Embed Size (px)
Citation preview
Annual Report 2011
CONTENTS PAGE
Notice of the Meeting 1
Company Information 2-3
Company Milestones 4
Chairman’s Statement 5-7
Board of Directors' Report 8-13
Progress at a Glance 14-15
Auditors' Report to the Shareholders 16
Balance Sheet 18-19
Profit and Loss Account 20
Statement of Changes in Equity 21
Cash Flow Statement 22-23
Liquidity Statement 24
Notes to the Accounts 25-56
Annexure 57
Proxy Form 59
Notice is hereby given that the Twenty Third Annual General Meeting of the shareholders of United Leasing
Company Limited will be held at the Trust Milonayaton, 545 Old Airport Road, Dhaka Cantonment,Dhaka on
Monday, April 9, 2012 at 10.00 a.m. to transact the following business:
1. To receive and adopt the Directors' Report and Audited Accounts for the year ended December 31, 2011.
2. To declare Dividend for 2011.
3. To elect Directors as per Articles of Association of the Company.
4. To consider the appointment of Auditors for 2012 and fix their remuneration.
By order of the Board
Dated: Dhaka Sharmi Noor Nahar
March 6, 2012 Company Secretary
1. A Shareholder entitled to attend and vote at the meeting may appoint a proxy to attend and vote in his/her stead. The proxy form must be affixed with a revenue stamp of Tk 10.00 and submitted to the Registered Office of the Company no later than 48 hours before the day of the Annual General Meeting.
2. March 18, 2012 is the Record Date.
3. Shareholders are requested to submit their queries on the Directors' Report and Audited Accounts, if any, at the Registered Office of the Company by Thursday, April 5, 2012.
4. Shareholders and proxies are requested to record their entry in the Annual General Meeting well in time.
Notes :
NOTICE OF THE TWENTY THIRD ANNUAL GENERAL MEETING
1
Board of Directors
Chairman
Directors
Independent Director
Ex- officio Director
Company Secretary
Nominated by
Imran Ahmed :
Peter J. Field : Lawrie Group Plc of the U.K.
A. Rouf : United Insurance Company Limited
L. H. Khan : United Insurance Company Limited
Shama Rukh Alam : Surmah Valley Tea Company Limited
M. Nurul Alam : Surmah Valley Tea Company Limited
A. F. M. Misfaqus Samad Choudhury : United Insurance Company Limited
M. Abdul Wahed
Syed Ehsan Quadir, Managing Director
Lawrie Group Plc of the U.K.
Sharmi Noor Nahar
COMPANY INFORMATION
2
COMPANY INFORMATION
3
Registered Office:
Other Offices
Camellia House, 22 Kazi Nazrul Islam Avenue, Dhaka - 1000PABX: (880-2) 9669006, Fax: (880-2) 9662596Website: www.ulc.com.bd, E-mail: [email protected]
Dhaka Bogra
BongshalSylhet
Chittagong Belkuchi
Jessore Chowmuhani
Rangpur Barisal
Farmgate
Gazipur
rd ndNoor Tower (3 Floor), 110 B. U. C. R. Dutta Saha Complex (2 Floor), Jhawtola, Road (Sonargaon Road), Dhaka-1205. Kabi Nazrul Islam Road, Bogra. Telephone: (880-2) 9662923 Telephone: (880-051) 69873,
E-mail: [email protected]
rd th57 Shahid Syed Nazrul Islam Soroni (3 & 4 ndFloor), Bongshal, Dhaka. Holy Complex (2 Floor), East Dargah Gate,
Telephone:(880-2) 7165955-6 Sylhet- 3100. Telephone: (880-821) 2830195, E-mail: [email protected] 2830736, E-mail: [email protected]
th ndC & F Tower (5 Floor), 1712 Sheikh Mujib Road, Amin Razzak Plaza (2 Floor) Agrabad Commercial Area, Chittagong. 130 Makundagati Bazar, Belkuchi, Sirajgonj.PABX: (880-31) 714882, 2519948 Telephone: (880-7522) 56428Fax: (880-31) 2519949, E-mail: [email protected] E-mail: [email protected]
nd rd41 M.K. Road (2 Floor), Jessore. GDS Bhaban (3 floor), Feni Road, Chowmuhani, Telephone: (880-421) 68425, 68426 Noakhali. Telephone: (880-0321) 51086, 51093 E-mail: [email protected] E-mail: [email protected]
rd rd75/76 Station Road (3 Floor), Rangpur. 119 Sadar Road (3 floor), Barisal.Telephone: (880-521) 53397 Telephone: (880-0431) 61747, 2177408 E-mail: [email protected] E-mail: [email protected]
rd941-03 Post Office Para, Shahid Abul Kashem Northern S.R. Tower (3 Floor), 49 Bir Uttam Sarak Barabazar, Chuadanga. Ziaur Rahman Road (Old Airport Road), Tejgaon, Telephone: (880-761) 63995-6 Dhaka. Telephone:(880-2) 9103002, 9102879E-mail: [email protected]
rdIslam Plaza (3 Floor), Joydevpur Chowrasta, Chandana, Gazipur. Telephone: (880-2) 9257255, E-mail: [email protected]
Chuadanga
Incorporation and c 1989
Public issue and trading of shares on Dhaka Stock Exchange 1994
Commencement of credit sale financing operation 2005
Commencement of public deposit mobilisation 2005
Commencement of home loan 2007
Increase of authorised capital 2011
Chittagong, Agrabad 1994
Jessore, M.K. Road 2005
Gazipur, Joydevpur Chowrasta 2006
Bogra, Jhawtola 2006
Sylhet, East Dargah Gate 2009
Belkuchi, Makundagati Bazar, Sirajgonj 2010
Rangpur, Station Road 2010
Chuadanga, Barabazar 2010
Bongshal, Shahid Syed Nazrul Islam Soroni 2010
Chowmuhani, Feni Road, Noakhali 2011
Barisal, Sadar Road 2011
Farmgate, Bir Uttam Ziaur Rahman Road 2011
ommencement of operation
Offices opened
COMPANY MILESTONES
4
CHAIRMAN’S STATEMENT
Dear Shareholders:
Economy
Financial Services Sector
Company Performance
I welcome you on behalf of the Board of Directors to the 23rd Annual General Meeting of United Leasing Company Limited.
Kindly allow me to brief you on the Country's economic scenario, the Financial Services sector and Company's overall
activities during the year 2011.
Bangladesh economy achieved GDP growth of 6.66% in FY 2010-11 (6.07% in FY 2009-10). The services sector accounted
for 50% of GDP, Industrial sector contributed around 30% while the Agriculture sector contributed nearly 20% to the GDP
in FY 2010-11. Despite some fluctuations, the growth was broad-based and across sub-sectors.
2011 was an economically challenging year. Increase in the international price of fuel, food grain as well as other
commodities, increase in our own consumption of these items and the impracticality of further subsidising fuel led to
significant price increases. The economy experienced inflation rising through out the year and reaching a peak of 12% in
September 2011.
The slowdown in remittance growth and foreign aid flow created pressure on the foreign exchange reserves. The growth in
import payments mainly on account of sizeable fuel import led to the depreciation of Taka. While this may have helped
boost export but the import bill far exceeded the demand for foreign exchange.
Bangladesh Bank had to take a contractionary monetary policy to curb inflation; however the unavoidable side effect was
the private sector credit squeeze.
Tight liquidity and the downward slide of the Capital Market were the two dominant events during the entire 2011 for the
Financial Services Sector.
Since curbing inflation became Bangladesh Bank's priority, the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio
(SLR) were increased by 50 basis points each at the end of 2010 to restrict money supply. Government's dependence on
borrowings from the domestic banking system in the absence of long-term external financing and slowing inflow of aid to
meet Annual Development Plan as well as expenditure did not help the situation.
The liquidity crises created a favourable environment for the depositors as rates moved up with removal of cap on the
deposit rates by Bangladesh Bank in line with free market principle. For the borrowers of fund, however, the cost of doing
business went up and this created a general strain on the financier-borrower relationship.
The downturn of capital market continued throughout the year and adversely impacted Financial Institutions and Banks to
a varying degree, depending on the level of their involvement.
I am pleased to inform you that the Total Operating Income of the Company registered 7.3% growth over last year despite
shrinking margins due to significant increase in the cost of deposit in 2011. Operating Profit Before Tax however was similar
to last year due to increase in operating cost. Part of the increase in operating cost was due to the overall cost escalation
caused by inflation over which we had no control. The other component of operating cost increase was due to our setting up
of new offices and the full year impact of geographic and product expansions undertaken the year before (2010).
Earnings Per Share (EPS), not considering the one-time non-operating income last year and on the basis of current number
of share, increased by 7.94% (from Taka 2.14 in 2010 to Taka 2.31) largely due to adequacy in provision for both bad debt
and tax. Net Asset Value (NAV), on the basis of current number of share, increased by 10.72% (from Taka 17.54 in 2010 to
Taka 19.42) due to increased investments.
2011 was a very difficult year for our deposit operation. While the Country was constantly facing liquidity shortage, our
deposit operations managed to attract deposit at very competitive rates. This allowed the Company to support our lending
business and keeping our financial commitment to our clients.
During 2011 your Company further expanded its geographical reach and opened offices in branch Barisal, Chowmohuni
and Farmgate, Dhaka.
Your Company now has a range of working capital solutions and mid-term capital investment support products that appeal
to a diverse client base. You will be happy to learn that the Company's client base, both in the deposit and lending side,
increased by 22% in 2011.
5
There were areas where we did not progress as much as we hoped for. Small Enterprise Financing and Credit Sale Financing
(Recourse based Factoring) did not deliver the desired growth. The coverage, depth and volume of business done with
women entrepreneurs were far from what was targeted. Efforts are already underway to improve branch productivity and
efficiency so that the growth in all these areas are addressed going forward.
From collection perspective, it was a very challenging year as many businesses were impacted by the liquidity crunch. The
entire team had to devote extra effort to ensure timely payments. At the same time active effort was also undertaken to
recover from long standing problem exposures. Their intensive and proactive monitoring yielded result and the Non-
Performing Loan ratio was kept below 5% with overall recovery ratio of 95% in 2011. The level of yearly provisioning also
came down from Tk. 50 million in 2010 to Tk. 35 million in 2011.
With the increase of the branch network and product diversification, the challenge of timely recruitment of motivated
human resources for the new offices as well as for expanding businesses was met successfully.
Given the unique marketing, credit and collection culture of your Company, it is imperative that these values are imparted
on the new entrants. Our in-house training capabilities were further strengthened this year. Subject specific mid-level
management trainings were added in addition to the entry level trainings. To improve the efficiency of the existing human
resources, trainings were also conducted in various local and foreign training institutions. During the year, Company
provided a total of 2,564 man days of training.
The Company's growth necessitates that the human resources are objectively evaluated, that efforts are recognised and
that underperformers are counselled immediately. A Quantitative Scoring Model (QSM), developed in-house, saw it first
year of deployment. The purpose of the QSM is to help managers evaluate their resources more objectively and
immediately so that corrective measures can be taken at once to ensure employee efficiency.
The developments and activities of Company's three risk management components during 2011 were as follows:
Operational Risk Management (ORM) Committee was established. The Committee, made up of the Head of Development,
Head of Human Resources and Head of Technology & Services, continuously evaluates operational processes and re-
engineers them to achieve maximum efficiency without subjecting the Company to risk. ORM became necessary in the
face of geographical and product diversification as well as increasing volume.
The Industry Risk assessment team further improved the coverage of the industrial sub-sectors. The quality of information
and risk management guidance provided was significantly improved.
Credit Risk Management has now matured in terms of its evaluation capabilities. The Company has separate procedures
and skill-sets for evaluation of large structured clients and small un-structured clients. Asset Liability Management
Committee (ALCO) continued with their effective monitoring of market dynamics and taking timely decisions. In a crucial
time of liquidity strain when foresight was increasingly necessary, their contribution to effective fund management by
minimising leakage and maximising return was quite substantial.
Credit Administration improved their inspection and documentation capabilities. The time taken to complete
documentation has also been shortened considerably. The collection, recovery and litigation teams, as mentioned earlier,
were effective in keeping collection rate high and their recovery efforts yielded tangible results.
There has been positive development in portfolio risk analysis and development of an early warning mechanism. It allows
us to take pre-emptive measures to minimise probable future risks.
Internal Compliance Department was engaged in evaluating the performances of the control mechanisms established to
minimise risks through stringent analytical review. To ensure effectiveness of the control system, the compliance team
conducted regular audits of all departments and branches of your Company. Additionally, the team evaluated policy
documents and audited operating procedures to ensure the effectiveness of the risk control systems. The audit and
inspection reports were regularly placed to the Audit Committee of the Board for its review and recommendations.
The Management Information department has now a wider role to play in supporting the management of the Company
with timely management reports. We anticipate significant progress next year in the quality of reporting which will
empower the senior management team to manage their resources more effectively.
Collection
Human Resources
Risk Management
Pre-emptive Risk Management
Contemporaneous Risk Management
Post-facto Risk Management
6
Post Balance Sheet Date Events
Outlook
Acknowledgement
Subsequent to the balance sheet date, the Directors recommended one bonus share for every five shares held and cash
dividend of Taka 0.75 per share.
As our continuing effort to expand our geographic reach, our Rangamati Office started operation on March 06, 2012. We
are hopeful that this office will contribute to the development of region, especially the women entrepreneurs.
There were no circumstances in the Company in which non-disclosure affected the ability of the users of the financial
statements to make proper evaluation and decisions.
GDP growth is estimated to be 7% for FY 2011-12. This estimate is based largely on expectation of strong export growth
and increase in inward remittance. However, several downward risks, including weaker than anticipated global recovery
and possible downturn in exports remains. This could retard growth below the projection.
Bangladesh Bank has taken a contractionary monetary policy aiming to restrict credit flow to the non productive sectors.
