To be a market leader in providing internetagni.com/financial/Annual_Report_2018-19.pdfOtobi Center,...

Annual Report 2018-19 Page 01

To be a market leader in providing internet services with special focus on creating values for our clients, shareholders, employees and communities.

To achieve corporate vision with special focus on creating values by:

Partnering with clients to understand and fulfill their needs considering the development of technology.

Maximizing shareholders value through strong performance and returns.

Developing and rewarding employees to effectively manage client relationships.

Diligently serving our communities with integrity and pride.


Understanding the clients' needs and to connect with them. By doing so benefit our shareholders, employees and the community where we do business.


GOAL

Registered Office

Corporate Office

Share Office

Chittagong Office

Date of Incorporation

Date of Commercial Operation

Auditor

Compliance Auditor

Legal Adviser

Bankers

Insurer

Legal Status

Authorized Share Capital in Taka

Member of the Share Market(s)

Regulatory Authority

Number of Employees

Navana Tower, 11th Floor, Suite - A45 Gulshan Avenue, Gulshan-1, Dhaka-1212



Shahjadi Chamber, 6th Floor, 1331/BSheikh Mujib Road, Agrabad C/A, Chittagong-4100

November 4, 1995

November 4, 1995

Aziz Halim Khair ChoudhuryChartered Accountants

M/s. Mollah Quadir Yusuf & Co.Chartered Accountants

Zaman & Associates Eastern Trade Center3rd Floor: 56, Inner Circular Road, Dhaka.

Standard Chartered BankBank Asia LimitedHSBCBRAC Bank LimitedWoori BankEastern Bank LimitedDhaka Bank LimitedDutch Bangla Bank LimitedSonali Bank Limited

Green Delta Insurance Company Ltd.

Public Limited Company

1000 Million

Dhaka Stock Exchange Ltd.Chittagong Stock Exchange Ltd.

Bangladesh Telecommunication Regulatory Commission (BTRC)

245


Corporate Information

Board of Directors

Mr. Javed BukthChairman

Mr. Zia ShamsiDirector

Mr. Md. Atiqul Islam

Independent Director

Mr. Mohammed Abdus SalamManaging Director


Management of the Company

Mr. Mohammed Abdus Salam Managing Director

Mr. Zia Shamsi Director

Mr. Md. Abu Jafor Head of Internal Audit and Compliance

Ms. Farhana Haque Head of Sales

Mr. Mozammal Hoque Chief Technical Officer (CTO)

Name Designation

1.

2.

3.

4.

5.

6.

7.

Mr. Muhammed Shariful Islam Company Secretary

Chief Financial Officer (CFO)Mr. Saroj Biswas



Photographs of 22nd AGM

Directors on Dias in the 22nd AGM

Shareholders are in que for Registration

Shareholders Present in the 22nd AGM


Financial highlights of past five years


Year 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

Net Operating Revenue

379,807,634 329,450,195 326,774,332 336,375,715 311,984,468

Non Operating Income

454,804 74,180 518,908 4,150,497 5,164,005

Direct Operating Expenses

234,998,541 170,785,228 169,507,646 157,861,111 147,179,170

Administrative & General Expenses

72,364,243 61,886,934 67,305,567 87,140,357 69,023,500

Total Fixed Assets 597,641,911 612,633,361 637,702,096 657,968,483 613,797,825

Total Current Assets 580,014,619 579,040,982 575,848,144 531,117,666 879,364,973

Total Assets 1,177,656,529 1,191,674,343 1,213,550,240 1,189,086,149 1,481,191,262

Total Current

Liabilities 115,835,512 118,660,356 146,909,792 130,671,309 549,196,715

Total Net Assets 1,047,832,808 1,028,316,668 991,670,005 952,599,492 885,214,826

Paid up Capital 725,561,920 691,011,360 658,106,060 626,767,680 569,788,800

Gross Profit 144,809,093 158,664,967 157,266,686 178,514,604 164,805,298

Net Profit before Tax (NPBT)

64,186,949 83,459,917 75,121,949 78,366,032 79,424,218

Net Profit After Tax (NPAT)

54,066,717 69,551,963 67,162,653 67,384,666 63,058,361

Current Ratio 5.01 4.88 3.91 4.06 1.57

Return On Equity (ROE)

5.16% 6.76% 6.77% 7.07% 7.12%

Return On Assets (ROA)

5.59% 5.84% 5.53% 5.67% 4.22%

GP Margin 38.13% 48.16% 48.13% 53.07% 52.82%

NP Margin 14.24% 21.11% 20.55% 20.03% 20.21%

Dividend 50,789,334 69,101,136 65,810,606 62,676,768 56,978,880

Dividend % 7%Cash 5%C 5%B 5%C 5%B 5%C 5%B 10%B

EPS 0.75 1.01 1.02 1.08 1.11

Net Assets Value per Shares (NAVPS)

14.44 14.88 15.07 15.20 15.54

Net Operating Cash Flow per Share (NOCFPS)

1.56 0.91 0.74 (0.43) 1.84

Graphical Presentation of Financial Indicators


Net Operating Revenue

Total Assets

NAV Per Share (Tk.)

Net Profit After Tax (NPAT)

Net Profit before Tax (NPBT)

379,807,634329,450,195 326,774,332 336,375,715

311,984,468

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

1,177,656,5291,191,674,343

1,213,550,2401,189,086,149

1,481,191,262

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

14.4414.88

15.07 15.215.54

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

64,186,949

83,459,917 75,121,949 78,366,032 79,424,218

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

54,066,71769,551,963 67,162,653 67,384,666

63,058,361

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

Graphical Presentation of Financial Indicators


EPS

Shareholders' Equity

Return On Equity (ROE)

Return On Assets (ROA)

1,047,832,808

1,028,316,668

991,670,005

952,599,492885,214,826

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

0.75 1.01 1.02 1.08 1.11

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

5.16% 6.76% 6.77% 7.07% 7.12%

2018-2019 2017-2018 2016-2017 2015-2016 2014-201

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015

5.59% 5.84%5.53% 5.67% 4.22%

5


Message fromthe Chairman

Dear Shareholders: It is my great pleasure to welcome you to the 23rd Annual General Meeting of the Company. Agni continued its growth during the during 2018-19 too. Here is how we grew during the past three years:

I express my heartfelt gratitude to all of you for the trust and confidence you have placed on us and for your continued support at all times. I would like to thank all of our employees for their dedication and hard work for the growth of the company.

I want to thank our customers, partners and shareholders for their continued trust. I also want to thank our employees for their commitment, energy and irrepressible drive to always improve our capability, as One Agni team. Sincerely, Javed BukthChairman

Year

Revenue

NPAT

2018-2019

379,807,634

54,066,717

2017-2018

329,450,195

69,551,963

2016-2017

326,774,332

67,162,653


Message fromthe ManagingDirector

Last year was a financially challenging year for us. Even though we managed to grow our revenue by 15% over the previous year, the decision by the VAT authority to reduce VAT on Internet service to 5% stopped us from taking rebate on VAT payments on chief expenses such as bandwidth payments. This had impacted our bottom line quite drastically and the situation is still persisting. Nevertheless, we are taking steps to address the matter through our association.

Due to fierce competition in the Internet service industry, customer retention has become an important part of our business strategy. In addition to providing much better service than before, we are having to match lower rates prevailing specially in the non traditional channels. Many ISPs are operating without license, without proper service guideline and without paying VAT and income taxes. This has impacted our revenue growth further and the profitability of our operation.

Payments to NTTN is one of the major expenses for us. There has been a virtual monopoly in the NTTN industry because of two NTTN service providers in the country for more than ten years now. Although, we expected the price of NTTN service to decrease every year, the cost of NTTN service has remained quite stagnant and in some cases, national data transmission rates have become more expensive than International bandwidth prices. The current rate of NTTN is cutting into our gross profit and we are having to operate on a very thin margin. Currently, the government is taking positive steps and in the process of opening up the NTTN industry to more competition.

International call volume through our ICX business has also decreased drastically because of OTT (over the top applications e.g. Viber, WhatsApp) and grey channel operators. This was also one of the reasons we could not grow our revenue as expected.

In conclusion, the coming years are going to be very difficult to grow our traditional revenue against the business climate mentioned above. We are looking to invest in other sources of revenue and manage operation costs and taxes by employing various cost cutting and tax strategies. We already identified a few businesses that will drive our revenue growth such as software as a service and from next year we hope to book revenue against these new ventures.

Sincerely,

Mohammed Abdus SalamManaging Director

Dear Shareholders,

I would like to start by wishing all our shareholders a happy and prosperous 2020 and take this opportunity to present to you our company's financial reports, auditor's report and directors' report for the year ending June 2019.

Notice of the 23rdAnnual General Meeting


Notice is hereby given that the 23rd Annual General Meeting of the Shareholders of Agni Systems Limited will be held on Thursday 12th December 2019 at 10:00 a.m. at Celebrity Convention Hall, Otobi Center, Plot # 12, Block-CWS(C) Level-6, Gulshan South Avenue, Gulshan-1, Dhaka 1212 to transact the following business:

1. To receive, consider and adopt the Directors and Auditors Report and Audited Financial Statements for the year ended June 30, 2019.

2. To approve Dividend as recommended by the Board of Directors for the year ended June 30, 2019.

3. To elect the Directors of the Company.4. To approve appointment of the Independent Directors.5. To appoint Auditor of the Company and fixation of their remuneration for the year ending June 30, 2020.6. To appoint Professionals for certification on compliance of conditions of Corporate Governance

Code for the year ending June 30, 2020.

Notes:

1. "Record date" is on November 21, 2019. The shareholders, whose name would appear in the Register of Members of the Company or Depository record on "Record date" November 21, 2019, will be eligible to attend the meeting and receive dividend.

2. A member eligible to attend at the 23rd Annual General Meeting may appoint a proxy to attend on his/her behalf. The proxy form must be affixed with requisite revenue stamp and submitted to the Registered Office of the Company not later then 48 (forty eight) hours before the time fixed for the Annual General Meeting.

3. Annual Report and proxy form can be available on the website: www.agni.com

4. Annual Report will be duly sent in soft form to the members/shareholders e-mail address available in their BO account maintained with the Depository; Shareholders may collect the same from the registered office of the company or from the AGM venue.

5. Admission to the meeting will be strictly on production of the attendance slip attached with the Annual Report and Registration of attendance will start at 9:00 a.m.

6. There will be no gift or entertainment arrangement for the shareholders for attending the meeting as per BSEC notification no. SEC/CMRRCD/2009-193/154 dated October 24, 2013.

