
101
Oth
er c
ompr
ehen
sive
inco
me
-
-
-
-
-
-
Ear
lier
year
tax
adj
ustm
ent
(3,2
90,3
51)
(3,2
90,3
51)
Tota
l co
mp
reh
ensi
ve i
nco
me
-
-
-
-
697,
379,
750
697,
379,
750
Tran
sact
ion
wit
h o
wn
ers
Inte
rim d
ivid
end
for
the
year
201
4-
-
-
-
(2
39,4
00,0
00)
(239
,400
,000
)F
inal
div
iden
d fo
r th
e ye
ar 2
013
-
-
-
-
(143
,640
,000
)(1
43,6
40,0
00)
Bal
ance
at
31 D
ecem
ber
201
413
6,80
0,00
0 60
,631
,183
99
8,62
0 48
,863
,000
2,
323,
731,
090
2,57
1,02
3,89
3
The
not
es o
n pa
ges
7 to
40
are
an in
tegr
al p
art
of t
hese
fin
anci
al s
tate
men
ts.
Bata Shoe Company (Bangladesh) LimitedStatement of cash flows
for the year ended 31 December 2015
37
In Taka Note 2015 2014
Cash flows from operating activities
cash receipts from customers 8,071,753,106 8,035,999,651
cash payments to and on behalf of employees (1,274,021,900) (1,299,182,104)
cash payments for deferred liabilities 14 (30,391,821) (10,350,777)
cash payments to suppliers and contractors for goods and services (5,850,057,590) (5,707,134,456)
cash generated from operating activities 917,281,795 1,019,332,314
interest received from std account 24 5,558,453 6,117,072
interest paid 25 (4,309,610) (4,951,020)
income tax paid 19.1 (326,643,464) (376,439,028)
Net cash from operating activities 591,887,174 644,059,338
Cash flows from investing activities
interest received from fdr 24 18,395,246 7,123,001
proceed from sales of property, plant and equipment 6.3 2,333,269 897,655
acquisition of property, plant and equipment 6 (123,036,407) (238,452,772)
Net cash used in investing activities (102,307,892) (230,432,116)
Cash flows from financing activities
dividend paid (430,597,951) (378,670,132)
Net cash used in financing activities (430,597,951) (378,670,132)
Net cash increase/(decrease) in cash and cash equivalents 58,981,331 34,957,090
Cash and cash equivalents at 1 January 292,396,800 257,439,710
Cash and cash equivalents at 31 December 351,378,131 292,396,800
Closing cash and cash equivalents have been arrived at as follows
cash and cash equivalents 11 351,378,131 292,396,800
351,378,131 292,396,800
the notes on pages 7 to 40 are an integral part of these financial statements.
38
Notes to the Financial Statements
39
1. Reporting entity
Bata Shoe Company (Bangladesh) Limited (hereinafter referred to as ("Bata"/"the Company") is a public Companylimited by shares. It was incorporated in Bangladesh in 1972 under the Companies Act 1913. The address of theregistered office of the Company is Tongi, Gazipur, Bangladesh. The Company is one of the operating companies ofworldwide Bata Shoe Organization (BSO). The shares in the Company are listed in both Dhaka Stock Exchange(DSE) and Chittagong Stock Exchange (CSE) and mostly held by Bafin (Nederland) B.V. The financial year of theCompany covers one year from 1 January to 31 December.
The Company is mainly engaged in manufacturing and marketing of leather, rubber, plastic, canvas footwear, hosieryand accessories items. Manufacturing plants of the Company are situated at Tongi and Dhamrai.
2. Basis of accounting
The financial statements have been prepared in accordance with Bangladesh Financial Reporting Standards (BFRS), theCompanies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.
The titles and format of these financial statements follow the requirements of BFRSs which are to some extentdifferent from the requirements of the Companies Act 1994. However, such differences are not material and in theview of management BFRSs titles and format give better presentation to the shareholders.
Financial Reporting Act 2015 (FRA) has been enacted during the year. Under the FRA, the Financial Reporting Council(FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as listed company.As the FRC is yet to be formed and as such no financial reporting standards have been issued as per the provisionsof the FRA, hence, the financial statements of the Company continue to be prepared in accordance with BangladeshFinancial Reporting Standards (BFRS), the Securities and Exchange rules 1987 and the Companies Act 1994.
These financial statements were authorised for issue by the Board of Directors at its 226th meeting held on 28 April 2016
3. Functional and presentational currency
These financial statements are presented in Bangladesh Taka (Taka/Tk) which is both functional and presentationalcurrency of the Company. The amounts in these financial statements have been rounded off to the nearest Taka exceptfor the amounts presented in revenue in note 20, segment reporting in note 5, related party transactions in note 37.2 &37.3 and operating lease payments disclosure in note 38 which have been rounded off to the nearest thousand Taka andcredit facilities available as at 31 December in note 11.1 have been rounded off to the nearest million Taka.
4. Use of judgments and estimates
In preparing these financial statements, management has made judgments, estimates and assumptions that affectthe application of company's accounting policies and the reported amounts of assets, liabilities, income andexpenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to estimates are recognisedprospectively.
A. Judgments
Information about judgments made in applying accounting policies that have the most significant effects on theamounts recognised in the financial statements is included in the following note:
Note 38 Operating leases
B. Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a materialadjustment in the year ending 31 December 2016 is included in the following notes:
Note 6 Property, plant & equipmentNote 7 Deferred tax assets (liabilities)Note 8 InventoriesNote 9 Accounts receivableNote 14 Deferred liabilityNote 19 Current tax liabilitiesNote 39 Capital expenditure and financial commitmentNote 40 Contingent liabilities
Notes to the financial statements (continued)
40
C. Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for bothfinancial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. Managementhas the overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.
Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information,such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses theevidence obtained from the third parties to support the conclusion that such valuations meet the requirements ofBFRS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of an asset or a liability, the Company uses market observable data as far aspossible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in thevaluation techniques as follows.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, eitherdirectly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fairvalue hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair valuehierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting periodduring which the change has occurred.
5. Operating segments
See accounting policies in note 46(n)
a) Basis for segmentation
The Company has two operating segments, Domestic and Unallocated, which are the company's strategic divisions.They are managed separately because they require different technology and marketing strategies. For each of thestrategic divisions, the company's management reviews internal management reports at least on a monthly basis.Of these two, only domestic segment is reportable. The following summary describes the operations in thecompany's reportable segments:
Reportable segments Operations
Domestic This segment is mainly engaged in manufacturing and marketing of leather,rubber, plastic and canvas footwear, hosiery and accessories in domestic market.
b) Information about reportable segments
Information related to each reportable segment is set out below. Segment profit from operation is used to measureperformance because management believes that this information is the most relevant in evaluating the results ofthe respective segments relative to other entities that operate in the same industries.
Notes to the financial statements (continued)
41
Reportable segmentsAll other
Taka in thousand Domestic Segments Total
2015
Revenue 8,458,376 64,426 8,522,802 Cost of sales (5,057,341) (37,064) (5,094,405)Gross profit 3,401,035 27,362 3,428,397 Exchange gain/(loss) - 5,239 5,239 Other income - 8,260 8,260 Administrative, selling and distribution expense (1,661,657) (534,174) (2,195,831)Profit from operation 1,739,378 (493,313) 1,246,065 Finance income - 28,843 28,843 Finance expense - (4,310) (4,310)Contribution to workers' profit participation fund (63,530) - (63,530)Profit before tax 1,675,848 (468,780) 1,207,068
2014
Revenue 7,987,119 89,876 8,076,995 Cost of sales (4,884,620) (60,867) (4,945,487)Gross profit 3,102,499 29,009 3,131,508 Exchange gain/(loss) - 6,887 6,887 Other income - 20,222 20,222 Administrative, selling and distribution exp. (1,546,326) (549,692) (2,096,018)Profit from operation 1,556,173 (493,574) 1,062,599 Finance income - 13,847 13,847 Finance expense - (4,951) (4,951)Contribution to workers' profit participation fund (53,575) - (53,575)Profit before tax 1,502,598 (484,678) 1,017,920
c) Reconciliation of information on reportable segments to BFRS measures
Taka in thousand Note 2015 2014
i. Revenue
Total revenue for reportable segments 8,458,376 7,987,119 Revenue for other segments - - Elimination of inter-segment revenue - - Total revenue 8,458,376 7,987,119
ii. Operating profit
Total profit before tax for reportable segments 1,675,848 1,502,598 Profit before tax for other segments (468,780) (484,678)Elimination of inter-segment profit - - Amount not related to reported segments - - Total profit before tax 1,207,068 1,017,920
iii. Amount not related to reportable segments
Technical services fee - - Unallocated corporate overheads - -
- -
d) Segment assets and liabilitiesThe necessary information regarding assets and liabilities of operating segments are not separable and individuallyidentifiable for this purpose. For this reason the assets and liabilities of the respective segments have not beenpresented here.
