apex tannery limitedapextannery.com/resources/ar-2013.pdf · 2018-09-20 · 8 annual report 2013...

Apex Tannery Limited

CONTENTS

Our Vision, Mission, Values and Objectives 04

Corporate Directory 05

Directors and Management Team 06

Directors’ Report 07

Finanacial Highlights 15

Financial Highlights (Graphical presentation) 16

Statement of Value Addition 17

Report on Corporate Social Responsibilities 18

Report on Corporate Governance 20

Corporate Governance Compliance Report 23

Pattern of Shareholding 29

Audit Committee Report 30

Auditors’ Report 33

Statement of Financial Position 34

Statement of Comprehensive Income 35

Statement of Cash Flow 36

Statement of Changes in Equity 37

Notes to the Financial Statements 38

Notice of the AGM 53

Attendance slip and Proxy form 55


Annual Report 20134


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Annual Report 2013 5


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Annual Report 20136




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434,184 387,367e›Ub mycvwik cÖ‡`q jf¨vsk ,70 60,960 53,340jf¨vsk cieZx© ‡Ri 387 373,224 334,027

434,184 387,367


Annual Report 20138


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REPORT OF THE DIRECTORS

DEAR SHAREHOLDERS,

On behalf of your Directors, I have the pleasure in submitting the Report and Financial Statements for the year ended June 30, 2013.

PERFORMANCE

+ Increase

- Decrease

This Year Previous Year %

Sales (Taka in ‘000’) 3,248,799 3,067,208 05.92

Raw Cowhides purchase price (Taka/sft) 99.66 98.98 0.70

Raw Goatskins purchase price ( “ ) 74.19 78.75 (5.79)

Cow leather selling price ( “ ) 166.85 166.87 (0.01)

Goat leather selling price ( “ ) 118.65 122.23 (2.93)

Chemical cost ( “ ) 39.78 32.63 21.91

Gross profit (Taka in ‘000’) 253,309 271,157 (6.58)

Operating expenses ( “ ) 153,270 122,340 25.28

INVENTORIES

We normally purchase huge quantities of raw hides and skins during the Eid-ul-Azha festival, so that our production is not adversely affected due to low supply during the rest of the year. We feel that the inventory holding shows a positive trend because this year’s inventory represents 50 days of production as compared to 105 days last year.

FINANCIAL RESULTS

Taka in thousand

Year Ended Year EndedJune 30, 2013 June 30, 2012

Net profit after tax 100,157 107,676

Add: Previous years’ surplus 334,027 279,691

434,184 387,367

Appropriation recommended

Dividend payable 60,960 53,340

Balance 373,224 334,027

434,184 387,367



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Annual Report 201310


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DIVIDENDS

During the year EPS of your Company was Taka 6.57. Directors decided in the Board Meeting held on August 05, 2013 to recommend dividend of Taka 4.00 per share of Taka 10/- each. After your approval in this General Meeting, the dividend will be paid to the Shareholders.

EMPLOYMENT

Although the labour situation in the RMG sector was unsatisfactory, if not violent sometimes, the labour environment in the leather sector was quiet. Labour relation in your Company was cordial and morale of the workers was high. The breakdown of your Company’s human resources are:

This Year Previous YearTotal Total

Workers 650 605Staff 170 175Management 32 32

INDUSTRY OUTLOOK AND POSSIBLE FUTURE DEVELOPMENTS

Before the recession in Europe, our main market was Italy. For the past two years, our export to Italy has gone down tremendously and we do not see any prospects in this market. Fortunately, we were aware of this and explored the Chinese and Indian markets and were able to find good customers. Also, Japan is a steady market for us but the volume is not substantial.

We feel that the leather industry of Bangladesh will have to depend on the Chinese and Indian markets for the next few years. China and India are big producers and exporters of shoes and leather goods, but their domestic supply of finished leather is totally inadequate. Both these countries have to depend on supply of finished leather from abroad and here Bangladesh can be an important link to their supply chain.

RISKS AND CONCERNS

Raw hides and skins is a by-product of the meat industry. If the consumption of red meat decreases, then correspondingly the supply of hides and skins goes down with increase in price. We have noticed that the supply of hides and skins have been erratic in the world because of the difference in consumption of red meat in different countries. It is very difficult to predict the supply and prices of raw hides and skins in Bangladesh because the demand for red meat varies from month to month. So the biggest risk of leather industry is the price elasticity of raw hides and skins.

The main concern of leather industry in Bangladesh is the problem of pollution. Environment is a big issue everywhere but very unfortunately, there is no pollution plant for the leather industry in Bangladesh. It is a matter of great concern that if the government is not able to shift the entire leather industry of Dhaka from Hazaribagh to Savar within a short time, then there is a great possibility that the importing countries may impose a ban of Bangladeshi leather.



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FINANCIAL HIGHLIGHTSTaka in thousand

Particulars 2013 2012 2011 2010 2009

Restated

Sales 3,248,799 3,067,208 2,515,867 1,723,639 1,625,358

Gross profit 253,309 271,157 225,046 253,519 169,998

Profit before tax 126,047 131,981 119,361 179,180 160,454

Net profit after tax 100,157 107,676 96,843 142,853 146,792

Property, plant & equipment 280,531 241,175 209,719 152,810 147,069

Authorized capital 500,000 500,000 500,000 500,000 500,000

Issued and paid up capital 152,400 152,400 152,400 152,400 152,400

Current assets 1,112,356 1,313,429 1,394,792 933,045 1,370,835

Current liabilities 311,474 525,849 651,702 195,850 742,687

Net current assets 800,882 787,580 743,090 737,195 628,148

Dividend 60,960 53,340 45,720 38,100 32,004

Earnings per share (Taka) 6.57 7.07 6.35 9.37 9.63

Dividend per share (Taka) 4.00 3.50 3.00 2.50 2.10

Market value per share at year end (Taka) 86.70 103.10 136.20 148.50 118.90

Net asset value per share (Taka) 69.38 66.44 60.10 56.25 48.98

Net operating cash flow per share (Taka) 31.12 9.35 (4.48) 22.68 18.30

Price earning ratio (Times) 13.20 14.58 21.43 15.84 12.34

Dividend yield ratio (%) 4.61 3.39 2.20 1.68 1.77

Current ratio 3.57 2.50 2.14 4.76 1.85

Quick ratio 2.28 1.00 0.99 1.94 0.73

Return on Shareholder’s fund (%) 9.77 11.01 10.57 16.66 19.67

Interest coverage ratio 3.34 2.79 2.95 5.91 1.89



Pro�t before tax (Tk. in million)Net pro�t after tax (Tk. in million)

Net asset value per share (Tk.)

Market value per share (Tk.) at year end Return on Shareholder's fund (%)

Net operating income Net relized investment gain Net other income

Components of EPS (Tk.)

0

1

2

3

4

5

6

7

8

2009 2010 2011 2012 2013

0 0 0 0

2.01

6.05

1.58

7.51

1.86

4.33

2.03

5.01

2.06

3.543.03

2009 2010 2011 2012 20130

50

100

150

200160

147

179

143119

97

132108

126100

16.66

10.57 11.01 9.777.32

2009 2010 2011 2012 20130

5

10

15

20

2009 2010 2011 2012 20130

30

60

90

120

150118.90

148.50136.20

103.1086.70

2009 2010 2011 2012 201301020304050607080

48.9856.25

60.1 66.4 69.38

FINANCIAL HIGHLIGHTS (GRAPHICAL PRESENTATION)

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STATEMENT OF VALUE ADDITIONTaka in thousand

Year Ended Year EndedJune 30,

2013June 30,

2012Value addedSales 3,248,799 3,067,208Bought in materials and services (3,001,462) (2,784,974)

247,337 282,234Other income 62,262 43,193

Available for distribution 309,599 325,427

Distribution of value additionTo Government (Income tax) 26,114 08.43% 25,734 07.91%To Employees & workers (Salary, wages and other benefits) 153,599 49.61% 140,013 43.02%To Banks (Interest and charges) 29,954 09.68% 53,433 16.42%To Shareholders (Dividend) 60,960 19.69% 53,340 16.39%

270,627 87.41% 272,520 83.74%Retained for reinvestment and future growth 38,972 12.59% 52,907 16.26%

309,599 100.00% 325,427 100.00%

49 %

8 %

13 %

20 %

10 %

17 %

16 %

8 %

43 %

16 %

To Banks 10%To Shareholders 20%Retained for reinvestment 13%To Government 8%To Employees & workers 49%

2013 2012

To Banks 16%To Shareholders 17%Retained for reinvestment 16%To Government 8%To Employees & workers 43%



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CORPORATE GOVERNANCE COMPLIANCE REPORT

Status of compliance with the conditions imposed by the Commissions Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07th August 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969 (Report under Condition No. 7.00)

Condition No.

