A.Qnsrm&Co. - RAK Ceramics€¦ · A.Qnsrm&Co. Charter€d Accountants Since 1953 RAK Ceramics...

A.Qnsrm&Co.Charter€d Accountants Since 1953

RAK Ceramics (Bangladesh) Ltd.

Auditors' Report and Consolidated financial statements

As at and for the vear ended 31 December 2017

A member fim of Emst & Young Global Limited

EY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited

A.QnsEM&Co.Chartered Accountants

IndePendent Auditors' RePort

to the Shareholders ofRAK Ceramics (Bangladesh) Ltd.

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of RAK Ceramics (Bangladesh) Ltd. which comprise the

consolidated statement of financial position as at 3 I December 2077 , and the consolidated statement of profit or loss and other

comprehensive income, consolidated statement of changes in equrty and consolidated statement of cash flows for the yem then

ended, and a summary of significant accounting policies and other explanatory information

Management's Responsibili8 for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in

accordance with Bangladesh Financial Reporting Standards (BFRS) and for such internal control as management determines is

necessary to enable the prcparation of financial statements that are free from material misstatement, whether due to fraud or

e1Tor.

Auditors' ResPonsibilitY

our responsibility is to express an opinion on these consolidated financial statements based on our audit We conducted our audit

in accordance with Bangladesh Standards on Auditing (BSA). Those standards requke 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

misstatemenl.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements'

The procedures selected OeperrA on the auditors' judgment, including the assessment of the risks of material misstatement of the

financial statements, whether due to fraud or eror. In making those risk assessments, the auditor considers internal control

relevant to the entity,s preparation and fair presentation ofthe 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 intemal

control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made bv manasement, as well as eva'luat'ins the overallnresentationofthefinancia'l 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 consolidated financial statements present fairly, in all material respects, the financial position of RAK

Ceramics (Bangladesh) Ltd. as at 3l December 2017 andits financial performance and its cash flows for the year then ended in

accordance with Bangladesh Financial Reportine Standards (BFRS)'

Other matter

The financial statements oftwo subsidiaries ofRAK Ceramics (Bangladesh) Ltd. are audited by another auditor who expressed an

unmodified opinion on those financial statements on 28 January 2018'

Report on other legal and regulatory requirements

In accordance with the Companies Act 1994 and Securities and Exchange Rules 1987, we also report the following:

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

purpose of our audit and made due verification thereof; '

(b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our

examination of those books;

(c) the consolidated statement of financial position and the consolidated statement of profit or loss and other comprehensive

income dealt with by the report are in agreement with the books of accounts; and

Since 1953

Gulshan Pink CitySuites # 01-03, Level :7 , Plot # 15, Road # 103Gulshan Avenue, Dhaka - 1212, Bangladesh

Phone : 880-2-8881824-6Fax : 880-2-8881822E-mail : [email protected]

(A. Qasem & Co.)Chartered Accountants

EY

(d) the expenditure incurred was for the purposes of the Company's busrness'

Dated,28 January 2018

A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more ofthe independent member firms of Ernst & Young Global Limited

Building a betterworking world

A.Qesrm&Co.Charterad Accountants Since 1953

AssetsProperty, plant and equipmentInvestment property

Intangible assets

Capital work-in-progressTrade and other receivables

Total non-current assets

lnventories

Trade and other receivables

Loan to disposed subsidiaryAdvances, deposits and prepayments

Advance income tax

Cash and cash equivalents

Total current assets

Total assets

EquitvShare capitalShare premium

Retained earnings

Equity attributable to equity holders ofthe companyNon-controlling interests

Totrl equity

LiabilitiesBorrowings

Defened tax liability

Total non-current liabilities

Employees benefi ts payable

BorrowingsTrade and other payables

Accrued expenses

Provision for income taxTotal current liabilitiesTotal liabilitiesTotal equity ald liabilities

The accompanying notes are an integral part of these financial


Consolidated statement of frnancial positionas at 3l December 2017

Notes

4

5

6

7

10

3,394,940,284 3,s00,77s,2s870t,68t,877 504,343,755

5,429,027 6,740,15941,4t5,7t9 28,726,285

2016

Taka2017

Taka

t4 3,536,93t,4t0t,473 ,647 ,979t,445,455,970

6,4s6,03s,3s9

1,524

6,456,036,883

3,368,s06,1 10

1,473,647,9791,269,570,793

6,t11,724,8821,501

6,111,726,383

60r,200,t32t28,416,223

t715

359,163,292178.8 13.760

537,977,052 729,616,355

16 - 3,458,78317 548,162,038 566,254,99918 573,706,4t6 590,472,t14t9 447,661,843 269,520,037

20 3,227,80s,t10 2,886,541,5904,797,335,407 4,316,247,5235,335,312,459 5,045,963,979

__! | J 9 1,3 49; A_ ___!y s7,s9 0,261_

Company Secretary

As per our report of same date

(A Qasem & Co.)

Chartered Accountants

--_'{

' Managing flt$tor

Dated,28 January 2018

A member firm of Ernst & Youne Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited

- 74,025,0004,143,466,907 4,114,610,457

9 2,533,703,266 2,527,s07,042l0 590,423,877 618,841,5568 - 201,898,00011 309,772,083 406,247,968

t2 2,83t,624,003 2,485,84t,75913 t,382,359,206 802,643,479

7,647,882,435 7,042,979,804

11,791,349,342 11,157,590,261

RAK Ceramics @angladesh) Ltd.

Consolidated profit or loss and other comprehensive incomefor the year ended 31 December 2017

2017

Sales

Cost of sales

Gross profit

Other income

Administrative expenses

Marketing and selling expenses

Profit from operating activities

Finance income

Finance expenses

Net finance income

Profit before contribution to workers'profit participation and welfare fund

Contribution to workers'profit participation and welfare fund

Profit before income tax,/

Income tax expense /Current taxDeferred tax

Profit for the year

Other comprehensive income

Total comprehensive income for the year

Profit attributable to:

Equity holders of the company

Non-controlling interests

Profit after tax for the year

Basic earnings per share (Par value TK 10)

The accompanying notes are an integral part of these financial

23

24

25

26

27

28

29

15

(346,te0,2r0)ll (302,7e8

537)ll (s2.60s.

