Malek Spinning Mills Ltd.Auditors’ Report of Malek Spinning Mills Ltd. 41 Statement of Financial Position as at 30th June, 2014 42 Statement of Comprehensive Income for the year

Annual Report2 0 1 3 - 2 0 1 4

Malek Spinning Mills Ltd.

25TH ANNUAL REPORT 2013-2014

INDEXSubject PageTransmittal Letter 2Notice to the Shareholders 3Corporate Governance 4Audit Committee of Board 5Executive Management 6Corporate Review 7Corporate operational Result for 5 years 8Message from the Chairman 9Directors’ Report 10-18Corporate Governance Compliance Status Report 19-23Consolidated Auditors’ Report 24Statement of Consolidated Financial Position as at 30th June, 2014 25Statement of Consolidated Comprehensive Income for the year ended 30th June, 2014 26Statement of Consolidated Cash Flows for the year ended 30th June, 2014 27Consolidated Statement of Changes in Equity 28Notes of Consolidated Financial Statements 29-40Auditors’ Report of Malek Spinning Mills Ltd. 41Statement of Financial Position as at 30th June, 2014 42Statement of Comprehensive Income for the year ended 30th June, 2014 43Statement of Cash Flows for the year ended 30th June, 2014 44Statement of Changes in Equity 45Notes of Financial Statements 46-52SUBSIDIARY REPORTSalek Textile Limited Directors’ Report 53-54Auditors’ Report 55Statement of Financial Position as at 30th June, 2014 56Statement of Comprehensive Income for the year ended 30th June, 2014 57Statement of Cash Flows for the year ended 30th June, 2014 58Statement of Changes in Equity 59NewAsia Synthetics Limited Directors’ Report 60Auditors’ Report 61Statement of Financial Position as at 30th June, 2014 62Statement of Comprehensive Income for the year ended 30th June, 2014 63Statement of Cash Flows for the year ended 30th June, 2014 64Statement of Changes in Equity 65J.M. Fabrics LimitedDirectors’ Report 66-67Auditors’ Report 68Statement of Financial Position as at 30th June, 2014 69Statement of Comprehensive Income for the year ended 30th June, 2014 70Statement of Changes in Equity 71Statement of Cash Flows for the year ended 30th June, 2014 72Titas Spinning & Denim Company Limited Auditors’ Report 73Statement of Financial Position as at 31st March, 2014 74Statement of Comprehensive Income for the period from 1st July 2013 to 31st March, 2014 75Statement of Cash Flows for the period from 1st July 2013 to 31st March, 2014 76Statement of Changes in Equity 77Form of Proxy 79

Malek Spinning Mills LimitedRegistered Office: 117/A, Tejgaon Industrial Area, Dhaka-1208, BangladeshCorporate & Share Office: Mehnaj Monsur Tower House No-11A, Road No-130, Gulshan-1, Dhaka-1212Tel: +880-2-8832771-82, 8816128, Fax: 880-2-8828953, E-mail: [email protected], Website: www.malekspinning.com

25 th ANNUAL REPORT

2013-2014

2MALEK SPNNING MILLS LIMITED

MALEK SPINNING MILLS LIMITED

TRANSMITTAL LETTER

The ShareholdersBangladesh Securities and Exchange CommissionRegistrar of Joint Stock Companies & FirmsDhaka Stock Exchange Ltd.Chittagong Stock Exchange Ltd.

Sub: Annual Report for the year ended 30th June, 2014.

Dear Sir (s),

We are pleased to enclose herewith a copy of Annual Report together with the Audited Financial Statements comprising Consolidated and Separate Statement of Financial Position as at June 30, 2014, Statement of Comprehensive Income, Statement of Cash Flows and Statement of Changes in Equity for the year ended June 30, 2014 along with notes thereon of Malek Spinning Mills Limited and its Subsidiaries for your information and record.

Yours sincerely

(Syed Saiful Haque)Company Secretary

Dated: November 06, 2014

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Annual Report 2014

MALEK SPINNING MILLS LIMITED

NOTICE OF THE 25TH ANNUAL GENERAL MEETING

Notice is hereby given that the 25TH ANNUAL GENERAL MEETING of the shareholders of the Company will be held on Thursday, 18th December, 2014 at 10.30 a.m. at Trust Milonayaton, 545, Puraton Biman Bandar Sarak (Adjacent to Shahid Bir Shresta Jahangir Gate), Dhaka Cantonment, Dhaka-1206 to transact the following business:

Agenda-1. To receive, consider and adopt the Audited Financial Statements for the year ended 30th June, 2014 together with the Report of the Directors’ and the Auditors’ thereon.

Agenda-2. To declare dividend for the year ended 30th June, 2014.

Agenda-3. To elect Directors in terms of the relevant provision of the Articles of Association of the Company.

Agenda-4. To appoint Auditors for the year ended 30th June, 2015 and to fix their remuneration.

By order of the Board

Syed Saiful HaqueCompany Secretary Dated: November 06, 2014

Notes:

(i) The Shareholders whose names would appear in the Share Register of the Company and/or Depository Register of CDBL as on record date i.e. November 18, 2014 would be entitled to attend at the AGM and to receive the dividend.

(ii) The Proxy form must be affixed with requisite revenue stamp and be deposited at the Corporate & Share Office of the Company not less than 72 hours before the time fixed for the meeting.

(iii) Admittance to the meeting venue will be on production of the attendance slip sent with the Annual Report.

(iv) The Annual Report is available in the Company’s website at www.malekspinning.com

(v) No benefit in cash or kind, other than in the form of cash dividend or stock dividend, shall be paid to the holders of equity securities in terms of the Notification No. SEC/SRMI/2000-953/1950 dated 24th October, 2000 for attending this AGM of the company.

MALEK SPNNING MILLS LIMITED 4

CORPORATE GOVERNANCE:Corporate Governance involves decision making processes for any corporate body as a going concern for the benefit of all concerned, present and future. These decisions may be categorized as policy & strategic, operational and executing, performance & evaluation and sharing of the accretional assets between present and future cohorts. The involvement of the entrepreneur in all these areas invokes decisions making governance on a continuous basis, the degree of involve-ment being variable with the extent of delegation of authority top down and reporting for accountability bottom up of the management echelon. These aspects of governance are shared by the Board of Directors, Executive Management, operational participants and workers and others in fulfillment of the common goals that converge in increasing the benefits of the stakeholders. To this end entire corporate governance efforts are blended with ‘good governance practices’ as ethically and morally acceptable standards under a given socio politico environmental phenomenon of our society in which we work, live and exist. The organs through which the corporate governance functions are carried out:

BOARD OF DIRECTORS:(a) Constitution: The Board of Directors, the top Management echelon, consisting of the founder entrepreneurs/ successors and two Independent Directors, provides the policy and strategic support and direction for the entire range of the corporate activities. The Board of Directors consist of Eight (8) members including two Independent Directors with varied educa-tion and experience which provides a balancing character in decision making process. The Board is re-constituted every year at each Annual General Meeting when one-third of the members retire and seek re- election. A director is liable to be removed if the conditions of the Articles of Association and the provisions of the Companies Act 1994 are not fulfilled.(b ) Role & Responsibilities:The main role of the Board of Directors, which is the highest level of authority, is to provide general superintendence, oversee the operations and control the affairs of the Company through appropriate delegation and accountability processes via the lines of command. However the Board of Directors hold the ultimate responsibility & accountability with due diligence for conducting the activities of the Company as per provisions of law in the interest of the sharehold-ers, the stakeholders, the state and the society. The Board of Directors, in fulfillment of its responsibility hold periodic meetings, at least once a quarter and provides appropriate decisions/directions to the Executive Management. Such meetings usually consider operational performance, financial results, review of budgets, capital expenditure, proposals for BMRE or new projects/divisions/product lines, procurement of funds by issue of shares or borrowing, procurement of raw materials, plant & machinery, pricing of products/discounts, recruitment, training and promotion of officers, approval of audited accounts and distribution of dividends and other interest of the stakeholders including the employ-ees and workers. The Board of Directors take special care in designing and articulating productivity and compensation plans of employees and workers and rewarding them appropriately on the basis of quality and quantity of performance as an incentive. Board also remains responsible for removal of operational hazards to life and health of workers, friendly environmental work condition and social relationship as demanded of good citizen in a country.(c) Relationship with Shareholders and Public:The shareholders as owners are required to be provided with material information on the Company’s operation quarterly, half-yearly and annually, the latter at the AGM. They are also provided routine services by the Company Secre-tary. The Board is, however, responsible to the public for publication of any Price Sensitive Information as per BSEC Regu-lation. A qualified & experienced person is in charge for all these responsibilities as Company Secretary. (d) Relationship with Government:In its role on accountability to the government, the Board of Directors ensure payments of all dues to government in the form of import duty, custom duty and port charges, VAT, Corporate Taxes and other levies as and when they become due on the basis of actual operations and make sure to avoid corruption. This has enabled the Company to enhance its contribution to the National Exchequer on a progressive rate year after year. (e) Relationship with Financiers/ Bankers:The Board of Directors oversees the financial transactions and ensures to meet company’s commitments to the lenders without default. (f) Relationship with Suppliers:As the Company has to import almost all the raw materials from abroad, it maintains cordial and mutually beneficial interest with its international as well as local suppliers. This has enabled the company to avoid any legal disputes in international/local courts and enhanced the Company’s image as a good customer.

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Annual Report 2014

(g) Corporate Social Responsibilities (CSR):The Board of Directors is also aware of the Corporate Social Responsibilities (CSR) especially in the areas of gender equality, race-religion- regional equality, non- employment of child labour, human rights, environmental pollution, social–marketing and social-activities.

SEPARATE ROLE OF THE CHAIRMAN AND MANAGING DIRECTOR:The positions of Chairman and Managing Director are held by separate persons. The Chairman is responsible for the functions of the Board while the Managing Director serves as the Chief Executive Officer (CEO) of the Company.

CHIEF FINANCIAL OFFICER, HEAD OF INTERNAL AUDIT AND COMPANY SECRETARY:The Company has appointed Mr. B. K. Chaki, as Chief Financial Officer, Md. Rakibul Islam, as Head of Internal Audit and Mr. Syed Saiful Haque, as Company Secretary of the Company as per requirement of Bangladesh Securities and Exchange Commission.

AUDIT COMMITTEE OF BOARD:The Board of Directors has constituted an Audit Committee of the Board consisting of three Directors. The Audit Committee is headed by the Independent Director, Mr. M. Sekander Ali, an MBA and a Senior Development and Investment Banker of the Country. Other members are Dr. Shamim Matin Chowdhury, Director and Mr. Azizur Rahim Chowdhury, Director. The Audit Committee carries out its responsibilities as per the provisions of law and submits its report to the Board of Directors from time to time. The Audit Committee shall also co-ordinates with the Internal and External Auditors as and when required. The Audit Committee ensures that adequate internal checks & balances supported by adequate MIS are in place for detection of errors, frauds and other deficiencies. The other responsibilities include inter alia, not being limited to, the prevention of conflict of interest between the Company and its Directors, officials, customers, suppliers, government and any other interest groups and detect or remove any scope of insider trading in the Company’s stock. The Audit Committee also ensures compliance of requirements of BSEC and other agencies.

OTHER GOVERNANCE APPARATUS:The Company, in its efforts for Corporate Good Governance Practices, uses a series of top ranking professional service providers including Bankers, Insurers and Technical experts who continuously assist the Board of Directors and the Executive Management in properly discharging their duties to all the shareholders, stakeholders, the Government, and the Public as highlighted below:(a) Independent Directors:In compliance of the BSEC Regulations on Good Governance, the Board of Directors as empowered by the Regulations, appointed Mr. M. Sekander Ali, one of the Senior Development/Investment Bankers of the country, former Managing Director of Bangladesh Shilpa Bank/Bangladesh Shilpa Rin Sangstha/Investment Corporation of Bangladesh and Senior Adviser, the Bangladesh Securities and Exchange Commission and Md. Qamrul Huda, one of the Senior Bankers of the country, former Managing Director of Pubali Bank Limited/Eastern Bank Limited and former Chief Executive of BCCI and additional Managing Director of Uttara Bank Limited and General Manager of Janata Bank, as the non-shareholder Independent Directors. It is expected that their expertise would help contribute to the further disclosure and protect the interest of all investors in general and smaller investors in particular.(b) Bankers:The degree of efficient business operation largely depends on the quality of efficiency of banking services received by the company. Efficient banking service brings down cost of operations. On the other hand, cost of financial services and interest on the lending by the banks are also required to be the minimum. With this end of view, the company has estab-lished long term business relationship with the banks namely Eastern Bank Limited, Dhaka Bank Limited, HSBC, One Bank Limited and Trust Bank Limited who provide most efficient service at minimum cost/interest that benefit the share-holders.The company has neither ever defaulted in any commitment with its Bankers nor did get entangled in legal dispute at any court premises.(c) Insurer:Insurance services cover certain operational risks which are required by law/business practices to be covered by legiti-mate insurance service providers for protection of the interest of the company, the investors. To this end, the company has to select insurer with the most efficient, reputed and financially sound history so that claims, if any, are settled promptly and the premium rates are market competitive. The Company, based on these considerations, is maintaining


insurance business relationship with the highly reputed and publicly listed insurance companies namely Pioneer Insur-ance Co. Ltd, Eastland Insurance Co. Ltd., Central Insurance Co. Ltd and Reliance Insurance Co. Ltd.The company has not yet faced any dispute over any claims and the company enjoys special premium rates which protects the interest of the investors.(d) Auditors:The role of the auditors in certification of the financial statement is the most significant aspect of Corporate Governance and protection of interest of investors. As evident from the Annual Reports, the company rigidly follows the code of International Accounting Standards (IAS) and International Standard of Auditing (ISA) with legally required disclosures of Accounts and Financial Statements. This has been possible due to the high level capability and integrity of M/S. Malek Siddiqui Wali, Chartered Accountants whose performance has played a very trustworthy role in the protection of interest of the investors.

EXECUTIVE MANAGEMENT:The Executive Management is led by the Managing Director (CEO) who is appointed by the Board of Directors for a term of 5 years (renewable) with the approval of shareholders in the Annual General Meeting. The Managing Director is supported by professional, well educated, trained and experienced team consisting of Mr. Moshiur Rahman, Director and Mr. Azizur Rahim Chowdhury, Director, Mr. Ghaus Mohammad, Director-HR & Admin, Mr. Hasan Mahmood, Execu-tive Director and Mr. B. K. Chaki, Chief Financial Officer and a host of Senior Executives in the hierarchy of management.

SEGMENT REPORT:The company’s operations are carried out on a single business and geographic segment within which the company operates as such no segment reporting is felt necessary.

RISK PERCEPTION:The Company Management perceives investment risk within the national and international economic situation in relation to legal and moral requirements involving inter alia, intellectual property right, scientific invention, WTO Regula-tion etc and monetary and fiscal investment policies and has prepared its production & marketing strategy to meet the challenges from these risks.

WE STRIVE FOR

• We in Malek Spinning Mills Ltd., strive, above all, for top quality products at an appropriate cost.

• We owe our shareholders and strive for protection of their capital as well as ensure highest return and growth of their assets.

• We strive for best compensation to all the employees who constitute the back-bone of the management and opera-tional strength of the Company.

• We strive for the best co-opeartion of the creditors and debtors the banks & financial institutions who provide finan-cial support when we need them, the suppliers of raw materials & suppliers who offer them at the best prices at the opportune moments, the providers of utilities- power, gas & water etc. and the customers who buy our products and services by redeeming their claim in time by making prompt payment and by distributing proper product on due dates to our customers.

• We strive for fulfillment of our responsibility to the Government through payment of entire range of due taxes, duties and claims by various public agencies like municipalities etc.

• We strive, as responsible citizen, for a social order devoid of malpractices, anti environmental behaviors, unethical and immoral activities and corruptive dealings.

• We strive for practicing good-governance in every sphere of activities covering inter alia not being limited to, disclo-sure & reporting to shareholders, holding AGM in time, distribution of dividends and other benefits to shareholders, reporting/dissemination of price sensitive information etc.

• We strive for equality between sexes, races, religions and regions in all sphere of operation without any discrimina-tory treatment.

• We strive for an environment free from pollution and poisoning.

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Annual Report 2014

CORPORATE REVIEWI. MANAGEMENT APPARATUS:

(a) BOARD OF DIRECTORS: Mr. A.F.M. Zubair Chairman Mr. A. Matin Chowdhury Managing Director Dr. Shamim Matin Chowdhury Director Mr. Azizur Rahim Chowdhury Director Ms. Saima Matin Chowdhury Director Mr. Moshiur Rahman Director (Nominee of Paragon Poultry Ltd.) Mr. M. Sekander Ali Independent Director Md.Qamrul Huda Independent Director

(b) AUDIT COMMITTEE: Mr. M. Sekander Ali Chairman Dr. Shamim Matin Chowdhury Member Mr. Azizur Rahim Chowdhury Member

(c) MANAGEMENT COMMITTEE: Mr. A. Matin Chowdhury Chairman Mr. Moshiur Rahman Member Mr. Azizur Rahim Chowdhury Member Mr. Ghaus Mohammad Member Mr. Hasan Mahmood Member Mr. B. K. Chaki Member

(d) SENIOR CORPORATE OFFICIALS: Mr. Ghaus Mohammad Director HR & Admin Mr. Hasan Mahmood Executive Director Mr. B. K. Chaki Chief Financial Officer Mr. Syed Saiful Haque Company Secretary Md. Rakibul Islam Head of Internal Audit

(e) AUDITORS: Malek Siddiqui Wali Chartered Accountants (f) BANKERS: i. Eastern Bank Ltd. Principal Br, Dhaka ii. Dhaka Bank Ltd. Karwan Bazar Br, Dhaka iii. The Trust Bank Ltd. Sena Kalyan Br, Dhaka iv. HSBC Main Br, Dhaka v. One Bank Ltd. Principal Br, Dhaka vi. AB Bank Ltd. Principal Br, Dhaka vii. BRAC Bank Ltd. Head Office, Dhaka

(g ) INSURERS: i. Pioneer Insurance Co. Ltd. ii. Reliance Insurance Co. Ltd. iii. Eastland Insurance Co. Ltd. iv. Central Insurance Co. Ltd.

( h) LISTING: Dhaka Stock Exchange Ltd. Chittagong Stock Exchange Ltd.

(i) REGISTERED OFFICE: 117/A, Tejgaon Industrial Area, Dhaka-1208.

(j) CORPORATE AND SHARE OFFICE: Mehnaj Monsur Tower House # 11A, Road # 130, Gulshan-1, Dhaka.

(k) FACTORY: Shafipur, Kaliakoir, Gazipur.


II. CORPORATE HISTORY:

• Year of Incorporation : 02 November, 1989• Year of Commencement of Production : 01 January, 1991• Year of Conversion to Public Ltd. Co. : 14 September, 2008• Year of Initial Public Offering (IPO) : 2010• Stock Exchange Listing date : 2nd August, 2010 (DSE & CSE)• Authorized Capital : Tk.3,000 Million• Paid Up Capital : Tk.1,936 Million• Product Lines : Combed and carded yarn of various Counts • Number of Employees (30th June 2014) : a. Executive & staff : 250 b. Workers : 1,299• Subsidiary Companies : a. Salek Textile Ltd. b. NewAsia Synthetics Ltd. c. J.M. Fabrics Ltd.

III. FIVE YEARS OPERATIONAL RESULTS: (Figures in thousand Tk.)

2013-14 2012-13 2011-12 2010-11 2009-10Turnover 3,065,013 3,262,553 2,966,197 3,509,105 1,978,824Gross Profit 395,471 520,463 10,727 199,489 285,937Net Profit (Before Tax) 249,470 249,158 (351,237) 131,625 188,044Net Profit (After Tax) 215,231 240,442 (351,237) 101,958 156,189Shareholder’s Equity 5,483,097 5,461,466 5,402,999 4,806,251 20,169,468Total Assets 7,113,508 7,504,000 7,927,057 7,254,501 20,926,009Total Current Assets 3,043,633 3,353,939 4,540,220 4,722,005 18,782,534Total Current Liabilities 1,405,194 1,766,205 1,875,701 2,332,535 756,540Current Ratio 2.17 1.90 2.42 2.02 3.18 ** Number of shares outstanding 193,600,000 193,600,000 176,000,000 160,000,000 120,000,000Face Value per share 10 10 10 10 10Shareholder’s Equity per Share 28.32 28.21 30.70 30.16 36.64 ***Earning per share (MSML) 1.11 1.24 (1.81) 0.64 1.51Earning per share (Consolidated) 2.33 2.81 (1.31) **** 1.72 2.73Dividend Declared Per Share (Stock) Nil Nil 10% (s) 10% (s) NilDividend Declared Per Share (Cash) 1.00 1.00 Nil Nil 1.00Net Operating Cash Flow per Share 2.62 1.46 (6.78) 3.79 0.28Number of Shareholders * 27,537 30,699 30,947 25,717 60 Human Resources: Executives & Staff 250 246 250 261 251Workers 1299 1,342 1,356 1,343 1,160

* Number of shareholders considered as on 30th June, 2014.

** Current Ratio is calculated in the year 2009-2010 excluding IPO share money deposit.

*** Shareholders Equity per share in the year 2009-2010 is excluding IPO share money deposit.

**** In 2011-12 Earning per share (consolidated) number of share considered 193,600,000 shares.

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Annual Report 2014

MESSAGEFROM THE CHAIRMAN

Dear Shareholders, It is a great pleasure for me to welcome you on behalf of the Board of Directors to the 25thAnnual General Meeting of Shareholders of the Company. The Directors’ report containing inter alia Audited Accounts and Auditors report thereon for the year ended 30th June 2014 is enclosed for your perusal.

The year under review had passed through socio-politico turbulence having a deep scar on the economy and industry which had just started to stabilize after the socio-politico stabilization since 2008 election. In addition, the country was hit by the terrible tragedy of the collapse of Rana Plaza, which resulted in widespread panic amongst buyers and affected the Bangladesh industry’s image and reliability to our customers. This tragedy and other violence in the RMG sector caused international buyers and Agencies to impose various conditions of compliance through BGMEA/BKMEA including fire and building safety, for which we had to make extensive investments in order to remain fully compliant.

Our sincere efforts were rewarded positively through recognition from our buyers who have vetted our factories to be safe and compliant and in turn, resulted in increased sales over previous years in our RMG concerns. However, the spinning industry was hard hit by increased cotton prices in the international market and lower selling price (in deemed export market) due to less demand in the market as many other RMG concerns had less orders after the Rana Plaza tragedy. In addition, the unreliable gas supply has been a constant headache for the industry and has resulted in increased energy costs to produce power using diesel fuel. We hope that with improvement of power situation in the country and stabilization of socio-politico situation, the industrial performance in future would lead us to a new height on the record to Middle Income Nations.

I would also like to take this opportunity to thank our Bankers, Bangladesh Securities and Exchange Commission, Stock Exchanges and our shareholders for their cooperation and support to our Company.

Looking forward to better days ahead.

A. F. M. Zubair Chairman


MALEK SPINNING MILLS LIMITEDDIRECTORS’ REPORT

TO THE SHAREHOLDERS FOR THE YEAR 2013-2014

Dear Shareholders,In terms of provisions of section 184 of the Companies Act 1994, Rule 12 of the Securities and Exchange Rules 1987, SEC Notification dated 07 August, 2012 and IAS (International Accounting Standards) codes as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), it is the pleasure of the Board of Directors to submit its Report to the Shareholders for the year ended 30 June, 2014 in the following paragraphs: The company currently owns 3 (three) subsidiaries as follows:1. Salek Textile Limited- An open end yarn and weaving manufacturing unit with a capacity of 14,621 tons per annum yarn and

9,600,000 yards fabrics.2. New Asia Synthetics Limited- A project promoted for setting up a polyester staple fibre and chips plant the implementation of

which has since been kept in abeyance due to non-availability of energy/fuel & gas.3. J.M. Fabrics Limited- A knitting, dyeing and garments factory located at South Nayapara, 6 No. Dogri, P.O. Bhawal, Mirzapur,

Gazipur with a capacity of 22.00 million pcs. of T-Shirt & Intimate garments per annum which has been acquired on 10.04.2011.• Titas Spinning & Denim Company Ltd.- A subsidiary of Malek Spinning Mills Limited have been amalgamated with our another

subsidiary company Salek Textile Limited as per order of the Hon’ble High Court Division of the Supreme Court of Bangladesh in the Company Matter No.248 of 2013 dated 05.03.3014.

COMPANY’S OPERATIONS:

TEXTILE SECTOR:(i) Industry outlook and possible future developments in the industry: Bangladesh has emerged as a very strong supplier in the global textile and clothing industry. This is proven by the fact that even after socio-politico turbulence and a disaster like the Rana Plaza collapse, the industry still remains vibrant, although it went through a temporary slump. The possibilities of growth in this area are enormous and the challenges that need to be sorted out urgently and efficiently are:(a) Labor relations (b) Labor productivity (c) Energy(d) Other infrastructures (e) Law and order (f) Financial costsIf these issues are appropriately addressed in time, the growth is expected to improve substantially as Bangladesh has already attained the name for being a quality manufacturer who is very reasonably priced.CAPACITY/PRODUCTION(ii) Segment-wise or product wise performance:Our capacity utilization was almost same as the previous year. However, the ratio of cost of goods sold rose to 87.10% compared to previous year 84.05% due to decrease of selling price by approximately 6%. The financial expenses decreased from Tk.200.24 million in 2012-2013 to Tk.107.49 million in 2013-2014 (6.14% -3.51%) by 2.63% of sales which helped us to attain a reasonable profit.The installed production capacity of the company is 35,000 kgs. Yarn per day with 360 working days of 63,624 Spindles. Comparative positions of its operating performance are given below:Sl. No. Description 2013-2014 (Kg.) 2012-2013 (Kg.) 2011-2012 (Kg.)01 Production capacity 12,600,000 12,600,000 12,600,00002 Actual Production 10,640,598 10,643,465 10,286,56503 Capacity Utilization 84.45% 84.47% 81.64%04 Quantity Sold (kg) 10,708,092 10,707,591 9,309,16405 Sales Revenue (Tk.) 3,065,012,791 3,262,553,013 2,966,197,04706 Average selling price (Tk.) 286.23 304.70 318.63From the above we can notice the following:(a) The revenue earning had decreased from Tk.3.262 billion to Tk.3.065 billion because of mainly decrease in selling price.(iii) Risk and concerns: All sectors of the textile industry face many of the similar challenges. These are lack of power, labor unrest, political unrest resulting hartal causing disruption of production and cost of fund. Gas price has not yet been increased for the industries but erratic supply had affected production. (iv) Analysis of Cost of Goods Sold, Gross Profit Margin and Net Profit Margin:(a) Cost of Goods Sold:The cost of goods sold was 87.10% during the year as compared to 84.05% during the previous year, an increase of 3.05% due to decrease of sales. The decrease in production quantity was 2,867 kg over the last year. Production capacity utilized during the year was 84.45% compared to 84.47% from previous year, a fall by 0.02%.(b) Export:The company had achieved an export turnover of Tk.3,065.01 million during the year ended 30th June 2014. Last year’s export turno-ver was Tk. 3,262.55 million. The turnover had decreased by 6.05% over the last year. (c) Gross Profit:Gross Profit earned during the year was Tk.395.47 million as against last year’s gross profit of Tk.520.46 million. Gross profit decreased due to decreased of selling price compared to last year.