Title Compliance status

Remarks(If any)

1 Board of Directors

1.1 Board’s SizeThe number of the Board members shall not be less than 5 (five) and more than 20 (twenty);

Complied

1.2 Independent Director

(i) At least one fifth (1/5) of total number of directors shall be Independent Director;

Complied

(ii) a) Does not hold any share or holds less than 1% shares of the total paid-up shares of the Company;

Complied

(ii) b) Who is not a sponsor and not connected with any sponsor/director/ shareholder who hold 1% or more shares of the total paid-up shares on the basis of family relationship;

Complied

(ii) c) Does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies;

Complied

(ii) d) Not a member, director or officer of any stock exchange; Complied(ii) e) Not a shareholder, director or officer of any member of stock

exchange or an intermediary of the capital market;Complied

(ii) f ) Not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of any statutory audit firm;

Complied

(ii) g) Not be an independent director in more than 3 (three) listed companies;

Complied

(ii) h) 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);

Complied

(ii) i) Not been convicted for a criminal offence involving moral turpitude;

Complied

(iii) Nominated by the Board of Directors and approved by the shareholders in the AGM;

Complied

(iv) The post of Independent Director can not remain vacant for more than 90 (ninety) days;

Complied There was no vacancy in the position of Independent Director.

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

Complied

(vi) 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;

Complied



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Condition No.


Remarks(If any)

1.3 Qualification of Independent Director

(i) 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;

Complied

(ii) Should be a Business Leader/Corporate Leader/Bureaucrat/University Teacher with Economics or Business Studies or Law background/Professionals like Chartered Accountants, Cost and Management Accountants, Chartered Secretaries. Must have at least 12 (twelve) years of corporate management/professional experiences;

Complied

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

Not applicable

1.4 Chairman of the Board and CEO

Chairman and CEO shall be filled by different individuals. 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.

Complied

1.5 The Directors’ Report to Shareholders

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

Complied

(ii) Segment-wise or product-wise performance; Complied

(iii) Risks and Concerns; Complied

(iv) Discussion on Cost of goods sold, Gross profit margin and Net profit margin;

Complied

(v) Discussion on continuity of any extra-ordinary gain or loss; Not applicable

(vi) Disclosure for related party transactions; Complied

(vii) Utilization of proceeds from public issues, rights issues and/or through any others;

Not applicable

(viii) Explanation if the financial results deteriorate after the company goes for IPO, RPO, Rights Offer and Direct Listing;

Not applicable

(ix) Explanation about significant variance occurs between quarterly financial performance and annual financial statements;

Not applicable

(x) Remuneration to directors including independent directors; Complied

(xi) Fairness of financial statements; Complied

(xii) Maintenance of proper books of account; Complied

(xiii) Application of appropriate accounting policies and estimates; Complied

(xiv) Followed IAS, BAS, IFRS, and BFRS in preparation of the financial statements;

Complied

(xv) Soundness of internal control system; Complied

(xvi) Ability to continue as a going concern; Complied

(xvii) Significant deviations from the last year; Complied

(xviii) Key operating and financial data of at least preceding 5(five) years; Complied

(xix) Reasons for not declared dividend; Not applicable



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Condition No.


Remarks(If any)

(xx) Number of Board meetings held during the year and attendance; Complied

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

Complied

(xxi) a) Parent/subsidiary/associated companies and other related parties (Name wise details);

Complied

(xxi) b) Directors, CEO, CS, CFO, HIA and their spouses and minor children (Name wise details);

Complied

(xxi) c) Executives (Name wise details); Complied

(xxi) d) Shareholders holding ten percent (10%) or more voting interest (Name wise details);

Complied

(xxii) Directors appointment/re-appointment; Complied

(xxii) a) A brief resume of the director; Complied

(xxii) b) Expertise in specific functional areas; Complied

(xxii) c) Holding the directorship and the membership of committees of the board other than this company;

Complied

2 Chief Financial Officer (CFO), Head of Internal Audit (HIA) and Company Secretary (CS)

1 The company shall appoint a Chief Financial Officer (CFO), a Head of Internal Audit (Internal Control and Compliance) and a Company Secretary (CS). The Board of Directors should clearly define respective roles, responsibilities and duties of CFO, The Head of Internal Audit and the CS;

Complied

2 The Chief Financial Officer (CFO) and the Company Secretary (CS) of the Company shall attend the meetings of the Board of Directors;

Complied

3 Audit Committee

(i) The company shall have an Audit Committee as a sub- committee of the Board of Directors;

Complied

(ii) Assistance of the Audit Committee to Board of Directors; Complied

(iii) The Audit Committee shall be responsible to the Board of Directors. The duties of the Audit Committee shall be clearly set forth in writing.;

Complied

3.1 Constitution of the Audit Committee

(i) Compositions (At least three members should be in Audit Committee);

Complied

(ii) Appointment of Members of the Audit Committee (Members should be appointed by the Board with at least one Independent Director);

Complied

(iii) Qualification of Members of the Audit Committee (Members should be “financially literate” and at least one (01) member shall have accounting or related financial management experience);

Complied

(iv) Casual vacancy in Audit Committee shall be filled by the Board; Complied

(v) The Company Secretary shall act as the Secretary of the committee; Complied



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Condition No.


Remarks(If any)

(vi) The quorum of the Audit Committee (AC) meeting shall not constitute without at least 1 (one) Independent Director;

Complied

3.2 Chairman of the Audit Committee

(i) The Board of Directors shall select 1 (one) member of the Audit Committee to be Chairmen of the Audit Committee, who shall be an Independent Director;

Complied

(ii) Chairman of the Audit Committee shall remain present in the Annual General Meeting (AGM);

Complied

3.3 Role of Audit Committee

(i) Oversee the financial reporting process; Complied

(ii) Monitor choice of accounting policies and principles; Complied

(iii) Monitor internal control risk management process; Complied

(iv) Oversee hiring and performance of external auditors; Complied

(v) Review the annual financial statements before submission to the board for approval;

Complied

(vi) Review the quarterly and half yearly financial statements before submission to the board for approval;

Complied

(vii) Review the adequacy of internal audit function; Complied

(viii) Review statement of significant related party transactions; Complied

(ix) Review management letters/letter of internal control weakness issued by statutory auditors;

Complied

(x) Disclosure about the uses/ applications of funds raised by IPO/RPO/ Right Issue;

Complied

3.4.1 Reporting of the Audit Committee

(i) The Audit Committee shall report on its activities to the Board of Directors;

Complied

(ii) a) Report on conflicts of interest to the Board of Directors; Not applicable

((ii) b) Will report any suspected or presumed fraud or irregularities or material defect in the internal control system to the Board;

Complied

((ii) c) Will report any suspected infringement of laws, including securities related laws, rules and regulations to the Board;

Not applicable

((ii) d) Will report any other matters which shall be disclosed to the Board of Directors immediately;

Not applicable

3.4.2 Reporting to the Authorities (BSEC)If any materials impact on the financial condition & results of operation, unreasonably ignored by the management;

Not applicable

3.5 Reporting to the Shareholders and General InvestorsReport on activities carried out by the Audit Committee, including any report made to the Board of Directors under condition 3.4.1 (ii) above during the year, shall be signed by the Chairman of the Audit Committee and disclosed in the annual report of the issuer company;

Complied



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Condition No.