By Order of the Board of DirectorsSd/-

Muhammed Shariful IslamCompany Secretary

DhakaNovember 24, 2019


Directors' ReportReport of the Board of Directors of Agni Systems Limited

Note: The Company could not achieve profitability in proportion to revenue growth owing to a controversial decision of VAT authority. Change in the VAT rate from 15% to 5% restricted the ISPs from getting rebate on its advance VAT payments against its prime raw material - the Bandwidth. This in turn affected our profitability. The situation is still haunting us and we expect the situation to be rectified soon.

Dear Shareholders,

The Board of Directors have the great pleasure to welcome you to the 23rd Annual General Meeting of the Company. We are also pleased to present Financial Statements of the Company for the year ending 30th June 2019. The statements include Auditor's Report and reports of company's performance and other matters as per Companies Act 1994 Guidelines issued by Bangladesh Securities and Exchange Commission and Bangladesh Accounting and Financial Reporting Standards.

On behalf of the Board of Directors of Agni Systems Limited, I congratulate and welcome you as valued shareholders of the Company. We are a Technology Company - established in the year of 1995. During the last 25 years of operation of our company, we have strived hard to evolve with the changes in the industry with new and creative products and services. Because of continued focus on innovation and improvements, our products and services have enjoyed sustained popularity in the marketplace.

Agni Systems Limited directly operates an ISP business, and an ICX business. We have been operating the ISP business since 1995. Initially using dial-up phone lines but later switching to wireless and fiber infrastructure, we were one of the pioneers in bringing the Internet to the country. Our ICX business carries inter operator voice calls and plays an important role in ensuring Government revenue from country's voice traffic. Additionally, we have significant investment in other telecom business entities namely Songbird Telecom (IGW) and Skytel (IIG).

New1. Data Center: 4000 Sq Ft of new space at Progoti Sharani.2. Agni Agro: 45 Bighas Land Purchased between 2011

and 2019 is now under renovation for setting up a Diary project. Investments are still ongoing and we expect to earn revenue for this venture by 2020-2021 financial year.

The Company has achieved a little over 15% growth in revenue before taxes for the year 2018-19 over the previous fiscal year. Here is the comparison of 2018-19 financials against 2017-18:

Licenses we hold: Agni Systems has and operates the following licenses (Issued by BTRC):● ISP License● IPTSP License● ICX License● 3.5 GHz Frequency allocation Investment in other Telecom Companies: IGW: Songbird Telecom Limited

IIG: Skytel Communications LimitedProducts & ServicesCore Services

● High speed Internet and Data ServicesA collaborated service with major transmission providers, it connects residential homes, businesses plus central and remote offices countrywide. Our customers include Major Banks, NGOs, MNCs, Garment and Buying Industries, etc.

Name 2018-19 2017-18 Increase/Decrease Taka Increase/Decrease %

Net Operating Revenue 379,807,634 329,450,195 50,357,439 15.29

Gross Profit 144,809,093 158,664,967 (13,855,874) (8.73)

Net Profit Before Tax 64,186,949 83,459,917 (19,272,968) (23.09)

Net Profit After Tax 54,066,717 69,551,963 (15,485,246) (22.26)

Total Current Assets 580,014,619 579,040,983 973,636 0.17

Total Current Liabilities 115,835,512 118,660,356 (2,824,844) (2.38)

Total Net Assets 1,047,832,808 1,028,316,668 19,516,140 1.90


Directors' Report● IP Telephony ServiceOur IP Telephony service works wherever there is Internet. IPTSP subscribers are now able to get telephone services anywhere in Bangladesh. Products available are SIP trunks, National number range, IP phones, and Softphones. The IP PABX solution is popular among Call Centers and corporate houses having offices in multiple locations.

● WiFi Solution (Residential & Commercial)We are experts in turning homes, offices and open spaces into WiFi Zones.

● Domain name registration and hosting ServicesOur people at Domain Registration and Hosting Services desk are busy all over the year. Agni's good name and reliability attracts corporate houses to renew their Domain Name and hosting on a yearly basis with us.

● Email Hosting ServicesEmail has become the prime source of communication in the modern world. Corporate houses and individuals require their email services to be uninterrupted and flawless. Agni has earned a name for itself on being the most reliable email hosting service providers in the country. Agni has email hosting plans for personal, and big corporate houses.

● Web design and hosting solutionsWebsite development, dynamic and static, along with Hosting Service is another area where Agni enjoys excellent market reputation. It is important for a Company to make their web presence in the most effective way possible and also make sure that the site is hosted with a reliable hosting service provider.

● Network design, installation and administration servicesAgni has the perfect know how for designing, sourcing and installing any size network infrastructure.

ICX ServiceIn addition to its core business of Internet and Data, Agni acquired an ICX license from the Telecom Regulator, The BTRC. This license allows it to take national and International voice traffic from ANS operators and terminate these calls to other ANS and IOS operators.

Trade body membershipsAs a premier IT company in Bangladesh, Agni is an active member of the following associations:● Internet Service Providers Association of Bangladesh

(ISPAB)● Association of ICX Operators Bangladesh (AIOB)● Bangladesh Computer Samity (BCS)● Bangladesh Association of Software and Information

Services (BASIS)

Risks and ConcernsMarket and technology related RiskUnlicensed ISPs regularly impose barriers to expand our service to various areas. These ISPs employ a number of techniques including strongman tactics to keep out

licensed ISPs from operating in their area of interest.High price of transmission capacity and discriminatory pricing by the NTTN service providers pose a significant challenge in winning big tenders where NTTN providers give favorable prices to their chosen ISP.NTTN operators are chosen over ISPs in Govt procurements of Internet services further limiting business scope of ISPs.

Though a booming sector with great potential, IT industry has also its own risk factors such as Regulatory risks, Market risks, Technology related risks, political unrest, increasing govt. payments in the form of VAT, etc.

Technology related RiskProliferation of 5G services may limit the growth of ISPs in certain residential segments.

Future OutlookOur core strategy will remain on continued investment in growing our network, our geographic footprint, our infrastructure and processes and our outstanding employees. After a successful 2018-2019 we remain convinced that Agni is extremely well positioned to capture the opportunities offered by the industry and remain in the position of a leading ISP in the country. Corporate Social ResponsibilityAgni has committed to a distance education program for underprivileged children in remote locations. This Online School program run by Jaago Foundation for the past 7 years.

Discussion on Cost of Goods Sold, Gross Profit Margin and Net Profit MarginThe Statement of Comprehensive Income shows that the Cost of Goods Sold for the year ended June 30, 2019 is Tk. 235.00 millions against Tk 170.79 millions for the last year. Gross Profit for the year ended June 30, 2019 is Tk. 144.81 millions against Tk. 158.66 millions for the last year. Net Profit after tax for the year ended June 30, 2019 is Tk. 54.07 millions against Tk. 69.55 millions for the last year.

Continuity of any Extra-Ordinary Gain or Loss Agni Systems limited has extra-ordinary gain as interest income Tk. 0.45 million and gain as Share investment Tk. 0.03 million during the financial year ended June 30, 2019.

Related Party Transaction The company has no other related party transaction except all insurance policies with Green Delta Insurance Company Ltd. and IGW operation with Songbird Telecom Ltd. as mentioned in the note no. 2.25 (iii).

Directors RemunerationOnly two Directors take remuneration from the company. Total remuneration expenses of the Directors have been disclosed as an expense under the head of Administrative Expenses in the notes 23.04 of the financial statements. Independent Director did not take any remuneration from the company.


Directors' ReportCorporate and Financial ReportingThe Directors are pleased to confirm the following: ● The financial statements prepared by the

management of the company present fairly its statements state of affairs, the result of its operations, cash flows and changes in equity.

● Proper books and accounts of the company have been maintained.

● Appropriate accounting policies have been consistently applied in the preparation of the financial statements and the accounting estimates are based on reasonable and prudent judgment.

● International Accounting Standards (IAS) / Bangladesh Accounting Standards (BAS) / International financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRS), as applicable in

Bangladesh, have been followed in preparation of the financial statements and any departure there from has been adequately disclosed.

● The system of Internal Control is sound in design and has been effectively implemented and monitored.

● There are no significant doubts upon the Company's ability to continue as a going concern.

● There are no significant deviations from last year in operating results but normal growth is there.

● The financial data for the last five years are enclosed.● Minority shareholders have been protected from

abusive actions by, or in the interest of controlling shareholders acting either directly or indirectly and have effective means of redress.

● No bonus share or stock dividend has been or shall be declared as interim dividend.

The Board of Directors did not take attendance fees during the financial year 2018-2019.

Shareholding Pattern

Shareholding patterns of the company as on June 30, 2019

Name of Directors Number of Meeting held during the year ended 30.06.2019

Number of Meeting attended

Mr. Javed Bukth 6 6

Mr. Mohammed Abdus Salam 6 6

Mr. Zia Shamsi 6 6

Mr. Md. Atiqul Islam 6 6

Name of the Shareholders Designation No. of Shares

Percentage %

(a) Parent or Subsidiary or Associated Companies and other related parties (Name-wise details);

Nil Nil

(b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and Compliance and their spouses and minor children (Name-wise details);

Directors:

Mr. Javed Bukth Chairman & Independent Director

42,543 0.06

Mr. Mohammed Abdus Salam Managing Director 53,21,070 7.33

Mr. Zia Shamsi Director 14,52,931 2.00

Mr. Md. Atiqul Islam Independent Director

Nil Nil

CEO, CS, CFO, HIAC:

Mr. Muhammed Shariful Islam Company Secretary

Nil Nil

Mr. Saroj Biswas Chief Financial Officer

Nil Nil


Directors' Report

Directors Appointment & Re-AppointmentAs per the Article of Association of the company the following Director shall retire in the 23rd Annual General Meeting and being eligible offered himself for re-election.

Mr. Zia Shamsi

Independent Director:a) Mr. Md. Atiqul Islam, Independent Director completed three years and he is retiring in the 23rd Annual General Meeting from the position. As per BSEC regulation & Corporate Governance Compliance Code, he is eligible to continue as an Independent Director and the Board of Directors recommended appointing him for the next three years.

Mr. Md. Atiqul Islam: He was born on July 01, 1961 in Dhaka. He holds a Bachelor's Degree in Commerce from Dhaka University. He is a very dynamic and resourceful person for the business sector in the country. He is a Director of Islam Garments Ltd. (A Group of Industries) since 1985. He was the President of BGMEA in the year 2013-14. He was Declared CIP by the Government of Bangladesh for the year 2002, 2003, 2008, 2010 and 2011. He was awarded as best vendor by Wal-Mart Inc. for several years. He is involved with various social and economic activities.

b) According to the Bangladesh Securities and Exchange Commission's notification no. BSEC Notification No.SEC/CMRRCD/ 2006-158/207/Admin/80:dated 3rd June 2018 regarding Corporate Governance Compliance Code as per condition (1.1) We could not be complied due to the resignation of the board member. In the meantime, the Board of Directors of the company has taken the necessary steps to comply with the condition (1.1).

