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Contents
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BOARD OF DIRECTORS NOTICE OF MEETING

COMPANY INFORMATION

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PRODUCT DEVELOPMENT & MERCHANDISING MARKETING OPERATIONS MANUFACTURING

CHAIRMAN'S STATEMENT DIRECTORS' REPORT AUDITORS' REPORT

HUMAN RESOURCES

21

STATEMENT OF FINANCIAL POSITION

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF CHANGES IN EQUITY (GROUP) STATEMENT OF CASH FLOWS NOTES TO THE ACCOUNTS

STATEMENT OF CHANGES IN EQUITY (COMPANY)

BB EXPORT LTD. (SUBSIDIARY PROFILE)

Board of Directors
Fernando Garcia Restrepo Chairman Present position Group Managing Director, Bata Emerging Markets (WEST) Rashidul Hasan Independent Director

Previous positions President Director, Bata Indonesia Managing Director, Bata Kenya Managing Director, Bata India Vice President, Wholesale & Marketing, Bata Ltd, Toronto, Canada Managing Director, Bata Bangladesh

Current positions Chairman, Uttara Finance & Investments Ltd. Independent Director, Reckitt Benckiser Bangladesh Ltd. Independent Director, Monno Group of Industries Trustee, Kumudini Welfare Trust of Bangladesh Ltd.

Previous positions Founder Chairman of IDLC the first joint venture leasing company of Bangladesh CEO & Managing Director of IPDC the first joint venture investment company of Bangladesh Director General, Department of Industries of the Republic of Bangladesh

Muhammad Qayyum Vice Chairman & Managing Director

Previous positions Retail Manager, Futura Footwear Limited, South Africa Retail Manager, Bata Pakistan Limited Merchandising Manager, Bata Pakistan Limited Area Manager, Bata Pakistan Limited Merchandise Planning & Budget Control Manager, Bata Pakistan Limited

Rokanuddin Mahmud Bar-at-law Independent Director

Senior Advocate in the Supreme Court and High Court in Bangladesh

Current Positions CFO, Bata Emerging Markets Limited, Bermuda Director, Bata Pakistan Limited Director, Bata Shoe of Thailand Public Company Limited Director, Bata Malaysia Limited Director, Bata Shoe Company of Ceylon Limited Commissioner, P.T. Sepatu Bata Tbk., Indonesia

Mike Middleton Director

Previous Positions Finance Manager, Bata Shoe Company (Malawi) Limited Company Secretary, The Zimbabwe Bata Shoe Company Limited Finance Manager, Bata Shoe Company (Kenya) Limited Director of Finance, Bata Limited, Toronto, Canada Finance Director, Bata India Limited
ANNUAL REPORT 2010

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Company Secretary Md. Hashim Reza

Company Information

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Auditors Rahman Rahman Huq Chartered Accountants 9, Mohakhali C/A (11th Floor) Dhaka-1212 Legal Advisers Malik Law Associates

Bankers Eastern Bank Ltd. Dutch Bangla Bank Ltd. HSBC Ltd. Islami Bank (Bangladesh) Ltd. Agrani Bank Ltd. Factories 1. Tongi Industrial Area Tongi, Gazipur 2. Dhamrai, Dhaka Tannery Dhamrai, Dhaka

Registered Office Bata Shoe Company (Bangladesh) Limited Tongi Industrial Area Tongi, Gazipur Share Liaison Office 6, B. B. Avenue (2nd floor) Dhaka

ANNUAL REPORT 2010

Notice of Annual General Meeting


1. 2. 3. 4. 5.

Notice is hereby given that the 39TH ANNUAL GENERAL MEETING of Bata Shoe Company (Bangladesh) Limited will be held at Dhamrai Factory, Dhaka, on 23 June 2011, Thursday at 10:30 a.m. to transact the following business: To receive, consider and adopt the audited financial statements of the Company and the Auditors Report thereon for the year ended 31 December 2010. To declare Dividend as recommended by the Directors. To elect Directors. To appoint Auditors for the year 2011 and to fix their remuneration. By order of the Board Tongi, 21 April 2011 NOTES: 1. Md. Hashim Reza Company Secretary To receive, consider and adopt the Directors Report for the year ended 31 December 2010.

Product Development & Merchandising


2010 was as very significant year for product development & marketing for Bata Bangladesh. During the year Bata Bangladesh introduced many exclusive new lines of shoes the majority of which were during festival periods. These new arrivals were introduced in different Bata brands. Some of them are as follows:

North Star is a sports-casual footwear brand for the youth market. Its collections are inspired by world trends and young peoples versatility; developing fashionable commercial products. The qualities that identify this brand are its creativity, design, dynamism, and modernity. The main objective of our North Star brand is to develop high quality products that follow world trends, adapting them to the youth market and showing that it is a brand with fashionable products at good value.

2. 3. 4.

4 May 2011 is the RECORD DATE. Shareholders whose names appearing in the share register of the Company or in the depository register on that date will be eligible to receive dividend as approved at the Annual General Meeting. A member eligible to attend and vote at the General Meeting is entitled to appoint a proxy to attend the meeting and vote on his/her behalf. A Proxy Form is enclosed. Form of Proxy, duly completed, must be deposited at the Companys Registered Office at least 48 (fortyeight) hours before the appointed time for the Meeting.

Created in France, Marie Claire, epitomises Parisienne style and sophistication. As a brand,Marie Clarie encompasses what it is like to be a woman in charge, a woman who expresses her confidence through the clothes and shoes she wears with a tagline Confident Femininity, Marie Claire provides stylish and chic shoes for the women in charge, both while they work in the office, or go out for a party.

Like a maternal figure, one thats nurturing and protective, Bata Comfit exudes certain warmth that only a mother can contest to. Unconditionally giving to provide tender loving care, moving with you every step of the way, Bata Comfit as a brand embraces its image as your loyal safe keeper.

For all things ingenious and all things bright, B.First represents children at their most curious years. Children who are more than willing to pick up, to try and to venture into the world of trial and error, B.First challenges and inspires these students to outdo themselves. In a day, I sit, stand, walk, run, chase, follow, play, study... and Id most likely need a pair of sturdy-soled, sporty, & padded shoes to see me through it all! That is our B First branded shoe for all children out there who go to school & love to be in study & play all day.

ANNUAL REPORT 2010

Non Retail
Power is the sports & athletic- leisure shoe brand. The shoes have been specially designed for activities like running, training, outdoor, soccer & lifestyle. No other sports brand can give you the value for money like Power. These shoes help you to perform comfortably any particular outdoor activity. Non Retail business played a vital role in the companys total turnover in 2010. This business channel includes 5 different divisions namely Dealers Support Program (DSP), Wholesalers, Rural Sales, Department Stores and Industrial & Institutions. The Company discontinued business with low volume dealers and focused on the high contribution dealers to minimize business risks and operating expenses. In addition, emphasis was given to open new dealers. Around 71 new dealers were opened during the year which contributed around Tk. 88 million in turnover. Currently, the company has 562 DSPs and 393 wholesalers running under a sound meaningful business policy focused on development of good relationship. For retaining market leadership, the company focuses on appropriate shoe design and product development to meet the needs of the market.

Marketing Operations
Retail
In 2010 our Retail channel sold 8.6 million pairs of shoes with a turnover of Tk 3.5 billion which is 109% growth against last year. To achieve this outstanding growth in spite of global recession, company took different initiatives like product innovation, aggressive marketing programmes, market expansion, human resource development, operational efficiency, team work etc.

Bata Industrials

Manufacturing

The company has established a new business channel under the brand Bata Industrials to serve the industrial growth. After launching Bata Industrials shoes and we received very encouraging feedback from different industrial groups who focus on quality and safety such as petrochemicals, food Industries, machineries, automobile parts, electrical equipments etc.

The company operates two manufacturing facilities one in Tongi and the other in Dhamrai. With a production capacity of 110,000 pairs of shoes daily, the company also has a modern tannery facility with an output of 3.4 million square feet of leather annually. In 2010 company produced over 24.9 million pairs. Currently company continues producing quality & fashionable shoes to respond to customers demand.

ANNUAL REPORT 2010

Human Resources
COSTEF WORKSHOP Bata Shoe Company (Bangladesh) Ltd. organized a day long Workshop on COSTEF (Costing & Efficiency) on June 01, 2010 at the Human Resources Training Center, Tongi. A total of 30 participants from Merchandising, Product Development and Distribution department participated in the workshop. The main topics were Concept of BSO Costing/Standard Cost, Material Calculation, Practical Session - One Pair Area Drawing & Paper Skin Tracing, Labour Cost & Concept of SPM, Production Expenses, Capacity Utilization, Prodeffcost, Negotiation with Supplier and Pricing & Gross Margin Establishment.

With a view to improve sales and management skills of Store Managers, a number of STOREMANCO have been organized in 2010. The course covers Job Responsibilities of Store Managers, Product Knowledge, Visual Merchandising, Marketing, Distribution & Customers Claim, Books of Accounts, Remittance, Store Audit, Effective Utilization of Point of Sales (POS), Staff Productivity Analysis, Store Profile, Customer Service and Team Work.

STOREMANCO

Bata Bangladesh donated computers with printers and multi-media to the Maer Achol Shelter, Mirpur, Dhaka to set a computer lab. Bata Bangladesh also donated shoes and color televisions for the children of the shelter.

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ANNUAL REPORT 2010 11

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Chairman's Statement 2010


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company currently has nearly 1,000 independent dealers throughout the country. Recently your company launched the Bata Gift Voucher to extend its service to its valued customers. Our customers will now be able to order and buy these colleagues and staff. Aggressive media campaigns and in-store promotions were conducted at various occasions during year to support our leadership Gift Vouchers to present to their friends, relatives,

Fernando Garcia Restrepo


Chairman

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12

Dear Shareholders

position, stimulate sales during peak selling periods and number of sports activities throughout the country with promotional programmes.

On behalf of the Board of Directors of the Company, it is my privilege and honour to present to you the Directors Auditors Report thereon, for the year ended 31 December 2010. Report together with the Financial Statements and Your company continued to achieve significant growth in impressive increase of Tk 113 million against 2009. In 2010 your company achieved a turnover of Tk. 5,663 against 2009. The retail channel underwent both phases of million representing an increase of more than 10%

provide support for our branded programmes. As in the past, your company participated with sponsorship in a

the year under review. During the year your company recorded a profit before tax of Tk 743 million, an

Your company continues to be highest tax payer in the leather and footwear sector in the country. In 2010 your company contributed Tk 1,361 million to the countrys National Exchequer. This represents an increase of 14% over that of the previous year. Emphasis has always been given to personnel development since this is an essential requirement for the companys progress. Sixteen of our employees participated in overseas courses organised by BSO and 584 participated in local and in-house courses in 2010. To promote team spirit, integrity and to improve employee relations your company organised an annual picnic and cultural programme where all employees participated. We also continued to award Employee of the Month certificates which provided due recognition to deserving employees. Your company is committed to being a good corporate citizen. CSR activities involve supporting individuals Batas CSR. In 2010 Bata Bangladesh donated shoes to non-religious and non-political organization. Bata and communities in need. Partnership with voluntary the poor students of Shishu Polli Plus, an UK based a France based non-profit orgainization which supports company donated shoes and computers with printer and

consolidation and expansion. Smaller stores which did same time, more profitable stores were opened or expanded. Strategic stores were renovated and flagship store at Bashundhara Mall, Dhaka was concepts. For example, the total floor area of the

not generate the required returns were closed. At the upgraded to reflect the improved image of the various expanded to 20,000 sq ft, making it the biggest shoe

store in the world. This store now represents the Organisation (BSO), officially opening the store in December 2010.

business card of Bata Bangladesh. We had the honour of having Mr T.G.Bata, President of the Bata Shoe

and charitable organizations is a prominent feature of

In the Non-Retail Sales Department (NRSD), business segment serves the semi-urban and rural areas. The grew by approximately 13% compared to 2009 in spite of stiffer competition in this segment of the market. This

Bangladesh also collaborated with Maer Achol Shelter, street children between 5 to 18 years by providing shelter, food, education, and health care & training. Your
ANNUAL REPORT 2010 1 3

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multi-media functions to set up a computer laboratory for company also provides sales training to the older children and offer them part time jobs in our retail stores.

the children of Maer Achol Shelter, Mirpur, Dhaka. Your Your Board continues its intention to recommend the payment of dividends commensurate with the profitability and sustainability of the companys financial position. The Board has, therefore, proposed for approval at the Annual General Meeting the payment of a final dividend of Tk 10.50 per share which, together with the interim dividend of Tk 14.50 per share paid in December 2010, will make a total dividend of Tk 25.00 per share for the financial year ended 31 December 2010.