Remarks(If any)

4. Engagement of external/ statutory auditors

(i) Non-engagement of appraisal or valuation services or fairness opinions;

Complied

(ii) Non-engagement in designing financial information systems and implementation;

Complied

(iii) Non-engagement in Book-keeping; Complied

(iv) Non-engagement in Broker-dealer services; Complied

(v) Non-engagement in Actuarial services; Complied

(vi) Non-engagement in Internal audit services; Complied

(vii) Non-engagement in services that the Audit Committee determines;

Complied

(viii) No partner or employees of the external audit firm’s shall possess any share of the company they audit at least during the tenure of their audit assignment of that company;

Complied

5. Subsidiary Company

(i) Composition of the Board of Directors; Not applicable

(ii) At least 1 (one) Independent Director to the subsidiary company; Not applicable

(iii) Submission of minutes to the holding company ; Not applicable

(iv) Review of minutes by the holding company ; Not applicable

(v) Review of financial statements by holding company; Not applicable

6. Certification of Chief Executive Officer (CEO) and Chief Financial Officer (CFO) to the Board

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

Complied

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

Complied

(ii) No transactions entered into by the Company during the year which are fraudulent, illegal or violation of the Company’s code of conduct;

Complied

7. Reporting and compliance of Corporate Governance

(i) Obtain certificate about compliance of conditions of Corporate Governance Guidelines;

Complied

(ii) Directors shall state in the Directors’ report about the compliance with the conditions of the Corporate Governance Notification;

Complied



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ARTISANChartered Accountants

BSEC BHABAN (Level-10), 102, Kazi Nazrul Islam Avenue

Kawran Bazar, Dhaka-1215Tel: 028189885

Mobile # 01922 797851

Certificate of Compliance to the Shareholders of APEX TANNERY LIMITED

On the Conditions of Corporate Governance Guidelines

We have reviewed the statement of compliance of Conditions of Corporate Governance guidelines prepared by the

Management of APEX TANNERY LIMITED to comply with the Notification No. SEC/CMRRCD/2006-158/134/Admin/44

dated 7th August 2012 of Bangladesh Securities and Exchange Commission (BSEC), where the company is listed.

The responsibility for compliance with the Conditions of Corporate Governance Guideline is that of the Board of

Directors of the company. Our responsibility is to review, to the extent where such compliance can be objectively

verified, whether the statement of compliance reflects the status of the Company’s compliance with the provisions of

the conditions of Corporate Governance guidelines and report if it does not.

Based on our review, we certify that nothing has come to our attention which causes us to believe that the Statement of

Compliance does not appropriately reflect the Company’s compliance, in all material respects, with the best practices

contained in the Conditions of Corporate Governance as applicable to the Company for the year ended June 30, 2013.

Md. Selim Reza FCA FCSPartnerARTISANChartered Accountants



PATTERN OF SHAREHOLDINGAs of June 30, 2013

Annexure – I

(a) Parent/Subsidiary/Associated companies and other related parties (name wise details): N/A

(b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and their spouses and minor childrens (name wise details):

SL No. Name Number of

Shareholding Name of SpouseShares held by

the Spouse/ Children

01 Directors

i Mr. Syed Manzur Elahi 3,85,550 Mrs. Niloufer Manzur -

ii Mr. Md. Rahmatullah 3,04,800 Mrs. Halima Rahmatullah 1,43,500

iii Mr. Syed Nasim Manzur 3,24,100 Mrs. Samia Huq -

iv Mr. Md. Hedayetullah 3,04,950 Mrs. Afia Hedayetullah -

v Mr. Md. Fayekuzzaman (MD of ICB) 64,34,550 Mrs. Munira Begum -

vi Mr. Prof. Mohammed FarashuddinPh.D.-Independent Director

- Mrs. Suraiya Farashuddin -

02 Chief Executive OfficerMr. Md. Rahmatullah 3,04,800 Mrs. Halima Rahmatullah 1,43,500

03 Head of Internal Audit and DirectorMr. Md. Hedayetullah 3,04,950 Mrs. Afia Hedayetullah -

04 Chief Financial OfficerMr. Anup Kumar Mukherjee - Mrs. Swapna Mukherjee -

05 Company SecretaryMr. Jagadish Kumar Bhanja - Mrs. Nanda Bhanja -

(c) Executives (Top five salaried employees of the company, other than the Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer and Head of Internal Audit):

Name Designation Shares held

Mr. M. A. Majed Executive Director 4,200

Mr. Ansarul Islam Executive Director --

Mr. Syed Abdul Matin General Manager (Finance) 50

Mr. Md. Sayeed Hossain General Manager (Commercial) --

Mr. Md. Nazrul Islam Khan General Manager (Production) --

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AUDITORS’ REPORT To the Shareholders of Apex Tannery Limited

We have audited the accompanying Statement of Financial Position of the Apex Tannery Limited as at June 30, 2013 and statement of Comprehensive Income and Statement of Cash Flow, Changes in Equity and Notes to the Financial Statements for the year then ended.

Respective Responsibilities of Management and Auditors

The Company’s management is responsible for preparing the financial statements, which give true and fair view, in accordance with the Bangladesh Accounting Standards (BAS). Our responsibility is to express an independent opinion on the financial statements, presented to us, based on Bangladesh Standards on Auditing (BSA).

Scope

We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and Bangladesh Accounting Standards (BAS), give a true and fair view of the sate of the Company’s affairs as at June 30, 2013 and of the results of its operations and it’s cash flows for the year then ended and comply with the applicable sections of the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

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 those books.

c) The company’s Statement of Financial Position and statement of Comprehensive Income dealt with by the report are in agreement with the books of account; and

d) The expenditure incurred was for the purposes of the company’s business.

Place : Dhaka Malek Siddiqui WaliDate : August 07, 2013 (Chartered Accountants)

(Md. Waliullah, FCA)



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APEX TANNERY LIMITEDStatement of Financial Position as of June 30, 2013

Taka in thousand

As of As of Notes June 30, 2013 June 30, 2012AssetsNon current assets Property, plant and equipment 4 280,531 241,175 Investments 5 40,078 39,014 Deferred tax assets 6 3,182 2,957 323,791 283,146Current assets Inventories 7 401,762 790,040 Trade and other receivables 8 184,763 177,758 Advances, deposits and prepayments 9 171,037 127,829 Cash & cash equivalents 10 354,794 217,802 1,112,356 1,313,429Total Assets 1,436,147 1,596,575

Equity and LiabilitiesShareholders’ equity Share capital 11 152,400 152,400 Share premium 425,333 425,333 Dividend equalization fund 44,888 44,888 Retained earnings 402,180 355,363 Fair valuation surplus of investment 12 32,522 34,600 1,057,323 1,012,584Non current liabilities Retirement benefit obligations 13 67,350 58,142

Current liabilities Short-term loan 14 214,530 - Working capital loan 15 397 433,029 Trade payables 16 18,367 14,488 Other payables 17 19,599 18,394 Provision for income-tax 18 58,581 59,938 311,474 525,849Total Equity and Liabilities 1,436,147 1,596,575

The annexed notes form an integral part of these financial statements. For and on behalf of the Board of Directors

Md. Rahmatullah Md. Fayekuzzaman Jagadish Kumar Bhanja Managing Director Director Company Secretary

Signed in terms of our annexed report of even date.