(396,587,747) (355,403,678)

1,018,012,122 915,254,771

1,019,012,122 915,254,771

r,018,01 1,699

423

915,254,299

472

2.8833

1,018,012,122 915,254,771

2.59

Company Secretary

As per out report of same date

(A Qasem & Co.)Chartered AccountantsDated, 28 January 2018

A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited

A.Qnsrttt&Co.Since 1953

2016Notes Taka Taka

2t 7,067,872,487 5,661,411,57822 (4,2st,220,093) (3,252,0s4,966)

2,816,652,394 2,409,356,612

12,392,92r ll 3,10e,360(378,r10,155)ll Gss,404,446)

944\ll 006.362^t3s(1,2ss,752,178) (1,0s8,6s7,22r)1,560,900,216 1,350,699,391

22,r6s,853 ll 21,029.885

10t.024.93 40.014"661

(78,8s9,083) (18,984,776)

1,482,041,133 1,331,714,615

(67,441,264) (61,056,166)

1,414,599,869 1,270,659,449

A.Qnsrm&Co.Chartered Accountants Since 1953

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A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited

A.Qnsru&Co.Chartered Accountants Since 1953


Consolidated statement of cash flowsfor the year ended 31 December 2017

7,198,545,493 5,601,413,958(5,025,320,3s4) (4,235,590,594)

2,173,225,139 1,365,923,364

8,791,396 3,356,834(345,782,243) (266,034,e73)

1,836,234,292 L,103,145,225

(32e,063,241) (585,844,016)

- 707,15074,025,000 86,710,000

9,429,742 15,105,005

10,557,999 2,020,000

(6,92s,4s8) (12,401,s43)

200 250

Q41,975,758) (493,703,154\

(41,426,174) (42,s54,701)(267,565,020) 174,301,262

(35,815,064) (203,400,043)(66e,7 3 6,1 48_) (rri,,lzi,,x13)

(400) (500)(\014,542,806) (908,365,112)

579,715,727 Q99,923,041)802,643,479 1,101,566,520

1,392,359,206 802,643,479

A member firm of Ernst & Youne Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited

2016

Taka2017

TakaCash flows from operating activities

Cash receipts from customers

Cash payments to suppliers and employees

Cash generated from operating activities

Interest received from bank deposit

Income tax paidNet cosh fow from operaring activities

Cash flows from investing activities

Acquisition of property, plant and equipmentSale ofproperty, plant and equipment

Disposal proceeds of associate

Interest received from FDRIncome from rentalIntangible assets

Dividend received

Net cash used in investing activities

Cash flows from financing activities

Finance charges

AvaiV(repal,rnent) of term loan

Avail/(repayment) of short-term loan

Dividend paidUnclaimed share application refirndAdjustment related with non-controlling interestNet cash ased inJinancing activitiesNet increase(decrease) in cash and cash equivalentsCash and cash equivalents as at 01 JanuaryCash and cash equivalents as at 31 December

l.



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Reporting entity

RAK Ceramics (Bangladesh) Limited (the Company), formerly RAK Ceramics @angladesh) Pvr. Limited,a UAE-Bangladesh jornt venture company, was incorporated in Bangladesh on 26 November 1998 as aprivate company limited by shares under the Companies Act 1994. The Company was latfl converted froma private limited into a public limited on 10 June 2008 after observance of required formalities as per laws.The name of the Company was thereafter changed to RAK Ceramics @angladesh) Ltd- as per certificateissued by the Registrar of Joint Stock Companies dated 1l February 2009. The address of the Company'sregistered office is RAK Tower, Plot # 1/A, Jasimuddin Avenue, Sector # 3, IJttwa, Dhaka 1230. Thecompany got listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) on 13 June2010.

Nature of business

The Company is engaged in manufacturing and marketing of ceramics tiles, bathroom sets and all types ofsanitary ware. It has started its commercial production on 12 November 2000. The commercial productionof its new sanitary ware plant, expansion unit of ceramics facilities, tiles and sanitary plant was started onl0January2004, I July2004,1 September2007, l April2015 and l7thMay2016respectively.

Description of subsidiaries

RAK Power Pvt. Ltd.

RAK Power Pvt. Ltd. has been incorporated in Bangladesh under the Companies Act l994on 30 June 2005as a private company limited by shares with an authorized capital of Taka 1,000,000,000 divided into10,000,000 ordinary shares ofTaka 100 each. The paid up capital stands at Taka 205,000,000 as at 31December 2017. The Company has gone into operation from I May 2009. The registered office of theCompany is at House # 5, Road # 1/A Sector # 4, IJttara, Dhaka- 1230. The Power Plant is located atVillage : Dhanu4 P.S: Sreepur, District: Gazipur. 57% shares of RAK Power Prt. Ltd. is held by RAKCeramics Ganeladesh) Limited.

The Board of Directors of RAK Ceramics @angladesh) Limited in its meeting held on July 26, 2075 havedecided to further increase the shareholding in RAK Power Prt. Ltd. from 57%o to 99 .99%o through purchaseof881,495 number ofordinary shares ofBDT 100 each in consideration ofBDT 255 per share totalling toBDT 224,781,225 only from all the other shareholders ofRAK Power Prt. Ltd. subject to approval by theshareholders and concemed authorities for the interest ofthe business ofthe Company. The shareholders ofRAK Ceramics (Bangladesh) Limited have approved the same in the EGM dated September 20, 2015.Theeffect of acquisition has been taken place as approved in Board of Directors meeting of RAK Power (Prt.)Ltd on 20 October 2015.

R{K Security and Services Pvt, Limited

RAK Security and Services P\4. Ltd. has been incorporated in Bangladesh under the Companies Act 1994on 2l December 2006 as a private company limited by shares with an authorized capital of Taka1,00,000,000 divided into 1,000,000 ordinary shares ofTaka 100 each. The paid up capital stands at Taka1,000,000 as at 31 December 2017. The Company has gone into operation from I May 2007. Tlne registeredoffice of the Company is at House # 5, Road # 1/A Sector # 4,IJttNa, Dhaka- 1230. 35% shares of RAKSecuriw and Services (P\,1.) Ltd is held by RAK Ceramics (Baneladesh) Limited.

A member firm of Ernst & Voung Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited

1.1

1.2

7

2.1

A.Qasru&Co.Chartered Accountants Since 1953

The Board of Directors of RAK Ceramics (Bangladesh) Limited in its meeting held on July 26, 2015 havedecided to further increase the shareholding in RAK Security and Services (Pvt.) Ltd. from 35% to 99.00%o

through purchase of6,500 number ofordinary shares ofBDT 100 each in consideration ofBDT 2,875 pershare totalling to BDT 18,687,500 only from all the other shareholders of RAK Security and Services (Pr,t.)Ltd. subject to approval by the shareholders and concemed authorities for the interest ofthe business oftheCompany. The shmeholders of RAK Ceramics @angladesh) Limited have approved the same in the EGMdated September 20, 2015. The effect of acquisition has been taken place as approved in Board of Directorsmeeting of RAK Securitv and Services G!t.) Ltd on 20 October 2015.

Basis of preparation

Statement of compliance

These financial statements have been prepared in accordance with Bangladesh Financial ReportingStandards (BFRS$, the Companies Act 1994 and the Securities and Exchange Rules, I 987.

The title and format of these financial statements follow the requirements of BFRS which are to some extent

different from the requirement of the Companies Act 1994. However, such differences are not material and

in the view of management BFRS titles and format give better presentation to the shareholders.

Authorisation for issue

These financial statements have been authorised for issue by the Board of Directors of the Company on 28

January 2018.