The Directors retiring as per Article 104 of the Companys Articles of Association are Mr. Fernando Garcia Restrepo, Mr. Mike Middleton, Mr. Rashidul Hasan and Mr. Rokanuddin Mahmud. All of them, except Mr. Rokanuddin Mahmud, offer themselves for re-election. In conclusion, on behalf of the Board of Directors, I would like to express my appreciation to you, our shareholders, as well as to our valued customers, suppliers, dealers, employees and the Government of the Peoples Republic of Bangladesh for the support and cooperation extended to the Company. Fernando Garcia Restrepo Chairman 21 April 2011

lJjtJPJ VJKxt~J rxPasPkJ PY~JroqJj 21 FKku 2011

14

ANNUAL REPORT 2010 1 5

Directors' Report
FINANCIAL RESULTS Net Profit before tax Provision for tax Net profit after tax

Your Directors have pleasure in submitting their Report and Audited Financial Statements of the Company for the year ended 31 December 2010 along with the preceding three years as follows: 2010 TAKA 2009 TAKA 2008 TAKA 2007 TAKA

The Directors also report that:


N

Statutory Information on the Financial Statements


The Financial Statements of the Company present a true and fair view of the Companys state of affairs, the results of its operations, cash flow and changes in equity. Proper books of accounts as required by law have been maintained. Appropriate accounting policies have been followed in formulating the Financial Statements and accounting estimates are reasonable and prudent.

N N

742,970,530 199,000,000 543,970,530 873,194,520

629,692,445 180,286,000 449,406,445 724,748,075

619,634,702 170,219,000 449,415,702 575,292,171 1,000,202

493,927,273 169,078,000 324,849,273 571,417,361 21,025,537

Unappropriated profit, brought forward

Over tax provision transferred for finalization of assessment (1981 to 1994) Undistributed dividend reserved Profit available for appropriation

N N N N

The Financial Statements which were prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFFS) also comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Internal control system is sound in design and effectively implemented and monitored. There are no significant doubts on the Companys ability to continue as a going concern. The deviation from the operating result of last year is reported in the details to the accounts.

1,417,165,050 1,174,154,520

1,025,708,075

917,292,171

From which the Directors recommended the following appropriations: Final dividend paid (previous year) Interim dividend paid (current year) Unappropriated profit carried forward DIVIDEND

Board meetings, Audit Committee meetings, Shareholdings and the Compliance report as per Securities and Exchange Commissions Notification are enclosed herewith as Annexure-I and Annexure-II respectively.

198,360,000 342,000,000

143,640,000

157,320,000

143,640,000

1,075,165,050

300,960,000

157,320,000

143,640,000

873,194,520

300,960,000

198,360,000

143,640,000

On behalf of the Board Muhammad Qayyum Managing Director

724,748,075

342,000,000

575,292,171

For the year ended 31 December 2010 the Board of Directors recommended an interim dividend of Tk. 14.50 to Tk. 143,640,000 thus making a total dividend of Tk.25.00. per share amounting to Tk.342,000,000 DIRECTORS

per share amounting to Tk 198,360,000 and now recommends a final dividend of Tk 10.50 per share amounting

The Directors retiring as per Article 104 of the Companys Articles of Association are Mr. Fernando Garcia Restrepo, Mr. Mike Middleton, Mr. Rashidul Hasan and Mr. Rokanuddin Mahmud. All of them, except Mr. Rokanuddin Mahmud, offer themselves for re-election. AUDITORS

as auditors of the Company.


16

Rahman Rahman Huq, Chartered Accountants, retire and being eligible offer themselves for re - appointment

ANNUAL REPORT 2010 1 7

Annexure - I

The information regarding Board meetings, Audit Committee meetings and Shareholdings of the Company for the year 2010 are mentioned below in compliance with Securities and Exchange Commissions Notification No.SEC/CMRRCD/2006-158/Admin/02-08 dated 20 February 2006. Board Meetings The Board met five times during the year 2010. The Company Secretary and the Chief Financial Officer were also present in the meetings. The attendance by each Director is mentioned below: Name of Director Fernando Garcia Restrepo Mike Middleton Rashidul Hasan Rokanuddin Mahmud Rajeev Gopalakrishnan Muhammad Qayyum No. of Attendance 2 Meetings 5 Meetings 5 Meetings 1 Meeting 4 Meetings (resigned on 31 December 2010) (appointed on 31 December 2010)

Annexure II

Status of Compliance with the conditions imposed by the Securities & Exchange Commissions Notification No. SEC/CMRRCD/2006-158/Admn/02-08, dated 20 February 2006 (Report under Condition No. 5.00) Condition No. 1.1 Compliance Status

Title Boards Size (not less than 5 and not more than 20 members)

Complied

Not Complied

Explanation for non compliance with the condition

1.2(i) 1.2(ii) 1.3 1.4

Audit Committee Meeting

Independent non-shareholder Director number (At least one tenth(1/10) of total number of Directors) Appointed independent Director (s) by elected directors Individual Chairman of the Board and Chief Executive and their roles and responsibilities The Directors Report to the Shareholders: Fairness of Financial Statements Adoption of appropriate accounting policies and estimates Maintenance of proper books of accounts

The Audit Committee is a sub-committee of the Board. All members of the Audit Committee were appointed by the Board of Directors among their members. They met once during the year 2010. Except for Mr. Fernando Garcia Restrepo and Mr. Rokanuddin Mahmud all the members were present in the meeting of the committee. The Company Secretary was the Secretary of the Committee. The Audit Committee comprise of: Fernando Garcia Restrepo Muhammad Qayyum Mike Middleton Rashidul Hasan Rokanuddin Mahmud Rajeev Gopalakrishnan Chairman Member (appointed on 31 December 2010) Member Member as Independent Director Member as Independent Director Member (resigned on 31 December 2010)

1.4(a) 1.4(b) 1.4(c) 1.4(d) 1.4(e) 1.4(f) 1.4(g) 1.4(h) 1.4(i) 1.4(j) 2.1 2.2 3.0 3.1(i)

Shareholdings

Compliance with International Accounting Standards Ability to continue as a going concern Significant deviations from last year Soundness of internal control system

The names of the Shareholders along with the positions of their shares are listed below: NAME OF SHAREHOLDER i) ii) Directors N Mr. Rashidul Hasan Parent/subsidiary/associate/related parties: N Bafin (Nederland) B.V. Executives (Head of Functions) SHARES HELD 9,576,000 Nil 64

% OF HOLDING 70.00

Presentation of last three years key operating and financial data Declaration of dividend Shareholding pattern

iii)

iv) iv)

Other Shareholders who hold less than 10% each N Institutions (Other Non Resident) N Institutions (Local) N Individuals Total

Shareholders who hold 10% or more.

13,680,000

1,030,720 1,028,800 2,044,416

Nil

Nil

1.4(k)

Details of Board Meeting and attendance Appointment of Company Secretary (CS), Chief Financial Officer (CFO) and Head of Audit (HOA) and define their respective roles responsibilities and duties. Audit Committee:

100.00

7.53 7.52 14.95

Nil

Attendance of Company Secretary and Chief Financial Officer at the Board Meeting Constitution of Audit Committee

ANNUAL REPORT 2010 1 9

18

Condition No. 3.1(ii) 3.2(i)

Title Constitution of Committee with Board member including one independent Director Professional qualification and experience of the Chairman of the Committee. Reporting of conflict of interest to Board of Directors Reporting to the Board of Directors Chairman of Committee Filling of casual vacancy in committee

Complied

Compliance Status

Not Complied

Explanation for non compliance with the condition

3.1(iii) 3.2(ii)

N/A

3.3.1(i)

3.3.1(ii) (a) 3.3.1(ii) (b) 3.3.1(ii) (c) 3.3.2 3.4 4.00 3.3.1(ii)(d)

Reporting of any fraud or irregularity or defect in the internal control system Reporting of infringement of laws, including securities related laws, rules and regulations. Reporting of the qualified point to the Commission External/Statutory Auditors: Reporting any other matter to the Board of Directors

N/A

We have audited the accompanying financial statements of Bata Shoe Company (Bangladesh) Limited, which comprise the statement of financial position as at 31 December 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information and all related consolidated financial statements of Bata Shoe Company (Bangladesh) Limited and its subsidiary (together referred to as "the group").

Independent Auditors' Report to the Shareholders of Bata Shoe Company (Bangladesh) Limited

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Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987, other applicable laws and regulations and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' 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 from material misstatement.

N/A

4.00(i)

Reporting of activities to the shareholders and General Investors Non engagement in designing of financial information system

N/A N/A

4.00(ii)

Non-engagement in appraisal or valuation

4.00(iii) 4.00(iv) 4.00(v) 4.00(vi) 4.00(vii)

Non-engagement in bookkeeping or other services related to the accounting records or financial statement Non engagement in broker dealer services Non engagement in actuarial services Non engagement in Internal Audit services Non engagement in any other services

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation 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. 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 including consolidated financial statements, give a true and fair view of the financial position of the company/group as at 31 December 2010 and of their financial performance and cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) and comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. We also report that: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;

b) in our opinion, proper books of account as required by law have been kept by the company and its subsidiary so far as it appeared from our examination of these books; d) the expenditure incurred was for the purposes of the company's/group's business.

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

Dhaka, 21 April 2011 20

Rahman Rahman Huq Chartered Accountants


ANNUAL REPORT 2010 2 1

Bata Shoe Company (Bangladesh) Limited Statement of Financial Position as at 31 December 2010
Notes 4 5 6 7 10 8 9 10 11 Assets Property, plant and equipment Capital work in progress Investment in subsidiary Deferred tax assets Prepayments of rent Total non-current assets Group 2010 Taka 2010 Taka

Company

Bata Shoe Company (Bangladesh) Limited Statement of Comprehensive Income for the year ended 31 December 2010
2009 Taka Notes Group 2010 Taka 2010 Taka Company 2009 Taka

Inventories Accounts receivable Advances, deposits and prepayments Cash and cash equivalents Total current assets Total assets

Equity Share capital Reserves and surplus Total equity attributable to equity holders Less: Non-controlling interest Total equity Liabilities Deferred liability Total non-current liabilities

1,701,382,223 132,014,023 299,007,464 172,640,520 2,305,044,230 3,054,447,548 136,800,000 1,184,257,799 1,321,057,799 2,103 1,321,055,696 147,847,820 147,847,820

663,672,651 8,906,555 7,000,000 69,824,112 749,403,318

1,701,382,223 132,014,023 299,007,285 172,517,113 2,304,920,644 3,056,956,615 136,800,000 1,185,657,853 1,322,457,853 1,322,457,853 147,847,820 147,847,820

646,335,304 8,906,555 19,970,000 7,000,000 69,824,112 752,035,971

1,433,325,407 101,858,206 238,829,873 352,067,178 2,126,080,664 2,722,964,025 136,800,000 983,687,323 1,120,487,323 1,120,487,323 131,959,233 131,959,233

508,297,292 13,860,671 19,970,000 16,000,000 38,755,398 596,883,361

12 13

Revenue 20 Cost of sales 21 Gross profit Exchange gain/(loss) Other income 22 Administration, selling and distribution expenses 23 Profit from operating activities Finance income 24 Finance expenses 25 Net finance income/(expenses) Profit before contribution to workers' profit participation fund Contribution to workers' profit participation fund Profit before income tax 29 Income tax expense: Current tax 19 Deferred tax 7 Profit for the year

5,663,090,394 (3,617,511,236) 2,045,579,158 (24,598) 17,845,108 (1,293,524,631) 769,875,037 14,558,419 (3,756,371) 10,802,048 780,677,085 (39,103,712) 741,573,373 190,005,000 9,000,000 199,005,000 542,568,373

5,663,090,394 (3,617,511,236) 2,045,579,158 (24,598) 17,845,108 (1,292,125,679) 771,273,989 14,556,624 (3,756,371) 10,800,253 782,074,242 (39,103,712) 742,970,530 190,000,000 9,000,000 199,000,000 543,970,530

5,141,034,678 (3,237,854,140) 1,903,180,538 269,207 7,103,518 (1,254,198,947) 656,354,316 10,400,256 (3,920,419) 6,479,837 662,834,153 (33,141,708) 629,692,445 184,000,000 (3,714,000) 180,286,000 449,406,445

14 15 16 17 18 19

Creditors for goods Creditors for expenses Creditors for other finance Accrued expenses Provision for tax Unclaimed dividend Total current liabilities Total liabilities Total equity and liabilities

The annexed notes 1 to 39 form an integral part of these financial statements.