42
6. P
rop
erty
, p
lan
t an
d e
qu
ipm
ent
See
acc
ount
ing
polic
ies
in n
ote
46(c
)
Fu
rnit
ure
,U
nd
er
Pla
nt
and
fi
xtu
res
and
con
stru
ctio
n
In T
aka
Fre
eho
ld l
and
Bu
ildin
gm
ach
iner
yV
ehic
les
offic
e eq
uipm
ent
(No
te 6
.2)
Tota
l
Co
st
Bal
ance
at
1 Ja
nuar
y 20
1486
,057
,856
37
7,87
7,94
2 73
8,77
0,88
6 25
,008
,751
61
1,96
5,12
3 -
1,
839,
680,
558
Add
ition
s-
6,
201,
709
16,1
19,5
62
-
156,
763,
620
59,3
67,8
81
238,
452,
772
Tran
sfer
s-
-
-
-
-
-
-
Dis
posa
ls-
-
-
(4
,257
,655
)(2
,307
,471
)-
(6
,565
,126
)
Bal
ance
at
31 D
ecem
ber
201
486
,057
,856
38
4,07
9,65
1 75
4,89
0,44
8 20
,751
,096
76
6,42
1,27
2 59
,367
,881
2,
071,
568,
204
Bal
ance
at
1 Ja
nuar
y 20
1586
,057
,856
38
4,07
9,65
1 75
4,89
0,44
8 20
,751
,096
76
6,42
1,27
2 59
,367
,881
2,
071,
568,
204
Add
ition
s-
1,
024,
912
67,8
90,4
34
-
98,4
12,8
43
41,3
00,4
56
208,
628,
645
Tran
sfer
s-
-
-
-
-
(8
5,59
2,23
8)(8
5,59
2,23
8)
Dis
posa
ls-
-
(8
,167
,993
)(6
,300
,187
)(2
5,23
8,43
5)-
(3
9,70
6,61
5)
Bal
ance
at
31 D
ecem
ber
201
586
,057
,856
38
5,10
4,56
3 81
4,61
2,88
9 14
,450
,909
83
9,59
5,68
0 15
,076
,099
2,
154,
897,
996
Acc
umul
ated
dep
reci
atio
n
Bal
ance
at
1 Ja
nuar
y 20
14-
18
1,13
1,21
3 44
2,68
4,86
4 21
,376
,683
26
1,94
3,19
3 -
90
7,13
5,95
3
Dep
reci
atio
n fo
r th
e ye
ar-
7,
915,
712
33,1
02,9
47
1,40
8,38
9 70
,788
,228
-
11
3,21
5,27
6
Adj
ustm
ent
for
disp
osal
/tran
sfer
s-
-
-
(4
,257
,655
)(1
,998
,025
)-
(6
,255
,680
)
Bal
ance
at
31 D
ecem
ber
201
4-
18
9,04
6,92
5 47
5,78
7,81
1 18
,527
,417
33
0,73
3,39
6 -
1,
014,
095,
549
Bal
ance
at
1 Ja
nuar
y 20
15-
18
9,04
6,92
5 47
5,78
7,81
1 18
,527
,417
33
0,73
3,39
6 -
1,
014,
095,
549
Dep
reci
atio
n fo
r th
e ye
ar-
7,
940,
511
37,3
41,0
58
633,
840
78,3
10,9
62
-
124,
226,
371
Adj
ustm
ent
for
disp
osal
/tran
sfer
s-
-
(7
,311
,756
)(5
,344
,187
)(2
0,14
7,54
2)-
(3
2,80
3,48
5)
Bal
ance
at
31 D
ecem
ber
201
5-
19
6,98
7,43
6 50
5,81
7,11
3 13
,817
,070
38
8,89
6,81
6 -
1,
105,
518,
435
Car
ryin
g am
ount
s
At
31 D
ecem
ber
2014
86,0
57,8
56
195,
032,
726
279,
102,
637
2,22
3,67
9 43
5,68
7,87
6 59
,367
,881
1,
057,
472,
655
At
31 D
ecem
ber
201
586
,057
,856
18
8,11
7,12
7 30
8,79
5,77
6 63
3,83
9 45
0,69
8,86
4 15
,076
,099
1,
049,
379,
561
The
Com
pany
rev
alue
d its
land
of T
ongi
fac
tory
at
1979
by
Tk.
60,
631,
183.
Bui
ldin
g in
clud
es p
rope
rtie
s at
24
Ban
gaba
ndhu
Ave
nue,
Dha
ka w
hich
wer
e pu
rcha
sed
in 1
985
from
the
Gov
ernm
ent
of B
angl
ades
h at
a c
ost
of T
k 5,
344,
417.
Sal
e de
edis
yet
to
be e
xecu
ted.
6.1
Allo
cati
on
of
dep
reci
atio
n
In T
aka
No
te20
1520
14
Cos
t of
sal
es21
.1
36,7
61,1
79
32,5
65,1
75
Adm
inis
trat
ion,
sel
ling
and
dist
ribut
ion
expe
nses
23
87,4
65,1
92
80,6
50,1
01
124,
226,
371
113,
215,
276
Not
es t
o th
e fin
anci
al s
tate
men
ts (
cont
inue
d)
Notes to the financial statements (continued)
43
6.2 Under construction as follows
31 December 2015Opening Closing
In Taka balance Addition Transfer Balance
Plant and machinery 56,203,366 14,510,349 (14,428,785) 56,284,930 Furniture for different stores 3,164,515 25,459,457 (69,832,803) (41,208,831)
Total 59,367,881 39,969,806 (84,261,588) 15,076,099
31 December 2014Opening Closing
In Taka balance Addition Transfer Balance
Plant and machinery - 56,203,366 - 56,203,366 Furniture for different stores - 3,164,515 - 3,164,515
Total - 59,367,881 - 59,367,881
6.3 Disposal of property, plant and equipment
31 December 2015Original Accumulated Book Mode of
In Taka cost depreciation value Sales value disposal Purchaser
Machinery 8,167,993 7,311,756 856,238 79,908 Auction Various partiesMotor car 6,300,187 5,344,187 956,000 1,343,119 Auction Various partiesComputer 110,260 55,130 55,130 68,097 Insurance claim N/AFurniture andequipment in shops 25,128,175 20,092,412 5,035,762 842,145 Auction Various parties
39,706,615 32,803,485 6,903,130 2,333,269
31 December 2014
Original Accumulated Book Mode ofIn Taka cost depreciation value Sales value disposal Purchaser
Machinery 4,257,655 4,257,655 - 486,238 Auction Various partiesComputer 414,086 282,781 131,305 282,624 Negotiations Insurance claim/
Various partiesFurniture andequipment in shops 1,893,385 1,715,244 178,141 128,793 Auction Various parties
6,565,126 6,255,680 309,446 897,655
6.4 C&F value of imported capital assets
The import of capital assets by the company at C&F value was as follows:
Foreign currency Local currency
Capital assets 2015 2014 2015 2014
Plant and machinery and USD 126,443 1,014,479 9,871,446 78,746,051
furniture and fixtures in shops GBP - - - -
EUR - - - -
126,443 1,014,479 9,871,446 78,746,051
Notes to the financial statements (continued)
44
7. Deferred tax assets (liabilities)
See accounting policies in note 46(l)
2015 Recognised Balance as at 31 DecemberNet balance in profit Deferred tax Deferred tax
Taka in thousand at 1 January or loss Net assets liabilities
Property, plant and equipment (52,887,412) 3,062,428 (55,949,840) - (55,949,840)Deferred liability 40,179,893 (4,217,357) 44,397,250 44,397,250 - Bad & doubtful debt provision 5,190,989 (1,527,469) 6,718,458 6,718,458 - Personal account provision 6,798,155 425,612 6,372,543 6,372,543 - Rounded off (31,625) (93,214) 61,589 61,589 -
Deferred tax assets (liabilities) (750,000) (2,350,000) 1,600,000 57,549,840 (55,949,840)
Net deferred tax assets 1,600,000
2014 Recognised Balance as at 31 December
Net balance in profit Deferred tax Deferred taxTaka in thousand at 1 January or loss Net assets liabilities
Property, plant and equipment (53,596,889) (709,477) (52,887,412) - (52,887,412)Deferred liability 33,290,419 (6,889,474) 40,179,893 40,179,893
- Bad & doubtful debt provision - (5,190,989) 5,190,989 5,190,989
- Personal account provision 5,966,255 (831,900) 6,798,155 6,798,155
- Rounded off (159,785) (128,160) (31,625) -
(31,625)
Deferred tax assets (liabilities) (14,500,000) (13,750,000) (750,000) 52,169,037 (52,919,037)
Net deferred tax liabilities (750,000)
8. Inventories
See accounting policies in note 46(d)
In Taka 2015 2014
Raw materials 350,759,390 349,157,694 Work in process 56,396,852 63,491,401 Finished goods 1,859,195,767 1,746,450,314
2,266,352,009 2,159,099,409
9. Accounts receivable
See accounting policies in note 46(b)
In Taka Note 2015 2014
Trade receivables- Export customers - Non BSO companies 3,944,665 1,458,871 - Export customers - BSO companies 3,107,616 8,053,327 - Receivables from dealers 908,263,058 446,760,746 - Receivables from institutional sale 10,949,701 18,943,582
926,265,040 475,216,526 Other receivables
- Interest receivable 5,495,784 606,527 - VAT claims 580,795 586,664 - Import claim receivable - 36,094 - Insurance claim 56,481 -
6,133,060 1,229,285 932,398,100 476,445,811
Provision for doubtful debts 9.1 (25,490,172) (20,973,694)
906,907,928 455,472,117
Notes to the financial statements (continued)
45
9.1 Provision for doubtful debts
See accounting policies in note 46(b)
In Taka Note 2015 2014
Balance as at 1 January 20,973,694 -
Provision made during the year 23.1 4,516,478 20,973,694
Balance as at 31 December 25,490,172 20,973,694
Accounts receivable are aged as below:
2015 2014
Below Over Below Over
In Taka six months six months six months six months
Export customers - non BSO companies 3,944,665 - 1,458,871 -
Export customers - BSO companies 3,107,616 - 8,053,327 -
Receivables from dealers 882,772,886 25,490,172 426,052,762 20,707,984
Receivables from institutional sale 10,949,701 - 18,677,872 265,710
Interest receivable 5,495,784 - 606,527 -
VAT claims 580,795 - 586,664 -
Import claim receivable - - 36,094 -
Insurance claim 56,481 - - -
906,907,928 25,490,172 455,472,117 20,973,694
9.2 Debts due by directors, officers and other related parties
As at 31 December 2015, accounts receivables does not include any amount due by:
(a) Directors and other officers of the company;
(b) Firms or private limited companies respectively in which any director of the company is a partner, director or member, other
than those disclosed in note 36.1; and
(c) Companies under the same management.