Basis of measurement

These financial statements have been prepared on historical cost basis except for inventories which are

measured at lower ofcost and net realisable value.

f,'unctional and presentational currency

These furancial statements me presented in Bangladesh Taka (Taka/Tk/BDT), which is the functionalctrtrency and presentation currency of the Company. The figlres of financial statements have been rounded

offto the nearest Taka.

Use of estimates and judgements

The preparation of these financial statements in conformity with BFRSs requires management to makejudgements, 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. Revisions to accounting estimates

me recognised in the year in which the estimates are revised and in any future years affected.

ln particulm, information about significant areas of estimation uncertainty and critical judgements inapplying accounting policies that have the most sigrificant effect on the amount recogrrised in the financialstatements are stated in the following notes:

Note 4 Property, plant and equipmentNote 5 lnvestment propertyNote l5 Delerred tax liabilityNote 16 Employees benefitpayableNote 20 Provision for income tax


2.3

2.4

2.5

2.6

A.Qasru&Co.Chartered Accountants Since 1953

Rbporting period

The financial period of the Company covers one year from I January to 31 December and is followedconsistently.

Going concern

The Company has adequate resources to continue in operation for foreseeable future and hence, thefinancial statements have been prepared on going concem basis. As per management assessment there are

no material uncertainties related to events or conditions which may cast signif,rcant doubt upon theCompany's ability to continue as a going concem.

Signifi cant accounting policies

The accor.rnting policies set out below, which comply with BFRS, have been applied consistently to all yearspresented in these consolidated financial statements, and have been applied consistently by Group entities.

Basis of consolidation

These consolidated financial statements comprise the consolidated financial position and the consolidatedresults ofoperations ofthe Company and its subsidiaries (collectively referred to as "the Group") on a lineby line basis together with the Group's share in the net assets of its equity- accounted investees.

BFRS-l0 "Consolidated Financial Statements" infoduces a new control model that focuses on whether thegroup has power over an investee, exposure or rights to variable retums from its involvement with theinvestee and ability to use its power to affect those retums. An investor has power over an investee when theinvestor has existing rights that gives it the cunent ability to direct the relevant activities that significantlyaffect the investee's retums. Power mises from rights. An investor is exposed, or has rights, to vmiablereturns from its involvement with the investee when the investor's retums from its involvement have thepotential to vary as a result of the investee's performance. An investor controls an investee if the investornot only has the power over the investee and exposure or rights to vmiable retums from its involvement withthe investee, but also has the ability to use its power to affect the investor's return from its involvement withthe investee.

Subsidiaries

Subsidiaries are enterprises controlled by the Group. Control exists when the Group has the power to govemthe financial and operating policies of an entity so as to obtain benefits from its activities. In assessing

control, potential voting rights that me presently exercisable are taken into account. The results of operationsand total assets and liabilities of subsidiary companies are included in the consolidated financial statementson a line-byJine basis and the interest of minority shareholders, if any, in the results and net assets ofsubsidiaries is stated separately. The financial statements of subsidiaries are included in the consolidatedfinancial statements ofthe Group from the date that control commences until the date that control ceases.

Any gains or losses on increase/decrease in non-controlling interest in subsidiaries without a change incontrol, is recognised as a component of equity.

Loss of control

Upon the loss of control, the Group derecogrises the assets and liabilities of the subsidiary, any non-controlling interest and other components of equity related to the subsidiary. Any surplus or deficit arisingon the loss of control is recognised in prof,rt or loss. If the Group retains any interest in the previoussubsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is

accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on thelevel of influence retained.


3.1

A.Qesrttt&Co.Chartered Accountants Since 1953

Transactions eliminated on consolidation

Intra-goup balances and transactions, and any unrealised income and expenses arising from intra-grouptransactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising fromtransactions with equity-accounted investees are eliminated against the investrnent to the extent of theGroup's interest in the investee. Unrealised losses me eliminated in the same way as unrealised gains, butonly to the extent that there is no evidence of impairment.

3.2 Financialinstruments

A financial instrument is any confact that gives rise to a financial asset ofone entity and a flnancial liabilityor equity instrument of another entity-

3.2.1 Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated. All other financialassets are recognised initially on the trade date, which is the date that the Group becomes a party to the

conffactual provisions of the instrument.

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 in a transaction in which substantially all the

risks and rewards of ownership of the financial asset are transferred. Any interest in such fansferredfinancial assets that is created or retained by the Group is recognised as a separate asset or liability.

The Group classifies non-derivative financial assets into the following categories: financial assets at fairvalue through profit or loss, heldto-maturity financial assets, loans and receivables and available for-sale

financial assets.

A member firm of Ernst & Young clobal LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited

A.QnsEM&Co.Chartered Accountants Slnce 1953

Financial assets at fair value through profit br loss

A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or isdesignated as such on initial recognition. Financial assets are designated as at fair value through profit orloss if the Group manages such investrnents and makes purchase and sale decisions based on their fair valuein accordance with the Group's documented risk management or investment sffategy- Attributabletransaction costs are recogrised in prof,rt or loss as incurred. Financial assets at fair value through profit orlbss are measured at fair value and changes therein, which takes into account any dividend income, merecomised in the statement of profit or loss and other comprehensive income.

Financial assets designated as at fair value through profit or loss comprise equity securities that otherwisewould have been classified as available for sale.

Held-to-maturity financial assets

If the Group has the positive intent and ability to hold debt securities to matuilty, then such financial assets

are classified as held to maturity. Held-to-matr.rity financial assets are recognised initially at fair value plus

any directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity financial assets

are measured at amortised cost using the effective interest method, less any impairment losses.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative lurancial assets that are designated as available for sale

or are not classified in any ofthe above categories offinancial assets. Available-for-sale financial assets are

recogrised initiafly at fair value plus any directly attributable transaction costs.

Subsequent to initial recogrition, they are measured at fair value and changes therein, other than impairmentlosses and foreign currency differences on available-for-sale debt instruments, are recognised in othercomprehensive income and presented by the fair value reserve in equity. When an investment isderecognised, the gain or loss accumulated in equity is reclassified to profit or loss.

Available-for-sale financial assets comprise equity securities and debt securities.

Loans and receivables

Loans and receivables me financial assets with fixed or determinable pa).rnents that me not quoted in anactive mmket. Such assets are recognised initially at fair value plus any directly attributable transactioncosts. Subsequent to initial recognition, loans and receivables are measured at amortised cost using theeffective interest method, less any impairment losses.

Non-derivative financial assets comprise investment in associates, loans to associates, trade and otherreceivables and cash and cash equivalents.

Trade and other receivables

Trade and other receivables are financial assets with fixed or determinable pa).rnents that are not quoted inan active mmket. Such assets are recognised initially at fair value plus any directly attributable transactioncosts. Subsequent to initial recognition trade and other receivables are measured at amortised cost using theeffective interest method, less any bad debts provision-

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank including short notice deposits and fixeddeposits having maturity of three months or less that are subject to an insignificant risk of changes in theirfair value, and are used by the Group in the management of its short-term commitments.