The liquidity crisis is likely to continue if Government continues to borrow from the banking sector.
Tight credit environment and intensifying competition may create pressure on the margins. Rising cost of deposit in 2011
will inevitably impact the overall cost of fund in 2012. We will devout our efforts to minimise both deposit and operating
costs.
We believe that your Company can overcome the challenges by ensuring fund availability and judicious investment
through our expanding geographical footprint.
Improvement of service quality would be vital in retaining the existing customers and attracting the new. There is
significant scope for improving the service quality and overall customer experience. In 2012 considerable effort will be
devoted to add value to our offerings and provide better customer service than we have done thus far.
The Company has acquired considerable experience in managing small enterprise portfolio, developed different working
capital solutions for a wide range of clients beside our traditional mid-term finance solutions of lease and loan. We will
continue participating in large syndications and are considering further expansion of our geographic reach. This will allow
us to progress in our growth path.
We, therefore, look forward to the coming year with confidence.
We wish to thank our valued customers, shareholders, regulators, service providers and the international agencies for
their continuous support and cooperation.
I take the privilege of thanking my colleagues in the Board of Directors of the Company for their contribution towards
development of the Company and the support rendered to me during the year in conducting the meetings of the Board of
Directors.
Last but not the least, I also express my gratitude to all the employees of the Company for their sincere and dedicated
services and would encourage them to work harder for the growth of the Company.
Sincerely,
Imran Ahmed
Chairman of the Board
7
BOARD OF DIRECTORS' REPORT
8
Dear Shareholders:
Principal activities
Financial results
Dividend
Plan for utilisation of undistributed profit
Directors
rdWe are pleased to submit herewith the 23 annual report of the Company together with the audited financial statements for the year ended December 31, 2011 and the auditors' report thereon.
The principal activities of the Company are:
- Mid to long term financing in the form of lease, term loan and home loan.
- Working capital finance in the form of credit sale financing against accounts receivable, short term revolving loan and work order financing.
- Investment products in the form of deposits.
There was no significant change in the nature of these activities during the year 2011.
The Company's before and after tax profit for the year 2011 were Tk 369.34 million and Tk 213.34 million compared to Tk 578.28 million and Tk 378.28 million respectively in the previous year.
The financial results are summarised below:2011 2010Taka Taka
Operating Income 633,092,814 590,041,794
Operating expenses and provision (263,752,763) (223,949,718)
Non-operating income - 212,189,067
Profit before tax 369,340,051 578,281,143
Provision for taxation (156,000,000) (200,000,000)
Profit after tax 213,340,051 378,281,143
Retained earning brought forward 2,592,072 4,910,929
Available profit 215,932,123 383,192,072
Proposed transfer from General Reserve 86,000,000 135,000,000
Profit available for appropriation 301,932,123 518,192,072
Directors' recommendation of appropriation of accumulated profit:
Profit transferred to Statutory Reserve 45,000,000 80,000,000
Proposed cash dividend 69,300,000 39,600,000
Proposed bonus share 184,800,000 396,000,000
Un-appropriated profit carried forward 2,832,123 2,592,072301,932,123 518,192,072
The Board of Directors of the Company is pleased to recommend the distribution of one bonus share for every five shares held on record date March 18, 2012 amounting to Taka 184.8 million.
The Board also recommended cash dividend of Taka 0.75 per ordinary share amounting to Taka 69.30 million for 92.40 million ordinary shares held on record date March 18, 2012 for the year ended December 31, 2011.
The undistributed profit will be utilised to invest in financing assets and meet contingencies under section 100 of the Schedule 1 of the Companies Act 1994.
Securities and Exchange Commission issued a notification (no.SEC/CMRRCD/2009-193/119/admin dated November 22, 2011) outlining the minimum required shares to be held by the sponsors and directors.
To comply with the notification, the Board accepted the withdrawal of nominations to the ULC's Board by Macalms Bangladesh Trust, The Allynugger Tea Company Limited and The Chandpore Tea Company Limited vide their letters dated December 28, 2011.
United Insurance Company Limited withdrew the nomination of Mr. M. Moyeedul Islam and nominated Mr. A. Rouf, Mr. L. H. Khan and Mr. A.F.M. Misfaqus Samad Choudhury to represent them in ULC's Board. The Board accepted these nominations and they are eligible for election.
Surmah Valley Tea Company Limited withdrew the nomination of Mr. S. Aziz Ahmad and nominated Ms. Shama Rukh Alam and Mr. M. Nurul Alam to represent them in ULC's Board. The Board accepted these nominations and they are eligible for election.
As per Articles 154, 155 and 156 the Articles of Association of the Company, Mr. Imran Ahmed representing Lawrie Group PLC will retire by rotation from the office and is eligible for re-election.
The auditors of the Company, M/S Hoda Vasi Chowdhury & Co. retire and being eligible, offer themselves for re-appointment.
During the year, nine (9) Board Meetings were held. The attendance of the Directors is shown in annexure —1
The shareholding pattern as per clause 1.4 (K) of the SEC Notification No. SEC/CMRRCD/2006-158/Admin/02-08 dated February 20, 2006 is shown in annexure —2.
a) The financial statements together with the notes thereon have been drawn up in conformity with the Companies Act, 1994 and Securities and Exchange Rules, 1987. These statements present fairly the Company's statement of affairs, the result of its operation, cash flow, and statement of changes in equity.
b) Proper books of accounts of the Company have been maintained.
c) Appropriate Accounting Policies have been consistently applied in preparation of the financial statements except those referred to in the financial statements and that the accounting estimates are based on reasonable and prudent judgment.
d) The presentation of Financial Statements has been made in accordance with the Bangladesh Bank DFIM circular no. 11 dated December 23, 2009.
e) The International Accounting Standards, as applicable in Bangladesh, have been followed in preparation of the financial statements.
f) Internal Control System is sound in design and has been effectively implemented and monitored.
g) There are no significant doubts about the ability of the Company to continue as going concern.
Company's summarised key operating and financial data for last five years is shown in annexure-3.
Pursuant to the clause 5 of the SEC Notification No. SEC/CMRRCD/2006-158/Admin/02-08 dated February 20, 2006 we attach the Company's compliance status as annexure - 4.
For and on behalf of the Board of Directors
Imran AhmedMarch 6, 2012 Chairman of the Board
Auditors
Board Meeting and Attendance
Shareholding Pattern
Statement of Directors on Financial Reports
Key Operating and Financial Data
Corporate Governance Compliance Report
9
Name of Directors
Imran Ahmed 8
Peter John Field 2
A. Rouf 8
M. A. Wahed 7
Syed Ehsan Quadir 9
L. H. Khan† -
Shama Rukh Alam† -
M. Nurul Alam† -
A.F.M. Misfaqus Samad Choudhury† -
Annexure-2
Meetings attended
Leave of absence was granted in all cases of non-attendance † Appointed on 28.12.2011
Shareholdings of Parent/Subsidiary/Associated companies and other related parties
Shareholding pattern as at December 31, 2011
Board meeting and attendanceAnnexure-1
Shareholdings of the Directors, CEO, Company Secretary, Chief Financial Officer, Head of Internal Audit and their spouses and minor children
10% and above shareholdings of the Company
8,080
3,390
Name of shareholders Number of shares % of holdings
Syed Ehsan Quadir
Khurshid Ara Rouf (Wife of Mr. A. Rouf, Director)
(Managing Director) -
-
10
Name of shareholders Number of shares % of holdings
United Insurance Co. Ltd.(Sponsor)
Lawrie Group Plc, U.K. (Sponsor)
19,069,570
18,480,000
20.64
20.00
Name of shareholders Number of shares % of holdingsSl. No
19,069,570
18,480,000
7,644,870
924,000
890,850
659,990
535,950
105,660
64,610
56,700
55,020
54,950
54,910
54,880
20.64
20.00
8.27
1.00
0.96
0.71
0.58
0.11
0.07
0.06
0.06
0.06
0.06
0.06
United Insurance Co. Ltd.
Lawrie Group Plc, U.K.
Surmah Valley Tea Co. Ltd.
Duncan Brothers (Bangladesh) Ltd.
Macalms Bangladesh Trust
Octavius Steel & Co. of BD Ltd.
The Lunqla (Sylhet) Tea Co. Ltd.
Camellia Duncan Foundation
The ChandporeTea Co. Ltd.
Amo Tea Co. Ltd.
Chittaqonq Warehouses Ltd.
The Allynugger Tea Co. Ltd.
The Mazdehee Tea Co. Ltd.
Duncan Products Ltd.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Shareholding of Executive:
5,400
Name of Executive Number of shares % of holdings
M. A. Azim (Deputy Managing Director) -
Key operating and financial data Annexure-3
11
1. Debt-equity ratio is the ratio between total debt and total equity.
2. Return on equity is the ratio between net profit and average equity.
3. Financial expenses coverage is the ratio between profit before interest and tax plus depreciation and financial
expenses.
4. Net asset value per share, earning per share and cash dividend have been calculated based on shares outstanding at
the end of the respective year.
5. Restatements have been calculated based on shares outstanding at the end of the year 2011 (92.40 million shares)
and accordingly restated for the previous years.
Operating result
Balance Sheet
Financial ratios
Number of offices
Number of employees
5Restatements :
Net Operating Income
Non Operating income
Profit before tax
Provision for tax
Profit after tax
Total investment portfolio
Total assets
Financial liabilities
Total Liabilities
Shareholders' equity
Shares outstanding
1Debt-equity ratio 2Return on equity
3Financial expenses coverage
Provision for Doubtful Assets to total Investment 4Net asset value per share(NAV)
4Earning per share (EPS) 4Cash dividend (per share)
Stock dividend (bonus share)
EPS (with non operating income)
EPS (without non operating income)
NAV
633
-
369
156
213
7,867
10,305
6,626
8,510
1,795
92.40
4.7
12.5
1.6
6.6
19
2.31
7.5
5:1
13
196
2.31
2.31
19.42
590
212
578
200
378
7,596
9,260
5,872
7,639
1,621
5.28
4.7
26.2
1.6
6.4
307
71.64
7.5
4:3
10
175
4.09
2.14
17.54
447
-
213
50
162
7,212
8,718
5,396
7,456
1,262
2.64
6.1
13.5
1.3
6.8
478
61.44
7.5
1:1
6
127
1.76
1.76
13.65
419
-
203
50
153
7,264
8,752
5,773
7,606
1,146
2.31
6.6
14.0
1.3
6.6
496
66.18
17.5
7:1
5
128
1.65
1.65
12.40
387
-
201
57
144
7,175
7,894
5,488
6,859
1,035
2.1
6.6
14.6
1.4
5.3
494
68.43
15.9
10:1
5
89
1.56
1.56
11.22
MBDT
MBDT
MBDT
MBDT
MBDT
MBDT
MBDT
MBDT
MBDT
MBDT
MNos
Times
%
Times
%
BDT
BDT
%
Nos
Nos
BDT
BDT
BDT
2011 2010 2009 2008 2007
MBDT = Bangladeshi Taka in Million, BDT = Bangladeshi Taka, MNos = Number in Million
Status of compliance of corporate governance
Board’s size
Number of independent director
Chairman of the Board and CEO
Appointment of independent director
FS present fairly its state of affairs, results of its operations, cash flows & changes in equity
Proper books of accounts maintained
Appropriate accounting policies consistently applied in FS preparation & accounting estimates are based on reasonable & prudent judgment
lASs, as applicable in Bangladesh, followed in FS preparation & any departure adequately disclosed
The system of internal control sound in design & effectively implemented & monitored
No significant doubt upon its ability to continue as a going concern
Reporting of significant deviations from last year in operating results
Key operating & financial data of at least preceding three years
Dividend declared
Number of board meeting held & attendance reporting
Pattern of shareholding
Appointment of CFO, Head of Internal Audit & Company Secretary
Requirement to attend Board Meetings
Audit Committee
Composition of Audit Committee
Appointment of Audit Committee members
ConditionNo.
TitleCompliance status
Complied Not complied
Explanation for non-compliance/
comments
1.1
1.2 (i)
1.2 (ii)
1.3
1.4 (a)
1.4 (b)
1.4 (c)
1.4 (d)
1.4 (e)
1.4 (f)
1.4 (g)
1.4 (h)
1.4 (i)
1.4 (j)
1.4 (k)
2.1
2.2
3.00
3.1 (i)
3.1 (ii)
Yes
One
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Annexure-4
12
Service & tenure of Audit Committee members
Selection of the Chairman of Audit Committee
Qualification of the Chairman of Audit Committee
Reporting of Audit Committee
Report on conflicts of interest
Suspected or presumed fraud or irregularity or material defect in the internal control system
Suspected infringement of laws
Any other matter
Reporting to the Authorities
Reporting to the Shareholders & General Investors
Appraisal or valuation services or fairness opinions
Financial information system design and implementation
Book-keeping or other services related to accounting records or financial statements
Broker-dealer services
Actuarial services
Internal audit services
Any other services
ConditionNo.
