Annual Report 2014

cELEBRATING ourCUSTOMERSWhen we reached the 5 crore subscribers milestone last year, we realized once again the enormous responsibility we have on our shoulders. At Grameenphone, 5 crore is not just a number, our 5 crore subscribers are our reason to smile, push on and thrive. As our subscribers use our products and services to empower themselves and change their way of living, we become a part of their success stories too. Our internet and communication platforms help these dreamers to work towards fulfilling their aspirations. When our subscribers make us a part of their success stories, they become a part of our achievements and our reason to go beyond.

What’s Inside this ReportOverview This is Grameenphone 02

Vision, Mission & Values 03

History & Milestones 04

Products & Services 05

Awards 2014 06

Performance Highlights 2014 07

Corporate Information 09

Governance The Shareholders 22-23

Organisational Structure 24

Directors’ Profile 25-29

Management Team Profile 30-33

Corporate Governance in Grameenphone 35-43

Internal Control over Financial Reporting (ICFR) 44

Enterprise Risk Management 45

Audit Committee Report 47

Financial Analysis Five Years’ Financial Summary 48-49

Value Added Statement 2014 50

Contribution to National Exchequer 51

Directors’ Report 53-69

Auditors’ Report & Audited Financial Statements 70-112

Business Performance Business Highlights 2014 10-11

Chairman and CEO Message 12-13

Management Discussion & Analysis 15-17

Sustainability Corporate Responsibility at Grameenphone 18-19

Climate Change-Promoting Green for a Sustainable Lifestyle 20-21

Additional Information

02-09

22-47

48-112

10-17

18-21

114-119 Useful Information for Shareholders 114-116

Notice of the 18th Annual General Meeting 118

Proxy Form and Attendance Slip 119

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this isGrameenphone

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This is Grameenphone02

MILLIONSUBSCRIBERS51

64 DISTRICTS NOW

POWERED WITH3G

MOBILE OPERATORIN TERMS OF

SUBSCRIBERS & REVENUE

LARGEST

2013 September 12Awarded 3G License and related 10 Mhz of spectrum by Bangladesh Telecommunication Regulatory Commission.

2012 August 07Awarded 2G License by Bangladesh Telecommunication Regulatory Commission.

1997 March 26Launched its service on the Independence Day of Bangladesh.

2009 November 11Successfully listed on theStock Exchanges in Bangladesh.

1996 November 11Awarded a cellular license in Bangladesh by the Ministry of Posts and Telecommunications.

After eighteen years of operation, 51.50 million subscribers and more than 39 thousand Shareholders as of December 2014 are now empowered under a single network. The network is our strength and we hope this strength will be even stronger with you by our side.

VISION, MISSION& VALUES

Empowersocieties

We

are

here

to help our customers

Mak

e it e

asy Keep promises

Be in

spiringBe respectful

VisionEmpower societiesWe provide the power of digital communication, enabling everyone to improve their lives, build societies and secure a better future for all.

MissionWe are here to helpour customersWe exist to help our customers get the full benefit of being connected. Our success is measured by how passionately they promote us.

Values

Make it EasyEverything we produce should be easy to understand and use. We should always remember that we try to make customers’ lives easier.

Keep PromisesEverything we do should work perfectly. If it doesn’t, we’re there to put things right. We’re about delivery, not over-promising. We’re about actions, not words.

Be InspiringWe‘re creative. We bring energy and imagination to our work. Everything we produce should look fresh and modern.

Be RespectfulWe acknowledge and respect local cultures. We want to be a part of local communities wherever we operate. We want to help customers with their specific needs in a way that suits way of their life best.

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Vision, Mission & Values 03

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

HISTORY & MILESTONES

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History & Milestones04

2014 MarFastest coverage of

3G network across all64 districts of Bangladesh

2014 OctCelebrated50 million

subscribers

2005 AprLaunched djuice Brand

2005 AprReached 3 million subscribers

2005 AprLaunched Electronic Recharge System

for the first time in Bangladesh

2005 AugReached 4 million subscribers

2005 SepLaunched EDGE and Voice SMS for

the first time in Bangladesh

2005 OctReached 5 million subscribers

2010 JunFirst AGM held after

public listing

2008 JunReached 20 million

subscribers

2012 DecReached 40 million

subscribers

2013 OctLaunched 3G services

in Bangladesh

2007 AprLaunched Pay For Me service in Bangladesh

2007 DecReached 16 million

subscribers

2009 SepLaunched

GP branded handsets

2009 MayReached 21 million subscribers

2009Launched Call Block service

2009 NovSuccessfully listed on the

Stock Exchanges inBangladesh

2011Launched Customer

Experience Lab

2011Launched E-Care solution

through website

2011Swapped the entire network

2011 DecReached 36.5 million

subscribers

1998Launched M2M service for the

first time inBangladesh

1999Launched Pre-Paid

service for thefirst time inBangladesh 2001

Launched WAP Service for the first time in

Bangladesh

2003 AugReached 1 million

subscribers

2004 AugReached 2 million

subscribers

1997Grameenphone’s

Inauguration

2006 JanReached 6 million subscribers

2006 JulLaunched Cellbazaar.com

2006 NovCelebrated 10 million

subscribers

2006 DecLaunched Bill Pay service for

the first time in Bangladesh

PRODUCTS & SERVICES

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Products & Services 05

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

* In compliance with BTRC guidelines, GP is sharing its passive infrastructure with other licensees under “Infrastructure Services”.** Introduced different “Financial Services” in electronic ticketing, bill collection, electronic lottery and partner bank services under the brand “MobiCash”.

Handset Basic Phone,

Feature Phone & Smartphone (Android,

Apple iPhone, Mozilla Firefox)

Internet Device3G Modem & 3G Router

Instant Messaging Pay for Me

SMS Miss Call Alert Call Block Mobile TV Mobile Email GP World Facebook/Twitter Voice SMS Voice mail SMS MMS Voice Chat SMS Chat Online Mobile Games Welcome Tune Icche Tune Music Radio 3G Music Streaming Video Store Audio-Video Content News Alert Job Alert Sports Alert Election Information Health Line Education Line Blood Line Krishi Tottho Matrimonial Religious Service Muktijuddho Portal Video Doctor Entertainment Box Downloadable Content Infotainment Quick

Search Business Tune

Infrastructure Services*

Financial Services**

Outbound Roaming (Basic,

Data, SMS)Inbound Roaming

(Basic, Data, SMS)International SMS

International MMS

Nishchinto Bondhu djuice Apon

Shohoj Smile Spondon Amontron Village Phone GP

Public Phone BPO Internet SIM Business Solution Shofol

Ekota My Zone Emergency Balance 25 Paisa Offer Bundles

Weekly Packs Daily Pack Nishchinto 11 Paisa Offer Bondhu 27 Taka Super FnF Offer 7 Paisa Offer

STAR Bundle Call Drop Service

BlackBerry Service Web Based

SMS Business SMS Corporate Bulk SMS

Voice Message Broadcast Vehicle Tracking System Team

Tracker Buddy Tracker Train Tracking M-Reporting

GP-Connect M-Centrex E-Bill Go Broadband

3MB 9MB 60MB 500MB 2GB Heavy Browsing Pay As You Go

512kbps Packs4MB, 75MB, 250MB, 1GB, 2GB, Heavy

Browsing, Smart Plan 299, Smart Plan 499, 15MB Internet Scratch Card

1Mbps Packs3GB, Heavy Browsing, Smart Pack 699,

Night Heavy Browsing

Xplore Xplore Legend Business Solution Ekota GP Public Phone Internet SIM Bundles STAR Bundle Call Drop Service

512kbps Packs 4GB,8GB, 16GB,

35GB

800kbps Packs4GB, 8GB, 16GB, 35GB

1Mbps Packs4GB, 8GB, 16GB, 35GB

PREPAID POSTPAID

ROAMING

DEVICEAD

JACENT BUSINESS

VALUE AD

DED SERVICES

ENTERPRISE SOLUTIONCOORDINATED WiMAX

INTERNET 2G

INTE

RNET

3G

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Awards 201406

Awards 2014

Awarded best brand in mobile service provider category at the 6th Best Brand Award 2014 organized by Bangladesh Brand Forum in partnership with world’s leading brand research company Millward Brown.

Best Brand Award 2014

Won the awards from the South Asian Federation of Accountants (SAFA), The Institute of Chartered Accountants of Bangladesh (ICAB), the Institute of Chartered Secretaries of Bangladesh (ICSB) and The Institute of Cost and Management Accountants of Bangladesh (ICMAB) in

recognition of transparency, accountability and compliance with local and international standards.

Best Presented Annual Report 2013

Grameenphone’s Corporate Responsibility efforts received Standard Chartered Bank- Financial Express CSR Award -2014.

CSR Award 2014

Grameenphone won a number of prestigious awards in 2014. Wining such wonderful achievements is our commitment towards transparency, accountability and hard work. We dedicate these achievements to our Customers, Shareholders, Regulators, Employees and other Stakeholders. This is not the end of our journey, but recognition of the continuing efforts.

GSMA Green Mobile Award 2014

Awarded the prestigious Green Mobile Award by GSMA for extensive Climate Change Program.

Performance Highlights 2014

NAV- Net Asset ValueNOCF- Net Operating Cash Flow

Figures in BDT

REVENUE Billion

+6.3%

102.7

96.6

2014

2013

PROFIT BEFORE TAX Billion

+6.1%

34.9

32.9

2014

2013

NOCF PER SHARE

-15.7%

23.15

27.46

2014

2013

OPERATING PROFIT Billion

+11.1%

36.9

33.2

2014

2013

NET PROFIT AFTER TAX Billion

+34.7%

19.8

14.7

2014

2013

NAV PER SHARE

+0.7%

23.23

23.06

2014

2013

EARNINGS PER SHARE

+34.7%

14.67

10.89

2014

2013

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Performance Highlights 2014 07

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Number ofSubscribers

50.2M

Consumer Business

1.3M

51.5(Million)

9% 34%

Mobile DataRevenue

5.1(Billion BDT)

+61.2%

5.1B

2014

3.2B

2013

Smartphone deviceto total subscriber

8%

SmartphoneDevice No.

3.9(Million)

+75.9%

3.9M

2014

2.2M

2013

Data users tototal subscriber

Mobile DataUsers

10.8(Million)

21%

+138%

10.8M

2014

4.6M

2013

Rummaella SiddiquiFashion Designer & Owner of a Renowned Fashion HouseGrameenphone user for more than 5 years

“Through Grameenphone internet and phone network, I am able to expand my customer base not only throughout the country, but globally.”

CORPORATE INFORMATION

COMPANY NAMEGrameenphone Ltd.

COMPANY REGISTRATION NO.C-31531 (652)/96

BOARD OF DIRECTORSChairmanSigve Brekke

DirectorsM Shahjahan

Md. Ashraful Hassan

Tore Johnsen

Parveen Mahmud

Pal Wien Espen

Hakon Bruaset Kjol

Hans Martin Hoegh Henrichsen

Independent DirectorsDr. Jamaluddin Ahmed FCA

Rokia Afzal Rahman

COMPANY SECRETARYHossain Sadat

AUDIT COMMITTEEDr. Jamaluddin Ahmed FCA (Chairman)

M Shahjahan

Tore Johnsen

Hossain Sadat (Secretary)

TREASURY COMMITTEEM Shahjahan (Chairman)

Pal Stette

Dilip Pal

Imdadul Haque (Secretary)

HUMAN RESOURCES COMMITTEEHans Martin Hoegh Henrichsen (Chairman)

M Shahjahan

Quazi Mohammad Shahed

Hossain Sadat (Secretary)

HEALTH, SAFETY, SECURITY & ENVIRONMENT COMMITTEEHans Martin Hoegh Henrichsen (Chairman)

M Shahjahan

Quazi Mohammad Shahed

Hasanur Rahman Rakib (Secretary)

MANAGEMENT TEAMRajeev Sethi, Chief Executive Officer

Dilip Pal, Chief Financial Officer

Medhat El Husseiny, Chief Technology Officer

Quazi Mohammad Shahed, Chief Human Resources Officer

Allan Bonke, Chief Marketing Officer

Mahmud Hossain, Chief Corporate Affairs Officer

Erlend Prestgard, Head of Strategy

Marcus Adaktusson, Director-Communications

HEAD OF INTERNAL AUDITEmadul Hannan

STATUTORY AUDITORSACNABIN

Chartered Accountants

REGISTERED OFFICEGPHouse

Bashundhara, Baridhara

Dhaka-1229, Bangladesh

LEGAL FORMA public listed company with limited liability. Incorporated

as private limited company on October 10, 1996 and

subsequently converted to a public limited company on

June 25, 2007. Listed on the Dhaka and Chittagong Stock

Exchanges on November 11, 2009.

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Corporate Information 09

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

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Business Highlights 201410

BUSINESS HIGHLIGHTS 2014

1Q2014

Grameenphone Experience Center-G

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2Q2014

Reinforcing the focus on youth segment, we revamped offer portfolio of the youth pack ‘Bondhu’ with SMS bundle, welcome tune, music radio and data (free WhatsApp & Facebook messenger).

5000 square feet GP experience center launched at a mega mall of city center with unique design and experience elements.

To cater the big screen data users, we launched WiMAX services ‘Go Broadband’ in partnership with 2 leading local Internet Service Providers (ISP). The ISPs’ are using our network, marketing platform and distribution channel to market the product.

Launched a campaign to promote ICT enabled e-Krishok services in agricultural sector with partnership of government agencies. The objective was to build awareness among rural people, mainly farmers with mobile and internet based advisory services, market linkage, business planning services etc.

During the quarter, GP also developed partnership with 4 new banks to strengthen enabler stance on promising Mobile Financial Service arena.

During the quarter, all 64 district headquarters of the

country were brought under 3G coverage in record time.

This fast track rollout trajectory was managed through

installation of 2143 3G sites.

Inspired by Language Movement Day on 21st February, we

launched a program to provide 2.1 million free Internet

hours to 250 schools across the country with support from

BRAC. This initiative is also a part of GP’s Safer Internet

program aimed at creating awareness on internet safety for

young users.

We also introduced lowest ever priced GP branded 3G

modem and 3G Pocket Router to enable the potential data

subscribers.

During the quarter there has been an industry wide

revision of startup SIM price.

Grameenphone (GP) has had a prolific business year in 2014. Quarterly elaborations are as follows:

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Business Highlights 2014 11

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

3Q2014

In this quarter, GP accomplished the monumental milestone of surpassing 50 million subscriber base through its enduring commitment of offering innovative and customer centric products and services. This was also possible by merit of our countrywide robust and reliable network built over the years.

Month long free Facebook offer of the quarter was first of its kind in Bangladesh, where GP customers got the opportunity to access Facebook for free regardless of their device type from 12AM– 6PM. This was offered to stimulate the first time small screen users, specially the youth.

To drive “Internet for ALL” ambition, 2 micro packs for both 2G and 3G were launched. It managed to increase internet penetration by removing the affordability barrier.

To offer customers with affordable 3G smart-phones, GP has partnered up with Mozilla & Symphony to introduce FireFox 3G smart phones. The device is equipped with the latest Firefox mobile Operating System.

Simplified the 3 smart plan portfolios of all inclusive of 3G data, Voice, SMS & MMS with more affordability. The changes were targeted towards our growing smart phone user base.

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4Q2014 To strengthen 3G service experience even better, GP offered

double the speed in any respective data package without any

extra charge. Moreover, this enabled the data customers to

get the maximum available speed from 10 pm to 4 pm.

As part of our commitment towards customer centricity, we

introduced 60 seconds equivalent call reimbursements on

every call drop for all prepaid and postpaid subscribers.

Introduced Dynamic Emergency Balance starting from BDT

10 up to BDT 100 for prepaid customers. Customers will get

emergency balance based on their past usage pattern and

network age.

Facebook pack was introduced whereby customers could

use 9MB 2G pack for BDT 9 only for 3 days with nonstop

mobile Facebook use.

A stunning micro campaign was launched through which

our customers would be able to enjoy a huge bunch of

different offers as per their needs. All it requires for a

customer is to call an IVR hotline 12113 which is absolutely

free of charge.

During the quarter, we have completed upgrading our entire

IP transmission backbone & backhaul with a more robust

solution. This has ensured our readiness to cater the future

proliferation of data growth which is also consistent with our

strategic ambition of ‘Internet for ALL’.

Sigve BrekkeChairman

Rajeev SethiChief Executive Officer

Chairman and CEO Message

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Chairman and CEO Message12

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Chairman and CEO Message 13

Dear Shareholders,Grameenphone (GP) has concluded yet another year of successes and accomplishments. We witnessed two landmark achievements in 2014 - reaching the 50 million subscribers mark and posting of BDT 100 billion in revenues. These two achievements had been possible mainly because of the Company’s enduring commitment to offer innovative, value-for-money products and services.

We have experienced intense challenges and uncertainties throughout the year 2014. Telecom Regulatory environment continues to remain unpredictable and uncertain in the context of unresolved regulatory issues. Spectrum assignment in absence of a spectrum policy and roadmap had been a major concern. High taxation in the telecom sector and unpredictability in the taxation regime is considered to be a major barrier for expansion of the telecom industry.

In addition to other external challenges, the telecom sector also faced stiff market competition. Despite the pressures of the competitive environment, GP continued to focus on enhancing quality services, innovation and driving market expansion. In 2014, the Company maintained its competitive advantage in terms of scale by expanding its total subscriber base to 51.5 million, including adding 4.9 million 3G subscribers, representing a growth of 9.3% from 2013.

The Company made significant steps forward in its “Internet for All” ambition. The data business saw rapid growth, transforming data revenue into a major driver for operating revenue growth. We continued to attract more mobile internet customers in the year, reaching 10.8 million customers from a total base of 51.5 million, with data revenue contribution amounting to 5.2% of service revenues.

In terms of total revenue progression, 2014 was a year of good growth for GP. We closed the year on solid financial footing, with total revenue growing by 6.3% over 2013, to BDT 102.7 billion. EBITDA and the EBITDA margin were BDT 54.5 billion and 53.0% respectively, while operating cash-flow stood at BDT 39.4 billion at the end of 2014. This has placed the Company in a good position to deliver healthy Shareholders value for 2014. We are pleased to report that for the financial year 2014, we were able to give our Shareholders a 95% Interim Cash Dividend. The Board of Directors has also recommended 65% Final Cash Dividend for Shareholders’ approval. Together, it will amount to 160% of the paid-up capital in terms of total dividend, which is equivalent to BDT 16 per share of BDT 10 each.

GP invested BDT 15.2 billion (BDT 1,516 crore) in 2014. These investments bring GP’s accumulated investment in Bangladesh to around BDT 258.5 billion (BDT 25,852 crore) since inception. Meanwhile, we have contributed BDT 58.9 billion (BDT 5,892 crore) to the National Exchequer in 2014, which took our cumulative contribution to BDT 413.7 billion (BDT 41,368 crore) since inception.

With a focus on maintaining our industry lead in terms of customer satisfaction and network quality, we have further enhanced our product quality and services. We also focused on improving our customer service interface and customer experience.

In recognition of our efforts to positively impact environment and societies, we have received the prestigious global GSMA Mobile Award 2014 for our green initiatives, and a local award as Standard Chartered Bank-Financial Express CSR Award - for best CSR initiatives. The fact that others are acknowledging our work in this area is a testimony of what we do – realizing opportunities through connectivity, build societies and secure a better future for all. Besides, our Annual Report 2013 has been recognized by the regional and local professional bodies for our accountability, transparency, good governance practices, and on time fair disclosure to the stakeholders.

While 2014 was mainly about consolidating our position as the leading operator in the market, we expect 2015 to be marked as a year to push ahead for growth through change. By building on our strengths, applying the right mindset and executing our strategy, we will take an aggressive approach in the market and ensure that we not only stay ahead of the competition but remain at the forefront throughout 2015. Besides, the government is planning for an auction to release additional spectrum from 1800 and 2100 Mhz bands. In the above connection, we expect a level playing field ensuring participation of all mobile operators to cater the future subscribers growth and to ensure quality service to the customers.

We would like to thank all our Shareholders, employees, and key stakeholders for their continued commitment and support.

We look forward to meeting you at our upcoming Annual General Meeting (AGM).

February 08, 2015

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

“We witnessed two landmark achievements in 2014 that have created positive momentum for the Company.

“We expect 2015 to be marked as a year to push ahead for growth through change.

Highlights 2014BDT 102.7 billion revenues, 6.3% annual growth.�

51.5 million subscription base with 42.8% subscription market share.

Net profit after taxes BDT 19.8 billion with 19.3% margin and BDT 14.67 EPS.

BDT 15.2 billion capex for network quality and coverage enhancement.�

Final dividend recommendation @ 65% of the paid-up capital.

S.K. TajbirFreelance Software DeveloperGrameenphone internet user for 3 years

“Thanks to Grameenphone internet, I develop various software for different local and international clients.”

Management Discussion & Analysis

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Management Discussion & Analysis 15

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

2014 Key HighlightsIn 2014, Grameenphone (GP) recorded revenue growth of 6.3% over 2013 to BDT 102.7 billion (2013: BDT 96.6 billion), with net

profits of BDT 19.8 billion (2013: BDT 14.7 billion). In line with our Internet For All commitment, we continued to attract more

mobile internet customers in the year, which totaled 10.8 million at the end of 2014. This increase resulted in higher data revenue

contributions, followed by increased VAS revenue, to our total revenues.

After two consecutive quarters of strong growth in Q1 and Q2, GP reported moderate revenue growth in Q3 as a result of bad

weather, football World Cup and regulatory directive regarding the reduction in international call termination rate. However,

competitive data and VAS offers, along with the accelerated rollout of new 3G sites had a positive impact on revenues in Q4 and

throughout the year.

Customers and Average Revenue/Minutes Per User (ARPU & AMPU)

GP added 4.4 million (2013: 7.1 million) new customers in 2014, resulting in 1.4 percentage point increase in subscriber market

share at 42.8%,

In 2014, ARPU decreased by 6.0% at BDT 165 (2013: BDT 176), mainly

due to competitive pressure within domestic voice which was partly

offset by data and VAS uplift. With additional focus on new data user

acquisition, growth from data and VAS is further expected to continue.

Revenue PerformanceTotal revenue reached BDT 102.7 billion in 2014 (2013: BDT 96.6

billion), a growth of 6.3% over the previous year. This was mainly driven

by growth in revenue from mobile communication and customer

equipment.

Revenue from mobile communication grew by 5.9% in 2014 to BDT 98.5

billion (2013: BDT 92.9 billion) with positive contribution from data &

VAS, voice and interconnection.

Data & VAS revenues grew by BDT 3.3 billion for the year to BDT 11.2

billion (2013: BDT 7.9 billion). At the end of 2014, data & VAS revenue

accounted for 11.4% (2013: 8.5%) of mobile communication revenue.

Growth in data revenue was driven by higher mobile data usage from

Mobile CommunicationCustomer EquipmentOther Revenue

2014

2.0%2.0%

95.9%

1.9%1.9%

96.2%

2013

Revenue Composition

Voice TrafficInterconnectionData & VAS

2014

77.8%

11.4%

10.8%

80.7%

10.8%

8.5%

2013

Mobile Communication Revenue Composition

Subscriber Market Share (%)

51,504

2014

47,110

2013

40,021

2012

36,493

2011

29,970

2010

43.7% 42.7%41.2% 41.4%

42.8%

Total Subscriber (`000) : 51,504 ARPU & AMPU

ARPU (BDT) AMPU (Minutes)

2014

165 243176 249

2013

191 236

2012

214 258

2011

231 279

2010

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Management Discussion & Analysis16

higher take-up of 3G smart plans and heavy browsing packages. In 2014, GP

sold over 400 thousand of smartphones and internet enabled handsets

which also had a positive impact on growth from data & VAS revenue.

Voice revenues grew by 2.1% in 2014, to BDT 76.6 billion (2013: BDT 75.0

billion), mainly driven by subscription growth.

Interconnection revenues increased by BDT 648 million to BDT 10.6 billion

(2013: BDT 10.0 billion), from higher domestic and international voice

traffic. Regulatory directive regarding the reduction in international call

termination rate negatively impacted on the interconnection revenue

growth for GP as well as the industry in the second half of the year.

Growth in revenue from customer equipment was driven largely by the

strong demand for popular smartphones and internet enabled handsets.

Cost and Margin ReviewFor the year 2014, GP’s total cost base increased by 3.7% to BDT 65.8 billion

(2013: BDT 63.4 billion), mainly due to higher depreciation & amortization,

traffic related expenses, and higher revenue sharing. Reduction in

consultancy and lower subscriber acquisition cost partly compensated the

opex growth. Like previous years, GP continued its focus on operational

efficiency in 2014 which resulted in saving of BDT 2.3 billion. As a combined

effect, GP managed to maintain its cost base (excluding depreciation and

amortization) at last year’s level (BDT 48.1 billion).

EBITDA* rose by 11.2% over the previous year to BDT 54.5 billion (2013: BDT

49.0 billion), mainly driven by higher revenue, partly offset by higher cost.

With efficient opex management, EBITDA margin improved by 2.3

percentage point at 53.0% (2013: 50.7%).

*EBITDA before other items

Profit After TaxProfit after tax for 2014 increased by 34.7% at BDT 19.8 billion (2013: BDT 14.7 billion) driven by higher profit before tax and lower

income tax expense. Increase in profit before tax resulted from higher operating income, partly offset lower foreign exchange

gain and gain on sale of Grameenphone IT Ltd. (GPIT) last year. Lower income tax in 2014 was mainly due to one-off tax

adjustment for increased corporate tax rate from 35% to 40% last year, partly offset by higher profit before tax. Normalizing the

gain on GPIT sale and one-off tax adjustment, GP achieved 12% growth in profit after tax over the previous year.

Profit Before Tax & Profit After Tax

Data & VAS Revenue Contribution

Data & VAS (Mn BDT) % of total Revenue

11,243

2014

7,946

2013

6,189

2012

4,700

2011

3,623

2010

4.8%5.3%

6.7%

8.2%

11.0%

EBITDA & EBITDA Margin

EBITDA (Mn BDT) EBITDA Margin

54,538

2014

49,039

2013

48,991

2012

47,610

2011

37,001

2010

49.5% 53.4% 53.3% 50.7% 53.0%

17,6

57

15,3

39

15,17

7

15,0

38

16,7

94

Profit Before Tax (Mn BDT)

Profit After Tax (Mn BDT)

Depreciation & Amortization (Mn BDT)

2014

19,80334,85514,70232,852

2013

17,50530,193

2012

18,89133,006

2011

10,70520,913

2010

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Management Discussion & Analysis 17

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Capital Expenditure (Capex) and Network UpdatesIn 2014, Capex amounted to BDT 15.2 billion (2013: BDT 29.9 billion).

Majority of the capital expenditure was spent for 2G coverage & capacity

upgradation, 3G expansion and overall network operational efficiency. As a

result of accelerated roll-out of 3G sites, GP’s 3G coverage increased to

49.8% of the populated areas. With 9,163 sites across the country, GP

currently provides its telecommunication services across the country

covering 99.24% of the total population.

Balance SheetTotal asset base decreased to BDT 130.7 billion (2013: BDT 135.2 billion) mainly due to higher depreciation & amortization and

lower trade & other receivables, partly offset by Capex addition during the year.

Total liabilities decreased during 2014 due to higher payments to suppliers, repayment of short term borrowings, partly offset by

final drawdown of long term loan from IFC.

Total equity increased to BDT 31.4 billion (2013: BDT 31.1 billion) due to BDT 19.8 billion net profit generated from operations

during the year 2014, partly offset by the payment of final dividend for the year 2013 and interim dividend for the year 2014.

CAPEX (Mn BDT)

15,164

2014

29,925

2013

42,508

2012

12,963

2011

8,456

2010

It’s My TurnGrameenphone has consciously undertaken a number of awareness programs on Internet with external partners. Taking an exemplary step, Grameenphone employees are also contributing to ‘Internet for All’ through It’s My Turn initiative. It’s My Turn was initiated to promote “Safe Internet” and “Internet for All” among the school students of Dhaka, Chittagong, Rajshahi, Sylhet, Khulna, Barisal and Bogra. Enthusiastic Grameenphone employees, spared their personal time to educate school students on the benefits of internet. They also promoted ‘Safe Internet’ principles among school students to make sure the new internet users remain safe while surfing the internet and encouraged participating students to have positive online experiences. It’s My Turn got overwhelming response from all parts of the organization and over 850 Grameenphone employees registered to participate in the program.

Corporate Responsibility at GrameenphoneGrameenphone believes that Telecommunication technology can empower people to bring positive changes in their lives. As the Company continues to connect people with essential services, it is also looking into the ways to use its core expertise for social development especially in the areas of Health, Education and Climate. Such approaches are supportive of Company’s vision “Empower Societies.”

2.1 Million Internet HoursGrameenphone has launched a nationwide program to provide 2.1 million free Internet hours to 250 schools across the country with the support from BRAC. As Rural Bangladesh is still struggling with poor ICT infrastructure, low internet penetration, lack of awareness and limited access to different required information and content services, it has created a major digital divide between rural and urban societies. This program aims to help broaden access to the world of ICT for school children, especially those living in rural Bangladesh. The campaign will aid in creating equal opportunity to access educational content, news, information and knowledge for the students in those schools.

Online School The concept of ‘Online School’ has been conceived to find a way through which quality education could be provided in the remotest parts of the country. As education is one of the focus areas of Corporate Responsibility of Grameenphone, the idea was to reach out to the underprivileged and secluded population by the means of modern technology. The first pilot Online School started in August 2011 with 80 students in Gazipur. At present there are ten Online Schools sharing knowledge with 699 under privileged students. Teachers situated in Dhaka conduct classes using video conferencing technology with the aid of moderators in the actual class. In this initiative, Grameenphone has partnered with JAAGO and the technical support is provided by Agni Systems Limited.

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Corporate Responsibility at Grameenphone18

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Corporate Responsibility at Grameenphone 19

National Enrichment ProgramSince 2004, Grameenphone has been supporting Bishwo Shahitto Kendro to run National Enrichment Program. Supporting this campaign, Grameenphone is reaching out to 1.5 million students of 12,000 educational institutions throughout the nation enrolled in this program through its contribution in buying books and arranging prize giving programs in three divisional cities. As further support, an online portal for reading books have also been developed for Bishwo Shahitto Kendro reaching out to the remotest parts of the country, helping them to read books whenever and wherever they desire. This site now has over 100 e-books for download and was visited over 400,000 times in last one year. The National Enrichment Program had been initiated in 1985 to help develop enlightened, effective and committed visionary individual shaving high moral values.

Multi-purpose computer Lab for Dhaka UniversityGrameenphone launched a computer lab in the Tourism and Hospitality Management Department of Dhaka University on July 3, 2014.

The lab named Grameenphone- Tourism and Hospitality Lab situated in Faculty of Business Studies of Dhaka University was established with financial support of Grameenphone Ltd. The facility is equipped with 52 computers, along with printer, multimedia projector, CCTV and with the most modern server. Furthermore, Grameenphone already provided 15 MBPS internet connectivity for the university.

Disaster ResponseAt the difficult times of the country due to some natural calamities, be it flood, storm surge, cold wave, building collapse or landslide, Grameenphone always extended its support to the affected vulnerable people. In addition to its support in the form of distributing family relief packs, corrugated iron sheets, blankets etc., it also significantly contributed to setup medical camps in different areas to meet medical needs of distressed people.

SCB-Financial Express CSR AWARDGrameenphone was awarded the Standard Chartered Bank- Financial Express CSR Award -2014 as recognition for its Corporate Social Responsibility. Grameenphone was one of the three companies to receive this prestigious and only CSR award of Bangladesh. Grameenphone was awarded for its initiatives - Online School, Telemedicine, partnership with Special Olympics Bangladesh, and SMS based tube well maintenance project in partnership with HYSAWA.

Overview

BusinessPerform

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Information

Financial AnalysisSustainability

Governance

Top Green Initiatives of 2014:A. Carbon Dioxide (CO2) Emission Reduction

Aggressive rollout of solar powered base stationsBeing a socially responsible company, as part of its

continuous network expansion in the deep rural areas where

power availability is a concern, GP is always exploring

renewable energy solution. As of 2014, a total of 656 base

station sites are running on solar power. The Company has an

The ICT industry has an increasingly important role in working towards the prevention of

global warming due to the emission of hazardous greenhouse gases. Towards 2020, the

telecom industry will experience continued growth both in energy usage and CO2 footprint

as more people worldwide enter the digital age and more customers demand increased

mobile broadband services. Energy use in GP’s network operations represent around 81% of

our total energy consumption and is the main source for our CO2 emissions.