Dated: Dhaka Malek Siddiqui WaliAugust 07, 2013 Chartered Accountants



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APEX TANNERY LIMITEDStatement of Comprehensive Income for the year ended June 30, 2013

Taka in thousand Year Ended Year Ended Notes June 30, 2013 June 30, 2012

Sales 20 3,248,799 3,067,208Cost of salesCost of goods sold 21 (2,929,880) (2,733,678)Freight & forwarding 22 (65,610) (62,373) (2,995,490) (2,796,051)Gross profit 253,309 271,157

Operating expensesAdministrative expenses 23 (34,808) (32,918)Marketing expenses 24 (105,359) (76,118)Directors’ remuneration (6,840) (6,840)Legal & audit fees 25 (492) (420)Depreciation 4A (5,771) (6,044) (153,270) (122,340)

Operating profit 100,039 148,817 Bank interest expenses & charges 26 (29,954) (53,433)

Non operating incomeOther income 27 62,262 43,193Profit for the year 132,347 138,577

Contribution to workers’ profit participation fund (6,300) (6,596)

Profit before income tax 126,047 131,981

Income taxCurrent tax expenses 28 (26,115) (25,734) Deferred tax income 29 225 1,429 (25,890) (24,305)Net profit after tax 100,157 107,676

Other Comprehensive IncomeFair valuation surplus of investments (unrealized) (2,078) 34,600 Total Comprehensive Income 98,079 142,276Earnings per share with fair valuation surplus 30 6.44 9.34Earnings per share without fair valuation surplus 30 6.57 7.07







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APEX TANNERY LIMITEDStatement of Cash flow for the year ended june 30, 2013

Taka in thousand Year Ended Year Ended June 30, 2013 June 30, 2012

A. Cash flow from operating activities 474,221 142,444

Collections from turnover / bills receivable and other income 3,301,658 3,126,879

Payments for purchase of leather, chemicals, spare-parts, paymentsof creditors and other expenses (2,753,756) (2,902,752)

Interest paid (29,954) (53,433)

Payments to workers’ profit participation fund (6,546) (6,386)

Income tax paid (37,181) (21,864)

B. Cash flow from investing activities (68,184) (60,192)

Acquisition of property, plant and equipment (62,107) (56,962)

Purchase of Investment - 2,847

Advance payment for land at Savar (6,077) (6,077)

C. Cash flow from financing activities (269,045) (192,209)

Loans received / (paid) (218,102) (147,576)

Dividend received / (paid) (50,943) (44,633)

Increase / (decrease) in cash and cash equivalents (A+B+C) 136,992 (109,957)

Opening cash and cash equivalents 217,802 327,759

Closing cash and cash equivalents 354,794 217,802

The annexed notes form an integral part of these financial statements.For and on behalf of the Board of Directors






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APEX TANNERY LIMITEDStatement of Changes in Equity

For the year ended June 30, 2013

Taka in thousand

Particulars Share Capital

Share Premium

Dividend Equalization

Fund

Retained Earnings

Fair Valuation Surplus Total

As at June 30, 2012 152,400 425,333 44,888 355,363 34,600 1,012,584

Net profit 100,157 - 100,157

Cash dividend for 2011-2012 (53,340) - (53,340)

Fair valuation surplus (2,078) (2,078)

As at June 30, 2013 152,400 425,333 44,888 402,180 32,522 1,057,323

For the year ended June 30, 2012

Taka in thousand

Particulars Share Capital

Share Premium

Dividend Equalization

Fund

Retained Earnings

Fair Valuation Surplus Total

As at June 30, 2011 152,400 425,333 44,888 293,407 - 916,028

Net profit 107,676 - 107,676

Cash dividend for 2010-2011 (45,720) - (45,720)

Fair valuation surplus 34,600 34,600

As at June 30, 2012 152,400 425,333 44,888 355,363 34,600 1,012,584







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APEX TANNERY LIMITEDNotes to the Financial Statements for the year ended June 30, 2013

1. Reporting entity

a) Company profile

Apex Tannery is the largest tannery in Bangladesh and one of the largest in South Asia. It is a 100% export oriented company. The company is using state of the art machineries from Italy, France and Germany. Apex Tannery Limited was incorporated as a private limited company on 26th day of July 1976 under Companies Act 1913 and was converted into a public limited company in 1986. The shares of the Company are publicly traded at Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. The address of the registered office is 127 Hazaribagh T/A, Dhaka-1209.

b) Nature of business

The principal activities of Apex Tannery are to produce high quality leather, by using Italian chemicals, technology, complying with world fashion standards and specifications. Its annual capacity is about 26 million Sft. of finished goat and cow leather. Apex exports to Europe, China, South America and all major leather market of the world. It has two manufacturing facilities; Unit I situated at Hazaribagh and Unit II situated at Shafipur, Gazipur both engaged in processing and finishing cow and goat leather for 100% export. Unit II has been leased out to Apex Adelchi Footwear Ltd. for 10 years from 01. 10. 2011.

2. Basis of preparation of financial statements

a) Statement of compliance

The financial statements have been prepared in accordance with Bangladesh Accounting Standards (BAS), Bangladesh Financial Reporting Standards (BFRS), Companies Act 1994 and other applicable laws and regulations.

b) Basis of measurement

The financial statements have been prepared on historical cost basis.

c) Date of authorization

The board of directors has authorized these financial statements on August 05, 2013

d) Functional and presentation currency

These financial statements are presented in Bangladesh Taka which is the company’s functional currency. All financial information presented in Taka have been rounded off to the nearest Taka.

e) Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an on going basis. Revisions of accounting estimates are recognized in the period in which the estimates are revised or any future periods affected.

In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in the following notes:

Note 7 Inventory valuation Note 6 Deferred tax assets Note 18 Provision for tax

f) Reporting period The reporting period of the company covers one year from July 1 to June 30.



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3. Significant accounting policies The accounting policies set out below have been applied consistently to all period presented in these

financial statements.

a. Property, plant & equipment

I. Recognition and measurement: Property, plant & equipment (PPE) are initially measured at cost. After initial recognition an item of PPE carried at cost less accumulated depreciation in accordance with BAS 16 “Property plant & equipment”. Cost of PPE represents cost of purchase price, import duties and non refundable purchase taxes after deducting trade discounts and rebates and any cost directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management.

II. Subsequent cost: The costs of the day-to-day servicing of PPE are recognized in the Statement of Comprehensive Income. The costs of replacing of PPE are recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably.

III. Depreciation: The Company uses reducing balance method to depreciate property, plant & equipment. No depreciation is charged on Land and Land development. Full year depreciation is charged when the PPE is placed in service regardless of which month the PPE is placed in service. In case of disposals, no depreciation is charged during the year of its disposal. The annual depreciation rates applicable to the principal categories are: Building 10%Plant & machinery 15%Furniture & fittings 10%Vehicles 20%

Depreciation has been charged to cost of goods sold & administrative expenses consistently.

b. Inventories Inventories comprise of raw materials, work-in-progress and finished goods, chemicals and spare-

parts. They are stated at a lower of cost and net realizable value, in accordance with BAS 2 “Inventories”. The cost of inventories is measured by using the weighted average cost formula. The cost of inventories represents all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.

c. Trade and other receivables These are carried at original invoice value considered good and collectible.

d. Cash and cash equivalents Cash and cash equivalents comprises cash in hand, cash at Bank and FDR which is readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value.

e. Trade and other payables These are recognized for amounts to be paid in the future for goods and services.

f. Income Taxes

I) Current Income Tax The corporate tax rate for publicly listed companies is 27.50%. However companies deriving income from export are entitled to exemption of 50% tax on such income. Since the company is 100% export-oriented, 50% of trading income will not be subject to tax under paragraph 28 of Part A of the Sixth Schedule of the IT Ordinance, 1984. The provision made has been calculated on the above basis, which is adequate.

II) Deferred Income TaxDeferred tax is recognized on differences between the carrying amounts of assets and liabilities for financial reporting purpose and the corresponding tax bases used for taxation purpose. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized.



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g. Employee Benefits

The Company maintains both defined contribution plan (provident fund) and defined benefit plan (gratuity) for its eligible permanent employees.

I) Defined contribution plan (Provident fund)

The Company operates a contributory Provident fund for its eligible permanent employees. The fund is approved by the National Board of Revenue (NBR). The fund is administered by a Board of Trustee and is funded by contribution partly from the employee and partly from the Company at predetermined rates. The contribution is invested separately from the Company’s assets.