In this context, the Board of Directors unanimously decided to appoint Mr. Mohammad Rafiqul Islam Rowly as an Independent Director for the next three years. His shareholding is zero percent and he is not a sponsor of the company.

Mr. Mohammad Rafiqul Islam RowlyHe was born on December 11, 1961 in Dhaka. He has completed a Masters and Bachelors (Hons) in Commerce from Dhaka University. He is an IT entrepreneur and software developer with 30 years of experience in the ICT sector. He is the Managing Director and Co-founder of CSL Software Resources. He is an expert in business process analysis and reengineering, designing workflow based application architecture and implementation methodology. He is a very dynamic and resourceful person for the IT industry. He is involved with various social and economic activities.

Management's Discussion and AnalysisManagement's Discussion and Analysis has been highlighted in the Chairman and Managing Director's statement and in Director's Report.

Corporate Governance Compliance CertificationThe Company has also complied with all requirements of Corporate Governance Code as required by the Bangladesh Securities & Exchange Commission. According to Bangladesh Securities and Exchange Commission's notification no BSEC Notification No. SEC/CMRRCD/ 2006-158/207/Admin/80: dated 3rd June, 2018 a Corporate Governance Compliance Report is enclosed.

Appointment for Corporate Governance Compliance CertificationM/s. Mollah Quadir Yusuf & Co., Chartered Accountants in practice had conducted the investigation work on compliance of the code of corporate governance by this company as issued by the BSEC Notification No. SEC/CMRRCD/2006-158/207/Admin/80: dated 3rd June, 2018 during the FY 2018-2019.

The Board of Directors of this Company has recommended to reappoint M/s. Mollah Quadir Yusuf & Co., Chartered Accountants in Practice for the purpose of compliance certification of the corporate governance by this company under the BSEC Code for the FY 2019-2020 and placing the matter before the Members of this company in the 23rd Annual General Meeting for its approval.

Mr. Md. Abu Jafor Head of Internal Audit and Compliance

Nil Nil

Spouses and minor children: Nil Nil

(c) Executive (Top 5 persons other than Directors/CEO/CS/CFO/HIAC:

Ms. Farhana Haque Head of Sales Nil Nil

Mr. Mozammal Hoque CTO Nil Nil

Md. Husain Kabir Network Administrator

Nil Nil

Mr. Masiur Rahman Manager, Admin Nil Nil

Mr. Abu Obayed Md. Azrof Uzzal Manager, Service Delivery

Nil Nil

(d) Shareholding 10% or more voting right Nil Nil


Appropriation of ProfitConsidering the overall environment of IT sector and current strength of the Company, the Board of Directors has recommended for meeting the expectations and aspirations of all Shareholders, recommended 7% Cash dividend (i.e Tk. 0.70 per share) for the year ended June 30, 2019 against the

paid up capital of Tk. 725.56 millions for the members whose name shall appear in the share register/ depository record as on 21st November 2019.

The Board therefore, recommending the dividend for the year 2018-2019 as follows:

Capital of the CompanyThe authorized capital of the Company is Tk. 1000,000,000 divided into 100,000,000 shares of Tk. 10.00 each. Existing Paid up Capital of the Company is Tk. 725.56 millions divided into 72.56 millions shares of tk. 10.00 each.

Appointment of Auditors The auditors, Aziz Halim Khair Choudhury., Chartered Accountants, have completed the audit for the year 2018-2019. As per Bangladesh Securities and Exchange Commission (BSEC) Rules, existing auditor is eligible for appointment for performing audit of the company for next year since they did not cross the 3 years limit.

Therefore, the Board of Directors has proposed to reappoint existing auditor Aziz Halim Khair Choudhury., Chartered Accountants subject to the approval by shareholders in 23rd Annual General Meeting for the year ending June 2020.

AcknowledgementWe would like to thank our employees, directors and shareholders for their dedication as well as our business partners and customers around Bangladesh for the trust they have placed and continue to place in us. 2019-20 will be another exciting year for Agni.

Besides, we also appreciate the role of BTRC, Ministry of Post & Telecommunications Bangladesh Securities and Exchange Commission, Registrar of Joint Stock Companies and Firms, Dhaka Stock Exchange Limited, Chittagong Stock Exchange Limited and various other government and regulatory bodies for their cooperation. Our journey continues.

Dhaka, November 2019

Javed BukthChairman

Description Amount in Tk.

Net profit for the year 2018-2019 54,066,717

Profit brought forward from last year 35,635,672

Profit available for appropriation 89,702,388

Proposed Dividend 50,789,334 Transfer to Retained Earnings 38,913,054

Directors' Report

Report of the Audit Committee


Scope of work of Audit Committee

The committee is authorized to investigate any matter within its terms of reference, access all documents and information of the company, seek information from any director or employee of the Company and co-opt any resources (including external professional assistance) it sees fit in order to fulfill its duties. However, the committee has no executive function and its primary objective is to review and challenge, rather than assume responsibility for any matters within its remit.

Review of financial statements by the Audit committee

Audit Committee reviewed the annual financial statements for the year 2018-2019 and placed its recommendation to the Board of Directors.

Audit Committee of the Board

Audit Committee of the Board is constituted comprising three members to provide independent overview of the company's Financial Operational Report, internal controls system etc. Ideally the Audit Committee should:

● Have sufficient expertise in financial, accounting, auditing and legal matters to be able to adequately oversee and evaluate the control, risk management, compliance system and the quality of financial disclosures to shareholders and other stakeholders.

● Oversee the internal audit and control function; the internal audit auditor should report routinely to this committee of the board as and when necessary, report any concerns regarding the quality of controls or compliance issues.

● Have sufficient resources to be able to properly perform their responsibilities.

● Have full access to and the cooperation of management. ● Have authority to investigate fully any matters within its

purview. ● Have the authority for the hiring of auditors, including the

setting of contractual provisions, review of the cost-effectiveness of the audit, approving of non-audit services provided by the auditor, and assessing the auditor's independence.

● Meet with auditors independently of management or other company interest/ interested parties periodically but at least once annually.

● Have the full authority to review the audit and financial statements, question auditors regarding audit findings, including the review of the system of internal controls and to determine the quality and transparency of financial reporting choices

Following is the constituted Audit Committee of the Board: Mr. Md. Atiqul Islam, ChairmanMr. Mohammed Abdus Salam, MemberMr. Zia Shamsi, Member

Roles and Responsibilities of Audit Committee: Following are the detail roles and responsibilities of Audit Committee:

Internal Control:

● Consider whether internal control strategies recommended by internal and external auditors have been implemented timely by the management as regards to the report

relating to fraud forgery, deficiency in internal control or other similar issues detected by internal and external auditors and inspectors of the regulators and inform the board on a regular basis.

● To review the financial reporting process, the system of internal control and approach to manage risks, the audit process, and the Company processes for monitoring compliance with laws and regulations and its own code of business conduct.

● Evaluate whether management is adhering to the appropriate compliance culture by communicating the importance of internal control and risk management to ensure that all employees have clear understanding of their respective roles and responsibilities.

● Review the arrangements made by the management for developing and maintaining a suitable Management Information System (MIS).

Internal Audit: ● Review the Audit plan● Review the efficiency and effectiveness of internal audit

function. ● Review that findings and recommendations made by the

Internal Auditors for removing the irregularities, if any, detected are duly acted upon by the management in running the affairs of the Company.

● Review the activities and organizational structure of the internal audit function and ensure that no unjustified restrictions or limitations are made.

External Audit: ● Review the performance of auditing and their audit and

management reports by the external auditors. Review that findings and recommendations made by the external auditors for removing the irregularities, if any, detected are duly acted upon by the management in running the affairs of the Company.

● Make recommendations to the Board regarding the appointment of the external auditors.

Meeting: The Audit Committee holds meetings at least once in every three months to scrutinize matters as assigned by the Board of Directors. The Audit Committee held 4 (Four) Meetings in 2018-2019.

Based on the review and above discussion, the Audit committee is of the view that the internal control and compliance procedures are adequate to present a true and fair view of activities and financial status of the company and to ensure that its assets are safeguarded properly.

The Board Audit Committee would like to express its thanks to the Members of the Board, key Management personnel and all employees for their dedication and efforts during the year ended June 30, 2019.

Sd/-Md. Atiqul islamChairmanAudit Committee

---


Report of the Nomination & Remuneration Committee (NRC)The Board of the Directors of Agni Systems Limited has constitute a Nomination and Remuneration Committee (NRC) according to Bangladesh Securities Exchange Commission's Corporate Governance Code.The NRC assists the board in formulating the nomination criteria or policy for determining qualifications, positive attributes, experiences and independent Director and other top-level activities.

The rules of the NRC according to Bangladesh Securities and Exchange Commission's corporate governance code are as follows:

(i) Formulating the criteria for a director and recommend a policy to the Board relating to the remuneration of the Directors/top level executive, considering the following:

(a) The level & composition of remuneration is reasonable and sufficient to attract, retainand motivate directors to run the company successfully.

(b) The relationship of remuneration to performance is velar and meets performance benchmarks.(c) Remuneration to directors/top level executive involves a balance between fixed and incentive pay

reflecting short and long-term performance objectives.(ii) Devising a policy on Board's diversity taking into consideration age, gender, experience, ethnicity,

educational background and nationality.(iii) Identifying persons who are qualified to become directors/top level executive and recommend their

appointment and removal to the Board.(iv) Formulating the criteria for evaluation performance of independent directors and the Board.(v) Identifying company's needs for employees at different levels and determine their selection, transfer/

replacement and promotion criteria.(vi) Developing, recommending and reviewing annually the company's human resources and training policies

The NRC of Agni Systems Limited consists the following members: Mr. Md. Atiqul Islam, Chairman Mr. Zia Shamsi, MemberMr. Muhammed Shariful Islam, Secretary

Note: One of the Board Members Mr. Murshed Sayeed has not continued with us from the date 30th January 2019 due to resignation from the Board and he has also resigned from NRC.

The NRC may invite such or the executives of the company as it considers appropriate to be present the NRC meeting. It depends on the Chairman of the NRC. The company secretary shall act as the secretary of the NRC. The committee held a meeting in 2018-2019. The recommendations adopted at the meeting were sent to the Board for approval.

The recommendations of the NRC during the year were as follows:

i. Formulated a policy relating to the remuneration of the Directors, top-level executives and all employees of the Company.

ii. Formulated the criteria for the determining qualifications, positive attributes and independence of a Director

iii. Formulated the criteria for the evaluation of performance of Independent Directors and the Board Members

iv. Identified criteria for selection, transfer of replacement and promotion at different levels of the Company.v. Adopted a code of conduct for the Chairman, Directors and Top-level executives of the Company.vi. To identify the company's need for employees at different levels and empowers the relevant management

of the company's HRD for section transfer, replacement and promotion of respective employees based on the company's internal processes.