392,729,864 213,120,081 179,539,644 263,121,200 479,056,283 57,976,960 1,585,544,032 1,733,391,852 3,054,447,548

392,729,864 213,120,081 180,674,554 263,098,200 479,051,283 57,976,960 1,586,650,942 1,734,498,762 3,056,956,615

278,984,626 282,171,467 173,433,804 236,257,580 454,922,477 44,747,515 1,470,517,469 1,602,476,702 2,722,964,025

Other comprehensive income Total comprehensive income for the year

Profit/Total comprehensive income attributable to: Owners of the company Non-controlling interest Basic earnings per share (par value Tk 10)

542,568,373

543,970,530

449,406,445

Profit after tax from manufacturing and trading has been shown in attached Exhibit - I. The annexed notes 1 to 39 form an integral part of these financial statements.

32

542,570,476 (2,103) 542,568,373 39.66

543,970,530 543,970,530 39.76

449,406,445 449,406,445 32.85

Muhammad Qayyum Managing Director Dhaka, 21 April 2011 22

Rashidul Hasan Director

Md. Hashim Reza Company Secretary

As per our report of same date. Rahman Rahman Huq Chartered Accountants

Muhammad Qayyum Managing Director Dhaka, 21 April 2011

Rashidul Hasan Director

Md. Hashim Reza Company Secretary

As per our report of same date. Rahman Rahman Huq Chartered Accountants
ANNUAL REPORT 2010 2 3

Bata Shoe Company (Bangladesh) Limited Statement of Changes in Equity (Group) for the year ended 31 December 2010
Share capital 136,800,000 136,800,000 Taka Reserve on revaluation of land 60,631,183 60,631,183 Taka Nondistributable special reserve Taka Reserves and surplus General reserve 48,863,000 48,863,000 48,863,000 Taka Retained earnings 724,748,075 449,406,445 (143,640,000) 873,194,520 Taka Total Reserves and surplus 835,240,878 449,406,445 (143,640,000) 983,687,323 Taka Total equity attributable to equity holders 972,040,878 449,406,445 (143,640,000) 1,120,487,323 542,570,476 (143,640,000) 1,321,057,799 (198,360,000) Taka Noncontrolling interest Taka Total equity 972,040,878 449,406,445 Taka

Bata Shoe Company (Bangladesh) Limited Statement of Cash Flows for the year ended 31 December 2010
Group 2010 Taka 2010 Taka

Company

Particulars Balance as at 1 January 2009 Profit for the year

Total comprehensive income for 2009 Transactions with the shareholders Final dividend for the year 2008 Interim dividend for the year 2009

998,620 998,620 -

Cash flows from operating activities

2009 Taka

Balance as at 31 December 2009 Profit for the year

(157,320,000)

(157,320,000)

(157,320,000)

Total comprehensive income for 2010 Transactions with the shareholders Final dividend for the year 2009 Interim dividend for the year 2010

- 1,120,487,323 (2,103) 542,568,373

- (157,320,000)

- (143,640,000)

Cash receipts from customers Cash payments to and on behalf of employees Cash payments to suppliers and contractors for goods and services Cash generated from operating activities Interest received from STD account Interest paid Income tax paid Net cash from operating activities

5,629,704,667 (895,841,043) (4,204,011,159) 529,852,465 7,306,243 (3,780,969) (171,567,300) 361,810,439

5,629,704,667 (895,841,043) (4,203,315,494) 530,548,130 7,304,448 (3,780,969) (171,567,121) 362,504,488

5,121,291,041 (826,580,484) (3,579,304,433) 715,406,124 6,428,922 (3,920,419) (176,623,158) 541,291,469

60,631,183 -

542,570,476 (143,640,000) 1,073,764,996 (198,360,000)

542,570,476 (143,640,000) 1,184,257,799 (198,360,000)

Balance as at 31 December 2010

136,800,000

998,620

- (143,640,000) (2,103) 1,321,055,696 - (198,360,000)

Bata Shoe Company (Bangladesh) Limited Statement of Changes in Equity (Company) for the year ended 31 December 2010
Reserve on revaluation of land Nondistributable special reserve Taka Reserves and surplus General reserve Retained earnings Total Reserves and surplus

Cash flows from financing activities

Interest received from FDR Acquisition of subsidiary Proceed from sales of property, plant and equipment Acquisition of property, plant and equipment Payment for capital work in progress Net cash used in investing activities Dividend paid Net cash used in financing activities

Cash flows from investing activities

7,239,425 3,701,115 (96,300,656) (127,212,426) (212,572,542) (328,770,555) (328,770,555) (179,532,658) 172,640,520 352,173,178

7,239,425 (18,729,090) 3,701,115 (78,283,022) (127,212,426) (213,283,998) (328,770,555) (328,770,555) (179,550,065) 172,517,113 352,067,178

4,226,193 (106,000) 4,140,332 (69,869,753) (54,100,412) (115,709,640) (336,922,443) (336,922,443) 263,407,792 88,659,386

Particulars

Share capital

Balance as at 1 January 2009 Profit for the year

Total comprehensive income for 2009 Transactions with the shareholders Final dividend for the year 2008 Balance as at 31 December 2009 Profit for the year Interim dividend for the year 2009

136,800,000 136,800,000 136,800,000 -

Taka

60,631,183 60,631,183 60,631,183 -

Taka

998,620 998,620 -

48,863,000 48,863,000 -

Taka

724,748,075 449,406,445

Taka

835,240,878 449,406,445

Taka

Total equity

972,040,878 449,406,445

Taka

Cash and cash equivalents as at 1 January

Net cash increase/(decrease) in cash and cash equivalents Cash and cash equivalents as at 31 December (Note 11)

352,067,178

(143,640,000) (143,640,000) (143,640,000) (157,320,000) (157,320,000) (157,320,000) 873,194,520 983,687,323 1,120,487,323 543,970,530

Total comprehensive income for 2010 Transactions with the shareholders Final dividend for the year 2009 Balance as at 31 December 2010 Interim dividend for the year 2010

543,970,530

543,970,530

998,620

48,863,000 1,075,165,050 1,185,657,853 1,322,457,853

(143,640,000) (143,640,000) (143,640,000) (198,360,000) (198,360,000) (198,360,000)

24

ANNUAL REPORT 2010 2 5

1.

Bata Shoe Company (Bangladesh) Limited Notes to the Financial Statements as at and for the year ended 31 December 2010
Bata Shoe Company (Bangladesh) Limited (hereinafter referred to as "Bata"/"the company"/"the parent company") is a public company limited by shares. It was incorporated in Bangladesh in 1972 under the Companies Act 1913. The address of the registered office of the company is Tongi, Gazipur, Bangladesh. The company is one of the operating companies of worldwide Bata Shoe Organization (BSO). The shares in the company are listed in both Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and mostly held by Baffin (Netherlands) B.V. The financial period of the company covers one year from 1 January to 31 December. In November 2009, the company established a wholly owned subsidiary named "BB Export Ltd." (hereinafter referred to as "BB Export"/ "the subsidiary company"). BB Export has not started its operation till 31 December 2010. Reporting entity

2.5

The company has applied the following BASs/BFRSs for the first time in the year 2010. BAS 1: Presentation of Financial Statements (Revised) BAS 27: Consolidated and Separate Financial Statements BAS 32: Financial Instruments: Presentation BAS 39: Financial Instruments: Recognition and Measurement BFRS 7: Financial Instruments: Disclosures BFRS 8: Operating Segments

Changes in accounting policies

2.

These financial statements as at and for the year ended 31 December 2010 include consolidated ("Group") and separate ("Company") financial statements. The consolidated financial statements comprise the financial statements of the company and its subsidiary, BB Export Ltd. (together referred to as "the group"). The separate financial statements present the standalone financial statements of Bata Shoe Company (Bangladesh) Limited. Statement of compliance Basis of preparation

The company is mainly engaged in manufacturing and marketing of leather, rubber, plastic, canvas footwear, hosiery and accessories items as well as finished leather. Manufacturing plants of the company are situated at Tongi and Dhamrai. 2.6

BAS 27 has been applied since it is the first time the company is preparing consolidated financial statements. BAS 1 (Revised), BAS 32, BAS 39, BFRS 7 and BFRS 8 have been applied as these are applicable to the companies from 1 January 2010. These BASs/BFRSs have been applied prospectively and have had no material impact on earnings per share. Reporting period

2.1

These financial statements (including consolidated and separate financial statements) have been prepared in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. These financial statements were authorised for issue by the Board of Directors on 21 April 2011. Basis of measurement

3.

The reporting period of Bata Shoe Company (Bangladesh) Limited is from 1 January 2010 to 31 December 2010 whereas the reporting period of its subsidiary, BB Export Ltd. is from 19 November 2009 (from date of incorporation) to 31 December 2010. Since the transactions which occurred between 19 November 2009 to 31 December 2009 are immaterial, the whole period has been consolidated with the parent company in this year's financial statements. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently, except as explained in note 2.5, which addresses changes in accounting policies. Accounting policies related to consolidation process became applicable for the group after the formation of BB Export Ltd. in 2009. Comparative information for 2009 provided in these financial statements reflect Bata's individual financial statements only as at and for the year ended 31 December 2009 (as consolidation procedures were not applicable at that time). Certain comparative amounts have been reclassified to conform to current years presentation (Note 39.1). Basis of consolidation

2.2 2.3

These financial statements have been prepared on the historical cost basis except revaluation of land at Tongi made in 1979 in the statement of financial position. These financial statements are presented in Bangladesh Taka (Taka/Tk) which is both functional currency and presentational currency of the group/company. The amounts in these financial statements have been rounded off to the nearest Taka except the amounts presented in revenue in note 20, statement of production in note 23.2 and related party transactions in note 36 have been rounded off to the nearest thousand Taka and credit facilities available as at 31 December in note 11.2 have been rounded off to the nearest million Taka. The preparation of these financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes: Note Note Note Note Note Note 3.5 4 7 14 19 38 Inventories Property, plant and equipment Deferred tax assets Deferred liability Provision for tax Contingent liabilities Use of estimates and judgments Functional and presentational currency

3.1

3.1.1 Subsidiaries

2.4

3.1.2 Transaction eliminated on consolidation

Subsidiaries are entities controlled by the group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interest to have deficit balance. As the plant of BB Export Ltd has been set up at Dhamrai, all figures are consolidated with the figures of Bata's Dhamrai factory and policies are aligned with that of Bata's Dhamrai factory (where applicable). Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Foreign currency differences arising on translation are recognised in profit or loss.
ANNUAL REPORT 2010 2 7

3.2

Foreign currency

26

3.3

3.3.1 Financial assets

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date the Group becomes a party to the contractual provisions of the instrument.

Financial instruments

3.4.2 Subsequent costs

3.4.3 Depreciation

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

The group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. 3.3.1.1 Accounts receivables Financial assets include cash and cash equivalents, accounts receivable, advances, deposits and prepayments.

No depreciation is charged on land and capital work in progress. Depreciation is charged on all other items of property, plant and equipment of Tongi factory on reducing balance method while straight line method is followed in respect of Dhamrai factory. The rates of depreciation are as follows: Building - Factory Motor vehicles Tongi 20% 15% Dhamrai 2.5% 7.5% 10% 20%

Accounts receivables represent the amounts due from institutional customers, money on way from stores and depots, export customers etc. Accounts receivables are stated net of bad debts provision.