TitleCompliance status
Complied Not complied
Explanation for non-compliance/
comments
3.1 (iii)
3.2 (i)
3.2 (ii)
3.3.1 (i)
3.3.1 (ii) (a)
3.3.1 (ii) (b)
3.3.1 (ii) (c)
3.3.1 (ii) (d)
3.3.2
3.4
4.00 (i)
4.00 (ii)
4.00 (iii)
4.00 (iv)
4.00 (v)
4.00 (vi)
4.00 (vii)
Yes
Yes
Yes
Yes
-
-
-
-
-
-
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No such incidence
No such incidence
No such incidence
No such incidence
No such incidence
No such incidence
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
PROGRESS AT A GLANCE
14
2009
2008
2007
Total investment portfolioTaka in million
7,212
7,596
7,264
7,175
2010
7,8672011
Net operating income and profit after taxTaka in million
Net operating incomeProfit after tax
2009447
162
419
153
387
144
100 200 300 400 500 600 700
2010590
378
2011633
213
Shareholders’ equityTaka in million
2009
2010
1400 1600 1800
2011 1,795
PROGRESS AT A GLANCE
15
Return on equityIn percent
2007 2008 2009 2010 2011
14.6 14.0 26.213.5 12.5
Earning and net asset value per share
Amount in taka(Based on number of shares outstanding at the end of year 2011)
2009
20102.14
17.54
1.76
13.65
1.65
12.40
1.56
11.22
20112.31
19.42
0 5 10 15 20
Net Asset Value Per Share
We have audited the accompanying Balance Sheet of United Leasing Company Limited “the Company” as of 31 December 2011 and the related Profit and Loss Account, Statement of Cash Flows and Statement of Changes in Equity for the year then ended together with the notes 1 to 50 thereto. The preparation of these Financial Statements is the responsibility of the Company’s management. Our responsibility is to express an independent opinion on these Financial Statements based on our audit.
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 misstatement. 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 Statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the Financial Statements prepared in accordance with Bangladesh Accounting Standards (BAS), give a true and fair view of the state of the Company’s affairs as on 31 December 2011, and of the results of its operations and its cash flow for the year then ended and comply with the Financial Institutions Act 1993, the Companies Act 1994, The Securities and Exchange Rules 1987, the rules and regulations issued by the Bangladesh Bank 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 Balance Sheet and Profit and Loss Account together with the annexed notes 1 to 50 dealt with by the report are in agreement with the books of account;
d. the financial Statements have been prepared in accordance with generally accepted accounting principles in Bangladesh;
e. the expenditure incurred and payment made were for the purpose of company’s business;
f. the Financial Statements have been drawn up in conformity with the rules and regulations issued by the Bangladesh Bank to the extant applicable to the company;
g. adequate provision have been made for lease and advances considered to be doubtful;
h. the Financial Statements conform to the prescribed standards set in the accounting regulations issued by the Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh;
i. the records and the statements submitted by the branches have been properly maintained and consolidated in the Financial Statements;
j. the information and explanations required by us have been received and found satisfactory;
k. the Company has followed the instruction issued by the Bangladesh Bank in the matters of lease/advance classification, provisioning and suspension of interest; and
l. the Company has complied with the relevant laws pertaining to reserve and maintenance of liquid assets.
Hoda Vasi Chowdhury & CoDhaka, March 6, 2012 Chartered Accountants
AUDITORS’ REPORT TO THE SHAREHOLDERS
16
Financial Statements
PROPERTY AND ASSETSCash
In hand (including foreign currencies)Balance with Bangladesh Bank and its agent bank(s)(including foreign currencies)
Balance with banks and other financial institutionsIn BangladeshOutside Bangladesh
Money at call and short notice
InvestmentsGovernmentOthers
Lease, loans and advancesLease receivable and stock on hireLoans, cash credits, overdrafts, etc.Bills purchased and discounted
Fixed assets including premises, furniture and fixtures
Other assets
Non - financial institutional assets
Total assets
LIABILITIES AND CAPITALLiabilitiesBorrowing from banks, other financial institutions and agentsDeposits and other accounts
Current depositsBills payableSavings bank depositsTerm depositsBearer certificates of depositOther deposits
Other liabilitiesTotal liabilities
Capital / Shareholders' equityPaid- up capitalStatutory reserve Share premiumGeneral reserveRetained earnings
Total Shareholders' equity
Total liabilities and Shareholders' equity
Net asset value per share (NAV)
3
4
5
6
7
8
9
1011
12
13.214151617
18
60,000
124,153,595 124,213,595
1,130,723,458 -
1,130,723,458
450,000,000
- 91,763,932
91,763,932
5,585,551,004 2,281,394,553
- 7,866,945,557
77,486,050
563,489,610
-
10,304,622,202
1,527,289,501
- - -
4,681,673,569 -
416,634,960 5,098,308,529 1,884,342,049
8,509,940,079
924,000,000 425,000,000
3,750,000 185,000,000 256,932,123
1,794,682,123
10,304,622,202
19.42
40,500
104,317,382 104,357,882
577,837,375 -
577,837,375
320,000,000
- 158,454,916
158,454,916
5,125,601,798 2,470,038,559
- 7,595,640,357
42,826,833
460,641,546
-
9,259,758,909
1,360,317,795
- - -
4,035,304,336 -
476,327,440 4,511,631,776 1,766,867,266
7,638,816,837
528,000,000 380,000,000
3,750,000 271,000,000 438,192,072
1,620,942,072
9,259,758,909
307.00
18
Restatement of NAV:Net assetNumber of outstanding shares (current year's)NAV per share
OFF-BALANCE SHEET ITEMSContingent liabilitiesAcceptances and endorsementsLetters of guaranteeIrrevocable letters of creditBills for collectionOther contingent liabilities
Other commitmentsDocumentary credits and short term trade -related transactionsForward assets purchased and forward deposits placedUndrawn note issuance and revolving underwriting facilitiesUndrawn formal standby facilities , credit lines and other commitments
Total Off-Balance Sheet items including contingent liabilities
19
1,794,682,123 92,400,000
19.42
-
20,751,800 - - -
20,751,800
- - - - -
20,751,800
1,620,942,072 92,400,000
17.54
- 34,504,650
- - -
34,504,650
- - - - -
34,504,650
Hoda Vasi Chowdhury & CoChartered Accountants
Dhaka, March 06, 2012
The annexed notes 1 to 50 form an integral part of these financial statements.
See annexed auditors' report to the Shareholders of same date.
19
A. Rouf M. Abdul Wahed L. H. Khan
OPERATING INCOMEInterest income Interest paid on deposits, borrowings, etc.Net interest incomeInvestment incomeCommission, exchange and brokerageOther operating incomeTotal operating income (A)
OPERATING EXPENSESSalaries and allowancesRent, taxes, insurance, electricity, etc.Legal expensesPostage, stamp, telecommunication, etc.Stationery, printing, advertisements, etc.Managing Director's salary and benefitsDirectors' feesAuditors' feesCharges on loan lossesDepreciation and repair of assetsOther expensesTotal operating expenses (B)Profit before provision C=(A-B)Provision against lease, loans and advancesProvision for diminution in value of investmentsOther provisionsTotal provision (D)Operating profit before taxes (C-D)Non-operating incomeTotal profit before taxesProvision for taxationNet profit after taxation
AppropriationsStatutory reserveGeneral reserveDividends, etc.
Retained surplus Earnings per share (EPS)
Restatements of EPS:EPS considering current year's outstanding no. of shares and without non operating income
2122
23
24
2627282930313233
3435
2036
25
37
1416
1738
1,166,501,656 (613,190,698) 553,310,958
13,271,458 -
66,510,398 633,092,814
126,518,980 23,310,483 5,471,147 4,547,004 3,321,618 7,010,196
232,300 125,400
- 35,798,972 22,416,663
228,752,763 404,340,051
35,000,000 - -
35,000,000 369,340,051
- 369,340,051 156,000,000
213,340,051
45,000,000 - -
45,000,000 168,340,051
2.31
2.31
1,140,302,102 (594,335,784) 545,966,318
11,050,386 -
33,025,090 590,041,794
98,728,908 16,569,867 4,214,992 3,245,065 2,286,006 4,911,647
115,000 125,400
- 23,459,619 20,293,214
173,949,718 416,092,076
50,000,000 - -
50,000,000 366,092,076 212,189,067
578,281,143 200,000,000
378,281,143
80,000,000 - -
80,000,000 298,281,143
71.64
2.14
Hoda Vasi Chowdhury & CoChartered Accountants
Dhaka, March 06, 2012
The annexed notes 1 to 50 form an integral part of these financial statements.
See annexed auditors' report to the Shareholders of same date.
PROFIT AND LOSS ACCOUNT for the year ended December 31, 2011
20
A. Rouf M. Abdul Wahed L. H. Khan
The
annex
ed n
ote
s 1 t
o 5
0 f
orm
an inte
gra
l par
t of
thes
e finan
cial
sta
tem
ents
.
LIQ
UID
ITY
STA
TEM
EN
T a
s at
Dec
ember
31,
2011
(Anal
ysis
of
mat
uri
ty o
f as
sets
and lia
bili
ties
)
Part
icu
lars
Ass
ets
:
Lia
bilit
ies:
Up
to
1 m
on
th1
-3 m
on
ths
3-1
2 m
on
ths
Cas
h in h
and
60,0
00
--
Bal
ance
with B
angla
des
h B
ank
and its
agen
t(s)
124,1
53,5
95
--
Bal
ance
with b
anks
and o
ther
fin
anci
al inst
itutions
175,6
89,5
50
688,3
44,8
06
266,6
89,1
02
1,1
30,7
23,4
58
Money
at
call
and s
hort
notice
450,0
00,0
00
--
Inve
stm
ents
--
16,6
90,9
84
Leas
es,
loan
s an
d a
dva
nce
s 434,3
57,6
00
575,9
86,6
40
2,8
22,9
38,7
28
7,8
66,9
45,5
57
Fixe
d a
sset
s in
cludin
g p
rem
ises
, fu
rniture
and
fixt
ure
s-
--
Oth
er a
sset
s-
--
Non f
inan
cial
inst
itutional
ass
ets
--
-
To
tal ass
ets
(A
):1
,18
4,2
60
,74
51
,26
4,3
31
,44
63
,10
6,3
18
,81
4
Borr
ow
ings
from
ban
ks,
oth
er f
inan
cial
inst
itutions
and a
gen
ts860,1
81,1
88
234,7
75,8
26
165,9
86,6
82
Ter
m d
eposi
ts229,3
76,5
48
850,3
93,4
76
1,1
71,6
60,3
40
Oth
er d
eposi
ts13,8
93,4
34
11,9
56,1
06
84,4
12,2
78
Oth
er lia
bili
ties
63,9
48,8
97
158,8
78,9
75
334,7
94,5
41
To
tal liab
ilit
ies
(B):
1,1
67
,40
0,0
67
1,2
56
,00
4,3
83
1,7
56
,85
3,8
41
Net
liq
uid
ity g
ap
(A
- B
):1
6,8
60
,67
88
,32
7,0
63
1,3
49
,46
4,9
74
1-5
years
- - - -
60,0
72,9
48
3,8
53,3
66,8
50 - - -
3,9
13
,43
9,7
98
201,4
75,3
43
2,3
66,1
79,0
48
306,3
73,1
42
783,8
64,8
41
3,6
57
,89
2,3
74
25
5,5
47
,42
4
Ab
ove 5
years
- - - -
15,0
00,0
00
180,2
95,7
39
77,4
86,0
50
563,4
89,6
10 -
83
6,2
71
,39
9
64,8
70,4
62
64,0
64,1
57 -
542,8
54,7
96
67
1,7
89
,41
5
16
4,4
81
,98
4
To
tal 60,0
00
124,1
53,5
95
450,0
00,0
00
91,7
63,9
32
77,4
86,0
50
563,4
89,6
10 -
10
,30
4,6
22
,20
2
1,5
27,2
89,5
01
4,6
81,6
73,5
69
416,6
34,9
60
1,8
84,3
42,0
49
8,5
09
,94
0,0
79
1,7
94
,68
2,1
23
21
A.
Ro
uf
M.
Ab
du
l W
ah
ed
L.
H.
Kh
an
(Am
ount
in T
aka)
A) Cash flows from operating activities
Interest receipts in cash
Interest payments
Dividend receipts
Payments to employees
Payments to suppliers
Income taxes paid
Receipts from other operating activities
Payments for other operating activities
Cash generated from operating activities before changes in operating assets and liabilities
Increase / decrease in operating assets and liabilities
Lease, loans and advances to banks and other FIs
Lease, loans and advances to customers
Other assets
Deposits from other banks / borrowings
Deposits from customers
Accrued expenses and payables
Interest suspense
Employee gratuity
Other liabilities
Net cash from operating activities
B) Cash flows from investing activities
Proceeds from sale of securities
Investment in shares
Purchase of fixed assets
Proceeds from sale of fixed assets
Payment against lease obligation
Net cash from investing activities
C) Cash flows from financing activities
Receipts of long term loan
Repayment of long term loan
Net draw down/(payment) of short term loan
Dividend paid
Net Cash from financing activities
D) Net increase in cash and cash equivalents (A+B+C)
E) Effects of exchange rate changes on cash and cash equivalents
F) Cash and cash equivalents at beginning of the year
G) Cash and cash equivalents at end of the year (D+E+F)
Cash and cash equivalents at end of the year
Cash in hand (including foreign currencies)
Balance with Bangladesh Bank and its agent bank(s)
(including foreign currencies)
Balance with banks and other financial institutions Money at call and short notice
39
40
41
4
1,150,637,934
(555,522,909)
15,839,594
(133,529,176)
(14,999,915)
(278,855,242)
66,433,480
(60,583,673)
189,420,092
197,146,026
(464,311,291)
(59,425,036)
(10,127,500)
596,804,255
95,681,199
21,283,146
(489,500)
31,578,281
408,139,580
597,559,673
-
66,690,984
(56,272,298)
1,639,750
(2,295,756)
9,762,680
118,308,134
(238,474,178)
252,245,474
(36,659,986)
95,419,443
702,741,796
-
1,002,195,257
1,704,937,053
60,000
124,153,595
1,130,723,458
450,000,000
1,704,937,053
1,144,616,114
(597,848,387)
8,239,700
(98,608,708)
(17,160,160)
(62,074,460)
32,744,738
(53,117,138)
356,791,699
(129,198,793)
(204,705,795)
50,553,349
(675,000,000)
822,001,358
58,695,968
(25,122,311)
(1,765,391)
33,279,806
(71,261,809)
285,529,890
212,189,067
(83,309,016)
(19,504,616)
779,202
(350,503)
109,804,134
214,476,000
(444,901,296)
-
(19,002,677)
(249,427,973)
145,906,051
-
856,289,206
1,002,195,257
40,500
104,317,382
577,837,375
320,000,000
1,002,195,257
CASH FLOW STATEMENT for the year ended December 31, 2011
22
Net operating cash flow per share
Restatement of net operating cash flow per share:
Net cash from operating activities
Number of outstanding shares (Current year's)
Net operating cash flow per share
6.47
597,559,673
92,400,000
6.47
54.08
285,529,890
92,400,000
3.09
The annexed notes 1 to 50 form an integral part of these financial statements.