Sd/-Md. Atiqul IslamChairman Nomination & Remuneration Committee (NRC)

Status of Compliance with the Corporate Governance Code


Presently the

number of the

board members

are 4 (four). Very

shortly we shall

fulfill the required

members.

N/A

N/A



N/A







Chairperson

Chairperson.







Code.


[Declaration under condition No. 1(5)(xxvi) of theCorporate Governance Code, 2018]

The Board of DirectorsAgni Systems Limited

Subject: Declaration on Financial Statements for the year ended on 30 June 2019.

Dear Sirs,Pursuant to the condition No. 1(5)(xxvi) imposed vide the Commission's Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 Dated 03 June 2018 under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby declare that:

(1) The Financial Statements of Agni Systems Limited for the year ended on June 30, 2019 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed;

(2) The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view;

(3) The form and substance of transactions and the Company's state of affairs have been reasonably and fairly presented in its financial statements;

(4) To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records;

(5 Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and

(6) The management's use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern.

In this regard, we also certify that: -

(i) We have reviewed the financial statements for the year ended on June 30, 2019 and that to the best of our knowledge and belief:

a. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

b. These statements collectively present true and fair view of the Company's affairs and are in compliance with existing accounting standards and applicable laws.

(ii) There are, to the best of knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the code of conduct for the company's Board of Directors or its members.

Sincerely yours,

Mohammed Abdus Salam Managing Director

Date : 24/10/2019

Saroj BiswasChief Financial Officer

Date : 24/10/2019


21 November 2019


Independent Auditor's Report To the Shareholders of Agni Systems LimitedReport on the Audit of the Financial StatementsOpinion

We have audited the accompanying financial statements of Agni Systems Limited, which comprise the Statement of Financial Position as at 30 June 2019, and the statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended and notes to the financial Statements, including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Agni Systems Limited as at 30 June 2019, and its financial performance and its cash flows for year then ended in accordance with International Financial Reporting Standards (IFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (IASs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Bangladesh, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. Those matters were addressed in context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.Each audit matters and our respective response are disclosed below.


Risk Our response to the risk

Revenue recognition

As disclosed in note 21.00 at year end the Company reported total revenue of BDT 379,807,634

The Company has multiple revenue units including Internet service, Software sales, ICX, IPTSP. Since the company has complex terms of contracts which require significant management estimation and judgement in determining the timing of revenue recognition and measurement.Revenue is derived from several business segments and agreement with customers contain more than one performance obligation. Hence the management needs to determine the basis for allocating the consideration received between the separate performance obligations based on relative standard selling price.This matter is considered a key audit matter due to the level of judgement required to determine the timing of revenue recognition and measurement.

Our audit procedures included, among others, the following:

• We evaluated the revenue recognition principles applied by the Company towards applicable accounting standards;

• We evaluated the revenue recognition of different segments of revenue in relation to the terms of the service terms;

• We tested the key controls over the calculation, authorization and approval of bills forwarded to customers and the capturing and recording of revenue transections;

• We tested the timing of the revenue recognition;

• We evaluated the appropriateness of the notes related to the Company’s revenue;

• We critically assessed manual journals posted to revenue to identify unusual or irregular items; and

• Finally assessed the appropriateness and presentation of disclosures against relevant accounting standards.

See note no. 21of the financial statements

Property, plant and equipment (PP&E)

As disclosed in note 4.00 the carrying value of PP&E asat 30 June 2019 was BDT. 550,267,703. Which is 47% of total assets.

There are a number of areas where management judgement impacts the carrying value of PP&E, and the related depreciation profiles. These include:

• Determining which costs meet the criteria for capitalization;

• The estimation of economic useful lives and residual values assigned to property, plant and equipment.

We identified the carrying value of property, plant and equipment as a key audit matter because of the high level of management judgement involved and because of its significance to the financial statements.

Our audit procedures toassess the carrying value of PP&E included the following:

• assessing the design, implementation and operating effectiveness of key internal controls over the completeness, existence and accuracy of property, plant and equipment, including the key internal controls over the estimation of useful economic lives and residual values;

• assessing, on a sample basis, costs capitalized during the year by comparing the costs capitalized with the relevant underlying documentation, which included purchase agreements and invoices, and assessing whether the costs capitalized met the relevant criteria for capitalization; and

• evaluating management’s estimation of useful economic lives and residual values by considering our knowledge of the business.

See note no. 4.00 of the financial statements


Reporting on Other Information Management is responsible for the other information. The other information comprises all of the information in the Annual report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of our knowledge obtained in the audit or otherwise appears to be materially misstated.If,based on the work we have performed,we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal ControlsManagement is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As disclosed in note 7.00 the Company had inventory of BDT 18,378,336 at 30 June 2019, held and across multiple product lines. Inventories are carried at the lower of cost and net realizable value.

The company keep significant stock of internet equipment at its service units and stores mostly at its business place.

Inventory valuation and existence was a key audit matter because of store/ location that inventory was held and the judgment applied in the valuation of inventory.

We performed a number of audit procedures for inventory valuation and existence. The procedure introduced any others the followings:

• Evaluated and selected systems and processes for inventory and tested a sample of key controls for establishing volumes and cost;

• Evaluated the stocking process in the selected stores and undertook our own test of control;

• Tested, on a sample basis, stocks of raw materials to actual prices. Assessed the reasonableness of the product and service costing;

• Comparing the net realizable value obtained through a detailed review of sales subsequent to the year-end, to the cost price of a sample of inventories;

• Participated in stock takes at a number of locations and tested the cut-off of deliveries in or out of inventory; and

• Obtained the company’s monitoring controls of slow movers and assessments of obsolescence as well as net selling prices.

See note no. 7.00to the financial statements


As a part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

● Evaluate the appropriateness of accounting polices used and the reasonableness of accounting estimates and related disclosures made by management.

● Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubts on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusion is based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matter communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would be reasonably be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory Requirements

In accordance with the Companies Act 1994, the Securities and Exchange Rules 1987 and relevant notifications issued by Bangladesh Securities and Exchange Commission, we also report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief where necessary for the purpose of our audit and made due verification thereof;

b) In our opinion, proper books of accounts, records and other statutory books are required by law have been kept by the Company so far as it appeared from our examinations of those books.

c) The Statement of Financial Position, and the Statement of Profit or Loss and Other Comprehensive Income and Statement of Changes in Equity and Statement of Cash Flows of the Company dealt with by the report are in agreement with the books of account and returns; and

d) The expenditure was incurred for the purpose of the Company's business.

12 November 2019Dhaka

Aziz Halim Khair ChoudhuryChartered Accountants


Agni Systems Limited

Statement of Financial PositionAs at 30 June 2019

Figures in Tk

Non-Current Assets: 597,641,911 612,633,361 Property, Plant and Equipment 4.00 550,267,703 561,755,183

5.00 20,025,000 20,025,000 Intangible Assets 6.00 27,349,208 30,853,178

Current Assets: 580,014,619 579,040,982 Inventories 7.00 18,378,336 24,537,248 Trade & Other Receivables 8.00 312,235,111 285,019,511 Investment in Shares 9.00 1,190,439 680,000 Advance, Deposits & Prepayments 10.00 210,408,759 247,676,682 Cash and Cash Equivalents 11.00 37,801,973 21,127,541 Total Assets 1,177,656,529 1,191,674,343

EQUITY AND LIABILITIESShareholders' Equity: 1,047,832,808 1,028,316,668 Share Capital 12.00 725,561,920 691,011,360 Share Premium 232,568,500 232,568,500 Retained Earnings 13.00 89,702,388 104,736,808

Non-Current Liabilities: 13,988,208 44,697,320 14.00 2,481,907 32,464,609

Deferred Tax 15.00 11,506,301 12,232,711

Current Liabilities: 115,835,512 118,660,356 16.00 7,524,456 24,462,000

Liabilities for Services 17.00 11,336,092 11,431,835 Other Liabilities 18.00 5,362,543 5,701,643 Liabilities for Expenses and Provisions 19.00 19,131,450 15,430,550 Provision for Income Tax 27(d) 72,480,970 61,634,328 Total Liabilities 129,823,720 163,357,676 Total Equity and Liabilities 1,177,656,529 1,191,674,343

Chief Financial Officer

Signed in terms of our separate report of even date annexed.

Investment in Associates

Particulars

Long Term Borrowings

Notes 30 June 2019

_______________________

The annexed notes 01 to 40 form an integral part of these financial statements. These financial statements were approved by the Board of Directors on 28/10/2019 and were signed on its behalf by:

30 June 2018

Aziz Halim Khair Choudhury

ASSETS

__________________

Current Portion of Long Term Borrowings

Chartered Accountants12 November 2019

Dhaka

Managing Director

Company Secretary

Director Chairman



Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 30 June 2019

Figures in Tk

21.00 379,807,634 329,450,195 22.00 (234,998,541) (170,785,228)

144,809,093 158,664,967 Operating Expenses:

23.00 (72,364,243) (61,886,934) 72,444,850 96,778,033

24.00 (5,152,717) (7,998,926) Net Revenue from Operation 67,292,134 88,779,107

25.00 454,804 74,180 Investment Income/(Loss) 26.00 29,857 (1,117,232)

67,776,795 87,736,055 20.00 (380,498) (103,143)

Profit before WPPF 67,396,297 87,632,912 Contribution to Workers' Profit Participation Fund (WPPF) 3,209,347 4,172,996 Profit before Tax 64,186,949 83,459,917

27.00 (10,846,642) (10,579,964) 15.00 726,410 (3,327,990)

(10,120,233) (13,907,954) 54,066,717 69,551,963

Other comprehensive income - - Total comprehensive income 54,066,717 69,551,963

13.01 0.75 1.01 Restated Earnings per Share 13.02 0.96

Gross Profit

Notes Particulars 01 July 2018

to 30 June 2019

01 July 2017 to

30 June 2018

Income Tax Expenses

Deferred Tax Income/(Expense)

RevenueDirect Expenses

Non-Operating Income

Administrative & General Expenses

Financial ExpensesProfit from Operation

Provision against Investment in Shares


Profit before Provision

Earnings per Share (EPS)

Net Profit After Tax

Current Tax



_______________________


__________________

Chartered Accountants12 November 2019 Dhaka

Managing Director

Company Secretary

Director Chairman



Statement of Cash Flows For the year ended 30 June 2019

2018-19 2017-18A) Cash Flow from Operating Activities:

Collection from Customers 518,671,110 516,402,382 Advance, Deposits & Prepayments 55,223,985 11,564,618 Payment for Expenses & Others (441,720,676) (449,894,221) Cash Generated from Operations 132,174,418 78,072,779 Income Tax Paid (18,817,150) (14,856,236) Net Cash from Operating Activities 113,357,268 63,216,543