3.3.1.2 Cash and cash equivalents

Provision for doubtful debts is made based on the company policy. Bad debts are written off on consideration of the status of individual debtors. Cash and cash equivalents comprise cash on hand, cash in transit and cash at bank including fixed deposits having maturity of three months or less which are available for use by the company without any restriction. Bank overdrafts that are repayable on demand and form an integral part of the groups cash management are included as a component of cash and cash equivalents. The group recognises all financial liabilities on the trade date which is the date the group becomes a party to the contractual provisions of the instrument.

Plant and machinery Furniture, fixtures and equipment

- General

10% 10% - 15%

2.5%

20%

3.3.2 Financial liabilities

3.4.4 Capital work in progress 3.5 Inventories

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Property, plant and equipment that is being under construction/acquisition is accounted for as capital work in progress until construction/acquisition is complete and measured at cost. Inventories except raw material in transit are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. Impairment

3.3.2.1 Trade and other creditors 3.4

The group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. Financial liabilities comprise trade and other creditors only. The group recognises a financial liability when its contractual obligations arising from past events are certain and the settlement of which is expected to result in an outflow from the company of resources embodying economic benefits. Property, plant and equipment

3.4.1 Recognition and measurement

Items of property, plant and equipment excluding land are measured at cost less accumulated depreciation and accumulated impairment losses. Land is measured at revalued amount.

3.6

3.6.1 Non-derivative financial assets

Cost includes expenditures that are directly attributable to the acquisition of assets. The cost of self-constructed assets includes the cost of materials and direct labour, any other cost directly attributable to bringing the asset to a working condition for the intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised net within other income/other expenses in profit or loss. When revalued assets are sold, any related amount included in the revaluation reserve is transferred to retained earnings. 28

3.6.2 Non-financial assets

Financial assets not carried at fair value through profit or loss, loans and receivables are assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. The carrying amounts of the group's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the recoverable amount of the asset is estimated. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.
ANNUAL REPORT 2010 2 9

3.7

3.8

Paid up capital represents total amount contributed by the shareholders and bonus shares issued by the company to the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after all other shareholders and creditors are fully entitled to any residual proceeds of liquidation. The company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds. The company maintains three contributory provident funds for its permanent employees categorised as managers, officers and supervisors and workers. These are administered by the Boards of Trustees. The company maintains an unfunded gratuity scheme, provision in respect of which is made annually for the employees other than managerial staff. Gratuity payable at the end of each year has been determined on the basis of existing rules and regulations of the company. Actuarial valuation of the gratuity fund is carried out by a professional actuary. A funded pension fund is also in operation for managerial staff. Provisions Revenue A provision is recognised if, as a result of past event, the company has a present legal or constructive obligation that can reliably be estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, Value Added Tax and trade discounts. Employee benefits

Share capital

3.13.2 Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax

rates that are expected to be applied to the temporary differences when they are reversed, based on the laws that there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity. extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax 3.14 tax benefit will be realised. Earnings per share

have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related

3.8.1 Defined contribution plan (provident fund)

3.8.2 Defined benefit plan (gratuity and pension fund)

The group/company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the

3.9 3.10

group/company with the weighted average number of ordinary shares outstanding during the period, adjusted for the

effect of change in number of shares for bonus issue, share split and reverse split. Diluted EPS is determined by financial statements as there was no dilutive potential ordinary shares during the relevant periods. Segment reporting

adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares 3.15

outstanding, for the effects of all dilutive potential ordinary shares. However, dilution of EPS is not applicable for these

3.11 3.12

Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, the company has no managerial involvement of ownership for the goods, the amount of the revenue and the cost of the transaction can be measured reliably, and it is probable that the economic benefits associated with the transactions will flow to the company. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expenses over the term of the lease. Finance income and expenses Finance income comprises interest income on funds invested and interest on shop managers account held with the company. Interest income is recognised on accrual basis. Tax Lease payments

An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the groups financial information is available. make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete those that can be allocated on a reasonable basis. Duty drawback

other components. All operating segments operating results are reviewed regularly by the groups management to Segment results that are reported to the management include items directly attributable to a segment as well as 3.16 3.17

Duty drawback claimed on export sales is adjusted against cost of imported raw materials. Sales proceeds from wastage, scrap etc. Sales of empty drum of chemicals, split leather and other wastage of materials have been adjusted with cost of raw materials consumed. Income from non-operating activities is recognised as other income. Workers' profit participation fund (WPPF) Labour Act 2006.

3.13

Finance expense comprises interest expense on overdraft, finance lease and interest on shop managers account held with the company. All finance expenses are recognised in the statement of comprehensive income. Income tax expense comprises current and deferred tax. Income tax expense is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Bata qualifies as a "Publicly Traded Company"; hence the applicable tax rate is 27.50 %. It enjoys 10% rebate on income tax payable for declaring dividend more than 20% of paid up capital. Being a private limited company, applicable tax rate for BB Export Ltd. is 37.50%.

3.18

The company provides 5% of its profit before charging such expense as WPPF in accordance with The Bangladesh Events after the reporting period

3.13.1 Current tax

3.19

Events after the reporting period that provide additional information about the group's/company's position at the date when material.

of statement of financial position or those that indicate the going concern assumption is not appropriate are reflected

in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes
ANNUAL REPORT 2010 3 1

30

4.

4(a)

Year 2010 (Group)


As at 1 January 2010 268,177,094 86,057,856 Taka

Property, plant and equipment


Cost/Valuation Disposals/ transfers during the year Taka Depreciation Adjustment for disposals/ transfers Taka Written down value as at 31 December 2010 144,516,416 86,057,856 Taka

4.2 Disposal of property, plant and equipment


Particulars Machinery Computer Furniture, fixtures and equipment Shop furniture Original cost Taka Taka

Accumulated depreciation 17,986,383 42,817 53,176 9,160,439 27,533,700 290,885

Book value 148,833 108,724 2,924,922 4,144,206 408,215 553,512 Taka

Sale value 2,464,537 104,040 107,493 535,651 489,394 Taka

Mode of disposal Ins. Claim Auction Auction Ins. Claim Auction

Purchaser Various parties Various parties Various parties

Particulars Land 1

Additions during the year Taka

As at 31 December 2010 304,122,635 86,057,856 Taka

As at 1 January 2010 Taka 149,660,862 -

Charged for the year Taka

As at 31 December 2010 Taka 159,606,219 -

18,539,895 191,650 161,900 12,085,361 31,677,906 699,100

Building 2

Plant and machinery 554,207,671 Motor vehicles Furniture, fixtures and equipment

4(b)

Year 2010 (Company)


As at 1 January 2010 268,177,094 20,080,251 86,057,856 Taka

1,263,084,595

334,561,723

20,080,251

114,657,930

35,945,541

228,467,198

76,380,981

1,482,746

(18,539,895)

(31,677,906)

(13,138,011)

650,325,706

1,459,873,887

397,804,693

21,562,997

454,136,141 139,325,224 11,665,076

24,472,702 32,549,990 1,979,584

9,945,357

(17,986,383) (9,547,317) -

460,622,460 162,327,897 13,644,660

189,703,246 235,476,796 7,918,337

754,787,303

68,947,633

(27,533,700)

796,201,236

663,672,651

Shop furniture and equipment

Particulars Land 1

Additions during the year Taka

Cost/Valuation

Disposals/ transfers during the year Taka -

As at 31 December 2010 304,122,635 21,562,997 86,057,856 Taka

As at 1 January 2010 Taka 149,660,862 11,665,076 -

Charged for the year Taka

Depreciation

Adjustment for disposals/ transfers Taka -

As at 31 December 2010 Taka 159,606,219 13,644,660 -

Written down value as at 31 December 2010 144,516,416 7,918,337 86,057,856 Taka

4.3 CIF value of capital assets No capital assets were imported under CIF basis. However, import of capital assets by the group under C&F basis was as follows:

3,701,115

Plant and machinery 554,207,671 Furniture, fixtures and equipment Motor vehicles

Building 2

97,010,327 1,482,746

35,945,541

(18,539,895) -

632,678,103

454,136,141

23,810,917 1,979,584

9,945,357

(17,986,383) (9,547,317) -

459,960,675 162,309,395

172,717,428 235,125,267

Capital assets Plant and machinery USD

Foreign currency 2010 996,245

2009 -

1,263,084,595

334,561,723

210,449,564

76,010,950

(31,677,906)

(13,138,011)

1,441,856,253

397,434,662

754,787,303

139,325,224

68,267,346

32,531,488

(27,533,700)

795,520,949

646,335,304

4(c)

Year 2009 (Company)


As at 1 January 2010 248,260,456 22,540,651 86,057,856 Taka Additions during the year Taka

EUR

193,925

214,082

18,395,196 87,987,246 Group 2010 Taka

69,592,050

(Taka)

2010

Local currency

15,100,326 15,100,326 2010 Taka Company 2009 Taka -

(Taka)

2009

Particulars Land 1

Cost/Valuation

Disposals/ transfers during the year Taka -

As at 31 December 2010 268,177,094 20,080,251 86,057,856 Taka

As at 1 January 2010 Taka 139,838,274 11,917,151 -

Charged for the year Taka

Depreciation

Adjustment for disposals/ transfers Taka -

As at 31 December 2010 Taka 149,660,862 11,665,076 -

Written down value as at 31 December 2010 118,516,232 8,415,175 86,057,856 Taka

5.

Capital work in progress

Building 2

Furniture, fixtures and equipment

Plant and machinery 573,893,788 Motor vehicles 270,092,240

19,916,638 1,400,000

17,736,318 71,056,538

(37,422,435) (3,860,400) (6,587,055)

554,207,671 334,561,723

471,998,008 119,123,670

16,387,327 25,889,830 2,103,794

9,822,588

(34,249,194) (2,355,869) (5,688,276)

454,136,141 139,325,224

100,071,530 195,236,499

Balance as at 1 January Add: Addition during the year

1. Land includes Tk. 60,631,183 by revaluation in 1979.

1,200,844,991

110,109,494

(47,869,890)

1,263,084,595

742,877,103

54,203,539

(42,293,339)

754,787,303

508,297,292

Less: Transfer to property plant & equipment during the year

4.1

2. Building includes properties at 24 Bangabandhu Avenue, Dhaka which were purchased in 1985 from the Government of Bangladesh at a cost of Tk 5,344,417. Sale deed is yet to be executed.

Depreciation charged to:

Cost of goods sold (Note 21.1) Administration, selling and distribution expenses (Note 23)
32

27,300,975 41,646,658 68,947,633

Group 2010 Taka

27,300,975 40,966,371 68,267,346

2010 Taka

Company

20,450,664 33,752,875 54,203,539

2009 Taka

5.1 Capital work in progress represent as follows Building Plant and machinery Equipment 6.

Balance as at 31 December (Note 5.1)

13,860,671 127,212,426 141,073,097 132,166,542 8,906,555 1,263,410 7,643,145 8,906,555

13,860,671 127,212,426 141,073,097 132,166,542 8,906,555 1,263,410 7,643,145 8,906,555

54,100,412 54,100,412 40,239,741 13,860,671 13,546,426 64,245 250,000 13,860,671

Investment in subsidiary On 19 November 2009 the company subscribed an amount of Tk 19,970,000 for 199,700 shares (99.85% of total share capital) of Tk 100 each of its newly incorporated wholly owned subsidiary BB Export Limited. This subsidiary was incorporated in Bangladesh and did not commence its operation till 31 December 2010. Bata has paid Tk. 18,835,090 till 31 December 2010 for subscription in shares (2009: Tk. 106,000).
ANNUAL REPORT 2010 3 3

7.