10. Advances, deposits and prepayments
In Taka Note 2015 2014
Advances (considered good) to:
Agents and employees 20,778,585 15,378,295
Suppliers against materials and services 2,205,814 6,695,559
22,984,399 22,073,854
Security and other deposits 426,662,685 430,814,511
Prepayments to landlords-current portion 10.1 104,960,825 112,505,946
554,607,909 565,394,311
10.1 Prepayments of rent
In Taka Note 2015 2014
Prepayments to landlords 211,328,872 249,417,850
Less: Current portion 10 104,960,825 112,505,946
Non-current portion 106,368,047 136,911,904
Notes to the financial statements (continued)
46
10.2 Loans and advances to directors, officers and other related parties
Other than those mentioned in the note above, there were no loans or advances to:(a) Directors of the company;(b) Firms or private limited companies respectively in which any director of the company is a partner, director or member; and(c) Companies under the same management.
11. Cash and cash equivalents
See accounting policies in note 46(b)
In Taka 2015 2014
Cash in hand 7,205 1,817
Cash at Bank 24,370,926 92,394,983
Fixed deposits 327,000,000 200,000,000
351,378,131 292,396,800
11.1 Credit facilities available as at 31 DecemberThe company enjoys both funded and non funded short term working capital facilities with two banks. The non funded facilitiesinclude Letters of Credit (LC), Letters of Guarantee, Packing Credit, LDBP, FDBP and foreign exchange forward contracts (FXForward). The funded facilities include overdraft facility, short term loan and import loan. The aggregate amount of available shortterm working capital facilities is Tk 1,000 million (2014: Tk 1,000 million) of which non funded limit is Tk 700 million (2014: Tk 700million) and funded limit is Tk 300 million (2014: Tk 300 million).
Details of the total facilities are stated below:
(a) HSBC Bank
i) L/C facility - Tk 300 million (2014: Tk 300 million).
ii) Overdraft / short term loan facility - Tk 100 million (2014: Tk 100 million).
(b) EBL Bank
i) L/C facility - Tk 393 million (2014: Tk 394 million).ii) Overdraft facility / short term loan facility - Tk 200 million (2014: Tk 200 million).iii) Letters of Guarantee - Tk. 7 million (2014: Tk 6 million)
Taka in million 2015 2014
Total credit facilities available 1,000 1,000
Credit facilities availed 101 110
12. Share capital
See accounting policies in note 46(f)
In Taka 2015 2014
Authorised:
20,000,000 ordinary shares of Tk 10 each 200,000,000 200,000,000
200,000,000 200,000,000
Issued, subscribed and paid up:
2,850,723 ordinary shares of Tk 10 each issued for cash 28,507,230 28,507,230
10,829,277 ordinary shares (including 7,202,400 bonus shares)
of Tk 10 each issued for consideration other than cash 108,292,770 108,292,770
136,800,000 136,800,000
The shares are listed both in the Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited and quoted atTk 1,317.70 (2014: Tk 1,172.10) and Tk 1,348.00 (2014: Tk 1,143.80) per share at 31 December 2015 and 2014 respectively.
Notes to the financial statements (continued)
47
2015 2014
Percentage of shareholdings % Taka % Taka
Bafin (Nederland) B.V 70.00 95,760,000 70.00 95,760,000 Non-resident shareholders 9.84 13,466,410 8.05 11,012,540 Local shareholders 20.16 27,573,590 21.95 30,027,460
100.00 136,800,000 100.00 136,800,000
Classification of shareholders by range:Number of shareholders Number of shares
Shareholder's range 2015 2014 2015 2014
Less than 501 shares 5,048 5,195 576,681 683,221 501 to 5,000 shares 329 375 503,464 653,626 5,001 to 10,000 shares 31 24 232,336 277,540 10,001 to 20,000 shares 23 27 329,086 310,597 20,001 to 30,000 shares 9 11 226,008 122,768 30,001 to 40,000 shares 5 6 170,872 212,500 40,001 to 50,000 shares 2 1 87,514 143,100 50,001 to 100,000 shares 5 2 335,929 280,500 100,001 to 1,000,000 shares 9 7 1,642,110 1,420,148 Over 1,000,000 shares 1 1 9,576,000 9,576,000
5,462 5,649 13,680,000 13,680,000
13. Reserves and surplus
In Taka Note 2015 2014
Reserve on revaluation of land 60,631,183 60,631,183 Non-distributable special reserve 13.1 998,620 998,620 General reserve 48,863,000 48,863,000 Retained earnings 13.2 2,717,715,621 2,323,731,090
2,828,208,424 2,434,223,893
13.1 Non-distributable special reserveThis represents 90% of the cumulative post-tax profit in respect of certain categories of income up to 1992 as defined anddirected by Bangladesh Bank. Since 1993, the requirement for continuing to create such special reserve is applicable onlyto the profit on sale of immovable assets such as land, buildings etc.
13.2 Retained earnings
In Taka 2015 2014
Balance as at 1 January 2,323,731,090 2,009,391,340 Profit for the year 831,744,531 700,670,101 Prior year adjustment - (3,290,351)Interim dividend (294,120,000) (239,400,000)Final dividend (143,640,000) (143,640,000)
2,717,715,621 2,323,731,090
14. Deferred liabilitySee accounting policies in note 46(g)
In Taka 2015 2014
Balance as at 1 January 162,343,000 134,506,744 Add: Provision made / (reversed) during the year 45,637,821 38,142,033
207,980,821 172,648,777 Less: Paid during the year 30,391,821 10,305,777
177,589,000 162,343,000
Deferred liability represents provision for staff gratuity up to 31 December 2015.
Notes to the financial statements (continued)
48
15. Creditors for goods
See accounting policies in note 46(b)
In Taka 2015 2014
Payable to local suppliers 413,646,967 508,452,080 Payable to Foreign suppliers 657,937 - Payable to BSO companies 16,446,721 17,623,868
430,751,625 526,075,948
16. Creditors for expenses
See accounting policies in note 46(b)
In Taka 2015 2014
Payable to local suppliers 32,921,755 74,952,545 Payable to Foreign suppliers 3,743,850 - Payable to BSO companies 430,473,561 271,847,898
467,139,166 346,800,443
17. Creditors for other finance
See accounting policies in note 46(b)
In Taka Note 2015 2014
Workers' profit participation fund 26 63,529,923 53,574,742 Personal accounts of employees and agents 74,800,938 78,983,164 Security and other deposits 25,524,500 25,544,500 Provident fund 9,041,955 10,489,028 Tax deducted at source 67,293,907 47,441,190 Pension fund 687,230 621,818 VAT deducted at source 11,959,840 2,972,806 Salary and wages payable 37,497,438 21,321,732 Others 21,899,672 21,236,547
312,235,403 262,185,527
18. Accrued expenses
See accounting policies in note 46(b)
In Taka 2015 2014
Bonus 83,000,000 63,280,000 Utility 9,780,000 10,958,000 Legal & audit fee 3,200,800 2,418,050 Royalty 39,994,253 23,043,028 Joint venture commission 7,832,713 8,453,726 Other accrued liabilities 267,067,175 274,613,140
410,874,941 382,765,944
19. Current tax liabilities
See accounting policies in note 46(l)
In Taka Note 2015 2014
Income tax paid 19.1 226,617,063 233,473,827 Provision for income tax 19.2 623,732,902 579,559,130
397,115,839 346,085,303
49
19.1 Income tax paidIn Taka 2015 2014Balance at 1 January 233,473,827 198,325,148 Paid during the year for theIncome year ended 31 December 2015 167,319,668 - Income year ended 31 December 2014 147,846,750 179,048,804 Income year ended 31 December 2013 - 192,876,580 Income year ended 31 December 2012 3,298,383 - Income year ended 31 December 2011 6,604,674 - Income year ended 31 December 2009 1,173,548 4,513,645 Income year ended 31 December 2008 400,441 -
560,117,291 574,764,177 Adjustment of advance tax on completion of assessment (333,500,228) (341,290,350)Balance at 31 December 226,617,063 233,473,827
19.2 Provision for income taxIn Taka 2015 2014Balance at 1 January 579,559,130 586,559,130 Provision for the year 370,000,000 331,000,000 Prior year adjustment 7,674,000 3,290,350
957,233,130 920,849,480 Adjustment of tax provision on completion of assessment (333,500,228) (341,290,350)Balance at 31 December 623,732,902 579,559,130
20. RevenueSee accounting policies in note 46(i)In thousand 2015 2015 2014 2014
Pair Amount Pair Amount Local
Shoes 29,043 8,146,099 29,050 7,673,652 Hosiery & accessories - 330,307 - 313,467
Export - 46,396 - 89,876 8,522,802 8,076,995
21. Cost of salesIn Taka Note 2015 2014Stock of finished goods as at 1 January 1,746,450,314 1,710,433,990 Cost of goods manufactured 21.1 3,685,473,569 3,795,906,908 Finished goods purchased 1,521,676,785 1,185,595,965 Cost of finished goods available for sale 6,953,600,668 6,691,936,863 Stock of finished goods as at 31 December (1,859,195,767) (1,746,450,314)
5,094,404,901 4,945,486,549
The opening and closing stocks of goods produced are shown below:Figures in '000 pairs
Closing stock Opening stock Shoes 4,683 4,923
21.1 Cost of goods manufacturedIn Taka Note 2015 2014Cost of materials consumed 21.1.1 2,821,717,142 2,908,608,450 Direct wages 474,224,466 539,920,622 Prime cost 3,295,941,608 3,448,529,072
Manufacturing overhead:- Remuneration to employees 185,801,298 171,410,278 - Gas, water and electricity 39,629,243 52,694,243 - Repairs and maintenance 21.1.2 75,848,401 64,774,558 - Insurance 8,378,233 7,612,131 - Uniform for workers 1,259,272 - - Health and other welfare expenses 22,679,966 24,048,092 - Travelling 6,116,053 7,020,354 - Postage 1,590,940 1,927,520 - Stationery 1,429,013 2,355,905 - Entertainment 2,943,814 3,154,025 - Depreciation 6.1 36,761,179 32,565,175
382,437,412 367,562,281
Cost of production 3,678,379,020 3,816,091,353 Difference in work in process:
- Work in process as at 1 January 63,491,401 43,306,956 - Work in process as at 31 December (56,396,852) (63,491,401)
7,094,549 (20,184,445)3,685,473,569 3,795,906,908
Notes to the financial statements (continued)
Not
es t
o th
e fin
anci
al s
tate
men
ts (
cont
inue
d)
50
21.1
.1C
ost
of
mat
eria
ls c
on
sum
ed
In T
aka
Op
enin
g s
tock
Pu
rch
ase
Clo
sin
g s
tock
Co
nsu
mp
tio
n
Impo
rted
108,
958,
065
775,
040,
264
112,
003,
879
771,
994,
450
Loca
l pur
chas
e22
2,22
2,82
3 2,
057,
709,
238
230,
209,
369
2,04
9,72
2,69
2
2015
33
1,18
0,88
8 2,
832,
749,
502
342,
213,
248
2,82
1,71
7,14
2
2014
39
1,02
8,07
0 2,
848,
761,
268
331,
180,
888
2,90
8,60
8,45
0
Dut
y dr
awba
ck o
f Tk.