A.Qnsru&Co.Chartered Accountants Slnce 1953

3.2.2 Non-derivative financial liabilities

Financial liabilities me recognised initially on the trade date at which the Group becomes a party to thecontractual provisions of the instrument.

The Company derecognises a financial liability when its conffactual obligations are discharged, cancelled orexpired.

Non-derivative financial liabilities comprise trade and other payables, and interest bearing borrowings.

Trade and other payables

Trade and other payables are recognised initially at fair value less any direcfly attributable transaction costs.

Subsequent to initial recognition, trade and othqr payables are measured at amortised cost using the effectiveinterest method.

Borrowings

Interest-bearing borrowings include short term bank loan. Interest-bearing borrowings are recognised

initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, interest.

bearing borrowings are stated at amortised cost using the effective interest method.

Share capital

Ordinary shares me classified as equlty Incremental costs directly attributable to the issue of ordinaryshares are recognised as a deduction from equity, net of any tax effects. Paid up shme capital represents

total amount contributed by the shareholders and bonus shares issued by the Company to the ordinaryshareholders. Holders ofordinary 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, ordinaryshareholders rank after all other shareholders and creditors and are fillly entitled to any residual proceeds ofliquidation.

Properff, plant and equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairmentlosses, if any. Cost includes expenditures that are directly attributable to the acquisition of the property,plant and equipment.

Subsequent expenditure is capitalised only when it is probable that the future economic benefits associatedwith the expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.

An asset is derecognised on disposal or when no future economic benefits are expected from its use andsubsequent disposal. Any gain or loss on disposal ofan item ofproperty, plant and equipment (calculated as

the difference between the net proceeds from disposal and the carrying amount ofthe item) is recogrised as

gain or loss in the statement of comprehensive income.

3.4.1 Depreciation on property, plant and equipment

Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over theestimated useful lives of each component. Capital-work-in-progess and land are not depreciated.Depreciation on addition to fixed assets is charged from the day of their acquisition and charging ofdepreciation on property, plant and equipment ceases from the day on which the deletion thereof takesplace. Depreciation continues to be charged on each item of property, plant and equipment until writtendown value of such fixed asset is reduced to Taka one.


3.3

3.4

A.Qnsru&Co.chartered Accountants Since 1953

Rates ofdepreciation on various classes ofproperty, plant and equipment are as under:

Category ofproperty, plant and equipment

Factory buildingGeneral buildingHead Office buildingPlant and machineryMobile plantElectrical installationGas pipelineFurniture, fixture and equipment

Office equipmentCommunication equipmentTools and appliancesVehiclesFire fighting equipment

Category of Investment Property

Building

Land is not depreciated as it deemed to have an infinite lif-e.

t2

A member firm of Ernst & Young Global Limited


Depreciation methods, useful lives and residual values are reviewed at each reporling date and adjusted ifappropriate. Land is not depreciated as it deemed to have an indefinite life.

Investment property

Investment properties are propefties held to earn rentals and/or fbr capital appreciation (including property

under construction for such purposes). Investment properties are measured at cost less accumulated

depreciation and impairment losses, ifany. Cost includes expenditures that are directly attributable to the

acquisition of the investment property. Maintenance, renewals and betterments that enhances the

economic useful life of the investment property or that improve the capacity, quality or reduce

subsequently the operation cost or administration expenses and capitalized by adding it to the related

investment property. Ongoing repairs and maintenance is expensed as incurred.

An investment properly is derecognized upon disposal or when the investment propefty is permanently

withdrawn from use and no future economic benefits are expected tiom the disposal. Any gain or loss

arising on derecognition of the property (calculated as the diflerence between the net disposal proceeds

and the carrying amount of the asset) is included in statement of profit or loss and other comprehensive

income, the period in which the property is derecognised.

3.5.1 Depreciation on investment property

Depreciation charged on the basis of straight line method. Depreciation continues to be charged on each

item of investment propefty until written value of such fixed asset is reduced to Taka one. Depreciation on

addition to fixed assets is charged from the day of their acquisition and charging of depreciation on

investment propefty ceases from the day on which the deletion thereoftakes place.

Rates of depreciation on various classes of investment property are as under:

Rate (%)

2.5-52.s-202.5-55-10

10

10-201 0-20

l0t0-20t0-2010-2010-20

20

3.5

Rate (%)

5

3.6

3.7


Capital work-in-progress

Capital work in progress is stated at cost less impairment, if any, until the construction is completed. Uponcompletion of construction, the cost of such assets together with the cost directly attributable toconstruction, including capitalised borrowing costs are transferred to the respective class of asset- Nodepreciation is charged on capital work in progress.

Intangible assets

Intangible assets that are acquired by the Group (such as designs and trade marks for manufacture ofceramic tiles and sanitary ware and pharmaceuticals products) and have finite useful lives are measured atcost less accumulated amortisation and accumulated impairment losses, if any.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in thespecific asset to which it relates.

Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives of 2to 3 years from the date that they are available for use.

Amortisation methods, usefirl lives and residual values are reviewed at each reporting date and adjusted ifappropdate.

Leased assets

Leases in terms of which the Group assumes substantially all of the risks and rewards of ownership meclassified as f,mance leases. On initial recognition, the leased asset is measured at an amount equal to thelower of its fair value and the present value of the minimum lease payrnents. Subsequent to initialrecognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Lease payments

In respect offinance lease, lease palments are apportioned between finance charges and reduction ofleaseliability so as to achieve a constant rate ofinterest on the remaining balance ofliability. Finance charges are

reflected in profit or loss.

Operating leases pa;,rnents are recogrised as an expense in profit or loss on a straight-line basis over theterm of the lease. Lease incentives received are recognised as an integral part ofthe total lease expense, overthe term ofthe lease.

Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on theweighted average cost principle, and includes expenditure incurred in acquiring the inventories, productionor conversion costs, and other costs incurred in bringrng them to their eisting location and condition. In thecase of manufactured inventories and work in progress, cost includes an appropriate share of productionoverheads based on normal operating capacity. Raw materials in transit are valued at cost.

Net realisable value (\IRV) is the estimated selling price in the ordinary course of business, less estimatedcost of completion and any estimated costs necdssmy to make the sale.


3.9

t3

A.Qnsru&Co.Since 1953

3,10 Impairment

Non-derivative fi nancial assets

Financial assets not classified as at fair value through profit or loss, are assessed at each reporting date todetermine whether there is objective evidence that it is impaired. A financial asset is impaired if objectiveevidence indicates that a loss event has occurrbd after the initial recognition of the asset, and that the lossevent had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Non-financial assets

The carrying amount of the non-financial assets, other than inventories are reviewed at each reporting dateto determine whether there is any indication of impairment. If any such indication exists then the assets'

recoverable amounts me estimated. For intangible assets that have indefinite lives, recoverable amount isestimated at each reporting date. An impairment loss is recogrised if the carrying amount of an asset or itscash generating unit (CGU) exceeds its estimated recoverable amount.