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(d) Net Profit/(Loss):The company had succeeded in earning a lower Net Profit of Tk.215.23 million as compared to last year’s Net Profit of Tk.240.44 million. The gross profit and the operating profit declined during the year over the previous year due to reduced production/sales and lower selling prices. However, the Net Operating Profit marginally increased due to higher non-operating income. However, due to increased provision for Corporate Taxes during the year, the Net Profit after tax had decreased substantially with resultant fall in EPS from Tk.1.24 in 2012-2013 to Tk.1.11 during the year.(v ) Extra-Ordinary gain or loss:During the year extra-ordinary gain of Tk.41,477,984 was earned from cash incentive & interest income from bank which has been shown as Non–Operating Income in the Statement of Comprehensive Income and in the note no.22.1 in the Notes of Account.(vi) Related party transactions:Related party transactions are depicted in Note no.27.1 in the Notes of Account.(vii) Utilization of proceeds from public issues and/or right issues:There were no public issues and/or right issues during the year.(viii) Financial results after the company goes for Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Offer, Direct Listing, etc.:Initial Public Offering was made on 2010. There were no Repeat Public Offering, Rights Offer, Direct Listing, etc. in the history of the company.(ix) Variance between Quarterly Financial performance and Annual Financial Statements:The company’s earnings in quarter 2 & 3 was lower that of quarter 1 because of higher cost of goods sold in the quarters 2 & 3 from quarter 1. Profitability had increased during quarter 3 due to lower cost of goods sold and non-operating income in last quarter resulted in higher profitability during quarter 4.(x) Remuneration to directors including independent directors:The remuneration of Directors including Independent Directors are depicted in Note no.3.35 in the Notes of Account.(xi) to (xvi) Statement of Directors on Financial Reports:The above reports are depicted in Annexure-I.(xvii) Significant deviations from the last year’s operating results:The company’s Operating Profit ratio during the year 2013-2014, had marginally fallen to 7.19% of sales as compared to last year’s Operating Profit ratio of 7.88% i.e. 0.69%, an insignificant decrease of Operating Profit on sales compared to last year.(xviii) Key operating and financial data of last 5 (five) years have been presented in summarized form in page no.08.(xix) Dividend:Board of Directors has recommended for declaration of a Cash Dividend @ 10% i.e. Tk.1.00 (one) per share of Tk.10.00 each for ordinary shares held by the shareholders as on the Record Date.(xx) The number of Board Meeting and the Attendance of Directors during the year 2013-2014, stated in Annexure-I.(xxi) The pattern of shareholding as required by clause 1.5 (xxi) of the BSEC Notification dated 07 August 2012, stated in Annexure-II.(xxii) Appointment/re-appointment of the directors:Brief resume and other required information of the directors who seek re-appointed in the ensuing AGM are stated in Annexure-III.CAPITAL EXPENDITURES:The following Capital Expenditure was incurred during the last three years 2013-2014, 2012-2013 & 2011-2012.Description 2013-2014 (Tk.) 2012-2013 (Tk.) 2011-2012 (Tk.)Land and Land Development 1,825,257 599,994 69,900Plant & Machinery 34,933,578 41,102,166 950,000Furniture & Fixtures 19,310 153,550 76,500Office Equipments 322,908 166,120 1,228,040Motor Vehicles 2,910,000 1,860,000 --Telephone (PABX) installation -- 90,000 --Generator -- 26,814,800 --Total 40,011,053 70,786,630 2,324,440SUBSIDIARY OPERATION:Salek Textile Limited, NewAsia Synthetics Limited and J.M. Fabrics Limited are subsidiaries and as such Directors Report along with, Auditors Report and Audited Accounts containing Statement of Financial Position, Statement of Comprehensive Income, Statement of Cash Flows & Statement of Changes in Equity have been included as part of this report. It may be noted that due to Amalgamation of Titas Spinning & Denim Company Limited with Salek Textile Limited 09 (nine) months audited financial statements of Titas Spinning & Denim Company Limited i.e. 1st July 2013 to 31st March 2014 have been annexed. (a) Salek Textile Limited:Titas Spinning & Denim Company Ltd. was amalgamated with Salek Textile Limited with effect from 31-03-2014 as per order of the Hon’ble High Court Division of the Supreme Court of Bangladesh dated 05-03-2014 , Company Matter No. 248 of 2013 and for raising of paid up capital consent order No. BSEC/CI/CPLC (Pvt)-333/2011/446 dated June 24, 2014 of Bangladesh Securities and Exchange Commission (BSEC) the paid up capital of the company increased from Tk. Tk.400,000,000.00 to Tk.482,608,700.00 by issue and allotment of 826,087 ordinary shares of Tk.100.00 each in favors of the shareholders of Titas Spinning & Denim Company Ltd. The share exchange ratio was 01 (One) share of Salek Textile Limited for every 4.60 (Four point six zero) shares of Titas Spinning & Denim Company Ltd. (TSDL), as approved by the shareholders of Malek Spinning Mills Ltd. (MSM) in the 24th Annual General Meeting held on 24th December, 2013.


As a result the Company (MSM) holds 97.93% share of Salek Textile Limited i.e. 4,725,970 shares of Tk.100.00 each amounting to Tk. 472,597,000.00 out of 4,826,087 shares of Tk.100.00 each amounting to Tk.482,608,700.00. To comply the condition No. 9 of capital raising consent order No. BSEC/CI/CPLC (Pvt)-333/2011/446 dated June 24, 2014 of Bangladesh Securities and Exchange Commission (BSEC) and Notification No. SEC/CMRRCD/2006-159/36/Admin/03-44 dated May 05, 2010 published in the Bangladesh Gazette dated 01-06-2010 the status of the Company was converted from Private Limited Company to Public Limited Company on 23rd August, 2014. Subsequently the par value of share also was changed from Tk.100.00 per share to Tk.10.00 per share.• After amalgamation production capacity stood as follows: Yarn 14,621,000 kg. and Fabric 9,600,000 yards per annum.The project had started commercial operation in April 2009. The project has 10 Schlafhorst Autocoro machines of 360 Rotors each with production capacity of 14,621,000 kgs yarn per annum and 9,600,000 yards fabric. The company made additional investment of Tk.21,662,000 in Land & land development, Motor vehicle and in Gas line installation during the year 2013-2014.

The company is producing open end yarn for knitting, denim and home textile products and fabric. The Company’s operating results as on 2013-2014 and 2012-2013 are given below: Description 2013-2014 2012-2013Production (Kg) Yarn 10,455,062 11,145,027Production (Yards) Fabric for 3 months 1,596,792 --Sales Revenue (Tk.) 2,178,916,498 2,291,717,388Gross Profit (Tk.) 342,496,255 363,083,571Net Profit after tax holiday reserve (Tk.) 135,713,206 143,749,214Gross Margin 15.72% 15.84%Net Margin 6.23% 6.27%EPS (Tk.) * 29.49 42.55NAV (Tk.) 520.59 421.43* Earning per share has been restated.(b) NewAsia Synthetics Limited:The Company (MSM) holds 99.293% share of the NewAsia Synthetics Ltd. i.e. 4,964,650 shares of Tk.100.00 each amounting to Tk. 496,465,000.00 out of 5,000,000 shares of Tk.100.00 each amounting to Tk.500,000,000.00 as on 30th June, 2014. The company had increased its paid up capital from Tk.93,715,000.00 to Tk.500,000,000.00 after obtaining capital raising consent from Bangladesh Securities and Exchange Commission (BSEC) vide their letter SEC/CI/CPLC-442/2013/2903 Dated December 19, 2013. Due to non-availability of Gas connection from Titas Gas Transmission & Distribution Company Ltd. the project has been shelved until the situation changes regarding the availability of gas connection. The Company made additional investment of Tk.20,102,849.00 during the year 2013-2014 under Land & Land Development. The Net Assets Value (NAV) per share of the company stood at Tk.366.97(c) J.M. Fabrics Limited:The Company (MSM) holds 99.99% share of J.M. Fabrics Limited i.e. 3,999,900 shares of Tk.100.00 each amounting to Tk. 399,990,000.00 out of 4,000,000 shares of Tk.100.00 each amounting to Tk.400,000,000.00. The Company is engaged in the production of 100% export oriented garments and knit fabric with a production capacity of 12 (twelve) M. Tons of knitted and dyed fabric and 68 (sixty eight) lines of cutting and sewing operation with all necessary facilities, storage etc. The company was acquired on 10.04.2011 and during the year additional investment of Tk.103.52 million has been made for BMRE. The investments made during the year 2013-2014 as follows:Particulars TakaFactory Structures, Shades & Building 6,578,366Plant & Machinery 83,628,482Other Assets 13,308,650The Company’s operating results as on 2013-2014 and 2012-2013 are given below:Description 2013-2014 2012-2013 Production (Pcs) 16,983,987 6,436,574Sales Revenue (Tk.) 2,653,244,545 1,486,848,703Gross Profit (Tk.) 116,721,267 93,122,622Net Profit (Tk.) 72,365,854 63,678,226Gross Margin 4.40% 6.26%Net Margin 2.73% 4.28%EPS (Tk.) 18.09 15.92NAV (Tk.) 193.38 177.04(d) Titas Spinning & Denim Company Ltd.:As per order of the Hon’ble High Court Division of the Supreme Court of Bangladesh dated 05-03-2014 of Company Matter No. 248 of 2013 Titas Spinning & Denim Company Ltd. was dissolved automatically with effect from 31-03-2014. FINANCIAL RESULTS:The company’s (MSM) operating financial results, as compared to the previous year are summarized as follows: (Tk. in million)Description 2013-2014 2012-2013Sales 3065.013 3262.553Cost of goods sold 2669.542 2742.089Gross profit 395.471 520.463Operating expenses 67.517 63.221Financial expenses 107.488 200.244

13

Annual Report 2014

Operating profit 220.465 256.998Non -operating Income 41.478 4.617Net Operating Profit/(Loss) 261.943 261.615Contribution to WPPF 12.473 12.457Provision for Income Tax 34.238 8.715Net profit (after tax) 215.231 240.443Gross Margin 12.90% 15.95%Net Margin 7.02% 7.37%Earning per share –EPS (Tk.) 1.11 1.24Return on Equity (ROE) 3.93% 4.43%No. of shares outstanding 193,600,000 193,600,000Face value per share (Tk.) 10 10Consolidated Earning per share–EPS (Tk.) 2.33 2.81Observation on Financial Result:1. Turnover had marginally decreased due to lower selling price and lower output.2. Gross Profit and Net Profit had marginally decreased due to marginal increase in Cost of Goods Sold/Operating expenses.APPROPRIATION OF PROFIT:The Board of Directors recommended for appropriation of profit as follows:Retained Earnings brought forward from previous year : Tk. 202,019,642.00Less: Dividend Distribution for the year 2012-2013 : (Tk. 193,600,000.00)Balance surplus brought forward : Tk. 8,419,642.00Add: Net Profit (after tax) during the year 2013-2014 : Tk. 215,231,403.00Add: Adjustment of revaluation surplus of fixed assets : Tk. 71,176,390.00Total net free surplus available for appropriation : Tk. 294,827,434.00Appropriation Proposed:(a) Cash Dividend @ 10% i.e. Tk.1.00 (one) per share of Tk.10.00 each : (Tk. 193,600,000.00)Retained Earnings after payment of Dividend : Tk. 101,227,434.00DECLARATION OF DIVIDEND:In the line of proposed appropriation of profit, the Board of Directors proposed and recommended for declaration of Cash Dividend at the rate of 10% i.e Tk.1.00 (one) per share of Tk.10.00 each for the year 2013-2014. This will involve an amount of Tk.193,600,000 out of Reserve & Surplus/Retained Earnings (free reserves). The cash dividend will be available to the Shareholders whose names appear in the Share Registers of the Company or in the Depository on the record date.CONSOLIDATION OF ACCOUNTS:In terms of BSEC Regulations, the Company has consolidated the Accounts following the codes of International Accounting Standard -28 & IFRS-10 reflecting shareholders gross benefits/value of investments.ELECTION OF DIRECTORS:Rotation of Directors:Pursuant to Article 110 of the Articles of Association of the Company Dr. Shamim Matin Chowdhury, Director and Mr. A. F. M. Zubair, Director would retire by rotation and being eligible as per Article 112 of the Articles of Association of the Company they offered themselves for re-election. Brief resume and other information of the above mentioned directors as per clause 1.5 (xxii) of BSEC notification dated 7th August, 2012 are depicted in Annexure –III.APPOINTMENT OF AUDITORS:M/s. Malek Siddiqui Wali, Chartered Accountants, existing auditors of the company, will retire at this Annual General Meeting and being eligible offered themselves for re-appointment as auditors of the company for the year 2014-2015. The Board recommended M/s. Malek Siddiqui Wali, Chartered Accountants, 9-G, Motijheel C/A, Dhaka-1000 for re-appointment as auditors of the Company of the year 2014-2015 with fixation of their remuneration.CORPORATE GOVERNANCE:Corporate Governance is the practice of good citizenship, through which the Company is governed by the Board, keeping in view its accountability to the stakeholders and to the society. A statement in pursuance to clause 1.5, report of compliance, audit committee report as per clause 3.5, certificate from professional accountant as per clause 7(i) and a status of compliance as per clause 7(ii) of the BSEC Notification No.SEC/CMRRCD/2006-158/134/Admin/44 dated 07th August 2012 are depicted/disclosed in the ANNEXURE -I, II, III, IV, V and VI respectively.ACKNOWLWDGEMENT:The Directors are pleased to record with appreciation and gratitude the co-operation and support provided by Shareholders, Custom-ers, Bankers, Insurance Companies, Suppliers, BSEC, DSE, CSE, CDBL and dedication by Workers and Employees of the company without whose active support the result achieved would not have been possible.

Looking forward for a bright future for all of us.

On behalf of the Board of Directors,

A. F. M. Zubair Chairman

In the event of conflict between English text and Bangla text of this report, English text shall prevail.


-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2011-12 2012-13 2013-14

Sales

Gross Profit

Net Profit

8,500

9,000

9,500

10,000

10,500

11,000

2011-12 2012-13 2013-14

Production

Sales

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2011-12 2012-13 2013-14

Earning Per Share

FINANCIAL PERFORMANCE

SALES & PROFITABILITY OVER 3 YEARS TIME

(Tk. in ,000) Particulars 2011-12 2012-13 2013-14 Sales 2,966,197 3,262,553 3,065,013 Gross Profit 10,727 520,463 395,471 Net Profit (351,237) 240,443 215,231

PRODUCTION VS. SALES FIGURES TABLE

(Quantity in, 000 Kg.) Particulars 2011-12 2012-13 2013-14 Production 10,286 10,643 10,640 Sales 9,309 10,707 10,708

EARNING PER SHARE (EPS)

Particulars 2011-12 2012-13 2013-14 Earning Per Share (1.81) 1.24 1.11

15

Annual Report 2014

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5. A¯^vfvweK jvf ev ÿwZ tPjwZ eQ‡i †Kv¤úvbx 41,477,984 UvKv bM` cÖ‡Yv`bv Ges e¨vs‡Ki my` eve` bb-Acv‡iwUs BbKvg wn‡m‡e DcvR©b K‡i‡Q, hv bb-Acv‡iwUs Avq wnmv‡e Avq-weeiYx‡Z I wnmv‡ei †bvU bs 22.1G cÖ`k©b Kiv n‡q‡Q|6. AvšÍtm¤ú©wKZ ‡Kv¤úvbxi †jb‡`b mg~n twnmv‡ei †bvU bs 27.1‡Z AvšÍtm¤úwK©Z †jb‡`bmg~n eb©bv Kiv n‡q‡Q|7. cvewjK Bmy¨ A_ev ivBU Bmy¨ n‡Z cÖvß Znwe‡ji eënvi tG eQi †Kvb cvewjK Bmy¨ A_ev ivBU Bmy¨ Kiv nq bvB|8. Bbwmqvj cvewjK Advwis (AvBwcI), wiwcU cvewjK Advwis (AviwcI), ivBU Advi, WvB‡i± wjw÷s BZ¨vw` †_‡K A_© ev Znwej cÖvwßi ci †Kv¤úvbxi Avw_©K Ae¯’v tBbwmqvj cvewjK Advwis (AvBwcI) m¤úbœ n‡q‡Q 2010 mv‡j| cieZ©x‡Z †Kvb wiwcU cvewjK Advwis (AviwcI), ivBU Advi, WvB‡i± wjw÷s BZ¨vw` Kiv nq bvB|9. evwl©K Avw_©K weeibx I ˆÎgvwmK Avw_©K Ae¯’vi weeibxi g‡a¨ cv_©K¨ t2q Ges 3q cÖvwšÍK †KvqvU©v‡i †Kv¤úvbxi Avq cÖ_g †KvqvU©vi A‡cÿv Kg n‡q‡Q wewµZ c‡Yï e¨q e„w× cvIqvi Rb¨| 3q †KvqvU©vi cÖvwšÍK n‡Z gybvdv e„w× cvIqv ïiæ K‡i‡Q wewµZ c‡Yï e¨q Kg‡Z _vKvq Ges 4_© †KvqvU©v‡i Zv bb-Acv‡iwUs Av‡qi Rb¨ D”P nv‡i e„w× ‡c‡q‡Q| 10. ¯^Zš¿ cwiPvjKmn cwiPvjK‡ì cvwikÖwgK twnmv‡ei †bvU bs 3.35G ¯^Zš¿ cwiPvjKmn cwiPvjK‡ì cvwikÖwgK eb©bv Kiv n‡q‡Q|11. Avw_©K cÖwZ‡e`‡bi Dci cwiPvjKM‡Yi wee„wZ tDc‡iv³ wi‡cvU©mg~n G‡b·vi-1 G eb©bv Kiv n‡q‡Q|12. MZ eQ‡ii cwiPvjbvMZ djvd‡ji mwnZ PjwZ eQ‡ii eëavb t‡Kv¤úvbxi cwiPvjbv gybvdvi nvi weMZ eQ‡ii Zzjbvq mvgvb¨ n«vm †c‡q‡Q hv 2013-2014 eQ‡i weµ‡qi Dci 7.19% | weMZ eQ‡i hv nvi wQj 7.88% A_©vr weµ‡qi Dci cwiPvjbv gybvdv n«vm †c‡q‡Q weMZ eQ‡ii Zzjbvq 0.69% hv LyeB bMb¨|13. weMZ 05 (cuvP) eQ‡ii gyL¨ cwiPvjb Ges Avw_©K WvUvmg~n mswÿß AvKv‡i c„ôv bs 08 G eb©bv Kiv n‡q‡Q|14. jf¨vsk tcwiPvjbv cl©` 10% bM` jf¨vsk A_©vr cÖwZ 10.00 UvKvi mvaviY †kqv‡ii wecix‡Z 1.00 UvKv bM` jf¨vsk †Nvlbvi Rb¨ AÎ mvavib mfvq mycvwik K‡i‡Qb|15. 2013-2014 eQ‡ii †evW© wgwUs‡qi msL¨v Ges cwiPvjK‡ì Dcw¯’wZ G‡b·vi-1G eb©bv Kiv n‡q‡Q|16. †kqvi †nvwìs msµvšÍ weeiY aviv 1.5 Abyhvqx weGmBwm †bvwUwd‡Kkb ZvwiL 07 AvMó 2012 Abyhvqx G‡b·vi-2 G eb©bv Kiv n‡q‡Q|17. †Kv¤úvbxi cwiPvjKe„‡›ì wb‡qvM/cybtwb‡qvM msµvšÍ cwiPvjK‡ì mswÿß Rxeb e„ËvšÍ G‡b·vi-3 G eb©bv Kiv n‡q‡Q|

gyjabx e¨q:2013-2014, 2012-2013 I 2011-2012 wZb eQ‡ii gyjabx e¨q wbgœiæc n‡q‡Q: weeiY 2013-2014 (UvKv) 2012-2013 (UvKv) 2011-2012 (UvKv) Rwg I Rwg Dbœqb 1,825,257 599,994 69,900 cøv›U I †gwkbvix 34,933,578 41,102,166 950,000 dvwb©Pvi I wd·Pvi 19.310 153.550 76,500 Awdm mvgMÖx 322,908 166,120 1,228,040 †gvUi Mvox 2,910,000 1,860,000 -- †Uwj‡dvb ¯’vcbv (wcGweG·) -- 90,000 -- †Rbv‡iUi -- 26,814,800 -- †gvU 40,011,053 70,786,630 2,324,440

Aaxb¯’ †Kv¤úvbx:mv‡jK †U·UvBj wjwg‡UW, wbD Gwkqv wmb‡_wUKm wjwg‡UW Ges †R. Gg. †dweªKm wjwg‡UW mvewmwWqvwi †Kv¤úvbx nIqvq cwiPvjKe„‡›ì cÖwZ‡e`b GKB mv‡_ wbix¶‡Ki cÖwZ‡e`b, Avw_©K weeibx, Avq-weeiYx, K¨vk-‡d¬v weeiYx I BKy¨BwU cwieZ©b m¤úwK©Z weeiYx GB wi‡cv‡U©i Ask wn‡m‡e mshy³ Kiv n‡q‡Q| D‡jøL¨ †h, wZZvm w¯úwbs GÛ †Wwbg †Kv¤úvbx wjt, mv‡jK ‡U·UvBj wjt Gi mv‡_ GKwÎKiY (Amalgamated) nIqvi ìæb wZZvm w¯úwbs GÛ †Wwbg †Kv¤úvbx wjt Gi 09 (bq) gv‡mi wbixwÿZ Avw_©K weeiYx A_©vr 1jv RyjvB 2013 †_‡K 31B gvP© 2014 Zvwi‡Li Avw_©K weeibx mshy³ Kiv n‡q‡Q| (K) mv‡jK †U·UvBj wj: evsjv‡`‡ki gnvgvb¨ mywcÖg †Kv‡U©i nvB‡KvU© wWwfk‡bi AW©vi Abyhvqx †Kv¤úvbx g¨vUvi bs 248, 2013 Gi ZvwiL 05-03-2014 Abyhvqx wZZvm w¯úwbs GÛ †Wwbg †Kv¤úvbx wjt, mv‡jK †U·UvBj wjt Gi mv‡_ GKwÎKiY (Amalgamated) n‡q‡Q, hv 31-03-2014 ZvwiL †_‡K Kvh©Ki n‡q‡Q| evsjv‡`k wmwKDwiwUR GÛ GK‡PÄ Kwgk‡bi (weGmBwm) m¤§wZcÎ bs BSEC/CI/CPLC (Pvt)-333/2011/446 ZvwiL Ryb 24, 2014 Abyhvqx †Kv¤úvbxi cwi‡kvwaZ g~jab 400,000,000.00 UvKv n‡Z e„w× K‡i 482,608,700.00 UvKvq e„w× Kiv n‡q‡Q Gi Rb¨ wZZvm w¯úwbs GÛ †Wwbg †Kv¤úvbx wjt Gi †kqvi †nvìvi‡ì bv‡g cÖwZwU 100.00 UvKv g~‡jï 826,087 wU mvavib ‡kqvi Bmy¨ Kiv n‡q‡Q| †kqvi wewbgq nvi wQj mv‡jK †U·UvBj wjt Gi 01 (GK) wU †kqv‡ii wecix‡Z wZZvm w¯úwbs GÛ †Wwbg †Kv¤úvbx wjt Gi 4.60 (Pvi `kwgK Qq k~Y¨) †kqvi, hv gv‡jK w¯úwbs wgjm& wjt Gi 24 wW‡m¤î 2013 Zvwi‡L AbywôZ †kqvi †nvìvi‡ì 24Zg evwl©K mvaviY mfv©q Aby‡gvw`Z n‡q‡Q| djkÖæwZ‡Z †Kv¤úvbx (GgGmGg) mv‡jK ‡U·UvBj wj: Gi 97.93% †kqvi A_©vr †gvU 482,608,700.00 UvKvi cÖwZwU 100/- UvKv gyj¨gv‡bi 4,826,087 †kqvi †_‡K 472,597,000.00 UvKvi cÖwZwU 100/- UvKv gyj¨gv‡bi 4,725,970 wU †kqvi avib K‡i| weGmBwmi g~jab e„w×i m¤§wZ cÎ bs BSEC/CI/CPLC (Pvt)-333/2011/446 ZvwiL Ryb 24, 2014 Gi 09 (bq) bs kZ©vbyhvqx Ges evsjv‡`k wmwKDwiwUR GÛ GK‡PÄ Kwgk‡bi (weGmBwm)

17

Annual Report 2014

†bvwUwd‡Kkb bs SEC/CMRRCD/2006-159/36/Admin/03-44 ZvwiL †g 05, 2010 evsjv‡`k †MÖ‡R‡Ui cÖKvwkZ ZvwiL 01-06-2010 Abyhvqx †Kv¤úvwb‡K cÖvB‡fU wjt †Kv¤úvbx n‡Z cvewjK wjt †Kv¤úvbx‡Z iæcvšÍi Kiv n‡q‡Q 23‡k AvMó 2014 Zvwi‡L| GKB mv‡_ †Kv¤úvbxi cÖwZwU 100.00 UvKvi †kqvi g~j¨‡K 10.00 UvKvq cwieZ©b Kiv n‡q‡Q| GKwÎKiY (Amalgamation) Gi ci †Kv¤úvbxi evrmwiK Drcv`b ÿgZv `vwo‡q‡Q myZv 14,621,000 ‡KwR Ges ‡dweªK 9,600,000 MR| cÖKíwUi evwYwR¨K Acv‡ikb ïiæ nq GwcÖj 2009G| GB cÖK‡í i‡q‡Q cÖwZwU 360 †ivU‡ii 10 wU Schlafhorst A‡Uv‡Kv‡iv ‡gwkb hvi Drcv`b ÿgZv eQ‡i 14,621,000 †KwR BqvY© Ges 9,600,000 MR †dweªK| 2013-2014 eQ‡i f‚wg I f‚wg Dbœqb, †gvUiMvox Ges M¨vmjvBb ¯’vcbv eve` wewb‡qvM Kiv n‡q‡Q 21,662,000.00 UvKv 2013-2014 I 2012-2013 mv‡ji †Kv¤úvbxi cwiPvjbv djvdj wbgœiæc: weeiY 2013-2014 2012-2013 Drcv`b (†KwR) Bqvb© 10,455,062 11,145,027Drcv`b (MR) †dweª· 3 gv‡mi Rb¨ 1,596,792 --weµq †iwfwbD (UvKv) 2,178,916,498 2,291,717,388MÖm jvf (UvKv) 342,496,255 363,083,571wbU jvf Ki AeKvk wiRvf© cieZ©x (UvKv) 135,713,206 143,749,214MÖm gvwR©b 15.72% 15.84%wbU gvwR©b 6.23% 6.27%BwcGm (UvKv) ∗ 29.49 42.55GbGwf (UvKv) 520.59 421.43

∗ BwcGm wi‡÷‡UW Kiv n‡q‡Q|

L) wbDGwkqv wmb‡_wUK wjwg‡UW: †Kv¤úvbx (GgGmGg) wbDGwkqv wmb‡_wUK wjwg‡UW Gi 99.293% †kqvi aviY K‡i A_©vr cÖwZwU 100/- UvKv gyj¨gv‡bi 5,000,000 wU †kqv‡ii g‡a¨ cÖwZwU 100/- UvKv gyj¨gv‡bi 4,964,650 †kqvi avib K‡i| evsjv‡`k wmwKDwiwUR GÛ GK‡PÄ Kwgk‡bi (weGmBwm) m¤§wZcÎ bs SEC/CI/CPLC-442/2013/2903 ZvwiL wW‡m¤î 19, 2013 Abyhvqx †Kv¤úvbxi cwi‡kvwaZ g~jab 93,715,000.00 UvKv n‡Z e„w× K‡i 500,000,000,00 UvKvq DwbœZ Kiv n‡q‡Q| wZZvm M¨vm UªvÝwgkb GÛ wWw÷ªweDkb †Kv¤úvbx ‡_‡K M¨vm ms‡hvM bv cvIqvi Rb¨ cÖKíwU ¯’wMZ i‡q‡Q| †Kv¤úvbxwU 2013-2014 eQ‡i f~wg I f~wg Dbœqb I iÿbv‡eÿb eve` 20,102,849.00 UvKv wewb‡qvM K‡i‡Q| †Kv¤úvbxi cÖwZ †kqv‡ii bxU G¨‡mU f¨vjy 366.97 UvKv|

(M) †R. Gg. †dweªKm wjwg‡UW t ‡Kv¤úvbx (GgGmGg) †R. Gg. †dweªKm wjwg‡UW Gi 99.99% †kqvi aviY K‡i A_©vr cÖwZwU 100/- UvKv gyj¨gv‡bi 4,000,000 †kqv‡ii g‡a¨ cÖwZwU 100/- UvKv gyj¨gv‡bi 3,999,900 †kqvi avib K‡i| †Kv¤úvbxwU 100% ißvbxgyLx Mv‡g©›Um Ges bxU †dweªK Drcv`‡b wb‡qvwRZ, hvi Drcv`b ¶gZv 12 †gwUªK Ub bx‡UW I WvBW †dweªK Ges 68 jvBb KvwUs I my¨Bs Acv‡ikb mv‡_ cÖ‡qvRbxq mKj d¨vwmwjwUR I ¸`vgRvZKiY myweav we`¨vgvb| †Kv¤úvbxwU 10.04.2011 Zvwi‡L AwaMÖnb Kiv nq Ges PjwZ eQ‡i wewb‡qvM Kiv n‡q‡Q 103.52 wgwjqb UvKv|2013-2014 eQ‡ii wewb‡qvM wb¤œiæc : weeib UvKv d¨v±ix KvVv‡gv, ‡kW I wewìs 6,578,366 cøv›U I †gwkbvix 83,628,482 Ab¨vb¨ m¤ú` 13,308,6502013-2014 Ges 2012-2013 mv‡ji †Kv¤úvbxi cwiPvjbv djvdj wb¤œiæc: weeib 2013-2014 2012-2013 Drcv`b (wcQ) 16,983,987 6,436,574 weµq †iwfwbD (UvKv) 2,653,244,545 1,486,848,703 MÖm jvf (UvKv) 116,721,267 93,122,622 wbU jvf (UvKv) 72,365,854 63,678,226 MÖm gvwR©b 4.40% 6.26% wbU gvwR©b 2.73% 4.28% BwcGm (UvKv) 18.09 15.92 GbGwf (UvKv) 193.38 177.04