II) Defined benefit plan (Gratuity)

The Company maintains an unrecognized gratuity fund for its permanent employees, under which an employee is entitled to the benefits depending on the length of services and last drawn basic salary.

h. Statement of Cash Flow

Cash flow from operating activities have been presented under direct method.

i. Transaction with related parties

The company has carried on transactions with Apex Adelchi Footwear Limited, Pioneer Insurance Company Limited and Mutual Trust Bank Limited in the normal course of business.

j. Comparative information

Figures of the year 2011-2012 have been rearranged whenever considered necessary to ensure comparability with the current period.

k. Foreign currency transaction

Transactions in foreign currencies are converted into Bangladesh Taka at the exchange rate prevailing on the date of transaction in accordance with provisions of BAS 21 “The effects of changes in foreign currency rates”.

l. Revenue recognition

The Company recognizes revenue when risk and rewards associated with ownership has been transferred to the buyer, which satisfied all the conditions for the revenue recognition as provided in BAS 18 “Revenue Recognition”.

m. Earnings per share (EPS)

The Company calculates Earnings per share (EPS) in accordance with BAS 33 “Earnings per share” which has been shown on the face of Statement of Comprehensive Income.

n. Components of the Financial Statements

According to the Bangladesh Accounting Standard (BAS) 1 “presentation of Financial Statements”, the complete set of Financial Statements includes the following components:

i. Statement of Financial Position (Balance Sheet) as at June 30, 2013.ii. Statement of Comprehensive Income (Profit and loss Account) for the year ended June 30, 2013.iii. Statement of Cash Flow for the year ended June 30, 2013.iv. Statement of Changes in Equity for the year ended June 30, 2013.v. Accounting policies and explanatory notes.

o. Subsequent Disclosure of events occurring after the Reporting date

There is no adjusting event at the Reporting date of such importance non-disclosure of which would affect the availability to the user of the financial statement to make proper evaluation and decision.

p. Impairment The carrying amount of assets other than inventories and deferred tax assets are reviewed at each balance

sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated. An impairment loss is recognized in the Statement of Comprehensive Income when the carrying amount of the asset exceeds its recoverable amount.



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4. PROPERTY, PLANT & EQUIPMENT

Particulars Land Building Plant & Furniture Vehicles Total This Total Machinery & Fittings Year Previous Year

COSTUnit I 134,847,790 40,643,128 316,042,161 25,313,724 79,937,628 596,784,431 534,677,629

Unit II 12,769,246 121,196,341 113,940,412 883,041 486,500 249,275,540 249,275,540

147,617,036 161,839,469 429,982,573 26,196,765 80,424,128 846,059,971 783,953,169

DEPRECIATIONUnit I 0 36,494,511 247,314,485 20,297,407 59,081,487 363,187,889 344,827,114

Unit II 0 96,301,608 104,852,692 704,955 482,278 202,341,533 197,950,893

0 132,796,119 352,167,177 21,002,362 59,563,765 565,529,422 542,778,007

Written Down Value 147,617,036 29,043,350 77,815,396 5,194,403 20,860,363 280,530,549 241,175,161

A) Schedule of property, plant & equipment- Unit I as at June 30, 2013

Sl Particulars Land Building Plant & Furniture Vehicles Total This TotalNo. Machinery & Fittings Year Previous Year

COST1 As at 01.07.12 79,023,974 40,643,128 314,329,867 24,956,290 75,724,370 534,677,629 477,715,255

2 Addition this year 55,823,816 0.00 1,712,294 357,434 4,213,258 62,106,802 56,962,374

3 As at 30.6.13 (1+2) 134,847,790 40,643,128 316,042,161 25,313,724 79,937,628 596,784,431 534,677,629

4 Written down value

as at 30.06.12 79,023,974 4,609,575 79,143,796 5,216,252 21,856,918 189,850,514 153,410,679

DEPRECIATION5 Charged on (2+4) 134,847,790 4,609,575 80,856,090 5,573,686 26,070,176 251,957,316 210,373,054

6 Rate (%) 0 10 15 10 20

7 During the year 0 460,958 12,128,414 557,369 5,214,035 18,360,775 20,522,5408 As at 30.06.12 0 36,033,553 235,186,071 19,740,038 53,867,452 344,827,114 324,304,576

9 As at 30.06.13 (7+8) 0 36,494,511 247,314,485 20,297,407 59,081,487 363,187,889 344,827,11410 Written down value as at 30.06.13 134,847,790 4,148,617 68,727,676 5,016,317 20,856,142 233,596,542 189,850,514

Charged to Cost of Production 12,589,371 Profit & Loss Account 5,771,404 18,360,775

Addition of land represents purchase of 115 decimal land at Kandi Boilarpur, Savar , Dhaka. Addition of plant & machinery represents purchase of drum and measuring machine. Vehicle purchased for management. Addition of furniture & fittings represent purchase of computer, printer and ancillaries. There are no intangible assets. Depreciation has been charged on reducing balance method. There is no contract for capital expenditure to be executed and not provided for in the financial

statements.



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B) Schedule of property, plant & equipment -Unit II as at June 30, 2013

Sl Particulars Land Building Plant & Furniture Vehicles Total This TotalNo. Machinery & Fittings Year Previous Year

COST

1 As at 01.07.12 12,769,246 121,196,341 113,940,412 883,041 486,500 249,275,540 249,275,540

2 Addition this year 00 00 00 00 00 00 00

3 As at 30.6.13(1+2) 12,769,246 121,196,341 113,940,412 883,041 486,500 249,275,540 249,275,5404 Written down value

as at 30.06.12 12,769,246 27,660,815 10,691,435 197,873 5,278 51,324,647 56,308,100

DEPRECIATION

5 Charged on (2+4) 12,769,246 27,660,815 10,691,435 197,873 5,278 51,324,647 56,308,100

6 Rate (%) 0 10 15 10 20

7 During the year 0 2,766,082 1,603,715 19,787 1,056 4,390,640 4,983,453

8 As at 30.06.12 0 93,535,526 103,248,977 685,168 481,222 197,950,893 192,967,440

9 As at 30.06.13 (7+8) 0 96,301,608 104,852,692 704,955 482,278 202,341,533 197,950,893

10 Written down value as at 30.06.13 12,769,246 24,894,733 9,087,720 178,086 4,222 46,934,007 51,324,647

Depreciation of Unit II Taka 4,390,640 charged against rental income

As of As of June 30, 2013 June 30, 2012 Taka Taka

5. INVESTMENTS

Apex Adelchi Footwear Limited (136,700 shares @ 251.40) 34,366,380 36,444,220

Central Depository Bangladesh Limited (571,181 shares @ 10.00) 5,711,810 2,569,450

40,078,190 39,013,670

Investment in shares of Apex Adelchi Footwear Limited has been recorded at fair value as per BAS-39. The quoted price was Taka 251.40 per Taka 10 each share as at June 30, 2013 and company’s cost price for 136,700 shares was Taka 13.49 per Taka 10 each share.

6. DEFERRED TAX LIABILITIES / (ASSETS) (3,181,848) (2,957,373)

Deferred tax assets (9,260,579) (7,994,607)

Deferred tax liabilities 6,078,731 5,037,234

6.01 Deferred tax assets

Provision for gratuity (9,260,579) (7,994,607)

6.02 Deferred tax liabilities

Property, plant & equipment 6,078,731 5,037,234



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7. INVENTORIES

Total Taka Total Taka as of as of Sft. June 30, 2013 June 30, 2012 Goatskins

Raw 170,921 10,084,368 11,569,348 Wetblue 387,686 25,587,284 20,638,800 Work in Process 100,065 7,004,582 7,790,644 Crust/Finished 393,714 31,103,374 50,212,784 Cowhides Raw 376,039 33,467,431 103,006,907 Wetblue 813,119 80,571,997 168,438,158 Work in Process 139,081 14,464,470 50,649,504 Crust/Finished 651,683 81,460,434 191,712,073 Chemicals 106,324,950 166,547,776 Spare-parts 11,693,559 19,474,409 401,762,449 790,040,403

Inventories are valued at lower of cost price and net realizable value. Inventories at the end of the year are equivalent to 50 days consumption based on current year’s cost of

goods sold. A team, consisting of Auditors and Management staff, carried out physical verification of the inventories

as of June 30, 2013. Inventories were hypothecated to Agrani Bank, Amin Court branch as security of working capital loan.