Calculation of recoverable amount

The recoverable amount of an asset is the $eater of its value in use and its fair value less costs to sell. Inassessing value in use, the estimated future cash flows are discounted to thek present value using a pre-taxdiscount rate that reflects the current market assessment of the time value of money and risk specific to the

asset. For an asset that does not generate significantly independent cash inflows, the recoverable amount isdetermined for the cash generating unit (CGU) to which the asset belongs.

Recognition of impairment

Impairment losses are recognised in profit or loss. Impairment losses in respect of CGUs are allocated frstto reduced the carrying amount of any goodwill allocated to the CGU and then to reduce the carryingamount of other assets in the CGU on a pro-rata basis.

Reversal of impairment

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed

only to the extent that the asset's carrying amount does not exceed the carrying amount that would have beendetermined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.11 Emplovees' benefit schemes

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 respectivedeeds.

Defined contribution plan (Provident fund)

Defined contribution plan is a post emplolment benefit plan under which the Company provides benefits toone or more employees. The recognised Employees Provident Fund is considered as defined contributionplan as it meets the recognition criteria specified for this purpose. All permanent employees contribute 10

percent of their basic salary to the provident fimd and the Company also makes equal contribution to thefund. These are administered by the Board of Trustees. The conffibutions are invested separately from thecompany's assets.

Contribution to defined contribution plan is recognised as an expense when an employee has rendered

services to the Company. The legal and constructive obligation is limited to the amount it agrees tocontribute to the fund.

A member firm of Ernst & Young Global LimitedEY refers to the Slobal organization, and/or one or more of the independent member firms of Ernst & Young Global Limited

t4

A.Qffiu&Co.Chartered Accountants Since 1953

Defined benefit plan (Gratuity)

A defined benefit plan is a post-emplol,rnent benefit plan other than a defined contribution plan. TheCompany's net obligation in respect of defined benefit plans is calculated separately for each plan byestimating the amount of future benefit that employees have eamed in retum for their service in the currentand prior periods.

Permanent employees are entitled to gatuity on the basis of his latest basic salary for a completed year ofservice or for service for a period of more than six months, salary of minimum 30 days, or salary of 45 days

for a continuous service for more than ten years, it shall be in addition to any palment of compensation orpayment of any wage or allowance in lieu of notice due to termination of services of a worker on differentgrounds. The expected cost ofthis benefit is included in respective annual statement ofprofit or loss andother comprehensive income over the period of emplolnnent.

3-12 Workers' Profit Participation Fund and Welfare Fund (WPPF)

The Company provides 5% of its net prolit before tax after charging such expense as WPPF in accordance

with "The Bangladesh Labour (Amendment) Act 2013".

3.13 Provisions

Provisions are recognised on the reporting date if. as a result ofpast events, the Company has a present legal

or consfuctive obligation that can be estimated reliably, and it is probable that an outflow of economicbenefits will be required to settle the obligation.

3.14 Revenue recognition

Revenue is measured at fair value of consideration received or receivable. Revenue from sale of goods isrecognised when the company has transferred significant risk and rewards of ownership of the goods to thebuyer and the revenue and costs incurred to effect the hansaction can be measured reliably in compliancewith the requirements of Bangladesh Accounting Standard (BAS)-18 "Revenue".

Revenue represents excluding of sample sales to dealers and customer dwing the year.

3.15 Finance income and expenses

Finance income comprises interest income on fixed deposits, Short Notice Deposit (SND) and amounts duefrom related parties. lnterest income is recognized in profit or loss as it accrues, using the effective interestrate method.

Finance costs comprises interest expense on overdraft, LTR, term loan, short term borrowings and financelease. All finance expenses are recognised in the statement of comprehensive income.

Borrowing costs that are not directly attributable to the acquisition, construction or production of aqualifuing asset are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as

either finance income or fmance cost depending on whether foreign currency movements are in a net gain ornet loss position.


15


3.16 Foreign currency

Transactions in foreign currencies are translated to Taka at the foreign exchange rates prevailing on thedate of transaction. All monetary assets and liabilities denominated in foreign curencies at reporting dateare translated to Taka at the rates of exchange prevailing on that date. Resulting exchange differencesarising on the settlement of monetary items or on translating monetary items at the end of the reportingperiod are recognised in the statement of profit or loss and other comprehensive income as per BangladeshAccounting Standard (BAS)-21 "The Effects of Changes in Foreign Exchange Rates".

3.17 Taxation

Income tax expenses represents current tax and deferred tax. Income tax expense is recognised in thestatement of profit or loss and other comprehensive income except to the extent that it relates to itemsrecognised directly in equity, in which case it is recognised in equity.

Current tax:

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted orsubstantially enacted at the reporting date, and any adjustment to tax payable in respect of previous year.

Provisions for corporate income tax is made following the rate applicable for companies as per Finance\ct2017.

Deferred tax:

Deferred tax has been recognised in accordance with Bangladesh Accounting Standard (BAS) 12.

Deferred tax is provided using the liability method for temporary differences between the carrying amountof assets and liabilities for financial reporting purposes and the amount used for taxation purpose.

Deferred tax is determined at the effective income tax rate prevailing at the reporting date.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differencesto the extent that it is probable that future taxable profits will be available against which they can be

utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is nolonger probable that the related tax benefit will be realised.

3.18 Earning per share

The Company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for itsordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholdersof the Company with the weighted average number of ordinary shares outstanding during the year,

adjusted for the effect of change in number of shares for bonus issue. Diluted EPS is detemined byadjusting the profit or loss attributable to ordinary shareholders and the weighted average number ofordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution ofEPS is not applicable for these financial statements as there was no dilutive potential ordinary shares

durins the relevant years.

16



A.Qnseu&Co.Chartered Accountants Since 1953

3.19 Determination and presentation of operating segment

Details of product-wise segment reporting as required by BFRS-S operating segments is followed.

3.20 Contingencies

Contingent liability

Contingent liability is a possible obligation that arises fiom past events and whose existence will be

confirmed only by the occurrence or non-occurence of one or more uncertain future events not whollywithin the control of the entity.

Contingent liability should not be recognised in the financial statements, but may require disclosure. Aprovision should be recognised in the year in which the recogrrition criteria ofprovision have been met.

Contingent asset

Contingent asset is a possible asset that arises from past events and whose existence will be confirmed onlyby the occurrence or non-occrurence of one or more uncertain future events not wholly within the control ofthe entity.

A contingent asset must not be recognised. Onty when the realisation of the related economic benefits isvirtually certain should recogrrition take place provided that it can be measured reliably because, at thatpoint, the asset is no longer contingent.

3.21 Statement of cash flows

Statement of cash flows is prepared under direct method in accordance with Bangladesh AccountingStandmd (BAS)-7 "Statement of cashflows" as required by the Securities and Exchange Rules, 1987.