(N) wZZvm w¯úwbs GÛ †Wwbg †Kv¤úvbx wjt- evsjv‡`‡ki gnvgvb¨ mywcÖg †Kv‡U©i nvB‡KvU wWwfk‡bi AW©vi †Kv¤úvbx g¨vUvi bs 248, 2013 Gi ZvwiL 05-03-2014 Abyhvqx wZZvm w¯úwbs GÛ ‡Wwbg †Kv¤úvbx wjt ¯^qswµqfv‡e Aemvqb N‡U‡Q hv 31-03-2014 ZvwiL †_‡K Kvh©Ki n‡q‡Q|

Avw_©K djvdj :weMZ eQ‡ii mv‡_ †Kv¤úvbxi ZzjbvgyjK Avw_©K djvdj wb‡¤œ mswÿßKv‡i Dc¯’vcb Kiv n‡jv:

(wgwjqb UvKvq) weeib 2013-2014 2012-2013 weµq 3065.013 3262.553 wewµZ c‡Yï e¨q 2669.542 2742.089 †gvU jvf 395.471 520.463 cwiPvjb e¨q 67.517 63.221 Avw_©K e¨q 107.488 200.244 cwiPvjbv gybvdv 220.465 256.998 bb-Acv‡iwUs Avq 41.478 4.617 bxU Acv‡iwUs gybvdv/(‡jvKmvb) 261.943 261.615 WweøDwcwcGd G Pvu`v 12.473 12.457


AvqKi cÖwfkb 34.238 8.715bxU jvf (Ki cieZ©x) 215.231 240.443†gvU Av‡qi nvi 12.90% 15.95%bxU Av‡qi nvi 7.02% 7.37%‡kqvi cÖwZ Avq-BwcGm (UvKv) 1.11 1.24wiUvb© Ab BKy¨BwU 3.93% 4.43%AvDU÷¨vwÛs †kqvi msL¨v 193,600,000 193,600,000‡kqv‡ii AwfwnZ g~j¨ (UvKv) 10 10Kbmwj‡W‡UW †kqvi cÖwZ Avq-BwcGm (UvKv) 2.33 2.81

Avw_©K cÖwZ‡e`‡bi Dci gšÍe¨ t1| wewµZ c‡Yï g~j¨ K‡g hvIqvi Rb¨ weµq Kg n‡q‡Q|2| wewµZ c‡Yï e¨q/cwiPvjbv LiP e„w× cvIqvq ‡gvU gybvdv I bxU gybvdv K‡g‡Q|

gybvdv e›Ub:cwiPvjbv cl©` wb‡gœv³ Dcv‡q gybvdv e›U‡bi mycvwik K‡i‡Qb: c~e©eZ©x eQ‡ii wi‡UBb Avwb©sm UvKv 202,019,642.00 ev` : 2012-2013 eQ‡ii jf¨vsk weZiY UvKv (193,600,000.00) DØ„Ë ¯’vbvšÍi UvKv 8,419,642.00 †hvM: bxU gybvdv (Ki cieZ©x) 2013-2014 mv‡ji UvKv 215,231,403.00 ‡hvM: m¤úwË cyb:g~j¨vq‡bi AePq mgš^q UvKv 71,176,390.00 Ave›U‡bi Rb¨ †gvU wd« Znwej UvKv 294,827,434.00

cÖ¯ÍvweZ jf¨vsk: bM` jf¨vsk 10% cÖwZ 10.00 (`k) UvKvi mvavib †kqv‡ii Rb¨ 1.00 (GK) UvKv UvKv (193,600,000.00) jf¨vsk cÖ`v‡bi ci DØ„Ëc‡Î ¯’vbvšÍi UvKv 101,227,434.00

jf¨vsk †Nvlbv:cÖ¯ÍvweZ gybvdv Ave›Ub Abyhvqx cwiPvjbv cl©` 2013-2014 eQ‡ii Rb¨ 10% bM` jf¨vsk †Nvlbvi Rb¨ mycvwik K‡i‡Qb, Gi Rb¨ cÖwZwU 10.00 (`k) UvKvi mvaviY †kqv‡ii wecix‡Z 1.00 (GK) UvKv jf¨vsk cÖ`vb Ki‡Z n‡e| hvi Rb¨ cÖ‡qvRb n‡e 193,600,000.00 UvKv hv wi‡UBb Avwb©s (wd«-wiRvf©) n‡Z cÖ`vb Kiv n‡e| †iKW© †W‡U †h mKj †kqvi †nvìvi‡ì bvg †Kv¤úvbxi †kqvi †iwRóvi A_ev wW‡cvwRUwi †iwRóv‡i _vK‡e Zviv Dc‡iv³ jf¨vsk cv‡eb|

wnmv‡ei GKÎxKiY tweGmBwm Gi wewagvjv I B›Uvib¨vkbvj G¨vKvDw›Us ÷¨vÛvW©-28 Ges AvBGdAviGm -10 Gi wbqgvejx AbymiY K‡i †kqvi‡nvìvie„‡›ì †gvU myweav/wewb‡qvM g~j¨ wba©viY Kiv n‡q‡Q|

cwiPvjK wbev©Pb:†Kv¤úvbxi AvwU©‡Kjm Ae G‡mvwm‡qk‡bi 110 Aby‡”Q` †gvZv‡eK Wv: kvgxg gwZb ‡PŠayix, cwiPvjK I Rbve G.Gd.Gg. †hvev‡qi, cwiPvjK cwiPvjbv cl©` n‡Z †iv‡Ukb Abyhvqx Aemi wb‡”Qb Ges †hvM¨ weavq 112 Aby‡”Q` †gvZv‡eK Zviv c~b: wbev©wPZ nIqvi Rb¨ AvMÖn cÖKvk K‡i‡Qb| Dc‡i ewY©Z cwiPvjK e„‡›ì mswÿß Rxeb e„ËvšÍ I Z_¨vw` weGmBwm ‡bvwUwd‡Kkb ZvwiL 07 AvMó, 2012 Gi aviv 1.5 Abyhvqx G‡b·vi-3 G mwbœ‡ewkZ Kiv n‡q‡Q|

wbix¶K wb‡qvM:†gmvm© gv‡jK wmwÏKx Iqvjx, PvU©vW GKvD›U¨v›Um AÎ mfvq Aemi MÖnb Ki‡eb Ges †hvM¨ weavq 2014-2015 eQ‡ii Rb¨ AwWUi wn‡m‡e wb‡qvM †c‡Z AvMÖn cÖKvk K‡i‡Qb| cwiPvjbv cl©` †gmvm© gv‡jK wmwÏKx Iqvjx, PvU©vW GKvD›U¨v›Um, 9-wR, gwZwSj ev/G, XvKv‡K 2014-2015 eQ‡ii Rb¨ †Kv¤úvbx AwWUi wn‡m‡e wb‡qvM Kivi mycvwik K‡i‡Qb Ges Zv‡ì cvwikÖwgK wba©vi‡bi mycvwik K‡i‡Qb|

K‡cv©‡iU Mf©‡bÝ cÖwZ‡e`b: wmwKDwiwUR GÛ GK‡PÄ Kwgkb Gi †bvwUwd‡Kkb bs GmBwm/wmGgAviAviwmwW/2006-158/134/GWwgb/44 ZvwiL: 07 AvMó 2012 Gi wbwi‡L GKwU weeibx 1.5 aviv Abymv‡i cÖwZcvjb cÖwZ‡e`b, AwWU KwgwU cÖwZ‡e`b 3.5 aviv Abymv‡i, aviv 7(1) Abymv‡i cÖ‡dkbvj GKvDb‡U›U KZ…©K mvwU©wd‡KU Ges K‡cv©‡iU Mf©‡bÝ cÖwZcvjb 7(2) Gi Ae¯’v h_vµ‡g mshyw³- I, II, III, IV, V, Ges VI Gi g‡a¨ eb©bv/cÖKvk Kiv n‡jv|

abëv` Ávcb :cwiPvjbv cl©‡ì c¶ †_‡K †Kv¤úvbxi †kqvi †nvìvi, MÖvnK, e¨vsK, BÝy¨‡iÝ †Kv¤úvbx, mieivnKvix, weGmBwm, wWGmB, wmGmB, wmwWweGj I Ab¨vb¨ cÖwZôv‡bi mn‡hvMxZv I Dc‡`‡ki Rb¨ abëv` Rvbvw”Q| ZvQvov †Kv¤úvbxi kªwgK, Kg©Pvix‡ì wbôv I HKvwšÍK Kg© DÏxcbvi Rb¨ m‡šÍvl cÖKvk Ges abëv` Rvbvw”Q|

cwiPvjbv cl©‡ì c‡ÿ,

G. Gd. Gg. ‡Rvev‡qi‡Pqvig¨vb

Annual Report 2014

19

ANNEXURE –I

The Directors also report that:• Related Party Transactions are depicted in Note no. 27.1 in the Notes of Account.• Remuneration of Directors including Independent Director have been shown in Note no. 3.35 in the Notes of Account.• The Financial Statement of the Company present true and fair view of the Company’s state of affairs, result of its operations,

cash flows and changes in equity.• Proper books of accounts as required by the prevailing law have been maintained.• Appropriate accounting policies have been followed in formulating the financial statements and accounting estimates were

reasonable and prudent.• The financial statement was prepared in accordance with IAS/BAS/IFRS/BFRS.• The internal control system is sound in design and is effectively implemented and monitored.• There is no significant doubt about the company’s ability to continue as a going concern.• Significant deviation from the operating result compared to the last year is depicted in page no.11 clause (xvii) above.• Key operating and financial data of last five years have been presented in summarized form in page no.08• The number of Board Meeting and the Attendance of Directors during the year 2013-2014 were as follows:

Name of Directors Position Meeting Held Attended Mr. A. F. M. Zubair Chairman 06 05 Mr. A. Matin Chowdhury Managing Director 06 06 Dr. Shamim Matin Chowdhury Director 06 06 Ms. Saima Matin Chowdhury Director 06 05 Mr. Azizur Rahim Chowdhury Director 06 06 Mr. Moshiur Rahman Director 06 06 Mr. M. SekanderAli Independent Director 06 06 Md. Qamrul Huda Independent Director 06 06

• The pattern of shareholding as required by clause 1.5 (xxi) of the BSEC Notification dated 07th August, 2012, stated in Annexure-II.

• Information of Directors who seek appointment/re-appointment as required by clause 1.5 (xxii) of the BSEC Notification dated 07 August, 2012, stated in Annexure-III.

• Status of compliance with the conditions imposed by the Securities and Exchange Commission is enclosed as Annexure –VI.

ANNEXURE –IIPattern of Shareholding as on June 30, 2014Name of the Shareholders Status Shares held %i. Parent/Subsidiary/Associated Companies and other related parties Nil Nil Nilii. Directors: Mr. A.F.M. Zubair Chairman 8,470,000 4.37% Mr. A. Matin Chowdhury Managing Director 13,358,400 6.90% Dr. Shamim Matin Chowdhury Director 13,310,000 6.88% Mr. Azizur Rahim Chowdhury Director 18,585,600 9.60% Ms. Saima Matin Chowdhury Director 15,004,000 7.75% Mr. Moshiur Rahman Director (Nominated by Paragon Poultry Ltd.) 12,100,000 6.25% Mr. M. Sekander Ali Independent Director Nil Nil Md. Qamrul Huda Independent Director Nil Nil Mr. Shyan Zubair Sponsor Shareholder 3,872,000 2.00%iii. Chief Executive Officer, Chief Financial Officer, Company Secretary, Head of Internal Audit and their Spouses and Minor Childrens: Mr. A. Matin Chowdhury Chief Executive Officer 13,358,400 6.90% Mr. B. K. Chaki Chief Financial Officer Nil Nil Mr. Syed Saiful Haque Company Secretary Nil Nil Md. Rakibul Islam Head of Internal Audit Nil Niliv. Executives Nil Nil Nilv. Shareholders holding 10% or more voting interest in the Company Nil Nil Nil


ANNEXURE-IIIBrief Resume of the Directors

Directors who seek re-appointment:

Dr. Shamim Matin Chowdhury:Dr. Shamim Matin Chowdhury is a Sponsor Director of the Company since 1991, wife of Mr. A. Matin Chowdhury. She has more than 32 (thirty two) years experience in the textile sector. She completed M.B.B.S from Dhaka Medical College and postgraduate studies from the U.K. Mrs. Chowdhury is a famous Child and Adolescent Psychiatrist. She is the former Chief Consultant of Pabna Mental Hospital. She is also the Chairperson of Special Olympics in Bangladesh. She is the Director of Rahim Textile Mills Limited (listed company), Salek Textile Limited, Knit Asia Limited, J.M. Fabrics Limited, Hejaz Publications Limited, Fatehbagh Tea Company Limited and also the Managing Director of NewAsia Synthetics Limited. She is the Member of Audit Committee of Malek Spinning Mills Limited and Rahim Textile Mills Limited.

Mr. A. F. M. Zubair:Mr. A. F. M. Zubair is a Director of the Company since 1989. He is a renowned and dynamic personality in the Textile Sector of Bangladesh. By profession Mr. Zubair is a Textile Engineer. He has done Post Graduate from Leeds University, U.K. He has vast knowledge in the Textile Sector in the country. He is the Chairman and Director of Malek Spinning Mills Limited and Chairman & Director of Salek Textile Limited and Director of Knit Asia Limited, New Asia Synthetics Limited, Hejaz Publications Limited and also the Managing Director of Design Asia Limited.

ANNEXURE-IVAUDIT COMMITTEE REPORT

For the Year 2013-2014

Malek Spinning Mills Limited having an Audit Committee as a sub committee of the Board of Directors in order to assist the Board of Directors in ensuring and fulfilling its oversight responsibilities.

The Audit Committee consists of the following persons: Mr. M. Sekander Ali, Independent Director Chairman Dr. Shamim Matin Chowdhury, Director Member Mr. Azizur Rahim Chowdhury, Director Member Mr. Syed Saiful Haque, Company Secretary Secretary

The scope of Audit Committee was defined as under:a. Review and recommend to the Board to approve the quarterly, half yearly and annual financial statements prepared for statutory purpose;b.Monitor and oversee choice of accounting policies and principles, internal control risk management process, auditing matter, hiring and performance of external auditors;c. Review statement of significant related party transactions submitted by the management;d. Carry on a supervision role to safeguard the system of governance and independence of statutory auditors; and e. Review and consider the report of internal auditors and statutory auditors’ observations on internal control.

Activities carried out during the year:The Committee reviewed the integrity of the quarterly, half yearly and annual financial statements and recommended to the Board for consideration. The Committee had overseen, reviewed and approved the procedure and task of the internal audit, financial report preparation and the external audit reports. The Committee found adequate arrangement to present a true and fair view of the activities and the financial status of the company and didn’t find any material deviation, discrepancies or any adverse finding/observation in the areas of reporting.

M. Sekander AliChairmanAudit Committee

Date: 27th October, 2014.

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Annual Report 2014

ANNEXURE-V

CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE GUIDELINES.

To the Members of Malek Spinning Mills Limited,

This is to certify that Malek Spinning Mills Limited has Complied with the conditions of Corporate Governance Guidelines imposed by the Bangladesh Securities and Exchange Commission vide their Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07th August 2012.

Dated: 30th October, 2014 Ramendra Nath Basak, FCA Dhaka Partner Shiraz Khan Basak & Co. Chartered Accountants

DECLARATION BY THE CEO & CFO

The Board of DirectorsMalek Spinning Mills Limited117/A, Tejgaon Industrial Area Dhaka-1208.

Dear Sirs:In compliance with the condition no.6 imposed by the Bangladesh Securities and Exchange Commission’s Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 issued under Section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby certify to the Board of Directors that;

(i) We have reviewed the financial statements of the company for the year 2013-2014 and that to the best of our knowledge and belief:

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

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

(ii) There are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violation of the company’s code of conduct.

(B. K. Chaki) (A. Matin Chowdhury ) Chief Financial Officer Managing Director Dated: 12th October, 2014Dhaka


ANNEXURE-VI Corporate Governance Compliance Status Report

Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission’s Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012.(Report under Condition No.7.00)Condition No. Title Complied Not Complied Remarks (if any)

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√

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√ √ √

√

√

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N/A

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√ √ √ √ √ √ N/A

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1.1 Board Size : The number of the Board members shall not be less than 5 (Five) and more than 20 (Twenty)

1.2 Independent Directors: 1.2 (i) One fifth (1/5th) of the total number of directors 1.2 (ii) a) Does not hold any share or holds less than 1% shares of the total paid up shares1.2 (ii) b) Not connected with any sponsor/ director/shareholder who holds 1% or more shares of

the total paid up shares on the basis of family relationship.1.2 (ii) c) Does not have any other relationship, whether pecuniary or otherwise, with the

company or its subsidiary/associated companies1.2 (ii) d) Not a member, director or officer of any stock exchange1.2 (ii) e) Not a shareholder, director or officer of any member of stock exchange or an

intermediary of the capital market1.2 (ii) f) Not a partner or an executive or was not a partner or an executive during the

preceeding 3 (three) years of any statutory audit firm1.2 (ii) g) Not be an independent director in more than 3 (three) listed companies1.2 (ii) h) Not been convicted by a court of competent jurisdiction as a defaulter in payment of

any loan to a bank or a NBFI1.2 (ii) i) Not been convicted for a criminal offence involving moral turpitude1.2 (iii) Appointed by the Board of Directors and approved by the shareholders in the AGM1.2 (iv) Not remain vacant for more than 90 (ninety) days1.2 (v) Board shall lay down a code of conduct of all Board members and annual compliance of

the code to be recorded1.2 (vi) Tenure of office of an Independent Director shall be for a period of 3(three) years,

which may be extended for 1(one) term only1.3 Qualification of Independent Director (ID)1.3 (i) Knowledge of Independent Directors1.3 (ii) Background of Independent Directors1.3 (iii) Special cases for qualifications 1.4 Individual Chairman of the Board and Chief Executive Officer 1.5 The Directorʼs Report to Shareholders:1.5 (i) Industry outlook and possible future developments in the industry1.5 (ii) Segment-wise or product-wise performance 1.5 (iii) Risks and concerns1.5 (iv) Discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss1.5 (vi) Basis for related party transactions1.5 (vii) Utilization of proceeds from public issues, rights issues and/or through any others1.5 (viii) Explanation if the financial results deteriorate after the company goes for IPO, RPO,

Rights Offer, Direct Listing1.5 (ix) Explanation about significant variance occurs between Quarterly Financial performance

and Annual Financial Statements1.5 (x) Remuneration to directors including independent directors1.5 (xi) Fairness of Financial Statements 1.5 (xii) Maintenance of proper books of accounts 1.5 (xiii) Adoption of appropriate accounting policies and estimates1.5 (xiv) Followed IAS, BAS, IFRS and BFRS in preparation of financial statements1.5 (xv) Soundness of internal control system1.5 (xvi) Ability to continue as a going concern1.5 (xvii) Significant deviations from the last yearʼs 1.5 (xviii) Key operating and financial data of at least preceding 5 (five) years1.5 (xix) Reasons for not declared dividend 1.5 (xx) Number of Board meetings held during the year and attendance1.5 (xxi) Pattern of shareholding:1.5 (xxi) a) Parent/Subsidiary/Associated Companies and other related parties 1.5 (xxi) b) Directors, CEO, CS, CFO,HIA and their spouses and minor children 1.5 (xxi) c) Executives1.5 (xxi) d) 10% or more voting interest 1.5 (xxii) Appointment/re-appointment of director:1.5(xxii) a) Resume of the director

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Annual Report 2014

Condition No. Title Complied Not Complied Remarks (if any)√ √ √√ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ N/A

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1.5(xxii)b) Expertise in specific functional areas1.5(xxii) c) Holding of directorship and membership of committees of the board other then this company 2.1 Appointment of CFO, HIA and CS:2.2 Attendance of CFO and CS at the meeting of the Board of Directors3.0 Audit Committee: 3 (i) Constitution of Audit Committee 3 (ii) Assistance of the Audit Committee to Board of Directors3 (iii) Responsibility of the Audit Committee 3.1 Constitution of the Audit Committee:3.1 (i) At least 3(three) members3.1 (ii) Appointment of members of the Audit Committee3.1 (iii) Qualification of Audit Committee members 3.1 (iv) Term of Service of Audit Committee members3.1 (v) Secretary of the Audit Committee3.1 (vi) Quorum of the Audit Committee meeting 3.2 Chairman of the Audit Committee:3.2 (i) Board of Directors shall select the Chairman 3.2 (ii) Chairman of the audit committee shall remain present in the AGM3.3 Role of Audit Committee:3.3 (i) Oversee the financial reporting process3.3 (ii) Monitor choice of accounting policies and principles3.3 (iii) Monitor Internal Control Risk management process3.3 (iv) Oversee hiring and performance of external auditors3.3 (v) Review the annual financial statements before submission to the board for approval3.3 (vi) Review the quarterly and half yearly financial statements before submission to the

board for approval3.3 (vii) Review the adequacy of internal audit function3.3 (viii) Review statement of significant related party transactions3.3 (ix) Review Management Letters/Letter of Internal Control weakness issued by statutory auditors3.3 (x) Disclosure about the uses/applications of funds raised by IPO/RPO/Rights Issue 3.4 Reporting of the Audit Committee:3.4.1 Reporting to the Board of Directors:3.4.1 (i) Activities of Audit Committee 3.4.1 (ii)a) Conflicts of interest3.4.1 (ii)b) Material defect in the internal control system3.4.1 (ii)c) Infringement of laws, rules and regulations3.4.1 (ii)d) Any other matter3.4.2 Reporting to the Authorities3.5 Reporting to the Shareholders and General Investors4 Engagement of External/Statutory Auditors:4 (i) Appraisal or valuation services or fairness opinions4 (ii) Financial information systems design and implementation4 (iii) Book-keeping4 (iv) Broker-dealer services4 (v) Actuarial services4 (vi) Internal audit services4 (vii) Services that the Audit Committee determines4 (viii) Audit firms shall not hold any share of the company they audit.4 (ix) Audit/certification services on compliance of corporate governance 5 Subsidiary Company:5 (i) Composition of the Board of Directors5 (ii) At least 1 (one) independent director to the subsidiary company 5 (iii) Submission of Minutes to the holding company5 (iv) Review of Minutes by the holding company5 (v) Review of Financial Statement by the holding company6 Duties of Chief Executive Officer and Chief Financial Officer:6 (i) a) Reviewed the materially untrue of the financial statement6 (i) b) Reviewed about compliance of the accounting standard6 (ii) Reviewed about fraudulent, illegal or violation of the companyʼs code of conduct7 Reporting and Compliance of Corporate Governance:7 (i) Obtain certificate about compliance of conditions of Corporate Governance Guidelines 7 (ii) Annexure attached, in the directorʼs report


Malek Siddiqui WaliCHARTERED ACCOUNTANTS 9-G, MOTIJHEEL, C/A, Dhaka-1000, Bangladesh

AUDITORS’ REPORTto the shareholders of

Malek Spinning Mills Limited

We have audited the accompanying Consolidated Statement of Financial Position of Malek Spinning Mills Limited as at 30th June 2014 and the related Consolidated Statement of Comprehensive Income, Consolidated Statement of Cash Flow, Consolidated Statement of Change in Equity and Notes for the period from July 1, 2013 to June 30, 2014.

Management’s Responsibility for the Financial Statements:

The Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), the companies Act 1994 and other applicable laws and regulation and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, where due to fraud or error.

Auditor’s Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance where the financial statements are free from material misstatement.

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

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

Opinion:

In our opinion, the financial statements prepared in accordance with Bangladesh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company’s affairs as of 30th June 2014 and of the results of its operations and its cash flows for the period then ended and comply with the Companies Act 1994 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 purpose of our audit and made due verification thereof;

b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of those books;

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

d) The expenditures incurred and payments made were for the purpose of the company’s business.

Dated: Dhaka Malek Siddiqui Wali

October 27, 2014 Chartered Accountants

25

Annual Report 2014

MALEK SPINNING MILLS LIMITEDSTATEMENT OF CONSOLIDATED FINANCIAL POSITION

AS AT 30TH JUNE 2014

Notes JUNE'14 JUNE'13 Taka TakaASSETS :Non-Current Assets : 8,398,494,042 8,630,382,998 Property, Plant and Equipment 4 8,398,494,042 8,630,382,998

Current Assets : 7,008,235,816 6,847,016,087 Inventories 5 3,375,478,913 2,997,282,138 Accounts Receivable 6 2,804,027,102 3,273,459,578 Advances,Deposits and Pre-payments 7 293,622,098 265,894,920 Cash and Cash Equivalents 8 535,107,702 310,379,451

TOTAL ASSETS : 15,406,729,858 15,477,399,085 SHAREHOLDER'S EQUITY AND LIABILITIES:Shareholder's Equity : 8,723,317,999 8,417,743,889 Share Capital 9 1,936,000,000 1,936,000,000 Share Premium 10 1,500,000,000 1,500,000,000 Retained Earnings 11 778,865,865 414,712,962 Tax Holiday Reserve 12 210,883,871 203,647,436 Re-valuation Surplus of Fixed Assets 13 4,297,568,262 4,363,383,492

Minority Interest 14 52,628,362 97,757,791

Non Current Liabilities: 1,716,232,504 2,106,771,482 Long Term Loan 15 1,471,625,227 1,847,962,051 Deferred Tax Liabilities 16 244,607,277 258,809,431

Current Liabilities : 4,914,550,994 4,855,125,924 Short Term Loan 17 1,044,440,303 734,110,097 Current Portion of Long Term Loan 18 991,544,660 896,799,650 Security Deposit against Sales 19 - 5,000,000 Bank Acceptance Liabilities 20 1,920,390,417 2,265,137,023 Credirors and Accruals 21 958,175,613 954,079,154

TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES : 15,406,729,858 15,477,399,085

Net Assets Value Per Share (NAV) 45.06 43.48 Par Value Tk.10 The annexed notes 1 to 32 form an integral part of these financial statement.

A. Matin Chowdhury Azizur Rahim Chowdhury B.K. Chaki Syed Saiful Haque Managing Director Director Chief Financial Officer Company Secretary

As per our report of same date

Dhaka ( Malek Siddiqui Wali ) October 27, 2014 Chartered Accountants


MALEK SPINNING MILLS LIMITEDSTATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30TH JUNE 2014

Notes JUNE'14 JUNE'13 Taka Taka

Sales 22 8,239,372,911 7,737,869,878 Cost of Goods Sold 23 7,227,818,707 6,566,163,598 Gross Profit : 1,011,554,205 1,171,706,280

Operating Expenses 24 143,548,543 122,516,957 Financial Expenses 25 363,696,687 442,733,923 Operating Profit/(Loss) : 504,308,974 606,455,399

Non-operating Income/(Loss) 26 41,302,851 5,057,668 Net Operating Profit/(Loss) : 545,611,825 611,513,068

Provision for Contribution to WPPF 27 26,174,608 29,229,285 Profit/(Loss) before Tax : 519,437,217 582,283,783

Provision for Income Tax : 65,392,536 33,101,937 Current Tax 28 79,594,690 47,628,324 Deferred Tax 29 (14,202,154) (14,526,387)Net Profit/(Loss) after tax for the year 454,044,681 549,181,846

Provision for Tax Holiday Reserve 30 6,490,430 60,068,176 Net Profit/(Loss) after Tax Holiday Reserve 447,554,251 489,113,670

Minority Interest 31 3,579,700 5,916,032 Net Profit/(Loss) Balance 443,974,551 483,197,638 (Transferred to the Statement of Changes in Equity)

Earnings Per Share (EPS) 32 2.33 2.81 Par Value Tk.10 Number of Shares used to compute EPS 193,600,000 193,600,000

The annexed notes 1 to 32 form an integral part of these financial statement.