8. TRADE AND OTHER RECEIVABLES

Export bills receivable 176,137,516 172,368,736 Rental income receivable 5,000,000 2,500,000 Interest on FDR 3,625,835 2,889,275 184,763,351 177,758,011

Most of the above bills receivable remained from the sales of June 2013 and were considered good. Rental income receivable from Apex Adelchi Footwear Limited.

9. ADVANCES, DEPOSITS & PREPAYMENTS

L/C accounts (Goods in transit) 14,221,506 15,008,806 Advance income-tax 77,155,982 67,445,963 Advance rent 1,541,833 1,022,200 Advance for land 41,033,975 34,957,025 Advance to staff and workers 1,657,500 1,742,000 Advance to suppliers 28,292,890 520,000 Bank guarantee margin 731,764 731,764 Security deposit 6,401,200 6,401,200 171,036,650 127,828,958



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L/C accounts (goods-in-transit) represent cost incurred on import of chemicals, spare parts which will be adjusted against respective inventory items.

Advance income taxes are made to statutory authorities. Rent agreement made with Kohinoor Tannery Ltd. and Rana Leather Industries Ltd. for using their premises. Advance due from staff & workers are regularly being realized through their salaries. Advances to suppliers mainly given to suppliers of rawhides and skins. Advances considered good but

have no security other than personal security of the concerned parties. In the opinion of the Directors, all current assets, investments, loans and advances have, on realization

in the ordinary course of business, a value at least equal to the amounts at which they are stated in the Statement of Financial Position.

There is no amount of loans and advances due for payment for a period of more than 12 months from the date of Statement of Financial Position.

There is no aggregate amount due from Directors, Officers of the Company or by any associated companies. There are no claims against the company, which can be acknowledged as bad debt.

10. CASH AND CASH EQUIVALENTS Total Taka Total Taka as of as of

June 30, 2013 June 30, 2012

Cash in hand Head Office 8,013,017 8,050,467 Factory 249,036 285,188

Cash at Banks Agrani Bank 48,904,443 9,111,579 Rupali Bank 2,416 4,061 Mercantile Bank 4,637,318 3,213,344 Mutual Trust Bank Ltd. 140,186 104,192 State Bank of India 3,869,163 7,173,603 FDR 288,977,872 189,859,394 354,793,451 217,801,828

Cash balances were physically verified and bank balances were reconciled.

11. SHARE CAPITAL Authorized Capital 500,000,000 500,000,000 Issued, subscribed & fully paid-up capital 152,400,000 152,400,000

Distribution schedule showing the number of shareholders and their share holdings in percentage has been disclosed below:

Number Of share Range of Holdings Total Holders Holdings %

8,968 Less than & equal 5,000 shares 6,204,850 40.71 40 5,001 shares to 50,000 shares 215,000 1.41 4 50,001 shares to 100,000 shares 320,040 2.10 2 100,001 shares to 200,000 shares 277,370 1.82 1 200,001 shares to 300,000 shares 243,075 1.60 4 300,001 shares to 400,000 shares 1,319,785 8.66 0 400,001 shares to 500,000 shares - - 1 500,001 shares to 1000,000 shares 518,160 3.40 2 over 1000,000 share 6,141,720 40.30 9022 15,240,000 100.00



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Total Taka Total Taka as of as of

June 30, 2013 June 30, 201212. FAIR VALUATION SURPLUS OF INVESTMENTS

Investment in Apex Adelchi Footwear Limited:

Fair valuation surplus as of 30-06-2012 34,600,137 Fair value of 136,700 shares @ 251.40 as of 30-6-2013 34,366,380 Fair value of 136,700 shares @ 266.60 as of 30-6-2012 (36,444,220) (2,077,840) Fair valuation surplus as of 30-06-2013 32,522,297

13. RETIREMENT BENEFIT OBLIGATIONS Opening balance 58,142,696 45,570,244 Provision for the year 10,779,347 15,319,659 Payments during the year (1,572,280) (2,747,207) Closing balance 67,349,763 58,142,696

14. SHORT-TERM LOAN 214,529,733 -

Short-term loan taken from Agrani Bank Ltd., Amin Court Branch, Motijheel C/A, Dhaka-1000 as KORBANI ADVANCE for procurement of raw hides and skins after Korbani. This loan was sanctioned by Agrani Bank against existing fixed assets and inventory as securities.

15. WORKING CAPITAL LOAN Agrani Bank 397,118 433,028,527

The company has taken cash-credit (hypothecation) facilities from Agrani Bank, Amin Court Branch, Motijheel C/A, Dhaka-1000 against existing fixed assets and inventories as securities. Apart from the above, the Company has no other short term credit facilities.

16. TRADE PAYABLES Hides & Skins 18,367,025 14,488,381

This represents the amount payable for raw skins & hides, which is adjusted on recoverable basis.

17. OTHER PAYABLES Contribution to WPP & WF 6,418,544 6,664,655 Liabilities for freights, spare parts & other expenses 13,048,818 11,669,792 Audit fees 132,250 60,000 19,599,612 18,394,447 Contribution to WPP & WF duly paid. Payment against outstanding expenses were made subsequently in due time. For other credits,

payments are generally made by due date. There are no current liabilities due for more than 12 months. In the opinion of the Directors, no liabilities in the Statement of Financial Position are at a value less

than the amount at which it is repayable at the date of the Statement of Financial Position.

18. PROVISION FOR INCOME TAX Balance as per last year 59,937,803 34,204,217 Add: During the year 26,114,417 25,733,586 86,052,220 59,937,803 Adjustment of income tax for assessment year 2010-2011 (27,471,317) - 58,580,903 59,937,803



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Year Ended Year Ended June 30, 2013 June 30, 2012 Taka Taka19. PROPOSED DIVIDEND 60,960,000 53,340,000

The Board of Directors proposed dividend @40% for the year at the Board Meeting held on August 05, 2013.

The proposed dividend is not recognized as a liability at the Statement of Financial Position date in accordance with Bangladesh Accounting Standard (BAS) 10 “ Events after the Reporting Date”.

Bangladesh Accounting Standard (BAS) 1 “Presentation of Financial Statements” also require that the dividend proposed after the Statement of Financial Position date but before the financial statements are authorized for issue, be disclosed either on the face of the Statement of Financial Position as a separate component of equity or in the notes to the financial statements.

The provision of Companies Act, 1994, requires that dividend stated to be in respect of period covered by the financial statements and that are proposed or declared after the Statement of Financial Position date but before approval of the financial statements should be either adjusted or disclosed.

Considering the requirements of BAS-1, BAS-10 and Companies Act 1994, proposed dividend has been disclosed in the financial statements and not shown as liability.

20. SALES

Sft. Taka Taka

Finished Cow Leather 15,693,138 2,618,538,677 2,317,079,173 Finished Goat Leather 5,311,849 630,260,035 750,128,939

21,004,987 3,248,798,712 3,067,208,112

21. COST OF GOODS SOLD

Opening stock 2,549,129 241,924,857 260,774,139 Add: Cost of production 19,501,255 2,800,518,912 2,714,828,264 Less: Closing stock 1,045,397 112,563,808 241,924,857 Cost of goods sold 21,004,987 2,929,879,961 2,733,677,546

Cost of production Goatskins consumed 31 402,058,324 503,754,581 Cowhides consumed 32 1,370,197,819 1,340,614,526 Chemicals 33 775,822,098 648,925,621 Spare parts 34 23,639,389 21,091,967 Packing materials 3,734,552 4,490,013 Direct labour 74,388,959 68,674,487 Depreciation 4A 12,589,371 14,478,727 Factory overhead 35 138,088,400 112,798,342 2,800,518,912 2,714,828,264

22. FREIGHT & FORWARDING 65,610,421 62,373,254

Freight and forwarding represents cost of shipment of finished leather.