3.22 Events after the reporting period

Events after the reporting period that provide additional information about the Company's position at thereporting date me reflected in the financial statements. Material events after the reporting period that are notadiusting events are disclosed by way ofnote-

3.23 Comparatives and reclassification

Comparative information have been disclosed in respect of 2016 for all numerical information in thefinancial statements and also the narrative and descriptive information when it is relevant for understandingof the current year's fmancial statements.

To facilitate comparison, certain relevant, balances pertaining to the previous year have beenrearranged/reclassified whenever considered necessary to confirm to current year's presentation.

A member firm of Ernst & Young clobal LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited

l7

A.Qn^srw&Co.Chartered Accountants Since 1953

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A.Qnsrna & Co.Chartered Accountants Since 1953

2016Taka

2017

Taka

4.1 Depreciation charged on the basis ofthe purpose ofuse

Cost of sales (Note 22)

Administrative expenses (Note 4.2)

Marketing & selling expenses (Note 25)

4.2 Administrativeexpenses

379,753,825 354,673,598

44,987,283 3s,844,361

2,027,549 2,027,549

426,768,657 392,485,508

Depreciation on propefty, plant & equipment (Note 24) 36,121,760 35,622,443

Depreciation on investment property (Note 24) 8,865,523 221,91844,987,283 35,844,361

4.3 Disposal of property, plant and equipment

2017

Particulars Original costAccumulateddepreciation

Book value Receipt against

sales/insurance

Profit/(loss) on

disposal

No Disoosal

Taka Taka Taka Taka Taka

Total

2016

ParticularsOriginal

cost

Accumulated

depreciation

Book

value

Receipt against

sales/insurance

Profit/(loss) on

disposal

VehicleOffice eouioment

Taka

1,682,494

1t2.730

Taka

1,547,643

7 5.27 5

Taka

I 34,85 1

37.455

Taka

687,050

20. I 00

Taka

552,199(17,35s)

Iotal 1,795,224 r,622,918 172,306 707,150 534,844

20


EY refers to the global organlzation, and/or one or more of the independent member firms of Ernst & Young Global Limited

A.QnsEM&Co.Chartered Accountants Since 1953

6,740,159 6,683,9ss6,92s,4s8 12,401,543

13,665,617 19,08s,498

5,587,852 12,345,339

2,648,738

5,429,027 6,740,159

5,587,852 t2.345.3395,587,852 12,345,339

2016Taka

2017

Taka

6.1

Intangible assets

Balance as at 1 JanuaryAdd: Addition during the year

Less: Amortisation during the year (Note-6.1)

Less: Adjustment during the year

Balance as at 31 December

Amortisation charged on the basis ofthe purpose ofuse

Administrative expenses (Note - 24)

Capital Work-in-Progress

Balance as at I JanuaryAdd: Addition during the year

Less: Transfer to property, plant and equipment and IP during the year (note 7.1)Impairment loss on capital equipment during the year


t,545,379,71028,099,014

t,s73,478,7241,528,441,226

16.311,214

41,415,719 28,726,285

28,726,284444,202,680472,928,964431,513,245

7.1 Items transferred from capital work in progress to property, plant and equipment

Office buildingFactory buildingPlant and machinery

Others

Loan to disposed subsidiary

Julphar Bangladesh Ltd. (Erstwhile RAK Pharmaceuticals Pvt. Ltd.)

Inventories

Raw materials

Less : Provision for obsolescence made during the year

Stores and consumables spares

Finished goods

Work-in-processGoods-in-transit

207,433,930

53,235,483170,12s,8t7

718.015

431,513,245

t,098,231,281 r,082,968,2r9

237,2t9,1s4

1,2s6.s99,87t

34,622,201

-_J,sxA4r226_

201,898,000

201,898,000

i_*,ryffi]655,088,51 I 83t,012,396

t69,8s8,236 t29,410,652

-_ 2,5fi! B effi_ __2,527_,507,0A_

502,342,028

108,183,2 10

387,942,404

96,173,37 |

21



2016Taka

2017Taka

t0 Trade and other receivables

Non current :

Receivable against disposal of investment

Current :

Trade receivables (Note 10.1)

Accrued interest (Note 10.2)

Accruedrental income

Receivable against disposal of investment

Trade receivables

Receivables from local sales

Receivables from export sales

Accrued interest

Interest accrued on FDR

Advance, deposit and prepayments

Advances:EmployeesLand advance and others

Suppliers against material and services

Security and other deposits:

Titas gas

Myrnensingh Palli Bidyut Samity-2VAT and supplementary duty (note I 1. 1)

Deposit with income tax authorityDeposit with VAT authorityOther deposits

Prepalrnents:House rentInsurance and others

5t3,977,334513,9',77,334

4,778,0s42,070,000

69,598,489

590,423,877

__Jl,o25,ooo_

s48,029,728

548,029,728

2,336,7t4380,000

68,095,1 14

618,841,556

l0.l

10.2

11

5r2,343,t98 548,029,728

1,634,136

_____s1321J,331_ _____s48 W J n_

4,778,054

4,778,054

2,336,7t42,336,714

l- D-Tdd lf rTTdolI Lsqz.szs ll 36 776.888 I

I sr.s ro.+oq | | zzs,osz,gil |

93.465,744 261.877,329

I- 3e,6%Jsoll-22262-.6001I r.sss.ooo I I r.e5s.ooo II as ozs.ooa Il 36.23r.0% I

I re.oss-oss ll rz.rss.ess I

I enes+all Ts3ooorlI r.+ss.ssr ll r,+qr.ssr I

129,639,670 86,656,202

[-jjr3sJe5l- yn6mI t r,ozs,qtq ll +s,s:z,qoo I

86,666,669 57,714.437

309,772,083 406,247,968

22


2017

Taka

11.1 Supplementary duty and VAT

Balance as at 1 January

Add: Treasury deposit for SD and VAT purpose

Rebate of input VAT

Less: SD and VAT on sales

Payable- SD and VAT


Advance Income Tax

Balance as at 1 JanuaryAdd: Paid during the year

Less: Adjusted during the year

Balance as at 31 December (12. I )