CASH FLOW STATEMENT for the year ended December 31, 2011
23
A. Rouf M. Abdul Wahed L. H. Khan
The
annex
ed n
ote
s 1 t
o 5
0 form
an inte
gra
l par
t of th
ese
finan
cial
sta
tem
ents
.
STA
TEM
EN
T O
F C
HA
NG
ES
IN
EQ
UIT
Y f
or
the
year
ended
Dec
ember
31,
2011
Part
icu
lars
Bala
nce
as
at
Jan
uary
01
, 2
01
0
Cas
h d
ivid
end p
aid for
the
year
2009
Issu
ance
of
bonus
shar
e fo
r th
e ye
ar 2
009
Net
pro
fit
for
the
year
2010 a
fter
tax
Mov
emen
t of
gen
eral
res
erve
Appro
priat
ion m
ade
during t
he
year
Bala
nce
as
at
Dece
mb
er
31
, 2
01
0
Sur
plus
/ d
efic
it on
acc
ount
of re
valu
atio
n of
pro
pert
ies
Sur
plus
/ d
efic
it on
acc
ount
of re
valu
atio
n of
inve
stm
ents
Curr
ency
tra
nsl
atio
n d
iffe
rence
s
Net
gai
ns a
nd lo
sses
not
rec
ogni
zed
in t
he in
com
e st
atem
ent
Issu
ance
of
bonus
shar
e fo
r th
e ye
ar 2
010
Cas
h d
ivid
end f
or
2010
Net
pro
fit
afte
r ta
xation for
the
year
Mov
emen
t of
gen
eral
res
erve
Appro
priat
ion m
ade
during t
he
year
Bala
nce
as
at
Dece
mb
er
31
, 2
01
1
28
8,7
10
,93
0
(19,
800,
000)
(264
,000
,000
)
378,
281,
142
135,
000,
000
(80,
000,
000)
43
8,1
92
,07
2 - - - -
(396
,000
,000
)
(39,
600,
000)
213,
340,
051
86,0
00,0
00
(45,
000,
000)
25
6,9
32
,12
3
Ret
ain
ed E
arn
ing
sTo
tal
1,2
62
,46
0,9
30
(19,
800,
000) -
378,
281,
142 - -
1,6
20
,94
2,0
72 - - - - -
(39,
600,
000)
213,
340,
051 - -
1,7
94
,68
2,1
23
Gen
eral
Res
erve
40
6,0
00
,00
0 - - -
(135
,000
,000
) -
27
1,0
00
,00
0 - - - - - - -
(86,
000,
000) -
18
5,0
00
,00
0
Sh
are
Pre
miu
m
3,7
50
,00
0 - - - - -
3,7
50
,00
0 - - - - - - - - -
3,7
50
,00
0
Sta
tuto
ry R
eser
ve
30
0,0
00
,00
0 - - - -
80,0
00,0
00
38
0,0
00
,00
0 - - - - - - - -
45,0
00,0
00
42
5,0
00
,00
0
Pai
d-u
p C
apit
al
26
4,0
00
,00
0 -
264,
000,
000 - - -
52
8,0
00
,00
0 - - - -
396,
000,
000 - - - -
92
4,0
00
,00
0
24
(Am
ount
in T
aka)
A.
Ro
uf
M.
Ab
du
l W
ah
ed
L.
H.
Kh
an
1 General Information
1.1 Domicile and legal form
United Leasing Company Limited “the Company” was incorporated on April 27, 1989 as a public limited company under the Companies Act 1913 (currently 1994). The Company is domiciled in Bangladesh. It was granted license under the Financial Institutions Act, 1993. The shares of the Company are quoted on the Dhaka Stock Exchange Limited since 1994 and are transacted in dematerialised form through Central Depository Bangladesh Limited since October 14, 2004. The Company has its registered office at Camellia House, 22 Kazi Nazrul Islam Avenue, Dhaka.
1.2 Nature of operations and principal activities
The Company provides financial services which includes lease finance for acquiring assets for industrial and commercial use, term loans for meeting long term funding requirement, short-term working capital solutions and home loans to cater the needs of its diverse client base. The Company offers various deposit investment opportunities of predefined tenure ranging from six months to ten years.
2 Significant accounting policies 2.1 Measurement bases
The financial statements of the Company have been prepared on historical cost convention in compliance with the Bangladesh Financial Reporting Standards (BFRS).
2.2 Preparation and presentation criteria of Financial Statements
The financial statements have been prepared on a going concern basis following accrual method of accounting except for the cash flow statement and the disclosures have been made in conformity with the Bangladesh Financial Reporting Standards, the Companies Act 1994, the Financial Institutions Act 1993, the Securities and Exchange Commission Rules 1987, the Guidelines from Bangladesh Bank and the Listing Regulation of Dhaka Stock Exchange.
2.3 Use of Estimates
The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities and disclosure of contingent liabilities as at the date of the financial statements. Management believes that these estimates and assumptions are reasonable and prudent. However, the actual results could differ from estimates.
2.4 Reporting currency and level of exactitude
The figures in the financial statements have been stated in Bangladesh Taka and have been rounded off to the nearest integer.
2.5 Comparative information
Last year's figures and account titles have been rearranged to conform current year's presentation in accordance with the Bangladesh Bank DFIM Circular no. 11 dated December 23, 2009.
2.6 Authorisation for Issue of the Financial Statements
The Board of Directors of the Company has authorised these financial statements for issue on March 06, 2012.
2.7 Materiality of financial statements
Each material item, as considered by management significant, has been presented separately in the financial statements wherever applicable.
NOTES TO THE ACCOUNTS for the year ended December 31, 2011
25
2.8 Cash flow statement
Cash flow statement is prepared in accordance with BAS - 7 "Cash Flow Statement" and Bangladesh Bank DFIM Circular No - 11 dated December 23, 2009 under the direct method for the period, classified by operating, investing and financing activities in cash and cash equivalents during the financial year.
2.9 Statement of changes in equity
Statement of changes in equity is prepared in accordance with BFRS - 1 "Presentation of Financial Statements" and Bangladesh Bank DFIM Circular No - 11 dated December 23, 2009 which reflects the increase and decrease in net assets or wealth.
2.10 Liquidity statement (asset and liability maturity analysis)
Liquidity statement is prepared in accordance with Bangladesh Bank DFIM Circular No - 11 dated December 23, 2009 on residual maturity term of assets and liabilities as on the reporting date based on the following assumptions:
i) Balance with other Banks and financial institutions, money at call and short notice, etc. are on the basis of their maturity term
ii) Investments are on the basis of their respective maturity
iii) Lease, Loans and advances are on the basis of their repayment schedule
iv) Fixed assets are on the basis of their useful lives
v) Other assets are on the basis of their realisation / amortisation
vi) Borrowing from other Banks, financial institutions and agents, etc are as per their maturity / repayment terms.
vii) Deposits and other accounts are on the basis of their maturity term and past trend of withdrawal.
viii) Provisions and other liabilities are on the basis of their payment / adjustments schedule.
2.11 Assets and basis of their valuation
2.11.1 Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, bank balances and deposits held at call with banks and financial institutions and short term liquid investments that are readily convertible to known amount of cash which are unlikely to be affected by any insignificant risk of change in value.
2.11.2 Accounting for leases
Following Bangladesh Accounting Standards (BAS) 17 "Leases", accounting for lease transactions have been recorded under finance lease method since all the risks and rewards incidental to ownership are substantially transferred to the lessee as per agreement. Accordingly the aggregate lease receivables excluding un-guaranteed residual value throughout the primary lease term are recorded as gross lease receivables while the excess of net lease receivables over the total acquisition cost constitutes the unearned lease income.
The unearned lease income is amortised to revenue over the primary lease term yielding a constant rate of return over the period. Initial direct costs, if any, are charged in the year in which such costs are incurred.
2.11.3 Accounting for loans
Receivables against term loans including short term loan and home loan comprise of principal amounts due from customers against these loans. Accrued interest thereon are accounted for on accrual basis and shown separately.
2.11.4 Accounting for investment
Long term investments Long term Investments are carried at acquisition/amortised cost. Provision for permanent diminution on an individual basis is made as and when they arise.
26
Current investments
Current Investments are carried at the lower of cost or market value on an individual basis.
2.11.5 Fixed assets and depreciation
Recognition All property, plant and equipment are initially stated at cost and depreciated over their expected useful lives. The cost of acquisition of an asset is comprised of its purchase price and any directly attributable cost of bringing the asset to the location and condition for its intended use inclusive of duties and non-refundable taxes.
Fixed asset acquired under finance lease is accounted for at the lower of present value of minimum lease payments under the lease agreements and the fair value of the asset. The related obligation under the lease is accounted for as liability. Finance charges are allocated to accounting period in a manner so as to provide a constant rate of charge on the outstanding liability.
Subsequent cost related to property, plant and equipment is capitalised only when it increases the future economic benefit from the asset. All other expenditures are recognised as expenses as and when they are incurred.
Depreciation Items of property, plant and equipment are depreciated based on straight-line method throughout the estimated span of useful life ranging from five to eight years. Additions are depreciated for the full year irrespective of the date of acquisition of assets at the applicable rates while no depreciation is charged on any item in the year of its disposal. Depreciation is calculated on the cost of fixed asset in order to write off such amount over the estimated useful lives of such assets. The rates of depreciation used are as follows:
Furniture & fixture 12.50%
Office equipment 15.00%
Electrical equipment 20.00%
Motor vehicle 20.00%
Derecognition An item of property, plant and equipment is de-recognised on its disposal. The gain or loss arising from de-recognition of an asset is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
2.11.6 Account receivable
Account receivable at the balance sheet date is stated at amounts which are considered realisable. Specific allowance is made for receivables considered to be doubtful for recovery.
2.12 Liabilities and basis of their valuation
2.12.1 Provision for doubtful assets
Provisions, specific and general, are made on the basis of year end review by the management as per policy of the Company and guidelines contained in Bangladesh Bank’s FID circulars. Specific provisions are made where the repayment of identified leases / loans are in doubt and reflect an estimate of the amount of loss anticipated and the general provision is made for the inherent risk of losses. Provisions are applied to write off leases / loans, in part or in whole, when they are considered wholly or partly irrecoverable.
An appropriate general and specific provision for un-classified and classified leases, loans and advances at varying rates depending on the degree of risk associated with the certainty of collection has been provided as per company policy in excess of regulatory requirement.
27
2.12.2 Income taxes
Current tax Current tax expense is provided on estimated taxable profit for the year at the tax rate applicable for the year.
Deferred tax Deferred taxation is provided in full for all temporary differences arising between tax bases of assets and carrying amount of assets in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Tax rate prevailing at the Balance Sheet date is used to determine deferred tax.
2.12.3 Provision for accrued expenses
Provisions have been recognised in the balance sheet as follows: a. when the Company has a present obligation, legal or constructive as a result of a past event,b. when it is probable that an outflow of resources embodying economic benefits will be required to settle that obligation; and c. when a reliable estimate can be made of the amount of the obligation.
2.12.4 Employee benefits
Provident fund A contributory Provident Fund is operated by the Company on equal participation from both parties, the Company and the employee. The Fund is recognised by the National Board of Revenue and is administered by a Board of Trustees.
Gratuity fund A separate funded gratuity scheme is maintained by the Company to motivate it's employees for long term retention. Gratuity scheme is applicable for all its permanent employees who have completed their length of service at least for five years without any break. Provision for gratuity is made annually considering all its eligible employees available at the end of the year.
Other long term benefits The Company operates a group life insurance scheme for all of its permanent employees. It maintains a health insurance scheme for all of its permanent employees, their spouse and children.
2.12.5 Contingent liabilities and contingent assets
The contingent liability and contingent asset are not reflected in the balance sheet but the existence of contingent liability is disclosed in the financial statements. A contingent liability is a probable obligation that arises from past events whose existence will be confirmed by occurrence or non-occurrence of uncertain future events not within the control of the Company or a present obligation that is not recognised because outflow of resources is not likely or obligation cannot be measured reliably.
2.12.6 Proposed dividend
Dividend proposed by the Board of Directors for the year shall be recognised and is accounted for after approval by the shareholders at the Annual General Meeting.
2.13 Revenue recognition
2.13.1 Interest income
Interest income comprises of interest income from lease, loans and advances and interest on placement of fund with banks and other financial institutions. Interest due is recognised on accrual basis. Interest due over ninety days is not recognised as revenue rather it is recognised as interest suspense. Suspended interest is recognised as income on cash basis when it is received.
28
2.13.2 Lease income
The excess of gross lease rentals receivable over the cost of the leased asset represents the total unearned income at the time of execution of lease. The unearned income is allocated over the period of lease in a pattern reflecting a constant return on the net investment.
2.13.3 Hire purchase income
Finance income against hire purchase arrangement is allocated to the income statement over the hire purchase period to give a constant periodic rate of return on net receivable.
2.13.4 Income from long term and short term finance
Income from long and short term finance is recognised as revenue when the interest is due. Interest due over ninety days is not recognised as revenue rather it is recognised as interest suspense. Suspended interest is recognised as income on cash basis when it is received.
2.13.5 Income from dividend
Dividend income from investment in equity shares is recognised during the period in which it is declared. Dividend income from preference shares is recognised on accrual basis considering the establishment of right to receive the same.