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Year Ended Year Ended June 30, 2013 June 30, 2012 Taka Taka

23. ADMINISTRATIVE EXPENSES

Salary & allowances 16,592,791 14,531,026 Gratuity 4,514,580 5,963,548 Staff welfare 2,151,404 1,888,330 Telephone, telex & fax 190,571 191,054 Repairs & maintenance 197,830 149,745 Printing & stationery 252,085 282,801 Postage 40,897 28,468 Vehicle maintenance 1,431,088 964,470 Fuel & lubricant 1,790,373 1,522,903 Electricity & water 1,293,159 884,691 Social responsibilities (CSR) 2,771,054 1,999,996 Renewal & registration 13,505 13,505 Advertisement 977,546 1,054,482 Entertainment 193,595 174,460 AGM and EGM expenses 1,628,342 2,390,243 Forms & fees 214,050 246,506 Membership subscription 301,218 320,511 Board meeting fees 253,500 311,650 34,807,588 32,918,389

Salary & allowances increased because of annual increment.

Staff welfare increased due to increase of group insurance premium.

Repairs & maintenance expenses increased because of repairs of furnitures of share department.

Vehicle maintenance increased due to old age of vehicles.

Postage expenses increased because of rate increase.

Fuel and lubricant increased due to rate increase.

Electricity & water increased due to rate increase.

Social responsibilities increased because of more activities on CSR incurred during the year.

24. MARKETING EXPENSES

Sales commission 81,224,288 60,181,143 Sales promotion 24,134,343 15,937,038

105,358,631 76,118,181

Sales commission increased due to increase of sales volume.

Details of sales commission paid to agents are given on the next page.

In order to develop the sales the Company attended more international leather fairs compared to last year, more over stall rent and decoration charges increased, therefore more Sales promotion expenses incurred during the year.



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Sales commission:

We certify that the local & foreign agents, whose details are given below, have no connection whatsoever with any Director.

Local/Foreign Agent Address Amount in Taka

ABC Leather House # 50/1(1st floor) Road # 11/A, Dhanmondi, Dhaka-1209. 7,320,178

Abedin Corporation House # 50/1(1st floor) Road # 11/A, Dhanmondi, Dhaka-1209. 5,053,182

Hajee Mazharul Haque Ltd. 79/1 Water Works Road, Posta, Dhaka-1211 58,460

Ashok Lal Lala A-15, Sector-9, Noida, India. 5,971,299

Europa International House # 61, Road # 4, Block # B, section – 12 690,416

Mirpur, Dhaka- 1216

CFS Trade International 41/3-A, Moneshwar Road, Zigatola, Hazaribagh, Dhaka-1209 45,879

Exclusive Chemicals 124, Hazaribagh T/A, Dhaka Tannery Block, Dhaka-1209 284,022

Kema Trading 77, Hazaribagh, T/A, Dhaka 860,086

Schmenger Schmenger Leder GMBH & Co. Zweibrucker Strabe 29, 6,585,046

66953 Pirmasens, Garmany.

Shampan Trading corp 49 Hazaribagh, Tannery Area, Dhaka-1209. 5,315,834

Dairath Co. Ltd. Vill: Chamta, PO: Puran Dinara Hat. PS: Naria, Dist.: Shariatpur 337,745

Dowoo International Ltd. House # 394(2nd floor), Road # 01, Asulia, Savar, Dhaka-1349. 50,924

Fair International 86, Shere-e-Bangla Road, Dhaka-1209 168,960

PRP International 594/C, Khilgaon Police Line Khilgaon, Dhaka-1219 2,530,384

Ridge International 87/1, Moneshwar Road, Dhaka-1209. 7,438,945

Ruhuls Marketing Co. 81/A, Hazaribagh T/A(1st floor), Dhaka-1209. 53,243

Megumi International 66/14, West Razabazar (1st floor), Dhaka. 3,142,124

ML Pongchek Chakrabandhu 321, Moo 9, Chalongkrung Rd, Lampratew, Bankok 10520 389,893

Mostaque Ahmed Eastern Tulip apartment, 92 Baro Maghbazar, Dhaka-1217 509,762

Golden Craft 218 Elephant Road, Suite # 6 & 7, Level # 8, Dhaka-1205 307,328

Life Family Co. A-3, House # 8, Road # 107, Gulshan-2, Dhaka-1212 24,473

Progressive Leather Agency 298/A Tali Office Road, Rayer Bazar, Dhaka-1209 1,113,432

Universal Leather Corporation 27 Dilkusha C/A, 5th Floor, Dhaka-1000 6,791,460

Panna Zaman & Co. House # 390, Road # 29, New DOHS Mohakhali, Dhaka-1206 1,202,498

Tajin Leather Corporation 67/1 Zigatola T/A, Dhaka-1209 68,927

Parpia International Ltd. Hong Kong 71,565

Ital Bengal Leathers 124, Hazaribagh T/A, Dhaka-1209 284,753

Interkid AG Castano Primo, Itally 3,875,105

Global Union House # 25/A, Road # 96, Gulshan, Dhaka 4,309,129

Globe Leather SRL Via F, Turati 4, 56024 Poute A, Italy 557,466

Ambico Trade (Pvt.) Ltd. 124, Hazaribagh, Dhaka 1,390,052

Keywin Trading Corporation Level – 6, Suit – 601, Concord Tower, 123 Kazi Nazrul Islam 14,219,631

Avenue, Dhaka

Eximco International House 9/3 (4th floor), Block –B, Section-6, Mirpur, Dhaka 202,087

Total 81,224,288



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Year Ended Year Ended June 30, 2013 June 30, 2012 Taka Taka25. LEGAL & AUDIT FEES

Legal fees (Professional fees) 360,000 360,000 Audit fees 132,250 60,000 492,250 420,000

26. BANK INTEREST EXPENSES AND CHARGES

Bank interest 29,029,316 52,753,663 Bank charges 924,793 679,359 29,954,109 53,433,022

27. OTHER INCOME

Dividend income-Cash 2,397,043 1,086,956 Dividend income-Stock 3,142,360 - Interest on FDR 32,596,837 20,562,996 Rental income 30,000,000

Less: Depreciation (4B) 4,390,640 Rent, rates & taxes 3,72,553 Insurance premium 1,111,302 (5,874,495) 24,125,505 21,543,120 62,261,745 43,193,072

Cash dividend amounting Taka 2,397,043 included cash dividend from Apex Adelchi Footwear Limited Tk. 6,83,500 and Tk. 1,713,543 from Central Depository Bangladesh Limited. Stock dividend 3,14,236 shares were received from CDBL. Rental income of Unit II was received / receivable from Apex Adelchi Footwear Limited as monthly rent @ Tk. 2,500,000.