27

Annual Report 2014

MALEK SPINNING MILLS LIMITED STATEMENT OF CONSOLIDATED CASH FLOWS

FOR THE YEAR ENDED 30TH JUNE 2014 JUNE'14 JUNE'13 Taka TakaCASH FLOW FROM OPERATING ACTIVITIES :

Collection from Turnover & Bills Receivable 8,708,805,388 7,160,222,216 Non-operating Income/(Loss) 46,786,887 5,057,668 Payment for Raw Materials, Indirect Materials and other expenses (7,603,577,071) (6,233,112,194)Payment for Operating Expenses (132,385,529) (101,602,126)Payment of Financial Expenses (363,696,687) (442,733,923)Payment for Income Tax (68,987,191) (7,096,325)Net Cash provided/(used) by Operating Activities 586,945,796 380,735,315

CASH FLOW FROM INVESTING ACTIVITIES :

Acquisition of Fixed Assets (216,680,131) (595,573,352)Acquisition of Capital work in progress - 177,072,526 Disposal of Fixed Assets 1,612,469 1,043,232 Pre-operating expenses - 25,551,245 Advance realised 247,352 - Net cash provided/(used) in Investing Activities (214,820,310) (391,906,349)

CASH FLOW FROM FINANCING ACTIVITIES :

Bank Loan Increase/(Decrease) 28,738,392 40,327,955 Advance, Deposit & Prepayments - (105,321,184)Refundable IPO Share Money paid (175,002) (325,001)Dividend Paid (175,960,624) (32,408)Security Deposit against Sales - 3,500,000 Net cash provided/(used) in Financing Activities (147,397,235) (61,850,638)

Increase/(Decrease) in Cash and Cash Equivalents 224,728,251 (73,021,672)

Cash & Cash Equivalents at 1st July 2013 310,379,451 383,401,123

Cash and Cash Equivalents at 30th June 2014 535,107,702 310,379,451

Net Operating Cash Flow Per Share (NOCFPS) 3.03 1.97 Par Value Tk.10





MALEK SPINNING MILLS LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Particulars Share Share Revaluation Tax holiday Retained Total Capital Premium Surplus of Reserve Earnings Fixed AssetsBalance as at 1st July 2013 1,936,000,000 1,500,000,000 4,363,383,492 203,647,435 414,712,962 8,417,743,889 Net Profit/(Loss) during the year 443,974,551 443,974,551 Revaluation Surplus of Fixed Assets (110,401,870) 110,401,870 - Tax Holiday Reserve 6,490,430 6,490,430 Adjustment of Minority Interest 44,586,641 746,005 3,376,482 48,709,128 Cash Dividend for 2012-2013 (193,600,000) (193,600,000)As at 30th June 2014 1,936,000,000 1,500,000,000 4,297,568,262 210,883,871 778,865,865 8,723,317,999


Particulars Share Share Revaluation Tax holiday Retained Total Capital Premium Surplus of Reserve Earnings Fixed AssetsBalance as at 1st July 2012 1,760,000,000 1,500,000,000 4,566,486,822 142,176,636 279,602,328 8,248,265,786 Net Profit/(Loss) during the year 483,197,638 483,197,638 Revaluation Surplus of Fixed Assets (137,054,038) 137,054,038 - Adjustment of Deferred Tax Liabilities up to 30.06.2012 (273,335,818) (273,335,818)Tax Holiday Reserve 60,068,176 60,068,176 Adjustment of "Sub-sidiary co. reserve" for new ratio 1,402,623 (35,805,225) (34,402,602)Minority Interest (66,049,292) (66,049,292)Issuance of Stock Dividend for 2011-2012 176,000,000 (176,000,000) - As at 30th June 2013 1,936,000,000 1,500,000,000 4,363,383,492 203,647,435 414,712,962 8,417,743,889




29

Annual Report 2014

MALEK SPINNING MILLS LIMITEDNOTES OF CONSOLIDATED FINANCIAL STATEMENT

FOR THE YEAR ENDED 30TH JUNE 20141. COMPANY AND ITS ACTIVITIES:Malek Spinning Mills Limited was incorporated as a Private Limited Company on 2nd November, 1989 under Companies Act 1913. It was converted into Public Ltd. Company in the year 2008. The share of the company is denominated from Tk.100/- to Tk.10/- per share as on 14th September, 2008. Its subsidiary companies are Salek Textile Limited, Newasia Synthetics Limited and J.M. Fabrics Limited. Titas Spinning & Denim Company Ltd. one of the subsidiary company has been Merged and Amalgamated with another subsidiary company Salek Textile Ltd. as per order of the Hon’ble High Court Division of the Supreme Court of Bangladesh dated 05.03.2014 in the Company Matter No. 248 of 2013. All of the companies are incorporated with registrar of joint stock companies and firms, Dhaka, except J.M. Fabrics Limited which is registered with RJSC Chittagong, Bangladesh under Companies Act 1994. Registered office of the Companies are at 117/A, Tejgaon I/A, Dhaka-1208, while Factories are situated at Shafipur, Kaliakoir, Bhawal Mirzapur, Gazipur & Mahna Bhabanipur, Gazipur respectively.2. NATURE OF BUSINESS: The Company has got the capacity of 63,624 spindles to spin high quality Cotton hosiery yarns by using modern machinery including state-of-the-art yarn testing laboratory. Annual production capacity of the company is 12,600,000 Kgs.3. SIGNIFICANT ACCOUNTING POLICIES:3.1 Basis of Accounting:

The financial statements of the company under reporting have been prepared under historical cost convention in a going concern concept and on accrual basis in accordance with generally accepted accounting principles and practice in Bangladesh in compliance with the Companies Act 1994, The Securities and Exchange Rules 1987, Listing Regulations of Dhaka Stock Exchange Ltd (DSE) & Chittagong Stock Exchange Ltd. (CSE) and International Accounting Standards (IAS) as adopted by the Institute of Chartered Accountants of Bangla-desh (ICAB), as Bangladesh Accounting Standard (BAS).

3.2 Principal Accounting Policies: Specific accounting policies were selected and applied by the company’s management for significant transactions and events that have a material effect within the framework of BAS-1 “Preparation of Financial Statement” in preparation and presentation financial statements. The previous year’s figures were presented according to the same accounting principles.

3.3 Basis of Consolidation:The consolidated financial statements incorporate the financial statements of the company and entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other member of the group.All intra group transaction, balances, income and expenses are eliminated in full on consolidation. Minority interests in the net assets of consolidated subsidiaries are identified separately from the group equity therein. These consolidate financial statements have been prepared in consolidation with the audited accounts of the company and the audited accounts of Salek Textile Limited, Newasia Synthetics Limited, J.M. Fabrics Limited and Titas Spinning & Denim Company Ltd. for the period ended June 30, 2014, according to the relevant IFRS or IAS.

3.4 Percentage of Holding on Subsidiary Company:Name of Company Total No. Shares Total Holding Percentage of HoldingSalek Textile Ltd. 48,26,087 47,25,970 97.925%Newasia Synthetics Ltd. 50,00,000 49,64,650 99.293%J.M. Fabrics Ltd. 40,00,000 39,99,900 99.998%

3.5 Application of Bangladesh Accounting Standards (BAS): The following BAS are applicable for the financial statements for the year under review BAS – 1 Presentation of Financial Statement BAS – 2 Inventories BAS – 7 Statement of Cash Flows BAS – 8 Accounting Policies, Changes in Accounting Estimates and Errors BAS – 10 Events after the Balance Sheet Date BAS – 12 Income Tax BAS – 16 Property, Plant & Equipment BAS – 17 Leases BAS – 18 Revenue BAS – 20 Accounting for Government Grants and Disclosure of Government Assistance BAS – 21 The effect of changes in Foreign Exchange rate BAS – 23 Borrowing Cost BAS – 24 Related Party Discloser BAS – 27 Consolidated Financial Statements and Accounting for Investment in Subsidiary BAS – 33 Earnings per share BAS – 37 Provisions, Contingent Liabilities and Contingent Assets BAS – 38 Intangible Assets

3.6 Recognition of Property, Plant & Equipment and Depreciation: Property, Plant & Equipment are stated at cost less accumulated depreciation in accordance with BAS-16 “Property, Plant & Equipment”. Cost represents cost of acquisition or construction and include purchase price and other directly attributable cost of bringing the assets to working conditions for its intended use, but do not include any capitalized borrowing cost. Revaluation of Land, Building, Plant & Machineries were made by registered renowned Company Asian Surveyors Ltd. as on 30.06.2012. Depreciation on all other fixed assets is computed using the reducing balance method in amount sufficient to write-off depreciable assets over their estimated useful life. Full year depreciation is charged at the year of purchase and none in the year of disposal. Expenditure for mainte-nance and repairs are expenses; major replacements, renewals and betterment are capitalized. The cost and accumulated depreciation of depreciable assets retired or otherwise disposed off are eliminated from the assets and accumulated depreciation and any gain or loss on such disposal is reflected in operations for the year.

The annual depreciation rates applicable to the principal categories are: Building 5% Plant & Machinery 7.5% Generator 10% Furniture & Fixture 10% Motor Vehicles 15% Office Equipments 15% Electrical Installation 15% Gas Line Installation 15% Fire Installation 15% Loose Tools 15%3.7 Inventories:

Inventories comprise of Raw Materials, Raw Materials in Transit, Work-In-Process, Finished Goods and Stores and Spare Parts. They are stated at the lower of cost or market or net realizable value in accordance with the Para of 21 & 25 of BAS-2 “Inventories” after making due allowance for any obsolete or slow moving item.

3.8 Trade Debtors: These are carried at original invoice amount, they are unsecured and considered good and collectible.3.9 Cash and Cash Equivalents:

According to BAS-7 ‘Cash flow Statements’ cash comprises of cash-in-hand and demand deposits. BAS-1 ‘Presentation of Financial Statements’ provides that cash and cash equivalents are not restricted in use. Considering the provisions of BAS-7 and BAS-1, Cash in hand and Bank balances have been considered as cash and cash equivalents

3.10 Creditors and Accruals: Liabilities are recognized for amounts to be paid in the future for goods and services received, whether or not billed by the supplier.3.11 Income Tax: Provision for Tax has been calculated 15% as per SRO No. 221-AIN/IT/2011 because of carry forward of loss for previous year. 3.12 Cash Flow Statement: Cash Flow Statement is prepared in accordance with BAS-7 under direct method as outlined in the “Securities and Exchange Rules 1987”.3.13 Risk and Uncertainties for use of Estimates in Preparation of Financial Statements:

The preparation of financial statements in conformity with the international accounting standards requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of affecting financial statements and revenues and expenses during the reported year. Actual results could differ from those estimates. Estimates are used for accounting of certain items such as long-term contracts; depreciation and employees benefit plans, taxes, reserves and contingencies.

3.14 Compliance with Local Laws: The financial statements have been prepared in compliance with requirements of the Companies Act 1994, Securities and Exchange Rules 1987 and other relevant local laws and rules.

3.15 Compliance with Bangladesh Accounting Standards:The financial statements have been prepared in compliance with requirement of BAS as adopted by The Institute of Chartered Accoun-tants of Bangladesh (ICAB) and applicable in Bangladesh.

3.16 Contingent Liabilities and Assets:Current or possible obligations or assets arising from past events and whose existence is due to the occurrence or non-occurrence of one or more uncertain events which are not within the control of the group.

3.17 Transaction with Related Parties: In the period under review the company has transactions with related party in the normal course of business. 3.18 Reporting Year: Financial statements of the company cover from 1st July 2013 to 30th June 2014.3.19 Reporting Currency and Level of Precision:

The figures in the financial statements represent Bangladesh Currency (Taka), which have been rounded off to the nearest Taka except where indicates otherwise.


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3.20 Comparative Information:Comparative information have been disclosed in respect of year June 2013 for all numerical information in the financial statements and also the narrative and descriptive information when it is relevant for understanding of the current years financial statements. Figures of the year 2013 have been rearranged whenever considered necessary to ensure comparability with the current year.

3.21 Foreign Currency Transaction: Transactions in foreign currencies are translated into Bangladeshi Taka at the Exchange rate prevailing on the date of transactions in accordance with BAS- 21 “The Effects of Changes in Foreign Exchange Rate.” Bank deposit in foreign currency has been translated into taka at the year end at the rate of exchange ruling on that date.

3.22 Revenue Recognition:The Company recognizes revenue when risk and rewards associated with ownership has been transferred to buyer, which satisfied all the condition for the revenue recognition as provided in BAS-18 ‘Revenue Recognition.’

3.23 Accounting for Government Grants and Disclosure of Government Assistance:Cash Incentive recognize as per BAS-20 as non-operating income.

3.24 Responsibility for Preparation and Presentation of Financial Statements:The Board of Directors is responsible for the preparation and presentation of Financial Statements under Section 183 of the Companies Act 1994 and as per the provision of ‘The Framework for the Preparation and Presentation of Financial Statements’ issued by the International Accounting Standards Board (IASB).

3.25 Components of the Financial Statements: According to the Bangladesh Accounting Standard BAS-1 ‘Presentation of Financial Statements’ the complete set of Financial Statements includes the following components:

i. Statement of Financial Position as at 30th June 2014. ii. Statement of Comprehensive Income for the period from 1st July 2013 to 30th June 2014. iii. Statement of Cash flows for the period from 1st July 2013 to 30th June 2014. iv. Statement of changes in Equity for the period from 1st July 2013 to 30th June 2014. v. Accounting Policies and Explanatory Notes.3.26 Earnings per Share:

Earnings per share (EPS) is calculated in accordance with the Bangladesh Accounting Standard BAS-33 “Earnings per share”. Basic Earnings per Share:

Basic Earnings per share is calculated by dividing the net profit or loss for the year attributable to ordinary shareholders by the number of ordinary shares outstanding during the year.

3.27 Share Premium:The balance in share premium account shall be utilized in accordance with provisions of the Companies Act 1994 and as directed by the Bangladesh Securities and Exchange Commission in this respect.

3.28 Lease Assets:In Compliance with the BAS-17, Leases, cost of assets acquired under finance lease along with related obligation has been accounted for as assets and liabilities respectively of the company.

3.29 Subsequent Disclosure of Events occurring after the Financial Position date:The status of the subsidiary company Salek Textile Limited has been converted from Private Limited Company to Public Limited Company on 23rd August 2014 and face value of per share of the Company also changed from Tk. 100.00 each to Tk. 10.00 each.

3.30 Impairment of Assets:The company reviews the recoverable amount of its assets at each reporting date. If there exist any indication that the carrying amount of assets exceeds the recoverable amount, the company recognizes such impairment loss in accordance with BAS-36 “Impairment of Assets”.

3.31 Credit Facility Not Availed:There was no credit facility available to the company under any contract, other than trade credit available in the ordinary course of business.

3.32 Segment Reporting:As there is a single business and geographic segment within the company operates as such no segment reporting is felt necessary.

3.33 General Comments & Observations: a. Previous year’s figures have been regrouped/reclassified wherever considered necessary to confirm to current year’s presentation.

Figures have been rounded off to the nearest taka, as the currency represented in this financial statement. b. All shares have been fully called and paid up. c. There was no preference share issued by the company. d. The company has not incurred any expenditure in foreign currency against royalties and technical fees. e. Auditors are paid only statutory audit fees. f. No foreign exchange remitted to the relevant shareholders during the year under audit. g. No amount of money was expended by the company for compensating any members of the Board for special service rendered. h. No brokerage was paid against sales during the year under audit. i. There was no bank guarantee issued by the company on behalf of directors.


3.34 Attendance Status of Board Meeting of Directors: During the year 2013-2014 nine Board Meetings were held. The attendance status of all the meetings is as follows:

Name of Directors Position Meeting Held Attended Mr. A.F.M Zubair Chairman 6 5 Mr. A. Matin Chowdhury Managing Director 6 6 Dr. Shamim Matin Chowdhury Director 6 6 Mr. Azizur Rahim Chowdhury Director 6 6 Ms. Saima Matin Chowdhury Director 6 5 Mr. Moshiur Rahman Director 6 6 Mr. M. Sekander Ali Independent Director 6 6 Md. Qamrul Huda Independent Director 6 6

3.35 Discloser as per requirement of Schedule XI, Part II of Company Act 1994 Employee Position for Malek Spinning Mills Ltd. (as per 30th June 2014)

Salary Range Officer & Staff Worker Total Employee Head Office Factory Below 3,000 - - - - Above 3,000 69 181 1299 1549 Total 69 181 1299 1549

Employee Position for Salek Textile Ltd. (as per 30th June 2014) Salary Range Officer & Staff Worker Total Employee Head Office Factory Below 3,000 - - - - Above 3,000 35 285 1205 1525 Total 35 285 1205 1525

Employee Position for J.M. Fabrics Limited (as per 30th June 2014) Salary Range Officer & Staff Worker Total Employee Head Office Factory Below 3,000 - - - - Above 3,000 40 423 3829 4292 Total 40 423 3829 4292 Discloser as per requirement of schedule XI, part II, Para 4 Payment to Directors (From 1ST July 2013 to 30th June 2014) Tk. 65,69,000

Discloser as per requirement of schedule XI, part II, Para 7 Detail of Production Capacity Utilization Particulars Licence Capacity Installed Capacity Actual Production Capacity Utilization 2013-2014 2013-2014 Annual Production Capacity Not Mentioned of Yarn in KG. in the Licence 1,26,00,000 1,06,40,598 84.45%

Discloser as per requirement of schedule XI, part II, Para 8 Value of Raw Cotton, Spare Parts, Packing Materials and Capital Machinery (BDT)

Particulars Local Purchase Import Total Purchase Consumed Raw Cotton - 2,381,138,212 2,381,138,212 2,274,035,501 Spare Parts - 42,094,007 42,094,007 45,364,174 Packing Materials 27,043,924 - 27,043,924 27,043,924 Capital goods - 34,933,578 34,933,578 -

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Annual Report 2014

MALEK SPINNING MILLS LIMITEDNOTES OF CONSOLIDATED FINANCIAL STATEMENT


Amount in Taka JUNE'14 JUNE'134. CONSOLIDATED FIXED ASSETS: Tk 8,398,494,042 COST: Cost as at 01.07.2013 6,489,168,774 5,871,770,901 Addition during the year 191,229,493 595,573,352 6,680,398,267 6,467,344,253 Sales/Adjustment during the year 10,009,400 3,626,117 Total Cost as at 30.06.2014 6,670,388,867 6,463,718,136

Accumulated Depreciation as at 01.07.2013 2,311,163,415 1,933,246,346 Adjustments during the year 2,912,895 2,582,885 Depreciation during the year 268,065,272 332,104,461 Total Depreciation as at 30.06.2014 2,576,315,792 2,262,767,922 Written Down Value as at 30.06.2014 4,094,073,075 4,200,950,214

REVALUATION: Revaluated Assets as at 01.07.2013 4,814,879,388 4,814,879,388 Addition of Revaluated Assets - - Total Revaluated Assets 4,814,879,388 4,814,879,388 Accumulated Depreciation as at 01.07.2013 400,056,551 248,392,566 Depreciation during the year 110,401,870 137,054,038 Total Depreciation 510,458,421 385,446,604 Written Down Value of Revaluated Assets as at 30.06.2014 4,304,420,967 4,429,432,784 Total Written Down Value as at 30.06.2014 8,398,494,042 8,630,382,998

Allocation of depreciation charges for the year has been made in the accounts as follows: Factory Overhead 368,257,662 459,802,152 Administrative Overhead 10,209,480 9,356,347 378,467,143 469,158,500 Note- Details of Fixed Assets and Depreciation are shown in the Annexure-1 5. CONSOLIDATED INVENTORIES : Tk. 3,375,478,913 Raw Materials 1,454,364,012 1,136,960,910 Stock-in-Transit 133,819,384 201,533,236 Work-in-Process 274,931,478 282,142,051 Finished Goods 1,354,057,196 1,230,201,094 Stores and Accessories 158,306,844 146,444,847 3,375,478,913 2,997,282,138 6. CONSOLIDATED ACCOUNTS RECEIVABLE : Tk 2,804,027,102 i) Malek Spinning Mills Limited 954,189,301 1,378,710,075 ii) Salek Textile Limited 1,532,995,661 1,087,306,811 iii) J.M. Fabrics Limited 316,842,140 274,408,888 iv) Titas Spinning & Denim Company Ltd. - 533,033,805 2,804,027,102 3,273,459,578

7. CONSOLIDATED ADVANCE, DEPOSIT & PRE-PAYMENTS: 293,622,098 Advance against construction materials, Suppliers & Others 107,073,910 146,786,659 Security Deposit on REB 487,195 178,875 Security Deposit on Titas Gas T&D Co. 24,462,211 24,150,911 Advance against Income Tax Note: 7-A 137,025,656 80,797,527 Security Deposit to CDBL 500,000 500,000 Advance to CEGIS(Centre Environment & Geographics) - 410,000 Advance to M/S Maznu Traders(For Land purchase) 73,073 73,073 Advance to M/S Maznu Traders(For Land Development) - 600,000 Advance against Office Rent 5,516,678 2,979,174 Security Deposit to United Leasing Co. Ltd. 101,887 101,887 Security Deposit against LC margin 14,701,340 6,461,814 Advance to Sharif & Brothers(Land Purchase-Ashugonj) 2,615,000 2,615,000 Advance to M/S MR Traders (Land purchase-Ashugonj) 1,065,148 - Advance to Shajadul Islam Bhuiyan (Advocate) - 50,000 Advance to Mr. Abdus Salam(Land) - 190,000 293,622,098 265,894,920 7-A. CONSOLIDATED ADVANCE INCOME TAX: 137,025,656 Opening Balance 80,797,527 34,325,203 Payment/Adjustment for prior year Income 12,759,062 7,096,325 Last year Balance after adjustment- 68,038,465 27,228,878 Advance Income Tax paid (Against Export Proceeds) 65,190,504 51,897,388 Advance Income Tax paid (Against Interest Income) 481,122 596,432 Advance Income Tax paid (Against Cash Incentive) 3,267,565 1,059,829 Advance Income Tax paid (Against Vehicle Fitness) 48,000 15,000 Total AIT paid for the year: 68,987,191 53,568,650 Total- 137,025,656 80,797,527


8. CONSOLIDATED CASH AND CASH EQUIVALENTS: Tk. 535,107,702 Cash in Hand at Head Office 1,923,353 1,105,468 Cash at Banks : AB Bank Ltd. STD A/C: 4005-767482-430 (MSML) 225,416 219,196 Brac Bank STD A/C: 150510 (Deposit with IPO) MSML 53,365 19,537,390 Brac Bank (Dividend) A/C: 150120 (MSML) 13,501,189 12,656,489 Citibank N.A CD A/C: G010000200558006(MSML) - 27,602 CITI Bank N.A A/C :G010000200622006 (STL) - 887,665 The City Bank Ltd.-CD A/c 383,324 934,076 The City Bank Ltd.-FBPAR A/c 147,192 5,603,447 The City Bank Ltd.-ERQ A/C 35,804,459 - Dhaka Bank Ltd A/C: 207.100.6276 (STL) 318,400 9,303,136 Dhaka Bank USD Margin A/C:0032 (STL) 778,287 1,634,334 Dhaka Bank Ltd A/C: 207.100.6643 (NSL) 1,082,627 1,178,702 Dhaka Bank Ltd. CD A/C: 207-175000000023 1,352,241 - Dhaka Bank Ltd. STD A/C: 207-150000000806 18,304,164 - Dhaka Bank Ltd.- Margin Account: (MSML) 21,546,504 6,053 Eastern Bank CD A/C: 5745 (NSL) 94,126 95,396 Eastern Bank Ltd.- Margin Account: USD (MSML) 25,460,635 24,048,926 Eastern Bank USD Margin A/C:0311738 (STL) - 3,527 Eastern Bank CD A/C: 01011060020990 (STL) 193,385 198,654 Eastern Bank FC A/C: (Deposit-NRB IPO) MSML 1,283,358 1,383,360 Eastern Bank STD A/C: BDT (Deposit IPO) MSML 24,622,938 23,347,020 HSBC Bank CD A/C: (NASL) 840,581 21,846,310 HSBC Bank CD A/C:001-007475-011 (MSML) - 838,490 HSBC Bank USD Margin A/C: 091 (STL) 24,088,206 4,373,642 HSBC Bank-Margin A/C:091 USD (MSML) 37,010,698 1,870,202 HSBC Bank-R.Q A/C:095 USD (MSML) 320,680 42,694 Islami Bank-CD A/C: 010049410(Titas) - 3,924,288 Islami Bank-Margin A/C: 58(Titas) 3,952 1,020,172 Islami Bank-Margin A/C: 59(Titas) 389,110 517,725 Islami Bank-FC A/C: 80 (USD)(Titas) 68,376 19,208,466 Islami Bank-FDR A/C: 228312(Titas) 10,392,138 10,283,668 Islami Bank-FDR A/C: 237211(Titas) 5,151,070 5,099,252 Islami Bank-FDR A/C: 3301(Titas) 1,092,024 1,000,000 Islami Bank-ERQ A/C: 71(Titas) 228,096 - One Bank Ltd CD A/C: 16426008 (MSML) 3,074,035 - One Bank- Margin Account : USD (MSML) 8,303,740 20,044,559 Shahjalal Islami Bank A/C: 11100000252 8 (MSML) 15,998 17,148 Trust Bank Ltd A/C: 0003-0210009816 (STL) 1,506,457 1,038,881 Trust Bank Ltd - Margin A/C: 5025000082(MSML) 42,735 873,659 Trust Bank Ltd - Margin A/C: 5025000028(STL) 368,266 367,789 Trust Bank Ltd.- CD A/C: (NSL) 541,733 543,233 Eastern Bank Limited FC- Margin-JM 83,486,134 1,264,614 Eastern Bank Ltd. CD A/C (JM)-64055 209,242 249,148 Eastern Bank Ltd. CD A/C (JM)- 44855 26,327,746 Eastern Bank Ltd. ERQ A/C-JM 1,784,014 - HSBC Ltd. CD A/c(JM) 43,430 8,646 HSBC Ltd.Margin A/c(JM) 19,108 20,112 UCBL- FC Margin-JM 182,585,883 113,356,761 UCBL- Banani Branch-JM 139,288 - UCBL- ERQ A/C, Banani Branch-JM - 399,551 533,184,349 309,273,983 535,107,702 310,379,451 9. CONSOLIDATED SHARE CAPITAL: Tk. 1,936,000,000 1,936,000,000 It represents 19,36,00,000 ordinary shares of Tk.10 each. 10. CONSOLIDATED SHARE PREMIUM: Tk. 1,500,000,000 1,500,000,000 It represents premium of 100,000,000 ordinary shares of Tk.15 each. 11. CONSOLIDATED RETAINED EARNINGS: Tk. 778,865,865 Balance as on 01.07.2013 414,712,962 279,602,328 Add: Net Profit/(Loss) during this period 443,974,551 483,197,638 858,687,512 762,799,966 Add: Depreciation of Reserve for Revaluation of Fixed Assets 110,401,870 137,054,038 Less: Declared Cash Dividend 193,600,000 - Less: Declared Stock Dividend - 176,000,000 Add: Adjustment Minority Interest of Retained Earnings 3,376,482 (35,805,225) Less: Deferred Tax for the period up to 30.06.2014 - 273,335,818 Total 778,865,865 414,712,962 12. CONSOLIDATED TAX HOLIDAY RESERVE: Tk. 210,883,871 Opening Balance 203,647,436 142,176,637 Add: Adjustment Minority Interest of Tax Holiday Reserve 746,005 1,402,623 Add: Provided during the year 6,490,430 60,068,176 Closing Balance 210,883,871 203,647,436 13. CONSOLIDATED RE-VALUATION SURPLUS OF FIXED ASSETS: Tk. 4,297,568,262 Particulars Balance as on 01.07.2013 4,363,383,492 4,566,486,822 Add: Addition of Revaluated Assets - - 4,363,383,492 4,566,486,822 Less: Depreciation for the year on Revaluated Assets 110,401,870 137,054,038 Written Down Value- 4,252,981,622 4,429,432,784 Add: Adjustment Minority Interest of revaluation surplus Assets 44,586,641 - Less: Adjustment Minority Interest of revaluation surplus Assets - 66,049,292 Net Revaluated Surplus Asset Value 4,297,568,262 4,363,383,492Note: Detail of Re-valuation Surplus of Fixed Assets is given in the annexed Annexure-1.1