B) Cash Flow from Investing Activities:Purchase of Property, Plant and Equipment (9,623,166) (2,253,238) Sale of Listed Securities - 948,904 Purchase of Listed securities (890,936) (783,143) Interest Received 454,804 74,180 Dividend Received - 6,000 Net Cash used in Investing Activities (10,059,298) (2,007,297)

C) Cash Flow from Financing Activities:Payments against Long Term Borrowings (46,920,246) (27,623,383) Dividend Paid (34,550,576) (33,188,071) Proceeds from Margin Loan - (9,320,770) Financial Expenses (5,152,717) (7,998,927) Net Cash used in Financing Activities (86,623,539) (78,131,151)

D) Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 16,674,432 (16,921,905)

E) Cash and Cash Equivalents at Opening 21,127,541 38,049,446

F) Cash and Cash Equivalents at Closing (D+E) 37,801,973 21,127,541

1.56 0.91 Net Operating Cash Flow per Share

Amount in Taka


Particulars



_______________________


__________________


Managing Director

Company Secretary

Director Chairman



Statement of Changes in Equity For the year ended 30 June 2019

Particulars Share Capital Share Premium Retained Earnings Total

Balance as at 01 July 2018 691,011,360 232,568,500 104,736,808 1,028,316,668

Stock Dividend 34,550,560 - (34,550,560) -

Cash Dividend - - (34,550,576) (34,550,576)

Profit for the Year - - 54,066,716 54,066,716

Balance as at 30 June 2019 725,561,920 232,568,500 89,702,388 1,047,832,808

Particulars Share Capital Share Premium Retained Earnings Total

Balance as at 01 July 2017 658,106,060 232,568,500 100,995,445 991,670,005

Stock Dividend 32,905,300 - (32,905,300) -

Cash Dividend - (32,905,300) (32,905,300)

Prior Year's Adjustment - - - -

Profit for the Year - - 69,551,963 69,551,963

Balance as at 30 June 2018 691,011,360 232,568,500 104,736,808 1,028,316,668


For the year ended 30 June 2018

Amount in Taka



_______________________


__________________


Managing Director

Company Secretary

Director Chairman



Notes to the Financial StatementsAs at and for the year ended 30 June 2019

1.00

1.01

1.02

1.03

2.00

2.01

2.02

2.03

2.04 Foreign Currency Transaction

2.05

Note 4: Property, Plant and Equipment (Useful Life of Depreciable Assets)Note 6: Intangible Assets (Useful Life of Assets)Note 15:

Note 27: Current Tax ExpenseNote 15: Deferred Tax (Income)/Expense

Legal form of the Company

Address of the Registered Office

The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fairvalue of the consideration given in exchange for assets.

The financial statements are prepared in Bangladeshi Taka which is the company’s functional currency. All financialinformation presented in Taka has been rounded off to the nearest Taka.

Reporting Entity

The main activities of the company are to render service of electronic mail, internet access, electronic datacommunication, computer networking, electronic data processing, electronic data entry, software development, toprovide service of consultancy, to buy, setup, install, produce, rent and deal otherwise in all types of computer, computerperipherals, fax/data modem, computer networking equipment, related accessories, archiving contentment, accessnetwork, web listing, IT support & software maintenance service, domestic and international gateways for all type ofcommunication & computer software.

Statement of Compliance

Significant Accounting Policies

Functional and Presentational Currency and Level of Precision

The accounting policies set out below have been applied consistently to all periods presented in these financialstatements.

Nature of Business Activities

Foreign currency transactions are translated into Bangladeshi Taka using exchange rates prevailing on the transactiondates. Monetary assets and liabilities in foreign currency at the Statement of Financial Position date are translated at theclosing rate.

Basis of Preparation

Agni Systems Limited (the Company) was incorporated on 04 November 1995 as a private company limited by sharesregistered under the Companies Act 1994 vide registration no. 29635(923)/95. Subsequently the company wasconverted into a public company limited by shares on 28 August 2002 and is listed both in Dhaka Stock Exchange (DSE)& Chittagong Stock Exchange (CSE) under the symbol AGNISYSL.

The registered office of the company is located at Navana Tower, 11th floor, Suite-A, 45 Gulshan Avenue, Gulshan-1,Dhaka-1212.

The preparation of these financial statements in conformity with IFRS requires management to make judgments,estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,liabilities, income and expenses. Actual result may differ from the estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates arerecognized in the period in which the estimates are revised and in any future periods affected.

The financial statements have been prepared and the disclosures of information made in accordance with therequirements of the Companies Act 1994, the Securities and Exchange Rules 1987 and IFRS & IAS’s .The Statement ofFinancial Position and the Statement of Profit or Loss and Other Comprehensive Income have been prepared accordingto IAS 1: Presentation of Financial Statements based on accrual basis following going concern assumption andStatement of Cash Flows according to IAS 7: Statement of Cash Flows.

Use of Estimates and Judgments

Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies thathave the most significant effect on the amount recognized in the financial statements are described in the followingnotes:

Deferred Tax (asset)/liability (manner of recovery of temporary differences for determination of deferred tax(asset)/liability)


2.06

2.07

2.08

The financial period of the company covers one year from 01 July to 30 June and is followed consistently.

iv) Statement of Changes in Equity for the year ended 30 June 2019

i) Statement of Financial Position as at 30 June 2019

Components of the Financial Statements

There was no such impact on these financial statements as no new accounting standard was issued by the ICAB duringthe year under audit.

Impact of Recently Issued Accounting Standards

According to the International Accounting Standards (IAS) 1 "Presentation of Financial Statements" , the complete setof Financial Statements includes the following components:

Reporting Period

iii) Statement of Cash Flows for the year ended 30 June 2019ii) Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2019

v) Notes to the financial statements (comprising summary of significant accounting policies and other explanatoryinformation).

2.09

2.10

iii) Depreciation

Rate of Depreciation

-2.50%

10%

15%15%15%

15%

15%15%

15%15%15%15%10%10%

15%15%10%

-a) Wimax Equipment

Sundry Assets

Freehold Leasehold d) Other Equipmente) Wireless Equipmentf) Telephone Installationg) Cable Fiber OpticComputer & Accessories:

Work-in-Progress:

Freehold Leasehold

Freehold Leasehold

a) Air Conditioner

a) Computer & Accessories

ICX EquipmentMachinery and Equipment:

b) Power Backup Equipment

c) Internet Equipment

b) Software

Category of Fixed Assets

Land & Land DevelopmentBuildingFurniture & FixtureMotor Vehicle

Comparative information have been disclosed in respect of the year 2017-2018 for all numerical information in theFinancial Statements and also the narrative and descriptive information when it is relevant for understanding of thecurrent period's financial statements.

Depreciation is recognized in the statement of profit or loss and other comprehensive income using 'Reducing BalanceMethod' over the estimated useful lives of each fixed assets. No depreciation is charged on Land & Land Devwlopment.Depreciation is charged on additions ot fixed assets from the date when the assets are available for use. Depreciation ondisposals of fixed assets, ceases at the earlier of the date that the assets are disposed. Depreciation is allocated as 60%as direct expenses and 40% as administrative expenses. The rates of depreciation being charged on different assets aregiven below:

The cost of replacing or upgrading part of an item of property, plant and equipment is recognized in the carrying amountof the item if it is probable that the future economic benefits embodied within the part will flow to the company and itscost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day to dayservicing of the property, plant and equipment are recognized in the statement of comprehensive income as incurred.

Property, Plant and Equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation in accordance with IAS 16:Property, Plant and Equipment.

ii) Subsequent Cost

Comparative Information

i) Recognition and Measurement of Property, Plant and Equipment

Cost includes expenditure that are directly attributable to the acquisition of the property, plant and equipment. Property,plant and equipment under construction are stated at cost.


2.11 Leased assets

2.12

iii) Amortization

2.13

2.14 Associates

2.15

2.16

i) Recognition and MeasurementIntangible Assets

For the purpose of statement of financial position and statement of cash flows, cash in hand and bank balancesrepresent cash and cash equivalents considering the IAS 1: Presentation of Financial Statements and IAS 7: Statement of Cash Flows, which provide, that cash and cash equivalents are readily convertible to known amounts of cash and aresubject to and insignificant risk of changes in value and are not restricted as to use.

ii) Trade & Other Receivables

Intangible assets are amortized on a straight line basis. Software development is amortized at a rate of 6.67% and otherintangibles are amortized at a rate of 20%.

ii) Subsequent Costs

Inventories comprise various Modems, Media Converter, Router, Switch, Cables, Nano Station, Gipon, Vigor, IP Phone,Well Gate, Bullet and others. They are stated at the lower of cost and net realizable value in accordance with IAS 2:Inventories.

Financial Assets

Accounts receivable represent the amounts due from different customers for sale of internet services, softwaredevelopment service, software maintenance services, ICX service, network installation and other services and includesbilled portion of such services at the date of statement of financial position. Accounts receivables are stated net ofprovision for doubtful debts.

Investments in share of listed companies are presented at fair value (Market Value). Any unrealized gain or loss arisingfrom changes of fair value (market value) has accounted for through statement of profit or loss and other comprehensiveincome in these financial statements.

Investments in Share

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specificasset to which it relates. All other expenditures are recognized in profit or loss as incurred.

Assets are reviewed for impairment at each year and impairment is charged if appropriate. This year no impairment wasrecognized.

i) Cash and Cash Equivalents

v) Capital Work in Progress

iv) Gains or Losses on Disposal

Capital work in progress consists of acquisition costs of network plant and machinery, capital components and relatedinstallation cost until the date placed in service. In case of import of components, capital work in progress is recognizedwhen risks and rewards associated with such assets are transferred to the company, i.e. at the time shipment isconfirmed by the supplier and installation is made.

The cost is calculated on average method consistently. Costs comprise expenditure incurred in the normal course ofbusiness in bringing such inventories to its location and conditions.

Intangible assets that are acquired by the company and have finite useful lives are measured at cost less accumulatedamortization and accumulated impairment loss, if any. Intangible assets are recognized when all the conditions forrecognition as per IAS 38: Intangible assets are met. The cost of an intangible asset comprises its purchase price,import duties and non-refundable taxes and any directly attributable cost of preparing the asset for its intended use.

Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amounts and arerecognized net.

Inventories

Where the company has the power to participate in the financial and operating policy decisions of another entity, it isclassified as an associate. Associates are initially recognized in the consolidated statement of financial position at cost.Agni Systems Limited has representation in the board and ownership of 25% of paid up capital of Songbird Limitedwhich has made Songbird Limited an Associate of this Company and therefore recognized accordingly.