28. CURRENT TAX EXPENSES

Rate of Tax Taxable Profit Tax Tax

On export profit after 27.50% on 50% 72,991,740 10,036,364 13,937,013 adjustment of gratuity of income

On other income

Dividend on investment (Cash) 20 % 2,397,043 479,409 217,391 Rental income 27.50 % 24,125,505 6,634,514 5,924,358 Interest on FDR 27.50 % 32,596,837 8,964,130 5,654,824 132,111,125 26,114,417 25,733,586

29. DEFERRED TAX EXPENSES / (INCOME) (224,475) (1,429,051)



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Year Ended Year Ended June 30, 2013 June 30, 2012 Taka Taka

30 EARNINGS PER SHARE Components of earnings per share are as follows: Earnings per share without fair valuation of investment:

Net operating income 3.54 5.01 Net other income 3.03 2.06 Earnings per share (Tk.) 6.57 7.07

Earnings per share with fair valuation of investment: Net operating income 3.54 5.01 Net other income 3.03 2.06 Fair valuation of investment in share (0.13) 2.27

Earnings per share (Tk.) 6.44 9.34

31. GOATSKINS CONSUMED (RAW & WETBLUE)

Sft. Taka Taka

Opening stock (raw) 210,352 11,569,348 10,786,243 Add: Purchase this year 5,455,057 404,735,766 508,061,557 Less: Closing stock 170,921 10,084,368 11,569,348 5,494,488 406,220,746 507,278,452 Add: Opening stock (wetblue) 325,174 20,638,800 17,908,407 Add: Purchase this year - - - Less: Closing stock 387,686 25,587,284 20,638,800 5,431,976 401,272,262 504,548,059 Add: Opening WIP 116,539 7,790,644 6,997,166 Less: Closing WIP 100,065 7,004,582 7,790,644 5,448,450 402,058,324 503,754,581

32. COWHIDES CONSUMED (RAW & WETBLUE)

Sft. Taka Taka

Opening stock (raw) 1,211,846 103,006,907 53,285,606 Add: Purchase this year 11,806,788 1,176,607,147 1,432,676,465 Less: Closing stock 376,039 33,467,431 103,006,907 12,642,595 1,246,146,623 1,382,955,164 Add: Opening stock (wetblue) 1,840,251 168,438,158 136,511,550 Add: Purchase this Year - - 376,816 Less: Closing stock 813,119 80,571,997 168,438,158 13,669,727 1,334,012,784 1,351,405,372 Add: Opening WIP 522,160 50,649,504 39,858,658 Less: Closing WIP 139,081 14,464,470 50,649,504 14,052,806 1,370,197,818 1,340,614,526



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Year Ended Year Ended June 30, 2013 June 30, 2012

Taka Taka33. CHEMICALS CONSUMED

Opening Stock 166,547,776 207,071,708

Add: Purchase this year 715,599,272 608,401,689

Less: Closing stock 106,324,950 166,547,776

775,822,098 648,925,621 34. SPARE-PARTS CONSUMED

Opening stock 19,474,409 19,343,819

Add: Purchase this year 15,858,539 21,222,557

Less: Closing stock 11,693,559 19,474,409

23,639,389 21,091,967

35. FACTORY OVERHEAD

Salary & allowances 44,267,511 38,684,388

Gratuity 5,529,167 4,407,535

Staff welfare 3,058,260 2,798,723

Entertainment 715,079 621,282

Postage 87,071 69,358

Printing & stationery 362,833 524,799

Repair & maintenance 14,428,416 10,040,029

Insurance premium 13,023,436 8,495,599

Telephone & fax 270,461 243,046

Vehicle maintenance 2,180,395 1,908,726

Carriage inward 8,050,875 8,013,922

Power, gas & water 42,349,176 33,317,970

Consumable store 463,385 406,802

Rent, rates & taxes 3,041,908 3,048,951

Conveyance 230,927 193,512

Sundry expenses 29,500 23,700

138,088,400 112,798,342

Salary & allowances and Gratuity increased because of annual increment. Staff welfare increased due to payment of group insurance premium. Entertainment expenses increased due to increased cost of food. Postage increased due to rate increase. Repair & maintenance increased due to maintenance of building & office equipments. Carriage inward increased due to increase of production volume. Power, gas & water increased due to rate increase.



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36. AGGREGATE AMOUNT PAID TO THE DIRECTORS Aggregate amount paid to the Directors for their services rendered are as follows:

Per Year Name Designation Amount (Taka) Remarks

Syed Manzur Elahi Chairman 2,400,000 Full time work Md. Rahmatullah Managing Director 2,400,000 “ “ “ Md. Hedayetullah Director 2,040,000 “ “ “ Ansarul Islam Executive Director 2,155,800 “ “ “ M. Abdul Majed Executive Director 2,155,800 “ “ “

Syed Manzur Elahi is the Chairman of the associate companies of Apex Tannery Group but as a full time Director, he draws remuneration from Apex Tannery Limited.

37. NUMBER OF EMPLOYEES Number of employees and their salary and wages range are given below:

No. of Employees

Equal and above Taka 3000 per month 852 Below Taka 3000 per month -

38. PRODUCTION CAPACITY AND UTILIZATION

Particulars Sft. per year %

Installed capacity 18,500,000 71.00 Rented capacity (wetblue only) 7,500,000 29.00 Total capacity 26,000,000 100.00 Actual production 19,501,255 75.00

39. All shares have been fully called and paid up.40. There were no preference shares issued by the company.41. There was no bank guarantee issued by the company on behalf of their directors or the company itself

except bank loans.42. No expense was paid as royalty and salary to Technical Experts etc. [as para-8 (KHA) of part-II] in foreign

currencies.43. No brokerage was paid against sales during the year under audit.44. There was no sum for which the company was contingently liable as on June 30, 2013.45. During the year under review, 4 (Four) Board Meetings were held and Directors present were paid @

Taka 10,000.00 per head per meeting.46. Auditors are paid statutory audit fees as approved by the shareholders in the last Annual General

Meeting.47. The Company earned foreign currencies of US$ 41,395,294.97.48. There was no foreign exchange remitted, as there are no foreign shareholders.49. There is no claim against the company not acknowledged as debt except claim, which may have arisen

as insurance claim.50. No compensation was paid to any member of the Board for special service rendered.51. There is no expense on account of miscellaneous/general expenses. For and o




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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 37th Annual General Meeting of Apex Tannery Limited will be held on Thursday, September 26, 2013 at 10:00 a.m. at Dhaka Ladies Club, 36 Eskaton Garden, Dhaka-1000 to transact the following business:

1 To receive and adopt the Audited Accounts for the year ended June 30, 2013 and the Reports of the Auditors and Directors thereon.

2 To declare dividend.

3 To elect Directors

4 To appoint Auditors for the year 2013-2014 and fix their remuneration.

By Order of the Board

September 01, 2013127 Hazaribagh T/ADhaka-1209

(Jagadish Kumar Bhanja ACS) Company Secretary

Notes:

1. August 27, 2013 is the record date. Shareholders whose names will appear in the Members register of the Company or in the Depository Register on that date will eligible to attend at the Annual General Meeting and receive dividend .

2. A member entitled to attend and vote at the Annual General Meeting may appoint a proxy in his stead. The proxy form, duly stamped must be deposited at the Corporate Office of the Company not later than 48 (forty eight) hours before the time fixed for the meeting. Annual report and proxy form can be available on the website www.apextannery.com.

3. Admission to the hall will be only on production of the attendance slip sent with the notice.


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APEX TANNERY LIMITEDRegistered and Corporate Office : 127 Hazaribagh T/A, Dhaka-1209, Bangladesh

PROXY FORM

I/We

of

being Member of Apex Tannery Limited, hereby appoint

of as my /our proxy to attend and vote for me/us and on my/our behalf at the 37th Annual General Meeting of the Company to be held on Thursday, September 26, 2013 at 10:00 a.m. and/or at any adjournment thereof.

As witness my hand this day of 2013.

Signature of Proxy

Signature of the Member

No. of shares held

Register Folio/BO ID No.

Note : A Member entitled to attend and vote at the General Meeting may appoint a proxy to attend and vote on his behalf. The proxy form duly completed must be deposited at the registered office of the Company not later than 48 hours before the time fixed for the meeting.

APEX TANNERY LIMITEDRegistered and Corporate Office : 127 Hazaribagh T/A, Dhaka-1209, Bangladesh

ATTENDANCE SLIP

I hereby record my attendance at the 37th Annual General Meeting being held on Thursday, September 26, 2013 at 10:00 a.m. at Dhaka Ladies Club, 36 Eskaton Garden, Dhaka-1000.

Name of member/proxy

Register Folio/BO ID No.

Signature

Note : Shareholders attending meeting in person or proxy are requested to complete the attendance slip and hand it over at the entrance of the meeting hall.

AffixRevenue

Stamp

apex tannery limitedapextannery.com/resources/ar-2013.pdf · 2018-09-20 · 8 annual report 2013...

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