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Annual Report 2014

14. MINORITY INTEREST: TK. 52,628,362 Paid-up Capital- (i) Salek Textile Ltd. 2.0745% 10,011,700 9,990,000 (ii) Newasia Synthetics Ltd. 0.7070% 3,535,000 3,535,000 (iii) J.M Fabrics Ltd. 0.0025% 10,000 10,000 (iv) Titas Spinning & Denim Ltd. 0.0263% - 100,000 Total: 13,556,700 13,635,000 Retained Earnings- i) Salek Textile Ltd. 2.0745% 13,181,852 13,043,688 (ii) Newasia Synthetics Ltd. 0.7070% (48,054) (103,427) (iii) J.M Fabrics Ltd. 0.0025% 4,844 3,130 (iv) Titas Spinning & Denim Ltd. 0.0263% - (86,266) Total: 13,138,642 12,857,125 Tax Holiday reserve- (i) Salek Textile Ltd. 2.0745% 4,470,368 5,216,374 Total: 4,470,368 5,216,374 Revaluation Surplus- (i) Salek Textile Ltd. 2.0745% 11,972,689 15,313,450 (ii) Newasia Synthetics Ltd. 0.7070% 9,485,468 50,608,057 (iii) J.M Fabrics Ltd. 0.0025% 4,494 4,575 (iv) Titas Spinning & Denim Ltd. 0.0263% - 123,210 Total: 21,462,651 66,049,292 Total Minority Interest: 52,628,362 97,757,791 Note: This represents minority interest of Salek Textile Limited, Newasia Synthetics Limited, J.M. Fabrics Limited15. CONSOLIDATED LONG TERM LOAN: Tk. 1,471,625,227 Eastern Bank Limited 646,681,206 696,735,845 Dhaka Bank Limited 479,558,805 568,394,851 Trust Bank Limited 82,867,623 161,817,545 HSBC Limited 43,750,000 95,210,153 Islami Bank-A/C:19009 284,126,099 315,492,961 Islami Bank-A/C:32408 26,881,378 29,456,358 Islami Bank-A/C:32206 10,554,554 11,579,656 Islami Bank-A/C:35411 1,908,301 2,197,719 Islami Bank-A/C:49214 180,278,261 195,779,578 The City Bank-A/C: 276,522,227 218,379,331 UCBL-A/C: 429,925,942 448,676,126 United Leasing Co. Ltd.: 115,491 1,041,579 2,463,169,887 2,744,761,701 Less: Current Portion of Long Term Loan Note: 18 991,544,660 896,799,650 1,471,625,227 1,847,962,051 16. DEFERRED TAX LIABILITIES: Tk. 244,607,277 Opening Balance as at 01.07.2013 258,809,431 273,335,818 Add: Provision for the year (14,202,154) (14,526,387) Add: Provision for 9 month(Titas Spinning) - - Total- 244,607,277 258,809,431 17. CONSOLIDATED SHORT TERM LOAN: Tk. 1,044,440,303 Import Loan: Eastern Bank Ltd (JM) 236,247,974 27,729,012 Islami Bank Ltd.(Titas) 308,594,071 252,418,000 One Bank Ltd (MSML) - 18,102,765 United Commercial Bank Ltd.(J.M) 147,942,104 988,531 The City Bank Ltd. JM) 80,170,990 14,987,892 772,955,138 314,226,200 Bank Overdraft: Eastern Bank Ltd A/C: 01012050000180 & 11 (MSML) 29,463,601 45,886,486 Eastern Bank Ltd A/C: 01012040000780 (STL) 6,447,921 12,971,509 Eastern Bank Ltd A/C:(J.M) - 38,750,767 Dhaka Bank Ltd A/C: 207.175.23 (MSML) - 29,676,943 The city Bank Ltd. A/C:(JM) 10,361,914 12,380,082 United Commercial Bank Ltd.(J.M) 43,483,381 125,117,087 Islami Bank Ltd. (Titas) 115,161,474 63,436,467 One Bank Ltd A/C: 16426 008 (MSML) - 8,643,536 TBL CD/OD A/C: 0210006613 (MSML) 8,199,148 31,149,697 HSBC OD A/C : 001-007475-011(MSML) 2,669,721 - HSBC A/C: 001-241389-011 (STL) 55,698,005 51,871,324 271,485,164 419,883,897 1,044,440,303 734,110,097 18. CONSOLIDATED CURRENT PORTION OF LONG TERM LOAN : Eastern Bank Ltd. 193,194,307 236,245,483 Dhaka Bank Ltd. 291,600,000 161,751,616 HSBC Ltd. 43,750,000 52,547,110 Islami Bank Bangladesh Ltd. 164,400,000 164,831,292 Trust Bank Ltd. 82,867,623 114,224,149 The City Bank Ltd. 104,221,539 42,400,000 UCBL 111,395,700 124,800,000 United Leasing Co. Ltd. 115,491 - 991,544,660 896,799,650

Note- According to Bangladesh Accounting Standard (BAS) 1 "Preparation of Financial Statements", Current portion of Long Term Loan that are due for settlement within twelve month after the balance sheet date are current liabilities, therefore, the above amount has been shown in current liabilities.

19. SECURITY DEPOSIT AGAINST SALES: - 5,000,000 20. CONSOLIDATED BANK ACCEPTANCE LIABILITIES: TK. 1,920,390,417 Raw Materials: Eastern Bank Limited 466,458,619 638,135,544 HSBC Ltd. 580,358,417 545,662,379 The City Bank Ltd. 14,067,896 19,892,980 Islami Bank Ltd. 244,294,836 395,023,537 UCBL 14,258,264 69,199,086 Dhaka Bank Limited 582,881,581 529,356,532 1,902,319,612 2,197,270,057 Machinery & Spare parts: Eastern Bank Ltd. 18,070,805 67,866,966 18,070,805 67,866,966 1,920,390,417 2,265,137,02321. CONSOLIDATED CREDITORS & ACCRUALS: Tk. 958,175,613 Gas Bill Payable 10,883,652 13,348,521 Electricity Bill Payable 114,084 1,625,334 Telephone Bill Payable 118,216 - Audit Fee Payable 227,675 269,475 Legal Fee Payable 10,000 10,000 Office Rent Payable 107,900 9,100 Tax Deduction at Source 3,500,968 9,310,335 VAT Payable 999,987 7,997,361 Income Tax Payable Note: 21-A 114,463,952 47,628,324 Salary & Wages Payable 63,166,303 48,185,641 Contribution to WPPF Payable 141,330,549 115,155,942 Director's Remuneration Payable 684,729 664,729 Accounts Payable for Goods Suppliers & Others 170,411,596 177,118,190 Accounts Payable for Waste Cotton Purchase 158,016,411 263,480,250 Accounts Payable against Sales 5,000,000 - Interest accrued Note: 21-B 248,122,969 245,723,703 Dividend Payable 27,975,881 10,336,505 Refundable IPO Share money 13,040,743 13,215,745 958,175,613 954,079,154 21-A. CONSOLIDATED TAX PAYABLE: Balance as on 01.07.2013 47,967,277 7,096,325 Provision for the year (Current Tax): Note: 28 79,594,690 47,628,324 Less: Adjustment Tax provision of Titas for 9 month 7,161,120 - 120,400,848 54,724,648 Payment/Adjustment for prior year balance: 5,936,896 7,096,325 Total Payment/Adjustment for last year Income: 5,936,896 7,096,325 Total Payable- 114,463,952 47,628,324 21-B. INTERST ACCRUED: Tk. 248,122,969 On Import Loan: Islami Bank Bangladesh Ltd. 36,731,195 34,501,134 36,731,195 34,501,134 On Long Term Loan: Islami Bank Bangladesh Ltd. 211,391,774 211,222,569 211,391,774 211,222,569 248,122,969 245,723,703 22. CONSOLIDATED SALES: Tk. 8,239,372,911 Export Sales 8,659,013,092 7,982,740,183 Less: Inter Co. Sales 419,640,180 244,870,305 8,239,372,911 7,737,869,878 23. CONSOLIDATED COST OF GOODS SOLD: Tk. 7,227,818,707 Raw Material Consumed Note: 23-A. 6,274,423,518 5,812,625,021 Direct Expenses Note: 23-B. 517,240,423 400,596,380 Factory Overhead Note: 23-C. 1,033,114,877 891,137,316 Total Manufacturing Cost 7,824,778,818 7,104,358,717 Work-in-Process- Opening 282,142,051 120,065,813 Cost of Goods available for use 8,106,920,869 7,224,424,530 Work-in-Process- Closing 309,939,981 282,142,051 Cost of Production 7,796,980,888 6,942,282,479 Finished Goods- Opening 1,230,201,094 1,098,952,517 Cost of Goods Available for Sales 9,027,181,982 8,041,234,996 Finished Goods- Closing 1,397,940,480 1,230,201,094 Finished Goods- Inter Company 419,640,180 244,870,305 Loss on Fire 18,217,385 - Cost of Goods Sold: 7,227,818,707 6,566,163,59823-A. CONSOLIDATED RAW MATERIALS CONSUMED: 5,778,961,148 Opening Inventory of Raw Materials 1,174,964,168 796,547,686 Add: Purchase of Raw Materials 6,058,360,992 6,153,038,244 Less: Closing Stock of Raw Materials 1,454,364,012 1,136,960,910 Raw Materials Consumption: 5,778,961,148 5,812,625,021 Raw Materials Consumption(Titas 9 month) 495,462,370 - Total Raw Materials Consumption: 6,274,423,518 5,812,625,021


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Annual Report 2014

23-B. CONSOLIDATED DIRECT EXPENSE: Tk. 517,240,423 Direct Wages/Labour 406,673,193 378,165,773 Overtime Wages 110,567,230 22,430,607 Total 517,240,423 400,596,380

23-C. CONSOLIDATED FACTORY OVERHEAD: Tk. 1,033,114,877 Factory Salary and Allowances 64,390,309 53,848,835 Festival Bonus 2,231,676 154,450 Electricity Charges 3,824,182 5,347,555 Gas Charges 140,749,513 127,648,099 Gardening Expenses 18,158 68,888 Repairs & Maintenance 92,962,333 47,474,819 Air Freight/Courier charges 33,077 1,906,500 Packing Materials 51,989,724 59,515,307 Fuel, Oil & Lubricant 30,222,629 35,667,242 Insurance Premium- Fire 11,795,657 11,312,775 Insurance Premium- (Group) 48,440 - Stores & Accessories consump. Note:23(C)-i 80,154,024 53,512,833 Entertainment 8,792,394 5,053,285 Telephone, Mobile & Fax 1,491,739 1,291,484 Stationery charges 2,186,339 1,474,237 Printing Charges 453,911 629,859 Other Carrying Charges 13,823,558 5,286,793 Others Factory Office Expenses 361,772 304,389 Dyeing, Printing, Washing, Embroidary, Finishing Exp. 53,594,957 4,504,920 C&F agent commission 6,280,086 4,279,200 Lab test & Inspection charges 20,029,522 2,012,365 Factory Rent 3,900,000 - Vehicles Maintenance 6,699,463 5,813,783 Medical Expenses 744,152 333,233 Uniform & Leverage 72,550 22,630 Miscellaneous 1,358,265 1,133,364 Conveyances 2,511,058 1,746,632 House Rent for Worker Shed 2,092,455 991,687 Depreciation Note: 1.1 430,302,934 459,802,152 1,033,114,877 891,137,316

23(C )-i. CONSOLIDATED CONSUMPTION OF STORES AND ACCESSORIES: Opening Stock of Stores and Accessories 123,749,259 99,736,903 Opening Stock of Stores and Accessories(from Titas) 15,658,089 - Add: Purchase during the year 82,661,774 100,220,777 Less: Closing Stock of Stores and Accessories 158,306,844 146,444,847 Stores and Accessories Consumed 63,762,278 53,512,833 Stores and Accessories Consumed(Titas 9 month) 16,391,746 - Total Stores and Accessories Consumed 80,154,024 53,512,833

24. CONSOLIDATED OPERATING EXPENSES : Tk. 143,548,543 Salaries & Allowances 42,341,468 35,501,191 Festival Bonus 6,892,042 4,184,270 Director's Remuneration 10,334,000 10,534,000 Fees, Forms & Others 7,425,481 5,275,962 Audit Fees 229,250 212,000 Printing & Stationery 2,545,490 1,345,841 Electricity Charges - 28,381 Telephone,Mobile & Internet Expenses 2,188,383 1,211,725 Postage & Stamp 427,173 229,708 Vehicle Maintenance 6,538,923 4,849,093 Miscellaneous Expenses 16,546,665 9,630,337 Business Development Exp. 8,687,212 7,176,890 Office Rent 2,314,488 1,362,504 Rates & Taxes 2,035,291 2,293,425 Carriage Outward, Selling & Distribution, C&F exp., Sample charges 12,059,825 8,990,130 Travelling & Conveyance 2,806,115 2,485,035 Entertainments 1,811,764 1,182,957 Office Expenses 275,332 72,878 Fuel & Oil for Head Office 287,570 461,788 Advertisement/ Publicity Expenses 723,511 463,061 AGM Expenses 2,377,808 2,278,896 Security Charges 459,200 405,525 Gardening Expenses 29,455 21,605 Uniform & Leverage Security 378,954 99,320 Repairs & Maintenance 2,232,422 1,221,819 Donation & Subscription 80,000 - Software Maintenance Expenditure 277,596 105,000 Trial and Operation Loss - 11,537,269 Credit Rating Charges 73,478 - Depreciation Note: 4 11,169,647 9,356,347 143,548,543 122,516,957


25. CONSOLIDATED FINANCIAL EXPENSES : Tk. 363,696,687 EASTERN BANK LTD. : Interest on Long Term Loan 21,979,667 41,088,461 Interest on Short Term Loan 4,371,470 1,545,921 Interest on Overdraft 6,862,168 6,517,184 Bank Charges & Commission 9,348,551 11,331,584 Export L/C Negotiation Commission 100,582 1,052,210 Interest on Bill Discount 1,850,053 11,627,013 TOTAL 44,512,491 73,162,372 HSBC LTD. : Interest on Long Term Loan 9,490,816 24,540,022 Interest on Short Term Loan 13,843,835 7,548,828 Interest on Overdraft 4,624,939 4,821,532 Bank Charges & Commission 8,189,966 4,214,764 Export L/C Negotiation Commission - 2,646,025 Interest on Bill Discount 27,233,458 39,929,660 TOTAL 63,383,014 83,700,830

DHAKA BANK LTD. : Interest on Long Term Loan 85,862,900 102,378,315 Interest on Short Term Loan 1,608,076 1,321,913 Interest on Overdraft 2,038,903 2,679,276 Bank Charges & Commission 5,617,080 1,470,168 Export L/C Negotiation Commission 147,104 - Interest on Bill Discount 4,496,252 14,203,854 TOTAL 99,770,315 122,053,527

ONE BANK LTD. : Interest on Short Term Loan 1,060,899 683,116 Interest on Overdraft 1,223,467 1,075,496 Bank Charges & Commission 1,170,234 199,289 Interest on Bill Discount - 2,543 TOTAL 3,454,599 1,960,445

TRUST BANK LTD. : Interest on Long Term Loan 18,610,078 32,215,559 Bank Charges & Commission 1,260,972 1,401,712 Interest on Overdraft 3,173,733 1,867,944 Interest on Bill Discount - 380,371 TOTAL 23,044,783 35,865,586 SHAHJALAL ISLAMI BANK LTD. : Bank Charges & Commission 1,150 1,150 TOTAL 1,150 1,150

CITIBANK N.A : Bank Charges & Commission 1,620 1,810 TOTAL 1,620 1,810

ISLAMI BANK BANGLADESH LTD.: Interest on Long Term Loan 81,901,624 64,567,452 Interest on Short Term Loan 23,620,197 43,876,908 Bank Charges & Commission 5,596,866 3,610,867 Export Bill Negotiation Commission 254,846 558,649 Interest on Bill Discount 9,484,310 6,827,060 TOTAL 120,857,843 119,440,936

UNITED LEASING CO./UTTARA FINANCE & INVENSTMENT LTD.: Interest on Lease Finance 92,783 240,416 TOTAL 92,783 240,416

AB BANK LTD :

Bank Charges & Commission 57,232 3,000 TOTAL 57,232 3,000

BRAC BANK LTD: Bank Charges and Commission 11,380 11,150 TOTAL 11,380 11,150

THE CITY BANK LTD.: Bank Charges and Commission 1,014,930 1,647,852 Interest on Long Term Loan 4,796,787 - TOTAL 5,811,717 1,647,852

UCBL: Interest on Term Loan 1,257,397 - Bank Charges & Commission 1,440,363 4,644,849 TOTAL 2,697,760 4,644,849 363,696,687 442,733,923

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Annual Report 2014

26. NON-OPERATING INCOME/(LOSS): Tk. 41,302,851 CASH INCENTIVE: 37,185,368 - OTHER INCOME/(LOSS): Interest Received from Dividend A/C with BRAC Bank Ltd. 1,010,529 947,853 Interest Received from Dividend A/C with Dhaka Bank Ltd. 730,492 - Interest Income from STD A/C with AB Bank Ltd. 4,383 8,576 Interest Income from STD A/C witth BRAC Bank Ltd. 746,055 1,326,482 Interest Income from STD A/C witth Eastern Bank Ltd. 1,507,854 1,884,236 Interest Received from CD A/C-Islami Bank - 440,005 3,999,314 4,607,153 Interest Received from Overdue Bill - 490,489 Foreign currency exchange Gain 393,674 - Gain on Sale of Assets 63,264 16,853 456,938 507,342 Less: Loss on Sale of Assets 338,769 56,827 338,769 56,827 Total Other Income- 4,117,483 5,057,668 Total 41,302,851 5,057,668 27. CONSOLIDATED PROVISION FOR WORKER'S PROFIT PARTICIPATION FUND: Provision for Contribution to WPPF(MSML) 12,473,497 12,457,900 Provision for Contribution to WPPF(STL) 8,104,203 10,792,322 Provision for Contribution to WPPF(JM) 3,940,365 3,498,363 Provision for Contribution to WPPF(TITAS) 1,656,543 2,480,699 26,174,608 29,229,285 28. CONSOLIDATED INCOME TAX PROVISION (CURRENT TAX): On operating Income: Malek Spinning Mills Ltd. 37,776,361 15,087,903 Salek Textile Ltd. 25,145,038 15,728,565 J.M Fabrics Ltd. 5,064,137 5,936,896 Titas Spinning & Denim Co. Ltd.( for 9 month) 7,161,120 10,686,869 75,146,656 47,440,234 On Cash Incentive: Malek Spinning Mills Ltd. 1,859,268 - J.M Fabrics Ltd. 1,408,297 - 3,267,565 - On other Income: Malek Spinning Mills Ltd. 1,180,469 23,088 Salek Textile Ltd. - 165,002 1,180,469 188,090 TOTAL 79,594,690 47,628,324

29. CONSOLIDATED INCOME TAX PROVISION (DEFERRED TAX): Malek Spinning Mills Ltd. (6,577,569) (6,395,612) Salek Textile Ltd. (5,402,104) (5,238,136) J.M Fabrics Ltd. (30,989) 352,134 Titas Spinning & Denim Co. Ltd. (2,191,492) (3,244,773) (14,202,154) (14,526,387)

30. CONSOLIDATED TAX HOLIDAY RESERVE: 6,490,430 Salek Textile Ltd. 97.9255% 6,490,430 60,068,176 6,490,430 60,068,176 31. MINORITY INTEREST: Tk. 3,579,700 On Net Profit/(Loss) after tax Salek Textile Ltd. 2.0745% 2,952,862 5,128,767 Newasia Synthetics Ltd. 0.7070% (28,668) (103,427) J.M. Fabrics Limited 0.0025% 1,809 1,592 Titas Spinning & Denim Co. Ltd. 0.0263% - 11,170 2,926,002 5,038,102 On Revaluation Reserve Salek Textile Ltd. 2.0745% 653,617 872,150 J.M. Fabrics Limited 0.0025% 80 88 Titas Spinning & Denim Co. Ltd. - 5,693 653,698 877,930 3,579,700 5,916,032 32. CONSOLIDATED BASIC EARNINGS PER SHARE (EPS): 2.33 (a) Consolidated Net Profit/(Loss) after tax for the year 454,044,681 549,181,846 (b) Consolidated Minority Interest for the year 3,579,700 5,916,032 Consolidated Net Profit/(Loss): (a-b) 450,464,981 543,265,814 (c) Number of total share 193,600,000 193,600,000 Basic Earnings per Share (EPS): [(a-b)/c] 2.33 2.81


MALEK SPINNING MILLS LIMITEDCONSOLIDATED FIXED ASSETS SCHEDULE AS AT 30TH JUNE 2014

ANNEXURE : 1

PARTICULARS COST RATE DEPRECIATION WRITTEN DOWN

SL AS AT ADDITION ADJUSTMENT AS AT AS AT THIS YEAR ADJUSTMENTS AS AT VALUE AS AT 01.07.2013 30.06.2014 01.07.2013 30.06.2014 30.06.2014A. Malek Spinning Mills Ltd., Salek Textile, Newasia Synthetics Ltd. & JM Fabrics Ltd. 1 Land and Land Development 728,669,681 29,526,153 - 758,195,834 - - - - 758,195,834 2 Factory Building 1,249,174,981 10,283,420 4,500,000 1,254,958,401 5% 352,322,400 39,890,706 - 392,213,106 862,745,295 3 Plant and Machinery 3,975,672,844 120,229,607 - 4,095,902,451 10% 1,685,733,807 191,679,118 - 1,877,412,925 2,218,489,526 4 Lease Assets(Plant and Machinery) 12,753,116 - - 12,753,116 10% 5,222,528 753,059 - 5,975,587 6,777,529 5 Electrical Installation 125,417,732 3,390,880 - 128,808,612 10%,15% 70,823,123 7,531,882 - 78,355,005 50,453,607 6 Tubewell and Water Pump 10,185,308 - - 10,185,308 10%,15% 5,589,775 505,669 - 6,095,444 4,089,864 7 Furniture and Fixtures 25,247,164 4,299,968 1,021,000 28,526,132 10% 6,369,288 2,088,599 - 8,457,888 20,068,245 8 Office Equipments 19,301,202 1,598,797 - 20,899,999 15% 8,968,715 1,613,354 - 10,582,069 10,317,930 9 Gas Line Installation 25,515,257 2,337,592 - 27,852,849 15% 12,853,892 2,214,360 - 15,068,253 12,784,596 10 Cargo Lift 4,679,223 - - 4,679,223 0% 467,922 421,130 - 889,052 3,790,171 11 Loose Tools and Equipment 14,731,875 623,166 - 15,355,041 15% 4,853,500 1,061,968 - 5,915,468 9,439,573 12 Motor Vehicle 60,062,797 18,905,000 4,488,400 74,479,397 15% 23,730,291 7,190,235 2,912,895 28,007,631 46,471,766 13 Telephone (PABX) Installation 790,975 - - 790,975 15% 418,131 28,029 - 446,160 344,815 14 Crockaries and Cutlaries 84,091 34,910 - 119,001 15% 52,059 10,041 - 62,100 56,901 15 Generator 236,629,429 - - 236,629,429 15% 133,562,555 13,068,471 - 146,631,026 89,998,403 16 Fire Installation 253,100 - - 253,100 15% 195,428 8,651 - 204,079 49,021 Total (A) 6,489,168,774 191,229,493 10,009,400 6,670,388,867 2,311,163,415 268,065,272 2,912,895 2,576,315,792 4,094,073,075

MALEK SPINNING MILLS LIMITED AND ITS SUBSIDIARIESCONSOLIDATED REVALUATED ASSETS SCHEDULE


PARTICULARS

COST RATE DEPRECIATION WRITTEN DOWN AS AT ADDITION ADJUSTMENT AS AT AS AT THIS YEAR ADJUSTMENTS AS AT VALUE AS AT

Sl 01.07.2013 30.06.2014 01.07.2013 30.06.2014 30.06.2014B. REVALUATION OF FIXED ASSETS : 1 Land and Land Development 2,859,354,760 - - 2,859,354,760 - - - - - 2,859,354,760 2 Factory Building 348,907,426 - - 348,907,426 5% 43,487,981 15,116,084 - 58,604,066 290,303,361 3 Plant and Machinery 1,448,886,907 - - 1,448,886,907 7.5% 317,864,187 82,295,891 - 400,160,078 1,048,726,829 4 Generator 157,730,295 - - 157,730,295 10% 38,704,383 12,989,895 - 51,694,278 106,036,017 Total (B) 4,814,879,388 - - 4,814,879,388 - 400,056,551 110,401,870 - 510,458,421 4,304,420,967 GRAND TOTAL ( A+B ) 11,304,048,162 191,229,493 10,009,400 11,485,268,255 2,711,219,966 378,467,142 2,912,895 3,086,774,213 8,398,494,042 Depreciation Charges to:

Factory Overhead: 368,257,662 Operating Expenses: 10,209,480 Tk. 378,467,143

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Annual Report 2014

Malek Siddiqui Wali CHARTERED ACCOUNTANTS 9-G, MOTIJHEEL, C/A, Dhaka-1000, Bangladesh


Malek Spinning Mills Limited

We have audited the accompanying Statement of Financial Position of Malek Spinning Mills Limited as at 30th June 2014 and the related Statement of Comprehensive Income, Statement of Cash Flow, Statement of Change in Equity and Notes for the period from 1st July 2013 to 30th June 2014.

Management’s Responsibility for the Financial Statements:The Management is responsible for the preparation and fair presentation of these financial statements is accordance with Bangla-desh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), the companies Act 1994 and other applicable laws and regulation and for such internal control as management determines is necessary to enable the prepatation of financial statements that are free from material misstatement, where due to fraud or error.

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

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


Opinion:In our opinion, the financial statements prepared in accordance with Bangladesh Accounting Standard/Bangladesh Financial Report-ing Standards (BFRS), give a true and fair view of the state of the company’s affairs as of 30th June 2014 and of the results of its operations and its cash flows for the period then ended and comply with the Companies Act 1994 and other applicable laws and regulations.


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




Dated : Dhaka Malek Siddiqui WaliOctober 27, 2014 Chartered Accountants


MALEK SPINNING MILLS LIMITEDSTATEMENT OF FINANCIAL POSITION


Notes JUNE'14 JUNE'13 Taka TakaASSETS :Non-Current Assets: 4,069,874,426 4,150,061,479 Property, Plant and Equipment 1.1 2,403,509,426 2,483,696,479 Investment in Subsidiary Company 2.1 1,666,365,000 1,260,080,000 Share Money Deposit to Subsidiary Company 3.1 - 406,285,000

Current Assets : 3,043,633,395 3,353,938,944 Inventories 4.1 1,620,225,789 1,518,380,701 Accounts Receivable 5.1 1,152,092,612 1,378,710,075 Advances, Deposits and Pre-payments 6.1 116,017,297 351,755,380 Cash and Cash Equivalents 7.1 155,297,696 105,092,788

TOTAL ASSETS : 7,113,507,820 7,504,000,423

SHAREHOLDER'S EQUITY AND LIABILITIES : Shareholder's Equity : 5,483,097,155 5,461,465,752 Share Capital 8.1 1,936,000,000 1,936,000,000 Share Premium 9.1 1,500,000,000 1,500,000,000 Retained Earnings 10.1 294,827,434 202,019,642 Re-valuation Surplus of Fixed Assets 11.1 1,752,269,720 1,823,446,110

Non-Current Liabilities: 225,216,480 276,329,500 Long Term Loan 12.1 56,213,179 100,748,630 Deferred Tax Liabilities 13.1 169,003,301 175,580,870

Current Liabilities : 1,405,194,186 1,766,205,171 Short Term Loan 14.1 40,332,469 133,459,426 Current Portion of Long Term Loan 15.1 165,616,966 269,050,030 Bank Acceptance Liabilities 16.1 973,348,689 1,223,532,143 Creditors and Accruals 17.1 225,896,061 140,163,572


Net Assets Value Per Share (NAV) 28.32 28.21 Par Value Tk.10 The annexed notes 1.1 to 27.1 form an integral part of these financial statement.