2.13.6 Income from bank deposits
Interests from short term deposits and fixed deposits are recognised on accrual basis taking into account the principal outstanding and the effective rate.
2.13.7 Fee based income
Fee based income is recognised as revenue when it is received.
2.13.8 Interest paid on deposits, borrowing, etc.
Interest paid comprises of the interest payable on external borrowing, individual and institutional deposits and direct deposit expenses and are recognised as they accrue.
2.13.9 Impairment of assets
The carrying amounts of the property, plant and equipment and intangible assets are reviewed at each balance sheet date or whenever there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of the asset exceeds its recoverable amount. Impairment losses, if any, are recognised in the profit and loss account.
2.14 Related party disclosure
The Company transacts with related parties. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related party transactions have been disclosed in note 44.
2.15 Earning per share
Earning per share has been calculated in accordance with BAS-33 “Earning Per Share” and shown on the face of Profit and Loss Account. Basic earning per share is calculated by dividing the net profit attributable to shareholders by the average number of ordinary shares during the financial year.
29
2.16 Events after the balance sheet date
Events after the balance sheet date are those events that occur between the balance sheet and the date when the financial statements are authorised for issue. All material events occurring after the balance sheet date have been considered in these financial statements.
2.17 Disclosure of deviations from few requirements of BAS/BFRS due to regulatory compliance of Bangladesh Bank's requirements.
Bangladesh Bank is the prime regulatory body for banks and financial institutions in Bangladesh. Some requirements of Bangladesh Bank's rules and regulations contradict with those of BAS and BFRS. As such, the Company has, in some cases, compiled with the rules and regulations of Bangladesh Bank.
2.18 Financial risk management policies and objectives
The Board of Directors of the Company sets the overall risk appetite and philosophy; the risk and capital framework underpins delivery of the Board’s strategy.
It is the Company’s policy to optimise return to shareholders while maintaining a strong capital base and credit rating to support business growth and meet regulatory capital requirements at all times.
The main financial risks facing the Company and its management are as follows:
Credit risk
Credit risk is the risk arising from the possibility that the Company will incur losses from the failure of customers to meet their obligations.
The Company has segregated duties for the officers involved in credit related activities. Credit evaluation, credit administration and credit monitoring and recovery functions are segregated and delegated to credit evaluation department, operations department, collection and special assets management department respectively.
Risk Review department is entrusted with the task of managing the internal risk rating model. This Internal Rating Based (IRB) approach, recommended by the Basel-II committee and also by the Bangladesh Bank in its Supervisory Review Process, coupled with the data integrity management process of monthly credit audit, helps manage asset quality and establishing a prudent credit culture within the Company that is efficient and transparent.
Liquidity risk
Liquidity risk is the risk that the Company is unable to meet its obligations as they fall due.
The Company’s liquidity policy is designed to ensure that it can at all times meet its obligations as they fall due. Liquidity management focuses on overall balance sheet structure and the control, within prudent limits, of risk arising from exposure to the mismatch of maturities across the balance sheet and from undrawn commitments and other contingent obligations. The management of liquidity risk is carried out by Treasury department under approved policy guidelines. Compliance is monitored and coordinated by Treasury both in respect of internal policy and the regulatory requirements. The liquidity management is monitored by Asset Liability Committee (ALCO) on a regular basis. A contingency plan is in place for managing extreme situation. The risk of short term mismatch can be met by the undrawn commitment and expected renewal of deposits.
Market risk
Market risk is defined as the risk of loss resulting from adverse changes in risk factors such as interest rates, and equity prices together with related factors such as market volatilities. The Company is exposed to market risk because of positions held in its trading portfolios and its non-trading businesses.
Interest rate risk arises from the Company’s treasury activities and lending businesses due to mismatches between the future yield. Funding cost is managed daily by the Treasury department and monthly reviewed by Asset Liability Committee to monitor the interest rate movement and devise a number of alternative options to mitigate possible interest rate risks.
30
Equity positions can result in changes in the Company’s non-trading income and reserves arising from changes in equity prices/income. Such exposure may take the form of listed and unlisted equity. The type, nature and amount of equity exposure held by the Company is not significant. The market value of the equity assets held by the Company at the balance sheet date is much higher than cost price.
Operational risk
Operational risk arises from inadequate process, misuse of process, from human or system error or from external factors.
The Operation Risk Management Committee is responsible for identifying operational risk and take steps to mitigate such risks. The Committee comprises of the Head of Development, Head of Human Resources and the Head of Technology and Services. The Committee reviews operational processes and evaluates the process in terms of efficiency and adequacy of the process to ensure adequate control. Processes are re-engineered to improve efficiency without diluting the control/risk. The re-engineered process is documented and imparted among the stakeholders of the process to ensure the process delivers as expected. To prevent misuse, ‘maker and checker’ concept is implemented in every step of operational processes. Also appropriate trainings are arranged regularly to reduce human errors. New products are also designed with operational risk mitigating features.
31
3 Cash
Cash in hand (note-3.1) Balance with Bangladesh Bank and its agent bank(s) (note-3.2)
3.1 Cash in hand
In local currency In foreign currency 3.2 Balance with Bangladesh Bank and its agent bank(s)
In local currency (with Bangladesh Bank) Sonali Bank as agent of Bangladesh Bank (local currency) 3.3 Statutory deposits
Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR)
Cash Reserve Requirement and Statutory Liquidity Reserve have been calculated and maintained in accordance with section 19 of the Financial Institutions Act 1993, regulation 5 of the Financial Institution Regulations 1994 and FID circular no.6 dated November 06, 2003.
The Cash Reserve Requirement on the Company's term deposits received from public at the rate of 2.5% has been calculated and maintained with Bangladesh Bank in current account and 5% Statutory Liquidity Reserve, including CRR, on the total liabilities has been maintained in the form of balance with banks and the Company's call money deposit. Both the reserves maintained by the Company are in excess of the statutory requirements, as shown below:
The surplus for SLR mostly comprises of interest earnings deposits maintained with banks and financial institutions, some of which are kept under lien against credit facilities and countervailing arrangements.
60,000
124,153,595 124,213,595
60,000
- 60,000
124,153,595 -
124,153,595
40,500
104,317,382 104,357,882
40,500 -
40,500
104,317,382 -
104,317,382
a) Cash Reserve Requirement (CRR) Required reserve (2.5% on deposit) Actual reserve maintained (note-3.2) Surplus b) Statutory Liquidity Reserve (SLR) Required reserve (5% on total liabilities) Actual reserve maintained including CRR (note-3.4) Surplus
115,895,233 124,153,595
8,258,362
311,595,400 1,254,937,053 943,341,653
102,403,259 104,317,382
1,914,123
276,416,503 682,195,257
405,778,754
3.4 Actual reserve maintained (including CRR)
Cash in hand Balance with Bangladesh Bank and its agent bank(s) Balance with banks and other financial institutions (note-4) 4 Balance with banks and other financial institutions
In Bangladesh (note-4.1) Outside Bangladesh
60,000
124,153,595 1,130,723,458
1,254,937,053
1,130,723,458 -
1,130,723,458
40,500
104,317,382 577,837,375
682,195,257
577,837,375 -
577,837,375
32
4.1 In Bangladesh Current deposits Nationalised Commercial Bank Private Commercial Bank Foreign Commercial Bank Short-term deposits Nationalised Commercial Bank Private Commercial Bank Foreign Commercial Bank Fixed deposits Nationalised Commercial Bank Private Commercial Bank Foreign Commercial Bank Financial Institutions 4.2 Maturity grouping of balance with banks and other financial institutions On demand Up to 1 month Over 1 month but not more than 3 months Over 3 months but not more than 6 months Over 6 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years 5 Money at call and short notice
Union Capital Limited LankaBangla Finance Limited Prime Finance and Investment Limited Jamuna Bank Limited Agrani Bank Limited International Leasing and Financial Services Limited AB Bank Limited Bank Asia Limited
6 Investments Investment classified as per nature a) Government securities: National investment bonds Bangladesh Bank bills Government bonds Prize bonds b) Other investment: Shares (note-6.2)
715,592 56,672,546
57,034 57,445,172
- 11,627,197
537,729 12,164,925
-
491,936,957 353,938,185 215,238,219
1,061,113,361 1,130,723,458
69,610,098 106,079,452 688,344,806 213,761,020 52,928,082
- -
1,130,723,458
120,000,000 100,000,000 100,000,000 80,000,000 50,000,000
- - -
450,000,000
- - - - -
91,763,932 91,763,932 91,763,932
50,925 27,941,212 1,198,083
29,190,220
- 45,974,201 34,887,182
80,861,383
- 311,349,314
- 156,436,458
467,785,771 577,837,375
29,190,220 134,802,167 212,900,543 200,944,445
- - -
577,837,375
- 30,000,000 50,000,000
- -
110,000,000 80,000,000 50,000,000
320,000,000
- - - - -
158,454,916 158,454,916 158,454,916
33
6.1 Maturity grouping of investments On demand Up to 1 month Over 1 month but not more than 3 months Over 3 months but not more than 6 months Over 6 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years 6.2 Investment in shares Quoted United Insurance Company Limited Unquoted 10% preference share in Summit Purbanchol Power Co. Ltd. 10% preference share in Summit Uttaranchol Power Co. Ltd. 12.75% preference share of Energypac Confidence Power Venture Limited 9% preference share of BRAC Bank Limited
7 Lease, loans and advances 7.1 Broad category-wise break up Inside Bangladesh Lease receivable and stock on hire (note-7.2) Loans (note-7.3) Cash credit Overdrafts etc. Outside Bangladesh
- - -
845,492 15,845,492 60,072,948 15,000,000
91,763,932
15,000,000 15,000,000
35,000,000 35,000,000 6,763,932
- 76,763,932 91,763,932
- -
50,000,000 845,492
15,845,492 73,381,965 18,381,967
158,454,916
15,000,000 15,000,000
42,500,000 42,500,000 8,454,916
50,000,000 143,454,916 158,454,916
5,585,551,004 2,281,394,553
- -
7,866,945,557
- 7,866,945,557
5,125,601,798 2,470,038,559
- -
7,595,640,357
- 7,595,640,357
United Insurance Company Limited
The Company purchased 600,000 ordinary shares of United Insurance Company Limited, a listed public limited company, @ Tk 25 per share in 2001. Subsequently the Company received bonus shares in 2007, 2008, 2009, 2010 and 2011.
The total number of ordinary shares of United Insurance Company Limited now held by the Company is as follows:
As on December 31, 2011 the market value of the above shares was Tk. 216,810,000 against cost price of 600,000 shares at Tk.15,000,000 reflected in the accounts.
Original purchase in 2001Bonus share received in 2007Bonus share received in 2008Bonus share received in 2009Bonus share received in 2010Bonus share received in 2011
Nos. 600,000 180,000 220,000
1,500,000 500,000 300,000
3,300,000 Shares
34
7.2 Lease receivable and stock on hire Net lease receivable (note-7.2.1) Stock on hire Advances for leases (note-7.2.3) Interest receivable 7.2.1 Net lease receivable Gross lease receivable Less: Unearned finance income Net lease receivable 7.2.2 Movement of net lease receivables Balance at January 01 Addition during the year Realisation during the year Balance at December 31
7.3 Loans
Term loan and home loan Short term loan and factoring advances Interest receivable 7.4 Maturity grouping of lease, loans and advances On demand Up to 1 month Over 1 month but not more than 3 months Over 3 months but not more than 1 year Over 1 year but not more than 5 years Over 5 years
5,536,306,199 744,120
11,491,090 37,009,595
5,585,551,004
6,644,915,391 1,108,609,192
5,536,306,199
5,042,097,935 2,735,806,022
(2,241,597,758) 5,536,306,199
5,042,097,935 6,869,332
38,091,609 38,542,922
5,125,601,798
6,180,803,197 1,138,705,262
5,042,097,935
4,978,157,040 2,330,836,705
(2,266,895,810) 5,042,097,935
1,499,881,817 774,874,172
6,638,564 2,281,394,553
- 434,357,600 575,986,640
2,822,938,728 3,853,366,850
180,295,739 7,866,945,557
1,455,574,731 1,013,498,527
965,301 2,470,038,559
- 593,880,435 568,456,293
2,746,495,363 3,633,341,704
53,466,562 7,595,640,357
7.5 Lease, loans and advances on the basis of significant concentration
a) Lease, loans and advances to companies or firms in which the Directors of the Company have interests b) Lease, loans and advances to Chief Executive and other Senior Executives
7,969,078
4,059,417
12,678,563
4,606,279
7.2.3 Advance for leases
These represent disbursements made to clients for procuring assets under lease and quarterly capitalised interests on disbursements. On execution, advances are transferred to lease finance.