Deferred tax assets is arrived at as follows:

Deferred tax assets

8. Group 2010 Taka 2010 Taka Company 2009 Taka

Inventories

Group 440,215,075 110,165,436 1,151,001,712 1,701,382,223 10,754,687 103,491,137 16,633,585 130,879,409 2010 Taka

Balance as at 1 January

Addition/(reduction) during the year Balance as at 31 December

(9,000,000) Carrying amount on the date of statement of financial position Taka 558,849,861 7,000,000

16,000,000

(9,000,000) 7,000,000

16,000,000

12,286,000

16,000,000

3,714,000

Raw materials Work in process Finished goods 9. Accounts receivable Trade (unsecured) - considered good Export customers - Non BSO companies Receivables from dealers (Note 9.1) Receivables from institutional sale (Note 9.2) Others (unsecured) - considered good Insurance claims VAT claims Claim receivable on import Duty drawback claim receivable

440,215,075 110,165,436 1,151,001,712 1,701,382,223 10,754,687 103,491,137 16,633,585 130,879,409

2010 Taka

Company

311,328,857 88,710,604 1,033,285,946 1,433,325,407 8,659,308 58,596,776 31,399,966 98,656,050

2009 Taka

(a) As at 31 December 2010 (Company) Property, plant and equipment

Tax base Taka 401,731,522 -

Taxable/ (deductible) temporary difference Taka 157,118,339

Provision for bad and doubtful debts (Note 9.3 & 9.4) Net deductible temporary difference Deferred tax assets

Provision for staff gratuity (Note 14)

(excluding land and certain motor vehicles)

(147,847,820) (35,923,248)

(147,847,820) (35,923,248) (26,652,729) 7,000,000

Agents and employees (considered doubtful - Note 9.3) 9.1 Receivables from depots Accounts receivable Provision for doubtful debts (Note 9.4) 9.2 Receivables from institutional sale Accounts receivable Provision for doubtful debts (Note 9.4) 9.3 Agents and employees Accounts receivable Provision for doubtful debts (Note 9.4)

714,474 87,577 12,421 320,142 1,134,614 132,014,023

714,474 87,577 12,421 320,142 1,134,614 132,014,023

1,229,210 108,480 339,664 654,522 2,331,876 870,280 101,858,206

121,503,138 (18,012,000) 103,491,137 16,831,745 (198,160) 16,633,585 17,713,088 (17,713,088) -

121,503,138 (18,012,000) 103,491,137 16,831,745 (198,160) 16,633,585 17,713,088 (17,713,088) -

75,064,646 (16,467,870) 58,596,776 31,399,966 31,399,966 20,577,126 (19,706,846) 870,280

(b) As at 31 December 2010 (Group)

Deferred tax assets for Bata Shoe Company (Bangladesh) Limited Deferred tax assets for BB Export Ltd. No deferred tax has been recognised for BB Export Ltd. because of its immaterial impact. Property, plant and equipment

7,000,000 7,000,000

(c) As at 31 December 2009 (Company)

(excluding land and certain motor vehicles) Provision for staff gratuity (net of payment) Provision for bad and doubtful debts Net deductible temporary difference

(131,959,233) (36,174,716)

420,454,951

315,932,419 -

(131,959,233) (36,174,716) (63,611,417)

104,522,532

9.4 Provision for doubtful debts Total provision for doubtful debts as at 31 December 2010 which were arrived at as follows: Receivables from depots (Note 9.1) 18,012,000 Receivables from institutional sale (Note 9.2) 198,160 Agents and employees (Note 9.3) 17,713,088 35,923,248 Balance as at 1 January Provision made during the year Bad debts written off during the year Provision reversed during the year Balance as at 31 December 36,174,716 1,742,290 (790,695) (1,203,063) 35,923,248

Deferred tax assets


34

16,000,000

36,174,716 1,742,290 (790,695) (1,203,063) 35,923,248

35,611,243 2,571,501 (369,125) (1,638,903) 36,174,716


ANNUAL REPORT 2010 3 5

Accounts receivable were aged as below:

Export customers - Non BSO companies Receivables from dealers Insurance claims VAT claims Receivables from institutional sale Claim receivable on import Duty draw back claim receivable Agents and employees 9.5

103,491,137 714,474 87,577 -

10,754,687

Below six months Taka

Group and company 2010

Over six months Taka -

Below six months Taka 58,596,776 1,229,210 108,480 8,659,308

Company 2009

10.2

Over six months Taka 16,467,870 -

16,633,585 12,421 320,142

18,012,001 -

11.

Loans and advances to subsidiaries, directors, officers and other related parties Other than those mentioned in note above, there were no loans or advances to: (a) Directors of the company/group; (b) Firms or private limited companies respectively in which any director of the company is a partner, director or member; and (c) Subsidiaries or companies under the same management. Cash and cash equivalents Group 2010 Taka 852,396 2010 Taka Company 2009 Taka

198,160 -

31,399,966 339,664 654,522

132,014,023

17,713,088 35,923,248

101,858,206

870,280

36,174,716

19,706,846

Cash balances: On hand

As at 31 December 2010, accounts receivable does not include any receivable from: (a) The directors and other officers of the company/group; (c) Companies under the same management. Advances, deposits and prepayments (b) Firms or private limited companies respectively in which any director of the company is a partner, director or member, other than those disclosed in note 36; and

Debts due by directors, officers and other related parties

Balances with banks in: Current accounts (Note 11.1) In Taka In USD Short term deposits 11.1

In transit: From stores From depots From institutions

852,396

574,865

30,406,295 10,037,761 6,306,395 12,809,771 28,070,498 84,157,404 125,037,673 172,640,520

30,406,295 10,037,761 6,306,395 12,709,173 28,070,498 84,134,595 124,914,266 172,517,113

38,687,463 15,123,381 1,177,007 (48,603,002) 345,107,464 296,504,462 352,067,178

10.

Group 2010 Taka

2010 Taka

Company

2009 Taka 599,592

Advances (considered good) to: Agents and employees

Suppliers against materials and services

Advance income tax

Security and other deposits

Prepayments to landlords (current portion - Note 10.1) 10.1 Prepayments of rent Non-current portion 36

299,007,464

148,957,098

47,612,175

92,911,502

9,526,689

5,145,090

4,381,599

299,007,285

148,957,098

47,612,175

92,911,323

9,526,689

5,145,090

4,381,599

238,829,873

123,327,401

87,221,219

2,444,321

1,844,729

25,836,932

Prepayments to landlords

Less: Current portion (Note 10)

117,436,287

47,612,175 69,824,112

117,436,287

47,612,175 69,824,112

64,592,330

Book overdrafts The current accounts include book overdrafts (i.e. cheque outstanding in excess of deposits) from Eastern Bank Limited and HSBC as follows: 2010 2009 Taka Taka Eastern Bank Limited 5,089,333 85,892,508 HSBC 1,296,359 5,089,333 87,188,867 11.2 Credit facilities available as at 31 December The company enjoys both funded and non funded short term working capital facilities with two banks. The non funded facilities include Letters of Credit (LC), Letters of Guarantee, Packing Credit, LDBP, FDBP and foreign exchange forward contracts (FX Forward). The funded facilities include overdraft facility, short term loan and import loan. The aggregate amount of available short term working capital facilities is Tk 740 million (2009: Tk 675 million) of which non funded limit is Tk 340 million (2009: Tk 375 million) and funded limit is Tk 400 million (2009: Tk 300 million). Detail of the total facilities are stated below: (a) HSBC Bank i) L/C facility - Tk 200 million (2009: Tk 100 million). ii) Overdraft / short term loan facility - Tk 200 million (2009: Tk 200 million). (b) EBL Bank i) L/C facility - Tk 400 million (2009: Tk 400 million). ii) Overdraft facility / short term loan facility - Tk 200 million (2009: Tk 200 million). Total credit facilities available Credit facilities not availed 2010 (Tk in million) 1,000 740 2009 (Tk in million) 800 675

38,755,398

25,836,932

ANNUAL REPORT 2010 3 7

12.

Share capital Authorised:

2010 Taka 200,000,000 28,507,230 108,292,770

2009 Taka 200,000,000 28,507,230 108,292,770

13. Reserves and surplus

Issued, subscribed and paid up:

20,000,000 ordinary shares of Tk 10 each 2,850,723 ordinary shares of Tk 10 each issued for cash of Tk 10 each issued for consideration other than cash

10,829,277 ordinary shares (including 7,202,400 bonus shares)

13.1 Non-distributable special reserve

Reserve on revaluation of land Non-distributable special reserve (Note 13.1) General reserve Retained earnings (Note 13.2)

The shares are listed both in the Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited and quoted at Tk 652.90 (2009: Tk 528.30) and Tk 666.10 (2009: Tk 522.90) per share at 31 December 2010 respectively. Percentage of shareholdings: Baffin (Netherlands) B.V Local shareholders 2010 2009

136,800,000

136,800,000

International Finance Corporation Other non-resident shareholders

70.00 22.44 7.53

0.03

Classification of shareholders by range: Shareholders range Less than 501 shares

100.00

136,800,000

10,307,200

95,760,000

Taka

30,696,400

36,400

70.00 20.18 9.79

0.03

100.00

136,800,000

13,390,800

95,760,000

Taka

13.2 Retained earnings Balance as at 1 January Profit for the year Interim dividend Final dividend Balance as at 31 December

This represents 90% of the cumulative post-tax profit in respect of certain categories of income up to 1992 as defined and directed by Bangladesh Bank. Since 1993, the requirement for continuing to create such special reserve is applicable only to the profit on sale of immovable assets such as land, buildings, etc. 873,194,520 542,570,476 (198,360,000) (143,640,000) 1,073,764,996 131,959,233 27,619,124 159,578,357 11,730,537 147,847,820 350,954,843 34,922,526 6,852,495 392,729,864 90,884,870 122,235,211 213,120,081 39,103,712 52,811,255 18,812,500 7,806,430 32,196,795 1,733,216 4,120,248 10,777,765 12,177,723 179,539,644 873,194,520 543,970,530 (198,360,000) (143,640,000) 1,075,165,050 131,959,233 27,619,124 159,578,357 11,730,537 147,847,820 350,954,843 34,922,526 6,852,495 392,729,864 90,884,870 122,235,211 213,120,081 39,103,712 52,811,255 18,812,500 1,134,910 7,806,430 32,196,795 1,733,216 4,120,248 10,777,765 12,177,723 180,674,554 724,748,075 449,406,445 (157,320,000) (143,640,000) 873,194,520 127,064,575 17,149,366 144,213,941 12,254,708 131,959,233 260,583,634 18,400,992 278,984,626 73,648,500 208,522,967 282,171,467 33,141,708 50,156,293 15,160,500 19,864,000 6,626,798 38,401,508 1,323,668 2,778,039 4,907,315 1,073,975 173,433,804

60,631,183 998,620 48,863,000 1,073,764,996 1,184,257,799

Group 2010 Taka

60,631,183 998,620 48,863,000 1,075,165,050 1,185,657,853

2010 Taka

Company

60,631,183 998,620 48,863,000 873,194,520 983,687,323

2009 Taka

27,606,800

42,400

14. Deferred liability Balance as at 1 January Add: Provision made during the year Less: Paid during the year Balance as at 31 December

501 to 5,000 shares

6,208 41 13 3

2010

Number of holders

10,001 to 20,000 shares 30,001 to 40,000 shares 40,001 to 50,000 shares 20,001 to 30,000 shares

5,001 to 10,000 shares

595 26 5 1

6,152 35 6 1

2009

525 15 6 4

816,944 274,540 324,554 140,148

2010

Number of shares

903,106

804,500 253,456

2009

15. Creditors for goods Payable to local suppliers Payable to BSO companies Payable to other foreign suppliers 16. Creditors for expenses Payable to local suppliers Payable to BSO companies

Deferred liability represents provision for staff gratuity up to 31 December 2010.