Grameenphone (GP) continually strives to reduce the environment and climate impact of its

operations and services and inspires employees and all its stakeholders to act responsibly.

This is why the Climate Change Program was initiated by GP in 2008, with the objective of

minimizing the negative environmental impact on the community. At the same time, GP

adopted EMS (Environmental Management Systems) approach that laid out the policy

framework to look for sustainable operations.

As a part of continuous efforts, GP has taken a number of initiatives like introduction of green

base stations, swapping of air conditioners with DC ventilation fans, and modernization of

entire network which helped reduce carbon footprint significantly over the years. Built in

2010, as part of awareness and adoption, the corporate headquarter, GPHouse, has also

become a magnificent model of true green architecture in the country. Mobicash and Billpay

have been instrumental in reducing customers’ travel requirement and hence contributed to

minimizing carbon emission of the society. As a result of such sustainable operational

activities, GP has been both locally and globally recognized and rewarded on different

occasions; the latest one being the winner of the prestigious GSMA Green Mobile Award 2014.

Climate Change-Promoting Green for a Sustainable Lifestyle

CSR (Adaptation)

AdvocacyGreen Company

Gree

n Bu

sines

s

EXTE

RNAL Corporate

ClimateInitiatives

CO2 Reduction

Employee

Awareness

INTERN

AL

GOALS Reduce 30% CO2

intensity by 2017 Green company

MEASURES Internal optimization and modernization in network, IT and offices Aggressive rollout of solar sites E-waste management Employee awareness

MANAGEMENTCONTROLS Environment Management System (EMS) Green champions Business reviews

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Climate Change-Promoting Green for a Sustainable Lifestyle20

Networks Transport Office

13%6%

81%

Use of Energy

Energy SourceDistribution for Networks

93%

7%

National Grid Solar

ambition of rolling out this solution more aggressively in the

coming years. Around 40% of network expansion of 2015 has

been designed with solar power. These solar powered base

station sites will be saving around 4 Million liters of fossil fuel

and more than 10 thousand tons of CO2 emission annually.

Modernization of transmission network and core site consolidation In the context of network modernization, in the year 2014, GP

has swapped its IP transmission backbone network. These

modern equipments consume less than 15% energy

compared to previous ones which is saving 176 tons of CO2

emission annually. Moreover, as a part of continuous network

modernization and introduction of higher capacity switching

equipments with less footprints, GP has been consolidating

its switch locations and hence, in 2014, three more core

locations were vacated. The result was a savings of 650

MWhr electricity and 10,500 Liters fuel which is saving 420

tons of CO2 emission.

Introduction of bio-generatorIn continuation of introducing innovative power generation

solutions, GP in partnership with a local partner, has set up a

generator which runs on biogas produced from poultry litters.

This set up is supplying more than 1 KW of power for our base

station in parallel to supplying power to nearby few small

shops. Based on the success, similar solutions can be rolled

out to other suitable locations.

B. Environment Friendly Operation

Electronic waste management Being an environment friendly company, GP manages its

obsolete electronic wastes following the international policy

and fully complying with laws of the country. After recycling

the huge BTS and core cabinets in the previous years, GP is

now recycling its obsolete GSM and microwave antennas and

other electronic accessories engaging globally renowned

vendors. As part of this recycling process, all hardware except

the circuit boards will be recycled to recover the constituent

iron, aluminum, stainless steel, copper, and plastic for reuse.

The circuit boards will be drilled and exported to vendor

facility to recycle through electronic waste treatment. The

recycling work will be performed both in Bangladesh and

abroad according to ISO 14000, OSHAS 18000 and R2

Standards.

C. Awareness & Engagement

Click Green photography contestGP always encourages and promotes various employee

awareness and engagement programs to enable the

employees to make a difference. One such initiative is “Click

Green” a photography competition which is regularly being

arranged since 2009 for the employees of GP to create

environmental awareness. In 2014, for the first time, it was

open for all GP Facebook Page fans and GP Instagram

Account followers. The aim of this competition is to

encourage our fans and followers to think, reflect and act

towards the commitment of being environment friendly and

also to inspire and promote ‘Green Lifestyle’.

Cycling awareness for the GP employeesAnother major employee awareness session was arranged in

November 2014 to promote and inspire cycling for GP

employees. Cycling for a healthy life and greener

environment was the main focus of the event. Arranging cycle

fair, demonstration of safe cycle riding, safety tool

distribution etc. were some major activities of the session.

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Climate Change-Promoting Green for a Sustainable Lifestyle 21

Overview

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Governance

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The Shareholders22

Telenor Mobile Communications AS (TMC)TMC, a company established under the laws of the Kingdom of Norway, seeks to develop and invest in telecommunication solutions through direct and indirect ownership of companies and to enter into national and international alliances relating to telecommunications. It is a subsidiary of Telenor Mobile Holdings AS and an affiliate of Telenor. Telenor ASA is the leading Telecommunications Company of Norway listed on the Oslo Stock Exchange. TMC owns 55.80% shares of Grameenphone Ltd.

Telenor's strong international expansion in recent years has been based on leading-edge expertise, acquired in the Norwegian and Nordic markets, which are among the most highly developed technology markets in the world. It has substantial international operations in mobile telephony, satellite operations and pay television services. In addition to Norway and Bangladesh, Telenor owns mobile telephony companies in Sweden, Denmark, Hungary, Serbia, Montenegro, Bulgaria, Thailand, Malaysia, Pakistan, India and Myanmar. Telenor has 186 million consolidated mobile subscriptions worldwide as of December 31, 2014.

Telenor uses the expertise it has gained at its home and international markets for the development of emerging markets like Bangladesh.

As part of the conversion of Grameenphone from a private limited to a public limited company, Telenor Mobile Communications AS transferred ten (10) shares each on May 31, 2007 to its three (3) affiliate organizations namely Nye Telenor Mobile Communications II AS, Norway; Telenor Asia Pte. Ltd., Singapore; and Nye Telenor Mobile Communications III AS, Norway.

Grameen Telecom (GTC)Grameen Telecom, which owns 34.20% of the shares of Grameenphone, is a not-for-profit company in Bangladesh established by Professor Muhammad Yunus, winner of the Nobel Peace Prize 2006.

The Shareholders

Telenor MobileCommunications AS

55.80%

GrameenTelecom

34.20%

OtherInstitutions

4.13%Foreign

3.06%

GeneralPublic

2.81%

The shareholding structure comprises of mainly two sponsor Shareholders namely Telenor Mobile Communications AS (55.80%) and Grameen Telecom (34.20%). The rest 10.00% shareholding includes General Public (2.81%), Foreign (3.06%) and Other Institutions (4.13%) as on 31 December 2014.

GTC’s mandate is to provide easy access to GSM cellular services in rural Bangladesh and create new opportunities for income generation through self-employment by providing villagers, mostly the poor rural women, with access to modern information and communication-based technologies.

Grameen Telecom, with its field network, administers the Village Phone Program, through which Grameenphone provides its services to the fast growing rural customers. Grameen Telecom trains the operators and handles all service-related issues.

GTC has been acclaimed for the innovative Village Phone Program. GTC & its Chairman Nobel Peace prize laureate Professor Muhammad Yunus have received several awards which include: First ITU World information Society Award in 2005; Petersburg Prize for Use of the IT to improve Poor People’s Lives” in 2004; GSM Association Award for “GSM in Community Service” in 2000.

As part of the conversion of Grameenphone from a private limited to a public limited company, Grameen Telecom transferred one (1) share each on May 31, 2007 to Grameen Kalyan and Grameen Shakti.

Top Twenty Shareholders as on December 31, 2014

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The Shareholders 23

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Name of Shareholders PercentageNumber of OrdinaryShares Held

Telenor Mobile Communications AS

Grameen Telecom

Investment Corporation of Bangladesh

Grameen Bank Borrower's Investment Trust

SSBT A/C Wasatch Frontier Emerging Small Countries Fund

SSBT A/C Morgan Stanley Institutional Fund, Inc.- Frontier Emerging Markets Portfolio

A.K. Khan & Co. Limited

ICB Unit Fund

JPMCB NA for JPMCB LUX A/C Frankin Templeton Investment Funds

AB Investment Limited-Investors Discretionary Account

SSBT for SSB LUX A/C Morgan Stanley Asset Management

JPMCB NA for JPM LUX A/C Schroder International Selection Fund

SSBT for SS Lux A/C Goldman Sachs Funds - Goldman Sachs N-11 (R) Equity Portfolio

Bangladesh Fund

Mellon Bank N.A. A/C Acadien Frontier Markets Equity Fund

United Commercial Bank Ltd.

Grameen One: Scheme Two

SSBT A/C Parametric Emerging Markets Fund

JPMCB NA for JPMCC A/C Everest Capital Frontier Markets Fund L.P.

Rupali Bank Limited

TOTAL

753,407,724

461,766,409

14,084,800

11,037,221

7,738,600

3,895,672

3,800,746

3,412,269

2,966,600

2,874,000

2,410,728

1,966,800

1,766,800

1,605,000

1,514,600

1,501,100

1,500,000

1,496,400

1,292,200

1,283,800

1,281,321,469

Sl.No.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

55.80%

34.20%

1.04%

0.82%

0.57%

0.29%

0.28%

0.25%

0.22%

0.21%

0.18%

0.15%

0.13%

0.12%

0.11%

0.11%

0.11%

0.11%

0.10%

0.10%

94.89%

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Organisational Structure24

ORGANISATIONAL STRUCTURE

Boardof

Directors

Rajeev SethiChief Executive Officer

Hossain Sadat*Company Secretary

Quazi Mohammad ShahedChief Human Resources Officer

Erlend PrestgardHead of Strategy

Medhat El HusseinyChief Technology Officer

Allan BonkeChief Marketing Officer

Mahmud HossainChief Corporate Affairs Officer

Marcus AdaktussonDirector-Communications

Dilip PalChief Financial Officer

*He also acts as Director and Head of Regulatory Affairs of the Company reporting to Chief Corporate Affairs Officer.Organisational structure as of February 2015

DIRECTORS’ PROFILE

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Directors’ Profile 25

Overview

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anceAdditional

Information

Financial AnalysisSustainability

Governance

Mr. Sigve Brekke was appointed to the Board on September 1, 2008 and is also the Chairman of Grameenphone Board. Mr. Brekke has held a number of positions in the Telenor Group. He joined Telenor Asia Pte. Ltd. in 1999 as Manager of Business Development and later became the Managing Director. He served as the Co-Chief Executive Officer (Co-CEO) of Total Access Communication PLC (‘dtac’) from 2002 to 2005, was the sole CEO and Director from 2006 to 2008 and was elected as the Vice Chairman of dtac Board in 2008. He has been made responsible to serve as interim CEO at dtac from September 2014. He also served as Director and CEO of United Communication Industry PLC from 2005 to 2008. In July 2008, he was appointed as Director and Executive Vice President of Telenor Group, Head of Asia Region, Telenor. In 2009, Mr. Brekke was elected as Director of Unitech Wireless Ltd. (‘Uninor’) and the Chairman of DiGi.Com Berhad Board. He was appointed Managing Director of Uninor in July 2010. Prior to joining Telenor, Mr. Brekke served as the Deputy Minister (State Secretary) of Defence in Norway in 1993 and was also an associate research fellow at the John F. Kennedy School of Government, Harvard University. Mr. Brekke obtained Master’s degree in Public Administration from John F. Kennedy School of Government, Harvard University.

Sigve Brekke

Mr. Tore Johnsen was appointed to the Board on December 10, 2013. Mr. Tore

Johnsen has a long career in Telenor since 1974. He is now Senior Vice President

at Telenor Group, Asia Region responsible for Performance Management of the

Asian companies where Telenor is a shareholder. He has been CEO of 4 Asian

companies - Grameenphone Ltd. from 2011 to 2013, Total Access Communication

PLC (‘dtac’), Thailand from 2008 to 2011, Telenor Pakistan from 2004 to 2008

and DiGi.Com Berhad, Malaysia from 2001 to 2004. Since joining Telenor Group

in 1974, he has held a number of managerial positions and international

assignments. He holds a Master of Science in addition to studies in International

Business Management.

Tore Johnsen

M Shahjahan

Mr. M Shahjahan was appointed to the Board on June 26, 2006 and is also

Chairman of the Company’s Treasury Committee. He acted as the Managing

Director of Grameen Bank from August 14, 2011 to October 30, 2014. Now, he is on

leave prior to retirement. Earlier, he served as the Deputy Managing Director, the

General Manager and Head of the Accounts, Finance, Planning, Monitoring and

Evaluation Division, the Chief of the Audit Department, and the Zonal Manager of

Grameen Bank. Mr. Shahjahan is a member of the Board of Directors of several

companies that work in the fields of health, education, agriculture, welfare,

renewable energy and telecommunications. He obtained a Bachelor of

Commerce (Honours) degree in Accounting from the University of Dhaka in 1976,

as well as a Master’s degree in Accounting in 1977 and a Master’s degree in

Finance in 1981. He was awarded ICAB Medal (Silver) for passing the ‘C.A.

Intermediate’ examination at the earliest eligible chance in 1981.

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Directors’ Profile26

Mr. Md. Ashraful Hassan was appointed to the Board on January 20, 2010. He currently serves as Managing Director of Grameen Telecom and is engaged in promoting and providing easy access to GSM cellular services in rural Bangladesh. He also serves as Managing Director of Grameen Distribution Ltd., Grameen Knitwear Ltd. and Grameen Fabrics & Fashions Ltd. He has a profound knowledge in sales channels and product sourcing. He keeps his own signature tune in Grameen Distribution with a broad experience in the concept of business development and supply chain management. He gained extensive and diversified knowledge in various industrial sectors especially in the field of textile focusing on resource efficient and energy saving production having wide exposures in the industrial management, export market, labor management and so on. Mr. Ashraf also acquired a wide range of experience for different kinds of project development and industrial setup. He has an extensive knowledge in the field of construction engineering. He started his career in Grameen Bank in 1984. During his 16 years of tenure with the Bank, he held various key positions including the Chief of Engineering section. He extended notable contribution to the infrastructural development of Grameen Bank. He serves as a member of the Board of Directors of several enterprises that play commendable role in the fields of renewable energy, health care, food & nutrition, information and communication technology, employment generation and so forth. He holds Bachelor of Science in Engineering from Khulna University of Engineering and Technology, Bangladesh.Md. Ashraful Hassan

Hans Martin Hoegh Henrichsen

Mr. Hans Martin Hoegh Henrichsen was appointed to the Board on January 22,

2014 and is Chairman of the Company’s Human Resources Committee, and

Health, Safety, Security & Environment Committee. He is Senior Vice President in

Telenor Asia and serves as Chief Representative Officer for Bangladesh. Mr.

Henrichsen has professional experiences in the financing and

telecommunications industries. He joined Telenor in 2000 and has since then

held several senior positions in the Company. During the past 14 years, Mr.

Henrichsen has worked with project financing and mobile acquisition projects in

markets new to Telenor, most recently with Telenor’s expansion into Myanmar. He

is a Master of Science (MSc) in Economics and Business Administration from the

Norwegian School of Economics.

Mr. Hakon Bruaset Kjol was appointed to the Board on September 14, 2011. He is Senior Vice President and Head of Corporate Affairs of Asia Region, Telenor Group. Mr. Kjol joined the Telenor Group in 1995, beginning his career in the domestic mobile operations in Norway. Since then, he contributed to the Group’s growing international presence through his strategic involvement in Telenor’s international mobile activities where he played significant roles in operational development and merger and acquisition activities both in Europe and Asia. For the last 15 years, Mr. Kjol has been based in Asia where he continues to assume a key role in the development of the Group strategy for Asia and managing the Asia business environment to include the areas of public affairs, regulatory management, government relations, strategic communications and corporate responsibility. He has been a key member of several management committees and is currently the Director of Total Access Communication PLC (‘dtac’), Thailand; Telenor Asia Pte Ltd., Singapore; Digi.Com Berhad, Malaysia, Telenor Pakistan Ltd., Pakistan and Telenor Myanmar Ltd., Myanmar. Mr. Kjol is a former student of the Norwegian School of Management majoring in Marketing and Communications.Hakon Bruaset Kjol

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Directors’ Profile 27

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Parveen Mahmud

Ms. Parveen Mahmud FCA was appointed to the Board on October 17, 2012. She is the Managing Director of Grameen Telecom Trust, and a fellow member of the Institute of Chartered Accountants of Bangladesh (ICAB). In her diversified professional career, Ms. Mahmud worked for a substantial amount of time with national and international development agencies and was a practicing chartered accountant. Ms. Mahmud started her career with BRAC, and was the Deputy Managing Director of Palli Karma-Sahayak Foundation (PKSF). She was a partner of ACNABIN, Chartered Accountants. She was the first female President of ICAB for the year 2011 and also the first female Board member in the South Asian Federation of Accountants (SAFA), the apex accounting professional body of the SAARC. She was the member of National Advisory Panel for SME Development of Bangladesh and founding Board member of SME Foundation and Convener, SME Women’s Forum. Ms. Mahmud serves in various Boards including the Chairperson of Shasha Denims Ltd., and was the Chairperson of Acid Survivors Foundation. She was awarded Begum Rokeya Shining Personality Award 2006 for women’s empowerment by the Narikantha Foundation, Bangladesh.

Dr. Jamaluddin Ahmed FCA

Dr. Jamaluddin Ahmed FCA was appointed to the Board on March 19, 2010 as an Independent Director and is also Chairman of the Board Audit Committee (since 2012). He is the Chairman of Emerging Credit Rating Company Limited which is affiliated with the Malaysian Rating Corporation (MRC). Dr. Jamal was the President (2010) of the Institute of Chartered Accountants of Bangladesh (ICAB). He is the elected General Secretary (2015-16) of the country’s independent think tank-Bangladesh Economic Association. He is engaged in assignments in Financial, Banking and Energy Sector industries. He worked as country specialist in Migrant Remittance Management. He was involved in DFID funded Cheque Automation, Automated Clearing System, mobile banking and in the development of National Payment System in Bangladesh. He was involved with Bangladesh Energy Regulatory Commission for introducing Uniform Energy Accounting in Bangladesh. Over his professional career, Dr. Jamal has written copious publications and conducted numerous research papers on various aspects. In addition to his earlier publications, his paper on “Watching the Watchdogs-the Political Economy of Public Accounting Oversight”; “Economic Rationale for the Separation of Conventional and Merchant Banking” and “The Political Economy of the Size of the Government” was published in 2014. He holds Master’s degree in Accounting from the University of Dhaka, PhD from the Cardiff Business School, under the University of Wales, United Kingdom, and is also a fellow of ICAB.

Mr. Pal Wien Espen was appointed to the Board on April 24, 2013. In 1995, he joined Telenor Legal Department and in 1998, he became Deputy Group General Counsel, and in 2000 he was appointed Group General Counsel and Executive Vice President in Telenor. After obtaining his law degree, he joined Bugge, Arentz-Hansen & Rasmussen, one of the major law firms in Norway in 1992, focusing on M&A and financing. After that he served as a judge at Nedre Ringerike Court, Norway during 1994-95 before joining Telenor. Mr. Espen obtained his Law degree from University of Oslo, Norway and Social Science degree from District University of Lillehammer, Norway.Pal Wien Espen

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Directors’ Profile28

Name of Director Directorship Member of Board committees

Unitech Wireless Ltd.(‘Uninor’), IndiaDiGi.Com Berhad, MalaysiaTotal Access Communication PLC (‘dtac’), Thailand

Grameen TelecomGrameen ShaktiGrameen UddogGrameen FundGrameen Krishi FoundationGrameen KalyanGrameen Fabrics & Fashions Ltd.Grameen Credit Agricole Microfinance FoundationGrameen Employment Services Limited (GES)Grameen Knitwear Ltd.Grameen ShikkhaGrameen CommunicationsGrameen Shakti Samajik Byabosa Ltd.Member of Board of TrusteesNobel Laureate TrustGrameen TrustGrameen Telecom TrustGrameen Healthcare Trust

Total access Communication PLC (‘dtac’), ThailandTelenor Pakistan Ltd., PakistanTelenor Myanmar Ltd., MyanmarDiGi.Com Berhad, MalaysiaDiGi Telecommunications Sdn. Bhd., Malaysia

DiGi.Com Berhad, Malaysia Remuneration Committee

dtac, Thailand Remuneration Committee Nomination Committee Governance CommitteeTelenor Myanmar Ltd., Myanmar Audit CommitteeDiGi.Com Berhad, Malaysia Audit CommitteeDiGi TelecommunicationsSdn. Bhd., Malaysia Audit Committee

None

Mr. Sigve Brekke

Mr. M Shahjahan

Mr. Tore Johnsen

Mr. Md. Ashraful Hassan

Sl.No.

1

2

3

Grameen ShaktiGrameen KalyanGrameen Solutions Ltd.Grameen Veolia Water Ltd.Grameen Danone Foods Ltd.Grameen Health Care Services Ltd.Grameen Employment Services Ltd.Grameen Shakti Samajik Byabosa Ltd.Member of Board of TrusteesGrameen Telecom Trust

None4

Companies (other than Grameenphone Ltd.) in which GP Directors hold directorship andcommittee memberships:

Rokia Afzal Rahman

Ms. Rokia Afzal Rahman was appointed to the Board on December 6, 2012 as an Independent Director. A leading woman entrepreneur and a former Adviser to the Caretaker Government of Bangladesh, Ms. Rahman started her agro-based company in 1980 and further diversified her business into insurance, media, financial institution and real estate. She is currently the Vice President of International Chamber of Commerce-ICC Bangladesh and Trustee Board Member of Transparency International Bangladesh–TIB. Ms. Rahman is founder President of Bangladesh Federation of Women Entrepreneurs–BFWE and former President of Metropolitan Chamber of Commerce and Industries-MCCI, Dhaka. Her commitment to development brought her to the Boards of a number of development organizations. She is also Chair and Managing Director of R. R. Group of Companies; Chair and Managing Director of Arlinks Group of Companies. Ms. Rahman did her Post Graduate Diploma in Banking from Pakistan.

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Directors’ Profile 29

Overview

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anceAdditional

Information

Financial AnalysisSustainability

Governance

Name of Director Directorship Member of Board committees

DiGi.Com Berhad, MalaysiaDiGi Telecommunications Sdn. Bhd., MalaysiaTelenor Pakistan Ltd., PakistanTelenor Asia Pte Ltd., SingaporeTelenor South Asia Investment Pte. Ltd., SingaporeTelenor South East Asia Investment Pte. Ltd., SingaporeTelenor GO Pte. Ltd, SingaporeTotal Access Communication PLC, ThailandTelenor Myanmar Ltd., Myanmar

DiGi.Com Berhad, Malaysia Nomination Committee and Remuneration Committee

Mr. Hakon Bruaset Kjol

Sl.No.

6

Grameen Danone Foods Ltd.Grameen Krishi FoundationGrameen Fisheries and Livestock FoundationGrameen Capital Management Ltd.Grameen Health Care Services Ltd.Grameen Fabrics & Fashions Ltd.Grameen Distribution Ltd.Grameen TelecomGrameen Solutions Ltd.Linde Bangladesh Ltd.BRAC InternationalActionaid BangladeshUCEP-BangladeshManusher Jonno Foundation (MJF)MIDASSAP BangladeshCAMPEShasha Denims Ltd.

Linde Bangladesh Ltd. Finance and Audit Committee

BRAC and BRAC International Finance and Audit Committee

Actionaid Bangladesh Finance and Audit Committee

UCEP- Bangladesh Finance and Audit Committee

Ms. Parveen Mahmud7

Telenor Communication II AS, NorwayTelenor Kapitalforvaltning AS, NorwayTelenor Aeromobile AS, NorwayTelenor Myanmar Ltd., Myanmar

NoneMr. Pal Wien Espen8

Power Grid Company of Bangladesh Ltd.Essential Drugs Company LimitedMacksons Spinning Limited

Power Grid Company of Bangladesh Ltd. Audit CommitteeEssential Drugs Company Limited Audit Committee

Dr. JamaluddinAhmed FCA

9

R.R. Cold Storage Ltd.Imaan Cold Storage Ltd.R. R. Estates Ltd.Aris Holdings Ltd.Arlinks LimitedMediaworld Ltd. (owning company of “The Daily Star”)MIDAS Financing Ltd.Mediastar Ltd. (owning company of “Prothom Alo”)ABC RadioMIDAS Investment Ltd.BRACMarico Bangladesh LimitedManusher Jonno Foundation (MJF)Banchte Shekha, Jessore

Member of Board of TrusteesTransparency International Bangladesh (TIB)

NoneMs. Rokia Afzal Rahman10

Mr. Hans Martin HoeghHenrichsen

None None5

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Management Team30

MANAGEMENT TEAM

Rajeev SethiChief Executive Officer

Quazi Mohammad ShahedChief Human Resources Officer

Erlend PrestgardHead of Strategy

Mahmud HossainChief Corporate Affairs Officer

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Medhat El HusseinyChief Technology Officer

Marcus AdaktussonDirector-Communications

Dilip PalChief Financial Officer

Allan BonkeChief Marketing Officer

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MANAGEMENT TEAM PROFILE

Mr. Rajeev Sethi was appointed as Chief Executive Officer (CEO) effective from December 1, 2014.

Before joining Grameenphone he was Chief Marketing Officer (CMO) of Uninor, Telenor’s wholly

owned subsidiary in India. Mr. Rajeev Sethi has served as CMO in Uninor for nearly two years. Prior

to that, Mr. Sethi spent more than 3 years as the head of Uninor’s Uttar Pradesh East circle. He has

significant ICT industry experience, including executive engagements in companies such as

Vodafone, HP, Hutchison Telecom and Asian Paints.Rajeev Sethi

CEO

Mr. Dilip Pal was appointed as Chief Financial Officer (CFO), effective from September 01, 2014.

Coming with 22 years of experience across Financial Service, Engineering, FMCG and Telecom

sector, his last stint was at Vodafone India as Executive Vice President and National Business

Finance Operations head. He has also served in executive positions in leading Indian companies

like Tata Tinplate, Hindustan Coca-Cola Beverages (Coca-Cola India). Mr. Dilip is both a Chartered

Accountant and Cost Accountant by profession. He holds a Masters degree in Commerce from

Calcutta University.

Dilip PalCFO

Mr. Medhat El Husseiny was appointed as Chief Technology Officer (CTO) effective from October 2014. He brings over 20 years of experience from telecom sector, holding senior management roles in different multinational companies. Prior to joining Grameenphone, he held the position of CTO at Orascom Telecom Algeria (Djezzy), where he was also a member of Vimpelcom Group Leadership Team. His expertise encompasses a range of areas, such as operation management, corporate strategy, network development & operation and negotiations/contract management. He has also worked at Orascom Telecom Holding and Lucent Technologies in Egypt. Mr. Medhat is an Engineer by profession with a Masters in Telecommunication Engineering from Benha University, Egypt, along with MBA from Maastricht School of Management, Netherlands and Master’s Certificate in Project Management from STEVENS Institute of Technology, USA.

Medhat El Husseiny

CTO

Mr. Allan Bonke was appointed as Chief Marketing Officer (CMO), effective from August 05, 2012.

Before joining Grameenphone, he was Executive Vice President in Uninor, India. While with Uninor,

he was responsible for Uttar Pradesh west (UP) circle operation. He joined Telenor in 2006 and

worked as Director, Business Sales in Telenor Denmark before joining Uninor. Before joining

Telenor, he held senior positions in different Danish ICT companies. He has a financial background

from the Danish banking sector. He holds a diploma education in business economics from

Copenhagen Business School-CBSI with strategy as line of specialization.

Allan BonkeCMO

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Mr. Quazi Mohammad Shahed was appointed as Chief Human Resources Officer (CHRO), effective from November 01, 2012. Before joining Grameenphone, he was employed by British American Tobacco (BAT) as Human Resources Lead, Global SAP, Template & Pilot Project in United Kingdom. After obtaining his Bachelor’s Degree in Mechanical Engineering from Bangladesh University of Engineering and Technology (BUET), he started his career in BAT Bangladesh. He subsequently earned Masters in Business Administration. During the early part of his career, he worked in different roles within operations and subsequently moved to HR as the Head of HR of BAT Bangladesh in December 2001. He later worked in Iran, Pakistan, Malaysia and UK in different HR leadership and global project roles. After joining Grameenphone, he undertook many initiatives in the people front, focusing on building leadership within Grameenphone and enhancing engagement within the organization, that resulted in the highest EES index growth within the Telenor group for two successive years in 2013 and 2014.

Quazi Mohammad ShahedCHRO

Mr. Mahmud Hossain was appointed as Chief Corporate Affairs Officer (CCAO), effective from March 08, 2010. He started his career in 1990 when he joined the technical team of the erstwhile Hutchison BD Telecom Ltd. He worked for Grameenphone, at his first spell with the Company, as Additional General Manager at Technology Operations during 2000-2001. In his credibly long career, he also worked for few other telecom operators before rejoining Grameenphone in August 2009. He obtained his B.Sc. in Electrical & Electronic Engineering from Bangladesh University of Engineering and Technology (BUET). He obtained his MBA from the Institute of Business Administration (IBA), Bangladesh. He also holds a Master’s (Telecom) Degree from Concordia University, Canada.Mahmud Hossain

CCAO

Mr. Marcus Adaktusson was appointed Director-Communications, effective from February 2014.

Before joining Grameenphone, he was Director Communications in Telenor Sweden. Prior to his

positions in Grameenphone and Telenor, he worked as communications strategist and consultant

for leading Nordic PR agencies. He holds a Master of Science degree (MSc) in Economics and

Business Administration from Stockholm School of Economics.

Marcus Adaktusson

Director-Communications

Erlend Prestgard

Head of Strategy

Mr. Erlend Prestgard was appointed as Head of Strategy, effective from September 01, 2013. Before

joining Grameenphone, he was Director in the strategy team of the Telenor ASA. Prior to Telenor

and Grameenphone, he worked as Chief Commercial Officer and Chief Financial Officer with

over-the-top service companies delivering music and TV streaming services. He also has

background from McKinsey & Company and UBS Investment Bank. He holds a Master of Science

degree in Economics and Business Administration from the Norwegian School of Economics and

Business Administration.

PROFILE of company secretary

Mr. Hossain Sadat was appointed as Company Secretary effective from July 01, 2010. In addition, he has also been appointed as Director and Head of Regulatory Affairs, effective from February 24, 2014. Prior to taking up the above roles in Grameenphone, he has also worked in Finance function for several years in the capacity of Head of Financial Reporting, Head of Budgeting & Accounting, and Financial Controller. Before joining Grameenphone in mid 2001, he worked in a number of multinational organizations including Shell Oil & Gas, Cairn Energy PLC and KPMG Bangladesh. During his service tenure, he has worked in the areas of corporate governance, financial management, stakeholder relations, regulatory management and public communications for around eighteen years. Mr. Sadat holds a Master’s degree and is a Chartered Secretary by profession.

Hossain Sadat

Company Secretary

Rabeya GafurOnline Diploma StudentGrameenphone Community Information Center (CIC) visitor for 2 years“I have been able to learn a lot and attain knowledge about various topics. The computers and internet at Grameenphone CIC has made it possible for me to attend exams online.”

Corporate Governance in Gp

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Grameenphone (GP) believes that good corporate governance is the backbone of an upright business entity. Accordingly, GP emphasises on stronger diligence to business, all operations being transparent and invites larger involvement of the stakeholders. And aspiring on that, the Company has always strived to maintain the highest standards of corporate governance and business conduct so as to create and maintain value for Shareholders, safeguard stakeholders' interest and justify investor confidence. With this end in view, GP has been providing and maintaining innovative, user-friendly and best-value telecommunication services to create sustainable stakeholders' value. To attain these objectives, the Board of Directors of the Company is dedicated to ensuring highest standards of Corporate Governance to keep the Company's business integrity and performance on the right track. Being a responsible corporate entity, GP maintains adequate transparency and encourages sound business conduct both in its in-house practices and in its external relationship with the community as well as suppliers, customers and business partners. The Company, at the same time, expects acts of honesty and integrity from its Board of Directors, employees and suppliers.

As a Public Listed Company, GP Board of Directors plays a crucial role in upholding the interests of all its stakeholders. The Board of Directors and the Management Team are also dedicated to maintaining a well-established culture of accountability, transparency, easy-to-understand policies and procedures to ensure effective Corporate Governance at every level of its operations. The Board and the Management Team also put their best efforts to comply with all the laws of the country and all internal regulations, policies and procedures to make GP a thoroughly transparent Company. Moreover, recognizing the fact that compliance has been the corner stone of good governance, the Company meticulously undergoes through the process of statutory audit and compliance certification as required by laws of the land. As a result, GP has been able to maintain the highest level of integrity, transparency and accountability of global standards over the years.