1,2
68,7
75 c
laim
ed o
n ex
port
sal
es h
ave
been
adj
uste
d ag
ains
t co
st o
f ra
w m
ater
ials
.
Cos
t of
mat
eria
ls c
onsu
med
is 2
7% im
port
ed a
nd 7
3% lo
cally
pur
chas
ed (
2014
: 29
% im
port
ed a
nd 7
1% lo
cally
pur
chas
ed).
21.1
.2R
epai
rs a
nd
mai
nte
nan
ce
Rep
airs
and
mai
nten
ance
am
ount
ing
to T
k 75
,848
,401
incl
udes
Tk
46,8
03,8
11 (
incl
udin
g C
&F
val
ue o
f U
S$
548,
522,
EU
RO
25,
739
and
GB
P 1
3,80
7 of
impo
rted
item
s)re
pres
entin
g co
st o
f sp
are
part
s, m
ould
s an
d ac
cess
orie
s co
nsum
ed.
21.2
Sta
tem
ent
of
pro
du
ctio
n c
apac
ity
and
act
ual
pro
du
ctio
n
Pro
du
ctio
n c
apac
ity
in p
airs
A
ctu
al p
rod
uct
ion
in
pai
rsC
apacity in t
housand
2015
2014
2015
2014
Tong
i26
,487
26
,487
19
,601
19
,742
D
ham
rai
9,95
4 9,
954
7,07
4 7,
060
36,4
41
36,4
41
26,6
75
26,8
02
51
Notes to the financial statements (continued)
22. Other income
In Taka 2015 2014
Gain/(loss) on disposal of property, plant and equipment (4,569,861) 588,209
Discount for early payment 12,829,603 19,633,377
8,259,742 20,221,586
23. Administration, selling and distribution expenses
In Taka Note 2015 2014
Remuneration to employees 612,949,597 527,535,810
Health and other welfare expenses 13,041,348 13,780,529
Travelling expenses 60,077,664 77,962,266
Bank charges 1,824,263 1,603,264
Repairs and maintenance 63,785,013 70,465,915
Stationery 15,836,573 17,982,488
Postage, telegram and telephone 9,617,540 10,406,046
Entertainment expenses 16,196,328 16,370,347
Subscription and donation 1,663,334 1,653,134
Advertisement 37,038,002 34,003,739
Rent, rates and taxes 441,590,607 385,356,807
General charges 23.1 20,600,896 51,479,092
Directors' fees 90,000 104,000
Auditors' fees 575,000 546,250
Legal and other professional fees 23.2 4,742,720 6,925,960
Insurance 4,997,478 5,881,058
Land revenue 497,125 999,786
Freight and transport 67,207,397 72,028,955
Packing expenses 72,203,143 80,936,766
Commission 23.3 263,181,868 240,690,360
Royalty on Hush Puppies brand 23.4 13,282,338 13,592,913
Royalty on Dr. Scholl brand 23.4 5,124,427 4,385,579
Royalty on Naturalizer Brand 23.4 450,129 434,965
Royalty on Ben10 & Powerpuff Girls 23.4 2,723,902 -
Global Footwear Services fees 23.4 121,780,627 131,340,405
Trade mark license fees 23.4 179,821,929 171,167,152
IT fees 8,251,867 9,882,726
Electricity 69,214,635 67,851,316
Depreciation 6.1 87,465,192 80,650,101
2,195,830,942 2,096,017,729
23.1 General charges
General charges comprises of provision for bad debt TK 4,516,478 (Note: 9.1).
23.2 Legal and other professional fees
Legal and other professional fees include fees of Tk 1,488,500 (2014: Tk 1,134,700) to the audit firms in connectionwith global reporting, tax certification and services regarding assessments/appeals and advisory services.
Notes to the financial statements (continued)
52
23.3 Commission
In Taka 2015 2014
Retail 136,721,302 149,478,335 Wholesale 125,980,450 90,954,453 Export 480,116 257,572
263,181,868 240,690,360
23.4 Royalty on Hush Puppies, Dr. Scholl and Naturalizer brands, Ben10 & Powerpuff girls, Global Footwear Servicesfees and Trade Mark License fees of Tk 13,282,338 Tk. 5,124,427 Tk.450,129 Tk. 2,723,902 Tk. 121,780,627 andTk 179,821,929 respectively represent equivalent foreign currency of USD 169,418, USD 65,363, USD 5,741, SGD2,100,000 and USD 2,293,646 provided during the year.
24. Finance incomeSee accounting policies in note 46(k)
In Taka 2015 2014
Interest on:- Fixed deposit 18,395,246 7,123,001 - Short term deposit 5,558,453 6,117,072 - Personal account 4,889,257 606,527
28,842,956 13,846,600
25. Finance expense
See accounting policies in note 46(k)
In Taka 2015 2014
Interest on:- Overdraft 320,572 375,145 - Personal account 3,989,038 4,575,875
4,309,610 4,951,020
26. Contribution to workers' profit participation fundSee accounting policies in note 46(q)
In Taka 2015 2014
Profit from operating activities 1,246,065,108 1,062,599,263 Net finance income/(expense) 24,533,346 8,895,580
Profit before contribution to workers' profit participation fund 1,270,598,454 1,071,494,843
Workers' profit participation fund @ 5% 63,529,923 53,574,742
27. Emoluments to directors
In Taka 2015 2014
Remuneration 13,120,008 13,063,088 Bonus 4,990,496 4,185,600 Retirement benefit schemes 1,035,996 994,239 Housing 4,455,000 3,960,000
23,601,500 22,202,927
Notes to the financial statements (continued)
53
28. Emoluments to managers
In Taka 2015 2014
Remuneration 93,593,782 99,558,844 Retirement benefit schemes 16,104,752 13,909,833 Housing 18,948,963 12,539,349
128,647,497 126,008,026
29. Contribution to employees' provident fund and pension fund
See accounting policies in note 46(p)
In Taka 2015 2014
Provident fund:- Managers 7,404,590 6,597,914 - Officers & supervisors 12,396,947 10,421,968 - Workers 10,134,091 11,027,469
29,935,628 28,047,351 Pension fund 8,700,162 8,306,158
38,635,790 36,353,509
30. Profit before tax See accounting policies in note 46(u)
Profit before tax Tk.1,207,068,531 (2014: Tk. 1,017,920,101) includes profit amounting to Tk 201,163,945 (2014: Tk.34,150,225) of leather shoe factory at Dhamrai and Tk.1,005,904,586 (2014: Tk. 983,769,876) at Tongi.
31. Income tax expensesSee accounting policy in note 46(l)
A. Amounts recognised in profit or loss
In Taka 2015 2014
Current tax expense
Current year 370,000,000 331,000,000 Prior year adjustment 7,674,000 -
377,674,000 331,000,000
B. Deferred tax (income)/expense
Change in recognised deductible temporary and other differences (2,350,000) (13,750,000)
(2,350,000) (13,750,000)
Tax expense on continuing operations 375,324,000 317,250,000
C. Reconciliation of effective tax
In Taka 2015 2014
Profit before tax 1,207,068,531 1,017,920,101
Factors affecting the tax charge for current period:
Income tax using the Company’s domestic tax rate 25.0% 301,767,133 27.5% 279,928,028 Non-deductible expenses 5.4% 65,138,189 8.7% 88,931,627 Tax exempt income -0.1% (970,322) -0.2% (2,000,995)Tax incentives 0.0% - -3.6% (36,685,866)Round off adjustment 0.3% 3,979,043 0.1% 699,046 Under/(over) provided in prior year -0.2% (2,264,042) -1.3% (13,621,840)Change in estimate related to prior year 0.6% 7,674,000 0.3% 3,290,351
31.1% 375,324,000 31.5% 320,540,351
Notes to the financial statements (continued)
54
32. Remittance of foreign currency
See accounting policies in note 46(a)
2015 2014
Name of the parties Nature of transaction Currency FC Taka FC Taka
Baffin (Nederland) B.V. Dividend USD 3,507,913 275,788,800 3,085,147 241,315,200
SSL International PLC Royalty on Dr. Scholl Brand GBP - - - -
Global Footwear Services Management services fees SGD 1,417,500 83,892,375 1,663,200 103,862,682 Pte. Ltd., Singapore
Wolverine World Royalty on Hush Puppies Brand USD - - 127,912 10,098,681 Wide Inc., USA Consultancy Fees USD 4,684 369,807
Euro Footwear Holdings IT Fees EUR 78,000 6,716,705 60,000 6,525,000 S.a.r.l USD 2,238 174,570 1,318 102,773
Bata Brands S.a.r.l - Trade Mark License Fees USD - - 3,850,524 301,945,237 Swiss Branch
OctaShop eRetail Servises Consultancy Fees USD 5,400 441,840 - - Private Ltd.