Payment for the year

Income vearYew 2077Year 2016Yem 2015

Year 2074Yem 2013

Year 2072Year 201 1

Year 2010

Year 2009

Year 2008

Year 2007

Yem 2006

36,231,093

l,s 13,000,000

346,947,267

1.896.178.360

12

1,843,007,696

t0,092,5971,853,100,292

___43,078,066._

2,485,841,7593s0,708,934

4,926,690

__2-,4!W_

1,416,418,729

471,266

1,416,889,99s

36,231,093

2,219,806,786266,034,973

2,485,841,759

t2.l

285,614,513291,375,845t87 ,267,28529s,379,428

392,118,319

334,263,453

328,701,317

265,s32,626

218,091,876

85,378,847

t24,813,16123.087.333

22s,6rc,;24187,267,285

295,379,428

392,118,319

336,319,884

328,082,711

265,684,491

218,091,876

85,378i,847

124,813,161

23,087,3332,831,624,003


2,485,841,759

A.Qnsrttt&Co.chartered Accountants Since 1953

2016Taka

58,015,290

1,12 1,800,000

273,305,798

1.453,121,088

A.Qasrm&Co.Chartered Accountants Since 1953

2016Taka

2017

Taka

lJ Cash and cash equivalents

Cash in hand

Cash at banks

HSBC (cunent account -001-013432-01 1,001-107580-01 1,001-096015-01 l, 001-096007-01 1 - BDTStandard Chartered Bad< (current account - 01-6162940-01,01-3767272-01 - BDT)Brac Bank Ltd. (curent account - 1 53030 173 1248001 - BDT)Citibank N.A. (cunent account - CrO 10000 I 2002620 I 8 - BDT)Dutch Bangla Bank Ltd. (cunent accowt - 117-110-12733,117-110-4311, 117.110.23474 -BDT)HSBC (ERQ account - 001-013432-047 - USD)Standard Chartered Ba* (ERQ - 42-6162940-01 - USD)Standard Chartered Bank (Margin money account)United Commercial Bank (SND account - 0831301000000164 BDT)Eastem Bank Ltd. (SND account - I I 3 I 350237146 - BDT)EXIM Bank (SND account - 01513 10003 1 877 - BDT)Standard Chartered Bank (SND account - 02-37 67272-0 I - BDT)Dutch Bangla Bank Ltd. (SND account - 117-120-589,117-120-330,11"1-120.2550 - BDT)BRAC Bank (SND - 1513101731248001 - BDT)Prime Bank Ltd. (SND - 12531010022563 -BDT)Dhaka Bank Ltd (SND - 102.150.274- BDT))Commercial Bank ofCeylon (CD-2817000776 - BDT.)Dhaka Bank Ltd (CD - 2041000000193 1 8- BDT)Commercial Bank of Ceylon (SND-2 817 0007 7 7 - BDT .)Meghra Bank Ltd. (SND 1 1 12-13500000004 - BDT)

IPO bank account

Citibank N.A. (RAK-IPO Central Account - c010001200262022 -BDT)Citibank N.A. (RAK-IPO-NRB Subscnption - G0100001200262042 - USD)Citibank N.A. (RAK-IPO-NRB Subscription - G01 00001200262026 - EURO)Citibaxk N.A. (RAK-IPO-NRB Subscription - G0100001200262034 - cBP)

Dividend bank accountBRAC Bank (Cunent - 1510201731248001 - BDT) - 2010BRAC Bank (Cunent - 1513201731248001 - BDT) - 201 1

SCB (Cunent - 02-6162940-02-BDT) - 2012SCB (Cunent - 02-6162940-03- BDT) - 2013SCB (Cunent - 02-6162940-04-BDT) - 2014SCB (Cunent - 02-6162940-05- BDT) - 2015SCB (Cunent - 02-6162940-06-BDT) - 2016

lnvestment in Fixed Deposit Receipt (FDR)HSBCSCB

Brac Bank Ltd.Dutch Bangla Bank Ltd.Eastem Bark Ltd.Dhaka Bank Ltd.Meghna Bank Ltd.

Total

9,880,543

40,412,746

66,626,s93

15,162,084

142,3026,549,288

973,8_13

rrq.itrt,038,t42

8 1,82 1,359

356,70320,282,604

6.55s.;s443,154,459

733,879,731 240,039,659

5,631"704

25,409,026

t17,911,77457,502,367

172,812

1,628,ts79,438,932

975,788306,739

33,s72,2143s,308,039

t14,7614s4,397

261,903,04715R 15s

53,513,417

52,825,646,? srq

8,470

39.297.802

126,594 126,5886,654,092 6,674,919

2,454,3893,919,501

1 53,608

2,453,275

3,941,453

153,603

2,618,43t2,204,4s93,837,331

16,734,192

4,977,932

3,847,536

2,627,8312,222,4t83,899,024

16,697,585

5,082,074

4,082,7954,3 83,884

38,603,76s 34,611,727

16,827,834 30,674,5s1762,080 762,080

I 50,000,000

25,000,000 480,000,000300,000,000

I 00,000,000s oo0 000

597,s89,914 511,436,631

- t]srrdli-@

24

A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & youne Global Limited

A.Qesrm&Co.Chartered Accountants Since 1953

2017 2016

Taka Taka

6,000,000,000 6,000,000,000

3,536,931,410 3,368,506,110

2016

l4 Share Capital

Authorised :

600,000,000 ordinary shares ofTaka l0/- each

Issued, subscribed, called and paid up :

353,693,141 ordinary shares ofTaka 10/- each

Percentage of shareholdings :

RAK Ceramics PJSC, UAES.A.K. Ekamuzzaman

HH Sheikh Saud Bin Saqr A1 QassimiSheikh Omer Bin Saqr Al QassimiSheikh Ahmad Bin Humaid al QassimiHamad Abdulla AI Muttawa

Dr. Khater Massaad

Abdallah Massaad

Manoj Uttamrao AhireGeneral Public

Less than 500 shares

501 to 5,000 shares

5001 to 10,000 shares

10,001 to 20,000 shares

20,001 to 30,000 shares

30,001 to 40,000 shares

40,001 to 50,000 shares

50,001 to 100,000 shares

100,001 to 1,000,000 shares

Over 1,000,000 shares

0.00 290

0.00 2900.00 2900.00 140

Taka

71.67 2.414.100.210

132,1 19,850

280

280

280140

140

140

140

2017

%

68.13

3.92

0.00

3.92

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Taka

2,409,805.220

138,725,830

140

oa

0.00 140

0.00 140

Classification of shareholders by hotding

Shareholder's range

2'7.95 988,398,930 24.41 822,284,650

L0q.00 3,536,931,410 100.00 3,368,506,110:::

Number of shareholders Number of shares

2017

24,431

8,673

9t6

134

72

,4284

89

20t6

26,718

8,021

618

2016

s,617,564

tl,426,4204,593,9s8

4,505,626

2,463,0t2t,774,201

t,760,460

5,479,79s

18,732,649

20t7

s,260,532

13,964,830

6,687,868

475 308 6,676,203

99 3.318,356

50 2,550,406

38 1,903,394

80 s,708,527

63 23,843,323

ll 283,779,702 280,496,92634,926 36,005 353,693,141 336,850,611: :