Board Formation & Structure

a) Role of the BoardThe Directors of the Board are appointed by the Shareholders at the Annual General Meeting (AGM) and accountable to the Shareholders. The Board is responsible for ensuring that the business activities are soundly administered and effectively controlled. The Directors keep themselves informed about the Company's financial position and ensure that its activities, accounts and asset management are subject to adequate monitoring and control. The Board also ensures that GP Policies & Procedures and Codes of Conduct are understood, implemented and maintained at all levels and the Company adheres to generally accepted principles for good governance and effective control of Company activities.

In addition to other regulatory guidelines, the Board has also adopted the “Rules of Procedure for the Board of Directors” for ensuring better governance in the work and administration of the Board. The Board is also guided by a Delegation of Authority which spells out the practices and processes in discharging its responsibilities.

b) Board CompositionThe GP Board is comprised of ten (10) Directors, including the Chairman who is elected from amongst the members. In compliance with the conditions of Corporate Governance Guidelines issued by the Bangladesh Securities and Exchange Commission (BSEC), the Board has appointed two (2) Independent Directors. We believe that our Board has the optimum level of knowledge, composure and technical understanding about the Company’s business which, combined with its diversity of culture and background, stands as the perfect platform to perform and deliver.

Chief Executive Officer

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c) Board MeetingsThe Articles of Association (AoA) of the Company requires the Board to meet at least four times or more in a year when duly called in writing by a Board member. Dates for Board Meetings in a year are decided in advance and notice of each Board Meeting is served in writing well ahead of the meeting. Such notice contains detailed statement of business to be transacted at each meeting. The Board meets for both scheduled meetings and on other occasions to deal with urgent and important matters that require attention.

d) Delegation of Authority for the Chairman and Chief Executive Officer (CEO)The roles of the Chairman and Chief Executive Officer are separate and delineation of responsibilities is clearly established, set out in writing and agreed by the Board to ensure transparency and better corporate governance. To that end, GP has also adopted “Rules of Procedure for Chief Executive Officer”. The CEO is the authoritative head for day-to-day management in the Company. He acts to reasonably ensure that GP operates business as per the Articles of Association, decisions made by the Board and Shareholders, as well as according to GP Policies and Procedures and applicable regulatory laws and legislations.

e) Access to InformationThe Board recognizes that the decision-making process is highly dependent on the quality of information furnished. In furtherance to this, every Director has access to all information within the Company. Throughout their tenure in office, the Directors are continually updated on the Company’s business and the regulatory and industry specific environments in which it operates. These updates are given by way of written briefings and meetings with senior executives and, where appropriate, external sources.

Board CommitteesFor better, quicker and furnished flow of information and thereby exercising effective governance, the Board has also constituted a number of Committees and has delegated certain responsibilities to the Committees to assist the Board in the discharge of its responsibilities. The role of Board Committees is to review and appraise in the respective areas and then to advise and make recommendations to the Board. Each Committee operates in accordance with the Charter/Terms of Reference (ToR) approved by the Board. The Board reviews the ToR of the committees from time to time. The Board appoints the members and Chairman of each committee. A brief description of each Committee is presented below:

a) Audit CommitteeThe GP Audit Committee was established in late 2008 as a sub-committee of the Board and has jurisdiction all over the Company. The Audit Committee is comprised of three (3) members of the Board. The Chairman of the committee is an Independent Director. The Chief Executive Officer, the Chief Financial Officer, the Company Secretary and the Head of Internal Audit are permanent invitees to the Audit Committee meetings.

The Audit Committee assists the Board in discharging its supervisory responsibilities with respect to internal control, financial reporting, risk management, auditing matters and GP’s processes of monitoring compliance with applicable legal & regulatory requirements and the Code of Conduct. The Audit Committee Charter, as approved by the Board, defines the purpose, authority, composition, meetings, duties and responsibilities of the Audit Committee.

Boardof Directors

TreasuryCommittee

Health, Safety,Security & Environment

Committee

AuditCommittee

Human ResourcesCommittee

The Audit Committee met five (5) times during the year 2014 and attendance of the Committee members in the meetings was as follows:

b) Treasury CommitteeThis Committee consists of three (3) members who are appointed by the GP Board. All significant financial matters which concern the Board are discussed in this committee meeting in detail. Upon endorsement of the Treasury Committee, such issues are forwarded to the Board for their final review and approval.

The Treasury Committee met four (4) times during the year 2014 and attendance of the Committee members in the meetings was as follows:

c) Human Resources CommitteeThis Committee consists of three (3) members who are appointed by the GP Board. The Committee supports the Board in discharging its supervisory responsibilities with respect to Company’s Human Resources policy, including employee performance, motivation, retention, succession matters, rewards and Code of Conduct.

The Human Resources Committee met one (1) time during the year 2014 and attendance of the Committee members in the meeting was as follows:

d) Health, Safety, Security and Environment CommitteeThis Committee consists of three (3) members who are appointed by the GP Board. The Committee meets whenever necessary and supports the Board in fulfilling its legal and other obligations with respect to Health, Safety, Security and Environment (HSSE) issues. The Committee also assists the Board in obtaining assurance that appropriate systems are in place to mitigate HSSE risks in relation to the general environment, company, employees, vendors, etc.

The HSSE Committee met one (1) time during the year 2014 and attendance of the Committee members in the meeting was as follows:

Company SecretaryTo ensure effective assimilation and timely flow of information required by the Board and to maintain necessary liaison with internal organs as well as external agencies, the Board has appointed a Company Secretary. The Corporate Governance Guidelines issued by the Bangladesh Securities and Exchange Commission (BSEC) also require a listed company to appoint

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NameDr. Jamaluddin Ahmed FCA

Tore Johnsen

M Shahjahan

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Dilip Pal (Appointed on 01 September 2014)

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M Shahjahan

Quazi Mohammad Shahed

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M Shahjahan

Quazi Mohammad Shahed

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Company Secretary. In pursuance of the same, the Board of Directors has appointed Company Secretary and defined his roles & responsibilities. In GP, among other functions, the Company Secretary: Performs as the bridge between the Board, Management and Shareholders on strategic and statutory decisions and directions. Acts as a quality assurance agent in all information streams towards the Shareholders/Board. Is responsible for ensuring that appropriate Board procedures are followed and advises the Board on Corporate Governance matters. Acts as the Disclosure Officer of the Company and monitors the compliance of the acts, rules, regulations, notifications, guidelines, orders/directives, etc. issued by BSEC or Stock Exchange(s) applicable to the conduct of the business activities of the Company so as to protect the interests of the investors and other stakeholders.

Management Team (MT)The Management Team is the Executive Committee of GP. Headed by the CEO, the Management Team is responsible for managing and running the affairs of the Company. All other key Managers across the Company are members of the Management Team. The Management Team works to achieve the strategic goals & mission of the Company set by the Board of Directors. In discharging its assigned responsibilities, the Management Team meets on a weekly basis to monitor the business performance of the Company.

The Control Environment In GrameenphoneIn implementing and ensuring good Governance in GP, the Board and Management Team ensure the following:

a) Beyond Budgeting Management ModelGP employs a Beyond Budgeting strategic management model whereby the Company reviews its strategy for the next three years and sets annual and quarterly targets on key KPIs for the upcoming year. The targets/KPIs are set on relative terms to reflect the changes in business environment. The quarterly targets are subject to rigorous monitoring thereby ensuring a performance culture focused on attaining the targets and steering the Company towards fulfilling its strategic ambitions. In every quarter, the Company also prepares forecast for the next five quarters. These forecasts are realistic projections of future directions.

The model focuses on initiatives to minimize the gap between the targets (KPIs) and forecasts. The corporate level initiatives are cascaded down to divisional as well as individual levels. The forecasts on the key KPIs which serve as radar screen on future directions are reviewed and monitored against targets. This is a forward-looking and action-oriented approach towards managing the business. The resource allocations are dynamic and are based on the intended actions linked with the target and strategy. It aims to build a culture of freedom through responsibility and thereby leading to increased responsiveness to surrounding changes.

b) Financial ReportingGP has strong financial reporting procedures. Financial statements are prepared in accordance with International/Bangladesh Financial Reporting Standards (IFRS/BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable financial legislations. The financial data are captured from the financial reports generated from Oracle ERP (Enterprise Resource Planning) system. These financial statements, once prepared, are reviewed initially by CFO and CEO and then by the Audit Committee on a regular basis. Upon submission to the Group in the form of Management Accounts, these financial statements are reviewed by Group Accounting and Group Finance. At every quarter, external auditors review the quarterly financial statements prepared in accordance with local financial reporting policies and Company procedures. The annual audit is conducted by the external auditors, who are appointed by the Board of Directors followed by the Shareholders’ approval in the Annual General Meeting. Apart from the statutory reporting of financial statements, GP also maintains regular reporting to its group company Telenor, which consolidates all its subsidiaries’ financial information in its consolidated financial statements.

c) Operational Excellence (OE)GP believes in Operational Excellence (OE) as a day to day phenomenon rather a strategic move to make in a discrete timeframe. As a destination OE strives to take GP’s operations to a level that becomes a unique differentiator which helps Company to be ready for next miles of competitiveness.“Customer is the King” this is the primary mission of excellence and accordingly addressing all possible prospects of time, quality and cost. This is nothing but to challenge all functional areas

that have the potential to improve and achieve better results to satisfy most of the customer’s need. GP is trying to establish a culture whereby striving for excellence and achieving results becomes a core effort that gives GP employees a profound sense of accomplishment.

Friendly yet firm governance structure, deep dive analysis, critical assessment of business dynamism and ownership of the efficiency targets are the key factors for Grameenphone operational excellence. Three basic enabler functions mainly push the journey of excellence–namely: Telenor best practices, Global best practices, and GP’s internal evaluation and innovative ideas that come from different levels of the organization. As part of its commitment to excellence, GP has been conducting yearly cost benchmarking exercises through a global benchmarking expert for many years. The findings reflect that GP has been progressively moving towards being a fully efficient operator.

In recent years, many of the best practices of GP has been recognized by Telenor Group and many has been adopted in different Telenor Operations in Asia/Europe. Last year, GP managed to meet all the internal targets of efficiency that were set in different areas of Operational expenses, Working Capital, Capital expenditures, Sourcing and in many mentionable areas of operations. Some of the timely needed steps and tactical moves in Capex and Opex management areas steered the company to meet its annual targets. GP nurtures a long term vision on OE. A well-structured three to five years excellence plan has been prepared and this is revisited every year. In this structure all the perspectives are being considered to hold the right business dynamics that enable GP to act accordingly. Three major aspects are the pillars of this endeavor: ONE- fight well with the year-on-year inflationary impact, TWO- critical assessment and management of organic business growth and THREE- leverage inherent/hidden strengths such as GP’s size of operations and consequent potential for scale economies to address savings opportunities. GP has its strong aspiration to be the most efficient telecom operator of the world in near future.

d) Business Reviews and Financial ReviewsBusiness reviews and financial reviews are conducted on a quarterly basis by the Group. The purpose of business review is to ensure strategic control and follow-up of results based on the prevailing strategic objectives and value drivers. Financial reviews provide the internal quarterly results follow-up for the Company. The purpose is to provide an analysis of the economic and financial situations, which will then form the basis for external reporting and presentations, and to provide quality assurance for the financial reporting. In addition to quarterly business and financial review with Group, the CEO and CFO review financial results on a monthly basis and set action points to achieve the Company’s business goals. In 2013, GP had initiated the process of quarterly regional business reviews whereby the business performance of the nine regions are presented to GP Management and way forward plans are devised.

e) Management of AssetsGP, in its pursuit of best quality network for its subscribers, has been investing in cutting-edge telecom technology since its inception. Transparency and accountability are ensured at all stages from acquisition to disposal to protect the interest of Shareholders. Internationally accepted safety measures have been implemented and periodic physical verification is undertaken on a test basis to safeguard the assets and to ensure accuracy and authenticity of reported numbers. All the assets are adequately insured against industrial risks with local and international insurance companies.

f) Statutory Audit and CertificationAuditing of the Company is governed by the Companies Act, 1994 and Securities and Exchange Rules 1987. As per these regulations, auditors are appointed by Shareholders at each Annual General Meeting (AGM) and their remuneration is also fixed by the Shareholders at the AGM. Appropriate structure is in place as per corporate governance best practices to ensure independence of statutory auditors. Statutory auditors are rotated every three years in compliance with the order of Bangladesh Securities and Exchange Commission (BSEC). Audit Committee meets with the statutory auditors to ensure that auditors are acting independently and reviews the Financial Statements before submission to the Board for approval. Non-audit services that may create threat to independence are not obtained from statutory auditors unless otherwise required by regulators. In addition to the audit of annual financial statements, the auditors also carry out audit of half-yearly financial statements of the Company.

Further, to ensure adequate regulatory discharge, a Compliance Certificate is obtained from licensed practicing professional who certify that the Company has duly complied with all the regulatory requirements as stipulated by the Bangladesh Securities and Exchange Commission (BSEC).

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g) Internal AuditInternal Audit supports the Company in achieving its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of its risk management, control and governance processes. In order to ensure organizational independence of Internal Audit, the Head of Internal Audit reports functionally to the Audit Committee and administratively to the Chief Executive Officer.

GP Internal Audit is empowered to carry out its assigned activities in all respects of the Company. Internal Audit activity is governed by the Internal Audit Charter, which is approved by the Board. GP Internal Audit department discharges its assurance and consulting activities through management of three distinct audit streams: Finance, Technology and General Business processes. Additionally, a separate team is responsible for quality assurance of internal audit activity. A risk-based annual audit plan is in place, which takes into consideration the strategic imperatives and major risks surrounding GP, while considering pervasive audit needs. GP Internal Audit also works closely with Telenor Group Internal Audit in sharing knowledge and resources to ensure achievement of internal audit deliverables.

h) Internal Control Over Financial Reporting (ICFR)Internal Control over Financial Reporting (ICFR) in GP is, as such, a process, affected by its Board of Directors, Management and other relevant officials, designed to provide reasonable assurance regarding achievement of objectives in the following categories:

Effectiveness and efficiency in operationsReliability of financial reportingCompliance with applicable laws and legislations

GP is committed to high standards of internal control as this process has proven to provide significant merits in relation to the quality of GP’s Financial Statements. The works to operate and document good Internal Control Over Financial Reporting is continued over the years and the objective today is still to ensure that ICFR related activities are integrated into GP’s business operations.

A standard accountability structure is implemented with defined roles and responsibilities within ICFR in-scope areas to create the basic building blocks to ensure effective ICFR ownership. The overall responsibility for ensuring ICFR, including monitoring and performance of internal controls and maintaining documentation lies with the CEO/CFO, and the process level responsibility lies with the process owners and control owners.

The scope of ICFR includes Company Level Control (CLC–Policies & Manuals) along with General Computer Control (GCC) and Transactional Controls to ascertain operational efficacy, consistent and dependable financial reporting, information security and legal compliance. This reasonable assurance has become even more crucial after being a listed company in the country’s Stock Exchanges.

i) Related Party TransactionsThe Board through its Audit Committee reviews all the major related party transactions from time to time. Abiding by the laws, a Director who has an interest in a transaction discloses his interest as such and abstains from deliberations and voting on the relevant resolution in respect of the transactions at the Board meetings. Details of significant related party transactions are disclosed in notes to the Financial Statements.

j) Dividend PolicyThe Board of Directors has established a dividend policy which forms the basis for the proposals on dividend payments that it makes to the Shareholders taking into consideration the business performance of the Company and its strategic initiatives. The Board believes that it is in the best interest of GP to draw up a long-term and predictable dividend policy. The objective of the policy is to allow the Shareholders to make informed investment decisions.

k) Enterprise Risk Management & Risk MitigationRisk Management at GP is concerned with earning competitive returns from the Company’s various business activities at acceptable risk level. It supports the Company’s competitiveness by developing a culture, practice and structure that systematically recognizes and addresses future opportunities whilst managing adverse effects (i.e. threats) through recognizing risk and responding appropriately upon it. The Company has well defined risk management manual and processes to mitigate enterprise level risks. This aspect is discussed more elaborately at the ‘Enterprise Risk Management’ section of the Annual Report.

l) Revenue Assurance and Fraud ManagementRevenue Assurance function secures the revenue generated by any business activity and its realization through preventing or fixing any possible revenue leakages. In extension, it has considerable presence over cost assurance which involves partner payments and revenue sharing. This function also supports to give assurance on accurate revenue recognition and reporting. The Fraud Management systems and processes in place ensure innovative & effective defense mechanisms to prevent losses from internal/external Telecom frauds.

m) Compliance with Rules & Regulations of the CountryCompliance helps build trust among the Board Members, Shareholders, Customers and other stakeholders including the regulators. As leaders of a compliant Company, the Management Team of GP adopted strategies that assure compliance with all legal and regulatory requirements. This ensures that good governance cascades right throughout the Company. GP is subject to close monitoring process of regulatory bodies that focus on transparency and require that GP provides accurate and periodic reporting of issues/events and certification where necessary. In this context, GP regularly provides a complete set of financial statements and relevant documents to the Bangladesh Securities and Exchange Commission (BSEC), Stock Exchanges, National Board of Revenue (NBR), Registrar of Joint Stock Companies & Firms (RJSC), Bangladesh Telecommunication Regulatory Commission (BTRC), the Board of Investment (BOI) and all other relevant bodies and authorities. Further, in order to conduct day-to-day business in a compliant way, GP renders its best efforts to comply with the existing applicable laws of the land as well as with the directives/guidelines/regulations of various government authorities. GP also takes various initiatives to conduct awareness sessions on existing and proposed laws and regulations of the country to ensure compliance throughout the Company. Overall, GP has always strived to remain a fully compliant Company accommodating every possible ways and strategies to ensure the same.

n) Business Continuity and Crisis Management (BCCM)To secure the business operation and continued telecommunication service for the people of Bangladesh, and being the largest mobile phone operator of the country, GP has structured Business Continuity Management (BCM) process. This proactive readiness, both in terms of process and infrastructure, is very important to minimize the network and service impact especially for a country like Bangladesh which is prone to many natural disasters like cyclone, flood, earthquake etc.

As a part of disaster management readiness, GP has built a robust and protected network infrastructure. For example, one of the important requirements for telecom operation is transmission network where GP has diversified optical fiber transmission both through highways and railways. The journey is continuously progressing and we have set some aggressive plans to expand the fiber network for avoiding network disruption.

GP got the advantage of this BCM practices when the country faced severe power blackout for 10 hours on 01 November 2014. Having a proper process in place, and capable organization all over the country and proper infrastructure dimensioning, GP could minimize the impact in its network.

In 2014, GP has strengthened the BCM team with more empowerment and skills. The team is scanning all the business critical processes, systems and services and bringing those to the attention of the Management. The Company is investing in disaster management proposals based on priority and vulnerability. This preparedness will help the Company and the country to ensure continued and uninterrupted telecommunication services, under any unforeseen circumstances, which is a very important tool for managing any scale of disaster.

o) Supply Chain SustainabilityGP strives for a high labor standards and continuous improvement in its own operations and throughout its entire supply chain. GP with its vigilant and systematic effort endeavors to engage with their supply chains to ensure responsible business conduct. As a part of the process, GP ensures all of its contractual suppliers & value chain partners are committed to follow a set of Supplier Conduct Principles (SCP), which is based on some internationally recognized standards emphasizing on human rights, health and safety, labor rights, environment and anti-corruption. In 2014, Grameenphone continued to work proactively and systematically within the area of supply chain sustainability focusing on mitigation of supply chain risk, anti-corruption work in the supply chain and sustainability training and awareness. GP has also increased the capacity to run simultaneous inspections by 100% and developed 2 lead auditors in house for environmental management system at the global standard. Further to that, GP is also leading some cross-industry initiatives to enhance and standardize the sustainability practice in collaboration with several other companies. GP’s ambition is to make an impact in the local markets through its consistent sustainability efforts. GP believes that decent working conditions, respect for human rights and the environment, as well as willingness to improve standards amongst our suppliers is the only viable route forward.

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p) Ethics and Behavior

i) Code of ConductGP has adopted a Code of Conduct (“Code”) approved by the Board of Directors, which reflects GP’s core values, integrity, respect, trust and openness. It provides clear direction on conducting business, interacting with the community, government, business partners and general workplace behavior. It also includes guidance on disclosure of conflict of interest situations, maintaining confidentiality and disclosure of information, good international practices and internal control and the duty to report where there is a breach against the Code. The Code is properly communicated to all the employees including its Board members and others acting on behalf, who are strictly required to abide by it. All of them have certified in writing that they have read and understood the Code.

ii) Restrictions on dealings in GP Shares by InsidersThe Company has established a detailed policy relating to trading in GP shares by Directors, Employees and other Insiders. The securities laws also impose restrictions on similar transactions. All the Insiders are prohibited from trading in the GP shares, while in possession of unpublished price sensitive information in relation to the Company during prescribed restricted trading periods. Directors and Employees are also required to notify their intention to trade in the GP shares prior to initiating the same.

iii) Supplier Conduct PrinciplesThe Supplier Conduct Principles (“SCP”) outline the standards for ethical and business conduct expected from suppliers and contractors in their relationship with the Company. The SCP are binding on the Company’s suppliers through the confirmation and signing of the Agreement on Responsible Business Conduct to ensure high standards of business ethics amongst all suppliers of the Company.

iv) Anti Corruption PolicyGP adopted a zero tolerance policy against corruption and firmly opposes all forms of corruption. GP is making active efforts to ensure that corruption does not occur in its business activities. The policy on anti-corruption applies to the Board members, employees and others with the authority to act on behalf of GP. The policy clearly states that bribes are strictly prohibited and the employees should never offer, give, ask for, accept or receive any form of bribe. Awareness sessions are arranged for internal and external stakeholders on regular basis for better understanding of the policy requirements especially with regards to gifts and events arrangements.

q) Investor Relations (IR)As the largest public listed corporate house in Bangladesh, GP has always placed high importance to the investor community and caters to their various information requirements. With a vision of establishing the most effective two-way communication between the investors and the Company, a dedicated Investor Relations team started its journey from 2010. IR as a specialized function has maintained close contact with both local and international investors, analysts, market experts and financial community on a proactive basis. Through this, the relevant stakeholders were kept informed about the company’s financial results, growth opportunities and strategic ambitions while objectively sharing the associated risk and reward profile. This also reflects GP’s commitment towards developing the Capital Market of the country by introducing global best practices and ensuring transparency and accountability. Notable events that IR conducted during the year were financial publication press conferences, analyst call conferences and IR best practice benchmarking.

r) Shareholders

i) Communications with ShareholdersWe believe good Corporate Governance involves openness and trustful cooperation between all stakeholders involved in the Company, including the owners of the Company–the Shareholders. Information is communicated to the Shareholders regularly through a number of forums and publications. The Company has adopted a detailed policy on information disclosure and communication. In compliance with continuous disclosure requirements, the Company’s policy is that Shareholders will be informed in a routine manner of all major developments that impact the business of the Company and also be able to make informed decisions.

ii) Information DisclosureIn accordance with the disclosure requirements, the Company follows these three main forms of information disclosure:Continuous disclosure – which is its core disclosure and primary method of informing the market and Shareholders;Periodic disclosure – in the form of quarterly and yearly reporting of financial results and other issues; andEvent based disclosure – as and when required, of administrative and corporate developments, usually in the form of stock exchanges & press releases.

All information provided to BSEC and stock exchanges are immediately made available to Shareholders and the market on the Company’s Investor Relations section of the website: www.grameenphone.com

iii) General MeetingThe General Meeting of the Shareholders is the supreme governing body in GP. The Company recognizes the rights of Shareholders and the Shareholders' interests are primarily ensured through GP’s Annual General Meeting (“AGM”). The Board Members and Statutory Auditors attend AGM to respond to the Shareholders’ queries on the result or any other aspect of the Company, if any.

iv) WebsiteAll financial results and key performance indicators as well as other relevant financial and non-financial data are posted on the Investor Relations section of the Company’s website: www.grameenphone.com

v) Shareholders' QueriesWhilst the Company aims to provide sufficient information to Shareholders and Investors about the Company and its activities, it also recognizes that Shareholders may have specific queries relating to their shareholding. These queries may be directed at 01711555888 or mailed to GP Share Office at shareoffice@grameenphone.com.

GP believes in transparency and accountability to the society as a whole through establishment of an efficient and effective Corporate Governance regime. It also believes that Corporate Governance is a journey and not a destination and it needs to be continuously developed, nurtured and adapted to meet the varying needs of a modern business house as well as the justified aspirations of our valued investors, other stakeholders and the society at large.

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Corporate Governance in GP 43

Overview

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Financial AnalysisSustainability

Governance

Internal Control over Financial Reporting (ICFR)Grameenphone (GP), as part of its commitment to transparent and reliable financial reporting, has established adequate Internal Controls Over Financial Reporting. These controls are part of GP’s overall corporate governance structure and are very much embedded in the business processes affecting the financial reporting. GP follows a risk-based approach in designing and implementing the internal controls and monitors the effectiveness of the controls regularly. A formal communication framework is in place for effective functioning of the entire internal control system.

The entire financial reporting structure is subdivided into 19 individual processes. Risks are identified and assessed for each individual process. Risks are assessed on a three-point ordinal scale (High, Medium, Low) and controls are primarily targeted towards mitigating high risks.

A yearly exercise is performed to evaluate the risks and to amend/modify the controls accordingly. Operating effectiveness of controls is monitored throughout the year on test basis. Control monitoring process is established in two different approaches – Self Assessment and Direct Testing. Direct testing is also divided into two phases – Interim Testing and Year end Testing. External tester from local reputed audit firms is engaged in year end testing.

There is a separate team responsible for coordinating the activities related to internal control over financial reporting. The team is adequately resourced and empowered to discharge its responsibilities.

Controls are embedded in the processes by establishing ownership and through regular communication and training across the organization. Commitment at the top of the organization underpins a strong culture of internal control in GP.

Identify& managechanges

Adjust fin.reporting

risk

Controlremediation

Implementor adjustcontrols

ICFR ManagementDeliverables

Scoping

Risk assessment

Risk coverage

Monitoring & testing

YE assessment- filing

Fig: Components of internal control system (COSO Internal Control Framework)

Fig: ICFR routines in Grameenphone

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Internal Control over Financial Reporting (ICFR)44

MONITORING

INFORMATION & COMMUNICATION

CONTROL ACTIVITIES

RISK ASSESSMENT

CONTROL ENVIRONMENT

MONITORING

INFORMATION & COMMUNICATION

CONTROL ACTIVITIES

RISK ASSESSMENT

CONTROL ENVIRONMENT

OPERATIONS

FINANCIAL

COMPLIANCE

OPERATIONS

FINANCIAL

COMPLIANCE

PRO

CESS

- A

PRO

CESS

- B

PRO

CESS

- C

PRO

CESS

- D

PRO

CESS

- A

PRO

CESS

- B

PRO

CESS

- C

PRO

CESS

- D

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Enterprise Risk Management 45

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Financial AnalysisSustainability

Governance

Enterprise Risk Management

The ERM takes an integrated and holistic view of the risks facing the organization. A Risk Management Forum has been established in the Company to ensure active participation from different functional areas to increase its effectiveness.

During the financial year under review, the Company (with assistance of the Risk Management Forum) had conducted a review of its risk management framework and processes to ensure their adequacy and effectiveness. The significant risks in the Company’s business were reviewed, monitored and reported and mitigating measures were evaluated by the Board and Management on a regular basis. This is to ensure that the Company’s risk management framework continues to effectively promote and enable the identification, management and monitoring of risks across the organization.

The Company faces a variety of risks due to the complexity of its business and the dynamic business environment in which it operates. Effective management of risks enhances the Company’s ability to achieve business, financial, customer-centric and social goals and to meet its legal and compliance responsibilities, thereby protecting and enhancing the Shareholders’ value. Grameenphone (GP) is committed to manage those risks that arise in the course of the business to an acceptable level, so as to maximize opportunities and minimize impacts. Recognizing this, GP has put in place an effective Enterprise Risk Management (ERM) framework. ERM in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which involves identifying particular events or circumstances relevant to the Company's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact, determining an action strategy, and also monitoring progress. By identifying and proactively addressing risks and opportunities, GP creates value for its stakeholders including customers, regulators, and the society at large.

The ERM implemented in GP has five follow-up steps from identification of risk up to monitoring and assessment of the events.

Fig: Enterprise Risk Management Process

EventIdentification

RiskAssessment

RiskResponse

ObjectiveSetting

Control&

Monitoring

RiskManagement

Process

Strategy Operational Regulatory Financial

GP Board

GP Management

Compliance

Fig: Enterprise Risk Management Reporting

Md. Mohsen Uddin Owner of a General Store and Manufacturer of fast-food and bakery goods Grameenphone user for 5 years“As a manufacturer of fast-food and bakery goods, I always ensure that all the customers get my products in time. Thanks to Grameenphone’s strong network, I am able to reach my customers easily.”

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Audit Committee Report 47

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Governance

Audit Committee ReportGrameenphone (GP) Board Audit Committee, a sub-committee of the Board, supports the Board in fulfilling its oversight responsibilities.

Composition and MeetingsDr. Jamaluddin Ahmed FCA, ChairmanM Shahjahan, MemberTore Johnsen, Member

The Independent Director, Dr. Jamaluddin Ahmed FCA acts as Chairman and the Company Secretary, Mr. Hossain Sadat acts as Secretary to the Committee, which ensures compliance with the Corporate Governance Guidelines promulgated by the Bangladesh Securities and Exchange Commission (BSEC).

A total of 5 (five) meetings were held during 2014. Mr. Md. Ashraful Hassan (Managing Director, Grameen Telecom) attended the meetings as a special invitee. Permanent invitees to the meetings were the Chief Executive Officer, Chief Financial Officer and Head of Internal Audit. Relevant heads of divisions and other members of the Management also attended the meetings as required.

Major Responsibilities of the Audit CommitteeThe purpose, authority, composition, duties and responsibilities of the Audit Committee are delineated in its Charter. Some of the major responsibilities of the Audit Committee are as follows:Review the annual, half-yearly and quarterly Financial Statements and other financial results, and upon its satisfaction of the review, recommend the same to the Board.Review the adequacy and effectiveness of financial reporting process, internal control system, risk management, auditing matters, and the Company’s processes for monitoring compliance with laws and regulations and the Codes of Conduct.Recommend appointment, termination and determination of audit fees for statutory auditors. Consider the scope of work, and oversee and evaluate the work performed by statutory auditors. Review permitted non-audit services performed by statutory auditors.Exercise its oversight of the work of GP Internal Audit. Review the effectiveness of internal audit function including performance, structure, adequacy of resources, and compliance with professional standards. Examine audit findings and material weaknesses and monitor implementation of audit action plans.

Major Activities of the Audit CommitteeReviewed the quarterly and annual Financial Statements for the year ended December 31, 2014.Considered and made recommendation to the Board on the appointment and remuneration of statutory auditors, Rahman Rahman Huq, Chartered Accounts, a member firm of KPMG for the year 2015.Approved the Internal Audit Plan, monitored progress and effected revisions when necessary.Reviewed related party transactions for foreign remittance.Reviewed compliance of Code of Conduct of the Company.Reviewed Management Letter issued by the external auditors in their presence. Discussed Internal Audit reports and findings and monitored the status of implementation of audit action plans and provided guidance to ensure timely completion of action plans.Reviewed and received report on the matters as per requirement from the Bangladesh Securities and Exchange Commission (BSEC).Reviewed other matters & incidents of significance as per Audit Committee Charter.

Dr. Jamaluddin Ahmed FCAChairmanAudit CommitteeFebruary 08, 2015

FIVE YEARS’ FINANCIAL SUMMARY

*Gain/loss on disposal of property, plant and equipment has been included in operating profit.1 Including proposed dividend2 Based on Tk. 10 equivalent ordinary share outstanding at 31 December.3 Based on weighted average number of share of Tk. 10 each.