35
c) Number of clients with outstanding amount and classified lease, loans and advances exceeding 15% of total capital of the Company is as follows: Total capital of the Company Number of clients Amount of outstanding advances Amount of classified advances Measures taken for recovery
d) Industry-wise distribution of lease, loans and advances: 1. Agricultural sector 2. Industrial sector: a) Service industry b) Food production/processing industry c) Chemical & Pharmaceutical d) Plastic industry e) Garments f) Textile g) Paper, Printing and packaging industry h) Iron, Steel & Engineering industry i) Leather & leather products j) Electronics and electrical industry k) Telecommunication/Information Technology l) Jute and jute products m) Cement/Concrete and allied industry n) Glass and ceramic industry 3. Power, Gas, Water and sanitary service 4. Transport & Communication 5. Real Estate & Housing 6. Others
e) Geographical location-wise lease, loans and advances: Inside Bangladesh Urban Dhaka Division Chittagong Division Khulna Division Rajshahi Division Rangpur Division Barisal Division Sylhet Division Rural Outside Bangladesh
7.6 Sector-wise lease, loans and advances
Public sector Co-operative sector Private sector
1,794,682,123 Nil
Nil Nil
Not applicable
286,898,466
1,124,601,555 1,101,545,768
558,259,677 475,086,881 465,236,914 455,289,710 451,009,980 306,565,324 125,576,747 99,020,058 71,521,128 57,549,545 32,926,740 29,377,243
297,756,303 688,375,870 265,226,765 975,120,883
7,866,945,557
6,040,421,400 1,256,834,472
323,923,590 150,547,171 64,731,321 8,715,309
21,772,294 7,866,945,557
- 7,866,945,557
- 7,866,945,557
- -
7,866,945,557 7,866,945,557
1,620,942,072 Nil Nil Nil
Not applicable
561,639,568
1,238,198,571 359,289,894 622,790,763 578,956,881 390,989,789 669,186,658 503,951,599 505,242,814 14,318,596 20,421,546
122,839,429 18,839,574 28,957,640 6,161,864
185,136,814 724,790,488 12,609,953
1,031,317,914 7,595,640,357
6,181,517,379 960,962,090 210,328,806 187,430,762 48,755,755
- 6,645,564
7,595,640,357 -
7,595,640,357 -
7,595,640,357
- -
7,595,640,357 7,595,640,357
36
7.7 Particulars of lease, loans and advances
i) Leases and loans considered good in respect of which the Company is fully secured ii) Leases and loans considered good in respect of which the Company is partially secured iii) Loans considered good against which the Company holds no security other than the debtors' personal guarantee
iv) Loans considered good secured by the personal undertaking of one or more parties in addition to the personal guarantee of the debtors v) Classified loans against which no provision has been made
vi) Loans due from Directors either separately or jointly with any other persons vii) Loans due from Officers either separately or jointly with any other persons viii) Loans due from Companies or firms in which the Directors have interest as Directors, Partners or managing agents Companies, as members.
ix) Maximum total amount of advances, including temporary advances made at any time during the year to Directors or Managers or Officers either separately or jointly with any other person.
x) Maximum total amount of advances, including temporary advances granted during the year to the Companies or firms in which the Directors have interest as Directors, Partners or Managing agents or in the case of private Companies, as members.
xi) Due from banking Companies and other financial institutions xii) Classified lease, loans and advances
a) Classified lease, loans and advances on which interest has not been charged b) Increase/(decrease) of specific provision c) Amount of loan written off d) Amount realised against loan previously written off e) Provision kept against loans classified as bad/loss on the date of preparing the balance sheet f) Interest credited to Interest Suspense account (note-12.3)
xiii) Written off lease, loans and advances
Opening Balance During the year Cumulative to-date The amount of written-off leases, loans and advances for which law suits have been filed
168,864,665
4,537,904,655
-
3,160,176,237
- 7,866,945,557
-
4,059,417
7,969,078
-
-
61,115,681
174,700,917 25,273,281 7,600,960
32,000,000
174,700,917 35,734,184
131,085,445 7,600,960
138,686,405
138,686,405
670,587,115
4,155,031,945
-
2,770,021,297
- 7,595,640,357
-
4,606,279
12,678,563
-
-
255,261,706
175,440,585 94,225,687 20,578,093
-
175,440,585 14,451,038
110,507,352 20,578,093
131,085,445
131,085,445
37
7.8 Classification of lease, loans and advances Unclassified Standard Special mention account (SMA) Classified Sub-standard Doubtful Bad/Loss 8 Fixed assets including premises, furniture and fixtures Cost Furniture and fixtures Office equipment Electrical equipment Vehicles Less: Accumulated depreciation Net book value at the end of the year (Statement of property, plant and equipment is detailed in Annexure - A)
9 Other assets Inside Bangladesh Income generating: Income receivable (note-9.1) Non-income generating: Deferred tax assets (note-9.2) Advance, deposit and prepaid expenses Other receivables Advance corporate tax (note-9.3) Outside Bangladesh
Balance as on January 01 Deferred tax relating to fixed assets including furniture and fixtures (note-37) Balance as on December 31
7,124,671,524 421,957,538
7,546,629,062
56,792,637 88,822,941
174,700,917 320,316,495
7,866,945,557
42,999,328 250,469
71,079,271 31,421,387
145,750,455 68,264,405
77,486,050
21,204,134
4,742,285 30,388,998 66,481,948
440,672,245 563,489,610
- 563,489,610
7,172,831,323 205,552,107
7,378,383,430
34,176,188 7,640,154
175,440,585 217,256,927
7,595,640,357
40,894,975 219,041
32,273,772 19,020,562
92,408,350 49,581,517
42,826,833
9,480,346
2,073,534 31,280,995 8,833,667
408,973,004 460,641,546
- 460,641,546
2,073,534
2,668,751 4,742,285
1,083,369
990,165 2,073,534
9.1 Income receivable amount represents interest receivable on other investment and other operating income receivable.
9.2 Deferred tax asset
Deferred tax asset has been arising due to difference in the carrying amount of the assets and its tax base. Deferred tax arisen from property, plant and equipment has been recognised as following:
38
9.3 Advance corporate tax Balance as on January 01 Paid during the year Settlement of previous years' tax liabilities Balance as on December 31
10 Borrowing from banks, other financial institutions and agents In Bangladesh (note-10.1) Outside Bangladesh 10.1 In Bangladesh Bank overdraft Standard Chartered Bank United Commercial Bank Limited Commercial Bank of Ceylon Plc. One Bank Limited Standard Bank Limited Citibank N. A. Mutual Trust Bank Limited Dutch-Bangla Bank Limited Short term loan Citibank N. A. Standard Chartered Bank Long term loan Commercial long term loan Commercial Bank of Ceylon Plc. Specialised refinancing Bangladesh Bank (SERP) Kreditanstalt Für Wiederaufbau (KfW) 10.2 Analysis by security against borrowing from banks, other financial institutions and agents
Secured (FDR pledged as security) Secured (Corporate guarantee and Pari passu) Unsecured
10.3 Maturity grouping of borrowing from banks, other financial institutions and agents
On demand Up to 1 month Over 1 month but within 3 months Over 3 months but within 1 year Over 1 year but within 5 years Over 5 years
408,973,004 278,855,242
(247,156,001) 440,672,245
1,527,289,501 -
1,527,289,501
197,443,380 192,561,741 90,970,966 89,414,257 84,422,836 39,327,822 25,590,303 1,487,846
721,219,151
200,000,000 120,000,000 320,000,000
- -
360,713,899 125,356,451 486,070,350
1,527,289,501
346,898,544 62,074,460
- 408,973,004
1,360,317,795 -
1,360,317,795
42,623,363 50,718,262 75,807,128
- 91,948,346 85,914,980 99,676,762 7,392,560
454,081,401
200,000,000 100,000,000 300,000,000
39,823,486 39,823,486
421,905,232 144,507,676 566,412,908
1,360,317,795
774,813,180 264,918,126 487,558,195
1,527,289,501
- 860,181,188 234,775,826 165,986,682 201,475,343 64,870,462
1,527,289,501
444,168,957 142,666,607 773,482,231
1,360,317,795
- 581,662,253 249,399,339 195,154,102 259,945,377 74,156,724
1,360,317,795
39
11 Deposits and other accounts Current deposits Bills payable Savings bank deposits Term deposits (note -11.1) Bearer certificates of deposit Other deposits (note-11.2) 11.1 Term deposits Deposits from banks and financial institutions Deposits from other than banks and financial institutions
11.1.1 Sector-wise break-up of term deposits Government Banks and financial institutions Other public Foreign currency Private 11.1.2 Maturity analysis of term deposits a) Maturity analysis of deposits from banks & financial institutions Payable on demand Up to 1 month Over 1 month but within 3 months Over 3 months but within 1 year Over 1 year but within 5 years Over 5 years but within 10 years Over 10 years b) Maturity analysis of deposits from other than banks & financial institutions Payable on demand Up to 1 month Over 1 month but within 3 months Over 3 months but within 1 year Over 1 year but within 5 years Over 5 years but within 10 years Over 10 years
These represent deposits from individuals and institutions under the Company's term deposit schemes for a period of not less than six months.
- - -
4,681,673,569 -
416,634,960 5,098,308,529
200,000,000 4,481,673,569
4,681,673,569
- - -
4,035,304,336 -
476,327,440 4,511,631,776
210,127,500 3,825,176,836
4,035,304,336
- 200,000,000
- -
4,481,673,569 4,681,673,569
- -
200,000,000 - - - -
200,000,000
- 229,376,548 650,393,476
2,929,150,854 608,688,534 64,064,157
- 4,481,673,569
4,681,673,569
- 210,127,500
- -
3,825,176,836 4,035,304,336
- 10,127,500
- 200,000,000
- - -
210,127,500
- 277,395,125 603,253,835
1,767,521,639 1,102,430,563
74,145,674 430,000
3,825,176,836 4,035,304,336
40
Non-interest bearing deposit Interest bearing deposit
11.2.1 Maturity analysis of other deposits Payable on demand Up to 1 month Over 1 month but within 3 months Over 3 months but within 1 year Over 1 year but within 5 years Over 5 years but within 10 years Over 10 years
12 Other liabilities
Finance lease obligation (note-12.1) Provision for gratuity Unclaimed dividend KfW interest differential fund (note-12.2) Interest suspense account (note-12.3) Accrued expenses and payables (note-12.4) Provision for lease, loans and advances (note-12.5) Provision for taxation (note-12.6)
11.2 Other deposits
This represents deposits against financing which is advance rental and security deposits received from clients at the inception of allowing any lease/loan facility to the clients adjustable or refundable at the expiry of the facility.
12.1 Finance lease obligation comprises the liability arisen from asset taken under finance lease from different financial institutions.
12.2 KfW interest differential fund
This represents the difference between interest on loan from KfW @9.5% per annum and the Bangladesh Bank rate. This interest differential fund is being used for the financing of training of personnel or for other activities for the promotion or development of small enterprises in Bangladesh.
12.3 Interest suspense account
This represents interest receivable on lease, hire purchase, term finance and short term finance due over ninety days as per Bangladesh Bank guidelines.
339,797,542 76,837,418
416,634,960
- 13,893,434 11,956,106 84,412,278
306,373,142 - -
416,634,960
- 546,905
6,953,907 38,630,712 35,734,184
559,478,652 516,313,595 726,684,095
1,884,342,049
341,579,459 134,747,981
476,327,440
- 31,458,293 4,280,613
67,601,631 372,986,903
- -
476,327,440
2,295,756 1,036,405 4,013,892
34,451,470 14,451,038
406,532,803 488,914,555 815,171,347
1,766,867,266
Balance as on January 01 Addition during the year Adjusted against programmes during the year Balance as on December 31
Balance as on January 01Add: Amount transferred to "interest suspense" account during the yearLess: Amount recovered from "interest suspense" account during the yearBalance as on December 31
34,451,470 5,575,622
(1,396,381) 38,630,712
31,681,311 5,891,753
(3,121,594) 34,451,470
14,451,038 127,492,776
(106,209,630) 35,734,184
39,573,781 147,545,328
(172,668,071) 14,451,038
41
12.4 Accrued expenses and payables
This is made up of the following:
Liabilities for expenses Liabilities other than expenses
12.5 Provision for lease, loans and advances Specific provision on classified lease, loans and advances Balance at January 01 Fully provided debts written off during the year Recovery of amounts previously written off Provision made for the year (note-36) Recoveries and provision no longer required Net charge to profit and loss account Total provision on classified lease, loans and advances General provision on unclassified lease, loans and advances Balance at January 01 Provision made for the year (note-36) Total provision on unclassified lease, loans and advances Total provision on lease, loans and advances Provision surplus/(shortage):
On classified lease, loans and advances On un-classified lease, loans and advances Total surplus
Liabilities for expenses represent interest accrued but not paid on borrowing and deposits as well as administrative expenses.
Liabilities other than expenses represent income tax deducted at source from depositors, suppliers, employees, VAT payables, collection against leases/loans in advance etc.
366,979,406 192,499,246
559,478,652
299,123,005 107,409,798
406,532,803
12.6 Provision for taxation
Balance as on January 01 Add: For the year (note-37) For prior years
Less: Settlement of previous years' tax liabilities (Statement of tax status is detailed in Annexure - B)
815,171,347
158,668,751 -
973,840,098 (247,156,003) 726,684,095
614,181,181
200,990,166 -
815,171,347 -
815,171,347
415,514,618 (7,600,960) 32,000,000 32,874,241
(32,000,000) -
440,787,899
73,399,937 2,125,759
75,525,696 516,313,595
321,288,931 (20,578,093)
- 114,803,780
- -
415,514,618
138,203,717 (64,803,780) 73,399,937
488,914,555
2011 2010
Required Maintained Required Maintained
235,491,311 72,164,355
307,655,666
440,787,899 75,525,696
516,313,595 208,657,929
181,834,082 71,534,963
253,369,044
415,514,618 73,399,937
488,914,555 235,545,511
42
13 Share capital 13.1 Authorized capital
300,000,000 ordinary shares of Taka 10 each (2010: 10,000,000 shares @ Tk 100 each)
13.2 Issued, subscribed and fully paid-up capital
7,000,000 ordinary shares of Taka 10 each issued for cash 85,400,000 ordinary shares of Taka 10 each issued as bonus shares
13.3 Capital adequacy ratio
As per Basel Accord guideline incorporated by Bangladesh Bank vide DFIM Circular no.08 dated 02 August 2010 all Financial Institution should calculate capital adequacy ratio on solo basis as well as consolidated basis.
In 2010 Minimum Capital Requirement (MCR) was calculated on the basis of total liabilities as per Bangladesh Bank circular ( 6% of Tk. 7,638,816,836).