The figures represent net of tax.
33. Earnings in foreign currency
See accounting policies in note 46(a)
In taka 2015 2014
Export of shoes and other footwear goods 46,396,428 89,875,763
46,396,428 89,875,763
34. Earnings per share
See accounting policies in note 46(m)
34.1 Basic earnings per share (EPS)
In taka 2015 2014
Earnings attributable to the ordinary shareholders (net profit after tax) 831,744,531 700,670,101
Weighted average number of ordinary shares outstanding during the year 13,680,000 13,680,000
Basic earnings per share (EPS) 60.80 51.22
34.2 Diluted earnings per share
No diluted earnings per share is required to be calculated for the year as there was no potentially dilutive ordinary shares during the year.
So both basic and diluted earning per share are same.
35. Number of employees
The number of employees for the whole year or part thereof who received a total remuneration of Tk 36,000 and above was 1,723
(2014: 1,816).
Notes to the financial statements (continued)
55
36. Financial risk managementThe management has overall responsibility for the establishment and oversight of the company's risk management framework. Thecompany's risk management policies are established to identify and analyse the risks faced by the company to set appropriate risklimits and controls, and to monitor risks and adherence to limits. Risk management policies, procedures and systems are reviewedregularly to reflect changes in market conditions and the company's activities.This note presents information about the company'sexposure to each of the following risks, the Company's objectives, policies and processes for measuring and managing risk, andthe Company's management of capital. The company has exposure to the following risks from its use of financial instruments;
● Credit risk● Liquidity risk● Market risk
36.1 Credit riskCredit risk is the risk of a financial loss to the company if a customer or counterparty to a financial instrument fails to meet itscontractual obligations, and arises principally from the company's receivables from dealers, institutional and export customers etc.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
In monitoring credit risk, debtors are Grouped according to their risk profile, i.e. their legal status, financial condition, ageing profileetc. Accounts receivable are mainly related to sale of shoes, hosiery, accessories and finished leather etc.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financialposition.
a) Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at thereporting date was:
In Taka Note 2015 2014
Trade receivables 9
Export customers - Non BSO companies 3,944,665 1,458,871
Export customers - BSO companies 3,107,616 8,053,327
Receivables from dealers 908,263,058 446,760,746
Receivables from institutional sale 10,949,701 18,943,582
926,265,040 475,216,526
Other receivable 9 6,133,060 1,229,285
Security and other deposits 10 426,662,685 430,814,511
Cash and cash equivalents 11 351,378,131 292,396,800
1,710,438,916 1,199,657,122
The maximum exposure to credit risk for accounts receivable as at 31 December by geographic regions was:
In Taka 2015 2014
Domestic 919,212,758 465,704,328
Asia 5,545,942 8,053,327
Australia 1,226,882 1,458,871
South America 279,457 -
926,265,040 475,216,526
Notes to the financial statements (continued)
56
b) Ageing of receivables
In Taka Note 2015 2014
Export customers - Non BSO companies 9
- Invoiced 0-30 days 1,226,882 1,458,871
- Invoiced 31-60 days 2,717,783 -
3,944,665 1,458,871
Export customers - BSO companies 9
- Invoiced 0-30 days 279,457 2,009,362
- Invoiced 31-60 days - 2,678,863
- Invoiced 61-90 days 2,828,159 3,365,102
3,107,616 8,053,327
Receivables from domestics 9
- Invoiced 0-30 days 347,987,525 239,917,290
- Invoiced 31-60 days 241,339,161 165,819,770
- Invoiced 61-90 days 234,489,890 22,993,621
- Invoiced 91-365 days 74,207,781 20,688,011
- Invoiced over 365 days 21,188,401 16,285,636
919,212,758 465,704,328
c) Impairment losses
Impairment losses on the above receivables were recognised as per the company policy mentioned in note 3.2.1.1.
Quantitative disclosure for such impairment losses are as below:
In Taka Note 2015 2014
Receivables from dealers
- Accounts receivable 9 908,263,058 446,760,746
- Provision for doubtful debts 9.1 (25,490,172) (20,960,474)
882,772,886 425,800,272
Receivables from institutional sale
- Accounts receivable 9 10,949,700 18,943,582
- Provision for doubtful debts 9.1 - (13,220)
10,949,700 18,930,362
Not
es t
o th
e fin
anci
al s
tate
men
ts (
cont
inue
d)
57
36.2
Liq
uid
ity
risk
Liqu
idity
ris
k is
the
risk
that
the
com
pany
will
not
be
able
to m
eet i
ts fi
nanc
ial o
blig
atio
ns a
s th
ey fa
ll du
e. T
he c
ompa
ny's
app
roac
h to
man
agin
g liq
uidi
ty (
cash
and
cas
h eq
uiva
lent
s) is
to e
nsur
e,as
far
as
poss
ible
, th
at it
will
alw
ays
have
suf
ficie
nt li
quid
ity t
o m
eet
its li
abili
ties
whe
n du
e, u
nder
bot
h no
rmal
and
str
esse
d co
nditi
ons,
with
out
incu
rrin
g un
acce
ptab
le lo
sses
or
riski
ng d
amag
eto
the
com
pany
's r
eput
atio
n. T
ypic
ally
, th
e co
mpa
ny e
nsur
es t
hat
it ha
s su
ffici
ent
cash
and
cas
h eq
uiva
lent
s to
mee
t ex
pect
ed o
pera
tiona
l ex
pens
es,
incl
udin
g fin
anci
al o
blig
atio
ns t
hrou
ghpr
epar
atio
n of
the
cash
flow
fore
cast
, bas
ed o
n tim
e lin
e of
pay
men
t of f
inan
cial
obl
igat
ions
and
acc
ordi
ngly
arr
ange
for
suffi
cien
t liq
uidi
ty/fu
nd to
mak
e th
e ex
pect
ed p
aym
ents
with
in d
ue d
ates
.M
oreo
ver,
the
com
pany
has
sho
rt te
rm c
redi
t fac
ilitie
s w
ith s
ched
uled
com
mer
cial
ban
ks to
ens
ure
paym
ent o
f obl
igat
ion
in th
e ev
ent t
hat t
here
is in
suffi
cien
t cas
h to
mak
e th
e re
quire
d pa
ymen
t.T
he r
equi
rem
ent
is d
eter
min
ed in
adv
ance
thr
ough
cas
h flo
w p
roje
ctio
ns a
nd c
redi
t lin
es w
ith b
anks
are
neg
otia
ted
acco
rdin
gly.
The
fol
low
ing
are
the
cont
ract
ual m
atur
ities
of
finan
cial
liab
ilitie
s:
As
at 3
1 D
ecem
ber
20
15C
on
trac
tual
cas
h f
low
s
No
teC
arry
ing
am
ou
nt
Mat
uri
ty p
erio
dN
om
inal
W
ith
in 6
mo
nth
s W
ith
in
In t
aka
Inte
rest
rat
eo
r le
ss6-
12 m
on
ths
Cre
dit
ors
fo
r g
oo
ds
15
- P
ayab
le t
o lo
cal s
uppl
iers
413,
646,
967
June
201
6N
/A
413,
646,
967
-
- P
ayab
le t
o fo
reig
n su
pplie
rs65
7,93
7 Ju
ne 2
016
N/A
65
7,93
7 -
-
Pay
able
to
BS
O c
ompa
nies
16,4
46,7
21
June
201
6N
/A
16,4
46,7
21
-
430,
751,
625
430,
751,
625
-
Cre
dit
ors
fo
r ex
pen
ses
16
- P
ayab
le t
o lo
cal s
uppl
iers
32,9
21,7
55
June
201
6N
/A
-
-
- P
ayab
le t
o fo
reig
n su
pplie
rs3,
743,
850
June
201
6N
/A
-
-
- P
ayab
le t
o B
SO
com
pani
es43
0,47
3,56
1 D
ecem
ber
2016
N
/A
-
-
467,
139,
166
-
-
Cre
dit
ors
fo
r o
ther
fin
ance
17
- P
erso
nal a
ccou
nts
of e
mpl
oyee
s an
d ag
ents
74,8
00,9
38
June
201
66.