2014 2013* 2012* 2011 2010

102,663

36,896

34,855

19,803

96,624

33,199

32,852

14,702

91,920

33,675

30,193

17,505

74,733

20,207

20,913

10,705

Individual Consolidated

Operational Results in million BDT

Financial Position in million BDT

Financial Ratios

Revenue

Operating Profit

Profit before tax

Net Profit after tax

13,503

31,365

130,673

99,308

14,865

61,402

115,808

37,906

13,503

31,141

135,221

104,080

16,993

78,580

118,227

25,500

13,503

35,458

117,665

82,207

14,005

63,060

103,660

19,148

13,503

50,374

109,502

59,129

30,802

42,300

78,700

16,828

Paid-up Capital

Shareholders' equity

Total assets

Total liabilities

Current assets

Current liabilities

Non-current assets

Non-current liabilities

Ordinary Shares Information

0.24

0.95

36%

19%

63%

15%

0.22

0.55

34%

15%

44%

12%

0.22

0.16

37%

19%

47%

15%

0.73

0.10

27%

14%

21%

10%

Current Asset to Current Liability

Debt to Equity

Operating Profit Margin

Net Profit Margin

Return on Equity

Return on Total Assets

1,350

10

160%

109%

23.23

23.15

14.67

1,350

10

140%

129%

23.06

27.46

10.89

1,350

10

140%

108%

26.26

22.23

12.96

1,350

10

120%

151%

37.31

23.16

7.93

89,060

32,572

33,006

18,891

13,503

38,883

108,905

70,022

32,421

51,469

76,484

18,552

0.63

0.13

37%

21%

42%

17%

1,350

10

205%

147%

28.80

30.09

13.99

Ordinary Shares outstanding (in million)

Face Value per share

Cash Dividend on paid up capital 1

Dividend payout 1

NAV per Share 2

Net Operating Cash Flow per Share 3

Earnings Per Share 3

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Five Years’ Financial Summary48

* ARPU - Average Revenue Per User; ** AMPU - Average Minutes Per User

Revenue (Million BDT)

102,6632014

96,6242013

91,9202012

89,0602011

74,7332010

+6.3%

Operating Profit (Million BDT)

36,8962014

33,1992013

33,6752012

32,5722011

20,2072010

+11.1%

NPAT (Million BDT)

19,8032014

14,7022013

17,5052012

18,8912011

10,7052010

+34.7%

Capex (Million BDT)

15,1642014

29,9252013

42,5082012

12,9632011

8,4562010

-49.3%

Total Assets (Million BDT)

130,6732014

135,2212013

117,6652012

108,9052011

109,5022010

-3.4%

Total Equity (Million BDT)

31,3652014

31,1412013

35,4582012

38,8832011

50,3742010

+0.7%

Net Operating Cash Flow/Share (BDT)

23.152014

27.462013

22.232012

30.092011

23.162010

-15.7%

Net Asset Value/Share (BDT)

23.232014

23.062013

26.262012

28.802011

37.312010

+0.7%

Earnings Per Share (BDT)

14.672014

10.892013

12.962012

13.992011

7.932010

+34.7%

Return on Assets %

14.9%2014

11.7%2013

15.5%2012

17.3%2011

9.8%2010

+27.7%

Return on Equity %

63.4%2014

44.2%2013

47.1%2012

42.3%2011

21.3%2010

+43.3%

Subscriber ('000)

51,5042014

47,1102013

40,0212012

36,4932011

29,9702010

+9.3%

Market Share %

43%2014

41%2013

41%2012

43%2011

44%2010

+3.4%

ARPU* (BDT)

1652014

1762013

1912012

2142011

2312010

-6.0%

AMPU** (Minutes)

2432014

2492013

2362012

2582011

2792010

-2.2%

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Five Years’ Financial Summary 49

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Financial AnalysisSustainability

Governance

Value Added Statement 2014

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Value Added Statement 201450

Value Added Revenue Other income including interest income Share of profit of associate, Gain on sale of shares in GPIT Indirect tax Less: Cost of network and services Available for distribution Distributions Employees Government Providers of finance: Financial institutions Shareholders*

Value reinvested and retained Depreciation and amortization Retained profit

in '000 BDT

2014 102,663,372

509,676 125,008

15,078,221 118,376,277 35,153,245

83,223,032

6,455,286 36,738,425

2,569,370 19,803,283

65,566,364

17,656,668 -

17,656,668 83,223,032

100%

7.8%44.1%

3.1%23.8%78.8%

21.2%

21.2%100%

% 2013 96,624,227

454,505 1,055,210

14,511,990 112,645,932 29,829,156

82,816,776

7,062,188 42,786,892

2,927,092 14,701,574

67,477,746

15,339,030

- 15,339,030

82,816,776

100%

8.5%51.7%

3.5%17.8%81.5%

18.5%

18.5%100%

%

GovernmentValue reinvested and retainedFinancial Institutions

ShareholdersEmployees

Distribution of Value Added (2014 & 2013)

* Distribution for 2014 was BDT 21,604,800,352 (including the proposed dividend) out of which BDT 19,803,282,618 was from the wealth created during the current year. The rest of the distribution was from wealth accumulated in earlier years.

2014

44%

21%

3%

24%

8%8%

18%

4%18%

52%

2013

Contribution to National Exchequer

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Contribution to National Exchequer 51

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Financial AnalysisSustainability

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The collective contribution to the National Exchequer from inception up to December 2014 was BDT 413.7 billion (BDT 41,368

crore), of which BDT 58.9 billion (BDT 5,892 crore) was made in 2014 alone. Out of total BDT 413.7 billion (BDT 41,368 crore), BDT

380.4 billion (BDT 38,040 crore) was made on account of direct tax, VAT and duties through National Board of Revenue (NBR)

and Bangladesh Telecommunication Regulatory Commission (BTRC), BDT 33.8 billion (BDT 3,384 crore) on account of renewal

of 2G license and spectrum in 2011-13, purchase of additional spectrum in 2008 and BDT 17.2 billion (BDT 1,725 crore) on

account of 3G license and spectrum fee for 10MHz in 2013 and BDT 33.3 billion (BDT 3,329 crore) as indirect payments on

account of local and foreign staff income taxes and withholding taxes on operating expenditure payments. Grameenphone has

been the largest corporate taxpayer in the country for the last eight years.

Grameenphone has also generated direct and indirect employment for a large number of people over the years. The Company

presently has about 4,700 employees while more than 750,000 people are directly dependent on Grameenphone for their

livelihood, which includes dealers, retailers, electronic reload and scratch card retail outlets, suppliers, vendors, contractors and

other business partners.

With the payment of taxes and the investment in the network, Grameenphone is making a significant contribution to the

country’s development and growth.

Year-wise Contribution to National Exchequeras of December 31, 2014

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Withholding Taxes - 11 18 22 28 36 82 143 256 445 748 1,130 1,185 1,398 2,575 7,107 5,998 5,933 6,173

License & Spectrum 2,590 3,330 13,500 13,207 17,522 6,858

BTRC 10 34 32 75 213 575 712 650 1,168 1,239 2,523 4,766 6,204 3,836 4,308 5,138 6,659 7,461 7,321

NBR - 298 115 268 388 1,035 1,999 3,572 5,350 8,721 12,126 18,509 21,739 20,140 29,134 33,545 36,803 38,159 38,564

Total Payment (Mn) 10 344 165 365 629 1,646 2,792 4,366 6,774 10,405 15,397 24,405 31,718 28,704 36,017 59,289 62,667 69,076 58,915

10 344 165 365 629 1,646 2,792 4,366

6,774

10,405

15,397

24,405

31,718 28,704

36,017

59,289

62,667

69,076

58,915

Figures in BDT million

Umme Aklima Alam Anika Online bakery sensationGrameenphone internet user for the last 3 years

“My online bakery gets almost 20 orders every week. It would be impossible without Grameenphone’s internet.”

DIRECTORS’ REPORT

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Directors’ Report 53

Overview

BusinessPerform

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Information

Financial AnalysisSustainability

Governance

For the Year Ended December 31, 2014

Dear Shareholders,On behalf of the Board of Directors and Management, I welcome you all to the 18th Annual General Meeting (AGM) of

Grameenphone Ltd. (GP). We have the pleasure to place herewith the Directors' Report and the Auditors' Report together with

the Audited Financial Statements of the Company for the year ended December 31, 2014 for your valued consideration, approval

and adoption.

Crossing 50 Million Subscribers and BDT 100 Billion Revenue Landmarks – A year to Remember 2014 has been a year of solid growth for GP where we have kept a very good momentum of our business. GP became the first ever

mobile telecommunication operator to cross the 50 million (5 crore) customers milestone in Bangladesh in September 2014. The

success came after a journey of 17 years, serving the people of Bangladesh with the best telecommunication services. GP has

played a leading role in increasing the country’s tele-penetration rate from less than one percent to over 72% percent as of

December 2014.

Continuation of intensified competition has been the highlight of the year for telecom industry. However, GP had maintained its

strong presence in the competitive market place and was busy driving subscriber acquisition, value for money service offerings

and implementing the “Internet for All” ambition. As a result, GP added 4.4 million customers in 2014, taking the year-end

customer base to 51.50 million.

GP introduced 3G services in September 2013 and has brought all 64 districts under the fast mobile broadband coverage by

March in 2014 as the first ever mobile operator in the country. GP took special initiatives to market affordable 3G-enabled mobile

handsets, encourage the development of various mobile applications and contents and build awareness on Internet to pursue its

ambition “Internet for All”.

GP continued to enhance the value of its’ Shareholders’ investment. The significant growth in subscriber base has made a

positive contribution to the revenue, EBITDA and net results, in line with the expectation of the Shareholders. The Company’s

annual revenue exceeded BDT 100 billion (BDT 10,000 crore) landmark in 2014. With this, GP now happens to be the second

listed company in Dhaka Stock Exchange Ltd. (DSE) to enjoy such yearly revenue.

The journey towards reaching 50 million (5 crore) subscribers and BDT 100 billion (BDT 10,000 crore) revenue landmark was a

long one and had not been easy. Among others, pro-active policies of the government and strong support of our stakeholders

have enabled GP to achieve this success. We are confident that we will continue to receive similar kinds of support in the years to

come and hope that the Government will ensure a level-playing field in the telecommunication sector, allowing for a healthy

competitive environment for the benefit of the subscribers.

GP also wants to deliver long-term value for Shareholders and society. At GP, we value the country's society, her heritage and

culture, and always strive contributing in these through our diverse business initiatives and other various corporate responsibility

discharges all throughout the year.

Bangladesh in 2014 – the Socio-Economic StatusThe year 2014 has seen a steady economic progress in almost all socio-economic fields in terms of consistent GDP growth rate,

lower inflation rate, high foreign exchange reserves, increased per capita income and inflow of remittance, and most importantly

on the harvest yield. Substantial remittance inflows and export activities helped to achieve this consistent economic growth rate.

However, structural weaknesses, energy shortages and tensed political environment continued to persist and afflict the

economic activities.

Successes also confront uphill challenges ahead the most important of which is political instability and uncertainty. Without

continued stability in the political front, fears of policy flux cannot be decelerated. The issue of a stable policy regime is

absolutely necessary for investments in both domestic and foreign level, particularly in case of foreign direct investments (FDIs),

what Bangladesh needs most.

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Directors’ Report54

Telecommunication Industry ScenarioMobile Telecom industry in 2014 had reached a landmark figure of 100 million subscriptions, and ended the year with 120 million,

which took Bangladesh into the global list of top ten countries having highest number of mobile customers. In a fiercely

competitive market, the consumers were the ultimate beneficiaries, as the cost of ownership of a mobile connection became

viable to the majority of the population due to the competition. Reaching a mobile penetration level of 72% is a significant

achievement for the mobile industry, and it is expected that the industry will jointly drive further growth to connect the

unconnected.

Throughout the year, launching of attractive campaigns and promotions by the operators and bundling of the subscriptions with

the handsets, helped consumers to overcome the affordability barrier and get more value from such offerings. Price of

smartphones has come down below the 50 USD mark but still need to be lowered further for mass market adoption.

3G network expansion by all the operators continued with high pace. GP has led the race and managed to bring all 64 districts

under 3G network coverage within the first quarter of 2014. Consumers have responded very positively and there is an increasing

trend in terms of adoption and usage. In 2014, GP network has experienced almost double data traffic relative to previous year.

As per BTRC information almost 44 million people are now using the internet, out of which more than 95% are accessing the net

through their mobile devices. Then again, due to the competitive market pressure the price of data had started to decrease and

operators had to focus more on “value creation” by offering superior service propositions.

International incoming call rate was halved by the order of BTRC, and as a result of that the incoming call minutes were almost

doubled. This was done to curb the illegal international voice termination and bring in more calls through legal channels; it had

a positive impact as the illegal traffic was reduced by almost 80%. Interconnection payment settlement with the interconnection

operators, the ICXs and IGWs, remained to be a major concern and in some cases, operators had to take legal recourse to realize

the pending dues.

Growth in Mobile Financial Services was quite phenomenal in 2014, a daily transaction of BDT 300 crore and 2.1 crore of active

accounts support the fact that there still exist huge unmet demand. Also, mobile operators are playing an enabler role to render

the service, lending their distribution network and telecom services towards their banking partners.

Telecom Regulatory EnvironmentTelecom Regulatory environment continues to remain unpredictable and uncertain in the context of unresolved pending

regulatory issues and lack of government initiatives to improve the regulatory framework. Even though it was promised to resolve

the BDT 30 billion SIM replacement tax claim through a fair investigation process before the 3G auctions, it did not happen, as

the recommendation of the multi-party committee was disregarded. There was no visible progress and initiative to revise the 16

year old Telecom Policy and to amend the Telecom Act in order to improve regulatory certainty and predictability.

Spectrum assignment in absence of a spectrum policy and roadmap had been a major concern for the industry; however there

was no progress in formulating the spectrum roadmap and policy. Also regarding technology neutrality in the 900 MHz and 1800

MHz band, a positive intent was shown during 3G auction; but no initiative was taken in this regard which could actually help to

maximize the use of spectrum. The regulators are planning for a new spectrum auction in 2015 to sell frequency blocks in the

1800 & 2100 MHz bands. Without a level playing field ensuring all operators’ participation , long term roadmap and technology

neutrality, any new auction will produce sub optimal results and loss of economic value for the country.

High taxation in the telecom sector and unpredictability in the taxation regime is considered to be a major barrier for expansion

of the industry. More than 55% of operators’ revenue goes to the government exchequer in various forms of tax, VAT and fees. This

phenomenon, at one hand, limiting the operators’ ability to reduce price and on the other hand, making them extra cautious for

new investments. In the fiscal year 2014-15, a new tax of BDT 100 for replacement SIM was introduced in addition to the existing

SIM tax of BDT 300 for new connection, which all together is hindering mobile penetration in deep rural areas. Any new and

additional tax will further worsen the financial health of the sector, and will have a negative impact on the overall economy due

to the overarching impact of telecommunications.

Industry Outlook and Possible Future Developments It is expected in the coming year that competition in the market will further intensify which will lead to more innovative products

and services. Internet adoption rate will keep on increasing and it is anticipated that the consumers will find more value adding

applications and services which will enrich their personal and professional lives. Operators will be investing more to extend their

3G coverage outside the city areas and will focus on improving the service quality. Bundling of voice and data services will be

more prominent to counter the eroding price point and attract consumers to use more services.

Operators will venture into new partnerships with internet companies and other vertical industries to increase the value of the

communication services. The e-commerce market is flourishing and consumer confidence in mobile financial services is

increasing. These two will have a favorable impact on the trade of digital goods and services. The cooperation across the verticals

will be crucial, both at the policy and at the market level to develop and stimulate the market.

Regulatory issues, especially the long pending unresolved issues will be major concerns from the investors and would make them

conservative while investing. Govt.’s positive support towards the industry by resolving pending issues and addressing the policy

issues would certainly help to regain the confidence of the investors and create an investment friendly regulatory climate.

Capital Market was Vibrant with Both Indices and Turnover GrowthBangladesh Capital Market recovered sharply during the year 2014 with large capitalized stocks in the driving seat. Foreign

capital inflow picked up significantly in the market. However, South Asian peers outperformed Bangladesh during the period. In

Dhaka Stock Exchange (DSE), the broad and free float weighted index DSEX gained 14.03% (598.41 points) against 5.2% gain of

last year and closed at 4,864.96 points. Daily average turnover value rose by 25.0% compared to 2013.

GP share price increased by staggering 80.14%, closing at BDT 361.90 at the year end with a daily average turnover value worth

BDT 196.52 million (BDT 19.65 crore). GP stock experienced the highest value at BDT 409 and the lowest at BDT 198 during the

year. GP’s market capitalization on 30 December 2014 stood at BDT 488.67 billion (BDT 48,867 crore) on the DSE, representing

18.07% of the total equity market capitalization

Innovative Products & Services For GP, 2013 was a big milestone when we acquired the license & commercially launched the 3G service as the first operator in

Bangladesh. From the beginning of 2014, GP put all-out effort to make 3G accessible & affordable for all. We were the first

operator to expand coverage in all 64 districts within first quarter of 2014.

Another ambition for 2014 and the years to come is “Internet for All”. In addition to the widest coverage with good Internet speed

experience, throughout the year, we have delivered affordable packages with higher speed for our customers. In the middle of

the year, we have launched “1 Taka Internet” to provide better experience to new internet users. We also offered double speed

Internet to boost customer experience. To give customers the reason to use internet and promote internet for all, free Facebook

was offered for all the customers.

Along with offering superior experience, GP also followed up keenly on offering the right price to boost up the value for money,

which has improved significantly. By offering simplified voice tariff plans like Nishchinto and Bondhu, 1 Taka Welcome tune pack,

1 Taka Video and 1 Taka Internet pack have helped the customers to try out different services at lowest possible prices. Also,

several daily and weekly voice bundles and combo bundles were introduced to give customers more value at an affordable price.

At the end of the year, we have touched 5 crore customer landmark, which we celebrated with 5 paisa per 10 seconds offer to any

GP number. We followed up that celebration with further enhancing our unique service emergency balance by increasing the

balance up to BDT 100 and offering reimbursement on call drop minutes. We have ended the year with customized offer portal

for each and every customer by introducing 12113, which is first in the market. This will help the customers avail the attractive

offers in a very easy manner.

“Nirvoy” is the life insurance service of GP. “Nirvoy” was launched in June 2013 and rewards GP subscribers with free life insurance

based on the amount of airtime used each month. The product is underwritten by Pragati Life Insurance and powered by

MicroEnsure Bangladesh. GP has 3.85 million “Nirvoy” subscribers as of December 2014. During the period, 121 life insurance

claims have been settled and paid out over BDT 4.57 million to beneficiaries around the country.

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Continued Focus on Customer ServiceWe lead because our customers trust us with the products and services we offer. Our success is measured on how passionately our customers promote us. We have the ambition to be the most customer centric mobile telecommunications operator in Bangladesh by 2016. To achieve this goal, we will put customers first, in every activity, interaction and decision making. In this endeavor, the year 2014 was one step ahead. In our effort to bring comfort to our customers’ lives, a 2,215-member Customer Service team ran 24/7, 365 days a year! A total of over 120 million customers were served throughout 2014 from Customer Service (over phone) touch points.

Our Adjacent Business

i) “MobiCash” Financial ServicesGP made Mobile Financial Service (MFS) as one of its strategic pillar to contribute in “financial inclusion” agenda ofBangladesh Bank through its unique “MobiCash” enabling business model supporting major banks and service providers. The cornerstone of GP’s strategy was to launch its own nationwide network of 61,000 “MobiCash” Agent/Cash-points to provide 6 partner banks with a completely managed solution for delivering cash-in, cash-out, disbursements of salaries etc. GP is alsoproviding utility bill payment and ticketing services ensuring ultimate convenience for our valued customers. The exceptional consecutive 137% quarter-on-quarter volume growth from Q2’13 to Q3’14 demonstrates market demand and GP’s ability tocreate significant values for its partners and customers. GP strongly believes that, with regulatory support and through awinning collaboration with partner Banks, we can play a key role in converting cash based economy into digital economy.

ii) Infrastructure ServicesGP has continued its contribution towards the development of a more cost optimized telecom operation and has madeoptimum use of national resources, by sharing infrastructure, transmission capacity and OPEX with the telecom operators aswell as other businesses, such as WiMAX operators, ISPs, etc. By the end of 2014, we have shared more than 2,950 sites withtelecom operators and entered into agreements with 13 new customers. Besides, various initiatives were taken to increase our customer satisfaction.

Network to Cater Increasing Internet Traffic Ensuring Strong Customer Centricity & EfficiencyIn 2014, GP fulfilled its commitment to deliver 3G Network in all 64 district cities by end of March. 2,143 3G sites have been rolled out in just 6 months after securing 3G license. As a result, GP was the first operator to be refunded back BDT 150 crore by BTRC, which was earlier deposited with them as ‘Performance Bank Guarantee’.

After delivering first phase of 3G sites, GP further invested in additional 599 3G sites which bring the total number of 3G sites to 2,742 at the end of the year. Besides 3G sites, 387 new 2G BTSs have been rolled out to cater increasing demand particularly in internet service. The internet traffic tripled (212.4%) in organic growth from 2013 to 2014. Huge growth in 3G data consumption is observed in the 3G deployed areas. There has been a steady growth in 2G data volume also. In 2014, a total of BDT 1,516 crore investment has been made in network expansion and up-gradation.

In 2014, GP deployed SQMS (Service Quality Management System) with the intention to have more customer centric approach in network services. Resolution of customer complaints with better efficiency and faster resolution has been the prime target. Monitoring has been established on major service performance indicators at individual subscriber level. GP is now more prepared to provide better service quality on top of its superior network.

Going Beyond with Passionate and Engaged EmployeesGP has a strong team of 2,972 permanent employees with passion and high level of engagement. Our success depends upon the performance, behavior and commitment of our employees. Our people are key drivers of our business. We focused on building their individual and leadership capabilities and aimed to empower them to be the best they can be. Employee engagement index increased by 7 percentage points , which is the highest increase in Telenor group in 2014 for two consecutive years. GP was also ranked as the number 1 “Employer of choice” within Bangladesh’s Telecom Industry in various independent surveys in 2014. With a view to becoming a world-class organization, we have continued to invest in building the right culture around our values, performance, leadership and engagement.

+212%

20142013

Daily (avg.) Data Volume Consumption

Corporate Responsibility (CR) – Touching Lives in the SocietiesAs a responsible corporate citizen, GP acknowledges its’ role in contributing to the development of communities in which it operates. Investing in social projects has been an integral part of GP’s corporate culture and business philosophy.

As a result, GP exists just not to serve customers with products or services of value, but also to bring about a positive response to social issues that affect Bangladesh’s upward mobility. In 2014, we were involved with multiple initiatives that brought about positive results in the health and education standards of the underprivileged community. Detailed information on the initiatives of the Company towards CR activities is provided in the Corporate Responsibility section of the Annual Report.

Climate Change – Optimizing Our Green FootprintGP launched the Climate Change Program in 2008. The singular objective of this task was to regularly assess and find ways to minimize our operations’ impact on the environment. It is an ongoing program that focuses on five areas- reduction of carbon emission, creation of employee awareness, adoption of green practices, creation of a green momentum in society and provision of green services to our customers. As recognition to these efforts, GP achieved the prestigious global GSMA Green Mobile Award 2014. Details about this strategy and information on some other climate change initiatives of the Company are provided in the Climate Change section of the Annual Report.

Health, Safety, Security and Environment (HSSE)As a responsible company, GP continuously strives to ensure international standards of occupational health, safety, security and environment in line with Telenor principles and laws of the land to enable a safe working environment that yields productivity & efficiency, and maintains a compliant working environment for the employees and business partners directly working with GP. As part of continual improvement, in 2014, emphasis was given to revamping HSSE management system with refreshing HSSE culture among the employees. Several employee training and awareness sessions were organized addressing Road Safety, Ergonomics, Employee fitness and Healthy Living in 2014.

Directors’ Responsibilities for Financial StatementsThe Board is responsible to present a fair, balanced and understandable assessment of the Company’s position and prospect as part of good corporate governance and to that end the directors confirm to the best of their knowledge that-

a. the Financial Statements, prepared by the Management of the Company, present fairly its state of affairs, the result of itsoperations, cash flows and changes in equity;

b. proper books of account of the Company have been maintained;

c. appropriate accounting policies have been consistently applied in preparation of the Financial Statements and that theaccounting estimates are based on reasonable and prudent judgements;

d. International Financial Reporting Standards (IFRSs), as applicable in Bangladesh, have been followed in preparation of theFinancial Statements and any departure therefrom has been adequately disclosed;

e. the system of internal control is sound in design and has been effectively implemented and monitored;

f. there is no doubt upon the Company’s ability to continue as a going concern.

Corporate GovernanceGood corporate governance contributes to the long-term success of a company, creating trust and engagement between the company and its stakeholders. The Board of Directors and the Management Team are strongly committed in achieving and upholding effective Corporate Governance & ethical business conduct, promoting transparency & accountability.

The Company has complied with the conditions as stipulated in the Corporate Governance Guidelines issued on 07 August, 2012 by the Bangladesh Securities and Exchange Commission (BSEC). In this connection, status of compliance has been annexed to this report as Annexure-I. A certificate from M/s Al-Muqtadir Associates, Chartered Secretaries confirming compliance of conditions of Corporate Governance as stipulated under condition 7(i) is also annexed to this report as Annexure-IV.

Other Disclosure/Statements Pursuant to the Provisions of the BSEC’s Corporate Governance Guidelines 2012

• Segment/Product Wise PerformanceBusiness activities of GP are not organized on the basis of differences in products and services or variations in geographical areas of operations. GP essentially provides similar products and services to customers across the country. GP, however, reviews revenue performance of different services, which have been disclosed under notes to the Financial Statements.

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75,006

9,991 7,946

96,624

2013

76,582

10,640 11,243

102,663

2014

+6.3%

+41.5%+6.5%

+2.1%

Voice traffic Interconnection

Customer Equipment Other Mobile

Data and VAS

Total Revenue (In million BDT)

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Total revenue for 2014 was BDT 102.7 billion (BDT 10,266 crore) having a solid growth of 6.3% compared to the previous year. The growth in revenue was contributed by data & VAS, voice, device sales and adjacent business i.e. infrastructure services and financial services.

Voice traffic revenue increased by 2.1% for the year 2014 from 2013, mainly driven by the subscription growth. However, revenue growth for GP as well as the mobile industry was impacted by the regulatory directives regarding 50% reduction in international call termination rate.

Solid growth in data services revenue, mainly driven by 3G, growing internet users and low tariff based internet mini-packs followed by the heavy browsing packages in 2014. Total data & VAS revenue has increased by 41.5% from 2013 with data revenue increased by 61.2%. However, growth in SMS, MMS & content revenue was 27.2%.

Interconnection revenue is generated from the incoming traffic through the calls generated from outside GP network. Despite reduction in international call termination rate, interconnection revenue increased by 6.5% as a result of increase in incoming interconnection traffic both from international and national operators.

Other mobile revenue includes revenue mainly from telecom infrastructure sharing, mobile financial services, commission income, broadband internet revenue etc.

Revenue from customer equipment mainly includes sale of mobile devices, i.e. handsets and branded internet modems.

• Review on Cost of Goods Sold, Gross Profit Margin and Net Profit MarginOperating expenses consist of material cost, personnel expense, network operation and maintenance, selling & distribution cost, dealers’ commission & marketing expense, revenue sharing & frequency charges to regulator and depreciation & amortization. Increase in operating expense is mainly due to higher depreciation & amortization, increase in network operation & maintenance, higher mobile device sales and higher revenue sharing, partly offset by lower consultancy and subscriber acquisition cost.

As a combined effect of the revenue growth and higher operating expenses, operating profit for the year 2014 increased by 11.1% from 2013. However, profit before tax of 2014 has increased by 6.1% due to lower foreign exchange gain and gain on sale of GPIT in 2013.

Net profit margin for the year 2014 was 19.3% compared to 15.2% of 2013. Net profit after tax increased by 34.7% due to lower income tax expense resulted from one-off tax adjustment for increased corporate tax rate from 35% to 40% in 2013. As a result, Earnings Per Share (EPS) for the year 2014 stood at BDT 14.67 compared to BDT 10.89 of 2013.

All transactions with related parties have been made on a commercial basis. Details of related parties and related party transactions have been disclosed in note 37 to the Financial Statements as per requirements of relevant IFRS.

The GP Initial Public Offering (IPO) was made in 2009 and the fund raised thereby has already been utilized by 30 June, 2010 as reported to the regulators. No further equity instrument has been issued since then.

The financial results of the Company have continued to improve since the IPO in 2009 as reflected in the yearly Financial Statements.

NPAT (Mn BDT)NPAT Margin

14,702

2013

15.2%

19,861

2014

19.3%

Operating Profit (Mn BDT)Operating Profit Margin

33,199

2013

34.4%

36,896

2014

35.9%

As per IAS 1 Presentation of Financial Statements, no items of income and expense are presented as ‘extraordinary gain or loss’

in the Financial Statements. Accordingly, no gain or loss has been presented as ‘extraordinary gain or loss’ in the Financial

Statements.

No significant variations have occurred between quarterly and final financial performances of the Company during 2014.

No remuneration was paid to the Directors apart from their Board meeting attendance fees. During the year, the Company has

paid a total amount of BDT 312,645 as Board meeting attendance fees. However, payments to Foreign Directors, not remitted

as yet, have been provided for in the accounts of the relevant year.

Financial performance of this year has improved compared to last year’s performance due to reasons explained in other parts

of this report.

The key operating and financial data for the last five years has been disclosed in the Annual Report on page 48.

GP has declared interim dividend and recommended final dividend for the year 2014.

During 2014, a total of 10 (Ten) Board meetings were held, which met the regulatory requirements in this respect. The

attendance records of the Directors are shown in Annexure-II to this report.

Shareholding patterns of the Company as on December 31, 2014 are shown in Annexure-III to this report.

Annual Results and Allocations

The Directors take pleasure in reporting the financial results of the Company for the year ended 31 December 2014 and

recommended the appropriation as mentioned in the “Appropriation of Profit” table below:

Growth in Contribution to the National ExchequerBeing one of the largest contributors to the national exchequer for the last several consecutive years, the collective contribution

of GP from inception up to December 2014 was BDT 413.7 billion (BDT 41,368 crore). During 2014 alone, the Company contributed

BDT 58.9 billion (BDT 5,892 crore) to the national exchequer compared to BDT 69.1 billion (BDT 6,908 crore) of 2013, which

represents about 57% of GP’s total revenue of 2014. In 2014, GP’s contribution to national exchequer included BDT 6.9 billion

(BDT 686 crore) as final installment of 3G license acquisition and spectrum fees. It is also notable that GP has paid BDT 18.7

billion (BDT 1,871 crore) in corporate taxes during 2014, which was BDT 4.7 billion (BDT 468 crore) higher compared to 2013.

DividendFor the year ended December 31, 2014, the Board of Directors of the Company has paid an Interim Cash Dividend @ 95% of the

paid-up capital amounting to BDT 12,827,850,209 which was BDT 9.5 per share of BDT 10.00 each. Now, the Directors are

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Profit Available for Appropriation*

Profit/(Loss) after tax

Add: Un-appropriated profit brought forward from previous(including general reserve)

Total amount available for appropriation

Appropriation

Final Dividend Paid for Previous Year

Interim Dividend Paid for Current Year

Closing Retained Earnings at year end (before proposed Final Dividend)

Proposed Final Dividend for the year 2014 (65% cash) (In 2013: 50% cash)

Retained Earnings after Proposed Dividend

*Based on separate Financial Statements of Grameenphone Ltd.

19,697,026

9,327,317

29,024,343

6,751,500

12,827,850

9,444,993

8,776,950

668,043

14,247,875

13,983,642

28,231,517

6,751,500

12,152,700

9,327,317

6,751,500

2,575,817

Figures in ‘000 BDT

2014 2013

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pleased to recommend a Final Cash Dividend @ 65% of the paid-up capital amounting to BDT 8,776,950,143 which is BDT 6.5 per share of BDT 10.00 each for the year 2014 out of the divisible profits of the Company for consideration and approval of the Shareholders for distribution. Inclusive of the Interim Dividend of 95% paid already, this would make a cumulative total dividend @ 160% of the paid-up capital amounting to BDT 21,604,800,352 which was BDT 16 per share for the year 2014.

The above recommendation of dividend is as per the Board approved dividend policy, which is ‘Minimum 50% of the Net Profit After Tax to be allocated for dividend payment depending on the financial health and capital requirement of the Company with an aim to have a relatively steady growth in per share dividend’.