808,452 211,796

349,556

174,800 59,752

145,242 44,660

217,468 340,486

50,001 to 100,000 shares

Over 1,000,000 shares

100,001 to 1,000,000 shares

6,897

6,749

1,060,600

13,680,000

9,576,000

1,277,940

13,680,000

9,576,000

17. Creditors for other finance Workers' profit participation fund Personal accounts of employees and agents Security and other deposits Payable to subsidiary company Provident fund Tax deducted at source Pension fund VAT deducted at source Salary and wages payable Others

38

ANNUAL REPORT 2010 3 9

Group 18. Accrued expenses Provision for bonus Provision for utility Provision for legal & audit fee Provision for royalty Joint venture commission Other accrued liabilities 19. Provision for tax Current year Earlier years (net of advance tax)
19.1 Reconciliation of effective tax rate Profit for the year

2010 Taka

2010 Taka

Company

2009 Taka

21. Cost of sales

Group 1,033,285,945 3,107,823,481 627,403,522 4,768,512,948 1,151,001,712 3,617,511,236 2010 Taka

54,024,097 3,406,000 1,876,250 12,411,756 7,721,018 183,682,079 263,121,200 190,005,000 289,051,283 479,056,283
% 2010 (Company) Taka

54,024,097 3,406,000 1,853,250 12,411,756 7,721,018 183,682,079 263,098,200 190,000,000 289,051,283 479,051,283
%

63,667,769 3,285,858 2,392,050 13,266,156 5,423,458 148,222,289 236,257,580 184,000,000 270,922,477 454,922,477
Taka

Stock of finished goods as at 1 January Add: Cost of goods manufactured (Note 21.1) Finished goods purchased Cost of finished goods available for sale Less: Stock of finished goods as at 31 December

The opening and closing stocks of goods produced are shown below:

1,033,285,945 3,107,823,481 627,403,522 4,768,512,948 1,151,001,712 3,617,511,236

2010 Taka

Company

1,052,947,539 2,587,556,308 630,636,238 4,271,140,085 1,033,285,945 3,237,854,140

2009 Taka

2009 (Company)

21.1 Cost of goods manufactured

Shoes

Closing stock 4,535

Figures in '000 pairs

Opening stock

4,740

Total income tax expense

Profit excluding income tax

543,970,530

199,000,000

Factors affecting the tax charge for current period:

742,970,530 27.50% 0.00%

449,406,445

180,286,000

629,692,445

Income tax using the Companys domestic tax rate

Non-deductible expenses Tax exempt income Tax incentives

Income subject to reduced tax rate

27.50% 4.79%

-3.22%

Round off adjustment

Under/(over) provided in prior year 20. Revenue Unit Local

-2.74%

-0.20% 0.18% 0.47%

(23,945,637)

204,316,896 35,623,010

(20,364,876) 199,000,000

(1,479,693) 1,333,170 3,517,130

-3.22% 28.63%

-0.23% -0.19% -0.18%

4.95%

173,165,422 -

Manufacturing overhead:

Cost of materials consumed (Note 21.1.1) Direct wages Prime cost Remuneration to employees Gas, water and electricity Repairs and maintenance (Note 21.1.2) Insurance Uniform to workers Health and other welfare expenses Travelling Postage Freight and transport Stationery Entertainment Depreciation (Note 4.1)

2,449,795,310 417,177,483 2,866,972,793 104,278,951 49,562,612 48,233,481 4,290,077 986,703 14,373,270 7,713,479 335,313 835,476 1,264,137 3,131,046 27,300,975 262,305,520 3,129,278,313 88,710,604 110,165,436 (21,454,832) 3,107,823,481

2,449,795,310 417,177,483 2,866,972,793 104,278,951 49,562,612 48,233,481 4,290,077 986,703 14,373,270 7,713,479 335,313 835,476 1,264,137 3,131,046 27,300,975 262,305,520 3,129,278,313 88,710,604 110,165,436 (21,454,832) 3,107,823,481

1,961,392,914 352,101,234 2,313,494,148 114,222,980 47,776,047 74,843,881 3,875,547 903,246 13,818,831 5,679,643 384,666 1,695,029 1,866,587 2,266,094 20,450,664 287,783,215 2,601,277,363 74,989,549 88,710,604 (13,721,055) 2,587,556,308
ANNUAL REPORT 2010 4 1

(20,291,159) 180,286,000

(1,436,856)

31,183,028

26.78%

(1,173,246)

(1,161,189)

Shoes

Export

Hosiery & accessories

Pair

Quantity in '000 28,198

2010 (Company)

5,386,203 205,278 71,610

Amount '000 Taka

Quantity in '000 27,197

2009 (Company)

4,910,705 158,116 72,214

Amount '000 Taka

Difference in work in process:

Cost of production

5,663,091

5,141,035

Cost of goods manufactured

Work in process as at 1 January Work in process as at 31 December

40

42
21.1.1 Cost of materials consumed 1 Description Imported: PVC resin Sft 135,555,107 146,851,366 1,606,023,087 979,885,895 111,488,135 614,242,636 66,197 4,990,972 775,277 806,386 54,269,384 100,586 113,943,120 6,688,392 EVA resin Kg 150,375 10,526,250 2,351,259 1,935,500 164,588,125 263,050 22,359,250 Kg 77,725 8,549,750 2,096,939 964,000 146,785,750 85,725 13,287,375 1,822,825 771,997 956,000 Unit Quantity Quantity Quantity Quantity Opening stock Value (Taka) C&F value (USD) Value (Taka) Value (Taka) Purchase Closing stock Consumption Value (Taka) 142,048,125 152,755,125 52,571,964 Others Wet Blue 156,278,137 959,162,865 254,980,118 611,787,651 Local purchase Sales proceed from wastage, scrap, etc. 282,406,473 317,112,970 2010 (Group/Company) 1 2,578,647,092 (7,261,890) 1,497,894,335 411,258,255 1,926,686,417 2,449,795,310 282,406,473 (7,261,890) 2009 (Company) 1,961,392,914 Duty drawback of Tk. 2,909,424 claimed on export sales have been adjusted against cost of raw materials. 1 Since BB Export Ltd. has no operation till 31 December 2010, cost of materials consumed is same for both group and company financial statements. Cost of materials consumed is 39% imported and 61% locally purchased (2009: 48% imported and 52% locally purchased). 21.1.2 Repairs and maintenance 21.2 Repairs and maintenance amounting to Tk 48,233,481 includes Tk 12,330,183 (including C&F value of US$ 149,157 and EUR 21,210 of imported items) representing cost of spare parts, moulds and accessories consumed. Statement of production Production capacity in pairs Figures in '000 Group Tongi 2010 Dhamrai 2010 22,607 6,759 29,366 Actual production in pairs Figures in '000 Company 22,607 2009 6,759 29,366 21.2.1 Production capacity and actual production are given below: Installed capacity Shoes Group 29,366 Group 23,431 2010 6,673 30,104 2010 18,573 6,456 25,029 Company 18,573 25,029 6,456 19,912 2009 26,304 6,392 Figures in '000 pairs Company 29,366 25,029 Group Actual production Company 25,029

ANNUAL REPORT 2010 4 3

22. Other income

Notes

Group 2010 Taka

23. Administration, selling and distribution expenses Remuneration to employees Health and other welfare expenses Travelling expenses Bank charges Repairs and maintenance Stationery Postage, telegram and telephone Entertainment expenses Subscription and donation Advertisement Rent, rates and taxes General charges 23.1 Directors' fees Auditors' fees Legal and other professional fees 23.2 Insurance Land revenue Freight and transport Packing expenses Commission 23.3 Royalty on Hush Puppies brand 23.4 23.4 Royalty on Dr. Scholl brand 23.4 Global Footwear Services fees Electricity Trade mark licence fees 23.4 IT fees Depreciation 4.1 23.1 General charges

Loss on disposal of property, plant and equipment Discount for early payment

377,787,000 9,117,336 35,788,505 5,701,068 58,223,022 17,956,117 9,313,948 9,946,540 7,245,819 20,848,152 120,914,081 18,947,901 68,000 506,000 4,590,321 1,921,908 431,678 45,791,411 56,368,804 245,908,819 8,742,991 3,668,765 34,531,183 32,047,657 119,229,427 6,281,520 41,646,658 1,293,524,631

(443,091) 18,288,199 17,845,108

377,787,000 9,117,336 35,788,505 5,696,018 58,223,022 17,897,227 9,313,948 9,946,540 7,202,819 20,848,152 120,914,081 18,947,901 68,000 483,000 4,001,596 1,921,908 431,678 45,791,411 56,368,804 245,908,819 8,742,991 3,668,765 34,531,183 32,047,657 119,229,427 6,281,520 40,966,371 1,292,125,679

(443,091) 18,288,199 17,845,108

2010 Taka

Company

23.3 Commission 2009 Taka

Group 136,995,018 108,471,485 442,316 245,908,819 2010 Taka

360,350,283 8,646,380 38,975,461 6,551,142 62,177,793 12,286,535 9,595,338 9,977,547 6,839,209 20,991,682 93,203,114 23,040,859 68,000 418,000 5,128,947 2,454,104 431,678 44,568,980 56,997,081 269,091,521 8,655,078 2,477,165 32,174,700 31,625,199 107,215,954 6,504,322 33,752,875 1,254,198,947

(1,436,219) 8,539,737 7,103,518

Retail Wholesale Export

23.4 Royalty on Hush Puppies and Dr. Scholl brands, Global Footwear Services fees and trade mark licence fees of Tk 8,742,991, Tk. 3,668,765, Tk. 34,531,183 and Tk 119,229,427 respectively represent equivalent foreign currency of USD 122,812, USD 51,535, SGD 660,000 and USD 1,674,806 provided during the year as provision for expenses. 24. Interest on: Fixed deposit Short term deposit Personal account Finance expenses Finance income 7,239,425 7,306,243 12,751 14,558,419 7,239,425 7,304,448 12,751 14,556,624 4,226,193 6,159,715 14,348 10,400,256

136,995,018 108,471,485 442,316 245,908,819

2010 Taka

Company

121,559,616 145,677,736 1,854,169 269,091,521

2009 Taka

25.

Interest on: Overdraft Personal account Emoluments to directors

26.

77,591 3,678,780 3,756,371 14,338,580 7,963,549 1,164,396 2,160,000 25,626,525 64,447,419 13,886,133 8,371,570 86,705,122

77,591 3,678,780 3,756,371 14,338,580 7,963,549 1,164,396 2,160,000 25,626,525 64,447,419 13,886,133 8,371,570 86,705,122

766,401 3,154,018 3,920,419 14,606,145 17,465,488 1,041,880 2,160,000 35,273,513 81,312,938 10,337,137 9,713,959 101,364,034

Remuneration Bonus Retirement benefit schemes Housing Emoluments to managers

27.

General charges represent security services, samples, bad debts, etc. Bad debts represent the following: Provision for doubtful debt made Provision for doubtful debts reversed Bad debts previously written-off recovered 1,742,290 (1,203,063) 539,227 1,742,290 (1,203,063) 539,227 2,571,501 (1,638,903) (126,136) 806,462

Remuneration Retirement benefit schemes Housing Contribution to employees' provident fund and pension fund

28.

During the year the company contributed the following amounts to the employees' provident fund and pension fund: Provident fund : Managers Officers & supervisors Workers Pension fund 5,544,812 7,693,557 10,201,660 23,440,029 6,454,142 29,894,171 5,407,206 6,833,091 9,576,576 21,816,873 5,227,090 27,043,963
ANNUAL REPORT 2010 4 5

23.2 Legal and other professional fees Legal and other professional fees include fees of Tk 1,113,500 (2009: Tk 3,956,813) of the statutory audit firm in connection with global reporting, tax certification and services regarding assessments/appeals and advisory services. There was no legal and other professional fees in relation to BB Export Ltd. 44

29.

30.

Profit before tax Tk. 742,970,530 (2009: Tk. 629,692,445) includes profit amounting to Tk 440,335,635 (2009 : Tk 357,346,048) of leather shoe factory and tannery at Dhamrai and Tk. 302,634,895 (2009: Tk. 272,346,397) at Tongi. Remittance of foreign currency

Profit before tax (company)

32.2 33. 34.

No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during these years. The number of employees for the whole year or part thereof who received a total remuneration of Tk 36,000 and above was 1,460 (2009: 1,510). The management has overall responsibility for the establishment and oversight of the group's risk management framework. The group's risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the group's activities. This note presents information about the group's exposure to each of the following risks, the group's objectives, policies and processes for measuring and managing risk, and the group's management of capital. The company has exposure to the following risks from its use of financial instruments. N Credit risk N Liquidity risk N Market risk Financial risk management Number of employees

Diluted earning per share

Name of party Baffin (Netherlands) B.V. SSL International PLC

Nature of transaction Dividend

Currency USD

Amount in foreign currency 3,059,352

Wolverine World Wide Inc., USA

Global Footwear Services Pte. Ltd., Singapore

Royalty on Dr. Scholl Brand Footwear services fees

SGD USD USD

GBP

594,000 112,000 2,662,060

37,616

215,459,999

Amount in local currency Taka

30,472,200 7,789,570 186,387,098

4,149,970

34.1

Royalty on Hush Puppies Brand

Credit risk is the risk of a financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group's receivables from dealers, institutional and export customers etc. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. In monitoring credit risk, debtors are grouped according to their risk profile, i.e. their legal status, financial condition, ageing profile etc. Accounts receivable are mainly related to sale of shoes, hosiery, accessories and finished leather etc. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. a) Exposure to credit risk

Credit risk

Euro Footwear Holdings S.a.r.l

Bata Brands S.a.r.l - Swiss Branch Trade Mark Licence Fees IT Fees

31.