5%1,
115,
184
73,6
85,7
54
- W
orke
rs' p
rofit
par
ticip
atio
n fu
nd63
,529
,923
Ju
ne 2
016
N/A
63
,529
,923
-
-
Sec
urity
and
oth
er d
epos
its25
,524
,500
Ju
ne 2
016
N/A
25
,524
,500
-
-
Pro
vide
nt f
und
9,04
1,95
5 Ju
ne 2
016
N/A
9,
041,
955
-
- Ta
x de
duct
ed a
t so
urce
67,2
93,9
07
June
201
6N
/A
67,2
93,9
07
-
- P
ensi
on f
und
687,
230
June
201
6N
/A
687,
230
-
- V
AT
ded
ucte
d at
sou
rce
11,9
59,8
40
June
201
6N
/A
11,9
59,8
40
-
- S
alar
y an
d w
ages
pay
able
37,4
97,4
38
June
201
6N
/A
37,4
97,4
38
-
- O
ther
s21
,899
,672
Ju
ne 2
016
N/A
21
,899
,672
-
312,
235,
403
238,
549,
649
73,6
85,7
54
Acc
rued
lia
bili
ties
18
- B
onus
83,0
00,0
00
June
201
6N
/A
83,0
00,0
00
-
- U
tility
9,78
0,00
0 Ju
ne 2
016
N/A
9,
780,
000
-
- Le
gal &
aud
it fe
e3,
200,
800
June
201
6N
/A
3,20
0,80
0 -
-
Roy
alty
39,9
94,2
53
June
201
6N
/A
16,1
80,6
42
23,8
13,6
11
- Jo
int
vent
ure
com
mis
sion
7,83
2,71
3 Ju
ne 2
016
N/A
7,
832,
713
-
- O
ther
acc
rued
liab
ilitie
s26
7,06
7,17
5 D
ecem
ber
2016
N
/A
120,
523,
820
146,
543,
355
410,
874,
941
-
170,
356,
966
Un
clai
med
div
iden
d75
,879
,187
D
ecem
ber
2016
N
/A
45,5
28,0
00
30,3
51,1
87
Exp
osur
e to
liqu
idity
ris
k in
res
pect
of
the
com
pany
's f
inan
cial
sta
tem
ents
at
31 D
ecem
ber
2015
doe
s no
t va
ry s
igni
fican
tly f
rom
abo
ve.
Not
es t
o th
e fin
anci
al s
tate
men
ts (
cont
inue
d)
58
As
at 3
1 D
ecem
ber
20
14C
on
trac
tual
cas
h f
low
s
No
teC
arry
ing
am
ou
nt
Mat
uri
ty p
erio
dN
om
inal
W
ith
in 6
mo
nth
s W
ith
in
In t
aka
Inte
rest
rat
eo
r le
ss6-
12 m
on
ths
Cre
dit
ors
fo
r g
oo
ds
15
- P
ayab
le t
o lo
cal s
uppl
iers
508,
452,
080
June
201
5N
/A
508,
452,
080
-
- P
ayab
le t
o B
SO
com
pani
es17
,623
,868
Ju
ne 2
015
N/A
17
,623
,868
-
526,
075,
948
526,
075,
948
-
Cre
dit
ors
fo
r ex
pen
ses
16
- P
ayab
le t
o lo
cal s
uppl
iers
74,9
52,5
45
June
201
5N
/A
74,9
52,5
45
-
- P
ayab
le t
o B
SO
com
pani
es27
1,84
7,89
8 D
ecem
ber
2015
N
/A
244,
225,
548
27,6
22,3
50
346,
800,
443
319,
178,
093
27,6
22,3
50
Cre
dit
ors
fo
r o
ther
fin
ance
17
- P
erso
nal a
ccou
nts
of e
mpl
oyee
s an
d ag
ents
78,9
83,1
64
June
201
56.
5%1,
538,
675
77,4
44,4
89
- W
orke
rs' p
rofit
par
ticip
atio
n fu
nd53
,574
,742
Ju
ne 2
015
N/A
53
,574
,742
-
-
Sec
urity
and
oth
er d
epos
its25
,544
,500
Ju
ne 2
015
N/A
25
,544
,500
-
-
Pro
vide
nt f
und
10,4
89,0
28
June
201
5N
/A
10,4
89,0
28
-
- Ta
x de
duct
ed a
t so
urce
47,4
41,1
90
June
201
5N
/A
47,4
41,1
90
-
- P
ensi
on f
und
621,
818
June
201
5N
/A
621,
818
-
- V
AT
ded
ucte
d at
sou
rce
2,97
2,80
6 Ju
ne 2
015
N/A
2,
972,
806
-
- S
alar
y an
d w
ages
pay
able
21,3
21,7
32
June
201
5N
/A
21,3
21,7
32
-
- O
ther
s21
,236
,547
Ju
ne 2
015
N/A
21
,236
,547
-
262,
185,
527
184,
741,
038
77,4
44,4
89
Acc
rued
lia
bili
ties
18
- B
onus
63,2
80,0
00
June
201
5N
/A
63,2
80,0
00
-
- U
tility
10,9
58,0
00
June
201
5N
/A
10,9
58,0
00
-
- Le
gal &
aud
it fe
e2,
418,
050
June
201
5N
/A
2,41
8,05
0 -
-
Roy
alty
23,0
43,0
28
June
201
5N
/A
4,62
9,57
1 18
,413
,457
-
Join
t ve
ntur
e co
mm
issi
on8,
453,
726
June
201
5N
/A
8,45
3,72
6 -
-
Oth
er a
ccru
ed li
abili
ties
274,
613,
140
Dec
embe
r 20
15
N/A
68
,029
,136
20
6,58
4,00
4
382,
765,
944
157,
768,
483
224,
997,
461
Un
clai
med
div
iden
d68
,717
,138
D
ecem
ber
2015
N
/A
42,0
00,0
00
26,7
17,1
38
Exp
osur
e to
liqu
idity
ris
k in
res
pect
of
the
com
pany
's f
inan
cial
sta
tem
ents
at
31 D
ecem
ber
2014
doe
s no
t va
ry s
igni
fican
tly f
rom
abo
ve.
Notes to the financial statements (continued)
59
36.3 Market risk
Market risk is the risk that any change in market conditions, such as foreign exchange rates, interest rates and commodity prices that will affectthe Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and controlmarket risk exposures within acceptable parameters, while optimising the return.
a) Currency risk/foreign exchange riskThe Company is exposed to currency risk on sales and purchases with foreign customers and suppliers including Bata Group (globally) andon royalty payment. Majority of the company's foreign currency transactions are denominated in USD. The company maintains USD bankaccount where all receipts are deposited and all corresponding payments are made.
i) Exposure to currency risk
The company's exposure to foreign currency risk was as follows based on notional amounts:
31 December 2015 31 December 2014
USD SGD EUR USD SGD EUR
Foreign currency denominated assets
Accounts receivable 55,287 - - 123,592 - - Cash at bank
Eastern Bank Limited 88,994 - - 22,225 - - HSBC 32,030 - - 15,129 - -
176,311 - - 160,946 - -
Foreign currency denominated liabilities
Trade and other payables for expenses (4,277,853) (1,890,000) (86,667) (2,443,418) (1,890,000) (86,667)
Total (4,277,853) (1,890,000) (86,667) (2,443,418) (1,890,000) (86,667)
Net exposure (4,101,542) (1,890,000) (86,667) (2,282,472) (1,890,000) (86,667)
Payable to other entities represents payable for Global footwear service fees, IT fees etc.
Exposure to currency risk as at 31 December 2015 in respect of the separate financial statements does not vary from above. The Companyhas a foreign exchange gain amounting to Tk. 5,239,590 during the year ended 31 December 2015.
The following significant exchange rates are applied during the year:
Average rate Year end spot rate
2015 2014 2015 2014
Exchange rate at Taka Taka Taka
US Dollar 77.69 77.37 78.40 77.26 Singapore Dollar (SGD) 48.29 60.92 46.02 58.46 EURO (EUR) 84.99 102.19 84.94 93.91
ii) Foreign exchange rate sensitivity analysis for foreign currency expenditures
A strengthening (weakening) of the Taka, as indicated below, against the USD, SGD and EUR at 31 December would haveincreased/(decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange ratevariances that the company considered to be reasonably possible at the reporting date. The analysis assumes that all other variables, inparticular interest rates, remain constant. The analysis is performed on the same basis for 2015, albeit that the reasonably possible foreignexchange rate variances were different, as indicated below:
Profit or loss Equity
In Taka Strengthening Weakening Strengthening Weakening
At 31 December 2015USD (2 percent movement) 6,431,218 (6,431,218) 6,431,218 (6,431,218)SGD (2 percent movement) 1,739,536 (1,739,536) 1,739,536 (1,739,536)EUR (2 percent movement) 147,231 (147,231) 147,231 (147,231)
At 31 December 2014USD (0.04 percent movement) 70,538 (70,538) (70,538)SGD (4.51 percent movement) 4,983,072 (4,983,072) 4,983,072 (4,983,072)EUR (11.79 percent movement) 959,576 (959,576) 959,576 (959,576)
Notes to the financial statements (continued)
60
iii) Foreign exchange gain
In Taka 2015 2014
Foreign exchange gain 5,239,590 6,886,918
b) Interest rate risk
The interest bearing financial instrument for the company is the short term deposit (STD) account maintained by the company withits commercial banks. These are highly liquid and very short term deposits with nominal interest rate. Interest rate fluctuation for suchinvestment have little impact on financial statements. Therefore, interest rate risk for the company is insignificant.
c) Commodity risk
Commodity risk refers to the uncertainties of future market values and of the size of the future income, caused by the fluctuation inthe prices of commodities. As the Company purchases MS wire, blended power, calcium carbide and other raw materials, it isexposed to risks arising from the purchase of these materials for use in production. Commodity price risk is managed by supplycontracts with suppliers.
d) Accounting classification and fair values
Fair value of financial assets and liabilities together with carrying amount shown in the statement of financial position are asfollows:
Carrying amount Fair value Carrying amount Fair value
In Taka 2015 2014
Loans and receivables
Trade receivable, net 926,265,040 926,265,040 475,216,526 475,216,526
Other receivables 6,133,060 6,133,060 1,229,285 1,229,285
Cash and cash equivalents 351,378,131 351,378,131 292,396,800 292,396,800
Available for sale financial assets
Security deposits 442,581,021 442,581,021 485,239,534 485,239,534
Financial liabilities carried at amortised costs
Creditors for goods 430,751,625 430,751,625 526,075,948 526,075,948
Creditors for expenses 467,139,166 467,139,166 346,800,443 346,800,443
Creditors for other finance 312,235,403 312,235,403 262,185,527 262,185,527
Accrued expenses 410,874,941 410,874,941 382,765,944 382,765,944
37. Related party disclosures
37.1 Parent and ultimate controlling party
Bafin (Netherland) B.V has 70% shareholding of the Company which is fully owned by Compass Limited. As a result, the ultimatecontrolling party of the company is Compass Limited.