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Annual Report 2014

MALEK SPINNING MILLS LIMITEDSTATEMENT OF COMPREHENSIVE INCOME


Notes JUNE'14 JUNE'13 Taka Taka Sales 18.1 3,065,012,791 3,262,553,013 Cost of Goods Sold 19.1 2,669,542,115 2,742,089,807Gross Profit/(Loss) : 395,470,676 520,463,206

Operating Expenses 20.1 67,516,947 63,220,782 Financial Expenses 21.1 107,488,284 200,244,180 Operating Profit/(Loss) : 220,465,446 256,998,244

Non-operating Income/(Loss) 22.1 41,477,984 4,617,663 Net Operating Profit/(Loss) : 261,943,429 261,615,907

Provision for Contribution to WPPF 23.1 12,473,497 12,457,900 Profit/(Loss) before Tax : 249,469,933 249,158,007

Provision for Income Tax : 34,238,530 8,715,379 Current Tax 24.1 40,816,099 15,110,991 Deferred Tax 25.1 (6,577,569) (6,395,612)Net Profit/(Loss) after tax for this year 215,231,403 240,442,628 (Transferred to the Statement of Changes in Equity) Earnings Per Share (EPS) 26.1 1.11 1.24 Par Value Tk.10 Number of Shares used to compute EPS 193,600,000 193,600,000

The annexed notes 1.1 to 27.1 form an integral part of these financial statement.





MALEK SPINNING MILLS LIMITED STATEMENT OF CASH FLOWS


JUNE'14 JUNE'13 Taka TakaCASH FLOW FROM OPERATING ACTIVITIES : Collection from Turnover & Accounts Receivable 3,291,630,253 3,017,580,540 Payment for Raw Materials, Indirect Materials and other expenses (2,625,122,472) (2,479,523,748)Non-operating Income/(Loss) 41,441,020 4,617,663 Payment for Operating Expenses (64,680,408) (60,645,930)Payment for Income Tax (28,733,050) - Payment for Financial Expenses (107,488,284) (200,244,180)Net Cash provided/(used) by Operating Activities 507,047,059 281,784,345 CASH FLOW FROM INVESTING ACTIVITIES : Acquisition of Fixed Assets (40,011,053) (70,786,630)Disposal of Fixed Assets 400,000 1,043,232 Share Money Deposit to Subsidiary Company - 6,665,000 Investment to Subsidiary Company - (826,673,100)Net cash used in Investing Activities (39,611,053) (889,751,498) CASH FLOW FROM FINANCING ACTIVITIES : Bank Loan Increase/(Decrease) (241,095,472) (815,130,190)Refundable IPO Share Money paid (175,002) (325,001)Dividend Paid (175,960,624) (32,408)Advance realised - 1,369,258,860 Net Cash provided/(used) by Financing Activities (417,231,098) 553,771,261 Increase/(Decrease) in Cash and Cash Equivalents 50,204,908 (54,195,892) Cash & Cash Equivalents at 1st July 2013 105,092,788 159,288,680 Cash and Cash Equivalents at 30th June 2014 155,297,696 105,092,788 Net Operating Cash Flow Per Share (NOCFPS) 2.62 1.46 Par Value Tk.10 A. Matin Chowdhury Azizur Rahim Chowdhury B.K. Chaki Syed Saiful Haque Managing Director Director Chief Financial Officer Company Secretary



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Annual Report 2014

MALEK SPINNING MILLS LIMITED STATEMENT OF CHANGES IN EQUITY


Particulars Share Share Revaluation Surplus Retained Total Capital Premium of Fixed Assets EarningsBalance as at 1st July 2013 1,936,000,000 1,500,000,000 1,823,446,110 202,019,642 5,461,465,752 Net Profit/(Loss) during the year - 215,231,403 215,231,403 Adjustment of Revaluation surplus of Fixed Assets (71,176,390) 71,176,390 - Issuance of Cash Dividend for 2012-2013 (193,600,000) (193,600,000)As at 30th June 2014 1,936,000,000 1,500,000,000 1,752,269,720 294,827,434 5,483,097,155

FOR THE YEAR ENDED 30TH JUNE 2013 Particulars Share Share Revaluation Surplus Retained Total Capital Premium of Fixed Assets EarningsBalance as at 1st July 2012 1,760,000,000 1,500,000,000 1,900,426,080 242,573,526 5,402,999,606 Net Profit during the year 240,442,628 240,442,628 Adjustment of Revaluation surplus of Fixed Assets (76,979,970) 76,979,970 - Adjustment of Deferred Tax Liabilities up to 30.06.2012 (181,976,482) (181,976,482)Issuance of Stock Dividend for 2011-2012 176,000,000 (176,000,000) - As at 30th June 2013 1,936,000,000 1,500,000,000 1,823,446,110 202,019,642 5,461,465,752





MALEK SPINNING MILLS LIMITED NOTES OF FINANCIAL STATEMENT


Amount in Taka JUNE'14 JUNE'13 1.1 FIXED ASSETS: Tk. 2,403,509,426 COST: Cost as at 01.07.2013 1,890,598,036 1,823,437,523 Addition during the year 40,011,053 70,786,630 1,930,609,089 1,894,224,153 Sales/Adjustment during the year 1,567,400 3,626,117 Total Cost as at 30.06.2014 1,929,041,689 1,890,598,036 Accumulated Depreciation as at 01.07.2013 1,230,347,666 1,183,383,213 Depreciation during the year 48,658,681 49,547,338 Adjustments during the year 1,204,364 2,582,885 Total Depreciation as at 30.06.2014 1,277,801,983 1,230,347,666 Written Down Value as at 30.06.2014 651,239,706 660,250,369 - REVALUATION: Revaluated Assets as at 01.07.2013 2,148,818,646 2,148,818,646 Addition of Revaluated Assets - - Total Revaluated Assets 2,148,818,646 2,148,818,646 Accumulated Depreciation as at 01.07.2013 325,372,536 248,392,566 Depreciation during the year 71,176,390 76,979,970 Total Depreciation 396,548,926 325,372,536 Written Down Value of Revaluated Assets as at 30.06.2014 1,752,269,720 1,823,446,110 Total Written Down Value as at 30.06.2014 2,403,509,426 2,483,696,479

Allocation of depreciation charges for the period has been made in the accounts as follows: i) Factory Overhead 116,998,532 123,952,456 ii) Administrative Overhead 2,836,539 2,574,852 Total 119,835,071 126,527,308 Note- Details of Fixed Assets and Depreciation are shown in the Annexure- 1.1

2.1 INVESTMENT IN SUBSIDIARY COMPANY : Tk. 1,666,365,000 Salek Textile Limited 769,910,000 390,010,000 Newasia Synthetics Limited (49,64,650 Shares of Tk.100/- each) 496,465,000 90,180,000 J.M. Fabrics Limited (39,99,900 Shares of Tk.100/- each) 399,990,000 399,990,000 Titas Spinning & Denim Co. Ltd. - 379,900,000 1,666,365,000 1,260,080,000

Note- Salek Textile Ltd. issued 39,00,100 Shares @Tk,100 and 8,25,870 Share of Tk.460 each including Primium Tk.360

3.1 SHARE MONEY DEPOSIT TO SUBSIDIARY COMPANY: Tk. 0 Newasia Synthetics Ltd. - 406,285,000 - 406,285,000 Note- Share money deposit of Newasia Synthetics Ltd. 40,62,850 @Tk. 100 has been issued as paid up capital in this period.

4.1 INVENTORIES: Tk. 1,620,225,789 Raw Materials Note: 4.1-A 720,627,561 613,524,850 Stock-in-Transit Note: 4.1-B 62,433,043 131,026,938 Work-in-Process Note: 4.1-C 51,406,004 47,604,120 Finished Goods Note: 4.1-D 687,474,926 624,670,370 Stores and Accessories Note: 4.1-E 98,284,256 101,554,423 Total 1,620,225,789 1,518,380,701

Note- (i) Inventory of Raw Materials at the end of the year are equivalent to aprox. 120 days consumption based on current year's Raw Materials consumption.

(ii) A team, consisting of Auditors and Management staff, carried out physical verification of the inventories as of June 30, 2014. (iii) Inventories were hyphothecated to Dhaka Bank Ltd., HSBC Ltd., Eastern Bank Ltd., Trust Bank Ltd. and One Bank Ltd as security

of workings capital loan.

4.1-A RAW MATERIALS : Tk. 720,627,561 Raw Cotton USA 568,299,714 535,194,294 Raw Cotton Indian 152,327,847 78,330,556 Total 720,627,561 613,524,850

4.1-B STOCK IN TRANSIT : Tk. 62,433,043 Raw Material 62,433,043 131,026,938 Total 62,433,043 131,026,938

4.1-C WORK-IN-PROCESS : Tk. 51,406,004 Direct Materials 49,167,404 45,555,711 Direct Labour 767,130 701,955 Factory Overhead 1,471,470 1,346,454 Total 51,406,004 47,604,120

4.1-D FINISHED GOODS INVENTORY:Tk. 687,474,926 624,670,370

4.1-E STORES & ACCESSORIES: Tk. 98,284,256 Spare Parts & Accessories 98,284,256 101,554,423 98,284,256 101,554,423

47

Annual Report 2014

5.1 ACCOUNTS RECEIVABLE: Tk. 1,152,092,612 1,378,710,075 Note: (i) A/C Receivable occurred in the ordinary course of business. (ii) The A/C Receivable are secured against confirmed Export L/C (Deferred period is 120 days). (iii) Aging of the Receivables: Below 120 Days: Tk. 974,041,504 Above 120 Days: Tk. 178,051,108

(iv)Receivable from other company:Tk. 819,973,825 (v) Receivable from related party:- Knit Asia Limited: Tk. 111,251,722 Salek Textile Ltd.: Tk. 111,761,582 J.M. Fabrics Ltd.: Tk. 109,105,483 6.1 ADVANCES, DEPOSITS & PRE-PAYMENTS: Tk. 116,017,297 Advance against construction materials, suppliers and others 30,104,384 46,431,130 Advance to Salek Textile Ltd. - 154,962,662 Advance to Newasia Synthatics Ltd. 1,000,000 - Advance to J.M Fabrics Ltd. - 86,141,729 Advance to Titas Spinning & Denim Co. Ltd. - 7,040,000 Advance against Office Rent 1,166,678 2,166,674 Security Deposit to United Leasing Co. Ltd. 101,887 101,887 Security Deposit on REB 178,875 178,875 Security Deposit on Titas Gas T&D Co. 7,038,761 7,038,761 Advance Income Tax Note: 6.1-A 75,926,712 47,193,662 Security Deposit to CDBL 500,000 500,000 116,017,297 351,755,380 a) All the advances & deposits amount is considered good and recoverable.b) In the opinion of Directors, all current assets, investments, loans and advance have, on realization in the ordinary course of business,

a value at least equal to the amount at which they are stated in the Financial Position. c) There is no agreement amount due from Directors or officers of the Company.d) Advance against construction materials, supplies and others various party for construction materials, supplies and other

Indirect materials procurement. e) Partial advance given to Subsidiary Co. shall be realised in future.

6.1-A. ADVANCE INCOME TAX: Tk. 75,926,712 Opening Balance 47,193,662 20,984,551 Payment/Adjustment for prior year Income - - Last year Balance after adjustment- 47,193,662 20,984,551 Advance Income Tax paid (Against Export Proceeds) 26,362,660 25,678,679 Advance Income Tax paid (Against Cash Incentive) 1,859,268 - Advance Income Tax paid (Against Vehicle Fitness) 30,000 - Advance Income Tax paid (Against Interest Income) 481,122 530,432 Total AIT paid for the year: 28,733,050 26,209,111 Total- 75,926,712 47,193,662

7.1 CASH AND CASH EQUIVALENTS: Tk. 155,297,696 Cash in Hand at Head Office: 180,000 180,000 Cash at Banks: AB Bank Ltd.-STD Account: 4005-767482-430 225,416 219,196 BRAC Bank STD A/C: 1505-101-762043001 53,365 19,537,390 BRAC Bank CD A/C: 1501-201-762043001 (Dividend) 13,501,189 12,656,489 Citibank N.A CD A/C: G010000200558006 - 27,602 Dhaka Bank Ltd. CD A/C: 207-175000000023 1,352,241 - Dhaka Bank Ltd. STD A/C: 207-150000000806 (Dividend) 18,304,164 - Dhaka Bank Ltd. Margin A/C: 207-130000000013: US$ 2,79,099.79 21,546,504 6,053 Eastern Bank Ltd.-Margin A/C: 101-0100611: US$ 3,29,800.97 25,460,635 24,048,926 Eastern Bank Ltd.-FC A/C: (NRB IPO) 1,283,358 1,383,360 Eastern Bank Ltd.-STD A/C 101-1230000068: BDT-(IPO) 24,622,938 23,347,020 HSBC Ltd.-Margin A/C 001-007475-091: US$ 4,79,413.19 37,010,698 1,870,202 HSBC Ltd.-R.Q A/C 001-007475-095 320,680 42,694 HSBC Ltd.-CD A/C: 001-007475-011 - 838,490 One Bank Ltd.- CD A/C: 0010016426008 3,074,035 - One Bank Ltd.- Margin A/C: 0016426-091,US$ 1,07,561.40 8,303,740 20,044,559 Shahjalal Islami Bank Ltd.-CD A/C: 4005 1110000252 8 15,998 17,148 Trust Bank Ltd.-Margin A/C 003-5025000082: $553.56 42,735 873,659 155,117,696 104,912,788 155,297,696 105,092,788

Note: a) Cash balance is physically verified and Bank balances are reconciled and found in order. b) Export proceeds are realised in the Margin A/C and is utilized for Payment of Deferred L/C Payment for Raw Cotton.

8.1 SHARE CAPITAL : Tk. 1,936,000,000

AUTHORISED CAPITAL: Tk. 3,000,000,000 2,000,000,000 300,000,000 Shares @ Tk. 10/- each Authorized Capital has been increased from Tk. 200 crore to Tk. 300 crore as on 24.12.2013

ISSUED, SUBSCRIBED AND PAID-UP CAPITAL: Tk. 1,936,000,000 1,936,000,000 19,36,00,000 Ordinary Shares @ Tk.10/- each issued and paid-up.


Share Holding Composition of Malek Spinning Mills Ltd. as at 30.06.2014 are as follows:

SL Shareholder's Group No. of Shares held % of Shares No. of Shareholders1 Sponsors & Directors 84,700,000 43.75% 72 Institutions 44,255,375 22.86% 2763 Foreign Shareholders - 0.00% 04 General Public 64,644,625 33.39% 27254 Total 193,600,000 100% 27,537

Classification of shareholders by holdingDistribution schedule of each class of equity security setting out the number of holders and percentage as at 30.06.2014SL Range of Holdings No. of Holders Holdings Percentage1 Less than 500 shares 6,647 832,005 0.43%2 500 to 5,000 shares 18,965 20,210,861 10.44%3 5,001 to 10,000 shares 925 6,705,220 3.46%4 10,001 to 20,000 shares 487 7,005,585 3.62%5 20,001 to 30,000 shars 154 3,782,734 1.95%6 30,001 to 40,000 shares 90 3,090,095 1.60%7 40,001 to 50,000 shares 45 2,067,675 1.07%8 50,001 to 100,000 shares 102 7,330,775 3.79%9 100,001 to 1,000,000 shares 99 26,025,980 13.44%10 Over 1,000,000 shares 23 116,549,070 60.20% Total 27,537 193,600,000 100% 9.1 SHARE PREMIUM: 1,500,000,000 150,000,000 This represents issuance of 10,000,000 ordinary shares in September 2008 for Tk.25 each including premium of Tk. 15/- each in compliance with The Securities and Exchange Commission (SEC) consent No.SEC/CI/CPLC (PVT.)-95/06/337 dated on 30.06.2008 and further Placement issuance of 50,000,000 ordinary shares October 2009 for Tk.25/- each including premium of Tk.15 each in compliance with The Securities and Exchange Commission (SEC) consent No. SEC/CI/CPLC(PVT.)-95/dated on June 03, 2009 and further issuance of IPO of 4,00,00,000 ordinary shares on July 2010 for Tk. 25/- each including Premium of Tk. 15/- each in compliance with the Securities and Exchange Commission (SEC) consent No. SEC/CI/IPO-118/2010/462 dated April 15, 2010.

10.1 RETAINED EARINGS: Tk. 294,827,434 Balance as on 01.07.2013 202,019,642 242,573,526 Add: Net Profit/(Loss) for the year 215,231,403 240,442,628 417,251,045 483,016,154 Add: Depreciation of Reserve for Revaluation of Fixed Assets 71,176,390 76,979,970 Less: Declared Cash Dividend 193,600,000 - Less: Declared Stock Dividend - 176,000,000 Less: Deferred Tax for the period up to 30.06.2014 - 181,976,482 294,827,434 202,019,642

11.1 RE-VALUATION SURPLUS OF FIXED ASSETS: Tk. 1,752,269,720 Balance as on 01.07.2013 1,823,446,110 1,900,426,080 Less: Depreciation for the year on Revaluated Assets 71,176,390 76,979,970 Written Down Value as at 30.06.2014 1,752,269,720 1,823,446,110

Note: Details of Re-valuation Surplus of Fixed Assets is given in the Annexure-1 12.1 LONG TERM LOAN: Tk. 56,213,179 Eastern Bank Limited 95,097,031 113,189,536 HSBC Limited 43,750,000 93,750,000 Trust Bank Limited 82,867,623 161,817,545 United Leasing Co. Ltd. 115,491 1,041,579 Total 221,830,145 369,798,660 Less: Current Portion of Long Term Loan Note: 15.1 165,616,966 269,050,030 56,213,179 100,748,630 13.1 DEFERRED TAX LIABILITIES: Tk. 169,003,301 Opening Balance as on 01.07.2013 175,580,870 181,976,482 Add: Provision for the year (6,577,569) (6,395,612) Total Liabilities: 169,003,301 175,580,870 Deferred Tax Calculation: Accounts Base Tax Base Difference Written Down Value 651,239,706 430,801,928 220,437,778 Revaluation Surplus of Fixed Assets (without land) 906,250,896 - 906,250,896 Total 1,557,490,602 430,801,928 1,126,688,674 Deferred Tax @ 15% 169,003,301

14.1 SHORT TERM LOAN : Tk. 40,332,469 Import Loan: One Bank Ltd. - 18,102,765 - 18,102,765 Bank Overdraft: Eastern Bank Ltd A/C:180 & 011 29,463,601 45,886,486 Dhaka Bank Ltd OD A/C: 207.175.23 - 29,676,943 One Bank Ltd OD A/C: 0010016426008 - 8,643,536 HSBC OD A/C: 001-007475-011 2,669,721 - TBL OD A/C:003- 0210006613 8,199,148 31,149,697 40,332,469 115,356,661 40,332,469 133,459,426 Note: The above Import Loan and Overdraft loans are secured against hypothecation of Stocks and Book Debts.

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Annual Report 2014

15.1 CURRENT PORTION OF LONG TERM LOAN: Tk. 165,616,966 Eastern Bank Limited 38,883,852 103,738,923 HSBC Limited 43,750,000 51,086,957 Trust Bank Limited 82,867,623 114,224,149 United Leasing Co. Ltd. 115,491 - Total 165,616,966 269,050,030 16.1 BANK ACCEPTANCE LIABILITIES: 973,348,689 Raw Cotton: Eastern Bank Limited 112,348,163 450,948,160 Dhaka Bank Limited 262,571,305 427,356,316 HSBC Limited 580,358,417 277,360,701 = 955,277,884 1,155,665,177 Machinery: Eastern Bank Limited 18,070,805 67,866,966 18,070,805 67,866,966 973,348,689 1,223,532,143 Note: Acceptance liability represents the deferred payment of L/C for Imported Raw Materials for the period of 180 Days.

17.1 CREDITORS AND ACCRUALS: Tk. 225,896,061 Gas Bill Payable 4,598,669 3,984,637 Electricity Bill Payable 114,084 1,625,334 Audit Fees Payable 86,250 86,250 Office Rent Payable 98,800 - Salary & Wages Payable 12,121,298 12,441,108 Tax Deduction at Source Payable 558,559 436,339 VAT Payable 395,716 318,313 Income Tax Payable Note: 17.1-A 55,927,090 15,110,991 Contribution to WPPF Payable 81,997,337 69,523,840 Directors Remuneration Payable 435,146 415,146 Accounts Payable for Goods Supplies & Others 28,546,489 12,669,364 Dividend Payable 27,975,881 10,336,505 Refundable IPO Share money Note: 17.1-B 13,040,743 13,215,745 225,896,061 140,163,572

a) Accounts Payable for Goods Supplies and others represents regular suppliers of packing materials, ball-bearing, belts, fuel & lubricants, stationary items and others.

b) Factory Salary and Wages payable for the month of 30th June 2014 c) We observed that the WPPF has not been paid to the beneficiaries/employees or invested outside the business for earning profit as

specified in the companies WPPF & WF Act, 1968. However, the management agreed to settle this issue soon.

17.1-A. INCOME TAX PAYABLE: Balance as on 01.07.2013 15,110,991 - Provision for this year (Current Tax): Note: 24.1 40,816,099 15,110,991 Total Payable- 55,927,090 15,110,991

17.1-B. REFUNDABLE IPO SHARE MONEY: Eastern Bank FC A/C: (Deposit- NRB IPO) 1,283,358 1,383,360 Eastern Bank STD A/C: BDT (Deposit IPO) 11,757,385 11,832,385 Total- 13,040,743 13,215,745

18.1 SALES: Tk. 3,065,012,791 Export Sales 3,065,012,791 3,262,553,013

19.1 COST OF GOODS SOLD: Tk. 2,669,542,115 Raw Material Consumed Note: 19.1-(A) 2,274,035,501 2,283,725,885 Direct Expenses Note: 19.1-(B) 103,170,644 88,277,847 Factory Overhead Note: 19.1-(C). 358,942,409 321,394,214 Total Manufacturing Cost 2,736,148,554 2,693,397,946 Work-in-Process- Opening 47,604,120 55,970,825 Cost of Goods available for use 2,783,752,674 2,749,368,770 Work-in-Process- Closing 51,406,004 47,604,120 Cost of Production 2,732,346,671 2,701,764,650 Finished Goods- Opening 624,670,370 664,995,527 Cost of Goods Available for Sales 3,357,017,041 3,366,760,177 Finished Goods- Closing 687,474,926 624,670,370 Cost of Goods Sold: 2,669,542,115 2,742,089,807 19.1-(A) RAW MATERIALS CONSUMED: 2,274,035,501 Opening Inventory Raw Materials 613,524,850 556,287,808 Add: Purchase during the year 2,381,138,212 2,340,962,928 Less: Closing Inventory of Raw Materials 720,627,561 613,524,850 Raw Materials Consumed 2,274,035,501 2,283,725,885

19.1-(B) DIRECT EXPENSES: TK.103,170,644 Direct Labour/Wages 99,685,431 84,336,034 Overtime Wages 3,485,213 3,941,813 103,170,644 88,277,847 19.1-(C) FACTORY OVERHEAD: Tk. 358,942,409 Factory Salary and Allowances 25,658,492 25,197,591 Festval Bonus Factory 2,231,676 2,154,450 Electricity Charges 3,448,028 5,217,623 Gas Charges 63,654,931 52,901,042 Repairs & Maintenance 49,143,199 22,114,688 Packing Materials 27,043,924 29,506,467


Fuel,Oil & Lubricant 17,193,174 20,775,938 Insurance Premium 2,166,044 2,161,545 Insurance Premium (Group) 32,940 - Stores & Accessories consump. Note: 19.1( C)-i 45,364,174 32,431,292 Entertainment Factory 523,591 473,408 Telephone, Mobile & Fax 222,103 130,222 Statonery Charges 472,344 386,135 Printing Charges 330,071 413,406 Other Carrying Charges 1,337,550 150,329 Others Factory Office Expenses 21,653 8,144 Vehicles Maintenance 2,120,998 2,264,690 Conveyances Factory 36,063 37,055 House Rent for Worker Shed 490,150 557,350 Medical Expenses 91,293 55,844 Uniform & Leverage 72,550 22,630 Miscellaneous Exp. 288,929 481,909 Depreciation Note: 1 116,998,532 123,952,456 Total Factory Overhead- 358,942,409 321,394,214

19.1 ( C)-i STORES & ACCESSORIES CONSUMED: Tk. 45,364,174 Opening Balance as on 01.07.2013 101,554,423 74,233,247 Add: Purchase during the year 42,094,007 59,752,467 Less: Closing Balance as on 30.06.2014 98,284,256 101,554,423 Total Consumed- 45,364,174 32,431,292

20.1 OPERATING EXPENSES: Tk. 67,516,947 Salaries & Allowances 25,426,837 24,322,373 Festival Bonus 2,036,756 1,593,787 Director's Remuneration 6,569,000 6,569,000 Fees, Forms & Others 2,168,637 2,176,054 Audit Fees 86,250 86,250 Printing & Stationery 1,995,533 1,013,886 Electricity Charges - 28,381 Telephone,Mobile & Internet Expenses 1,558,309 924,322 Postage & Stamp 346,808 96,274 Vehicle Maintenance 5,840,739 4,655,662 Miscellaneous Expenses 2,846,888 6,272,670 Office Rent 1,326,520 1,362,504 Rate & Taxes 753,514 2,037,965 Carriage Outwards, Selling & Distribution exp. 3,213,960 2,938,620 Entertainment 911,425 691,614 Fuel for Head Office Generator 281,570 461,788 Advertisement & Publicity Expenses 723,511 463,061 AGM Expenses 2,377,808 2,278,896 Security Charges 459,200 405,525 Gardening Expenses 29,455 21,605 Travelling & Conveyance 1,515,168 1,266,518 Uniform / Leveries Security 36,740 11,520 Repairs & Maintenance 1,087,117 884,655 Dination & Subscription 20,000 - Business Development Exp. 2,811,089 Credit Rating Charges 73,478 - Software Maintenance Expenditure 184,096 83,000 Depreciation Note: 1 2,836,539 2,574,852 67,516,947 63,220,782 21.1 FINANCIAL EXPENSES: Tk. 107,488,284 EASTERN BANK LTD.: Interest on Long Term Loan 13,110,125 31,691,451 Interest on Short Term Loan 4,371,470 1,028,174 Interest on Overdraft 4,982,918 4,691,200 Bank Charges & Commission 6,231,762 5,880,238 Interest on Bill Discount 626,814 7,154,380 Total 29,323,088 50,445,443 HSBC LTD.: Interest on Long Term Loan 9,483,921 20,895,381 Interest on Short Term Loan 9,387,505 5,919,490 Bank Charges & Commission 4,862,824 2,103,827 Export L/C Negotiation Commission - 1,529,012 Interest on Overdraft 683,895 2,707,801 Interest on Bill Discount 15,167,439 23,528,061 Total 39,585,584 56,683,572 DHAKA BANK LTD.: Interest on Long Term Loan 1,858,561 45,872,866 Interest on Short Term Loan 1,608,076 641,470 Interest on Overdraft 2,038,903 2,679,276 Bank Charges and Commission 3,693,809 802,210 Export L/C Negotiation Commission 140,963 - Interest on Bill Discount 2,583,120 6,264,887 Total 11,923,432 56,260,709 ONE BANK LTD.: Interest on Short Term Loan 1,060,899 683,116 Interest on Overdraft 1,223,467 1,075,496 Bank Charges & Commission 1,170,234 199,289 Interest on Bill Discount - 2,543 Total 3,454,599 1,960,445

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Annual Report 2014

TRUST BANK LTD.: Interest on Long Term Loan 18,610,078 31,038,708 Bank Charges and Commission 1,254,530 1,350,462 Interest on Overdraft 3,173,733 1,867,944 Interest on Bill Discount - 380,371 Total 23,038,341 34,637,485 SHAHJALAL ISLAMI BANK LTD.: Bank Charge and Commission 1,150 1,150 Total 1,150 1,150 CITIBANK NA: Bank Charges and Commission 695 810 Total 695 810 UNITED LEASING CO. LTD., UTTARA FINANCE & INVENSTMENT LTD Interest on Lease Finance 92,783 240,416 Total 92,783 240,416 AB BANK LTD. Bank Charges and Commission 57,232 3,000 Total 57,232 3,000 BRAC BANK LTD. Bank Charges and Commission 11,380 11,150 Total 11,380 11,150 Total Financial Expenses- 107,488,284 200,244,180

22.1 NON-OPERATING INCOME/(LOSS): 41,477,984 CASH INCENTIVE: 37,185,368 - OTHER INCOME/(LOSS): Interest Received from BRAC Bank Ltd., STD A/C (1501201 762043001) 1,010,529 947,853 Interest Received from Dhaka Bank Ltd., STD A/C (0207-150000000806) 730,492 - Interest Received from AB Bank Ltd., STD A/C (4005-767482-430) 4,383 8,576 Interest Received from BRAC Bank Ltd., STD A/C (1505101 762043001) 746,055 1,326,482 Interest Received from Eastern Bank Ltd., STD A/C (101-1230000068) 1,507,854 1,884,236 3,999,314 4,167,148 Interest Received from Overdue Bill - 490,489 Foreign currency exchange Gain 256,338 - Gain on Sale of Assets 36,964 16,853 293,302 507,342 Less: Loss on Sale of Assets - 56,827 - 56,827 Total Other Income/(Loss) 4,292,616 4,617,663 Total 41,477,984 4,617,663

23.1 PROVISION FOR WORKER'S PROFIT PARTICIPATION FUND: Tk. 12,473,497 Provision for Contribution to WPPF 12,473,497 12,457,900 12,473,497 12,457,900

Note: This represents 5% of net profit before tax of the company and is payable to workers as per provision defined in the Labour Law 2006.