3,000,000,000
70,000,000
854,000,000 924,000,000
1,000,000,000
70,000,000
458,000,000 528,000,000
A Eligible Capital : Tier-1 Capital Tier-2 Capital Total Eligible Capital (1+2) :B Total Risk Weighted Assets (RWA):C Capital Adequacy Ratio (CAR) (A3 / B)*100D Core Capital to RWA (A1 / B)*100E Supplementary Capital to RWA (A2 / B)*100F Minimum Capital Requirement (MCR)Surplus
1,794,682,123 75,525,696
1,870,207,819 8,633,720,748
21.66 20.79 0.87
863,372,075 1,006,835,744
1,620,942,072 73,399,938
1,694,342,010
458,329,010 1,236,013,000
Core capital (Tier-I)Paid up capital (note-13.2)Statutory reserve (note-14)Share premium (note-15)General reserve (note-16)Retained earnings (note-17)
Eligible supplementary capital (Tier-II)General provision maintained against unclassified loanAssets Revaluation Reserves up to 50%Revaluation Reserve for Securities up to 50%All other preference sharesOther (if any item approved by Bangladesh Bank)
General provision( Unclassified+SMA+Off balance sheet exposure)Limit up to 1.25% of RWA for Credit Risk would be eligible as Tier-II capital
Risk Weighted Assets (RWA)A Credit Risk On- Balance sheet Off-Balance sheet B. Market RiskC. Operational Risk Total: RWA (A+B+C)
924,000,000425,000,000
3,750,000185,000,000256,932,123
1,794,682,123
75,525,696 - - - -
75,525,696
75,525,696 98,819,610
7,905,568,800 7,879,629,050
25,939,750 -
728,151,948 8,633,720,748
528,000,000 380,000,000
3,750,000 271,000,000 438,192,072
1,620,942,072
73,399,938 - - - -
73,399,938
43
No. of Shares Percentage
2011 2010 2011 2010
18,480,000 22,369,540 40,849,540
8,411,990 21,029,540 29,441,530 22,108,930
92,400,000
5,1136,119
53219762301839506
12,166
1,155,930 9,857,790 3,710,170 2,821,100 1,557,490 1,055,660
759,910 2,632,210
14,413,380 54,436,360
92,400,000
1.2510.674.023.051.691.140.822.85
15.6058.91
100.00
10,560,000 12,782,600 23,342,600
4,806,860 11,471,030 16,277,890 13,179,510
52,800,000
20.00 24.21 44.21
9.10 22.76 31.86 23.93
100.00
20.00 24.21 44.21
9.10 21.73 30.83 24.96
100.00
14 Statutory reserve Balance as at January 01 Addition during the year Balance as at December 31
As per section 9 of the Financial Institutions Act, 1993 and regulation 6 of the Financial Institutions Regulations 1994, at least 20% of post-tax profit or Tk.42,668,010 has to be transferred to Statutory Reserve Fund. During the year the Company has transferred Tk. 45,000,000 to the Statutory Reserve Fund.
15 Share premium
This represents a premium of 50% over the par value of share received against the issue of 750,000 shares in 1994 amounting to Tk. 3,750,000.
380,000,000 45,000,000
425,000,000
300,000,000 80,000,000
380,000,000
16 General reserve Balance at January 01 Appropriation from current year’s profit Transfer to retained surplus Balance at December 31
271,000,000 -
(86,000,000) 185,000,000
406,000,000 -
(135,000,000) 271,000,000
13.4 Percentage of shareholding at the closing date
(i) Sponsors - Foreign Domestic
(ii) Financial Institutions and Companies Foreign Domestic
(iii) General public – Domestic
1 Less then 500 2 500 to 5,000 3 5,001 to 10,000 4 10,001 to 20,000 5 20,001 to 30,000 6 30,001 to 40,000 7 40,001 to 50,000 8 50,001 to 100,000 9 100,001 to 1,000,000 10 Above 1,000,000
13.5 Shareholding range on the basis of shareholding as at 31 December 2011
Number of shares Number ofShareholders
Percentage of total holdings
Total numberof shares
44
17 Retained earnings
Balance at January 01 Cash dividend for last year Issue of bonus shares for last year
Addition during the year Net profit after taxation Transfer to statutory reserve Transfer to general reserve
Transfer from general reserve Balance at December 31
18 Net asset value per share (NAV)
Total asset Total liabilities Net asset Number of share outstanding Net asset value per share
Restatement of NAV: Number of outstanding shares Net asset NAV per share 19 Contingent liabilities
19.1 Letters of guarantee
Letters of guarantee (Local) Letters of guarantee (Foreign) Foreign counter guarantees
Banks and other financial institutions Directors or officers Government Others
Guarantees
The Company gives guarantees on behalf of customers. A financial guarantee represents an irrevocable undertaking that the Company will pay to third parties and it converts into lease or loan on the basis of an agreement with the customers. The maximum amount that the Company could be required to pay under a guarantee is its principal amount.
Money for which the Company is contingently liable in respect of guarantees given favoring:
438,192,072 (39,600,000)
(396,000,000) (435,600,000)
2,592,072
213,340,051 (45,000,000)
- 168,340,051 86,000,000
256,932,123
10,304,622,202 8,509,940,079 1,794,682,123
92,400,000 19.42
92,400,000.00 1,794,682,123
19.42
20,751,800
- -
20,751,800
288,710,929 (19,800,000)
(264,000,000) (283,800,000)
4,910,929
378,281,143 (80,000,000)
- 298,281,143 135,000,000
438,192,072
9,259,758,909
7,638,816,837 1,620,942,072
5,280,000 307.00
92,400,000.00 1,620,942,072
17.54
34,504,650
- -
34,504,650
20,751,800 - - -
20,751,800
34,504,650 - - -
34,504,650
45
20 Profit and loss account
Income: Interest, discount and similar income (note-20.1) Dividend income Fees, commission and brokerage Gains less losses arising from dealing in securities Gains less losses arising from investment securities Gains less losses arising from dealing in foreign currencies Income from non-Company assets Other operating income Profit less losses on interest rate changes
Expenses: Interest, fee and commission, etc. Administrative expenses (note-20.2) Other operating expenses Depreciation on Company's fixed assets
20.1 Interest, discount and similar income
Interest on loan, advances and leases Interest on bonds Discount income Interest on debentures Interest on deposits 20.2 Administrative expenses
Salary and allowances Rent, taxes, insurance, electricity, etc. Legal expenses Postage, stamp, telecommunication, etc. Stationery, printing, advertisement, etc. Managing Director's salary and benefits Directors' fees Auditors' fees Repairs and maintenance of the Company's assets 21 Interest income
Lease and hire purchase Term loan and home loan Short term financing Total interest on lease, loans and advances Interest on fixed deposit with banks and other financial institutions Interest on call loans Interest on balance with banks and other financial institutions
1,166,501,656 13,271,458
- - - - -
66,510,398 -
1,246,283,512
613,190,698 186,285,850 22,416,663 20,050,250
841,943,461 404,340,051
1,052,721,977 - - -
113,779,679 1,166,501,656
126,518,980 23,310,483 5,471,147 4,547,004 3,321,618 7,010,196
232,300 125,400
15,748,722 186,285,850
754,416,289
178,997,643 119,308,045
1,052,721,976 96,196,061 16,494,375 1,089,244
1,166,501,656
1,140,302,102 11,050,386
- - - - -
33,025,090 -
1,184,377,578
594,335,784 140,788,290 20,293,214 12,868,214
768,285,502 416,092,076
1,030,604,615 - - -
109,697,487 1,140,302,102
98,728,908 16,569,867 4,214,992 3,245,065 2,286,006 4,911,647
115,000 125,400
10,591,405 140,788,290
733,900,962 201,167,104 95,536,550
1,030,604,615 96,070,556 10,952,722 2,674,209
1,140,302,102
46
22 Interest paid on deposits, borrowing, etc. a) Interest paid on deposits Deposits from other than banks and financial institutions Deposits from banks and financial institutions Direct deposit expenses Interest bearing security deposits b) Interest paid for borrowing Bank loans Bangladesh Bank refinance Call loan Overdraft Finance charge on capital lease
23 Investment income
Interest on bonds Interest on debentures Discount income Gain on sale of shares Dividend on shares 24 Other operating income
Realised from write-off assets Reimbursement - invoice processing and collection costs Early repayment premium Reimbursement-documentation costs Proceeds on titleship transfer Profit on sale of fixed assets Miscellaneous earnings
Sale proceed Cost of investment
457,543,999 25,457,231 24,413,148 9,260,515
516,674,893
26,374,077 34,593,382 11,975,764 23,342,615
229,968 96,515,805
613,190,698
- - - -
13,271,458 13,271,458
32,000,000 11,176,898 10,323,576 6,070,605 1,871,627
76,918 4,990,774
66,510,398
395,459,772 50,085,398 14,824,202 8,482,725
468,852,097
69,161,583 21,570,158 27,977,958 6,528,575
245,413 125,483,687
594,335,784
- - - -
11,050,386 11,050,386
- 9,442,714
15,501,831 5,047,953 2,646,099
280,352 106,142
33,025,090
- - -
281,260,000 (69,070,933)
212,189,067
26 Salaries and allowances
Basic salary, provident fund contribution and all other allowances Festival and incentive bonus
105,916,539 20,602,441
126,518,980
82,637,713 16,091,195
98,728,908
25 Non-operating income
Non-operating income arose from divestment of share of Duncan Properties Pvt. Limited which is presented as follows:
Sale proceed of Taka 281,260,000 arose from sale of 686,000 shares of Duncan Properties Pvt. Limited. Cost of investment represents original acquisition cost with prior years profit from the investment.
47
27 Rent, taxes, insurance, electricity, etc.
Rent, rate and taxes Insurance Electricity, gas and water 28 Legal expenses
Legal expenses
16,113,632 2,716,875 4,479,976
23,310,483
5,471,147 5,471,147
11,835,322 834,715
3,899,830 16,569,867
4,214,992 4,214,992
29 Postage, stamp, telecommunication, etc.
Postage, stamp, internet Telephone - mobile and T & T 30 Stationery, printing and advertisements, etc.
Printing and stationery Publicity and advertisement
31 Managing Director's salary and benefits Remuneration Other benefits
590,486 3,956,518
4,547,004
1,874,121 1,447,497
3,321,618
4,031,680 2,978,516
7,010,196
392,188 2,852,877
3,245,065
979,966 1,306,040
2,286,006
2,950,000 1,961,647
4,911,647
32 Directors' fees
Directors' fees 232,300 232,300
115,000 115,000
33 Auditors' fees
Statutory audit fee (including VAT) 125,400 125,400
125,400 125,400
Bangladesh Bank approved the appointment of Managing Director for another three years term with new terms and conditions on expiry of first five years contract.
Directors' fee includes fees for attending committee meetings. Each Director was paid @Tk. 5,000 per meeting as attendance fee excluding VAT.
Legal expenses include expenses related to professional fees and other incidental fees relating to recovery of lease and loans. Cost of purchasing non-judicial stamp increased for additional volume of business in SME sector.
48
34 Depreciation and repair of Company's assets
Depreciation - (Annexure-A) Furniture and fixture Electrical equipment Motor vehicle Office equipment
Repairs Equipment Maintenance of other assets Vehicles 35 Other expenses Training expenses Books, magazines and newspapers, etc. Liveries and uniforms Medical expenses Fees and subscription Bank charges and commission paid CNG, petrol, oil and lubricant Entertainment Office expenses Business promotion expenses Annual General Meeting/Shareholder expenses Travelling and conveyance expenses Donations 36 Provision against lease, loans and advances On classified loans (note-12.5) On un-classified loans (note-12.5) (Please see note-2.12.1)
37 Provision for taxation Current tax For the year on operating profit (note-12.6) For the year on non-operating profit For prior years Deferred tax Deferred tax relating to fixed assets including premises, furniture and fixtures (note- 9.2)
8,757,186 6,796,181 4,474,565
22,317 20,050,250
1,204,292 7,822,995 6,721,435
15,748,722 35,798,972
40,000 105,177 129,497 373,193
1,223,928 1,150,262 1,124,495 1,427,905 2,018,845 6,509,080 4,326,227 3,988,053
- 22,416,663
32,874,241 2,125,759
35,000,000
158,668,751
- 158,668,751
- 158,668,751
(2,668,751) 156,000,000
4,992,613 5,401,836 2,455,462
18,303 12,868,214
1,347,044 5,770,410 3,473,950
10,591,405 23,459,619
60,000 107,084 140,448 538,746
1,260,006 1,423,816 1,827,063 2,155,147 1,012,780 2,953,565 2,687,552 4,077,007 2,050,000
20,293,214
114,803,780 (64,803,780) 50,000,000
169,161,806 31,828,360
200,990,166 -
200,990,166
(990,165) 200,000,000
49
38 Earnings per share (EPS)
Net profit after tax Number of ordinary shares outstanding Earnings per share (EPS) Restatements of EPS: Number of ordinary shares outstanding Net profit after tax with non-operating income Net profit after tax without non-operating income EPS with non-operating income EPS without non-operating income
Earning per share (EPS) has been computed by dividing the basic earnings by the number of ordinary shares outstanding as of December 31, 2011 as per Bangladesh Accounting Standard (BAS) -33. According to BAS 33, EPS for 2010 has been restated for the issues of bonus share in 2011.
42 Number of employees
The number of employees engaged for the whole year or part thereof who received a total remuneration of Tk. 36,000 p.a were 240 (2010:175). The number of employees at the end of the year was 196 (2010:162).