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to theentity, the asset is treated as if it had been purchased outright. The amount initially recognized as an asset is the lowerof the fair value of the leased property and the present value of the minimum lease payments payable over the term ofthe lease. The corresponding lease commitment is shown as a liability. Lease payments are analyzed between capitaland interest. The interest element is charged to the statement of comprehensive income over the period of the lease andis calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balanceowed to the lessor.


2.17

i) Current Tax

2.18

2.19

iii) Revenue from Wimax operation has not yet been started. 2.20

2.21

2.22

Deferred tax has been recognized in accordance with the provision of IAS 12: Income Taxes, based on the deductible ortaxable temporary difference between the carrying amount of assets/liabilities and its tax base. Deferred tax asset orliability is the amount of income tax recoverable or payable in the future periods recognized in the current period.Deferred tax asset or liability does not create a legal recoverability or liability from or to tax authority. Related deferredtax income/expense is recognized as well in the statement of comprehensive income. Deferred tax assets and liabilitiesare offsetted if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to incometaxes levied by the same tax authority on the same taxable entity.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available againstwhich the deductible temporary difference can be utilized. Deferred tax assets are reviewed at each date of statement offinancial position and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

The company initially recognizes financial liabilities on the transaction date at which the company becomes a party to the contractual provisions of the liability. The company derecognizes a financial liability when its contractual obligations aredischarged or cancelled or expired.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balancesheet date. Management periodically evaluates positions taken in tax returns with respect to situations in whichapplicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amountsexpected to be paid to the tax authorities. Agni Systems Limited is a publicly traded Company. As per the Income TaxOrdinance, 1984, provision for tax has been made at the existing rate of 25% in respect of business income.

Financial liabilities include creditors and accrued expense and provisions.These are recognized when its contractual obligations arising from past events are certain and the settlement of which isexpected to result in an outflow from the company of resources embodying economic benefits.

Financial expenses comprise of interest expense on long term loan, short term loan and finance lease. All such costs arerecognized in the Statement of Profit or Loss and Other Comprehensive Income except those are capitalized inaccordance with IAS 23: Borrowing Cost.

Income Tax

Liabilities are recognized for amounts to be paid in the future for goods and services received, whether or not billed bythe supplier.ii) Provisions

Income tax comprises current and deferred tax. Income tax expense/(income) is recognized in the Statement of Profit orLoss and Other Comprehensive Income.

Financial Expenses

ii) Deferred Tax

Financial Liabilities

i) Creditors and Accrued Expenses

Revenue are recognized as per IAS 18: Revenue Recognition, as follows:

ii) Other Income are recognized at the time of receive of money from other purpose than the normal course of businessof the company.

Software Development Cost

Earnings per Share (EPS)

Software development cost was incurred for development of own software of Agni Systems Limited. The cost isamortized every year @ 20% by using reducing balance method consistently. License acquisition cost is amortizedevery year 1/15 by using straight line method as per condition of license period.

The company calculates Earnings per Share (EPS) in accordance with IAS 33: Earnings per Share, which has beenshown at the bottom of the Statement of Profit or Loss and Other Comprehensive Income and the computation of EPS isstated in note # 13.01.

A provision is recognized if, as a result of a past event, the company has a present legal or constructive obligation thatcan be estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Revenue Recognition

i) Post-paid internet services, ICX service and web page software sales are recognized when invoices are made. Pre-paid Internet Services are recognized on receipts.


a) Basic Earnings per Share:This represents earnings for the period attributable to the ordinary shareholders. As there was no preference dividend,minority interest or extra ordinary items, the net profit for the period has been considered as fully attributable to ordinaryshareholders. Basic earnings per share has been calculated by dividing the net profit or loss by the weighted averagenumber of ordinary shares outstanding during the year. Computation of weighted average number of ordinary shares arerequired as number of shares outstanding has been changed during the year.

b)

2.23

2.24

2.25As per IAS 24: 'Related Party Disclosures' , parties are considered to be related if one of the party has the ability tocontrol the other party or exercise significant influence over the other party in making financial and operating decisions.The company carried out transactions in the ordinary course of business on an arm’s length basis at commercial rateswith its related parties.

The company has no scheme/option for dilutive potential ordinary shares. As a result, calculation and presentation ofdiluted EPS is not applicable for the company.

Events after the Reporting Period

Statement of Cash Flows

Diluted Earnings per Share:

All material events occurring after the Statement of Financial Position date are considered and where necessary,adjusted for or disclosed in note # 35.Related Party Disclosures

Statement of Cash Flows is prepared in accordance with IAS 7: Statement of Cash Flows and the cash flow from theoperating activities have been presented under direct method considering the provision of paragraph 19 of BAS-7 whichprovides that enterprises are encouraged to report cash flow from operating activities using the direct method.

(i)Sl. No.

Status with ASL Date of Appointment/

Reappointment

No. of shares held in ASL

1 Chairman & Existing 42,543

2 Managing Director 26-12-2018 Reappointed

5,321,070

3 Director Existing 1,452,931

4 Independent Director


Existing Nil

(ii)Sl. No.

Status with ASL

1. Chairman &

2. Managing Director i) Chairman

3. Director

4 Independent Director

(iii) Related party transaction disclosure during the year 2019 (in compliance with IAS 24)

Sl. No.

Number of Transactions

Nature of Transaction

Transaction during the year

1. 11 Insurance Premium 1,294,871

2 - Sales -

Particulars of Directors and their interest in other entities (as on 30 June 2019)Name of Directors

Director- Representative of Agni System Ltd.

Mr. Md. Atiqul Islam House No. 2/A, Road No. 16,

Mr. Zia Shamsi Songbird Telecom Ltd.

i) Libra Computer Aidii) ACME Electronics Ltd.iii) Pentagon Poultry and Dairies Ltd.

Mr. Javed Bukth

Islam Garments Ltd,

Associate

Relationship

Common Director

Director

Name of Related Party

Name of the firms/companies/ institutions in which they have

Status with the firms/companies/ institutions

Mr. Mohammed Abdus Salami) Songbird Telecom Ltd

Green Delta Insurance Company Ltd.

Mr. Md. Atiqul Islam

Songbird Telecom Ltd

Name of Directors AddressDirectors of Agni Systems Limited (ASL) and their interest in the company (as on 30 June 2019)

Mr. Javed Bukth

i) CEOii) Managing Directoriii) Chairman

Mr. Zia Shamsi House No. 06, Road No. 19, Sector-12, Uttara, Dhaka

99, Dhanmondi, Road No. 11/A, Dhaka

Mr. Mohammed Abdus Salam 39/C, Banani, Road No. 06, Banani, Dhaka

IndependentDirector


(iv) Key Management Personnel CompensationSl Short-term

employee benefits

Post-employee benefits

Other long-term benefits

Termination benefits

Share-based payment

1 42,65,600 N/A 150,000 N/A N/A

2 28,13,600 N/A 150,000 N/A N/A3 960,000 N/A 150,000 N/A N/A

4 880,000 N/A 150,000 N/A N/A5 18,51,010 N/A 150,000 N/A N/A

2.26 Audit Committee Disclosures

Sl.no.i)ii)iii)iv)

2.27

2.28

2.29

2.30

IAS No. StatusPresentation of Financial Statements 1 CompliedInventories 2 CompliedStatement of Cash Flows 7 CompliedAccounting Policies, Changes in Accounting Estimates and Errors 8 CompliedEvents after the Reporting Period 10 CompliedConstruction Contracts 11 N/AIncome Taxes 12 CompliedProperty, Plant and Equipment 16 CompliedLeases 17 CompliedRevenue 18 CompliedEmployee Benefits 19 CompliedAccounting for Govt. Grants and Disclosure of Govt. Assistance 20 N/AThe Effects of Changes in Foreign Exchange Rates 21 N/ABorrowing Costs 23 CompliedRelated Party Disclosures 24 CompliedAccounting & Reporting by Retirement Benefit Plans 26 N/AConsolidated and Separate Financial Statements 27 N/AInvestments in Associates 28 CompliedInterest in Joint Ventures 31 N/AFinancial Instruments: Presentation 32 CompliedEarnings per Share 33 CompliedInterim Financial Reporting 34 CompliedImpairment of Assets 36 CompliedProvisions, Contingent Liabilities and Contingent Assets 37 CompliedIntangible Assets 38 CompliedFinancial Instruments: Recognition and Measurement 39 CompliedInvestment Property 40 N/AAgriculture 41 N/A

IFRS No. StatusFirst-time Adoption of Bangladesh Financial Reporting Standards 1 N/AShare-Based Payment 2 N/ABusiness Combinations 3 N/AInsurance Contracts 4 N/ANon- Current Assets Held for Sale and Discontinued Operations 5 N/AExploration for and Evaluation of Mineral Resource 6 N/AFinancial Instruments: Disclosures 7 CompliedOperating Segments 8 N/A

Approval of Financial Statements

Name

Mr. Md. Atiqul IslamMr. Zia Shamsi

Md Abu Jafor

Name of International Financial Reporting Standards (IFRS)

Mohammed Abdus Salam Managing Director

Status with the committee

Member DirectorChairman

Status with ASL

Member


In compliance with the circular no. SEC/CMRRCD/2006-158/134/Admin/44 Dated 07 August 2012 of the Securities &Exchange Commission, an Audit Committee of Agni Systems Limited was constituted by the Board of Directors.

Name of International Accounting Standards (IAS)

These financial statements were approved by the Board of Directors on 28th October 2019.Contingencies

Head of Internal Audit and Compliance Member

Contingencies arising from claim, litigation assessment, fines, penalties etc. are recorded when it is probable that aliability has been incurred and the amount can reasonably be measured.

While preparing the financial statements, Agni Systems Limited applied most of IAS and IFRS a. Details are given below:Compliance of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS)

Responsibility for Preparation and Presentation of Financial StatementsThe Board of Directors is responsible for the preparation and presentation of Financial Statements under Section 183 ofthe Companies Act 1994, the Securities and Exchange Rules 1987 and as per the provisions of the Framework for thePreparation and Presentation of Financial Statements issued by the International Accounting Standards Committee (IASC).

Mr. Mozammal Hoque, CTO.

Name & Designation

Mr. Mohammed Abdus Salam,Managing DirectorMr. Zia Shamsi, DirectorMr. Muhammed Shariful Islam, Company SecretaryMr. Saroj Biswas, CFO.