24.1 INCOME TAX PROVISION (CURRENT TAX) : Tk. 40,816,099 Income Tax Tax i) On Operating Income 15% 251,842,408 37,776,361 15,087,903 ii) On Cash Incentive 5% 37,185,368 1,859,268 - iii) On Other Income 27.50% 4,292,616 1,180,469 23,088 Total 256,135,024 40,816,099 15,110,991

Taxable Operating Income Calculation: Net operating Profit before Tax 207,991,949 Add: Accounting Depreciation 119,835,071 Less: Tax Depreciation 75,984,612 Taxable Operating Income: 251,842,408

25.1 INCOME TAX PROVISION (DEFERRED TAX) : Tk. (6,577,569) (6,395,612) 26.1 BASIC EARNINGS PER SHARE (EPS): Tk. 1.11 (a) Net Profit/(Loss) after Tax for this period 215,231,403 240,442,628 (b) Number of Total Share 193,600,000 193,600,000 Basic Earnings per Share (a/b): 1.11 1.24

27.1 RELATED PARTY TRANSACTION:SL # Related Party Nature of Relationship Nature of Transaction Transation Amount Balance as at 30.06.2014 1 Knit Asia Limited Common Director Receivable 110,995,384 sales 1,454,735,920

2 Salek Textile Limited Subsidiary Invesment in equity 769,910,000

Receivable 111,761,582 sales 109,683,134 3 Newasia Synthetics Limited Subsidiary Invesment in equity 496,465,000

4 J.M. Fabrics Limited Subsidiary Invesment in equity 399,990,000

Receivable 109,105,484 sales 307,756,758


MALEK SPINNING MILLS LIMITEDFIXED ASSETS SCHEDULE AS AT 30TH JUNE 2014

ANNEXURE: 1.1


AS AT ADDITION ADJUSTMENT AS AT AS AT THIS YEAR ADJUSTMENTS AS AT VALUE AS AT 01.07.2013 30.06.2014 01.07.2013 30.06.2014 30.06.2014(A)- 1 Land and Land Development 70,406,170 1,825,257 72,231,427 0% - - - 72,231,427 2 Factory Building 313,271,373 313,271,373 5% 220,975,430 4,614,797 225,590,227 87,681,146 3 Plant and Machinery 1,266,335,080 34,933,578 1,301,268,659 7.5% 858,154,799 33,233,539 891,388,339 409,880,320 4 Lease Assets (Plant & Machinery) 12,753,116 12,753,116 10% 5,222,528 753,059 5,975,587 6,777,529 5 Electrical Installation 47,054,626 47,054,626 15% 36,036,985 1,652,646 37,689,632 9,364,994 6 Tubewell and Water Pump 2,463,406 2,463,406 15% 2,064,721 59,803 2,124,524 338,882 7 Furniture and Fixtures 3,315,868 19,310 3,335,178 10% 1,745,468 158,971 1,904,439 1,430,739 8 Office Equipments 10,101,679 322,908 10,424,587 15% 5,883,319 681,190 6,564,509 3,860,078 9 Gas Line Installation 10,618,384 10,618,384 15% 5,935,327 702,459 6,637,786 3,980,598 10 Loose Tools and Equipment 1,254,088 1,254,088 15% 1,160,291 14,070 1,174,360 79,728 11 Motor Vehicle 25,537,782 2,910,000 1,567,400 26,880,382 15% 13,707,636 1,975,912 1,204,364 14,479,184 12,401,198 12 Telephone (PABX) Installation 490,000 490,000 15% 365,138 18,729 383,867 106,133 13 Crockaries and Cutlaries 50,777 50,777 15% 39,204 1,736 40,940 9,837 14 Generator 126,692,586 126,692,586 10% 78,861,391 4,783,119 83,644,511 43,048,075 15 Fire Installation 253,100 253,100 15% 195,428 8,651 204,079 49,021 Total (A) 1,890,598,036 40,011,053 1,567,400 1,929,041,689 1,230,347,666 48,658,681 1,204,364 1,277,801,983 651,239,706

REVALUATED FIXED ASSETS SCHEDULE AS AT 30TH JUNE 2014


AS AT ADDITION ADJUSTMENT AS AT AS AT THIS YEAR ADJUSTMENTS AS AT VALUE AS AT 01.07.2013 30.06.2014 01.07.2013 30.06.2014 30.06.2014(B)- REVALUATION OF FIXED ASSETS : 1 Land and Land Development 846,018,824 - 846,018,824 - - - - - 846,018,824 2 Factory Building 219,355,567 - 219,355,567 5% 36,849,466 9,125,305 - 45,974,771 173,380,797 3 Plant and Machinery 951,297,577 - 951,297,577 7.5% 253,656,230 52,323,101 - 305,979,331 645,318,246 4 Generator 132,146,678 - 132,146,678 10% 34,866,840 9,727,984 - 44,594,824 87,551,854 Total (B) 2,148,818,646 - - 2,148,818,646 - 325,372,536 71,176,390 - 396,548,926 1,752,269,720 GRAND TOTAL ( A+B) 4,039,416,681 40,011,053 1,567,400 4,077,860,335 1,555,720,202 119,835,071 1,204,364 1,674,350,909 2,403,509,426 Depreciation Charged to:

Operating Expenses: 2,836,539 Factory Overhead: 116,998,532 Tk. 119,835,071

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Annual Report 2014

SALEK TEXTILE LIMITED DIRECTORS’ REPORT

TO THE SHAREHOLDERS FOR THE YEAR ENDED 30TH JUNE, 2014

Dear Shareholders, In terms of provisions of section 184 of Companies Act’1994 and IAS (International Accounting Standards) codes as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), the Board of Directors is pleased to submit its Report to the Shareholders together with Audited Accounts and Auditors’ Report thereon, containing Statement of Financial Position, Statement of Comprehensive Income, Statement of Cash Flows & Statement of Changes in Equity for the year ended 30 June 2014. BACKGROUND:The Company was incorporated with RJSC on 9th day of September 2007 as a Private Limited Company. The Authorized Share Capital of the company was increased from Tk.500,000,000.00 divided into 5,000,000 ordinary shares of Tk.100.00 each to Tk. 3,000,000,000.00 divided into 30,000,000 ordinary shares of Tk.100.00 each on 14th August, 2013. The paid-up capital as on 30th June, 2014 stood at Tk.482,608,700.00 consisting of 4,826,087 ordinary shares of Tk.100.00 each. As per decision of the Board of Directors Meeting held on 17th November, 2013 and Extra-ordinary General Meeting (EGM) of the shareholders of the Company held on 26th December, 2013 and as per order of the Hon’ble High Court Division of the Supreme Court of Bangladesh dated 05-03-2014 in the Company Matter No.248 of 2013 Titas Spinning & Denim Company Ltd. was Amalgamated with Salek Textile Limited. Salek Textile Limited has issued & allotted 826,087 ordinary shares of Tk.100.00 each on 25th June, 2014 in favour of the shareholders of Titas Spinning & Denim Company Ltd. as per approved Scheme of Amalgamation.The Company also obtained Consent for raising of Paid-up Capital from Bangladesh Securities and Exchange Commission (BSEC) vide their letter No. BSEC/CI/CPLC (Pvt)-333/2011/446 dated June 24, 2014. To comply the condition No. 9 of the Consent Letter of Bangladesh Securities and Exchange Commission (BSEC) dated June 24, 2014 and to comply the provisions of the Commission’s Notification No. SEC/CMRRCD/2006-159/Admin/03-44 dated 05-05-2010 published in the Bangladesh Gazette dated 01-06-2010 though the paid up capital of the company exceeds Tk.400,000,000.00 (Forty crore) the status of the Company has been converted from Private Limited Company to Public Limited Company on 23rd August, 2014 and the face value of per share of the Company also changed from Tk.100.00 each to Tk.10.00 each per share. The Company is a subsidiary company of Malek Spinning Mills Limited which holds 97.93% share & other sponsors of Malek Spinning Mills Ltd. hold 2.07% share of the company as on 30th June 2014. As a subsidiary of Malek Spinning Mills Limited and to comply with the Corporate Governance Guidelines of the Bangladesh Securities and Exchange Commission (BSEC) Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 the holding of positions of Chairman and Managing Director of the company has been separated. Mr. A. F. M. Zubair has been elected as Chairman by the Board of Directors and Mr. A. Matin Chowdhury has been retained as the Managing Director of the company. Mr. M. Sekander Ali, Independent Director of Malek Spinning Mills Limited has been appointed as Director (Non Shareholding).COMMERCIAL OPERATION:Salek Textile Limited started its commercial operation from 1st day of April 2009. The project has 10 Schlafhorst Autocoro machines of 360 Rotors each with production capacity of 14,621,000 kgs of yarn per annum and 9,600,000 yards fabric. The Company manufac-tures open end yarn for denim and home textile markets. COMPANY’S OPERATIONS:The position of its operating performance for the year ended 30th June, 2014 is given below:( 1 ) CAPACITY/PRODUCTIONThe Company’s installed estimated production capacity is 14,621,000 kg of yarn per annum with 10 Schlafhorst Autocoro Machine of 360 Rotors each and 9,600,000 yards fabric per annum. A comparative position of its operating performance are given below:Sl. No. Description 2013-2014 (Kg.) 2012-2013 (Kg.) 2011-2012 (Kg.)01 Production capacity (Yarn) 14,621,000 14,621,000 14,621,00002 Production capacity (Fabric) yds for 3 months 2,400,000 -- --03 Actual Production (Yarn) 10,455,062 11,145,027 5,336,16204 Actual Production (Fabric) yds for 3 months 1,596,792 -- --05 Capacity Utilization (Yarn) 71.51% 76.23% 36.50%06 Capacity Utilization (Fabric) 66.53% -- --07 Quantity Sold (kg) Yarn for 3 months 9,955,798 10,840,938 7,361,81008 Quantity Sold (yds) Fabric for 3 months 1,450,955 -- --09 Sales Revenue (Tk.) Yarn 1,940,147,376 2,291,717,388 1,663,517,87410 Sales Revenue (Tk.) Fabric for 3 months 238,769,122 -- --11 Average selling price (Tk.) Yarn 194.88 211.39 225.9712 Average selling price (Tk.) Fab. 164.56 -- --CAPITAL EXPENDITURES:The following Capital Expenditure was incurred during the last three years: Description 2013-2014 (Tk.) 2012-2013 (Tk.) 2011-2012 (Tk.)Land and Land Development 7,598,047 --- ---Factory Building 3,705,054 3,412,100 ---Plant and Machinery 1,667,547 --- 475,000Motor Vehicle 13,495,000 --- ---Office Equipments 18,090 --- ---Furniture & Fixtures 19,410 29,080 ---Electrical Installation 96,945 --- ---Gas Line Installation 1,000,000 --- ---Total 27,600,093 3,441,180 475,000


SHAREHOLDING:The Shareholding Position of different shareholders as at 30th June 2014 as follows: Name of Shareholders No. of share hold % of HoldingMalek Spinning Mills Limited 4,725,970 shares 97.93%Mr. A. Matin Chowdhury 48,978 shares 1.01%Dr. Shamim Matin Chowdhury 33,934 shares 0.70%Mr. A.F.M. Zubair 17,048 shares 0.35%Ms. Saima Matin Chowdhury 41 shares 0.001%Mr. Azizur R. Chowdhury 51 shares 0.001%Mr. Moshiur Rahman 65 shares 0.001%Total 4,826,087 shares 100%FINANCIAL RESULTS:The company’s operating financial results, as compared to the previous year are summarized as follows Tk. in million Description 2013-2014 2012-2013Sales 2178.92 2291.72Cost of goods sold 1836.42 1928.63Gross profit 342.50 363.08Operating expenses 27.99 23.96Financial Expenses 144.15 112.48Operating profit 170.36 226.64Provision for WPPF 8.10 10.79Provision for Income Tax 19.74 10.49Provision for Tax Holiday Reserve 6.63 61.61Net profit 135.71 143.75Gross Margin Ratio 15.72% 15.84%Net Margin Ratio 6.23% 6.27%Earnings per share (Tk.)* 29.49 42.55• Earning per share has been restated.APPROPRIATION OF PROFIT:The Board of Directors recommended for appropriation of profit as follows: Net Profit after tax holiday reserve 2013-2014 Tk. 135,713,206Add: Balance of profit B/F from previous year Tk. 463,696,968Add: Adjustment of revaluation surplus of fixed assets Tk. 36,014,024Total net free surplus available for appropriation Tk. 635,424,199Appropriation Proposed:Proposed Dividend NilBalance carried forward to Balance Sheet as Retained Earnings Tk. 635,424,199DECLARATION OF DIVIDEND:In order to strengthen the financial position of the company no dividend be and is recommended by the Board for the year ended 30th June, 2014.APPOINTMENT OF DIRECTORS:Rotation of Directors:Pursuant to Article 117 of the Articles of Association of the Company Mr. A. F. M. Zubair, Director and Mr. A. Matin Chowdhury, Director will retire by rotation and being eligible as per Article 119 of the Articles of Association of the Company they offered themselves for re-election.APPOINTMENT OF AUDITORS:The existing Auditor, M/s Malek Siddiqui Wali, Chartered Accountants would retire at the 7th Annual General Meeting and being eligible, they offered themselves for re-appointment as Auditors for the year 2014-2015 with re-fixation of their remuneration.BOARD MEETINGS:During the period 2013-2014, 09 (Nine) Board meetings were held. The attendance record of the Directors are as follows:Name of Directors Position Meeting held AttendedMr. A.F.M. Zubair Chairman 09 07Mr. A. Matin Chowdhury Managing Director 09 08Dr. Shamim Matin Chowdhury Director 09 08Mr. Azizur Rahim Chowdhury Director 09 09Ms. Saima Matin Chowdhury Director 09 07Mr.Moshiur Rahman Director (Nominated by Malek Spinning Mills Ltd.) 09 09Mr. M. Sekander Ali Director (Non Shareholding) 09 09ACKNOWLWDGEMENT:The Directors are pleased to record with appreciation and gratitude the co-operation and support provided by Shareholders, Customers, Bankers, Suppliers, Workers and Employees of the company without whose active support the result would not have been possible.Looking forward for a bright future for all of us.


(A.F.M. Zubair) Chairman

55

Annual Report 2014

Malek Siddiqui Wali CHARTERED ACCOUNTANTS 9-G, MOTIJHEEL, C/A, Dhaka-1000, Bangladesh

AUDITORS’ REPORTto the shareholders ofSalek Textile Limited

We have audited the accompanying Statement of Financial Position of Salek Textile Limited as at 30th June 2014 and the related Statement of Comprehensive Income, Statement of Cash Flow, Statement of Change in Equity and Notes for the period from 1st July 2013 to 30th June 2014.

Management’s Responsibility for the Financial Statements:The Management is responsible for the preparation and fair presentation of these financial statements is accordance with Bangla-desh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), the companies Act 1994 and other applicable laws and regulation and for such internal control as management determines is necessary to enable the prepatation of financial statements that are free from material misstatement, where due to fraud or error.




Opinion:In our opinion, the financial statements prepared in accordance with Bangladesh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company’s affairs as of 30th June 2014 and of the results of its operations and its cash flows for the period then ended and comply with the Companies Act 1994 and other applicable laws and regulations.







SHAREHOLDING:The Shareholding Position of different shareholders as at 30th June 2014 as follows: Name of Shareholders No. of share hold % of HoldingMalek Spinning Mills Limited 4,725,970 shares 97.93%Mr. A. Matin Chowdhury 48,978 shares 1.01%Dr. Shamim Matin Chowdhury 33,934 shares 0.70%Mr. A.F.M. Zubair 17,048 shares 0.35%Ms. Saima Matin Chowdhury 41 shares 0.001%Mr. Azizur R. Chowdhury 51 shares 0.001%Mr. Moshiur Rahman 65 shares 0.001%Total 4,826,087 shares 100%FINANCIAL RESULTS:The company’s operating financial results, as compared to the previous year are summarized as follows Tk. in million Description 2013-2014 2012-2013Sales 2178.92 2291.72Cost of goods sold 1836.42 1928.63Gross profit 342.50 363.08Operating expenses 27.99 23.96Financial Expenses 144.15 112.48Operating profit 170.36 226.64Provision for WPPF 8.10 10.79Provision for Income Tax 19.74 10.49Provision for Tax Holiday Reserve 6.63 61.61Net profit 135.71 143.75Gross Margin Ratio 15.72% 15.84%Net Margin Ratio 6.23% 6.27%Earnings per share (Tk.)* 29.49 42.55• Earning per share has been restated.APPROPRIATION OF PROFIT:The Board of Directors recommended for appropriation of profit as follows: Net Profit after tax holiday reserve 2013-2014 Tk. 135,713,206Add: Balance of profit B/F from previous year Tk. 463,696,968Add: Adjustment of revaluation surplus of fixed assets Tk. 36,014,024Total net free surplus available for appropriation Tk. 635,424,199Appropriation Proposed:Proposed Dividend NilBalance carried forward to Balance Sheet as Retained Earnings Tk. 635,424,199DECLARATION OF DIVIDEND:In order to strengthen the financial position of the company no dividend be and is recommended by the Board for the year ended 30th June, 2014.APPOINTMENT OF DIRECTORS:Rotation of Directors:Pursuant to Article 117 of the Articles of Association of the Company Mr. A. F. M. Zubair, Director and Mr. A. Matin Chowdhury, Director will retire by rotation and being eligible as per Article 119 of the Articles of Association of the Company they offered themselves for re-election.APPOINTMENT OF AUDITORS:The existing Auditor, M/s Malek Siddiqui Wali, Chartered Accountants would retire at the 7th Annual General Meeting and being eligible, they offered themselves for re-appointment as Auditors for the year 2014-2015 with re-fixation of their remuneration.BOARD MEETINGS:During the period 2013-2014, 09 (Nine) Board meetings were held. The attendance record of the Directors are as follows:Name of Directors Position Meeting held AttendedMr. A.F.M. Zubair Chairman 09 07Mr. A. Matin Chowdhury Managing Director 09 08Dr. Shamim Matin Chowdhury Director 09 08Mr. Azizur Rahim Chowdhury Director 09 09Ms. Saima Matin Chowdhury Director 09 07Mr.Moshiur Rahman Director (Nominated by Malek Spinning Mills Ltd.) 09 09Mr. M. Sekander Ali Director (Non Shareholding) 09 09ACKNOWLWDGEMENT:The Directors are pleased to record with appreciation and gratitude the co-operation and support provided by Shareholders, Customers, Bankers, Suppliers, Workers and Employees of the company without whose active support the result would not have been possible.Looking forward for a bright future for all of us.


(A.F.M. Zubair) Chairman


SALEK TEXTILE LIMITEDSTATEMENT OF FINANCIAL POSITION

AS AT 30TH JUNE 2014 JUNE'14 JUNE'13 Taka TakaASSETS :

Non-Current Assets: 2,817,894,343 1,618,842,499 Property, Plant and Equipment 2,649,294,323 1,618,842,499 Goodwill 168,600,020 -

Current Assets : 2,862,300,219 1,796,525,626 Inventories 1,157,600,705 613,568,428 Advance, Deposit and Pre-Payments 126,157,734 77,822,758 Accounts Rceivable 1,532,995,661 1,087,306,811 Cash and Cash Equivalents 45,546,120 17,827,628 TOTAL ASSETS : 5,680,194,562 3,415,368,125

SHAREHOLDER'S EQUITY AND LIABILITIES: Shareholder's Equity : 2,512,416,588 1,685,711,941 Share Capital 482,608,700 400,000,000 Share Premium 601,754,814 - Retained Earnings 635,424,199 463,696,968 Re-valuation Surplus of Fixed Assets 577,137,139 613,151,163 Tax Holiday Reserve 215,491,736 208,863,809

Non-Current Liabilities: 602,590,229 460,424,417 Long Term Loan 527,307,398 407,089,728 Deferred Tax Liabilities 75,282,831 53,334,689

Current Liabilities : 2,565,187,745 1,269,231,767 Short Term Loan 485,901,471 64,842,833 Current Portion of Long Term Loan 456,000,000 186,518,329 Bank Acceptance Liabilities 905,158,616 537,076,258 Creditors and Accruals 718,127,658 480,794,348 TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES : 5,680,194,562 3,415,368,125

Net Assets Value Per Share (NAV) 520.59 421.43 Par Value Tk.100

A. Matin Chowdhury Azizur R. Chowdhury B.K. Chaki Syed Saiful Haque Managing Director Director Chief Financial Officer Company Secretary



57

Annual Report 2014

SALEK TEXTILE LIMITEDSTATEMENT OF COMPREHENSIVE INCOME


JUL'13-MAR'14 APR'14-JUN'14 JUNE'14 JUNE'13 Taka Taka Taka Taka

Sales 1,485,859,949 693,056,549 2,178,916,498 2,291,717,388 Cost of Goods Sold 1,278,943,098 557,477,145 1,836,420,243 1,928,633,817 Gross Profit/(Loss) : 206,916,851 135,579,404 342,496,255 363,083,571

Operating Expenses 13,905,186 14,081,790 27,986,977 23,963,171 Financial Expenses 89,137,167 55,008,709 144,145,875 112,481,628 Operating Profit/(Loss) : 103,874,499 66,488,905 170,363,403 226,638,772

Non-operating Income/(Loss) (312,469) 137,336 (175,133) - Net Operating Profit/(Loss) : 103,562,030 66,626,241 170,188,270 226,638,772

Provision for Contribution to WPPF 4,946,405 3,157,799 8,104,203 10,792,322 Profit/(Loss) before Tax : 98,615,625 63,468,442 162,084,067 215,846,450

Provision for Income Tax : 10,243,268 9,499,666 19,742,934 10,490,429 Current Tax 13,787,837 11,357,201 25,145,038 15,728,565 Deferred Tax (3,544,569) (1,857,535) (5,402,104) (5,238,136)Net Profit/(Loss) after tax for this year 88,372,357 53,968,776 142,341,133 205,356,020

Provision for Tax Holiday Reserve 6,627,927 - 6,627,927 61,606,806 Net Profit/(Loss) Balance 81,744,430 53,968,776 135,713,206 143,749,214 (Transferred to the statement of Changes in Equity.)

Earnings Per Share (EPS) 18.31 11.18 29.49 42.55 Par Value Tk.100 Number of Shares used to compute EPS 4,826,087 4,826,087 4,826,087 4,826,087





SALEK TEXTILE LIMITED STATEMENT OF CASH FLOWS


JUNE'14 JUNE'13 Taka TakaCASH FLOW FROM OPERATING ACTIVITIES :Collection from Turnover & Bills Receivable 2,209,755,108 2,103,416,211 Payment for Raw Materials, Indirect Materials and other expenses (1,904,790,357) (1,601,321,123)Non-operating Income/(Loss) (175,133) - Payment for Operating Expenses (24,944,273) (11,051,592)Payment for Income Tax (14,887,267) (1,077,422)Payment of Financial Expenses (144,145,875) (112,481,628)Net Cash provided/(used) by Operating Activities 120,812,203 377,484,445

CASH FLOW FROM INVESTING ACTIVITIES :Acquisation of Fixed Assets (27,600,093) (3,441,180)Disposal of Fixed Assets 1,212,469 - Net cash used in Investing Activities (26,387,624) (3,441,180)

CASH FLOW FROM FINANCING ACTIVITIES : Advance, Deposits and Pre-payments - (62,522,827)Bank Loan Increase/(Decrease) (35,984,367) 289,964,876 Issuance of Share Capital - 110,173,100 Advance received from Malek Spinning Mills Ltd. (50,241,080) (747,860,103)Net cash provided/(used) by Financing Activities (86,225,447) (410,244,954)


Cash and Cash Equivalents at 1st July 2013 37,346,988 54,029,318






59

Annual Report 2014

SALEK TEXTILE LIMITED STATEMENT OF CHANGES IN EQUITY


Particulars Share Share Tax Holiday Revaluation Retained Total Capital Premium Reserve Surplus of Earnings Fixed AssetsBalance as at 1st July 2013 400,000,000 208,863,810 613,151,163 463,696,968 1,685,711,941 Net Profit/(Loss) during the year 135,713,206 135,713,206 Issuance of Share Capital 82,608,700 82,608,700 Issuance of Share Premium 601,754,814 601,754,814 Adjustment of Revaluation surplus of Fixed Assets (36,014,024) 36,014,024 - Tax Holiday Reserve 6,627,927 6,627,927 As at 30th June 2014 482,608,700 601,754,814 215,491,736 577,137,139 635,424,199 2,512,416,588

FOR THE YEAR ENDED 30TH JUNE 2013 Particulars Share Share Tax Holiday Revaluation Retained Total Capital Premium Reserve Surplus of Earnings Fixed AssetsBalance as at 1st July 2012 289,826,900 147,257,004 648,072,069 343,599,673 1,428,755,646 Issuance of Shares Capital 110,173,100 110,173,100 Net Profit during the year 143,749,214 143,749,214 Adjustment of Revaluation surplus of Fixed Assets (34,920,906) 34,920,906 - Adjustment of Deferred Tax Liabilities up to 30.06.2012 (58,572,825) (58,572,825)Tax Holiday Reserve 61,606,806 61,606,806 As at 30th June 2013 400,000,000 - 208,863,810 613,151,163 463,696,968 1,685,711,941





NEWASIA SYNTHETICS LIMITEDDIRECTORS’ REPORT

TO THE SHAREHOLDERS FOR THE YEAR ENDED 30TH JUNE, 2014Dear Shareholders, The directors are pleased to present their report on the activities of the company together with the Audited Accounts and Auditors’ Report thereon containing Statement of Financial Position, Statement of Comprehensive Income, Statement of Cash Flows & Statement of Changes in Equity for the year ended 30 June 2014. REFERRAL:In terms of the provisions of section 184 of the Companies Act’1994 and IAS (International Accounting Standards) codes as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), it is the pleasure of the Board of Directors to submit its report to the Shareholders for year ended 30 June 2014 in the following paragraphs:BACKGROUND:The Company was incorporated with RJSC on 30th day of July 2008 as a Private Limited Company and subsequently on October 24, 2009 it has been converted into a Public Limited Company. The Authorized Share Capital of the company has also been increased from Tk. 500,000,000.00 to Tk.5,000,000,000.00 divided into 50,000,000 ordinary shares of Tk.100.00 each. The paid-up capital as on 30th June, 2014 stood at Tk.500,000,000.00 consisting of 5,000,000 ordinary shares of Tk.100.00 each. The paid up capital of the company has been raised after receiving capital raising consent from Bangladesh Securities and Exchange Commission (BSEC) vide their letter No. SEC/CI/CPLC-442/2013/2903 dated December 19, 2013. The Company is a subsidiary company of Malek Spinning Mills Limited which holds 99.30% share & other sponsors of Malek Spinning Mills Ltd. hold 0.70% share of the company. As a subsidiary of Malek Spinning Mills Limited and to comply the Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC) Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 the Chairman and Managing Director of the company has been separated. Mr. M. Sekander Ali, Independent Director of Malek Spinning Mills Limited has been appointed as Director (Non Shareholding).COMPANY OPERATION AND FINANCIAL RESULTS: The following capital expenditure was incurred in the year 2013-2014, 2012-2013 & 2011-2012.Description 2013-2014 (Tk.) 2012-2013 (Tk.) 2011-2012 (Tk.)Land and Land Development 20,102,849 53,367,617 44,535,938Pre-operating expenses --- --- 3,832,180Current Assets --- --- (3,732,391)Total 20,102,849 53,367,617 44,635,727IMPLEMENTATION SCHEDULE:The project was undertaken to set up a PET Granule (Bottle grade & Industrial grade) and Polyster Staple Fibre manufacturing unit in the name of NewAsia Synthetics Ltd. As on 30th June 2014, MSML is the holder of 99.30% shares of NewAsia Synthetics Limited i.e. 4,964,650 shares of Tk.100.00 each total Tk.496,465,000.00 out of 5,000,000 shares of Tk.100.00 each total Tk.500,000,000.00. Due to failure of Gas connection by Titas Gas Transmission & Distribution Company Ltd. the project has been shelved until the Gas connection is provided.APPOINTMENT OF DIRECTORS:Rotation of Directors:Pursuant to Article 117 of the Articles of Association of the Company Mr. A. Matin Chowdhury, Director and Mr. A. F. M. Zubair, Director will retire by rotation and being eligible as per Article 119 of the Articles of Association of the Company they offered themselves for re-election.APPOINTMENT OF AUDITORS:The existing Auditor, M/S Malek Siddiqui Wali, Chartered Accountants would retire at the 6th Annual General Meeting and being eligible, have offered themselves for re-appointment as Auditors for the year 2014-2015 with re-fixation of their remuneration.APPOINTMENT OF MANAGING DIRECTOR:In terms of the provisions of Section 110 of the Companies Act.1994 the current tenure of the Managing Director (Dr. Shamim Matin Chowdhury) expired on 24th October, 2014. The Board of Directors have recommended for renewal of his appointment for a further period of 5 (Five) years with effect from 24th October, 2014 on the existing terms and conditions for consideration by the shareholders.BOARD MEETINGS:During the year 2013-2014, 07 (Seven) Board meetings were held. The attendance record of the Directors are as follows:Name of Directors Position Meeting held AttendedMr. A. Matin Chowdhury Chairman 07 07Dr. Shamim Matin Chowdhury Managing Director 07 07Mr. A. F. M. Zubair Director 07 05Mr.Moshiur Rahman Director 07 07Mr. M. Sekander Ali Director (Non Shareholding) 07 07FINANCIAL ACCOUNTS:As the Company did not commence production & marketing but due to operating and financial expenses Net Loss incurred Tk.4,054,933 in the Statement of Comprehensive Income for the year ended on 30th June, 2014.ACKNOWLWDGEMENT:The Directors are pleased to record with appreciation and gratitude the co-operation and support provided by Shareholders of the company.Looking forward for a bright future for all of us.On behalf of the Board of Directors,

(A. Matin Chowdhury) Chairman

61

Annual Report 2014

Malek Siddiqui Wali 9-G, MOTIJHEEL, C/A,CHARTERED ACCOUNTANTS Dhaka-1000, Bangladesh


Newasia Synthetics Ltd.