Board of DirectorsThe composition of the Board of Directors who held office during the year was as below:

1. Mr. Sigve Brekke, Telenor Mobile Communications AS, Director & Chairman

2. Mr. Hans Martin Hoegh Henrichsen, Telenor Mobile Communications AS, Director [appointed on January 22, 2014]

3. Mr. Hakon Bruaset Kjol, Telenor Mobile Communications AS, Director

4. Mr. Pal Wien Espen, Telenor Mobile Communications AS, Director

5. Mr. Tore Johnsen, Telenor Mobile Communications AS, Director

6. Mr. M Shahjahan, Grameen Telecom, Director

7. Mr. Md. Ashraful Hassan, Grameen Telecom, Director

8. Ms. Parveen Mahmud, Grameen Telecom, Director

9. Dr. Jamaluddin Ahmed FCA, Independent Director

10. Ms. Rokia Afzal Rahman, Independent Director

Directors’ Appointment & Re-AppointmentWith regard to the appointment, retirement and re-appointment of Directors, the Company is governed by its Articles of Association, the Companies Act. 1994 and other related legislations. Accordingly, the following Directors of the Board will retire at this Annual General Meeting. They are, however, eligible for re-appointment:

1. Mr. Hakon Bruaset Kjol

2. Mr. Tore Johnsen

3. Mr. Md. Ashraful Hassan

4. Ms. Parveen Mahmud

Brief profiles of the Directors being proposed for re-appointment are given on page 25 of the Annual Report, which fulfill condition 1.5 (xxii) of the Corporate Governance Guidelines of BSEC.

Appointment of Chief Executive OfficerThe Board of Directors has appointed Mr. Rajeev Sethi as the Chief Executive Officer (CEO) with effect from December 01, 2014 in place of Mr. Vivek Sood, who served the Company for almost two years. At this occasion, the Board of Directors would like to thank Mr. Vivek Sood for his dedication to GP. Under his leadership, the Company had continued its growing performance and secured 3G license. The Board also congratulates Mr. Rajeev Sethi and wishes him success in further developing GP’s position as the leading mobile operator in Bangladesh.

Appointment of AuditorsAs per the Companies Act 1994 and the Articles of Association of GP, the statutory auditors of the Company, ACNABIN, Chartered Accountants, shall retire at this AGM. As per BSEC Order No. SEC/CMRRCD/2009-193/104/Admin dated 27 July, 2011, an audit firm cannot be engaged for more than three consecutive years as statutory auditors of the same company. ACNABIN has been the statutory auditors of the Company since 2012. In compliance with the BSEC order, we are required to appoint new statutory auditors for the Company. Rahman Rahman Huq, Chartered Accountants has offered their willingness to be appointed as statutory auditors of GP. The Board recommends their appointment for the year 2015 and continuation till the next AGM at a fee of BDT 2 million (Taka two million only) plus VAT.

Expectations in 2015GP has an ambition to provide 'Internet for all', meaning we recognize the increased demand for data driven services throughout

Bangladesh. We have an extensive strategy to reach this ambition where awareness, affordable devices and attractive contents are

the three key aspects. Achieving the 50 million (5 crore) customers is a big milestone for us. Now, in the era of data communication,

we will focus on achieving 50 million (5 crore) internet users in next five years, in line with our ambition of “Internet for All”.

The shift in subscriber usage from voice to data services has been a gradual one. Historically, voice and SMS have been the

predominant revenue streams for the telecom providers. But innovation has changed the customers’ need patterns and the

market slowly steps into voice to data transition. We see continued growth in mobile data as more and more smart devices with

the capability to access the Internet wirelessly, enter the market.

Our focus in 2015 will be to drive the take-up of services for our customers. We will also continue to expand our content line-up

across all platforms, so that our customers can further experience the benefits and value for money products and innovative

services. We will also strive to maintain our leading position in network quality and ensure better customer experience. We

believe that 2015 will be a prospective year for us and we have all the elements in place to see us through the year and beyond.

AppreciationsThe year-end performance of GP in 2014, even with so many challenges confronted, demonstrates the resolves and

determination of the Board, Management and overall the people in the Company. The outstanding achievement of the year

is more than a tribute to the 50 million (5 crore) subscribers of the Company upfront, with numerous stakeholders backstage.

In this context, the Board also recognizes that its’ journey to attainments during the year was possible because of the

cooperation, positive support, and guidance that it had received from the Government of Bangladesh, the Ministry

of Posts and Telecommunications (MoPT), Bangladesh Telecommunication Regulatory Commission (BTRC),

Bangladesh Railway (BR), Bangladesh Bank (BB), Board of Investment (BOI), Registrar of Joint Stock Companies & Firms

(RJSC), Chief Controller of Export & Import, Bangladesh Securities and Exchange Commission (BSEC), Dhaka Stock Exchange

Ltd. (DSE), Chittagong Stock Exchange Ltd. (CSE), Central Depository Bangladesh Limited (CDBL), GP’s Bankers, insurers and

financial institutions, vendors and other business partners during the year under report. Accordingly, the Board records its

profound gratitude to all of them. The Board would also thank each and every customer for their continued trust and support

to the Company and making GP brands as their preferred choices.

We would also like to thank all of our people for their relentless contribution along the way in taking GP to greater heights. It is

their hard work, commitment and leadership that enabled us to mark our stronger presence in the Telecommunication arena. The

Board trusts that such towering attachment to the Company by its people would continue in the days ahead.

For and on behalf of the Board of Directors of Grameenphone Ltd.

Sigve Brekke Chairman

February 08, 2015

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Annexure-IStatus of compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission’s Notification No

SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August, 2012 issued under section 2CC of the Securities and Exchange

Ordinance, 1969 is presented below:

(Report under condition no. 7.00)

NotComplied

Board of Directors (BoD)

Independent Directors

Independent Director means a director:

1.

1.1

1.2

1.2 (ii)

- do -

ConditionNo.

Remarks (If any)Title

Compliance Status(“ ” has been put in

the appropriate column)

Complied

Board’s Size(number of Board members – minimum 5 and Maximum 20)

There are 10 (Ten) members in the Company Board

The appointments are duly approved

There is a written Code of Conduct and all

Board members and employees are obliged

to comply with.

No vacancyoccurred

1.2 (i) At least one fifth (1/5) of the total number of Directors shall be Independent Directors

There are 2 (Two) Independent Directors

(ID) out of total 10 (Ten) Directors

The IDs have submitted

declarations about their compliances

1.2 (ii) (a) who either does not hold any share in the company or holds less than one percent (1%) shares of the total paid-up shares of the company

1.2 (ii) (b) who is not a sponsor of the company and is not connected with the company’s any sponsor or director or shareholder who holds one percent (1%) or more shares of the total paid-up shares of the company on the basis of family relationship. His/her family members also should not hold above mentioned shares in the company

- do -1.2 (ii) (c) who does not have any other relationship, whether pecuniary or

otherwise, with the company or its subsidiary/associated companies

- do -1.2 (ii) (f) who is not a partner or executive or was not a partner or an

executive during the preceding 3 (three) years of the company’s statutory audit firm

- do -1.2 (ii) (d) who is not a member, director or officer of any stock exchange

- do -1.2 (ii) (e) who is not a shareholder, director or officer of any member of

stock exchange or an intermediary of the capital market

- do -1.2 (ii) (g) who shall not be an independent director in more than 3 (three)

listed companies

- do -1.2 (ii) (h) who has not been convicted by a court of competent jurisdiction

as a defaulter in payment of any loan to a bank or a Non-Bank Financial Institution (NBFI)

- do -

None

1.2 (ii) (i) who has not been convicted for a criminal offence involving moral turpitude

1.2 (v) The Board shall lay down a code of conduct of all Board members and annual compliance of the code to be recorded

1.2 (iii) Independent Director(s) shall be appointed by BoD and approved by the shareholders in the Annual General Meeting (AGM)

1.2 (iv) The post of independent director(s) cannot remain vacant for more than 90 (ninety) days

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NotComplied

The Directors’ Report shall include the following additional statements:1.5

ConditionNo.

Remarks (If any)Title

Compliance Status(“ ” has been put in

the appropriate column)

Complied

The IDs are in their regular term of

office

1.3 (i) Independent Director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial, regulatory and corporate laws and can make meaningful contribution to business

1.2 (vi) The tenure of office of an independent director shall be for a period of 3 (three) years, which may be extended for 1 (one) term only

The qualification and background of

IDs justify their abilities as such

1.4 The Chairman of the Board and the Chief Executive Officer (CEO) shall be different individuals. The Chairman shall be elected from among the directors. The Board of Directors shall clearly define respective roles and responsibilities of the Chairman and the CEO

The Chairman and CEO are different individuals with clearly defined

roles and responsibilities.

Included in the Directors’ Report

1.5 (i) Industry outlook and possible future developments in the industry

- do -

1.3 (ii) Independent Director should be a Business Leader/Corporate leader/Bureaucrat/University Teacher with Economics or Business Studies or Law background/Professionals like Chartered Accountants, Cost & Management Accountants, Chartered Secretaries. The independent director must have at least 12 (twelve) years of corporate management/professional experiences

- do -1.5 (ii) Segment-wise or product-wise performance

- do -1.5 (iii) Risks and concerns

- do -1.5 (iv) A discussion on Cost of Goods sold, Gross Profit and Net Profit

Margin

- do -1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss

- do -1.5 (x) Remuneration to directors including independent directors

- do -1.5 (xii) Proper books of account have been maintained

- do -1.5 (xiii) Adaptation of appropriate accounting policies & estimates

- do -1.5 (vi) Basis for related party transactions - a statement of all related

party transactions should be disclosed in the annual report

- do -1.5 (vii) Utilization of proceeds from public issues, rights issues and/or

through any other instruments

1.3 (iii) In special cases the above qualifications may be relaxed subject to prior approval of Commission

1.5 (ix) If significant variance occurs between Quarterly Financial performance and Annual Financial Statements & Management explanation thereof

None

- do -1.5 (viii) An explanation if the financial results deteriorate after the

company goes for Initial Public Offering (IPO) None

- do -None

- do -

- do -

1.5 (xi) The financial statements present fairly its state of affairs, the result of its operations, cash flows and changes in equity

1.5 (xiv) IAS/BAS/IFRS/BFRS, as applicable in Bangladesh, have been followed and adequate disclosure for any departure

- do -1.5 (xv) The system of internal control is sound in design and has been

effectively implemented and monitored

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Included in the Directors’ Report

1.5 (xxi) (b) Directors, Chief Executive Officer (CEO), Company Secretary (CS), Chief Financial Officer (CFO), Head of Internal Audit (HIA) and their spouses and minor children

One member of the Audit Committee is

Independent Director

3.1 (ii) The BoD shall appoint members of the Audit Committee who shall be directors of the company and shall include at least 1 (one) Independent Director

Given on Page 25 of the Annual Report

1.5 (xxii) (a) a brief resume of the director

3 (ii) The Audit Committee shall assist the BoD in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business

The Audit Committee

discharges as per given guidelines

3 (iii) The Audit Committee shall be responsible to the BoD. The duties of the Audit Committee shall be clearly set forth in writing

The duties of the Audit Committee

are clearly defined in the Audit

Committee Charter dully approved by

the Board.

NotComplied

ConditionNo.

Remarks (If any)Title

Compliance Status(“ ” has been put in

the appropriate column)

Complied

The CFO, HIA and CS are different

individuals and their roles and

responsibilities are separately defined

Given on Page 48 of the Annual Report

Pattern of shareholding and name wise details (disclosing aggregate number of shares):1.5 (xxi)

In case of the appointment/re-appointment of a director, disclose:1.5 (xxii)

Audit Committee3

- do -1.5 (xxii) (b) nature of his/her expertise in specific functional areas

- do -

1.5 (xxi) (a) Parent/Subsidiary/Associated Companies and other related parties

- do -1.5 (xxi) (c) Executives

2.1 Appointment of CFO, HIA and CS and defining their respective roles, responsibilities & duties

2.2 The CFO and the CS shall attend the meetings of the Board of Directors

- do -1.5 (xvi) Going Concern (ability to continue as a going concern)

1.5 (xix) Reason for non declaration of Dividend

- do -1.5 (xvii) Highlight and explain significant deviations from the last year’s

operating results

- do -1.5 (xxi) (d) Shareholders holding ten percent (10%) or more voting interest in

the company

1.5 (xviii) Key operating and financial data of at least preceding 5 (five) years shall be summarized

Included in the Directors’ Report

Does not arise

1.5 (xx) The number of Board meetings held during the year and attendance by each director

Given on Page 28 of the Annual Report

The CFO and CS participate in all Board meetings

3 (i) The company shall have an Audit Committee as a sub-committee of the BoD

Audit Committee is established as per

BSEC guidelines

3.1 (i) The Audit Committee shall be composed of at least 3 (three) members

Audit Committee comprises of 3

members

1.5 (xxii) (c) names of companies in which the person also holds the directorship and the membership of committees of the Board

None

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Directors’ Report 65

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

No vacancyoccurred

3.1 (iv) Expiration of the term of service of Audit Committee members making the number lower than 3 (three) and fill up the vacancy (ies) by the Board not later than 1 (one) month from the date of vacancy(ies)

- do -3.3 (v) Review the annual financial statements before submission to the

Board for approval

- do -3.3 (viii) Review statement of significant related party transactions

submitted by the management

3.4.1 (ii) (b) Reporting to BoD on any fraud or irregularity or material defect in the internal control system

- do -3.3 (ix) Review Management Letters/Letter of Internal Control weakness

issued by statutory auditors

- do -3.3 (vi) Review the quarterly and half yearly financial statements before

submission to the Board for approval

None

None

None

Was present in the AGM held in 2014

3.2 (ii) Chairman of the audit committee shall remain present in the AGM

The Audit Committee Charter clearly defines the

role of the Audit Committee as per BSEC’s guidelines

3.3 (i) Oversee the financial reporting process

No IPO was made in the year 2014

3.3 (x) Disclosure to the Audit Committee about the uses/applications of IPO funds by major category (capital expenditure, sales and marketing expenses, working capital, etc), on a quarterly basis, as a part of their quarterly declaration of financial results. Further, on an annual basis, shall prepare a statement of funds utilized for the purposes other than those stated in the prospectus

NotComplied

ConditionNo.

Remarks (If any)Title

Compliance Status(“ ” has been put in

the appropriate column)

Complied

Role of Audit Committee3.3

- do -3.3 (ii) Monitor choice of accounting policies and principles

3.4.1 (i) Reporting to BoD on the activities of the Audit Committee

None3.4.1 (ii) (a) Reporting to BoD on conflicts of interests

None3.4.1 (ii) (c) Reporting to BoD on suspected infringement of laws

None3.4.1 (ii) (d) Reporting to BoD on any other matter

- do -3.3 (vii) Review the adequacy of internal audit function

- do -3.3 (iii) Monitor Internal Control Risk management process

- do -3.3 (iv) Oversee hiring and performance of external auditors

The profiles of the members

demonstrate their capabilities as such

3.1 (iii) All members of the audit committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management experience

3.1 (v) The Company Secretary shall act as the secretary of the Audit Committee

3.1 (vi) The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) independent director

3.2 (i) The BoD shall select the Chairman of the Audit Committee, who shall be an Independent Director

AnnualReport

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Directors’ Report66

The CEO and CFO have duly certified

to the Board

6 (i) (a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading

As declared by Auditors

4.00 (i) Non-engagement in appraisal or valuation services or fairness opinions

GP does not have any subsidiary company as on reporting date

5 (i) Provisions relating to the composition of the BoD of the holding company shall be made applicable to the composition of the BoD of the subsidiary company

- do -4.00 (ii) Non-engagement in designing and implementation of Financial

Information System

- do -4.00 (iii) Non-engagement in Book Keeping or other services related to

the accounting records or financial statements

Notapplicable

5 (ii) At least 1 (one) Independent Director on the BoD of the holding company shall be a director on the BoD of the subsidiary company.

Notapplicable

None

Activities of the Audit Committee are reported on page 46 of the Annual report

3.5 Reporting to the Shareholders of Audit Committee activities, which shall be signed by the Chairman and disclosed in the Annual Report

NotComplied

ConditionNo.

Remarks (If any)Title

Compliance Status(“ ” has been put in

the appropriate column)

Complied

External / Statutory Auditors4.00

Subsidiary Company5

The CEO and CFO shall certify to the Board that they have reviewed financialstatements for the year and that to the best of their knowledge and belief:

6

- do -4.00 (vii) Non-engagement in any other services that the Audit Committee

determines

- do -4.00 (viii) No partner or employees of the external audit firms shall possess

any share of the company during the tenure of their assignment

- do -4.00 (ix) Non-engagement in audit/certification services on compliance of

corporate governance as required under clause (i) of condition no. 7

- do -4.00 (iv) Non-engagement in Broker-Dealer services

- do -4.00 (v) Non-engagement in Actuarial services

- do -4.00 (vi) Non-engagement in Internal Audit services

3.4.2 Reporting to BSEC (if any material impact on the financial condition & results of operation, unreasonably ignored by the management)

- do -

5 (iii) The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company

Notapplicable

- do -

5 (iv) The minutes of the respective Board meeting of the holding company shall state that they have reviewed the affairs of the subsidiary company also

Notapplicable

- do -

5 (v) The Audit Committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company

Notapplicable

- do -

Annexure-IIBoard Meeting and attendance during the year ended December 31, 2014

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Directors’ Report 67

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

- do -

- do -

Given on page 69 of the Annual

Report

7 (i) Obtaining certificate from a practicing Professional Accountant/Secretary regarding compliance of conditions of Corporate Governance Guidelines of the BSEC and include in the Annual Report

6 (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 violation of the company’s code of conduct

Detailed status of compliance given in

the Compliance Schedule as

published in the Directors' Report

7 (ii) Directors statement in the directors' report whether the company has complied with these conditions

NotComplied

ConditionNo.

Remarks (If any)Title

Compliance Status(“ ” has been put in

the appropriate column)

Complied

6 (i) (b) these statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws

Name of Directors RemarksNumber of meetingsheld whilst a Board member

Meetingsattended

Mr. Sigve Brekke

Mr. Hans Martin Hoegh Henrichsen

Mr. Tore Johnsen

Mr. Hakon Bruaset Kjol

Mr. Pal Wien Espen

Mr. M Shahjahan

Mr. Md. Ashraful Hassan

Ms. Parveen Mahmud

Dr. Jamaluddin Ahmed FCA

Ms. Rokia Afzal Rahman

Mr. Per Erik Hylland

10

9

10

10

10

10

10

10

10

10

1

9

9

8

8

8

9

10

9

6

5

1

(Appointed on 22 January 2014)

(Nomination withdrawn on 22 January 2014)

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Directors’ Report68

Annexure-IIIThe Pattern of Shareholding as on December 31, 2014

i) Parent/Subsidiary/Associate Companies

ii) Directors, Chief Executive Officer, Chief Financial Officer, Company Secretary, Head of Internal Audit and their spouses and minor children

Name of Shareholders PercentageStatus Shares Held

iii) Executives (as explained in the BSEC’s Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August, 2012 )

Telenor Mobile Communications AS

Nye Telenor Mobile Communications II AS

Nye Telenor Mobile Communications III AS

Telenor Asia Pte. Ltd.

Grameen Telecom

Grameen Kalyan

Grameen Shakti

Mr. Sigve Brekke

Mr. Hans Martin Hoegh Henrichsen

Mr. Pal Wien Espen

Mr. Hakon Bruaset Kjol

Mr. Tore Johnsen

Mr. M Shahjahan

Mr. Md. Ashraful Hassan

Ms. Parveen Mahmud

Dr. Jamaluddin Ahmed FCA

Ms. Rokia Afzal Rahman

Mr. Rajeev Sethi

Mr. Dilip Pal

Mr. Hossain Sadat

Mr. Emadul Hannan

Mr. Allan Bonke

Mr. Erlend Prestgard

Mr. Medhat El Husseiny

Mr. Marcus Adaktusson

Mr. Quazi Mohammad Shahed

-

-

-

-

-

-

-

753,407,724

215

215

215

461,766,409

22

22

55.80%

0.00%

0.00%

0.00%

34.20%

0.00%

0.00%

Chairman

Board Member

Board Member

Board Member

Board Member

Board Member

Board Member

Board Member

Board Member

Board Member

Chief Executive Officer

Chief Financial Officer

Company Secretary

Head of Internal Audit

-

-

-

-

-

-

-

-

-

-

-

-

376

-

-

-

-

-

-

-

-

-

-

-

-

-

0.00%

-

Chief Marketing Officer

Head of Strategy

Chief Technology Officer

Directors-Communications

Chief Human Resources Officer

-

-

-

-

-

-

-

-

-

-

iv) Shareholders holding ten percent or more Voting Interest

Telenor Mobile Communications AS

Grameen Telecom

-

-

753,407,724

461,766,409

55.80%

34.20%

ANNEXURE-IV

Certificate of Compliance to the Shareholders ofGrameenphone Ltd.(As required under the BSEC Corporate Governance Guidelines)

We have examined compliance to the BSEC guidelines on Corporate Governance by Grameenphone Ltd. for the year ended 31st

December 2014. These guidelines relate to the Notification no. SEC/CMRRCD/2006-158/134/Admin/44 dated 7th August 2012 of

Bangladesh Securities and Exchange Commission (BSEC) on Corporate Governance.

Such compliance to the codes of Corporate Governance is the responsibility of the Company. Our examination was limited to the

procedures and implementation thereof as adopted by the Management in ensuring compliance to the conditions of Corporate

Governance. This is a scrutiny and verification only and not an expression of opinion or audit on the Financial Statements of the

Company.

In our opinion and to the best of our information and according to the explanations provided to us, we certify that, subject to the

remarks and observations as reported in the attached Compliance Statement, the Company has complied with the conditions of

Corporate Governance as stipulated in the above mentioned guidelines issued by BSEC.

We also state that such compliance is neither an assurance as to the future viability of the Company nor a certification on the

efficiency or effectiveness with which the Management has conducted the affairs of the Company.

Al-Muqtadir AssociatesDhaka, February 08, 2015 Chartered Secretaries & Consultants

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Directors’ Report 69

Overview

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anceAdditional

Information

Financial AnalysisSustainability

Governance

Al-Muqtadir AssociatesChartered Secretaries & Consultants

Business Office:Block : F, Rania AvenueApurba GardeniaHouse # 530, (5th floor)Bashundhara R/A, Dhaka - 1229Bangladesh

Phones : 01730 340 340 01552 108 522

e-mail : akamuqtadir@gmail.com: muqtadir@muqtadirbd.com

URL : www.muqtadirbd.comVAT Reg : 19041063900

auditors’ report &audited financialstatements

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Auditors’ Report & Audited Financial Statements 71

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Independent Auditor’s ReportTo the shareholders of Grameenphone Ltd.

We have audited the accompanying financial statements of Grameenphone Ltd., which comprise the statement of financial position as at 31 December 2014, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards (IFRSs) and Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations 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.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs) and Bangladesh Standards on Auditing (BSAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements prepared in accordance with International Financial Reporting Standards (IFRSs) and Bangladesh Financial Reporting Standards (BFRSs), give a true and fair view of the state of the company’s affairs as at 31 December 2014 and of the results of its operations and cash flows for the year then ended and comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

Emphasis of MatterWithout qualifying our opinion as above, we draw attention to Note#41 to the financial statements, where management explains the circumstances of claim from Bangladesh Telecommunication Regulatory Commission (BTRC), claim from National Board of Revenue (NBR) for SIM tax on replacement SIMs, the uncertainties of getting rebate of input VAT paid on 2G licence renewal fee and claim for VAT based on C&AG audit and management’s position on the same.

We also report that:a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary

for the purposes of our audit and made due verification thereof;b) In our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of these books;c) The statement of financial position (balance sheet) and statement of comprehensive income (profit and loss account)

dealt with by the report are in agreement with the books of account and returns; andd) The expenditure incurred was for the purposes of the company’s business.

Telephone +880 (2) 8144347-52Fax +880 (2) 8144353Email acnabin@bangla.netWeb www.acnabin-bd.com

ACNABINChartered AccountantsBDBL Bhaban ( Level 13), 12 Kawran Bazar C/ADhaka-1215, BangladeshChartered Accountants

ACNABINChartered Accountants

Dhaka, February 08, 2015

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Auditors’ Report & Audited Financial Statements72

ASSETS

Non-current assetsProperty, plant and equipment, netIntangible assets, netInvestment in associateOther non-current assets

Total non-current assets

Current assets Inventories

Trade and other receivablesShort-term investmentCash and cash equivalents

Total current assets

Total assets

EQUITY AND LIABILITIES

Shareholders' equityShare capitalShare premiumCapital reserveDeposit from shareholdersRetained earnings

Total equity

Non-current liabilitiesFinance lease obligationLoans and borrowingsDeferred tax liabilitiesOther non-current liabilities

Total non-current liabilities

Current liabilitiesTrade and other payablesLoans and borrowingsCurrent tax payableOther current liabilities

Total current liabilities

Total equity and liabilities

The annexed notes 1 to 42 form an integral part of these financial statements.

Notes

456

78910

11121314

15161718

19162021

Grameenphone Ltd.Statement of Financial Positionas at 31 December 2014

Dhaka, February 08, 2015

Director Director Chief Executive Officer Company Secretary

As per our report of same date.

Auditor

31 December 2014Taka'000

31 December 2013Taka'000

70,306,649 44,774,181

695,524 31,536

115,807,890

387,475 9,717,558

- 4,759,902

14,864,935

130,672,825

13,503,000 7,840,226

14,446 1,880

10,004,950

31,364,502

5,277,626 24,003,730

7,993,446 631,385

37,906,187

34,573,809 4,147,583

19,629,253 3,051,491

61,402,136

130,672,825

69,922,682 47,734,203

570,516 -

118,227,401

560,034 11,809,676

78,276 4,545,257

16,993,243

135,220,644

13,503,000 7,840,226

14,446 1,880

9,781,017

31,140,570

5,310,947 11,665,214 7,820,601

703,316

25,500,078

40,368,468 7,700,000 23,463,733 7,047,796

78,579,997

135,220,644

AnnualReport

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Auditors’ Report & Audited Financial Statements 73

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Revenue

Operating expenses Cost of material and traffic charges Salaries and personnel cost Operation and maintenance Sales, marketing and commissions Revenue sharing, spectrum charges and licence fees Other operating (expenses)/income, net Depreciation and amortisation

Operating profit

Share of profit of associateGain on sale of shares in GPITFinance (expense)/income, net Foreign exchange gain/(loss)

Profit before tax

Income tax expense

Profit after tax

Other comprehensive income Total comprehensive income for the year

Earnings per share Basic and diluted earnings per share (par value Tk. 10 each in Taka)

The annexed notes 1 to 42 form an integral part of these financial statements.

Notes

22

23242526272829

30

3132

33

34

Grameenphone Ltd.Statement of Comprehensive Incomefor the year ended 31 December 2014

Dhaka, February 08, 2015

Director Director Company Secretary

As per our report of same date.

Auditor

2014Taka'000

2013Taka'000

102,663,372

(9,591,883) (6,455,286) (5,070,609) (13,200,722)

(8,082,170) (5,709,963)

(17,656,668) (65,767,301)

36,896,071

125,008 -

(2,307,001) 140,917

(2,041,076)

34,854,995

(15,051,712)

19,803,283

- 19,803,283

14.67

96,624,227

(8,395,314) (7,062,188) (5,023,411)

(14,446,477) (7,571,339)

(5,587,529) (15,339,030) (63,425,287)

33,198,940

30,281 1,024,929

(2,594,957) 1,192,879

(346,867)

32,852,073

(18,150,498)

14,701,574

- 14,701,574

10.89

Chief Executive Officer

AnnualReport

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Auditors’ Report & Audited Financial Statements74

Gra

mee

npho

ne L

td.

Stat

emen

t of C

hang

es in

Equ

ity

for t

he y

ear e

nded

31 D

ecem

ber 2

014

Bala

nce

as a

t 1 Ja

nuar

y 20

13

Gen

eral

rese

rve

tran

sfer

red

to re

tain

ed e

arni

ngs

Tran

sact

ions

with

the

equi

ty h

olde

rs:

Fi

nal d

ivid

end

for 2

012

In

terim

div

iden

d fo

r 20

13

Tota

l com

preh

ensi

ve in

com

e fo

r 20

13

Pr

ofit

for t

he y

ear

O

ther

com

preh

ensi

ve in

com

e

Bala

nce

as a

t 31

Dec

embe

r 20

13

Bala

nce

as a

t 1 Ja

nuar

y 20

14

Tran

sact

ions

with

the

equi

ty h

olde

rs:

Fi

nal d

ivid

end

for 2

013

In

terim

div

iden

d fo

r 20

14

Tota

l com

preh

ensi

ve in

com

e fo

r 20

14

Pr

ofit

for t

he y

ear

O

ther

com

preh

ensi

ve in

com

e

Bala

nce

as a

t 31

Dec

embe

r 20

14

Shar

eca

pita

l

Taka

'00

0

Shar

epr

emiu

m

Taka

'00

0

Capi

tal

rese

rve

Taka

'00

0

Dep

osit

from

shar

ehol

ders

Taka

'00

0

Gen

eral

re

serv

e

Taka

'00

0

Reta

ined

ea

rnin

gs

Taka

'00

0To

tal

Taka

'00

0

13,5

03,

00

0 - - - -

13,5

03,

00

0

13,5

03,

00

0 - - - -

13,5

03,

00

0

7,84

0,2

26

- - - -

7,84

0,2

26

7,84

0,2

26

- - - -

7,8

40,2

26

14,4

46

- - - -

14,4

46

14,4

46

- - - -

14,4

46

1,880

- - - -

1,88

0

1,880

- - - -

1,88

0

2,13

9,72

9

(2,13

9,72

9) - - - - - - - - - -

11,8

43,9

13

2,13

9,72

9

(6,7

51,5

00

)

(12,

152,

700

)

14,7

01,5

74 -

9,7

81,0

17

9,78

1,017

(6,7

51,5

00

)

(12,

827,

850

)

19,8

03,

283 -

10,0

04,

950

35,3

43,19

5 -

(6,7

51,5

00

)

(12,

152,

700

)

14,7

01,5

74 -

31,1

40,5

70

31,14

0,5

70

(6,7

51,5

00

)

(12,

827,

850

)

19,8

03,

283 -

31,3

64,

502

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Auditors’ Report & Audited Financial Statements 75

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Cash flows from operating activities

Cash receipts from customers

Payroll and other payments to employeesPayments to suppliers, contractors and othersInterest receivedInterest paidIncome tax paid

Net cash generated by operating activities

Cash flows from investing activities

Proceeds from disposal of shares in GPITPayment for acquisition of property, plant and equipment and intangible assetsProceeds from sale of property, plant and equipmentProceeds from sale of short-term investmentsNet cash used in investing activities

Cash flows from financing activities

Payment of short-term bank loanProceeds from long-term loanPayment of dividendAmount refunded to IPO share applicantsPayment of finance lease obligationNet cash used in financing activities

Net change in cash and cash equivalents

Cash and cash equivalents as at 1 JanuaryCash and cash equivalents as at 31 December

Grameenphone Ltd.Statement of Cash Flowsfor the year ended 31 December 2014

2014Taka'000

2013Taka'000

102,696,002

(10,506,839) (40,266,804)

265,764 (2,219,303) (18,713,347)

(71,440,529) 31,255,473

- (20,250,401)

102,847 78,276

(20,069,278)

(6,200,000) 15,089,705

(19,579,350) -

(281,906) (10,971,551)

214,645

4,545,257 4,759,902

96,720,248

(5,384,782) (37,613,269)

336,394 (2,939,431)

(14,038,057) (59,639,146) 37,081,103

730,971 (28,957,081)

50,032 65,436

(28,110,643)

(495,000) 11,665,214

(18,896,923) (346)

- (7,727,055)

1,243,405

3,301,852 4,545,257

Grameenphone Ltd.Notes to the Financial Statementsas at and for the year ended 31 December 2014

01 Corporate information

Grameenphone Ltd. (hereinafter referred to as "GP"/"Grameenphone"/"the company") is a public limited company incorporated in Bangladesh in 1996 under the Companies Act 1994 and has its registered address at GPHOUSE, Bashundhara, Baridhara, Dhaka 1229. GP was initially registered as a private limited company and subsequently converted into a public limited company on 25 June 2007. During November 2009, GP listed its shares with both Dhaka and Chittagong Stock Exchanges. The immediate parent of GP is Telenor Mobile Communications AS and the ultimate parent is Telenor ASA; both the companies are incorporated in Norway.

The company is primarily involved in providing mobile telecommunication services (voice, data and other related services) in Bangladesh. The company also provides international roaming services through international roaming agreements with various operators of different countries across the world.