The figures represent net of tax. Earnings in foreign currency

EUR

51,000

5,069,400

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Group 2010 Taka 2010 Taka Company 2009 Taka 8,659,308 58,596,776 31,399,966 98,656,050

Export of finished leather and shoes 32. Earnings per share

1,038,493

USD

C&F value

71,609,876

Taka

Trade Receivable Export customers - Non BSO companies Receivables from depots Receivables from institutional sale Receivable from Agents and employees Others Receivable Security and other deposits Cash and cash equivalents

32.1

Basic earnings per share (EPS)

10,754,687 103,491,137 16,633,585 130,879,409 1,134,614 148,957,098 172,640,520 453,611,641 122,983,071 7,089,090 807,248 130,879,409

Group 2010 Taka

The computation of EPS is given below:

2010 Taka

Company

2009 Taka

Earnings attributable to the ordinary shareholders (net profit after tax) Basic earnings per share (EPS)

Weighted average number of ordinary shares outstanding during the year

542,568,373 13,680,000 39.66

543,970,530 13,680,000 39.76

449,406,445 13,680,000 32.85

The maximum exposure to credit risk for accounts receivable as at 31 December by geographic regions was: Domestic Asia Africa 122,983,071 7,089,090 807,248 130,879,409

1,134,614 148,957,098 172,517,113 453,488,234

10,754,687 103,491,137 16,633,585 130,879,409

870,280 2,331,876 123,327,401 352,067,178 577,252,785 93,848,051 3,508,308 1,299,691 98,656,050

46

ANNUAL REPORT 2010 4 7

48 c) b) Impairment losses Receivables from depots Invoiced 0-30 days Invoiced 31-60 days Invoiced 61-90 days Invoiced 91-365 days Invoiced over 365 days Receivables from institutional sale Invoiced 0-30 days Invoiced 31-60 days Invoiced 61-90 days Invoiced 91-365 days Invoiced over 365 days Receivables from depots Accounts receivable Provision for doubtful debts (Note 9.4) Export customers - Non BSO companies Invoiced 0-30 days Invoiced 31-60 days Other Receivables Ageing of receivables Receivables from institutional sale Accounts receivable Provision for doubtful debts (Note 9.4) Group 2010 Taka 69,134,392 27,377,637 6,983,109 18,008,000 121,503,138 12,408,205 2,444,751 45,091 1,933,698 16,831,745 10,514,732 239,955 10,754,687 16,831,745 (198,160) 16,633,585 121,503,138 (18,012,000) 103,491,137 2010 Taka 69,134,392 27,377,637 6,983,109 18,008,000 121,503,138 12,408,205 2,444,751 45,091 1,933,698 16,831,745 10,514,732 239,955 10,754,687 16,831,745 (198,160) 16,633,585 121,503,138 (18,012,000) 103,491,137 Company 2009 Taka 10,433,781 9,114,064 8,097,950 3,633,951 120,220 31,399,966 7,321,030 1,338,278 8,659,308 31,399,966 31,399,966 57,826,184 249,936 520,656 16,467,870 75,064,646 75,064,646 (16,467,870) 58,596,776
34.2

Less: Provision against advances to agents and employees (Note 9.4)

The ageing of gross accounts receivables as at 31 December was: Accounts receivable were aged as below:

Impairment losses on the above receivables were recognised as per the group policy mentioned in note 3.3.1.1. Quantitative disclosure for such impairment losses are as below:

Receivable from Agents and employees


As at 31 December 2010 (Group) Carrying amount Taka Maturity period Nominal Interest rate Contractual cash flows Taka Within 6 months or less Taka Within 6-12 months Taka 392,729,864 350,954,843 34,922,526 6,852,495 June 2011 June 2011 June 2011 N/A N/A N/A 392,729,864 350,954,843 34,922,526 6,852,495 392,729,864 350,954,843 34,922,526 6,852,495 213,120,081 90,884,870 122,235,211 June 2011 December 2011 N/A N/A 213,120,081 90,884,870 122,235,211 90,884,870 90,884,870 122,235,211 122,235,211 Personal accounts of employees and agents Security and other deposits Tax deducted at source VAT deducted at source Salary and wages payable Others liabilities 130,896,287 52,811,255 18,812,500 32,196,795 4,120,248 10,777,765 12,177,724 June June June June June June 2011 2011 2011 2011 2011 2011 N/A N/A N/A N/A N/A N/A 263,121,200 54,024,097 3,406,000 1,876,250 12,411,756 7,721,018 183,682,079 June June June June June December 2011 2011 2011 2011 2011 2011 N/A N/A N/A N/A N/A N/A 130,896,287 52,811,255 18,812,500 32,196,795 4,120,248 10,777,765 12,177,724 57,976,960 December 2011 N/A 263,121,200 54,024,097 3,406,000 1,876,250 12,411,756 7,721,018 183,682,079 130,896,287 52,811,255 18,812,500 32,196,795 4,120,248 10,777,765 12,177,724 57,976,960 210,278,839 54,024,097 3,406,000 1,876,250 12,411,756 7,721,018 130,839,718 20,000,000 52,842,361 52,842,361 37,976,960

17,713,088 17,713,088 17,713,088 17,713,088 20,577,126 19,706,846 870,280


Liquidity risk The following are the contractual maturities of financial liabilities: Creditors for goods Payable to local suppliers Payable to BSO companies Payable to other foreign suppliers Creditors for expenses Payable to local suppliers Payable to BSO companies Creditors for other finance Accounts payable Accrued liabilities Provision for bonus Provision for utility Provision for legal & audit fee Provision for royalty Joint venture commission Other accrued liabilities

"Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group's approach to managing liquidity (cash and cash equivalents) is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group's reputation. Typically, the group ensures that it has sufficient cash and cash equivalents to meet expected operational expenses, including financial obligations through preparation of the cash flow forecast, based on time line of payment of financial obligations and accordingly arrange for sufficient liquidity/fund to make the expected payments within due dates. Moreover, the group has short term credit facilities with scheduled commercial banks to ensure payment of obligation in the event that there is insufficient cash to make the required payment. The requirement is determined in advance through cash flow projections and credit lines with banks are negotiated accordingly.

ANNUAL REPORT 2010 4 9

Exposure to liquidity risk in respect of the company's financial statements at 31 December 2010 does not vary significantly from above. The differences in such exposure arises from payable to BB Export for subscription of share (Tk. 1,134,910) and provision for legal & audit fee (Tk. 23,000) which has a maturity period of less than six months.

Unclaimed dividend

192,303,216

29,259,174

Within 6-12 months

192,303,216

Taka

29,259,174

34.3

Market risk Market risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect the group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. a) Currency risk/foreign exchange rate risk The group is exposed to currency risk on sales and purchases with foreign customers and suppliers including Bata group (globally) and on royalty payment. Majority of the company's foreign currency transactions are denominated in USD. The group maintains USD bank account where all receipts are deposited and all corresponding payments are made. i) Exposure to currency risk The group's exposure to foreign currency risk was as follows based on notional amounts: Foreign currency denominated assets Accounts receivable Cash at bank Islami Bank Bangladesh Limited Eastern Bank Limited Dutch-Bangla Bank Limited HSBC As at 31 December 2010 (Group 152,387 48,100 290,556 60,950 USD SGD EUR -

260,583,634 18,400,992

278,984,626

112,477,630

Within 6 months or less

206,998,406

63,667,769 3,285,858 2,392,050 13,266,156 5,423,458 118,963,115

Taka

89,868,251

73,648,500 16,219,751

50,156,293 15,160,500 38,401,508 2,778,039 4,907,315 1,073,975

As at 31 December 2009 (Company) 126,765 73,400 131,881 1,936 37,550 USD SGD EUR -

As at 31 December 2009 (Company)

260,583,634 18,400,992

73,648,500 208,522,967

63,667,769 3,285,858 2,392,050 13,266,156 5,423,458 148,222,289

112,477,630

50,156,293 15,160,500 38,401,508 2,778,039 4,907,315 1,073,975

278,984,626

282,171,467

236,257,580

Contractual cash flows

44,747,515

Taka

Nominal Interest rate

Foreign currency denominated liabilities Trade and other payables for expenses Net exposure

N/A N/A N/A

N/A N/A

N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A

N/A

551,993

(165,000)

(60,000)

371,532

(330,000)

(60,000)

(97,095) 454,898

(97,095)

(165,000)

Maturity period

June 2010 June 2010 June 2010

June 2010 June 2010

2010 2010 2010 2010 2010 2010

2010 2010 2010 2010 2010 2010

December 2010

Payable to other entities represents payable for Global footwear service fees, IT fees etc. The following significant exchange rates are applied during the year:

(165,000)

(60,000)

(60,000)

371,532

(330,000)

(330,000)

(60,000)

(60,000)

June June June June June December

June June June June June June

Exposure to currency risk as at 31 December 2010 in respect of the separate financial statements does not vary from above. The parent has a foreign exchange loss amounting to Tk. 24,598 during the year ended 31 December 2010. Exchange rate as at

Carrying amount

260,583,634 18,400,992

73,648,500 208,522,967

63,667,769 3,285,858 2,392,050 13,266,156 5,423,458 148,222,289

50,156,293 15,160,500 38,401,508 2,778,039 4,907,315 1,073,975

278,984,626

282,171,467

112,477,630

236,257,580

44,747,515

Taka

Creditors for other finance Personal accounts of employees and agents Security and other deposits Tax deducted at source VAT deducted at source Salary and wages payable Others

ii)

EURO (EUR)

US Dollar

31 Dec 2010 Taka 94.33 55.03 70.58

31 Dec 2009 Taka 98.60 49.15 69.65

Singapore Dollar

Accrued liabilities Provision for bonus Provision for utility Provision for legal & audit fee Provision for royalty Joint venture commission Other accrued liabilities

Creditors for goods Payable to foreign suppliers Payable to local suppliers Payable to BSO companies

Creditors for expenses Payable to local suppliers Payable to BSO companies

A strengthening or weakening of the Taka, as indicated below, against the USD, SGD and EUR at 31 December would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the reporting date. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2009, albeit that the reasonably possible foreign exchange rate variances were different, as indicated below: At 31 December 2010 Strengthening profit or loss Taka (963,133) 272,399 169,794 (776,316) 486,585 177,480 Weakening profit or loss Taka 963,133 (272,399) (169,794)

Foreign exchange rate sensitivity analysis for foreign currency expenditures

Unclaimed dividend

Accounts payable

USD (3 percent movement) SGD (3 percent movement) EUR (3 percent movement) At 31 December 2009 USD (3 percent movement) SGD (3 percent movement) EUR (3 percent movement)

776,316 (486,585) (177,480)

50

ANNUAL REPORT 2010 5 1

b)

c)

Accounting classification and fair values

The only interest bearing financial instrument for the company is the short term deposit (STD) account maintained by the company with its commercial banks. These are highly liquid and very short term deposits with nominal interest rate. Interest rate fluctuation for such investment have little impact on financial statements. Therefore, interest rate risk for the company is insignificant. Fair value of financial assets and liabilities together with carrying amount shown in the statement of financial position are as follows: Carrying amount Taka 130,879,409 1,134,614 172,640,520 148,957,098 392,729,864 476,218,281 179,539,645 2010 (Group) Fair value Taka Carrying amount Taka 98,656,050 870,280 2,331,876 352,067,178 123,327,401 278,984,626 518,429,047 153,569,804 2009 (Company) Fair value Taka

Interest rate risk

36.