213,340,051 92,400,000
2.31
92,400,000 213,340,051 213,340,051
2.31 2.31
378,281,143 5,280,000
71.64
92,400,000 378,281,143 197,920,436
4.09 2.14
39 Receipts from other operating activities
Realised from write-off assets Reimbursement - invoice processing and collection costs Early repayment premium Reimbursement-documentation costs Proceeds on titleship transfer Miscellaneous earnings
40 Payments for other operating activities
Rent, taxes, insurance, electricity, etc. Repairs and maintenance Travelling and conveyance expenses Business promotion expenses Annual General Meeting/Shareholder expenses Entertainment Bank charges and commission paid Fees and subscription Medical expenses Directors' fees Books, magazines and newspapers, etc. Liveries and uniforms Training expenses Office expenses 41 (Increase)/decrease of other assets
Other receivables Deferred tax asset
32,000,000 11,176,898 10,323,576 6,070,605 1,871,627 4,990,774
66,433,480
23,310,483 15,748,722 3,988,053 6,509,080 4,326,227 1,427,905 1,150,262 1,223,928
373,193 232,300 105,177 129,497 40,000
2,018,845 60,583,673
(56,756,284) (2,668,752)
(59,425,036)
- 9,442,715
15,501,831 5,047,953 2,646,099
106,142 32,744,738
21,092,549 12,418,468 4,077,007 4,953,565 2,687,552 2,155,147 1,423,816 1,260,006
538,746 115,000 107,084 140,448 60,000
2,087,750 53,117,138
48,479,815 2,073,534
50,553,349
50
During 2011, the Audit Committee discharged the following responsibilities:
- Reviewed the Company’s draft financial statements for the year ended on December 31, 2010 and recommended that the same be placed before the Board for approval.
- Recommended that the report of the Committee be adopted by the Board for publishing in the Annual Report 2010.
- Advised the Board on appointment of new external auditors for the year 2011 and their audit fee.
- Reviewed the quarterly reports on Internal Compliance prepared by the Compliance department.
- Reviewed the report on pending legal cases.
- Reviewed the quarterly financial statements and recommended that the same be placed to the Board for approval.
- Reviewed the Management Report of the external auditors along with the management responses on the Company’s internal control.
- Reviewed the quarterly report on written-off cases.
- Revised the Compliance Calendar-2011.
- Reviewed and approved the Compliance Calendar for 2012.
- Reviewed Bangladesh Bank Inspection Report on the inspection along with Company’s reply and recommended its placement before the Board meeting for approval and onward submission to Bangladesh Bank.
The Audit Committee held 5 (five) meetings during the year 2011. On invitation, Managing Director of the Company, Chief Financial Officer (CFO) and Head of Compliance attended the meeting to meet the queries of the Audit Committee and take directives for improvement.
43 Disclosure on Audit Committee
The Audit Committee comprised of:
Status in Status with
Sl. Name the Company Committee
Educational
qualification
1 M. Abdul Wahed Independent Director Chairman B.Sc. (Pharm.)2 A. Rouf Director Member Chartered Accountant3 L. H. Khan Director Member B.A.4 Shama Rukh Alam Director Member Chartered Accountant5 M. Nurul Alam Director Member M.Sc.6 Sharmi Noor Nahar Company Secretary Secretary Chartered Secretary
51
44 Related Party Disclosures
44.1 Particulars of Directors of the Company as on December 31, 2011
1.
2.
3.
4.
5.
6.
7.
8.
9.
Chairman
Director
Director
Director
Director
Director
Director
Independent Director
Managing Director
Imran Ahmed
Peter J. Field
A. Rouf
L. H. Khan
A. F. M. M. Samad Choudhury
Shama Rukh Alam
M. Nurul Alam
M. Abdul Wahed
Syed Ehsan Quadir
Nominated by Lawrie group Plc.,UKhaving share of 20%
Shareholding statusDesignationName of DirectorsSlno.
Nominated by United Insurance Co. Ltd.having share of 20.64%
Nominated by Surmah Valley Tea Co. Ltd.having share of 8.27%
Not applicable; no shareholdings.
Not applicable,Ex-officio capacity
}
}
}
52
44.2 Name of Directors and their interest in different entities as on December 31, 2011
Slno.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Name of Directors
Imran Ahmed A. Rouf Peter J. Field L. H. Khan Shama Rukh Alam M. Nurul Alam A. F. M. M. Samad Choudhury M. Abdul Wahed Syed Ehsan Quadir
Status with ULC
Chairman
Director
Director
Director
Director
Director
Director
Independent Director
Managing Director
Entities where they have interest
Director1. Eastland Camellia Ltd.2. Duncan Properties Ltd.3. Octavius Steel & Co. of BD Ltd.4. Duncan Brothers (BD) Ltd.5. Duncan Products Ltd.6. Chittagong Warehouse Ltd.7. Surmah Valley Tea Co. Ltd.8. The Lungla (Sylhet) Tea Co. Ltd.9. The Allynugger Tea Co. Ltd.10. Amo Tea Co. Ltd.11. The Chandpore Tea Co. Ltd.12. The Mazdehee Tea Co. Ltd.
Director1. The Lungla (Sylhet) Tea Co. Ltd.2. The Allynugger Tea Co. Ltd.3. Amo Tea Co. Ltd.4. The Chandpore Tea Co. Ltd.5. The Mazdehee Tea Co. Ltd.6. Octavius Steel & Co. of BD Ltd.7. Duncan Brothers (BD) Ltd.8. Duncan Products Ltd.9. Chittagong Warehouse Ltd.10. Eastland Camellia Ltd.11. Duncan Properties Ltd.
Director1. The Lungla (Sylhet) Tea Co. Ltd.2. The Allynugger Tea Co. Ltd.3. Amo Tea Co. Ltd.4. The Chandpore Tea Co. Ltd.5. The Mazdehee Tea Co. Ltd.6. Eastland Camellia Ltd.7. Surmah Valley Tea Co. Ltd.8. Duncan Properties Ltd.
ChairmanNational Brokers Ltd.
Director1. Duncan Brothers (BD) Ltd.2. Octavius Steel & Co. of BD Ltd.3. Duncan Products Ltd.4. Chittagong Warehouse Ltd.5. Eastland Camellia Ltd.6. Duncan Properties Ltd.
_
_
_
_
53
44.3 Transactions with Directors and their related entities
The Lungla (Sylhet) Tea Co. Ltd.
Amo Tea Co. Ltd.
Duncan Properties Ltd.
The Lungla (Sylhet) Tea Co. Ltd.
Macalms Bangladesh Trust
National Brokers Limited
Duncan Brothers (BD) Ltd.
The Mazdehee Tea Co. Ltd.
The Chandpore Tea Co. Ltd.
Name of the Party
Imran AhmedPeter J. FieldA. Rouf
Imran AhmedPeter J. FieldA. Rouf
Imran AhmedPeter J. FieldA. RoufShama Rukh Alam
Imran AhmedPeter J. FieldA. Rouf
Imran AhmedA. Rouf
L. H. Khan
Imran AhmedA. RoufShama Rukh Alam
Imran AhmedPeter J. FieldA. Rouf
Imran AhmedPeter J. FieldA. Rouf
Name ofDirectors
-Do--Do--Do-
-Do--Do--Do-
-Do--Do--Do--Do-
-Do--Do--Do-
-Do--Do-
-Do-
-Do--Do--Do-
-Do--Do--Do-
-Do--Do--Do-
Relatedby
Lease financing
Lease financing
Term deposit
Term deposit
Term deposit
Term deposit
Office rent paidfor the year
Office rent paidfor the year
Office rent paidfor the year
Nature oftransaction
7,504,814
464,264
23,892,053
23,125,000
3,500,000
1,800,270
3,658,184
143,635
143,635
Amountin Taka
Regular
Regular
Status ofloan andadvances
54
45 Commitment
Capital expenditureThe Company had no capital expenditure commitment contracted at December 31, 2011. (2010: nil).
Commitment to lendUnder a lease/loan commitment the Company agrees to make funds available to customers in the future. Lease/loan commitments, which are usually for a specified term may be unconditionally cancellable or may persist, provided all conditions in the lease/loan facility are satisfied or waived. At the end of the year 2011, the Company had Taka 235,000,277 commitment with customers (2010:Taka 363,176,343).
46 Claim against Company not acknowledged as debt
There were no such claims against the Company which required to be acknowledged as debt at December 31, 2011.
47 Proposal of dividend
The Board of Directors has recommended a cash dividend of Tk.0.75 per ordinary share i.e. a total of Tk. 69.3 million for 92.40 million ordinary shares and one bonus share for every five shares held for the year ended December 31, 2011.
48 Dividend Remitted to non-resident shareholders
An amount of Tk.3,022,577 equivalent to GBP 25,309.35 ( 2009:Tk 2,775,065 equivalent to GBP 25,902) was remitted to non-resident shareholder as dividend for the year 2010.
49 Foreign currency transactions
There were no foreign currency monetary transactions during the reporting year that would give rise to gains or losses in the profit and loss account.
55
50. Highlights on the overall activities
20102011ParticularsSl no.
Paid-up capital (note-13.2)
Total capital (note-13.3)
Capital surplus (note-13.3)
Total assets
Total term deposits (note-11.1)
Total lease, loans and advances (note-7.1)
Total contingent liabilities and commitments (note-19)
Loan to deposit ratio (note-7.1/note-11.1)
Percentage of classified lease, loans and advances against total leases, loans and advances (note-7.8)
Profit after tax and provision without non operating income
Amount of loans classified during the year
Provisions kept against classified loans (note-12.5)
Provision surplus (note-12.5)
Cost of fund
Interest earning assets
Non-interest earning assets
Return on investment (ROI)
Net Return on total assets (ROA)
Income from investment
Earnings per share
Net income per share*
Price earning ratio**
924.00
1,870.21
1,006.84
10,304.62
4,681.67
7,866.95
20.75
1.68
4.07
213.34
146.29
440.79
208.66
12.88
9,481.99
822.63
14.82
2.18
13.27
2.31
2.31
24.38
MBDT
MBDT
MBDT
MBDT
MBDT
MBDT
MBDT
Times
(%)
MBDT
MBDT
MBDT
MBDT
(%)
MBDT
MBDT
(%)
(%)
MBDT
BDT
BDT
Times
528.00
1,694.34
1,236.01
9,259.76
4,035.30
7,595.64
34.50
1.88
2.86
197.92
60.51
415.51
235.55
10.92
8,622.74
637.02
14.85
2.14
11.05
4.09
4.09
41.49
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
* Since ULC does not have any minority interest, EPS and net income per share remain same.** Based on December 31 market price of the respective year.
56
MBDT = Bangladeshi Taka in Million, BDT = Bangladeshi Taka
A. Rouf M. Abdul Wahed L. H. Khan
219,04131,428
-250,469
146,59922,317
-168,916
81,553
72,442
40,894,97531,231,847(1,047,551)71,079,271
16,078,1838,757,188(654,719)
24,180,652
46,898,619
11,961,999
19,020,56213,950,825(1,550,000)31,421,387
13,044,9624,474,565(380,000)
17,139,527
14,281,860
5,975,600
92,408,35056,272,298(2,930,193)
145,750,455
49,581,51620,050,250(1,367,361)68,264,405
77,486,050
42,826,833
Furniture &
FixtureMotor Vehicle Total
Electrical
Equipment
Office
Equipment
Cost Balance at January 1, 2011AdditionDisposal/adjustmentBalance at December 31, 2011
Accumulated depreciationBalance at January 1, 2011Charge for the yearDisposal /adjustmentBalance at December 31, 2011
WDV at December 31, 2011
WDV at December 31, 2010
32,273,77211,058,198
(332,642)42,999,328
20,311,7726,796,180(332,642)
26,775,310
16,224,018
24,816,792
Cost
Accumulated depreciation
Book value
Sale proceeds
Profit/(loss) on disposal
Buyer
Mode of disposal
Furniture &
Fixture
332,642
(332,642)
-
55,433
55,433
Outsider
Competitive
quotation
1,047,551
(654,719)
392,832
174,567
(218,265)
Outsider
Competitive
quotation
Electrical
Equipment
1,550,000
(380,000)
1,170,000
1,409,750
239,750
Employee
Acquired
by user
Motor Vehicle
2,930,193
(1,367,361)
1,562,832
1,639,750
76,918
Total
Annexure - A(From note - 8)
Fixed assets including premises, furniture and fixture
Statement of property, plant and equipment is as follows:
During the year the Company sold the following fixed assets:
57
(Amount in Taka)
(Amount in Taka)
Annexure - B(From note - 12.6)
Corporate Tax Status as on December 31, 2011
Assessment
year
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
N/A
(Taka)
Tax Provission
as per Accounts
41,732,299
11,854,373
-
-
152,661,018
160,777,489
200,990,166
158,668,751
-
(Taka)
Tax assessed
by DCT
26,639,273
9,246,714
-
-
143,882,192
-
-
-
-
(Taka)
Excess/(Short)
Provission
15,093,026
2,607,659
-
-
8,778,826
-
-
-
-
Present Status
Tax Libility setteled and Tax ClearanceCertificate received afterDecember 31, 2011.
The file was reopened u/s 120 andnot yet finalized
Tax Libility setteled andTax Clearance Certificate received
Tax Libility setteled andTax Clearance Certificate received
Under process for 3rd Appeal
Return submitted and assessmentis under process
Return submitted and assessmentis under process
Return yet to be submitted
Tax Libility setteled andTax Clearance Certificate received
Income
year
2004
2005
2006
2007
2008
2009
2010
2011
Up to 2003
58
Tk 10/-
2012
as my/our proxy, to vote for me/us and on my/our behalf at the Twenty Third Annual General Meeting of the Company to be held on April 9, 2012 at 10:00 a.m. and at any adjournment thereof or at any ballot to be taken in consequence thereof.
I hereby record my attendance at the TWENTY THIRD ANNUAL GENERAL MEETING of the Company being held on Monday, April 9, 2012 at 10:00 a.m. at the Trust Milonayaton, 545 Old Airport Road, Dhaka Cantonment, Dhaka.
PROXY FORM
ATTENDANCE SLIP
N.B.: i) Shareholders attending the meeting in person or by Proxy are requested to complete the attendance slip and deposit the same at the entrance of the meeting hall.
ii) Shareholders and proxies are requested to record their entry in the Annual General Meeting well in time.
59