37.2 Transaction with key management personnel
Transaction for the year
Taka In thousand 2015 2014
Directors 23,602 22,203
Top Managers 128,647 126,008
152,249 148,211
Notes to the financial statements (continued)
61
37.3 Other related party transactions
During the year ended 31 December 2015, company entered into a number of transactions with related parties / associated enterprises inthe normal course of business. Relationship with related parties / associated enterprises, nature of these transactions and amount thereofhave been set out below in accordance with the provisions of BAS 24: Related Party Disclosures.
Transaction values for the year Balance outstanding
Nature of Nature of ended 31 December as at 31 December
Taka in thousand relationship transactions 2015 2014 2015 2014
Holding company Dividend payment (306,432) (241,315) - -
Associated companies Purchase of goods (279,660) (319,626) (16,934) (17,624)Service received (3,208) (2,468) (3,168) (23)Sales of goods 10,120 55,753 3,108 8,053 Service provided 122 4,131 - 36 Trade mark license fees (178,226) (171,168) (350,989) (171,167)IT fees (8,079) (9,883) (7,518) (8,094)
38. Operating leases payments disclosure
See accounting policies in note 43(j)Non-cancellable operating lease rentals are payable as follows:
Taka in thousand 2015 2014
Less than one year 561,482 466,001 Between one and five years 3,667,533 3,006,778 More than five years 1,076,700 1,158,562
5,305,715 4,631,341
39. Capital expenditure and financial commitment
There were no capital expenditure and financial commitments as at 31 December 2015 (2014: Nil)
40. Contingent liabilities
There are contingent liabilities on account of unresolved disputed corporate tax assessments and VAT claims by the authorityaggregating to Tk. 475,502,000 (2014: Tk 480,314,000). Considering the merits of the cases, it has not been deemed necessary tomake provisions for all such disputed claims.
There is also contingent liability in respect of outstanding letters of credit of Tk. 76.8 million (2014: Tk 86.4 million) and letter ofguarantee of Tk. 6 million (2014: Tk 5.7 million).
41. Going concern
The Company has adequate resources to continue in operation for foreseeable future and hence, the financial statements have beenprepared on going concern basis. As per management assessment there are no material uncertainties related to events or conditionswhich may cast significant doubt upon the Company's ability to continue as a going concern.
Details of the Company's accounting policies including changes during the year are included in note 46.
42. Comparatives
Comparative information have been disclosed in respect of 2015 for all numerical information in the financial statements and alsothe narrative and descriptive information when it is relevant for understanding of the current year's financial statements.Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation .
43. Interim dividend
Bata paid an interim dividend @ Tk 21.50 per share of Tk 10 each aggregating to Tk 294,120,000 which was approved by the Boardof Directors at its 225th meeting held on 23 November 2015.
44. Events after the reporting period
The Board of Directors of Bata, at its 227 meeting held on 19 May 2016, proposed Tk 10.50 per share, amounting to a total of Tk143,640,000 as 2nd interim dividend for the year ended 31 December 2015, which represents 105% of the paid up capital. Totaldividend for the year ended 31 December 2015 including the 1st interim dividend (see note 43) thus comes to Tk 32 which is437,760,000 of paid up capital. These dividends are subject to final approval by the shareholders at the forthcoming Annual GeneralMeeting of the company.
Notes to the financial statements (continued)
62
45. Basis of measurement
These financial statements have been prepared on historical cost basis except for land at Tongi in the statement of financialposition which was revalued in 1979.
46. Significant accounting policies
The Company has consistently applied the following accounting policies to all periods presented in these financial statements,except as explained in note 46(c) which addresses review of useful lives of property, plant and equipment by managementduring the year 2011.
Set out below is an index of the significant accounting policies, the details of which are available on the pages that follow.
(a) Foreign currency 33(b) Financial instruments 33(c) Property, plant and equipment 35(d) Inventories 36(e) Impairment 36(f) Share capital 37(g) Employee benefits 37(h) Provisions 37(i ) Revenue 38(j) Lease payments 38(k) Finance income and expense 38(l) Tax 38(m) Earnings per share 39(n) Segment reporting 39(o) Duty drawback 39(p) Sales proceeds from wastage, scrap etc. 39(q) Workers' profit participation fund (WPPF) 39(r) Events after the reporting period 39(s) Comparatives and rearrangement 39
(a) Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies of the Company at exchange rateson the date of the transactions. Monetary assets and liabilities denominated in foreign currencies on the reporting date areretranslated to the functional currency at the exchange rate at that date.
"Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to thefunctional currency at the exchange rate on the date that the fair value was determined. Non-monetary items in a foreigncurrency that are measured based on historical cost are translated using the exchange rate on the date of the transaction."
Foreign currency differences arising on translation are recognised in profit or loss.
(b) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equityinstrument of another entity.
Non-derivative financial assets
The Company initially recognises loans and receivables and deposits on the date that they are originated. All other financialassets are recognised initially on the trade date, which is the date the Company becomes a party to the contractual provisionsof the instrument.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or ittransfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all therisks and rewards of ownership of the financial asset are transferred.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and onlywhen, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the assetand settle the liability simultaneously.
"The Company classifies non-derivative financial assets into the following categories: financial assets at fair value throughprofit or loss, held-to-maturity financial assets, loans and receivables and available for- sale financial assets.
Notes to the financial statements (continued)
63
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is designated as suchon initial recognition. Attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair valuethrough profit or loss are measured at fair value and changes therein, which takes into account any dividend income, arerecognised in profit or loss.
Held-to-maturity financial assets
If the Company has the positive intent and ability to hold debt securities to maturity, then such financial assets are classifiedas held to maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directly attributabletransaction costs. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortised cost usingthe effective interest method, less any impairment losses.
Loans and receivables
"Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Suchassets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses."
Accounts receivables
Accounts receivables represent the amounts due from institutional customers, export customers etc. Accounts receivablesare stated net off bad debts provision.
Provision for doubtful debts is made based on the Company policy. Bad debts are written off on consideration of the statusof individual debtors.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash in transit and cash at bank including fixed deposits having maturityof three months or less which are available for use by the Company without any restriction. Bank overdrafts that are repayableon demand and form an integral part of the Company’s cash management are included as a component of cash and cashequivalents.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are notclassified in any of the above categories of financial assets. Available-for-sale financial assets are recognised initially at fairvalue plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value andchanges therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments, arerecognised in other comprehensive income and presented in 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 assetscomprise security deposits.
Non-derivative financial liabilities
The Company recognises all financial liabilities on the trade date which is the date the Company becomes a party to thecontractual provisions of the instrument.
The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.Financial liabilities comprise trade and other creditors only.
Trade and other creditors
The company recognises a financial liability initially at fair value less any directly attributable transaction costs. Subsequentto initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.
(c) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment excluding land are measured at cost less accumulated depreciation and accumulatedimpairment losses. Land is measured at amount revalued in 1979.
"Cost includes expenditures that are directly attributable to the acquisition of assets. The cost of self-constructed assetsincludes the following:
- the cost of materials and direct labour;
- any other cost directly attributable to bringing the asset to a working condition for the intended use;
- when the Company has an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and
removing the items and restoring the site on which they are located; and
- capitalised borrowing costs."
Notes to the financial statements (continued)
64
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items(major components) of property, plant and equipment.Any gain or loss on disposal of an item of property, plant and equipment(calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised inprofit or loss.
Subsequent costs
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with theexpenditure will flow to the Company. Ongoing repairs and maintenance is expensed as incurred.
Depreciation
"Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over the estimated usefullives of each component. Land is not depreciated.
Addition during the year of property, plant and equipment are depreciated for full year irrespective of date of acquisition, whileno depreciation is charged in the year of disposal."
"The estimated useful lives for the current and comparative years of property, plant and equipment are as follows:"
Year
2015 2014
Building 40 40
Plant and machinery 13.33 13.33
Motor vehicles 5 5
Furniture, fixtures and equipment 4-13.33 4-13.33
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Theuseful lives and depreciation method of certain type of property, plant and equipment were revised in 2011.
Under construction
Property, plant and equipment that is being under construction/acquisition is accounted for as capital work in progress untilconstruction/acquisition is completed and measured at cost.
(d) Inventories
Inventories except raw material in transit are measured at the lower of cost and net realisable value. The cost of inventoriesis based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production orconversion costs and other costs incurred in bringing them to their existing location and condition. In the case ofmanufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normaloperating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completionand selling expenses.
(e) Impairment
Non-derivative financial assets
"A financial asset not classified at fair value through profit or loss is assessed at each reporting date to determine whetherthere is objective evidence that it is impaired. A financial asset is impaired if objective evidence of impairment as a result ofone or more events that occurred after the initial recognition of the asset, and that loss events had an impact on theestimated future cash flows of that asset that can be estimated reliably."
Financial assets measured at amortised cost
The Company considers evidence of impairment for financial assets measured at amortised cost at both a specific asset andcollective level. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the differencebetween its carrying amount and the present value of the estimated future cash flows discounted at the asset’s originaleffective interest rate.
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fairvalue reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the differencebetween the acquisition cost, net of any principle repayment and amortisation, and the current fair value, less any impairmentloss recognised previously in profit or loss.