30 June 2019 30 June 2018

4.00This is made up as follows:A) Cost

869,999,308 867,746,070 9,623,166 2,253,238

- - Total cost 879,622,474 869,999,308

Opening Balance 308,244,125 284,468,781 21,110,646 23,775,344

- - Total accumulated depreciation 329,354,771 308,244,125 Written Down Value (A-B) 550,267,703 561,755,182

5.00 20,025,000 20,025,000

5.01

5.02 The following entity has been included in the financial statements as associate. Name of the company Songbird Telecom LimitedInterest Held 25% of paid up capital and board representationPrinciple place of business DhakaNature of business IGW Operation

Non-current assetsCurrent assetsNon-current liabilities 9,055,071 24,664,147 Current liabilities NAV 39.82 35.98

6.00 Intangible AssetsSoftware Development 6.01 682,542 853,178 License Acquisition Cost 6.02 26,666,666 30,000,000 Total 27,349,208 30,853,178

6.01 Software DevelopmentThis is made up as follows:Opening Balance 853,178 1,066,473 Add: Addition during the year - - Less: Amortization during the year 170,636 213,295 Closing Balance 682,542 853,178

6.02 License Acquisition Cost Opening Balance 29,999,999 33,333,333 Addition during the year - - Less: Written off 1/15 3,333,333 3,333,333 Closing Balance 26,666,666 29,999,999

Details of Intangible Assets are shown in Annexure-2.

Particulars Ref. Notes

Less: Adjusted during the year

Investment in Share Capital(20,02,500 Shares @ Tk. 10 each)

The financial year of the associates ends on 30 June in each calendar year. The FinancialStatements of Songbird Telecom Limited as on 30 June 2018 has been audited and FinancialStatements as on 30 June 2019 has not been prepared.

Property, Plant and Equipment

Opening Balance (at cost)

Add: Charged during the year

B) Accumulated Depreciation

The summarized financial included in the audited Financial Statements of Song Bird Ltd as follows:

Investment in Associates

179,679,801

390,700,399 379,994,005 104,858,573

156,808,095

101,845,326

SL. No.

Amount in Taka

Add: Addition during the YearLess: Adjusted during the year

Details of Property, Plant and Equipment have been shown in Annexure-1.

This represents the amount paid to Songbird Telecom Limited for 20,02,500 nos. shares as allotted inthe name of Agni Systems Limited for Taka 2,00,25,000 which represents 25% of total paid up capital of Song Bird Ltd. No dividend/income has yet been received against above investment.

30 June 2018 30 June 2017

3.00Previous year's figures have been rearranged wherever considered necessary to conform to the currentyear's presentation.

General


30 June 2019 30 June 2018 Particulars Ref.

Notes SL. No.

Amount in Taka

7.00 InventoriesModem 1,037,565 1,317,565Media Converter 1,398,330 2,028,330Router 954,114 1,504,114Switch 2,316,857 5,047,857Cable 1,957,000 2,269,500Others 1,202,664 1,854,844Gipon 2,018,401 2,203,927Nano Station 197,646 72,183Vigor 575,037 529,352IP Phone 2,506,842 3,459,196Well Gate 318,095 333,095Bullet 206,743 209,743Wimax modem 3,689,041 3,707,541 Total 18,378,336 24,537,248

8.00 Trade & Other ReceivablesTrade receivables 334,942,301 307,726,701Other Receivables - -

334,942,301 307,726,701 Less: Provision for bad & doubtful debts 22,707,190 22,707,190 Total 312,235,111 285,019,511

49,855,162 42,701,550 57,142,000 48,915,166 60,123,144 50,122,456 59,615,622 47,916,856 94,499,195 95,363,483

321,235,123 285,019,511

9.00 Investment in Shares (Net realizable value)This is made up as follows:COST VALUE:PRIMELIFE (15,171 Shares @ Taka 64.11- each) 972,653 - ACFL (10,000 Shares @ Taka 59.83- each) 598,284 - Mercantile Bank (40,000 Shares @ Taka 19.58- each) - 783,143 Total cost value 1,570,937 783,143

Provision against Investment in Shares (Unrealized Gain/Loss) (380,498) (103,143) Total fair value 1,190,439 680,000

MARKET VALUE:Mercantile Bank 40,000 Shares @ Taka 17- each - 680,000 PRIMELIFE (15,171 Shares @ Taka 55.20- each) 837,439 - ACFL (10,000 Shares @ Taka 35.30- each) 353,000 -

1,190,439 680,000 9.01 Provision against Investment in Shares (Unrealized Gain/Loss)

Cost value 1,570,937 783,143 Less: Market value (1,190,439) (680,000)

380,498 103,143

6 to 12 months

up to 1 month

above 1 year

3 to 6 months

Total

Total Provision against Investment in Shares (Unrealized Gain/Loss)

1 to 3 months

Trade receivables are accrued in the ordinary course of business and have been stated at theirnominal value & considered good by the management. Break up of above is as under:



Notes SL. No.

Amount in Taka

10.00 Advance, Deposits & PrepaymentsA) AdvanceOffice Rent 1,949,742 2,534,742 Other Advance 11,854,163 13,215,251 Advance Tax 10.01 109,032,489 90,215,339 VAT 315,263 1,511,951 Advance to Songbird Telecom Ltd. 10.02 60,649,238 110,890,697 Total advance 183,800,895 218,367,980 B) DepositsBangladesh T & T Board 612,000 612,000 AKTEL 27,598 27,598 Grameen Phone 17,000 17,000 BTRC 1,000,300 1,000,300 Tender Submit 1,071,737 2,151,737

1,373,903 1,373,903 Other Deposit 4,613,276 5,433,276 IPTSP 100,000 100,000 Fiber Cable 800,000 800,000 IIG 1,695,000 1,695,000 Telephone Installation & Deposits 4,260,400 4,260,400 Total deposit 15,571,214 17,471,214 C) PrepaymentsInsurance 765,683 1,395,683 License & Renewal Fee- BTRC 7,666,891 7,470,529 Advertisement 1,479,810 1,577,010 Membership Fee 1,124,266 1,394,266 Total prepayments 11,036,650 11,837,488 Total (A+B+C): 210,408,759 247,676,682

10.01Advance Tax This is made up as follows:

Opening balance 90,215,339 75,359,103 Add: Paid/deducted at source during this year 18,817,150 14,856,236

109,032,489 90,215,339 Less: Adjustment made during the year - - Closing Balance 109,032,489 90,215,339

10.02

11.00 Cash and Cash EquivalentsCash in Hand 116,252 173,399 Cash at Bank: A/c type Standard Chartered Bank Ltd. CA 5,183,055 1,348,627 Eastern Bank Ltd. CD 102,322 6,803,978 Eastern Bank Ltd. SND 932,649 932,649 Bank Asia Ltd. SND 398,050 3,357,619 Sonali Bank Ltd. CA 2,053 7,513 ICB Islamic Bank Ltd. CA 12,229 12,229 Woori Bank CD 30 2,025 Dhaka Bank Ltd. CA 74,374 1,037,845 Bank Asia Ltd. SND 441,215 433,141 Bank Asia Ltd. SND 8,608,391 175,874 Bank Asia Ltd. CA 15,816,365 2,668,202 Bank Asia Ltd. CA 4,219,635 914,934 Shahjalal Islami Bank Ltd CA 1,354,953 1,758,038 BRAC Bank 13,916 - Islami Bank Ltd. SND 1,000 1,000 Bank Asia Ltd. SND 525,483 1,500,468

37,685,721 20,954,142 Total cash and cash equivalents 37,801,973 21,127,541

Advance to Songbird Telecom Limited represents Tk. 6,06,49,238 given to Songbird Telecom Limited an Associate of Agni Systems Limited from time to time as subscription money for share capital & short term loan respectively but necessary shares are yet to be allotted.

Deposits for Bandwidth Fee



Notes SL. No.

Amount in Taka

The collaterals and other securities against the above loans are as follows: Collaterals:

1

2

Others:12 Ownership of lease assets;3

45

Deferred Tax15.00This has been arrived as under:Opening Balance 12,232,711 8,904,721 Addition/(Written back) during the Year (726,410) 3,327,990

11,506,301 12,232,711 Deferred Tax Expense/(Income) This has been arrived as under:

Carrying amount of Assets Property, Plant and Equipment 550,267,703 561,755,183 Provision for investment as per financial statements (liability) 380,498 103,143 Accounts Receivables 312,235,111 285,019,511

862,883,312 846,877,837 Tax Base AssetsProperty, Plant and Equipment 481,915,807 490,220,294 Provision for investment as per financial statements (liability) - - Accounts Receivables 334,942,301 307,726,701

816,858,108 797,946,995 Taxable Temporary Difference 46,025,204 48,930,842 Effective Tax Rate 25% 25%Deferred Tax (Assets)/Liability 11,506,301 12,232,711 Opening Deferred Tax 12,232,711 8,904,721 Deferred Tax Expense/(Income) (726,410) 3,327,989

The long term loan has been taken from Bank Asia Limited at a interest @12% p.a. for 5 years. 14.01

Documents of title of goods;

Fixed charge on all the fixed and floating assets of the company with RJSC to cover the fullamount; Registered irrecoverable power of attorney empowering the bank to sell the mortgage property; Personal guarantee of all the directors of the company.

Registered mortgage of apartment # 20/A and car parking space at basement -2 at 'NavanaShopping Complex" valued at 57.07 million;Post dated cheque covering the Bank Guarantee limit.


30 June 2019 30 June 2018 Ref.

Notes Amount in Taka Particulars

22.00 Direct ExpensesThis has been arrived as under:Other Direct Expenses 22.01 2,896,849 2,520,037 Salary & Allowance 22.02 49,872,508 41,543,858 Other Operating Expenses 22.03 19,439,739 18,985,926 Utility & Supplies 22.04 1,838,150 1,211,000 Office rent 11,150,000 9,870,000 Depreciation (Operating) 22.05 12,666,388 14,265,207 Repairs & Maintenance 1,024,741 800,000 Bandwidth Related Expenses 36,093,225 26,468,833 IPTSP Interconnection Fee 7,672,359 6,480,207 Fiber Lease 66,345,734 32,739,080 Domain Charge 13,490 1,226,896 Lease Line 6,812,150 7,550,000 IPTSP Revenue sharing 9,780 52,268 GOBB Expense 17,864,798 2,257,628 Installation Expense. 219,154 236,800 Rack charge 1,079,476 4,552,172 T & T Bill - 25,316 Total 234,998,541 170,785,228

22.01 Other Direct ExpensesCourier Bill 210,065 153,000 Tower Construction & Maintenance Expense 1,192,800 1,007,853 POP Maintenance Cost 1,493,984 1,359,184 Total 2,896,849 2,520,037

22.02 Salary & AllowanceSalary Staff 45,837,620 38,200,000 Festival Allowances 4,016,888 3,290,977 Over time 18,000 52,881 Total 49,872,508 41,543,858

22.03 Other Operating ExpensesPrinting & Publication 88,695 141,900 Mobile Bill 650,000 621,697 License & Renewal Fee 15,050,090 14,644,087 Other Expenses-Operating 475,541 664,706 Conveyance-Line man 598,150 408,303 Insurance Premium 1,294,871 1,585,550 Petrol, Oil & Lubricants-Generator 419,244 488,000 Tender Schedule Purchase 863,148 431,683 Total 19,439,739 18,985,926

22.04 Utility & SuppliesThis has been arrived as under:Electricity Bill 1,822,150 1,661,050 Gas Bill 20,000 WASA Bill 16,000 16,000 Total 1,838,150 1,697,050

22.05 Depreciation ( Operating )60% of Current Year Depreciation 12,666,388 14,265,207 Total 12,666,388 14,265,207

23.00 Administrative & General ExpensesSalary & Allowance 23.01 32,372,150 22,735,051 Business Promotional Expenses 23.02 618,403 451,871 Utilities & Supplies 23.03 834,808 734,924 Office Rent 4,769,350 5,399,662 Repair & Maintenance 611,356 822,232 General & Administrative Expenses 23.04 24,713,918 22,233,056 Depreciation (Administrative ) 23.05 8,444,258 9,510,138 Total 72,364,243 61,886,934



Notes SL. No.