We have audited the accompanying Statement of Financial Position of Newasia Synthetics Ltd. as at 30th June 2014 and the related Statement of Comprehensive Income, Statement of Cash Flow, Statement of Change in Equity and Notes for the period from 1st July 2013 to 30th June 2014.

Management’s Responsibility for the Financial Statements:The Management is responsible for the preparation and fair presentation of these financial statements is accordance with Bangladesh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), the companies Act 1994 and other applicable laws and regulation and for such internal control as management determines is necessary to enable the prepatation of financial statements that are free from material misstatement, where due to fraud or error.




Opinion:In our opinion, the financial statements prepared in accordance with Bangladesh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company’s affairs as of 30th June 2014 and of the results of its operations and its cash flows for the period then ended and comply with the Companies Act 1994 and other applicable laws and regulations.








NEWASIA SYNTHETICS LIMITEDSTATEMENT OF FINANCIAL POSITION


JUNE'14 JUNE'13 Taka TakaASSETS :Non-Current Assets : 1,828,918,423 1,810,628,063 Property Plant & Equipment 1,828,918,423 1,810,628,063

Current Assets : 7,062,288 28,414,214 Advance, Deposit and Pre-Payments 4,503,221 4,750,573 Cash and Cash Equivalents 2,559,067 23,663,641

TOTAL ASSETS : 1,835,980,711 1,839,042,277

SHAREHOLDER'S EQUITY AND LIABILITIES: Shareholder's Equity : 1,834,853,519 1,838,908,452 Share Capital 500,000,000 93,715,000 Share Money Deposit - 406,285,000 Retained Earnings (6,796,846) (2,741,913)Re-valuation Surplus of Fixed Assets 1,341,650,365 1,341,650,365 Current Liabilities : 1,127,192 133,825 Creditors & Accruals 1,127,192 133,825 TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES : 1,835,980,711 1,839,042,277

Net Assets Value Per Share (NAV) 366.97 1,962.23 Par Value Tk.100

A. Matin Chowdhury Dr. Shamim Matin Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary


Dhaka (Malek Siddiqui Wali) October 27, 2014 Chartered Accountants

63

Annual Report 2014

NEWASIA SYNTHETICS LIMITEDSTATEMENT OF COMPREHENSIVE INCOME


JUNE'14 JUNE'13 Taka Taka

Sales - - Cost of Goods Sold - - Gross Profit/(Loss) : - -

Operating Expenses 4,040,323 2,730,616 Financial Expenses 14,610 11,297 Operating Profit/(Loss) : (4,054,933) (2,741,913)

Provision for Contribution to WPPF - - Profit/(Loss) before Tax : (4,054,933) (2,741,913)

Provision for Income Tax : - - Current Tax - - Deferred Tax - -

Net Profit/(Loss) after tax for this year (4,054,933) (2,741,913)

(Transferred to the statement of Changes in Equity.)

Earnings Per Share (EPS) (0.81) (0.55)Par Value Tk.100 Number of Shares used to compute EPS 5,000,000 5,000,000





NEWASIA SYNTHETICS LIMITED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30TH JUNE 2014 JUNE'14 JUNE'13 Taka TakaCASH FLOW FROM OPERATING ACTIVITIES : Payment for Operating Expenses (2,234,467) (443,789)Payment for Financial Expenses (14,610) (11,297)Net Cash provided/(used) by Operating Activities (2,249,077) (455,086)

CASH FLOW FROM INVESTING ACTIVITIES : Acqusition of Fixed Assets (20,102,849) (53,367,617)Pre-operating Expenses - 25,551,245 Advance, deposits and pre-payments 247,352 2,850,000 Net Cash used in Investing Activities (19,855,497) (24,966,372)

CASH FLOW FROM FINANCING ACTIVITIES : Share Money Deposit - 396,285,000 Advance from Malek Spinning Mills Ltd 1,000,000 (348,390,823)Net cash provided/(used) by Financing Activities 1,000,000 47,894,177

Increase/(Decrease) in Cash and Cash Equivalents (21,104,574) 22,472,719



Net Operating Cash Flow Per Share (NOCFPS) (0.45) (0.49)Par Value Tk.100




65

Annual Report 2014

NEWASIA SYNTHETICS LIMITED STATEMENT OF CHANGES IN EQUITY


Particulars Share Revaluation Surplus Share Money Retained Total Capital of Fixed Assets Deposit Earnings

Balance as on 1st July 2013 93,715,000 1,341,650,365 406,285,000 (2,741,913) 1,838,908,452 Isuance of Share Capital 406,285,000 (406,285,000) - - Net Profit/(Loss) during the year (4,054,933) (4,054,933) As at 30th June 2014 500,000,000 1,341,650,365 - (6,796,846) 1,834,853,519

FOR THE YEAR ENDED 30TH JUNE 2013 Particulars Share Revaluation Surplus Share Money Retained Total Capital of Fixed Assets Deposit Earnings

Balance as at 1st July 2012 93,715,000 1,341,650,365 10,000,000 1,445,365,365 Share Money Deposit 396,285,000 396,285,000 Net Profit/(Loss) during the year (2,741,913) (2,741,913) As at 30th June 2013 93,715,000 1,341,650,365 406,285,000 (2,741,913) 1,838,908,452





J.M. FABRICS LIMITED

DIRECTORS’ REPORT TO THE SHAREHOLDERS FOR THE YEAR ENDED 30TH JUNE, 2014

Dear Shareholders, In terms of provisions of section 184 of Companies Act’1994 and BAS (Bangladesh Accounting Standards) codes as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), the Board of Directors is pleased to submit its Report to the Shareholders together with Audited Accounts and Auditors’ Report thereon, containing Statement of Financial Position, Statement of Comprehen-sive Income, Statement of Cash Flows & Statement of Changes in Equity for the year ended 30 June 2014.

BACKGROUND:The Company was incorporated with RJSC on 25th day of May 2005 as a Private Limited Company. The Authorized Share Capital of the company is Tk.500,000,000.00 divided into 5,000,000 ordinary shares of Tk.100.00 each. The paid-up capital as on 30th June, 2014 stood at Tk.400,000,000.00 consisting of 4,000,000 ordinary shares of Tk.100.00 each of which 3,999,900 shares of Tk.100.00 each was held by Malek Spinning Mills Limited.The Company is a subsidiary company of Malek Spinning Mills Limited which holds 99.99% share & another sponsor of Malek Spinning Mills Ltd. holds 0.01% share of the company as on 30th June 2014. As a subsidiary of Malek Spinning Mills Limited and to comply the Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC) Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012, Mr. M. Sekander Ali, Independent Director of Malek Spinning Mills Limited has been appointed as Director (Non Shareholding).

COMMERCIAL OPERATION:J. M. Fabrics Limited started its commercial operation from 18th day of August 2007. The Company is engaged in the production of 100% export oriented garments and knit fabric with a production capacity of 12 (twelve) M. Tons of knitted and dyed fabric and 68 (sixty eight) lines of cutting and sewing operation with all necessary facilities, storage etc.

COMPANY’S OPERATIONS:The position of its operating performance for the year ended 30th June, 2014 is given below:

( 1 ) CAPACITY/PRODUCTIONThe Company’s installed estimated production capacity is 22,000,000 Pcs. of Basic T-Shirt & Intimate Garments per annum. A comparative position of its operating performance is given below:Sl. Description 2013-2014 (Pcs.) 2012-2013 (Pcs.) 2011-2012 (Pcs.)01 Production capacity 22,000,000 9,000,000 6,500,00002 Actual Production 16,983,987 6,436,574 4,544,18403 Capacity Utilization 77.20% 71.52% 69.91%04 Quantity Sold (Pcs.) 16,983,987 6,436,574 4,544,18405 Sales Revenue (Tk.) 2,653,244,545 1,486,848,703 1,030,369,35606 Average selling price (Tk.) 156.22 231.00 226.74

CAPITAL EXPENDITURES:The following Capital Expenditure was incurred during the year 2013-2014. Description 2013-2014 (Tk.) 2012-2013 (Tk.)Factory Building 6,578,366 159,493,251Plant and Machinery 83,628,482 140,036,015Office Equipments 1,257,799 1,311,956Furniture & Fixtures 4,261,248 7,117,602Electrical Installation 3,293,935 2,219,788Gas Line Installation 1,337,592 382,611Tools and Equipment 623,166 2,213,839Cargo Lift --- 130,000Motor Vehicle 2,500,000 ---Cookeries & Cutleries 34,910 ---Total 103,515,498 312,905,062

SHAREHOLDING:The Shareholding Position of different shareholders as at 30th June 2014 as follows: Name of Shareholders No. of share holdMalek Spinning Mills Limited 3,999,900 sharesMr. A.F.M. Zubair 100 shares Total 4,000,000 shares

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Annual Report 2014

FINANCIAL RESULTS:The company’s operating financial results, as compared to the previous year are summarized as follows:

Tk. in million Description 2013-2014 2012-2013Turnover 2,653.24 1,486.84Cost of goods sold 2,536.52 1,393.72Gross profit 116.72 93.12General and Administrative Expenses 33.97 19.66Operating profit 82.75 73.46Provision for Worker’s Profit Participation Fund 3.94 3.49Net Profit before tax 78.81 69.96Provision for Income Tax 6.44 6.29Net profit after tax 72.37 63.67Gross Margin Ratio 4.40% 6.26%Net Margin Ratio 2.73% 4.28%Earnings per share (Tk.) 18.09 15.92

APPROPRIATION OF PROFIT:The Board of Directors recommended for appropriation of profit as follows:

Net Profit (after tax provision) during the year 2013-2014 Tk. 72,365,854Add: Profit brought forward from previous year balance sheet Tk.125,192,894Add: Adjustment of revaluation surplus of fixed assets Tk. 3,211,456Less: Adjustment of Tax (Tk. 7,004,257)Total net free surplus available for appropriation Tk.193,765,946Appropriation Proposed:Proposed Dividend Nil____Balance carried forward to Balance Sheet as Retained earnings Tk.193,765,946

DECLARATION OF DIVIDEND:In order to strengthen the financial position of the company no dividend be and is recommended by the Board for the year ended 30th June, 2014.

APPOINTMENT OF AUDITORS:The existing Auditor, M/s. Das Chowdhury Dutta & Co., Chartered Accountants would retire at the 9th Annual General Meeting and being eligible, have offered themselves for re-appointment as Auditors for the year 2014-2015 with re-fixation of their remuneration.

ACKNOWLWDGEMENT:The Directors are pleased to record with appreciation and gratitude the co-operation and support provided by Shareholders, Custom-ers, Bankers, Suppliers, Workers and Employees of the company without whose active support the result would not have been possible.

Looking forward for a bright future for all of us.


(A. Matin Chowdhury) Chairman

DAS CHOWDHURY DUTTA & CO. “Well Tower” (Ist Floor), Flat-A/1Chartered Accountants 12/A Purana Paltan Line, Dhaka

AUDITORS’ REPORT to the shareholders of

J.M Fabrics Limited

We have audited the accompanying Financial Statements of J. M. Fabrics Limited which comprises of the statement of Financial Position as at 30 June 2014 and the related Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows for the year then ended together with a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements:Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) and other applicable laws and regulations and for such internal control as management determines is necessary to enable the prepatation of these financial statements that are free from material misstatement whether due to fraud or error.

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

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


Opinion:In our opinion, the financial statements give a ture and fair view of the financial position of J.M. Fabrics Limited as at 30 June 2014 and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards , the Companies Act 1994 and other applicable laws and regulations.


a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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; and

c) the company’s statement of financial position and statement of comprehensive income dealt with by the report are in agreement with the books of account;

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

Dhaka, 27 October 2014 Das Chowdhury Dutta & Co. Chartered Accountants


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Annual Report 2014

J. M. Fabrics LimitedStatement of Financial Position as at 30 June 2014

Taka 30.06.2014 30.06.2013ASSETS:Non-Current Assets 1,516,771,870 1,531,943,192 Property, plant and equipment 1,336,997,956 1,348,957,822 Revalued fixed assets 179,773,914 182,985,370 Current Assets 1,287,138,967 991,653,839 Inventories 597,652,419 557,322,251 Advance, deposits and pre-payments 40,939,588 37,436,345 Accounts receivable 316,842,140 274,408,888 Cash and cash equivalents 331,704,820 122,486,356Total 2,803,910,837 2,523,597,031 SHARE HOLDERS' EQUITY AND LIABILITIES: Shareholders' Equity 773,539,860 708,178,264 Share capital 400,000,000 400,000,000 Revaluation reserve 179,773,914 182,985,370 General reserve and surplus 193,765,946 125,192,894

Non-Current Liabilities 888,425,796 950,800,846 Long term loan from bank 888,104,650 950,448,712 Deferred tax liabilities 321,146 352,134

Current Liabilities 1,141,945,181 864,617,921 Short term loan 518,206,362 219,953,371 Current portion of term loan 369,927,694 276,400,000 Accounts payable 147,554,330 200,568,213 Bank acceptance liabilities 41,883,112 109,505,085 Liabilies for expenditure 64,373,683 58,191,252Total 2,803,910,837 2,523,597,031 Net Assets Value (NAV) Per Share (Including Revaluation surplus) 193.38 177.04

A. Matin Chowdhury Azizur R.Chowdhury B. K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary

Signed in terms of our report of even date annexed

Dhaka, 27 October 2014 Das Chowdhury Dutta & Co. Chatered Accountants


J. M. Fabrics LimitedStatement of Comprehensive Income for the year ended on 30 June 2014

Particulars Taka 30.06.2014 30.06.2013

Turnover

Export earnings 2,653,244,545 1,486,848,703

Less: Cost of goods sold 2,536,523,277 1,393,726,081

Gross Profit / (Loss) 116,721,267 93,122,622

General and Administrative Expenses 33,973,604 19,657,003

Administrative expenses 15,115,357 8,026,101

Selling and distribution expenses 2,721,223 1,075,020

Financial expenses 16,137,024 10,555,882

Operating Profit / (Loss) 82,747,663 73,465,619

Provision for WPPF 3,940,365 3,498,363

Net Profit Before Tax 78,807,298 69,967,256

Provision for Income Tax 6,441,444 6,289,030

Provision for tax - current year 6,472,433 5,936,896

Provision for deferred tax (30,989) 352,134

Net Profit 72,365,854 63,678,226

Earnings Per Share (EPS) 18.09 15.92

Number of shares used to compute EPS 4,000,000 4,000,000




J. M. Fabrics LimitedStatement of Changes in Equity

For the year ended 30 June 2014

Particulars Share Capital General Reserve Revaluation Total and Surplus Reserve Balance as at 01 July 2013 400,000,000 125,192,894 182,985,370 708,178,264 Net profit / (loss) for the year - 72,365,853 - 72,365,853 Tax adjustment - (7,004,257) - (7,004,257) Transfer to general reserve and surplus for depreciation charged on revalued assets - 3,211,456 (3,211,456) - Balance as at 30 June 2014 400,000,000 193,765,946 179,773,914 773,539,860

For the year ended 30 June 2013

Particulars Share Capital General Reserve Revaluation Total and Surplus Reserve Balance as at 01 July 2012 62,500,000 57,993,324 186,506,715 307,000,039 Capital increased by adjustment of: Share money deposit 308,750,000 - - 308,750,000 Accounts payable 28,750,000 - - 28,750,000 Net profit / (loss) for the year - 63,678,225 - 63,678,225 Transfer to general reserve and surplus for depreciation charged on revalued assets - 3,521,345 (3,521,345) - Balance as at 30 June 2013 400,000,000 125,192,894 182,985,370 708,178,264




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Annual Report 2014


J. M. Fabrics LimitedStatement of Cash Flows

For the year ended on 30 June 2014

Taka 30.06.2014 30.06.2013Cash Flow from Operating Activities: Collection from turnover and bills receivable 2,610,811,293 1,344,219,503 Payment for purchase of raw materials (2,476,587,184) (1,600,158,493) Payment for operating expenses (15,318,831) (6,839,517) Payment for financial expenses (16,137,024) (10,555,882) Increase in advance, deposit and prepayment (3,503,244) - Decrease in provision of tax (7,004,257) - Decrease in liabilities (114,484,414) (5,233,594)Net Cash Provided/ (Used) by Operating Activities (22,223,661) (278,567,983)

Cash Flow from Investing Activities: Acquisition of fixed assets (103,515,498) (312,905,062) Adjustment of assets for fire incidence 5,521,000 - Capital work-in-progress - 177,072,526 Net Cash Used by Investing Activities (97,994,498) (135,832,536)

Cash Flow from Financing Activities: Share money deposit - (308,750,000) Capital increase - 337,500,000 Loan received from bank 329,436,623 390,847,862 Decrease in advance, deposit and prepayment - 1,684,906 Loan received from malek spinning mills limited - (18,800,000)Net Cash Provided by Financing Activities 329,436,623 402,482,768


Cash and Cash Equivalents at 01 July 2013 122,486,356 134,404,107 Cash and Cash Equivalents at 30 June 2014 331,704,820 122,486,356

Net Operating Cash Flow Per Share (NOCFPS) (5.56) (69.64)




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Annual Report 2014

Malek Siddiqui Wali 9-G, MOTIJHEEL, C/A,CHARTERED ACCOUNTANTS Dhaka-1000, Bangladesh


Titas Spinning & Denim Co. Ltd.

We have audited the accompanying Statement of Financial Position of Titas Spinning & Denim Co. Ltd. as at 31st March 2014 and the related Statement of Comprehensive Income, Statement of Cash Flow, Statement of Change in Equity and Notes for the period from 1st July 2013 to 31st March 2014.

Management’s Responsibility for the Financial Statements:The Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), the companies Act 1994 and other applicable laws and regulation and for such internal control as management determines is necessary to enable the prepatation of financial statements that are free from material misstatement, where due to fraud or error.




Opinion:In our opinion, the financial statements prepared in accordance with Bangladesh Accounting Standard/Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company’s affairs as of 31st March 2014 and of the results of its operations and its cash flows for the period then ended and comply with the Companies Act 1994 and other applicable laws and regulations.







TITAS SPINNING & DENIM COMPANY LTD.STATEMENT OF FINANCIAL POSITION

AS AT 31ST MARCH 2014

MAR'14 JUNE'13 Taka TakaASSETS : Non-Current Assets: 1,147,717,962 1,185,272,763 Property, Plant and Equipment 1,147,717,962 1,185,272,763

Current Assets : 968,788,694 924,627,856 Inventories 421,574,293 308,010,757 Advance, Deposit and Pre-Payments 51,167,582 42,274,255 Accounts Rceivable 476,527,460 533,033,805 Cash and Cash Equivalents 19,519,360 41,309,039 TOTAL ASSETS : 2,116,506,656 2,109,900,619

SHAREHOLDER'S EQUITY AND LIABILITIES: Shareholder's Equity : 515,763,494 487,602,269 Share Capital 380,000,000 380,000,000 Retained Earnings (317,826,334) (360,597,505)Re-valuation Surplus of Fixed Assets 453,589,828 468,199,775

Non-Current Liabilities: 403,031,294 419,216,718 Long Term Loan 375,681,048 389,674,980 Deferred Tax Liabilities 27,350,246 29,541,738

Current Liabilities : 1,197,711,868 1,203,081,631 Short Term Loan 327,528,845 315,854,467 Current Portion of Long Term Loan 143,532,453 164,831,292 Security Deposit against Sales 5,000,000 5,000,000 Bank Acceptance Liabilities 393,580,411 395,023,537 Creditors and Accruals 328,070,159 322,372,335


Net Assets Value Per Share (NAV) 135.73 128.32 Par Value Tk.100

A. Matin Chowdhury A.F.M. Zubair B.K.Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date



TITAS SPINNING & DENIM COMPANY LTD.STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 1ST JULY 2013 TO 31ST MARCH 2014

JUL'13-MAR'14 JUL'12-MAR'13 Taka Taka

Sales 761,839,258 624,053,885 Cost of Goods Sold 604,973,252 514,985,157 Gross Profit/(Loss) : 156,866,006 109,068,728

Operating Expenses 26,167,717 15,401,672 Financial Expenses 95,910,894 66,458,777

Operating Profit/(Loss) : 34,787,395 27,208,280

Non-operating Income/(Loss) - 802,606 Net Operating Profit/(Loss) : 34,787,395 28,010,886

Provision for Contribution to WPPF 1,656,543 1,360,414 Profit/(Loss) before Tax : 33,130,853 26,650,472

Provision for Income Tax : 4,969,628 4,178,157 Current Tax 7,161,120 6,611,737 Deferred Tax (2,191,492) (2,433,580)

Net Profit/(Loss) after tax for this year 28,161,225 22,472,315 (Transferred to the statement of Changes in Equity.)

Earnings Per Share (EPS) 7.41 5.91 Par Value Tk.100 Number of Shares used to compute EPS 3,800,000 3,800,000



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Annual Report 2014


TITAS SPINNING & DENIM COMPANY LTD. STATEMENT OF CASH FLOWS


MAR'14 MAR'13 Taka TakaCASH FLOW FROM OPERATING ACTIVITIES :Collection from Turnover & Bills Receivable 818,345,603 548,407,041 Payment for Raw Materials, Indirect Materials and other expenses (663,219,821) (470,435,738)Non-operating Income/(Loss) - 802,606 Payment for Operating Expenses (25,207,550) (15,040,294)Payment for Income Tax (6,727,986) (785,309)Payment of Financial Expenses (95,910,894) (61,909,967)Net Cash provided/(used) by Operating Activities 27,279,352 1,038,340

CASH FLOW FROM INVESTING ACTIVITIES :Acquisation of Fixed Assets (25,450,638) (134,826,725)Net cash used in investing activities (25,450,638) (134,826,725)

CASH FLOW FROM FINANCING ACTIVITIES :Advance paid - (17,631,156)Bank Loan Increase/(Decrease) (23,618,393) 152,697,399 Loan from Directors - 18,695,168 Share money deposit - 284,800,000 Advance from Malek Spinning Mills Ltd. - (285,500,000)Net cash provided/(used) in financing activities (23,618,393) 153,061,411

Increase/(Decrease) in cash and cash equivalents (21,789,679) 19,273,026


Cash and Cash Equivalents at 31st March 2014 19,519,360 53,761,122




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Annual Report 2014

TITAS SPINNING & DENIM COMPANY LTD. STATEMENT OF CHANGES IN EQUITY


Particulars Share Capital Revaluation surplus Retained Total of Fixed Assets Earnings Balance as at 1st July 2013 380,000,000 468,199,775 (360,597,505) 487,602,269 Net Profit/(Loss) during this period 28,161,225 28,161,225 Adjustment of Revaluation surplus of Fixed Assets (14,609,947) 14,609,947 - As at 31st March 2014 380,000,000 453,589,828 (317,826,334) 515,763,494


Particulars Share Capital Revaluation surplus Retained Total of Fixed Assets Earnings Balance as at 1st July 2012 1,000,000 489,831,593 (391,889,698) 98,941,895 Net Profit/(Loss) during this period 22,472,315 22,472,315 Profit & Loss appropriation A/c (Adjustment) 4,548,810 4,548,810 Adjustment of Deferred Tax Liabilities up to 30.06.2012 (32,786,511) (32,786,511)Adjustment of Revaluation surplus of Fixed Assets (16,223,863) 16,223,863 - As at 31st March 2013 1,000,000 473,607,729 (381,431,220) 93,176,509

A.Matin Chowdhury A.F.M. Zubair B.K.Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary




24th Annual General Meeting

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Annual Report 2014

Malek Spinning Mills LimitedRegistered Office: 117/A, Tejgaon Industrial Area, Dhaka-1208, BangladeshCorporate & Share Office: Mehnaj Monsur Tower, House # 11A, Road # 130

Gulshan-1, Dhaka

PROXY FORM

I/We -----------------------------------------------------------------------------------------------------------------------------------------------------

of----------------------------------------------------------------------------------------------------------------------------------------------------------

being a shareholder(s) of Malek Spinning Mills Limited and a holder of-------------------------------------------------------shares

hereby appoint Mr/Mrs/Miss ---------------------------------------------------------------------------------------------------------------------

of----------------------------------------------------------------------------------------------------------------------------------------------------------as my/our proxy to attend and vote on my/our behalf at the 25th Annual General Meeting of the Company to be held on Thursday, December 18, 2014 at 10.30 a.m. at Trust Milonayaton, 545, Puraton Biman Bandar Sarak (Adjacent to Shahid Bir Shresta Jahangir Gate), Dhaka Cantonment, Dhaka-1206 and at any adjournment thereof.

Signed this ----------------------------------------day of December, 2014 Afix Revenue Stamp

Signature shareholder(s)----------------------------------- Signature of Proxy --------------------------------------

Name of shareholder (s) ----------------------------------- Name of Proxy-------------------------------------------

Folio/BO ID No.

Folio/BO ID No. of Proxy (if any):

Note: A member entitled to attend and vote at the Annual General Meeting may appoint proxy to attend and vote in his/her

stead. The proxy from should reach the Corporate & Share Office of the Company not less than 72 hours before the time fixed for the meeting.

--------------------------------------------------------------------------------------------------------------------------------------------

Malek Spinning Mills LimitedRegistered Office: 117/A, Tejgaon Industrial Area, Dhaka-1208, Bangladesh

Corporate & Share Office: Mehnaj Monsur Tower, House # 11A, Road # 130Gulshan-1, Dhaka

Attendance SlipI hereby record my attendance at the 25th Annual General Meeting of Malek Spinning Mills Limited being held today, the December 18, 2014 at 10.30 a.m. at Trust Milonayaton, 545, Puraton Biman Bandar Sarak (Adjacent to Shahid Bir Shresta Jahangir Gate), Dhaka Cantonment, Dhaka-1206 as a holder of ----------------------------------shares of the Company.

Signature of Shareholder/Proxy----------------------------------------------

Name of Shareholder/Proxy---------------------------------------------------Folio/BO ID No.

Note: Shareholder (s) attending the meeting in person or by proxy are requested to complete the Attendance Slip and hand it over at the entrance of the meeting hall.


Documents

Malek Spinning Mills Ltd.Auditors’ Report of Malek Spinning Mills Ltd. 41 Statement of Financial Position as at 30th June, 2014 42 Statement of Comprehensive Income for the year