02 Basis of preparation

Grameenphone disposed of 51% of its stake in its only subsidiary (GPIT) on 1 September 2013 and now retains significant influence over GPIT (now known as Accenture Communications Infrastructure Solutions Ltd.).

These financial statements are not the separate financial statements of Grameenphone. These financial statements are unconsolidated financial statements (also known as individual financial statements) of Grameenphone as at and for the year ended 31 December 2014. These unconsolidated financial statements present the financial position and performance of Grameenphone and Grameenphone's investment in Accenture Communications Infrastructure Solutions Ltd. (formerly known as GPIT) being accounted for under the equity method in accordance with IAS 28 Investment in Associates and Joint Ventures.

For understanding of Grameenphone's standalone financial performance, a separate statement of comprehensive income has been appended to these financial statements as supplementary information.

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws in Bangladesh. The requirements of IFRS and BFRS, to the extent relevant to these financial statements, do not vary from each other.

These financial statements have been prepared on the historical cost basis. Measurement at revalued amounts or fair value does not have significant impact on these financial statements.

Authorisation for issueThese financial statements were authorised for issue by the Board of Directors of the company on 8 February 2015.

2.1 Functional and presentation currencyItems included in these financial statements are measured using the currency of the primary economic environment in which the company operates (‘the functional currency’). These financial statements are presented in Bangladesh Taka (Taka/Tk./BDT) which is also the functional currency of the company. The amounts in these financial statements have been rounded off to the nearest Taka in thousand (Taka'000). Because of these rounding off, in some instances the totals may not match the sum of individual balances.

2.2 Use of estimates and judgementsThe preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

JudgementsIn the process of applying the accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

1. The company has a lease agreement with Bangladesh Railway for Fibre Optic Network (FON) and this lease has beentreated as finance lease. For details, please see note 15 to these financial statements.

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2. The company has significant influence over Accenture Communications Infrastructure Solutions Ltd. 3. The company has entered into lease agreements for base stations, switch locations and office space; and after evaluation of the terms and conditions of these agreements has determined that it does not have substantial risks and rewards related to the assets. For operating lease commitments, please see note 28.2 to these financial statements.

Estimates and assumptionsKey estimates and assumptions used in preparation of these financial statements are:

1. Applicable tax rate for Income Year 2014 will be declared by Finance Act 2015. For the purpose of these financial statements, management has assumed that the existing corporate tax rate (40%) will be applicable for Income Year 2014 as well.2. Appropriate financial and demographic assumptions have been used in consultation with a certified actuary to measure defined benefit obligation as at the reporting date.

03 Significant accounting policies

Accounting policies set out below have been applied consistently to all periods presented in these financial statements. Comparative information has been rearranged wherever considered necessary to conform to the current period’s presentation.

3.1 Current versus non-current classificationThe company presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is:i) expected to be realised or intended to be sold or consumed in normal operating cycleii) held primarily for the purpose of tradingiii) expected to be realised within twelve months after the reporting period oriv) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when it is:i) expected to be settled in normal operating cycleii) held primarily for the purpose of tradingiii) due to be settled within twelve months after the reporting period oriv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

3.2 Cash dividend to the equity holdersThe company recognises a liability to make cash dividend when the distribution is authorised and the distribution is no longer at the discretion of the company. As per the corporate laws in Bangladesh, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

3.3 Property, plant and equipment

(a) Recognition and measurementItems of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.

The cost of an item of property, plant and equipment comprises its purchase price, import duties and non-refundable taxes, after deducting trade discount and rebates, and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the intended manner. Cost also includes initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located and capitalised borrowing costs. The obligations for costs of dismantling and removing the item and restoring the site (generally called 'asset retirement obligation') are recognised and measured in accordance with IAS/BAS 37 Provisions, Contingent Liabilities and Contingent Assets. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

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2. The company has significant influence over Accenture Communications Infrastructure Solutions Ltd. 3. The company has entered into lease agreements for base stations, switch locations and office space; and after evaluation of the terms and conditions of these agreements has determined that it does not have substantial risks and rewards related to the assets. For operating lease commitments, please see note 28.2 to these financial statements.

Estimates and assumptionsKey estimates and assumptions used in preparation of these financial statements are:

1. Applicable tax rate for Income Year 2014 will be declared by Finance Act 2015. For the purpose of these financial statements, management has assumed that the existing corporate tax rate (40%) will be applicable for Income Year 2014 as well.2. Appropriate financial and demographic assumptions have been used in consultation with a certified actuary to measure defined benefit obligation as at the reporting date.

03 Significant accounting policies

Accounting policies set out below have been applied consistently to all periods presented in these financial statements. Comparative information has been rearranged wherever considered necessary to conform to the current period’s presentation.

3.1 Current versus non-current classificationThe company presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is:i) expected to be realised or intended to be sold or consumed in normal operating cycleii) held primarily for the purpose of tradingiii) expected to be realised within twelve months after the reporting period oriv) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when it is:i) expected to be settled in normal operating cycleii) held primarily for the purpose of tradingiii) due to be settled within twelve months after the reporting period oriv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

3.2 Cash dividend to the equity holdersThe company recognises a liability to make cash dividend when the distribution is authorised and the distribution is no longer at the discretion of the company. As per the corporate laws in Bangladesh, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

3.3 Property, plant and equipment

(a) Recognition and measurementItems of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.

The cost of an item of property, plant and equipment comprises its purchase price, import duties and non-refundable taxes, after deducting trade discount and rebates, and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the intended manner. Cost also includes initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located and capitalised borrowing costs. The obligations for costs of dismantling and removing the item and restoring the site (generally called 'asset retirement obligation') are recognised and measured in accordance with IAS/BAS 37 Provisions, Contingent Liabilities and Contingent Assets. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

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When major parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

b) Subsequent costsThe cost of replacing or upgradation of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the item will flow to the company and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day to day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(c) DepreciationNo depreciation is charged on land and capital work in progress (CWIP) as the land has unlimited useful life and CWIP has not yet been placed in service.

Depreciation on other items of property, plant and equipment is recognised on a straight-line basis over the estimated useful life of each item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the company will obtain ownership by the end of the lease term. Depreciation method, useful lives and residual values are reviewed at each year-end and adjusted if appropriate. The estimated useful lives of the items of property, plant and equipment for the current and comparative periods are as follows:

(d) DerecognitionAn item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in profit or loss.

(e) Capital work in progressCapital work in progress consists of unfinished work at sites and capital inventory. Spare parts expected to be used for more than one year are treated as capital work in progress. In case of import of components, capital work in progress is recognised when risks and rewards associated with such assets are transferred to the company.

(f) Capitalisation of borrowing costsAs per the requirements of IAS/BAS 23 Borrowing Costs, directly attributable borrowing costs are capitalised during construction period for all qualifying assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are those borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

3.4 Intangible assets

(a) Recognition and measurementIntangible assets that are acquired by the company and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment loss, if any. Intangible assets are recognised when all the conditions for recognition as per IAS/BAS 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.

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the profit or loss as incurred.

2014Years

10 - 50

3 - 10

7 - 20

5 -10

4

3 - 5

4

22.5 - 30

2013Years

10 - 50

3 - 10

7- 20

5 - 10

4

3 - 5

4

22.5 - 30

Own assets Building

Base station - equipment

Base station - tower, fibre optic network and related assets

Transmission equipment

Computers and other IT equipment

Furniture and fixtures (including office equipment)

Vehicles

Leased asset Fibre Optic Network (FON)

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Development activities involve a plan or design for the production of new and substantially improved products and processes. Development expenditures, on an individual project, are recognised as an intangible asset when the company can demonstrate all of the following:

(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale;

(b) its intention to complete the intangible asset and use or sell it;

(c) its ability to use or sell the intangible asset;

(d) how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;

(e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;

(f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Other development expenditures are recognised in profit or loss as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is placed in service. It is amortised over the period of expected future economic benefits. During the period of development, the asset is tested for impairment annually.

Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is incurred.

(b) Subsequent costsSubsequent costs are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate. All other costs are recognised in profit or loss as incurred.

(c) AmortisationAmortisation is recognised in profit or loss on a straight line basis over the estimated useful lives of intangible assets. The estimated useful lives are as follows:

(d) DerecognitionAn intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of intangible assets, measured as the difference between the net disposal proceeds and the carrying amount of the assets, are recognised in profit or loss.

3.5 Investment in associateAn associate is an entity over which the investor has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. Investment in associate is accounted for using the equity method. Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the investor's share of net assets of the associate since the acquisition date. The statement of comprehensive income reflects the

2014Years

5

5

3-7

7

18

15

15

2013Years

5

5

3-7

7

18

15

15

Software and others Pulse Code Modulation (PCM)

Billing software

Other operational software

Network management software

Telecom licence and spectrum Spectrum-2008

Telecom licence and spectrum -2011

3G licence and spectrum

Amortisation methods, useful lives and residual values are reviewed at each year-end and adjusted, if appropriate.

investor's share of the results of operations of the associate. Any change in other comprehensive income (OCI) of the investee is presented as part of the investor's OCI. In addition, when there has been a change recognised directly in the equity of the associate, the investor recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the investor and the associate are eliminated to the extent of the interest in the associate.

The financial statements of associate are prepared for the same reporting period by following the same accounting policies for like transactions and events as the investor.

3.6 Financial instrumentsA financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

3.6.1 Financial assetsThe company classifies non-derivative financial assets into financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' financial assets, 'loans and receivables' or 'available-for-sale' financial assets.

The company derecognises a financial asset when the contractual rights or probabilities of receiving the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the company is recognised as a separate financial asset or liability.

Financial assets and liabilities are offset and the net amount is presented in the statement of financial position when, and only when, the company has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

i. Financial assets at fair value through profit or lossA financial asset is classified as fair value through profit or loss if it is classified as held-for-trading or designated as such on initial recognition. A financial asset is designated as fair value through profit or loss if the company manages such investments and make purchase and sale decisions based on their fair value in accordance with company's documented risk management or investment strategy. Financial assets at fair value through profit or loss are measured at fair value and changes there in, which takes into account any dividend income, are recognised in the profit or loss.

As at the balance sheet date the company had no financial assets at fair value through profit or loss.

ii. Held-to-maturity financial assetsIf the company has positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity financial assets. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses.

Short-term investments are classified as held-to-maturity financial assets. Short term investments comprise investment in Fixed Deposit Receipts (FDR) with original maturity of more than three months.

iii. Loans and receivablesLoans and receivables are financial assets with fixed and determinable payments that are not quoted in the active market. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. This is the most relevant category of financial asset to the company and includes trade and other receivables. Trade receivables with no stated interest rate are recognised at the original invoice amount when the impact of discounting is not material.

iv. Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the above categories of financial assets.

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Subsequent to initial recognition, they are measured at fair value and changes there in, other than impairment losses and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.

3.6.2 Financial liabilitiesFinancial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'. Company's financial liabilities mainly include trade and other payables, loans and borrowings.

i. Financial liabilities at fair value through profit or loss (FVTPL)Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the company that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IAS 39 are satisfied.

Financial liabilities at fair value through profit or loss (FVTPL) are subsequently measured at fair value with gains or losses arising on remeasurement are recognised in profit or loss. The company has not designated any financial liabilities as at fair value through profit or loss.

ii. Other financial liabilitiesOther financial liabilities are subsequently measured at amortised cost using the effective interest rate method (EIR). Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortization process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Other financial liabilities include loans and borrowings, trade and other payables.

3.6.3 Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the company are recognised at the proceeds received, net of direct issue costs. No gain or loss is recognised in profit or loss on the sale , repurchase or cancellation of the company’s own equity instruments.

3.7 Impairment(a) Financial assets

A financial asset, not classified as fair value through profit or loss, is assessed at each reporting date to determine whether there is an objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the assets, and the loss event(s) had an impact on the estimated future cash flows of that assets that can be estimated reliably.

i. Financial assets measured at amortised costThe company considers evidence of impairment for financial assets (loans and receivables and held-to-maturity investment securities) at both a specific asset and collective asset level. All individually significant receivables and held-to-maturity investment securities are assessed for specific impairment. All individually significant loans and receivables and held-to-maturity investment securities found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables and held-to-maturity investment securities that are not individually significant are collectively assessed for impairment by grouping together loans and receivables and held-to-maturity investment securities with similar risk characteristics.

In assessing collective impairment, the company uses historical trend of probability of default, timing of recoveries and amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in the profit or loss and reflected in the allowance account against loans and receivables or held-to-maturity investment securities. Interest on the impaired assets continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

As per the existing credit policy, 100% impairment allowance is recognised on receivables from permanently disconnected post-paid subscribers. Post-paid subscribers are permanently disconnected if they fail to make any payment within 90 days of temporary disconnection. Any post-paid receivables remaining uncollected after one year of allowance creation are written-off. Other accounts receivable are written-off when there is no reasonable expectation of future recovery.

ii. Available-for-sale financial assetsImpairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of reversal recognised in profit or loss.

(b) Non-financial assetsThe carrying amounts of the company’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated in order to determine the extent of impairment loss (if any). Where it is not possible to determine the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs. An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, the company considers GP as the smallest identifiable groups of assets (CGU).

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.8 InventoriesInventories consisting of scratch cards, SIM cards, mobile handsets, data cards and other devices are valued at lower of cost and net realisable value. Cost of inventories include expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Cost of inventories is determined by using the weighted average cost formula. Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying amount of inventories to the lower of cost and net realisable value. Net realisable value is based on estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

3.9 Employee benefitsThe company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds. Both of the plans are funded and are recognised/approved under Income Tax Ordinance 1984.

(a) Defined contribution plan (provident fund)A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contribution to defined contribution plans are recognised as an employee benefit expense in profit or loss in the period during which related services are rendered by employees. Advance contributions are recognised as an asset to the extent that a cash refund or a reduction in future payment is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which employees render the services are discounted to the present value.

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GP has a separate recognised provident fund scheme. All permanent employees of GP contribute 10% of their basic salary to the provident fund and the company also makes equal contribution.

The company recognises contribution to defined contribution plan as an expense when an employee has rendered related services in exchange for such contribution. The legal and constructive obligation is limited to the amount it agrees to contribute to the fund.

(b) Defined benefit plan (gratuity)A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The employee gratuity plan is considered as defined benefit plan as it meets the recognition criteria. The company's obligation is to provide the agreed benefits to current and former employees as per condition of the fund.

The net defined benefit liability (asset) in respect of a defined benefit plan is recognised in the statement of financial position. The net defined benefit liability (asset) is made up of:

i) the present value of defined benefit obligation; lessii) the fair value of plan assets; adjusted foriii) any effect of limiting a net defined benefit asset to the asset ceiling.

Present value of defined benefit obligation is determined by professional actuary. Projected Unit Credit method is used to measure the present value of defined benefit obligations and related current and past service cost by using mutually compatible actuarial assumptions about demographic and financial variables.

Current service cost, past service cost and gain/loss on settlement and net interest on the net defined benefit liability (asset) are recognised in profit or loss.  Service cost and gain/loss on settlement are classified as personnel expense and net interest on the net defined benefit liability (asset) is classified as financial expense.

Remeasurements of the net defined liability (asset) are recognised in other comprehensive income, comprising:

i) actuarial gains and losses;ii) return on plan asset, excluding amounts included in net interest on the net defined benefit liability (asset); andiii) any change in the affect  of the asset ceiling excluding amounts included in net interest on the net defined benefit liability (asset).

(c) Short-term employee benefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. Provision is created for the amount of annual leave encashment based on the latest basic salary.

3.10 Income TaxIncome tax expense comprises current and deferred taxes. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

(a) Current taxCurrent tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods. The tax rates used for the reporting periods are as follows:

(b) Deferred taxDeferred tax is recognised in compliance with IAS/BAS 12 Income Taxes, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purpose and amounts used for taxation purpose. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the date of statement of financial position. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.

Years2013

2014

Tax rate40%

40%

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary difference can be utilised. Deferred tax assets are reviewed at each year-end and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

3.11 ProvisionsA provision is recognised in the statement of financial position when the company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provision is ordinarily measured at the best estimate of the expenditure required to settle the present obligation at the reporting date. Where the company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(a) Asset retirement obligations (ARO)Asset retirement obligations (ARO) are recognised when there is a legal or constructive obligation as a result of past event for dismantling and removing an item of property, plant and equipment and restoring the site on which the item is located and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made. A corresponding amount equivalent to the provision is recognised as part of the cost of the related property, plant and equipment. The amount recognised is the estimated expected cost of decommissioning, discounted to its present value. Changes in the estimated timing of decommissioning or decommissioning cost estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment to property, plant and equipment. The company recognises ARO in respect of roof-top base station and office space. The periodic unwinding of the discount is recognised in profit or loss as a finance cost as it occurs.

3.12 ContingenciesA contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company; or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company.

Contingent liabilities and assets are not recognised in the statement of financial position of the company.

3.13 Revenue recognition, measurement and presentationRevenues are recognised when goods are delivered or services rendered, to the extent that it is probable that the economic benefits from the transactions will flow to the company and the revenues can be reliably measured. Revenues are measured at the fair value of the consideration received or receivable, net of discounts and sales related taxes. These taxes are regarded as collected on behalf of the authorities.

Revenues primarily comprise sale of:• Services: subscription and traffic fees, connection fees, interconnection fees, roaming charges, fees for leased lines and leased networks.• Customer equipment is primarily mobile devices/phones and data card.

(a) Subscription and traffic feesRevenues from subscription fees are recognised over the subscription period while revenues from voice and non-voice services are recognised upon actual use. Consideration from the sale of prepaid cards to customers where services have not been rendered at the reporting date is deferred until actual usage or when the cards expire or are forfeited.

(b) Connection feesConnection fees that are charged and not allocated to the other elements of an arrangement are deferred and recognised over the periods in which the fees are expected to be earned. The earning period is the expected period of the customer relationship and is based on past history of churn.

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AnnualReport

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Notes to the Financial Statements 85

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

(c) Customer equipmentRevenues from sales of customer equipment are normally recognised when the equipment, including the related significant risks and rewards of ownership, is transferred to the buyer and the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

(d) DiscountsDiscounts are often provided in the form of cash discounts or free products and services delivered by the company or by external parties. Discounts are recognised on a systematic basis over the period the discount is earned. Cash discounts or free products and services given as part of sales transactions are recognised as a reduction of revenue. Free products or services provided that are not related to sales transactions are recognised as expenses.

(e) Multiple element arrangementsWhen the company delivers multiple services and/or equipment as part of one contract or arrangement, the consideration is allocated to the separate identifiable components if the delivered item has value to the customer on a standalone basis and there is objective and reliable evidence of the fair value of undelivered items. The consideration is allocated between the elements based on their relative fair values, and recognition of the revenue allocated to the delivered item is limited to the amount that is not contingent on the delivery of additional items or other specified performance criteria.

(f) Interest and dividendInterest income is accrued on a time proportion basis that reflects an effective yield on the financial asset. Dividend income from an investment is recognised when the company’s rights to receive payment is established (declared by the Annual General Meeting of the investee or otherwise).

PresentationThe determination of whether the company is acting as a principal or as an agent in a transaction is based on an evaluation of the substance of the transaction, the responsibility for providing the goods or services and setting prices and the underlying financial risks and rewards. Where the company acts as a principal, the revenues are recognised on a gross basis. This requires revenue to comprise the gross value of the transaction billed to the customers, after trade discounts, with any related expenses charged as operating costs. Where the company acts as an agent, the expenses are offset against the revenues and the resulting net revenues represent the margins or commissions earned for providing services in the capacity of an agent.

Revenues from roaming are recognised gross in line with generally accepted accounting principles within the telecommunications industry.

Licence fees payable to Bangladesh Telecommunication Regulatory Commission (BTRC) that are calculated on the basis of revenue share arrangements are not offset against the revenues. Instead, they are recognised as operating costs because the company is considered to be the primary obligor.

3.14 LeasesThe determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at the inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. Leases are classified as finance leases whenever the terms of lease transfer substantially all the risk and rewards of ownership to the lessee. All other leases are classified as operating leases.

(a) The company as lesseeAssets held under finance leases are initially recognised as asset of the company at their fair value at the inception of the lease or, if lower, at the present value of minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of lease obligation so as to achieve a constant rate of interest on the remaining balance of liability. Finance expenses are immediately recognised in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised. Contingent rentals are recognised as expenses in the period in which they incur.

Operating lease payments are recognised as an expense on straight line basis over the lease term, except where another systemic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as liability. The aggregate benefit of incentives is recognised as a reduction of rental expenses on a straight line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

(b) The company as lessorAmounts due from lessees under finance leases are recognised as receivables at the amount of company's net investment in the leases. Finance lease income is allocated to accounting period so as to reflect a constant periodic rate of return on the company's net investment outstanding in respect of the leases.

Rental income from operating lease is recognised on straight line basis over the term of relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to carrying amount of leased assets and recognised on a straight line basis over the lease term.

3.15 Foreign currency transactionsThe financial statements are presented in Taka/Tk./BDT, which is company's functional currency. Transactions in foreign currencies are recorded in the books at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities in foreign currencies at the date of statement of financial position are translated into taka at the exchange rate prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss as per IAS/BAS 21 The Effects of Changes in Foreign Exchange Rates.

3.16 Earnings per shareThe company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares for bonus issue, share split and reverse split. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the relevant periods.

3.17 Events after the reporting periodAmounts recognised in the financial statements are adjusted for events after the reporting period that provide evidence of conditions that existed at the end of the reporting period. No adjustment is given in the financial statements for events after the reporting period that are indicative of conditions that arose after the reporting period. Material non-adjusting events are disclosed in the financial statements.

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements86

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 87

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

04

Pro

pert

y, p

lant

and

equ

ipm

ent,

net

Year

20

14

Land

(Not

e 4.

1)

Build

ing

Base

sta

tion

Tran

smis

sion

equ

ipm

ent

Com

pute

rs a

nd o

ther

IT e

quip

men

t

Furn

iture

and

fixt

ures

(inc

ludi

ng o

ffice

equ

ipm

ent)

Vehi

cles

Capi

tal w

ork

in p

rogr

ess

(Not

e 4.

3)

Fibr

e Op

tic N

etwo

rk u

nder

fina

nce

leas

e (N

ote

4.4)

Addi

tion

durin

gth

e ye

ar

- -

8,55

5,92

4

2,34

3,18

5

382,

181

235,

706

373,

045

11,8

90,0

41

13,7

33,0

01

25,6

23,0

42

482,

113

26,1

05,1

55

Dis

posa

l/Ad

just

men

tdu

ring

the

year

- -

(2,7

44,3

10)

(3,7

49,7

64)

(80,

381)

(12,

369)

(24,

159)

(6,6

10,9

84)

(11,9

59,8

54)

(18,

570,

838) -

(18,

570,

838)

Char

ged

durin

gth

e ye

ar

-

198,

740

9,17

5,54

7

3,41

7,93

4

268,

209

160,

402

146,

006

13,3

66,8

38

-

13,3

66,8

38

381,3

99

13,7

48,2

37

Dis

posa

l/Ad

just

men

tdu

ring

the

year

- -

(2,7

41,0

76)

(3,7

49,7

64)

(80,

311)

(12,

345)

(14,

390)

(6,5

97,8

87) -

(6,5

97,8

87) -

(6,5

97,8

87)

As a

t31

Dec

embe

r20

14

-

873,

515

48,9

97,9

05

13,5

17,7

88

3,36

6,50

3

2,28

5,02

8

1,001

,002

70,0

41,7

41 -

70,0

41,7

41

3,58

2,64

2

73,6

24,3

83

As a

t1 J

anua

ry20

14

807,

497

4,05

8,11

6

78,9

13,8

36

26,2

14,8

82

3,70

0,44

8

2,36

5,73

0

1,417

,113

117,

477,

622

11,2

40,7

71

128,

718,

393

7,67

8,32

2

136,

396,

714

Taka

'00

0N

ame

of a

sset

sTa

ka'0

00

Taka

'00

0

Cost

Dep

reci

atio

nCa

rryin

g am

ount

As a

t31

Dec

embe

r20

14

807,

497

4,05

8,11

6

84,7

25,4

50

24,8

08,3

03

4,00

2,24

8

2,58

9,06

6

1,765

,999

122,

756,

679

13,0

13,9

18

135,

770,

597

8,16

0,43

5

143,

931,

032

Taka

'00

0

As a

t1 J

anua

ry20

14

-

674,

775

42,5

63,4

35

13,8

49,6

19

3,17

8,60

5

2,13

6,97

1

869,

385

63,2

72,7

89

-

63,2

72,7

89

3,20

1,243

66,4

74,0

32

Taka

'00

0Ta

ka'0

00

Taka

'00

0Ta

ka'0

00

As

at 3

1 Dec

embe

r 2

014

807,

497

3,18

4,60

1

35,7

27,5

45

11,2

90,5

15

635,

745

304,

038

764,

997

52,7

14,9

38

13,0

13,9

18

65,7

28,8

56

4,57

7,79

2

70,3

06,6

49

Taka

'00

0

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements88

04

Pro

pert

y, p

lant

and

equ

ipm

ent (

cont

d..)

Year

20

13

Land

(Not

e 4.

1)

Build

ing

Base

sta

tion

Tran

smis

sion

equ

ipm

ent

Com

pute

rs a

nd o

ther

IT e

quip

men

t

Furn

iture

and

fixt

ures

(inc

ludi

ng o

ffice

equ

ipm

ent)

Vehi

cles

Capi

tal w

ork

in p

rogr

ess

(Not

e 4.

3)

Fibr

e Op

tic N

etwo

rk u

nder

fina

nce

leas

e (N

ote

4.4)

Addi

tion

durin

gth

e ye

ar 550 -

6,11

5,97

2

2,07

0,55

6

151,4

74

72,5

32

214,

035

8,62

5,11

9

12,9

01,5

42

21,5

26,6

61 -

21,5

26,6

61

Dis

posa

l/Ad

just

men

tdu

ring

the

year (2

9) -

(1,5

16,0

33) -

(92,

322)

(39,

685)

(10,

502)

(1,6

58,5

72)

(8,6

59,0

62)

(10,

317,

633) -

(10,

317,

633)

Char

ged

durin

gth

e ye

ar

-

198,

324

7,92

9,78

6

2,91

7,79

2

267,

716

184,

006

126,

704

11,6

24,3

28

-

11,6

24,3

28

344,

416

11,9

68,7

44

Dis

posa

l/Ad

just

men

tdu

ring

the

year

- -

(1,4

97,8

54) -

(91,5

65)

(39,

540)

(5,2

86)

(1,6

34,2

46) -

(1,6

34,2

46)

-

(1,6

34,2

46)

As a

t31

Dec

embe

r20

13

-

674,

775

42,5

63,4

35

13,8

49,6

19

3,17

8,60

5

2,13

6,97

1

869,

385

63,2

72,7

89

-

63,2

72,7

89

3,20

1,243

66,4

74,0

32

As a

t1 J

anua

ry20

13

806,

976

4,05

8,11

6

74,3

13,8

98

24,14

4,32

6

3,64

1,296

2,33

2,88

3

1,213

,580

110,

511,0

74

6,99

8,29

0

117,

509,

365

7,67

8,32

2

125,

187,

686

Taka

'00

0N

ame

of a

sset

sTa

ka'0

00

Taka

'00

0

Cost

Dep

reci

atio

nCa

rryin

g am

ount

As a

t31

Dec

embe

r20

13

807,

497

4,05

8,11

6

78,9

13,8

36

26,2

14,8

82

3,70

0,44

8

2,36

5,73

0

1,417

,113

117,

477,

622

11,2

40,7

71

128,

718,

393

7,67

8,32

2

136,

396,

714

Taka

'00

0

As a

t1 J

anua

ry20

13

-

476,

451

36,13

1,502

10,9

31,8

27

3,00

2,45

4

1,992

,505

747,

968

53,2

82,7

07

-

53,2

82,7

07

2,85

6,82

8

56,1

39,5

34

Taka

'00

0Ta

ka'0

00

Taka

'00

0Ta

ka'0

00

As

at 3

1 Dec

embe

r 2

013

807,

497

3,38

3,34

1

36,3

50,4

02

12,3

65,2

64

521,8

43

228,

759

547,

728

54,2

04,8

33

11,2

40,7

71

65,4

45,6

04

4,47

7,07

8

69,9

22,6

82

Taka

'00

0

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 89

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

4.1 LandLand represents freehold land acquired for office premises and base stations.

4.2 Disposal/ adjustment during 2014Disposal/adjustment of base station, transmission equipment, computers and other IT equipment and furniture and

fixtures included accounting adjustment of Tk. 2,357,871,863, Tk. 3,749,764,245, Tk. 5,879,068 and Tk. 10,833,281

respectively for derecognition of fully depreciated assets not yet disposed of and no longer in use.

4.3 Capital work in progress (CWIP)This represents primarily the cost of network equipment under construction and capital inventory.

4.3.1 Capital work in progress - transferredThe amount of CWIP completed and transferred during the year to the corresponding items of property, plant and

equipment was as follows:

4.3.2 Capital work in progress - componentsCapital work in progress as at 31 December 2014 included capital inventory of Tk. 4,682,293,958 (2013: Tk.

8,566,032,092) and work-in-progress of Tk. 8,331,623,899 (2013: Tk. 2,674,738,469).

4.4 Fibre optic network under finance leaseThe addition to Fibre Optic Network under finance lease represents the fibre optic network acquired for a period of 30 years.

For details, please see note 15.

2014Taka'000

550

6,115,972

2,070,556

151,474

72,532

214,035

8,625,119

2013Taka'000

Name of assets

Land

Base station

Transmission equipment

Computers and other IT equipment

Furniture and fixtures

Vehicles

Total transfer of CWIP also includes capital inventory write off of Tk. 69,812,865.

-

8,555,924

2,343,185

382,181

235,706

373,045

11,890,041

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements90

05

Int

angi

ble

asse

ts, n

et

Year

20

14

Soft

war

e an

d ot

hers

(Not

e 5.

1)

Tele

com

lice

nce

and

spec

trum

(Not

e 5.

3)

Capi

tal w

ork

in p

rogr

ess

(Not

e 5.

4)

Addi

tion

durin

g th

e ye

ar

703,

180 -

703,

180

948,

409

1,65

1,58

9

Dis

posa

l/Ad

just

men

tdu

ring

the

year

(73,

415) -

(73,

415)

(703

,180)

(776

,595

)

Char

ged

durin

g th

e th

e ye

ar

802,

984

3,10

5,44

7

3,90

8,43

1 -

3,90

8,43

1

Dis

posa

l/Ad

just

men

tdu

ring

the

year

(73,

415) -

(73,

415) -

(73,

415)

As a

t31

Dec

embe

r20

14

5,66

6,99

4

9,31

6,36

6

14,9

83,3

60

-

14,9

83,3

60

As a

t1 J

anua

ry20

14

5,77

0,50

4

53,0

49,2

58

58,8

19,7

62

62,7

85

58,8

82,5

47

Taka

'00

0N

ame

of a

sset

sTa

ka'0

00

Taka

'00

0

Cost

Amor

tisat

ion

Carry

ing a

mou

nt

As a

t31

Dec

embe

r20

14

6,40

0,26

9

53,0

49,2

58

59,4

49,5

27

308,

014

59,7

57,5

41

Taka

'00

0

As a

t1 J

anua

ry20

14

4,93

7,42

5

6,21

0,91

9

11,14

8,34

4 -

11,1

48,3

44

Taka

'00

0Ta

ka'0

00

Taka

'00

0Ta

ka'0

00

As

at

31 D

ecem

ber

2014

733,

275

43,7

32,8

92

44,4

66,16

8

308,

014

44,7

74,1

81

Taka

'00

0

Year

20

13

Soft

war

e an

d ot

hers

(Not

e 5.

1)

Tele

com

lice

nce

and

spec

trum

(Not

e 5.

3)

Capi

tal w

ork

in p

rogr

ess

(Not

e 5.