During the year ended 31 December 2010, group entered into a number of transactions with related parties in the normal course of business. The names of the related parties, nature of these transactions and amount thereof have been set out below in accordance with the provisions of BAS 24: Related Party Disclosures. Related party transactions

Related party disclosures

36.1

Name of the party Bata, Singapore Bata, Czech

Nature of

relationship Group company Group company Group company Group company

transaction Purchase Service received

Nature of

Group Taka 2010

2010

Company

Loans and receivables Trade receivable, net Receivable from agents and employees Other receivables Cash and cash equivalents Available for sale financial assets Security deposits

130,879,409 1,134,614 172,640,520 148,957,098 392,729,864 476,218,281 179,539,645

98,656,050 870,280 2,331,876 352,067,178 123,327,401 278,984,626 518,429,047 153,569,804

Bata, Zambia

Service received Sales

(186,990) (1,205) 8,926 (133) (1,554) 164 -

(186,990) (1,205) 8,926 (133) (1,554) 164 -

Taka

2009 Taka

(257,819) (555) (105) -

Liabilities carried at amortised costs Creditors for goods Creditors for expenses Creditors for other finance

Bata, Sri Lanka

Service received Service received Service provided Purchase Service received Purchase Service received

Bata (Malaysia) Berhad Bata, Thailand P.T. Sepatu Bata, Jakarta

Group company

1,362

* Accounting classification and fair values as at 31 December 2010 in respect of the separate financial statements does not vary significantly from the consolidated one. Creditors for other finance Segment reporting 179,539,645 179,539,645 153,569,804 153,569,804

Group company Group company Group company Group company Group company

35.

The Company has two operating segments, Domestic and Export, which are the company's strategic divisions. They are managed separately because they require different technology and marketing strategies. For each of the strategic divisions, the company's management reviews internal management reports at least on a monthly basis. Of these two, only domestic segment is reportable. The following summary describes the operations in the company's reportable segments: Domestic This segment is mainly engaged in manufacturing and marketing of leather, rubber, plastic and canvas footwear, hosiery and accessories as well as finished leather in domestic market. Reportable business segment Taka 000 Domestic Unallocated Taka 000 71,609 48,823 22,786 5,591,481 1,996,756 2010 2009 Total

Global Footwear Service Pte. Ltd., Singapore Bata Brand S.a.r.l., Luxembourg Bata, Kenya

Service received

(34,531) (119,229) -

(3,641) (67)

(34,531) (119,229) -

(3,641) (67)

(32,136) (107,216) 33

(1,019) (139)

(867) (14)

(163) 16

Compass S.P.A, Italy Euro Footwear Holdings s.a.r.l. Bata, India Bata, Netherland Bata, Uganda BB Export Limited Key management employees

Trade mark licence fees

Group company

Particulars Revenue

Taka 000

Total

Group company

Service received

Service received

Service received

(6,282) (16,331) (1,433) 2,087

3,915

(6,282) (16,331)

3,915

(6,573) -

Gross profit

Exchange gain/(loss) Other income

Cost of sales

3,594,725 -

5,663,090 2,045,579

Taka 000

Reportable segment result

Administrative, selling and distribution expenses

Segment assets and liabilities

1,103,788

(892,969)

(332,514)

(399,157)

17,845

(25)

3,617,511 17,845 (25)

1,903,181

5,141,035

Group company Group company Group company Subsidiary company Directors Key employees

Purchase Purchase Subscription of shares Payment for subscription of shares Salary and other benefits -doSales

3,237,854 7,103 269

(1,433)

(1,292,126) 771,274

(1,254,199) 656,354

18,729 (25,627) (86,705)

18,729 (25,627) (86,705)

2,087

19,970 106 (35,274) (101,364)

The necessary information regarding assets and liabilities of operating segments are not separable and individually identifiable for this purpose. For this reason the assets and liabilities of the respective segments have not been presented here.

52

ANNUAL REPORT 2010 5 3

36.2

Receivables/(payables) with related parties Name of the party Bata, Singapore Bata (Malaysia) Berhad Bata, Thailand P.T. Sepatu Bata, Jakarta Nature of relationship Group company Group company

Bata Shoe Company (Bangladesh) Limited Statement of Comprehensive Income for the year ended 31 December 2010
transaction Purchase Service received Purchase Nature of Group Taka 2010 2010 Company 2009 Taka

Group company Group company

Group company

Service received

(33,814) (55)

Global Footwear Service Pte. Ltd., Singapore Bata Brand S.a.r.l., Luxembourg Euro Footwear Holdings s.a.r.l. Bata, India

Purchase Service received

(1,108) -

(133)

(33,814) (55) (1,108) -

Taka

Manufacturing Taka Revenue 5,104,921,715

Trading Taka 558,168,679

2010

Total

2009 Total

Exhibit - I

(133)

(17,165) (382)

Taka

Taka

Cost of goods sold Gross profit Other income Administration, selling and distribution expenses Finance income Finance expenses Profit before tax Tax expense: Deferred tax Profit after tax for the year Current tax Profit from operating activities Profit before contribution to WPPF Contribution to WPPF

(3,282,291,966) 1,822,629,749 17,845,108

(335,219,270) 222,949,409 -

(3,617,511,236) 2,045,579,158 17,845,108

5,663,090,394

(3,237,854,140) 1,903,180,538 7,103,518

5,141,034,678

Service received

(9,080)

(9,080) (119,229) (6,289) 12

(16,220) (207,097) (6,573) -

(375) (139)

(1,151,295,804) (3,346,961) 12,948,168

Group company Group company Group company

Trade mark licence fees

(119,229) (6,289) 12

689,179,053

(140,829,875) 1,583,858 (409,410)

82,119,534

(1,292,125,679) 771,298,587 (3,756,371) 14,532,026

(1,254,198,947) 656,085,109 (3,920,419) 10,669,463

Service received

BB Export Limited

Subsidiary company

Purchase

(34,939,013) 179,134,186 188,134,186

698,780,260

Subscription of shares

1,135

19,864

663,841,247 9,000,000

(4,164,699) 10,865,814

83,293,982

79,129,283 -

(39,103,712) 190,000,000

782,074,242

742,970,530 9,000,000

(33,141,708) 184,000,000

662,834,153

629,692,445 (3,714,000)

37. 38.

There were no capital expenditure and financial commitments as at 31 December 2010 (2009: Nil) There are contingent liabilities on account of unresolved disputed corporate tax assessments and VAT claims by the authority aggregating to Tk. 247,000,000 (2009: Tk 285,367,000). Considering the merits of the cases, it has not been deemed necessary to make provisions for all such disputed claims. There is also contingent liability in respect of outstanding letters of credit of Tk. 260 million and letter of guarantee of Tk. 4.1 million. Other disclosures Comparatives Contingent liabilities

Capital expenditure and financial commitment

475,707,061

10,865,814

68,263,469

199,000,000

543,970,530

180,286,000

449,406,445

39.

39.1 39.2 39.3

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation to the notes 4, 9, 22, 23. Bata paid an interim dividend @ Tk 14.50 per share of Tk 10 each aggregating to Tk 198,360,000 which was approved by the Board of Directors at its 201st meeting held on 11 November 2010. The Board of Directors of Bata, at its 202nd meeting held on 21 April 2011, proposed Tk 10.50 per share, amounting to a total of Tk 143,640,000 as final dividend for the year ended 31 December 2010, which represents 105% of the paid up capital. Total dividend for the year ended 31 December 2010 including the interim dividend (see note 39.2) thus comes to Tk 342,000,000, which is 250% of paid up capital. These dividends are subject to final approval by the shareholders at the forthcoming Annual General Meeting of the company. Events after the reporting period Interim dividend

54

ANNUAL REPORT 2010 5 5

BB Export Ltd is a private Limited Company incorporated in 2009 and is a fully owned subsidiary of Bata Shoe Company (Bangladesh) Limited.

BB EXPORT LTD. DIRECTORS REPORT

Since there is a great potential for export of leather and leather footwear to both Bata Shoe Organisation (BSO) and non BSO Companies in the world and to streamline the manufacturing operation, Bata Shoe Company (Bangladesh) Limited established this 100% export oriented company in the name of BB Export Ltd. Key Financial Results for the year 31 December 2010 is not available as the company has not yet started operations. On behalf of the Board

Muhammad Qayyum Managing Director

56

ANNUAL REPORT 2010 5 7

Introduction

Independent Auditors Report to Board of Directors of BB Export Ltd.

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BB Export Ltd. Satetement of Financial Positon as at 31 December 2010


Source of funds Shareholders' funds: Share capital Retained earnings Total Application of funds

Taka 18,835,090 (1,402,157) 17,432,933

We have audited the accompanying financial statements of BB Export Ltd. which comprise the statement of financial position as at 31 December 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the period from 19 November 2009 to 31 December 2010, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994 and other applicable laws and regulations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' 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 relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion

Property, plant and equipment At cost Less: Accumulated depreciation Current assets: Advances, deposits and prepayments Cash and cash equivalents Current liabilities and provisions: Creditors for expenses Provision for tax Net current assets Total The annexed notes 1 to 22 form an integral part of these financial statements.

18,017,634 680,287 17,337,347 179 123,407 23,000 5,000

123,586

17,432,933

95,586

28,000

In our opinion, the financial statements give a true and fair view of the financial position as at 31 December 2010 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. We also report that: a) b) c) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; in our opinion, proper books of account as required by law have been kept by the company in so far as it appeared from our examination of these books; and the statement of financial position and statement of comprehensive income dealt with by the report are in agreement with the books of account and returns.

Yee Siew NG Director

As per our report of same date. Rahman Rahman Huq Chartered Accountants

Md. Hashim Reza Director

Dhaka, 21 April 2011

Dhaka, 21 April 2011 58

Rahman Rahman Huq Chartered Accountants


ANNUAL REPORT 2010 5 9

BB Export Ltd. Statement of Comprehensive Income for the period from 19 November 2009 to 31 December 2010
Cost of sales Administration, selling and distribution expenses Profit/(loss) from operating activities Finance income Profit/(loss) before tax Income tax expense Profit/(loss) after tax for the period Other comprehensive income/(loss) Gross profit Revenue Taka -

Statement of Changes in Equity for the period from 19 November 2009 to 31 December 2010
Particulars Share capital Balance as at 19 November 2009 Share capital Taka Retained earnings Taka Total Taka -

BB Export Ltd.

(1,398,952) (1,397,157) 1,795

(1,398,952)

Profit/(loss) for the period

18,835,090

Other comprehensive income/(loss) Balance as at 31 December 2010

18,835,090

(1,402,157) (1,402,157)

(1,402,157) 17,432,933 -

18,835,090

(1,402,157) -

(5,000)

Total comprehensive income/(loss) for the period The annexed notes 1 to 22 form an integral part of these financial statements.

(1,402,157)

Yee Siew NG Director

As per our report of same date. Rahman Rahman Huq Chartered Accountants

Md. Hashim Reza Director

Dhaka, 21 April 2011

60

ANNUAL REPORT 2010 6 1

Statement of Cash Flows for the period from 19 November 2009 to 31 December 2010
Cash flows from operating activities Cash paid against various expenses Advance income tax paid Interest received Net cash from operating activities Cash flows from investing activities Taka (695,665) (694,049) 1,795 (179)

BB Export Ltd.

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Acquisition of property, plant and equipment Net cash used in investing activities

(18,017,634)

(18,017,634)

Cash flows from financing activities Paid-up share capital Net cash from financing activities Net cash increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period (Note 8)

18,835,090

18,835,090

123,407 123,407 -

v~JrPyJJPrr Jr

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62
ANNUAL REPORT 2010

Form of Proxy

Shareholder's Folio / BO No. I/We

Please Quote

No. of Shares held

being shareholder(s) BATA SHOE COMPANY (BANGLADESH) LIMITED, entitled to vote hereby appoint Mr./Ms. as my/our proxy to attend and vote for me/us and on my/our behalf at the 39th Annual General Meeting of the Company to be held on Thursday 23 June, 2011 and adjournment thereof and the poll that may be taken in consequence thereof. As witness my/our hand this day of 2011

of

Signature of Shareholder (s) Date

Signature of Proxy Signature of Witness

(Signature of Shareholder (s) must be in accordance with specimen signature with the Company.)

Revenue Stamp of Tk. 10.00

I/We hereby record my/our presence at the 39th Annual General Meeting of Bata Shoe Company (Bangladesh) Limited at Dhamrai Factory, Dhaka on Thursday 23 June, 2011 at 10:30 a.m. Full name of the Shareholder (in block letter) Full name of the Proxy (in block letter) Signature Signature

ATTENDANCE

Shareholder's Folio / BO No. Shareholders are requested to hand over the Attendance Slip at entrance of the meeting hall.

ANNUAL REPORT 2010

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