Amount in Taka

23.01 Salary & AllowanceSalary 29,956,000 21,053,845 Festival Allowance 2,416,150 1,681,206 Total 32,372,150 22,735,051

23.02 Business Promotional ExpensesAdvertisement & Publicity 513,371 443,871 Tours & Travels 105,032 8,000 Total 618,403 451,871

23.03 Utilities & SuppliesElectric Bill 818,060 723,903 Gas Bill - - WASA Bill 16,748 11,021 Total 834,808 734,924

23.04 General & Administrative ExpensesThis has been arrived as under:

Directors' Remuneration 14,112,600 13,816,200 Office Tea 78,150 56,970 Photocopy 8,128 4,818 Newspaper & Periodicals 8,618 7,040 Entertainment 324,538 106,943 Office Stationary 189,393 200,266 Postage & Stamp 33,156 21,060 Petrol, Oil & Lubricants - Pool Car 717,962 753,178 Mobile Bill 160,493 178,408 Conveyance - General 402,150 287,320 Printing & Publication 174,976 126,000 Membership Fee 558,800 123,000 Audit Fee 660,445 225,000 Regulatory Body 987,084 329,053 T & T Line Maintenance 300,175 353,785 Conveyance - Customer Support 698,450 592,182

3,333,333 3,333,333 AGM Expenses 1,122,017 968,500 Legal expense 843,450 750,000 Provision for Bad & Doubtful debt - - Total 24,713,918 22,233,056

23.05 Depreciation (Administrative )40% of Current Year Depreciation 8,444,258 9,510,138 Total 8,444,258 9,510,138

24.00 Financial ExpensesInterest on Bank Loan 4,088,405 7,224,045 Lease Finance 484,642 476,418 Bank Charge & Commission 579,670 298,463 Total 5,152,717 7,998,926

25.00 Non-Operating IncomeInterest Income 454,804 74,180 Total 454,804 74,180

26.00 Investment IncomeThis has been arrived as under:

Investment Income/(Loss) 133,000 (562,140) Unrealized Gain (103,143) (561,092) Dividend from Listed Securities - 6,000 Total 29,857 (1,117,232)

Amortization of License acquisition cost



Notes SL. No.

Amount in Taka

(a) Provision for Tax @ 25%Net Profit before Tax 64,186,949 83,459,917 Investment (income)/Loss (29,857) 1,117,232 Provision for loss on Investment in shares 380,498 103,143 Provision for doubtful debt - - Income from Software (2,410,081) (3,829,279) Income from IT Enable Service (18,740,940) (38,531,156) Gain or Loss on Fixed Assets - - Taxable Income 43,386,569 42,319,857 Provision for Tax @ 25% 10,846,642 10,579,964 Total

(b) Provision for Tax on Non-Operating & Investment Income - - (c)

10,846,642 10,579,964 - -

10,846,642 10,579,964 - -

10,846,642 10,579,964 (d)

61,634,328 51,054,364 10,846,642 10,579,964 72,480,970 61,634,328

- - Closing balance 72,480,970 61,634,328 Provision for tax on adjustment in respect of previous year has not been made.

Total Income Tax Expenses

Income Tax Expenses

Provision for Income Tax

Add: Short provision:

Add: Current Year's Tax

Less: Adjustment during the Year

Opening Balance

Tax on Operating Income (a)

TotalTax on Non-Operating & Investment Income (b)

28.0 Finance Lease

Future lease payments are due as follows:

Not later than one year 715,042 121,068 Between one year and five year - - Later than five years - - Total: 715,042 121,068

29.0 Financial Risk Management

* Credit Risk* Liquidity Risk* Market Risk

29.1 Credit Risk

(a) Exposure to Credit Risk

Financial assets (HTM)-investment in shares 20,025,000 20,025,000 Financial assets (HFT)-Investment in shares 1,190,439 2,072,136 Accounts receivable, net 312,235,111 285,019,511 Cash at bank balances - - Total 333,450,550 307,116,647

Domestic 312,235,111 285,019,511 Foreign - - Total 312,235,111 285,019,511

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposureto credit risk at the reporting date was:

The maximum exposure to credit risk for trade and other receivables as at the statement of financialposition date by geographic regions was:

Agni Systems Limited leases 01 (One) of its motor vehicles (net carrying value Tk. 4,780,000). Theseassets are classified as finance leases as the rental period amounts to the estimated useful economic life ofthe assets concerned and Agni Systems Limited has the right to purchase the assets outright at the end ofthe minimum lease term by paying a nominal amount.

Minimum lease

The management of the company has overall responsibility for the establishment and oversight of thecompany's risk management framework. The company's risk management policies have been establishedto identify and analyze the risks faced by the company, to set appropriate risk limits and controls, and tomonitor risks and adherence to limits. Risk management policies, procedures and systems are reviewedregularly to reflect changes in market conditions and the company's activities. The company has exposureto the following risks from its use of financial instruments.

Credit risk is the risk of a financial loss to the company if a client or counterparty to a financial instrumentfails to meet its contractual obligations, and arises principally from the company's receivables.

Interest

27.00 Current Year Provision for Income Tax


29.2 Liquidity risk

The following are the contractual maturities of financial liabilities of the company:Loans and borrowings 2,481,907 32,464,609 Current portion of long term loan 7,524,456 24,462,000 Liabilities for services 11,336,092 11,431,835 Income tax payable 72,480,970 61,634,328 Other payables 5,362,543 5,701,643 Total 99,185,968 135,694,414

29.3 Market risk

Interest rate risk

Fixed rate instrumentsFinancial liabilities 10,006,363 56,926,609 Total 10,006,363 56,926,609

30 Foreign Exchange Earned and Payment

31 Payment/ Perquisites to Directors and Officers

32 Capital Expenditure Commitment

33 Claim not Acknowledged

34 Commission, Brokerage or Discount against services

35 Events after the Reporting Period Proposed dividend : The board of directors in its board meeting held on 28 th October 2019 has recommended 7% cash dividend(Tk. 0.70 per share) for each share of Tk. 10 to the tune of Tk.50,789,334 on the paid up capital of Tk.725,561,920 for the year ended June 30, 2019 subject to approval of the shareholders at the ensuingAnnual General Meeting (AGM).

There was no such claim against the company as not acknowledged as debt as on 30 June 2019.

No commission brokerage or discount was allowed during the year under audit.

During the year under audit the company has not earned or make payment any amount in foreign currency.

i) No compensation was allowed by the company to the Directors of the company other than directorsremuneration as reported in note no. 23.04.ii) No amount of money was expended by the company for compensating any member of the board forspecial services rendered.

iii) No board meeting attendance fee was paid to the directors of the company.

There has been significant capital expenditure commitment of the company as per prospectus which is notyet completed.

Interest rate risk is the risk that arises due to changes in interest rates on borrowings. The company is notexposed to fluctuation in interest rates as it has no floating interest rate bearing financial liabilities and it didnot enter into any type of derivative instrument in order to hedge interest rate risk as at 30 June 2019.

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they falls due.The company's approach to managing liquidity (cash and cash equivalents) is to ensure, as far as possible,that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressedconditions, without incurring unacceptable losses or risking damage to the company's reputation. Typically,the company ensures that it has sufficient cash and cash equivalents to meet expected operationalexpenses, including financial obligations through preparation of the cash flow forecast, prepared based ontime line of payment of the financial obligation and accordingly arrange for sufficient liquidity/fund to makethe expected payment within due date.

Market risk is the risk that any change in market prices, such as foreign exchange rates and interest rateswill affect the company's income or the value of its holdings of financial instruments. The objective ofmarket risk management is to manage and control market risk exposures within acceptable parameters.


Notes SL. No.

Amount in Taka

Navana Tower (11th floor) Suite-A, 45 Gulshan Avenue, Gulshan-1 Dhaka-1212, Phone: 8812379, 09606100700, www.agni.com

Proxy Form

Signature of the Shareholder.....................................

BO ID/ Folio No.

No. of Shares.....................................................................

RevenueStamp

Tk. 10/=

Signature Verified by

...........................................Authorised Signatory

Navana Tower (11th floor) Suite-A, 45 Gulshan Avenue, Gulshan-1 Dhaka-1212, Phone: 8812379, 09606100700, www.agni.com

I/We..........................................................................................................................................................................................................

of................................................................................................................................................................................................................

being a Member of AGNI SYSTEMS LIMITED do hereby appoint

Mr./Mrs.....................................................................................................................................................................................................

of................................................................................................................................................................................................................

or (failing him /her ) Mr./Mrs............................................................................................................................................................

of................................................................................................................................................................................................................

as my proxy in my/our absence to attend and vote for me/us and on my/our behalf at the 23rd Annual General Meeting of the Company to be held on Thursday, 12th December 2019 and at any adjournment thereof.

As witness my hand this …………………………………… Day of December 2019

Signature of the Proxy............................................

Note: The proxy form duly completed must be deposited at the Company's Registered office, Navana Tower (11th Floor),

Suite # A, 45 Gulshan Avenue, Gulshan-1, Dhaka-1212, not later than 48 hours before the time fixed for the meeting.

Name of the Shareholder/Proxy....................................................................................................................................................

Register BO ID/Folio No.

I/We here by record my/our presence at the 23rd Annual General Meeting of Agni Systems Limited on Thursday, 12th December 2019 at 10:00 a.m. at Celebrity Convention Hall, Otobi Center, Plot # 12, Block-CWS(C) Level-6, Gulshan South Avenue, Gulshan-1, Dhaka 1212

Signature of Proxy………………………………… Signature of Member………………………………

Note: Shareholders attending the meeting in person or by proxy are requested to deposit the attendance slip duly filled in at the entrance of the meeting hall. Seats in the auditorium are reserved only for the shareholders/proxies.

Attendance Slip

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