4)

Addi

tion

durin

g th

e ye

ar

60,3

78

17,2

48,8

75

17,3

09,2

53

17,2

48,8

75

34,5

58,1

28

Dis

posa

l/Ad

just

men

tdu

ring

the

year

(1,11

0,7

85) -

(1,11

0,7

85)

(17,

534,

404)

(18,

645

,189

)

As a

t31

Dec

embe

r20

13

5,77

0,50

4

53,0

49,2

58

58,8

19,7

62

62,7

85

58,8

82,5

47

Char

ged

durin

g th

eth

e ye

ar

800,

999

2,56

9,28

7

3,37

0,28

6 -

3,37

0,28

6

Dis

posa

l/Ad

just

men

tdu

ring

the

year

(1,11

0,78

5) -

(1,11

0,78

5) -

(1,1

10,7

85)

As a

t31

Dec

embe

r20

13

4,93

7,42

5

6,21

0,91

9

11,14

8,34

4 -

11,1

48,3

44

As a

t1 J

anua

ry20

13

6,82

0,91

1

35,8

00,3

83

42,6

21,2

94

348,

314

42,9

69,6

09

Taka

'00

0N

ame

of a

sset

sTa

ka'0

00

Taka

'00

0

Cost

Amor

tisat

ion

Carry

ing a

mou

nt

Taka

'00

0

As a

t1 J

anua

ry20

13

5,24

7,21

1

3,64

1,632

8,88

8,84

3 -

8,88

8,84

3

Taka

'00

0Ta

ka'0

00

Taka

'00

0Ta

ka'0

00

As a

t31

Dec

embe

r20

13

833,

079

46,8

38,3

39

47,6

71,4

18

62,7

85

47,7

34,2

03

Taka

'00

0

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 91

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

169,790

110,273

107,412

387,475

As at31 December 2014

Taka'000171,373

233,910

154,752

560,034

As at31 December 2013

Taka'000Handset, data card and other devices

SIM card

Scratch card

5.1 Software and othersSoftware includes business software and network management software. Business software includes mainly billing

software, Oracle financial software, Data mining software, Campaign automation software etc. Network management

software represents NERM, HNMS, DMS, SGSN, OSS etc.

5.2 Disposal/ adjustment during 2014Disposal/ adjustment of software and others included accounting adjustment of Tk. 73,415,000 for derecognition of fully

depreciated assets no longer in use.

5.3 Telecom licence and spectrumGrameenphone, in 2013, acquired 3G licence and related 10 MHz of spectrum for 15 years effective from 12 September

2013.

The tenure of Mobile Cellular Licence and 14.6 MHz of spectrum acquired in 1996 expired on 10 November 2011. The tenure

of this 2G licence and spectrum was renewed for another 15 years on 7 August 2012. This 2G licence and spectrum was

recognised in accordance with IAS/BAS 38 Intangible Assets and was measured at the cash equivalent price being the

present value of the instalments. The difference between total payment and the cash equivalent price is recognised as

finance cost over the period of payment.

Total cost of telecom licence and spectrum also includes cost of 7.4 MHz of spectrum acquired in 2008 for 18 years.

5.4 Capital work in progress (CWIP)CWIP includes cost of software in process of installation/implementation and also software under testing phase awaiting

users' acceptance.

06 Investment in associate

Grameenphone disposed of 51% of its stake in its only subsidiary, Grameenphone IT Ltd. (GPIT) on 1 September 2013 and

thereby lost control over GPIT. However, Grameenphone retains significant influence over GPIT with its remaining 49%

stake. GP's remaining stake (49%) in GPIT has been measured at fair value at the date when control was lost. The fair value

(Tk. 540,235,154) has been determined based on the transaction price of 51% after giving adjustment for factors like

control premium. This fair value is regarded as the cost on initial recognition of 'investment in associate'. Initial carrying

amount of investment has increased by GP's share of investee's post-acquisition profit not yet distributed.

07 Inventories

During 2014, BDT 60,013,374 (2013: BDT 13,993,257) was recognised as an expense for inventories carried at net realisable

value. This is recognised in cost of materials and services.

7.1 Movement of inventories

Balance as at 1 January 2013

Purchase during 2013

Issue during 2013

Adjustment/write-off

Balance as at 31 December 2013

Balance as at 1 January 2014

Purchase during 2014

Issue during 2014

Adjustment/write-off

Balance as at 31 December 2014

223,666

785,156

(772,763)

236,060

(2,150)

233,910

233,910

555,500

(679,131)

110,279

(6)

110,273

89,897

1,279,668

(1,192,608)

176,957

(5,584)

171,373

171,373

1,911,399

(1,852,409)

230,363

(60,573)

169,790

95,967

522,781

(457,737)

161,011

(6,259)

154,752

154,752

497,316

(545,221)

106,847

565

107,412

SIM cardTaka'000

Handset, data cardand other device

Taka'000

Scratch card

Taka'000

80,890

2,913,505

162,135,010

99,773

4,390,528

211,459,231

As at31 December 2014

Units

As at31 December 2013

Units

7.2 Number of inventories

Handset, data card and other device

SIM card

Scratch card

6,280,721(1,482,094)

4,798,627

62359,825

1,134,7741,195,222

15,5381,243,9532,464,2183,723,7099,717,558

6,375,489(689,720)5,685,770

4,01823,258

1,569,3041,596,581

9,5882,096,8862,420,8524,527,326

11,809,676

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000 Trade receivables (Note 8.1) Provision for bad debts (Note 8.2) Total trade receivables Other current receivables Interest receivable Receivables on Employees - Non-Interest Bearing Other non-interest-bearing receivables Total other current receivables Prepayments Deferred costs related to connection revenue Prepaid expenses Indirect tax Total prepayments Total trade and other receivables

7.3 SIM cardSIM cards include SIMs for new connections and replacement SIMs. Each new connection attracts SIM tax of BDT 300 and

each replacement SIM attracts SIM tax of BDT 100. Value added tax (VAT) and supplementary duty (SD) imposed on SIM

cards are popularly known as SIM tax.

08 Trade and other receivables

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Notes to the Financial Statements92

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Notes to the Financial Statements 93

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

2,220,885

161,596

60,074

41,483

135,874

126,923

2,292,885

5,039,721

2,130,159

173,546

244,217

280,131

596,029

231,564

1,531,744

5,187,389

As at 31 December 2014

Taka'000

As at31 December 2013

Taka'000 Not past due

0-30 days past due

31-60 days past due

61-90 days past due

91-180 days past due

181-365 days past due

over 365 days past due

689,720

846,916

1,536,636

(54,542)

1,482,094

190,702

542,551

733,253

(43,534)

689,720

8.2 Provision for doubtful debts Opening balance

Provision made during the year

Written off during the year

Closing balance

418,480

4,380,147

1,482,094

6,280,721

(1,482,094)

4,798,627

412,267

5,273,503

689,720

6,375,489

(689,720)

5,685,770

8.3 Security against trade receivables Good and secured

Good with personal security/unsecured

Doubtful and bad

Gross trade receivables

Provision for bad and doubtful debts

Trade receivables, net

15,778

4,744,124

4,759,902

7,389

4,537,868

4,545,257

Cash in hand

Cash at bank

8.1 Trade receivablesThis included interconnection receivables of Tk. 5,039,720,538 as at 31 December 2014 (2013: Tk. 5,187,389,260). The

ageing of gross interconnection receivables as at the statement of financial position date was:

8.4 Debts due by directors, officers and other related partiesAs at 31 December 2014, trade and other receivables did not include any receivables from:

(a) the directors and other officers of the company;

(b) firms or private limited companies respectively in which any director of the company is a partner, director or member,

other than those disclosed in note 37.2; and

(c) companies under the same management.

09 Short-term investment

As at the statement of financial position date, there was no Fixed Deposit Receipts (FDR) having original maturity of three

months or more (2013: Tk. 44,931,297 with Southeast Bank Limited and Tk. 33,345,000 with One Bank Ltd.).

10 Cash and cash equivalents

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Notes to the Financial Statements94

40,000,00040,000,000

13,503,00013,503,000

40,000,00040,000,000

13,503,00013,503,000

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000 Authorised: 4,000,000,000 ordinary shares of Tk. 10 each

Issued, subscribed, called up and paid up:

1,350,300,022 ordinary shares of Tk. 10 each

7,534,077,240

2,150

2,150

2,150

4,617,664,090

220

220

1,351,252,000

13,503,000,220

7,534,077,240

2,150

2,150

2,150

4,617,664,090

220

220

1,351,252,000

13,503,000,220

As at31 December 2014

As at31 December 2013

As at31 December 2014

55.8%0.0%0.0%0.0%34.2%0.0%0.0%10.0%100%

As at31 December 2013

55.8%0.0%0.0%0.0%34.2%0.0%0.0%10.0%100%

Name of shareholders

Telenor Mobile Communications AS, Norway Nye Telenor Mobile Communications II AS, Norway Nye Telenor Mobile Communications III AS, Norway Telenor Asia Pte Ltd, Singapore Grameen Telecom, Bangladesh Grameen Kalyan, Bangladesh Grameen Shakti, Bangladesh General public, GP employees and institution

10.1 Cash and cash equivalents comprise cash balances and call deposits with maturity of three months or less from the date of acquisition that are subject to an insignificant risk of changes in their fair value, and are used by the company in the management of its short term commitments. Bank overdraft that are repayable on demand and form an integral part of company's cash management are included as a component of cash and cash equivalents for the statement of cash flows. Bank overdraft as at 31 December 2014 was nil and as at 31 December 2013 was BDT 3,788,052,715.

10.2 Restricted cash balanceCash at bank as at 31 December 2014 included BDT 5,367,876 equivalent to unused Mobicash points in customer wallet. This amount moves with changes in unused Mobicash points and is restricted for use.

11 Share capital

The company was initially registered with ordinary shares of Tk. 43.00 each. These shares were subsequently converted into Tk. 10 shares through a 43:1 split at the 16th EGM (held on 15 July 2008) and 1:10 reverse split at the 19th EGM (held on 2 July 2009).

There has been no change in share capital during the current and comparative period.

11.1 Shareholding position

a) Percentage of shareholdings

b) Classification of shareholders by range of number of shares held

% of holding Value of shares (Taka)

6,503,44211,597,4164,448,4874,216,6822,089,7352,067,287

1,114,2015,930,109

28,826,4271,283,506,2361,350,300,022

10,595,43317,696,8805,866,8595,428,6072,744,1021,690,7782,161,578

6,389,43326,418,847

1,271,307,5051,350,300,022

30,6507,435

600296

855924798923

39,340

48,10811,820

8033811104946908821

61,516

As at31 December 2014

As at31 December 2013

As at31 December 2014

As at31 December 2013

Shareholding range

1-500 501-5,000 5,001-10,000 10,001-20,000 20,001-30,000 30,001-40,000 40,001-50,000 50,001-100,000 100,001-1,000,000 1,000,001-1,000,000,000

No. of shareholders No. of shares

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Notes to the Financial Statements 95

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Future minimum lease payments and their presentvalue as at 31 December 2013 were as follows:

(i) Not later than one year

(ii) Later than one year but not later than five years

(iii) Later than five years

797,316

3,114,857

4,095,108

8,007,281

798,566

3,495,610

9,025,303

13,319,479

1,250

380,753

4,930,194

5,312,197

Future minimum lease payments and their presentvalue as at 31 December 2014 were as follows:

(i) Not later than one year

(ii) Later than one year but not later than five years

(iii) Later than five years

795,380

3,047,499

3,367,087

7,209,966

1,028,907

3,616,148

8,076,064

12,721,119

233,528

568,649

4,708,977

5,511,154

InterestTaka'000

Future minimumlease payments

Taka'000

Present value ofminimum lease payments

Taka'000

5,511,154233,528

5,277,626

5,312,1971,250

5,310,947

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000Finance lease obligation Less: Current portion (Note 19.1)

12 Share premiumTotal amount of Tk. 8,384,003,437 was received as share premium in respect of shares issued to shareholders. Net issue cost of Tk. 543,777,495 was set off against share premium as per IAS/BAS 32 Financial Instruments: Presentation.

13 Capital reserveIn 1999, Grameenphone issued 5,086,779 preference shares of Tk. 45.84 each, which were converted into ordinary shares of Tk. 43.00 each in 2004. The balance Tk. 2.84 per share was transferred to capital reserve account. The conversion was in accordance with clauses 41 to 44 of Memorandum and Articles of Association of GP. This amount is not distributable as dividend as per the Companies Act 1994.

14 Deposit from shareholdersDeposit from shareholders as at the statement of financial position date represents balance of the share money received from Telenor Mobile Communications AS, Norway, which has not been used against issuance of shares.

15 Finance lease obligationGrameenphone entered into a lease agreement with Bangladesh Railway (BR) in 1997 for the right to use the optical fibre network along with its ancillary facilities. The lease was treated as operating lease until the end of 2004. Following an amendment to the lease agreement in 2004, it has been reclassified as finance lease and has been treated as such since 1 January 2005. The lease agreement was further amended on 13 June 2007 with Guaranteed Annual Rental (GAR) being revised and lease term being extended up to June 2027.

Obligation under finance lease was initially measured at an amount equal to the present value of minimum lease payments. The effect of change in lease agreement in 2007 was accounted for as an adjustment of the leased asset and obligation by the amount equal to the difference between the present value of revised minimum lease payments and the carrying amount of lease obligation at that date. GP's incremental borrowing rate, which was 15% at the inception of the lease, was used to calculate the present value of minimum lease payments, as it was impracticable to determine the implicit interest rate at that time.

Apart from the above, GP has obtained total 331 Km of fibre optic network (FON) from Summit Communications Limited against a lease contract for 30 years. This lease has been treated as finance lease as per IAS 17 Leases. Total lease obligation as of 31 December 2014 for this FON amounted to Tk. 200,206,865. Under the same lease agreement, we are expecting to have additional 116 Km of FON from the same company.

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Notes to the Financial Statements96

16 Loans and borrowings

Loans and borrowings include a long-term syndicated loan led by the International Finance Corporation (IFC) of USD 345 Million at 6-month-LIBOR + 3.5% interest rate. The full loan amount of USD 345 million has been drawn down in multiple tranches, repayment of which will commence in October 2015. The syndicate members include IFC, DEG, FMO, Proparco, CDC and OFID. This financial liability has been recognised at amortised cost as per IAS 39 Financial Instruments: Recognition and Measurement.

Current portion of loans and borrowings includes short-term bank loan of Tk. 1,500,000,000 and the portion of the above long-term syndicated loan falling due for repayment in next 12 months. Interest rate for the short term bank loan is 7.45%.

17 Deferred tax liabilities

Deferred tax assets and liabilities have been recognised and measured in accordance with the provisions of IAS/BAS 12 Income Taxes. Related deferred tax expense/(income) have been disclosed in note 33. The components of deferred tax assets and liabilities are given below:

As at 31 December 2014Property, plant and equipment (excluding land,

CWIP and leased assets) (Note 4)

Property, plant and equipment under finance lease (Note 4)

Difference for vehicle (Note 17.1)

Investment in associate

3G licence and spectrum

Trade receivables (Note 8)

Finance lease obligation including current portion (Note 15)

Other current liabilities (profit sharing plan)

2G licence and spectrum

Net taxable temporary difference

Deferred tax liability @40% tax rate (Note 3.10)

Deferred tax liability @15% tax rate (Note 17.2)

Deferred tax liabilities

26,810,791

-

-

36,751

14,949,025

6,101,654

-

-

26,009,600

51,907,441

4,577,792

(241,583)

695,524

15,751,207

4,798,627

(5,511,154)

(1,764,721)

24,090,035

25,096,650

4,577,792

(241,583)

29,432,859

658,773

802,182

(1,303,027)

(5,511,154)

(1,764,721)

(1,919,565)

20,395,347

7,894,630

98,816

7,993,446

Tax baseTaka'000

Carrying amountTaka'000

Taxable/ (deductible)temporary difference

Taka'000

As at 31 December 2013Property, plant and equipment (excluding land,

CWIP and leased assets) (Note 4)

Property, plant and equipment under finance lease (Note 4)

Difference for vehicle (Note 17.1)

Investment in associate

3G licence and spectrum

Trade receivables (Note 8)

Finance lease obligation including current portion (Note 15)

Other current liabilities (profit sharing plan)

2G licence and spectrum

Net taxable temporary difference

Deferred tax liability @40% tax rate (Note 3.10)

Deferred tax liability @15% tax rate (Note 17.2)

Deferred tax liabilities

25,003,336

-

-

36,751

16,098,950

6,209,861

-

-

28,177,067

53,397,336

4,477,078

(108,611)

570,516

16,903,734

5,685,770

(5,312,197)

(5,916,638)

25,714,082

28,394,000

4,477,078

(108,611)

32,762,467

533,765

804,784

(524,092)

(5,312,197)

(5,916,638)

(2,462,984)

19,885,105

7,740,536

80,065

7,820,601

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Notes to the Financial Statements 97

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

428,515123,610

-79,260

631,385

489,662116,201

-97,452

703,316

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000Security deposits from subscribers and channel partnersAsset retirement obligations (Note 18.1)Employee benefits - provision for gratuity (Note 18.2)Other non-current liabilities

116,2019,800

126,001(2,391)

123,610

110,95111,666

122,617(6,416)116,201

18.1 Asset retirement obligations (ARO) Opening balance Provision made during the year

Adjustment/payment made during the year Closing balance

5,180,56917,126,3198,955,03431,261,922

12,0103,299,877

34,573,809

7,859,31714,291,59014,701,418

36,852,3256,667

3,509,47640,368,468

Trade payablesAccrued expenses (Note 19.1)Liability for capital expenditure (Note 19.2)

Deferred connection revenueUnearned revenue

280,000(20,000)260,000

(260,000)-

232,615(21,000)

211,615(211,615)

-

18.2 Employee benefits - provision for gratuity Service cost Net interest expense/(income) Defined benefit cost Transfer to fund during the year Closing balance

17.1 Difference for vehicleThis represents the permanent difference related to sedan cars, not plying for hire, owned by GP. As per the provisions of

Income Tax Ordinance 1984, depreciation on such cars is allowed only up to certain limit of cost (currently Tk. 2 million per

car) of such cars for tax purpose. Difference for vehicle represents the amount of depreciated cost exceeding such limits.

17.2 Applicable tax rate for investment in associateTemporary difference related to 'investment in associate' is expected to be reversed through sale of shares in GPIT and

hence tax rate applicable to capital gain (15%) has been considered for deferred tax computation purpose.

18 Other non-current liabilities

Grameenphone recognises asset retirement obligations (ARO) in respect of roof-top base stations and office space for any

constructive and/or legal obligations for dismantling, removal or restoration incurred by the company as a consequence of

installing or constructing the sites. ARO is measured at the present value of expected cash outflows required to settle such

obligations. Unwinding of the discount is charged as finance expense in the profit or loss.

Net defined benefit liability was nil at the end of 2014. There was no change in the discount rate (12.0%) and expected

salary increase rate (10%). Grameenphone engaged a qualified actuary in the measurement of this post-employment

benefit plan (gratuity).

19 Trade and other payables

19.1 Accrued expenses include provision for BTRC revenue share, annual operating licence fee, operation, maintenance, office

running expenses and accrued financial expenses. It also includes current portion of the finance lease obligation (Tk.

233,527,787).

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Notes to the Financial Statements98

19.2 Liability for capital expenditure as at 31 December 2013 included liability for 3G licence and spectrum-2013.

20 Current tax payable

20.1 There was an uncertainty regarding tax deductibility of amortization of 49% of the 2G licence and spectrum cost. That

uncertainty is no longer there due to changes brought in by Finance Act 2014.

21 Other current liabilities

Other current liabilities mainly include accruals for performance bonuses, profit sharing plan (Tk. 1,764,720,502) and

payable for bills pay receipts (Tk. 577,946,973).

22 Revenue

22.1 Revenue from mobile communicationThis includes revenue from voice and non-voice traffic, subscription and connection fee and interconnection revenue.

22.2 Revenue from customer equipmentThis mainly includes revenue from sale of mobile handsets/devices and data cards.

22.3 Other revenuesThis mainly includes revenue from telecom facility sharing and commission income.

23 Cost of material and traffic charges

Traffic charges mainly include national and international interconnection cost.

Cost of materials and services includes cost of SIM card, scratch card, devices and contents. Cost of contents has been

reclassified from ‘revenue sharing, spectrum charges and licence fees’ to ‘cost of materials and services’ to better reflect

the business model of telecommunication business. Amount reclassified for 2013 is BDT 639,463,697.

24 Salaries and personnel cost

Salaries and personnel cost includes salaries, bonuses, different employment benefits including provident, gratuity, profit

sharing (WPPF), training and other related costs.

23,463,73315,090,07038,553,803(18,713,347)

(211,203)19,629,253

17,896,43719,605,35437,501,790

(14,038,057)-

23,463,733

Movement of income tax provision is shown as under:

Opening balanceProvision made during the year

Paid during the year (incl. tax deducted at source)AdjustmentsClosing balance

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000

98,464,596

2,095,379

2,103,397

102,663,372

92,943,359

1,874,894

1,805,974

96,624,227

2014Taka'000

2013Taka'000

The following is an analysis of revenue for the year:

Revenue from mobile communication (Note 22.1)

Revenue from customer equipment (Note 22.2)

Other revenues (Note 22.3)

5,267,603

4,324,280

9,591,883

4,913,064

3,482,249

8,395,314

Traffic charges

Cost of materials and services

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Notes to the Financial Statements 99

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

24.1 Number of employeesTotal number of employees having annual salary of BDT 36,000 or above each was 2,979 as at 31 December 2014 and

3,204 as at 31 December 2013.

24.2 Key management personnel compensation

25 Operation and maintenance

26 Sales, marketing and commissions

27 Revenue sharing, spectrum charges and licence fees

Grameenphone shares 5.5% of its revenue as 'revenue sharing' and 1.0% of its revenue as 'contribution to social obligation

fund' with BTRC as per licencing conditions. Licencing conditions also require Grameenphone to pay annual licence fee and

annual spectrum fee and charges.

28 Other operating expenses/(income), net

28.1 Consultancy and professional servicesThis includes fees for accounting and legal services, technical and business consultancy and other professional services.

803,6662,000

1,347,9121,981,279

822,331(247,307)

(19,937)1,020,019

5,709,963

995,0581,800

1,298,5901,945,799

521,333(122,370)

8,236939,082

5,587,529

Consultancy and professional services (Note 28.1)Statutory audit feesRental expense for property, plant and equipment (Note 28.2)Fuel and energy costsBad debt expense (Note 28.3)Rental and other income(Gain)/loss on disposal of assetsOthers (Note 28.4)

1,199,004

129,205

1,079

1,329,288

1,376,584

148,447

12,726

1,537,757

2014Taka'000

2013Taka'000

Short term employee benefits (salary and other allowances)

Post employment benefits (provident fund, gratuity etc.)

Other long term benefits

Key management personnel includes employees of the rank of Deputy General Manager (DGM), DGM equivalent and above.

3,332,034

386,873

1,351,702

5,070,609

4,030,944

333,164

659,304

5,023,411

Service maintenance fee

Vehicle maintenance expense

Other operation and maintenance

Service maintenance fee includes costs related to operation and maintenance of serviceability of mobile communication network.

3,264,156

2,468,102

7,468,464

13,200,722

5,023,853

2,200,669

7,221,955

14,446,477

Sales, marketing and representation costs

Advertisement and promotional expenses

Commissions

Sales, marketing and representation costs include costs related to trade marketing and subscriber acquisition.

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Notes to the Financial Statements100

28.2 Rental expense for property, plant and equipmentRent includes location rent for base stations, mobile switching centres (switch) and other locations. Future minimum lease

payments during non-cancellable period for such locations are as follows:

28.3 Bad debt expense

28.4 OthersThis includes office supplies, printing and postage, travelling, subscriptions, meeting, insurance etc.

29 Depreciation and amortisation

30 Share of profit of associate

Share of profit of associate represents Grameenphone’s share of Accenture Communications Infrastructure Solutions Ltd.'s

(previously known as GPIT) profit for the year ended 31 December 2014. This share of profit is not recognised in GP’s

separate financial statements until is realised through dividend. Dividend income is recognised when Grameenphone’s

rights to receive payment is established.

31 Finance expense/(income), net

32 Foreign exchange (gain)/loss

846,916

(24,585)

822,331

542,551

(21,218)

521,333

Provision made/(reversed) during the year

Recovery of bad debt during the year

Bad debt expense

Provision for doubtful debts has been made as per policy of the company mentioned in Note 3.7.

13,748,237

3,908,431

17,656,668

11,968,744

3,370,286

15,339,030

Depreciation of property, plant and equipment

Amortisation of intangible assets

(347,769)

206,852

(140,917)

(1,214,576)

21,696

(1,192,879)

Exchange gain

Exchange loss

(262,369)

2,212,817

356,553

2,307,001

(332,134)

2,098,129

828,962

2,594,957

Interest income

Interest expense

Other finance expenses

(i) Not later than one year

(ii) Later than one year but not later than five years

(iii) Later than five years

455,559

-

-

455,559

357,644

-

-

357,644

2014Taka'000

2013Taka'000

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Notes to the Financial Statements 101

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

33 Income tax expense

Income tax expense for the year ended 31 December 2013 included additional current tax impact of Tk. 1,906,265,586 and additional deferred tax impact of Tk. 1,323,913,545 for the income year 2012 resulting from change in tax rate from 35% to 40% by Finance Act 2013.

34 Earnings per share

34.1 Weighted average number of ordinary sharesThe weighted average number of ordinary shares outstanding during the period is the number of ordinary shares

outstanding at the beginning of the period, adjusted by the number of ordinary shares issued during the period multiplied

by a time-weighting factor. The time-weighting factor is the number of days that the shares are outstanding as a

proportion of the total number of days in the period.

34.2 Diluted earnings per shareNo diluted earnings per share is required to be calculated for the periods presented as GP has no dilutive potential ordinary

shares.

35 Financial risk management

Company’s financial risk management is governed by Treasury Policy as approved by the Board of Directors. Company’s principal financial assets include trade and other receivables, cash and short-term deposits that arise directly from its operations. Company’s financial liabilities mainly include trade and other payables, finance lease obligation and loans and borrowings. The main purpose of these financial liabilities is to finance the company’s operations. The company is exposed to credit risk, liquidity risk and market risk in relation to its financial instruments.

35.1 Credit riskCredit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Company’s exposure to credit risk primarily relates to trade receivables and balances with banks including short and long term deposits.

Customer credit risk, where appropriate, is assessed by using qualitative and quantitative criteria. Outstanding trade receivables are regularly monitored and appropriate impairment charge is considered as per company’s policy.

19,803,282,618

1,350,300,022

14.67

14,701,574,489

1,350,300,022

10.89

Profit for the year (in Taka)

Weighted average number of shares (Note 34.1)

Basic and diluted earnings per share (Note 3.16) ( in Taka)

Current tax expenseIncome tax expenses for the year (Note 3.10)

Adjustment for previous years

Deferred tax expense/(income)Deferred tax expense/(income) relating to origination and

reversal of temporary differences

Deferred tax expense/(income) resulting from

increase in tax rate

15,090,070

(211,203)

14,878,867

172,845

-

172,845

15,051,712

17,699,088

1,906,266

19,605,354

(2,778,770)

1,323,914

(1,454,856)

18,150,498

2014Taka'000

2013Taka'000

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements102

4,356,176284,150143,590

47911,7002,532

4,798,627

5,339,712156,488174,559

7,1155,1752,721

5,685,770

DomesticAsiaEuropeAustraliaAmericaAfrica

Credit risk relating to balances with banks is managed by treasury department in accordance with company’s policy. Minimizing counterparty risk is given more importance to yield on investment in making investment decisions. Counterparty limits are reviewed and approved as per company’s authority matrix.

Company’s maximum exposure to credit risk for the components of the statement of financial position was represented by

the carrying amounts as illustrated below:

Trade receivables

Other current receivables Interest receivable Receivables on Employees - Non-Interest Bearing Other non-interest-bearing receivables

Short term investmentCash at bank

The maximum exposure to credit risk for trade receivables as at the statement of financial position date by geographicregions was:

4,798,627

62359,825

1,134,7741,195,222

-4,744,124

10,737,973

5,685,770

4,01823,258

1,569,3041,596,581

78,2764,537,868

11,898,495

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000

Fina

nce

leas

e ob

ligat

ion

(incl

udin

g cu

rren

t por

tion)

Loan

s an

d bo

rrow

ings

- lo

ng-t

erm

Loan

s an

d bo

rrow

ings

- s

hort

-ter

m

Fo

reig

n

Lo

cal

Trad

e an

d ot

her p

ayab

les

Tr

ade

paya

bles

Ac

crue

d ex

pens

es

Li

abili

ty fo

r cap

ital e

xpen

ditu

re

Oth

er c

urre

nt li

abili

ties

Mat

urity

date

June

20

27

April

20

20

Dece

mbe

r 201

5

Janu

ary

2015

Dece

mbe

r 201

5

Dece

mbe

r 201

5

Dece

mbe

r 201

5

Dece

mbe

r 201

5

Nom

inal

Inte

rest

rate

15%

6-mo

nth-LI

BOR +

3.5%

6-mo

nth-LI

BOR +

3.5%

7.45

%

N/A

N/A

N/A

N/A

6-12

mon

ths

421,8

84

-

3,20

1,939

-

1,295

,142

7,26

3,90

0

7,13

8,96

5 -

19,3

21,8

30

1-2

year

s

858,

835

6,24

9,72

8 - - - - - -

7,10

8,56

3

2-5

year

s

2,75

7,31

3

17,5

15,9

87

- - - - - -

20

,273

,30

0

Carr

ying

amou

nt

5,51

1,154

24,0

03,

730

2,64

7,58

3

1,50

0,0

00

5,18

0,5

69

16,8

92,7

92

8,95

5,0

34

3,0

51,4

91

67,7

42,3

51

Taka

'00

0

Cont

ract

ual

cash

flow

s

12,7

21,11

9

26,5

05,

205

3,71

5,77

0

1,50

5,58

8

5,18

0,5

69

16,8

92,7

92

8,95

5,0

34

3,0

51,4

91

78,5

27,5

66

Taka

'00

0

6 m

onth

sor

less

607,

024

-

513,

832

1,50

5,58

8

3,88

5,42

7

9,62

8,89

1

1,816

,069

3,0

51,4

91

21,0

08,

320

Taka

'00

0Ta

ka'0

00

Taka

'00

0Ta

ka'0

00

Mor

e th

an5

year

s

8,0

76,0

64

2,73

9,49

0 - - - - - -

10,8

15,5

54

Taka

'00

0

35.2

Liq

uidi

ty ri

skLi

quid

ity ri

sk is

the

risk

that

the

com

pany

is u

nabl

e to

mee

t its

fina

ncia

l obl

igat

ions

as

they

fall

due.

The

com

pany

fore

cast

s its

cas

h flo

w re

quire

men

ts a

nd e

nsur

es th

at it

has

suffi

cien

t cas

h an

d ca

sh e

quiv

alen

ts a

nd lo

an fa

cilit

ies

to c

over

exp

ecte

d ne

eds

for l

iqui

dity

dur

ing

the

next

12 m

onth

s. T

he c

ompa

ny m

aint

ains

a b

alan

ced

mat

urity

pro

file

of

debt

obl

igat

ions

and

in g

ener

al m

inim

izes

cur

rent

exc

ess

cash

.

The

tabl

e be

low

giv

es th

e m

atur

ity p

rofil

e of

the

com

pany

's fin

anci

al li

abili

ties

base

d on

con

trac

tual

und

isco

unte

d pa

ymen

ts.

As a

t 31

Dec

embe

r 20

14

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 103

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements104

Fina

nce

leas

e ob

ligat

ion

Loan

s an

d bo

rrow

ings

- lo

ng-t

erm

Loan

s an

d bo

rrow

ings

- s

hort

-ter

m

Trad

e an

d ot

her p

ayab

les

Tr

ade

paya

bles

Ac

crue

d ex

pens

es

Li

abili

ty fo

r cap

ital e

xpen

ditu

re

Oth

er c

urre

nt li

abili

ties

Mat

urity

perio

d

June

20

27

April

20

20

Janu

ary

2014

Dece

mbe

r 201

4

Dece

mbe

r 201

4

Dece

mbe

r 201

4

Dece

mbe

r 201

4

Nom

inal

Inte

rest

rate

15%

6-mo

nth-LI

BOR +

3.5%

10%

-11%

N/A

N/A

N/A

N/A

6-12

mon

ths

406,

817

228,

713 -

1,964

,829

6,14

5,38

4

11,7

19,9

90

-

20,4

65,7

33

1-2

year

s

828,

701

1,622

,698

- - - - -

2,45

1,398

2-5

year

s

2,66

6,90

9

7,88

9,61

0 - - - - -

10,5

56,5

19

Carr

ying

amou

nt

5,31

0,9

47

11,6

65,2

14

7,70

0,0

00

7,85

9,31

7

14,2

91,5

90

14,7

01,4

18

7,0

47,7

96

68,5

76,2

82

Taka

'00

0

Cont

ract

ual

cash

flow

s

13,3

19,4

79

13,5

89,9

03

7,70

0,0

00

7,85

9,31

7

14,2

91,5

90

14,7

01,4

18

7,0

47,7

96

78,5

09,

502

Taka

'00

0

6 m

onth

sor

less

391,7

49

212,

466

7,70

0,0

00

5,89

4,48

8

8,14

6,20

6

2,98

1,428

7,0

47,7

96

32,3

74,13

3

Taka

'00

0Ta

ka'0

00

Taka

'00

0Ta

ka'0

00

Mor

e th

an5

year

s

9,0

25,3

03

3,63

6,41

7 - - - - -

12,6

61,7

20

Taka

'00

0

Liqu

idit

y ri

sk (c

ontd

...)