Notes to the financial statements (continued)
65
Non-financial assets
The carrying amounts of the Company's non-financial assets, other than inventories and deferred tax assets, are reviewedat each reporting date to determine whether there is any indication of impairment. If any such indication exists then therecoverable amount of the asset is estimated. An impairment loss is recognised if the carrying amount of an asset or itsrelated cash-generating unit (CGU) exceeds its estimated recoverable amount.
(f) Share capital
Paid up capital represents total amount contributed by the shareholders and bonus shares issued by the Company to theordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time and areentitled to vote at shareholders' meetings. In the event of a winding up of the Company, ordinary shareholders rank after allother shareholders and creditors and are fully entitled to any residual proceeds of liquidation.
(g) Employee benefits
The Company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. Theeligibility is determined according to the terms and conditions set forth in the respective deeds.
Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separateentity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contributionplans are recognised as an employee benefit expense in profit or loss in the periods during which related services arerendered by employees.
The Company maintains three contributory provident funds for its permanent employees categorised as managers, officersand supervisors and workers. The Company also maintains a managerial staff pension fund which was a defined benefit ascontribution plan. These are administered by the Boards of Trustees.
Defined benefit plan
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligationin respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit thatemployees have earned in return for their service in the current and prior periods.
The Company maintains an unfunded gratuity scheme, provision in respect of which is made annually for the employeesother than managerial staff. Gratuity payable at the end of each year has been determined on the basis of existing rules andregulations of the Company. Actuarial valuation of the gratuity fund is carried out by a professional actuary.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service isprovided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans ifthe Company has a present legal or constructive obligation to pay this amount as a result of past service provided by theemployee, and the obligation can be estimated reliably.
(h) Provisions
A provision is recognised if, as a result of past event, the Company has a present legal or constructive obligation that canreliably be estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation.
(i ) Revenue
Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received orreceivable, net of returns and allowances, Value Added Tax and trade discounts.
Revenue is recognised when persuasive evidence exists that the significant risks and rewards of ownership have beentransferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods canbe estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can bemeasured reliably.
(j) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.Lease incentives received are recognised as an integral part of the total lease expenses, over the term of the lease.
"At inception of an arrangement, the Company determines whether such an arrangement is or contains a lease. This will bethe case if the following two criteria are met:
- the fulfillment of the arrangement is dependent on the use of a specific asset or assets; and
- the arrangement contains a right to use the asset(s)."
Notes to the financial statements (continued)
66
(k) Finance income and expense
Finance income comprises interest income on funds invested, interest on shop managers account held with the Companyand foreign exchange gain on translation of foreign currency that are recognised in profit or loss. Interest income isrecognised on accrual basis.
Finance expense comprises interest expense on overdraft, finance lease and interest on shop managers account held withthe Company and foreign exchange loss on translation of foreign currency. All finance expenses are recognised in thestatement of comprehensive income.
(l) Tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the statement ofcomprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognisedin equity.
Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enactedat the reporting date, and any adjustment to tax payable in respect of previous years. Bata qualifies as a "Publicly TradedCompany" hence the applicable tax rate is 25%.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that areexpected to be applied to the temporary differences when they are reversed, based on the laws that have been enacted orsubstantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable rightto offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxableentity.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent thatit is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewedat each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(m) Earnings per share
The Company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary shares. BasicEPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company with the weighted averagenumber of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares for bonusissue, share split and reverse split. Diluted EPS is determined by adjusting the profit or loss attributable to ordinaryshareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinaryshares. However, dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinaryshares during the relevant periods.
(n) Segment reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenuesand incur expenses, including revenues and expenses that relate to transactions with any of the Company’s othercomponents. All operating segments’ operating results are reviewed regularly by the Company’s management to makedecisions about resources to be allocated to the segment and to assess its performance, and for which discrete financialinformation is available.
Segment results that are reported to the management include items directly attributable to a segment as well as those thatcan be allocated on a reasonable basis.
(o) Duty drawback
Duty drawback claimed on export sales is adjusted against cost of imported raw materials.
(p) Sales proceeds from wastage, scrap etc.
Sales of empty drum of chemicals, split leather and other wastage of materials have been adjusted with cost of raw materialsconsumed.
(q) Workers' Profit Participation Fund (WPPF)
The Company provides 5% of its profit before charging such expense as WPPF in accordance with "The Bangladesh LabourAct 2006".
(r) Events after the reporting period
Events after the reporting period which provide additional information about the Company's position at the date of statementof financial position or those that indicate the going concern assumption is not appropriate are reflected in the financialstatements. Events after the reporting period that are not adjusting events are disclosed in the notes when material.
(s) Comparatives and rearrangement
Comparative information has been disclosed for all numerical information in the financial statements and also the narrativeand descriptive information when it is relevant for understanding of the current financial statements.
To facilitate comparison, certain relevant balances pertaining to the previous year have been rearranged or reclassifiedwhenever considered necessary to conform to current year's presentation.
47. Standards adopted but not yet effective
The Institute of Chartered Accountants of Bangladesh (ICAB) has adopted following new standards and amendments tostandards during the year 2015. All previously adopted reporting standards are consistently applied by the Company to theextent relevant for the Company.
New standards
BFRS 9 FinancialInstruments
BFRS 14 RegulatoryDeferral Accounts
BFRS 15 Revenuefrom Contracts withCustomers
"Agriculture:Bearer Plants(Amendments toBAS 16 and BAS 41)"
Possible impact onfinancial statements
The Company isassessing the potentialimpact on its financialstatements resultingfrom the application ofBFRS 9.
"None.
The Company does notperform any activitythat is subject to rateregulation."
The Company isassessing the potentialimpact on its financialstatements resultingfrom the application ofBFRS 15.
"None.
The Company does nothave any bearerplants."
Summary of the requirements
"BFRS 9, published in July 2014, replaces the existing guidance in BAS 39Financial Instruments: Recognition and Measurement. BFRS 9 includesrevised guidance on the classification and measurement of financialinstruments, a new expected credit loss model for calculating impairmenton financial assets, and new general hedge accounting requirements. Italso carries forward the guidance on recognition and derecognition offinancial instruments from BAS 39.
BFRS 9 is effective for annual reporting periods beginning on or after 1January 2018, with early adoption permitted."
"BFRS 14 specify the financial reporting requirements for regulatorydeferral account balance that arise when an entity provides goods orservices to customers at a price or rate that is subject to rate regulation.
BFRS 14 is effective for annual reporting periods beginning on or after 1January 2016, with early adoption permitted."
"BFRS 15 establishes a comprehensive framework for determiningwhether, how much and when revenue is recognised. It replaces existingrevenue recognition guidance, including BAS 18 Revenue, BAS 11Construction Contracts and BFRIC 13 Customer Loyalty Programmes.
BFRS 15 is effective for annual reporting periods beginning on or after 1January 2018, with early adoption permitted."
"These amendments require a bearer plant, defined as a living plant, to beaccounted for as property, plant and equipment and included in the scopeof IAS 16 Property, Plant and Equipment, instead of BAS 41 Agriculture.
The amendments are effective for annual reporting periods beginning onor after 1 January 2016, with early adoption permitted."
Notes to the financial statements (continued)
67
68
In Taka Manufacturing Trading 2015 2014
Revenue 7,493,454,939 1,029,346,680 8,522,801,619 8,076,995,037
Cost of goods sold (4,527,985,339) (566,419,562) (5,094,404,901) (4,945,486,549)
Gross profit 2,965,469,600 462,927,118 3,428,396,718 3,131,508,488
Exchange gain/(loss) 4,532,245 707,345 5,239,590 6,886,918
Other income 8,259,742 - 8,259,742 20,221,586
Administration, selling and distribution expenses (1,899,393,765) (296,437,177) (2,195,830,942) (2,096,017,729)
Profit from operating activities 1,078,867,823 167,197,285 1,246,065,108 1,062,599,263
Finance income 24,949,157 3,893,799 28,842,956 13,846,600
Finance expenses (3,727,813) (581,797) (4,309,610) (4,951,020)
Contribution to WPPF (54,953,383) (8,576,540) (63,529,923) (53,574,742)
Profit before income tax 1,045,135,783 161,932,748 1,207,068,531 1,017,920,101
Income tax expense (358,270,534) (17,053,466) (375,324,000) (317,250,000)
Profit after tax for the year 686,865,249 144,879,282 831,744,531 700,670,101
Bata Shoe Company (Bangladesh) LimitedStatement of Profit or Loss and other Comprehensive Income
for the year ended 31 December
Exhibit - I
69
Director Report
70
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Form of Proxy
Please Quote
Shareholder's Folio / BO No. No. of Shares held
ATTENDANCE
i/we hereby record my/our presence at the 44th annual general Meeting of Bata Shoe Company
(Bangladesh) Limited at registered office and factory premises, tongi, gazipur on Monday, 5 september
2016 at 10:30 a.m.
Full name of the Shareholder(in block letter) Signature
Full name of the Proxy(in block letter) Signature
Shareholder's Folio / BO No.
Shareholders are requested to hand over the Attendance Slip at entrance of the meeting hall.
I/We
of
being shareholder(s) of BATA SHOE COMPANY (BANGLADESH) LIMITED, entitled to vote hereby appoint
Mr./Ms.
as my/our proxy to attend and vote for me/us and on my/our behalf at the 44th Annual General Meeting of the
Company to be held on Monday, 5 September 2016 and any adjournment thereof and poll that may be taken
in consequenced thereof.
As witness my/our hand this day of 2016
Signature of Shareholder (s) Signature of Proxy
Date Signature of Witness
Revenue Stamp
of Tk. 20.00
(Signature of Shareholder (s) must be in accordance with specimen signature with the Company.)