As a

t 31

Dec

embe

r 20

13

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 105

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

77.9

210

.48

121.2

994

.72

0.6

5

77.6

812

.80

128.

6810

7.0

60

.74

31 D

ecem

ber 2

014

Taka

31 D

ecem

ber 2

013

Taka

The

follo

win

g si

gnifi

cant

exc

hang

e ra

tes

have

bee

n ap

plie

d:

US

Dol

lar (

USD

)N

orw

egia

n Kr

oner

(NO

K)G

reat

Brit

ain

Poun

d (G

BP)

EURO

(EU

R)Ja

pane

se Y

en (J

PY)

35.3

Mar

ket r

isk

Mar

ket r

isk

is th

e ris

k th

at th

e fa

ir va

lue

of fu

ture

cas

h flo

ws o

f a fi

nanc

ial i

nstr

umen

t will

fluc

tuat

e be

caus

e of

cha

nges

in m

arke

t pric

es. M

arke

t ris

k co

mpr

ises

thre

e ty

pes o

f ris

k:

curr

ency

risk

, int

eres

t rat

e ris

k an

d ot

her p

rice

risk.

a)

Curr

ency

risk

Fore

ign

curr

ency

risk

is th

e ris

k of

cha

nges

in th

e fa

ir va

le o

r fut

ure

cash

flow

s of

an

expo

sure

due

to c

hang

es in

fore

ign

exch

ange

rate

s. T

he c

ompa

ny's

expo

sure

to fo

reig

n

curr

ency

risk

rela

tes

prim

arily

to th

e co

mpa

ny's

oper

atin

g ac

tiviti

es (c

onsu

ltanc

y, ro

amin

g re

venu

e an

d ex

pens

e) a

nd fi

nanc

ing

activ

ities

(bor

row

ing

in fo

reig

n cu

rren

cy).

The

com

pany

is m

ainl

y ex

pose

d to

cha

nges

in U

SD a

nd N

OK

rate

s. T

he c

ompa

ny's

expo

sure

to fo

reig

n cu

rren

cy c

hang

es fo

r oth

er c

urre

ncie

s is

not

mat

eria

l.

i) Ex

posu

re to

cur

renc

y ri

skTh

e co

mpa

ny's

expo

sure

to m

onet

ary

asse

ts a

nd li

abili

ties

deno

min

ated

in fo

reig

n cu

rren

cies

was

as

follo

ws

(tak

a in

thou

sand

):

Fore

ign

curr

ency

den

omin

ated

ass

ets

Rece

ivab

le fr

om T

elen

or e

ntiti

esAc

coun

ts re

ceiv

able

Cash

at b

ank

Fore

ign

curr

ency

den

omin

ated

liab

ilitie

sLo

ans

and

borr

owin

gsPa

yabl

e to

oth

er T

elen

or e

ntiti

es*

Trad

e an

d ot

her p

ayab

les

for e

xpen

ses

Net

exp

osur

e

* Pay

able

to o

ther

Tel

enor

ent

ities

repr

esen

ts p

ayab

le fo

r bus

ines

s se

rvic

e co

sts,

con

sulta

ncy

fees

etc

. whi

ch a

re in

clud

ed m

ainl

y in

trad

e an

d ot

her p

ayab

les.

47,2

7542

0,15

548

2,94

395

0,37

2

(27,

155,

488)

(965

,745

)(4

11,2

44)

(28,

532,

476)

(27,

582,

104)

- - - - -(1

,079

,904

) -(1

,079

,904

)(1

,079

,904

)

- - - - - - - - -

- 24 - 24 - -(2

,362

)(2

,362

)(2

,337

)

- - - - - - - - -

USD

NO

KG

BPEU

RJP

YAs

at 3

1 D

ecem

ber 2

014

20,4

3934

6,05

818

4,32

555

0,82

2

(11,6

65,2

14)

(450

,644

)(3

,065

,417

)(1

5,18

1,275

)(1

4,63

0,45

3)

- - - - -(1

,658

,945

) -(1

,658

,945

)(1

,658

,945

)

2,80

5 - -2,

805 - - - -

2,80

5

1,137 - -

1,137 -

(3,2

39)

(1,9

07)

(5,14

6)(4

,009

)

- - - - - -(2

2,51

8)(2

2,51

8)(2

2,51

8)

USD

NO

KG

BPEU

RJP

YAs

at 3

1 D

ecem

ber 2

013

Exch

ange

rate

as

at

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements106

Market risk (contd..)

ii) Foreign exchange rate sensitivity analysis for foreign currency expendituresA change of 10 basis points in foreign currencies would have increased/ (decreased) equity and profit or loss of the company by the amounts shown below. This analysis assumes that all other variables, in particular interest rates remain constant.

b) Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. Exposure to fair value movement relates to fixed rate instruments subject to fair value accounting and exposure to cash flow fluctuation relates to variable rate instruments. The company is primarily exposed to cash flow fluctuation arising from variable rate borrowings. The objective of interest rate risk management for Grameenphone is to reduce financial cost and ensure predictability.

ProfileAs at 31 December 2014, the interest rate profile of the company's interest bearing financial instruments was:

-

1,500,000

26,651,313

78,276

7,700,000

11,665,214

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000Fixed rate instrumentsFinancial assets Short-term investmentFinancial liabilities Loans and borrowings

Floating rate instrumentsFinancial liabilities Loans and borrowings

Carrying amount

(27,582)

(1,080)

-

(2)

-

(28,664)

27,582

1,080

-

2

-

28,664

(27,582)

(1,080)

-

(2)

-

(28,664)

27,582

1,080

-

2

-

28,664

31 December 2014

Expenditures denominated in USD

Expenditures denominated in NOK

Expenditures denominated in GBP

Expenditures denominated in EURO

Expenditures denominated in JPY

Exchange rate sensitivity

Profit or loss Equity10 bp increase

Taka'00010 bp decrease

Taka'00010 bp increase

Taka'00010 bp decrease

Taka'000

31 December 2013

Expenditures denominated in USD

Expenditures denominated in NOK

Expenditures denominated in GBP

Expenditures denominated in EURO

Expenditures denominated in JPY

Exchange rate sensitivity

(14,630)

(1,659)

3

(4)

(23)

(16,313)

14,630

1,659

(3)

4

23

16,313

(14,630)

(1,659)

3

(4)

(23)

(16,313)

14,630

1,659

(3)

4

23

16,313

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 107

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

Financial assets

Assets carried at fair valuethrough profit or loss

Held to maturity assetsShort term investment

Loans and receivablesTrade and other receivables

Financial liabilities

Liabilities carried at fair valuethrough profit or loss

Liabilities carried at amortised costsFinance lease obligationLoans and borrowings - long-termTrade and other payablesLoans and borrowings - short-termOther current liabilities

-

-

9,717,558

-

5,277,62624,003,73034,573,809

4,147,5833,051,491

-

-

9,717,558

-

5,277,62624,003,730

N/A*4,147,583

N/A*

As at 31 December 2014

-

78,276

11,809,676

-

5,310,94711,665,214

40,368,4687,700,0007,047,796

-

78,276

11,809,676

-

5,310,94711,665,214

N/A*7,700,000

N/A*

Carrying amount Taka'000

Fair value Taka'000

Carrying amount Taka'000

Fair value Taka'000

As at 31 December 2013

201415.00%

-6-month-LIBOR + 3.5% - 7.45%

201315.00%

11.50%-12.50%6-month-LIBOR + 3.5%

Finance lease obligationShort term investmentLoans and borrowings

* Fair value of such instruments is not likely to be significantly different from the carrying amounts of such instruments.

Fair value of financial assets and liabilities of the company together with carrying amount shown in the statement of

financial position were as follows:

Interest rates used to determine amortised cost

The interest rates used to discount estimated cash flows, when applicable, were as follows:

36 Capital management

For the purpose of company's capital management, capital includes issued capital, share premium and all other equity

reserves attributable to the equity holders of the company. The primary objective of company's capital management is to

support long-term strategic ambitions of the company.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividend, return capital to

shareholders, issue new shares or obtain long-term debt. Company has capital structure and dividend policy approved by

its Board of Directors.

There have been no breaches in the financial covenants of any interest-bearing loans and borrowings in the current period.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31 December

2014.

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements108

37

Rel

ated

par

ty d

iscl

osur

es

Dur

ing

the

year

end

ed 3

1 Dec

embe

r 20

14, t

he c

ompa

ny e

nter

ed in

to a

num

ber o

f tra

nsac

tions

with

rela

ted

part

ies i

n th

e no

rmal

cou

rse

of b

usin

ess.

The

nam

es o

f the

sign

ifica

nt

rela

ted

part

ies,

nat

ure

of t

hese

tra

nsac

tions

[ex

pend

iture

s/(r

even

ue)/

, rec

eiva

bles

/(pa

yabl

es)

and

divi

dend

pay

men

ts]

and

amou

nts

ther

eof

have

bee

n se

t ou

t be

low

in

acco

rdan

ce w

ith th

e pr

ovis

ions

of I

AS/B

AS 2

4 Re

late

d Pa

rty

Dis

clos

ures

. Nat

ure

of re

latio

nshi

p an

d si

gnifi

canc

e of

the

amou

nts

have

bee

n co

nsid

ered

in g

ivin

g th

is d

iscl

osur

e.

37.1

Rel

ated

par

ty tr

ansa

ctio

ns d

urin

g th

e ye

ar

10,9

24,4

12 3 3 3

220

,227

6,69

5,61

3 - -

1,416

,622

(57,

247)

440

,819

279,

201

261,3

90

28,5

30

348,

00

7

10,5

47,7

08 3 3 3

220

,326

6,46

4,73

0 - -

1,265

,324

(27,

364)

626,

101 -

308,

855

23,4

95

64,8

76

2014

Taka

'00

020

13Ta

ka'0

00

Nam

e of

rela

ted

part

ies

Tele

nor M

obile

Com

mun

icat

ions

AS

Nye

Tel

enor

Mob

ile C

omm

unic

atio

ns II

AS

Nye

Tel

enor

Mob

ile C

omm

unic

atio

ns II

I AS

Tele

nor A

sia

Pte.

Ltd

.

Gra

mee

n Te

leco

m

Gra

mee

n Ka

lyan

Gra

mee

n Sh

akti

Acce

ntur

e Co

mm

unic

atio

ns In

frast

ruct

ure

Solu

tions

Ltd

.

Tele

nor A

SA

Tele

nor C

onsu

lt AS

Tele

nor G

loba

l Ser

vice

s AS

Tele

nor G

loba

l Sha

red

Serv

ices

AS

Nat

ure

Shar

ehol

der

Shar

ehol

der

Shar

ehol

der

Shar

ehol

der

Shar

ehol

der

Shar

ehol

der

Shar

ehol

der

Asso

ciat

e

Tele

nor g

roup

ent

ity

Tele

nor g

roup

ent

ity

Tele

nor g

roup

ent

ity

Tele

nor g

roup

ent

ity

Nat

ure

of tr

ansa

ctio

ns

Div

iden

d pa

ymen

t

Div

iden

d pa

ymen

t

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AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 109

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

As a

t31

Dec

embe

r 20

14Ta

ka'0

00

As a

t31

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embe

r 20

13Ta

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4,90

7

(17,

192)

110

,462

(371

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)

6,39

5

(1,4

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04)

10,5

42

(58,

280

) -

(39,

761)

11,10

3

(40

3,59

2)

3,17

0

(35,

484)

15,0

62

(157

,958

)

14,2

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(2,2

84,0

94)

407,

248

(51,2

50) -

(27,

159) -

(168

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)

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part

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Gra

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38 Expense/expenditure and (revenue) in foreign currency during the year

39 Short-term credit facilities available as at 31 December 2014

The company enjoys composite working capital facilities including both funded and non-funded facilities from 24 banks and 1 non-bank financial institution (2013: 21 banks and 1 non-bank financial institution). The non-funded facilities include Letters of Credit (LC), Shipping Guarantee, Letters of Guarantee and Foreign Exchange Forward Contracts. The funded facilities include overdraft facility and short term loan. Import loans, though funded in nature, have been incorporated under non-funded facilities given that they are availed solely for the purpose of settlement of LC. The aggregate amount of arranged composite working capital facilities is Tk. 50,696 million (2013: Tk. 50,134 million) of which non-funded limit is Tk. 27,514 million (2013: Tk. 30,348 million) and funded limit is Tk. 30,083 million (2013: Tk. 29,876 million).

As per the approval of the Board of Directors of GP, the total amount of short-term funded facilities are limited to maximum drawing of USD 250 million (2013: USD 250 million) in equivalent BDT.

Security against short term credit facilitiesThe short-term credit facilities are unsecured and backed by standard charge documents as per terms and conditions set by respective banks and financial institutions.

40 Commitments

41 Contingencies

The company is currently involved in a number of legal proceedings, including inquiries from, or discussions with, governmental authorities that are incidental to its operations. However, save as disclosed below, the company is not currently involved in any legal or arbitration proceedings which may have a significant effect on the financial position or profitability of the company but for which any provision has not been recognised in these financial statements.

(a) BTRC auditBTRC carried out an audit of the information system of Grameenphone from April 2011 and issued a letter on 3 October 2011 claiming an amount of Tk. 30,341,108,581 on various grounds. Grameenphone during and after the audit clarified to both BTRC and auditors appointed by BTRC that those observations were framed on wrong basis. Grameenphone disagrees to the claim made by BTRC and responded to the letter requesting BTRC to review the notice. GP also took the issue to the court and obtained a 'status quo' valid till disposal of the rule.

-7,881,889

499,935261,390

11,8481,191,200

211,039

(996,535)

61,8026,195,633

843,567393,996

25,686462,327181,960

(270,440)

CIF value of imports SIM card and scratch card Telecommunication equipment

Expenditure in foreign currency Consultancy fee Consultancy fee - expatriate Other fee (travel and training) Technical know how International roaming cost

Foreign earnings Revenue from roaming partners

4,810,610 7,078,279

1 January to31 December 2014

Taka'000

1 January to31 December 2013

Taka'000

As at31 December 2014

Taka'000

As at31 December 2013

Taka'000Capital commitment (open purchase order)

The company as lessee has finance and operating lease commitments as disclosed in Note 15 and Note 28.2.

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements110

(b) SIM tax on replacement SIMsLarge Taxpayer Unit (LTU)-VAT by a letter dated 16 May 2012 claimed SIM tax of BDT 15,804,391,570 for all replacement

SIMs issued during the period from July 2007 to December 2011 alleging that Grameenphone evaded SIM tax by selling

new connections in the name of replacement SIMs. GP challenged the demand by a writ petition and the High Court initially

passed a stay order on the operation of the demand. The High Court later on 6 June 2013 disposed of the writ petition filed

by Grameenphone and asked LTU VAT Commissioner to decide on this matter within 120 days and make no demand in the

mean time. Consequently a SIM Replacement Review Committee was constituted by the Commissioner. The LTU

representatives of the Committee in January 2014 finalized their observations and asked mobile operators including

Grameenphone to give their feedback. LTU in their observations have not changed their earlier position much as far as ‘fact

finding’ is concerned. The mobile operators expressed their dissatisfaction over the findings and the way LTU appointed

members of the committee disregarded the spirit of the ‘Terms of Reference’ and agreed methodology as endorsed by

BTRC in carrying out the review. Such deviation is evident from significant deviation between interim report and final

observations. Grameenphone received a letter from LTU-VAT asking Grameenphone to attend a hearing on 25 January

2015. By way of a Writ Petition, Grameenphone challenged the premises on which the ‘hearing notice’ was served and

obtained a stay order on 19 January 2015 on the operation of that notice for an interim period of three months pending

hearing of the Writ Petition.

(c) VAT rebate on 2G licence renewal fee2G licence of Grameenphone was renewed on 7 August 2012 for the next 15 years effective from November 2011. 100% of

the licence renewal fee has been capitalised based on the assumption that GP's VAT exposure will be nil. This assumption is

based on the High Court's verdict in February 2012.

However, the lawsuit over the VAT rebate mechanism is still pending before the Appellate Division. If Appellate Division

ruled that GP would be required to pay VAT and would not get rebate for this VAT, GP's financial exposure for this licence

would increase by 15% (i.e. BDT 4,876,800,000) of the licence renewal fee.

(d) Claim for VAT based on C&AG auditLarge Taxpayer Unit (LTU)-VAT on 14 May 2014 issued a ‘pay or explain’ demand of BDT 16.60 billion referring an

assessment by Local and Revenue Audit Department of Comptroller and Auditor General (C&AG) office. C&AG office has

made this assessment for the fiscal year 2010-11 and 2011-12. Grameenphone disagrees to the findings of the assessment

referred by LTU because of lack of jurisdiction and improper procedures followed and relevant facts and legal provisions

being misconstrued in reaching the conclusion. Grameenphone has taken this issue to court and the High Court on 28 May

2014 issued a rule nisi asking respondents to show cause as to why the demand shall not be declared to have been issued

without lawful authority and is of no legal effect and stayed the operation of the demand. The High Court on 15 December

2014 heard the case and passed a judgment making the rule absolute without any cost and set aside the demand. No

provision for this demand has been considered in the financials.

42 Other disclosures

42.1 Segment informationGrameenphone essentially provides similar products and services to customers across the country and its products and

services essentially have similar risk profile. Grameenphone's business is not organised in product or geographical

components and its operating result is reviewed as a whole by its management. Hence, segment information is not

relevant.

42.2 Events after the reporting periodThe Board of Directors of Grameenphone Ltd. at its 153rd meeting held on 8 February 2015 recommended a final cash

dividend amounting to BDT 8,776,950,143 being 65% of the paid-up capital (i.e. BDT 6.5 per share) for the year 2014. Total

cash dividend including this final cash dividend stands at 160% of the paid-up capital (i.e., BDT 16 per share) for the year

2014. These dividends are subject to final approval by the shareholders at the forthcoming annual general meeting of the

company.

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements 111

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

AnnualReport

2 0 1 4grameenphone

Notes to the Financial Statements112

102,663,372

(9,591,883)

(6,455,286)

(5,070,609)

(13,200,722)

(8,082,170)

(5,709,963)

(17,656,668)

(65,767,301)

36,896,071

-

-

(2,307,001)

140,917

(2,166,084)

34,729,987

(15,032,961)

19,697,026

-

19,697,026

14.59

96,624,227

(8,395,314)

(7,062,188)

(5,023,411)

(14,446,477)

(7,571,339)

(5,587,529)

(15,339,030)

(63,425,287)

33,198,940

-

521,445

(2,594,957)

1,192,879

(880,632)

32,318,308

(18,070,433)

14,247,875

-

14,247,875

10.55

2014Taka'000

2013Taka'000

Revenue

Operating expenses Cost of material and traffic charges

Salaries and personnel cost

Operation and maintenance

Sales, marketing and commissions

Revenue sharing, spectrum charges and licence fees

Other operating (expenses)/income, net

Depreciation and amortisation

Operating profit

Share of profit of associate

Gain on sale of shares in GPIT

Finance (expense)/income, net

Foreign exchange gain/(loss)

Profit before income tax

Income tax expense

Profit after tax

Other comprehensive incomeTotal comprehensive income for the year

Earnings per share Basic and diluted earnings per share

(par value Tk. 10 each in Taka)

Supplementary informationSeparate Statement of Comprehensive Income of Grameenphone Ltd. for the year ended 31 December 2014.

Md. ManikFish traderGrameenphone user for the last 10 years

“My orders are growing everyday as now I can contact my suppliers directly with my reliable Grameenphone network.”

Range of Shareholdings Number ofShareholders PercentageTotal Number of Shares

001 to 500

501 to 5,000

5,001 to 10,000

10,001 to 20,000

20,001 to 30,000

30,001 to 40,000

40,001 to 50,000

50,001 to 100,000

100,001 to 1,000,000

1,000,001 to 1,000,000,000

Total

30,650

7,435

600

296

85

59

24

79

89

23

39,340

6,503,442

11,597,416

4,448,487

4,216,682

2,089,735

2,067,287

1,114,201

5,930,109

28,826,427

1,283,506,236

1,350,300,022

0.48%

0.86%

0.33%

0.31%

0.16%

0.15%

0.08%

0.44%

2.14%

95.05%

100%

For the Year Dividend Rate Dividend PerShare (BDT)

Par ValuePer Share (BDT) Dividend Type

2014

2013

2012

2011

2010

65% (Proposed Final Dividend)

95 % (Interim Dividend)

50% (Final Dividend)

90 % (Interim Dividend)

50% (Final Dividend)

90 % (Interim Dividend)

65% (Final Dividend)

140 % (Interim Dividend)

85 % (Final Dividend)

35 % (Interim Dividend)

6.50

9.50

5.00

9.00

5.00

9.00

6.50

14.00

8.50

3.50

10.00

10.00

10.00

10.00

10.00

10.00

10.00

10.00

10.00

10.00

Cash

Cash

Cash

Cash

Cash

Cash

Cash

Cash

Cash

Cash

1. GeneralAuthorized Capital : BDT 40,000,000,000Issued and Fully Paid-up Capital : BDT 13,503,000,220 Class of Shares : Ordinary Shares of BDT 10.00 eachVoting Rights : One vote per Ordinary Share

2. Stock Exchange ListingThe Ordinary Shares of the Company are listed on the Dhaka and Chittagong Stock Exchanges. Company trading code is [GP].

3. Distribution Schedule of the Shares as on December 31, 2014

4. Dividend

Useful Information for Shareholders

AnnualReport

2 0 1 4grameenphone

Useful Information for Shareholders114

Long Term

AAA

Short Term

ST-1

5. Credit RatingThe Company’s credit rating was reaffirmed by Credit Rating Agency of Bangladesh Ltd. (CRAB) on December 24, 2014.

6. Associate CompanyName of the Company Holding ActivityAccenture Communications Infrastructure Solutions Ltd. 49% IT Company(Formerly known as Grameenphone IT Ltd.)

7. GP Share Performance at Stock ExchangesI. Monthly high, low and close share price and volume of the Company’s Shares traded at Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) during the year 2014:

MonthDSE CSE

January

February

March

April

May

June

July

August

September

October

November

December

Total shares traded during the year

218.7

215.6

224.0

276.2

278.0

312.0

309.3

350.4

409.0

390.1

379.4

370.0

198.0

199.0

207.3

214.7

251.8

265.1

278.1

303.0

327.0

366.6

312.4

319.0

212.3

214.0

213.8

268.9

266.3

300.3

307.5

323.7

381.9

374.5

318.7

361.9

High(BDT)

Low(BDT)

Close(BDT)

Volume(No.)

High(BDT)

Low(BDT)

Close(BDT)

Volume(No.)

9,741,200

11,405,000

10,412,200

29,005,800

11,725,000

18,590,800

9,889,600

18,362,600

17,394,800

11,903,400

6,885,400

4,803,747

160,119,547

1,678,000

2,511,414

2,090,000

4,538,000

1,243,600

2,179,600

1,408,000

2,788,800

1,787,600

927,910

762,820

4,986,062

26,901,806

202.7

202.5

208.1

213.2

255.7

265.6

279.5

307.4

324.2

368.7

312.4

318.4

213.2

213.6

211.6

268.9

265.6

300.4

307.7

324.2

382.0

373.7

318.4

360.9

215.3

213.6

220.1

269.9

276.2

307.6

307.7

345.0

400.0

385.9

373.7

364.9

Period

DSE2014 2013 2014 2013

CSE

Quarter 1

Quarter 2

Quarter 3

Quarter 4

224.0

312.0

409.0

390.1

198.0

214.7

278.1

312.4

176.1

195.2

247.2

218.0

High(BDT)

Low(BDT)

High(BDT)

Low(BDT)

High(BDT)

Low(BDT)

High(BDT)

Low(BDT)

138.1

143.0

166.1

175.0

140.6

142.7

171.0

178.6

202.5

213.2

279.5

312.4

175.0

192.7

239.5

214.4

220.1

307.6

400.0

385.9

II. Quarterly high-low price history of the Company’s share for the year 2014

III. GP Share Price Trend Year wise

DSE2014 2013 2014 2013

CSE

Highest Price (BDT)

Lowest Price (BDT)

409.0

198.0

247.2

138.1

239.5

140.6

400.0

202.5

AnnualReport

2 0 1 4grameenphone

Useful Information for Shareholders 115

Overview

BusinessPerform

anceAdditional

Information

Financial AnalysisSustainability

Governance

IV. GP Share Price & Transaction Volume in DSE

8. Financial Calendar 2015

* Subject to change, please check http://www.grameenphone.com/about/investor-relations for latest updates

9. Company WebsiteAnyone can get information regarding Company’s activities, products & services or can view Annual Report 2014 at www.grameenphone.com

10. Investor RelationsInstitutional investors, securities analysts and other members of the professional financial community requiring additional financial information can visit the Investor Relations section of the Company website: www.grameenphone.com

11. Shareholder ServicesIf you have any queries relating to your shareholding, please contact at 01711555888 or mail to GP Share Office at shareoffice@grameenphone.com

Stand alone performance 2011-2014

0

500

1000

1500

2000

2500

3000

3500

4000

4500

50

100

150

200

250

300

350

400

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

GP

Pric

e

Shar

es T

rade

d

2012 2013 20142011

No of Shares Traded ('000) Closing Price (BDT) Average Price (BDT)

AnnualReport

2 0 1 4grameenphone

Useful Information for Shareholders116

Apr 201518th Annual

General Meeting

Jul 20151H 2015 Results Announcement

Feb 2015FY 2014 ResultsAnnouncement

May 20151Q 2015 Results Announcement

Oct 20153Q 2015 Results Announcement

Adjusted Price: Average of High, Low & Closing Price; Rebase: Adjustment to 100

1-Jan-14 1-Feb-14 1-Mar-14 1-Apr-14 1-May-14 1-Jun-14 1-Jul-14 1-Aug-14 1-Sep-14 1-Oct-14 1-Nov-14 1-Dec-14

GP Turnover as % of DSE GP(Adjusted & Rebased) DSEX (Rebased) DS30 (Rebased)

40

60

80

100

120

140

160

180

200

0%

5%

10%

15%

20%

25%

Reba

sed

Scal

e

% o

f DSE

Tur

nove

r

Relative performance 2014

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

GLIMPSE OF 17TH

ANNUAL GENERAL MEETING

AnnualReport

2 0 1 4grameenphone

Notice of the 18th Annual General Meeting118

Grameenphone Ltd.Registered Office: GPHouse, Bashundhara, Baridhara, Dhaka-1229

Share Office: Zahurul Tower, Plot#9, Road#113/A, Gulshan-2, Dhaka-1212

Notice of the 18th Annual General Meeting

AGENDA

By order of the Board of Directors

Sd/-Hossain Sadat

Director and Head of Regulatory Affairs& Company Secretary

March 23, 2015

Notes:

Notice is hereby given that the 18th Annual General Meeting of Grameenphone Ltd. will be held on Tuesday, April 21, 2015 at 10:00 am at Bashundhara Convention Center-2, Block-C, Bashundhara R/A, Baridhara, Dhaka-1229 to transact the following businesses:

1. Consideration and adoption of the Directors’ Report and the Audited Financial Statements of the Company for the year

ended 31 December 2014 together with the Auditors’ Report thereon.

2. Declaration of Dividend for the year ended 31 December 2014 as recommended by the Board of Directors.

3. Election/Re-election of Directors.

4. Appointment of Auditors and fixation of their remuneration.

evsjv‡`k wmwKDwiwUR A¨vÛ G·‡PÄ Kwgk‡bi wb‡`©kbv Abyhvqx Avmbœ evwl©K mvaviY mfvq†Kvb cÖKvi Dcnvi/Lvevi/†Kvb ai‡bi Kzcb cÖ`v‡bi e¨e¯’v _vK‡e bv|

• Members whose names appeared on the Members/Depository Register as on “Record Date” i.e. February 18, 2015 are eligible to attend the Annual General Meeting (AGM) and receive dividend.

• A Member entitled to attend and vote at the AGM may appoint a Proxy to attend and vote in his/her stead.

• The “Proxy Form”, duly filled and stamped at Tk. 20 must be deposited at the Company’s Share Office located at Zahurul Tower, Road #113/A, Plot #9, Gulshan-2, Dhaka-1212 not later than 72 hours before commencement of the AGM.

• Members/Proxies are requested to record their entry in the AGM well in time on April 21, 2015. The registration counter will open at 9:00 am on the AGM date.

• In case of non-receipt of Annual Report 2014 of the Company sent through courier, Members may collect the same from the Company’s Share Office within April 20, 2015. No additional Annual Report will be distributed at AGM venue. Soft copy of the Annual Report is available in Investor Relations section of the Company’s website: www.grameenphone.com

• Members are requested to submit to the Company’s Share Office on or before April 12, 2015, their written option to receive dividend. In case of non-submission of such option within the stipulated time, the dividend will be paid off as deemed appropriate by the Company.

• Grameenphone is concerned about the environment and utilizes natural resources in a sustainable way. We request the members to update their email address and contact number (mobile/fixed phone) with their respective Depository Participant (DP) for quicker and easier communication. Such cooperation will help conserve paper and minimize the impact on the environment.

Signature Verified by

Grameenphone Ltd.Registered Office: GPHouse, Bashundhara, Baridhara, Dhaka-1229

Proxy Form

I/We................................................………………………………………………………………………of………………………………………………………………………...………...........…………………………….....................................................................................................……………… being Member of Grameenphone Ltd. do hereby appointMr./Ms. ……………………………………...…………....................…………………………………… of ……………………………………....……………....................……………………………… as my/our PROXY to attend and vote on my/our behalf at the 18th Annual General Meeting of the Company to be held on Tuesday, 21 April 2015 at 10:00 am at Bashundhara Convention Center-2, Block-C, Bashundhara R/A, Baridhara, Dhaka-1229 and at any adjournment thereof.

Signed this ...................................................... day of ...................................................... 2015.

Notes:• The Proxy Form, duly filled and stamped, must be deposited at the Company’s Share Office located at Zahurul Tower, Plot#9, Road #113/A, Gulshan-2, Dhaka-1212 not later than 72 hours before commencement of the AGM.

• Signature of the Member(s) must be in accordance with the Specimen Signature recorded with the Company.

Note: Please present this Attendance Slip at the registration counter on the AGM date.

…………………………………………………..Signature of the Member(s)

…………………………………………..Signature of the PROXY

Number of Shares held ................................. RevenueStampTk.20BO ID No.

………………………………………………….……..Signature of the Member/Proxy

………………………………......………………………………Authorised Signatory of the Company

Signature Verified by

………………………………......………………………………Authorised Signatory of the Company

Grameenphone Ltd.Registered Office: GPHouse, Bashundhara, Baridhara, Dhaka-1229

Attendance SlipI/We do hereby record my/our attendance at 18th Annual General Meeting of the Company to be held on Tuesday, 21 April 2015 at 10:00 am at Bashundhara Convention Center-2, Block-C, Bashundhara R/A, Baridhara, Dhaka-1229.

Name of the Member/Proxy(in Block Letter)

BO ID No.

disclaimerThis report contains statements regarding the future in connection with Grameenphone’s growth initiatives. outlook strategies and objectives. All statements regarding the future are subject to inherent risks and uncertainties, and many factors may lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.

www.grameenphone.comHere you will find downloadable PDFs of:• Annual Report 2014• Proxy Form• Notice of 18th AGM

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Annual Report 2014

Grameenphone Ltd.GPHouseBashundhara, Baridhara, Dhaka-1229, BangladeshTel: +880-2-9882990, Fax: +880-2-9882970Website: www.grameenphone.com

Grameenphone wants to contribute to meet climate challenges and aims to reduce the consumption of resources and overall impact on the environment. In an effort to minimize paper consumption, we limit the scope of the printed annual report within regulatory requirement. Grameenphone’s website provides extensive information about the Company and its current activities: www.grameenphone.com