25

2017

Taka2016Taka

15 Deferred tax liabilities


Less : Deferred tax (income/expensesBalance as at 31 December

16 Employees benefits payable

Provident fundGratuity fund

Balance as at 1 JanuaryAdd: Provision made during the year

Less: Pa),rnents made to fund during the yearBalance as at 3 I December

Balance as at 1 JanuaryAdd: Provision made during the year

Less: Payments made to fund during the year


l7 Borrowings

Non-current:Term loanCurrent portion ofterm loan

Cment:Bank overdraftsShort-tem borrowingsCurrent portion ofterm loan


362,7083,096,075

2017

Provident fundTaka

362,70854,249,20154,611,90954,61t,909

Gratuitv fundTaka

3,096,075

TotalTaka

3,458,78335,231,317 89,480,51838,327,392 92,939,30138,327,392 92,939,301

2016Provident fund Gratuitv fund Total

Taka Taka Taka

3,292,467 22,931,668 26,224,13s50,299,846 34,732,847 8s"032,69353,592,313 s7,664,515 111,2s6,828s3,229,605 54,568,440 107,798,04s

_____362108_ ____1,0e!pE______11!UqL

632,827,493 861,151,969(273,664,201) (2se,9s1,837)3s9,163,292 601,200,132

t8,244,25s 29,663,693256,253,582 276,639,469273,664,201 259,9st,837548,162,038 s66,254,999----milr$ j0---II6ZZss,r3r-

26

A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & youne Global Limited

A.Qesrm&Co.Chartered Accountants Since 1953

128,416,223 75,811,194

50,397,s37 s2,60s,029178,813,760 128,4t6,223

_______________i= __-__1llszgl_

A.Qnsrttt&Co.Chartered Accountants Since 1953

Borrowings by maturity

At 3l December 2017

17.2 Facilities details

Name oflJank

lacrlrtresOverdraft

< I year l-2 years 2-5 years Total

Bank overdrafts 18,244,255 18,244,255Short-tem borrowings 256,253,582 256,253,592Tem loan 273,664,201 271,747,942 87,415,349 632,827,493

___:1$192{1!_ _-2rJI 4?2a_ ___!111!t!2_ ___291i4t19_

At 3l December 20'16 < 1 year 1-2 years 2-5 years Total

Barkoverdrafts 29,663,693 29,663,693Short-term bonowings 276,639,469 2i6,639,469Term loan 259,951,837 259,951,837 341,248,296 861,151,969

___s66,2s!,ee2_ _22251,837_ _:4ry482e!_ _!l!24!!111_

SCBShort term loan 378,000,000

Overdraft 30,000,000

HSBC Shortterm loan 550,000,000

Long tem loan 1,366,872,000

Dutch Overdraft

Bansla- : - Short tem loan-tJafl( Ltd.

Commerci Overdrafta] Bank of

Short tem loant evton

25,000,000

125,000,000

2s,000,000

300,000,000

Trade and other payables

Trade payables

Payable to local suppliers

Payable to foreign suppliers

Payable to seruice proliderPayabletoC&Fagent

Other payables

Tax deducted at source

VAT deducted at source

Dividend Payable

Unclaimed share applicationAdvance fiom customer against sales

Securily deposit payable

Payable to employee for tradeProvisionat liabilities - material & services

[-iii-ossr6r I I- ,oszlsJ?ol| :oo,:rs.zqo ll ra:.soo.+ss I

I teSzt,nz ll so,re+.+as I

I q.sro,q:: ll ro.zs:.zso I

440,907,s66 449,599,420

a-::n4r.4or]f r-5-rn2oelI to,ass.osq ll s.qsa.zss II v.ss+.zos ll ::.ssq.rso II zo.sss.t ro l l zo srs r re I

I zz,rso,sro ll *,2:r.ons I

I r,ozq.aoz I I r.o:s.z:+ II zzo.qesll I

I rs zzn.soe ll so.zqq.qq: I

132,798,850 t40,872,69s

___ s71! 06/)S_ ___2!,472}1!_

Limit

50,000,000

Utilisation

t73,969,702

82,283,880

632,827,493

18,244,255

Maturity

Revolving

180/360 days

from B,{- date

Revolving

180/360 days

from 8,4- date

5 years

Revolving

180/360 days

from B,& date

Revolving

180/360 daysfrom B,/L date

Repayment

From compmy'sown soulce

From company's

owll source

From company's

om source

From company'som source

Security - STLI ) Letter ofcomfort,2) Hypothecation

over plant &machinery onpam - passu

basis with other

lenders.

3) Hypothecation

over stock &book debts on apani - passu

basis with otherlenders.

4) Demardoromissoru note.

Security - LTL

1) Land,

2) Plant andmachinery oftheexpansion plant.

2017Trk

2016Taka

l8

27

A member firm of Ernst & Young Global LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Globaj Limited

2017

Taka2016Taka

[9 Accrued expenses

Power and gas

Staffcost

Audit fees

Professional charges

Interest on loans

Telephone

Provision for freight

Managing Director's remuneration (Note 19.1)

Worker's profit participation and welfare fund (Note 19.2)

Royalty and technical know-how fees (I.lote 19.3)

Others

19.1 Managing Directorrs remuneration


Add: Provision made during the year

Less: Paid to Managing Director during the yearBalance as at 3 1 December

19.2 Workerrs profit participation and welfare fund


Add: Contribution made to the fund during the yea.r

Less: Palment made from the fund duing the yearBalance as at 3 1 December

19.3 Provision for royalty and technical know-how fees

Balance as at I January

Add: Provision made during the year

Less: Tax provision on disallowance ofroyalty paid for the yei ZOOI

Balance as at 3 I December

20 ProYision for income Tax


Add: Provision made for the year

Less: Adjustment for completed assessment

Less: Provision release during the yearBalance as at 31 December Q.{ote 20. l)

20.1 Provision for income Tax

Income vearYear 2017Year 2016Yer 2015Year 2014Year 2013Yeu 2012

Year 201 I

Year 2010

Year 2009

Year 2008

Yeu 2007

23,498,627

41,406,844

1,232,250

463,250

1,495,042)10 a)1

tt,774,67040,911,795

61,056,166

83,946,396

3,464,070

___?e,sz0,ott_

34,075,485

40,9t1,79574,987,280

40,911,795 34,075,485

191,8s2,419I 5,000,00083,946,396

2,886,541,s90 2,s83,742,941346,190,2t0 302,798,649

3,232,731,800 2,886,541,590

4,e26,690322?p0sJ t0 2,sc"s4r

"sr0

346,089,883302,798,649 302,798,649323 ,397 ,728 323 ,397 ,728381,57t,248 381,571,248364,979,858 364,979,858339,211,366 34t,267,796326,68s,21s 328,376,284

348,96s,691 3s0,044,556266,823,984 266,823,984

147 .117,914 147 ,117,91480,163,573 80,163,573

3,227,805,1t0 2,886,541,s90

28


A.Qesrttt&Co.Chartered Accountants Since 1953

40,240,928

86,556,724

1,532,250

455,840

9,561,366

228,743

45,725,t77

67,441,264

191,852,419

4,067,132

___347_561.8/3_

40,91',t,795

45,725,177

86,636972

45,725,177 40,911,795

61,056,t66 54,064,400

67 ,441 ,264 61 ,056 ,166128,497,430 115,t20,s6661,056,166 54,064,400

____9:!J 261_ ____gl9s6, 161

83,946,396 2,399"388107,906,023 96,547,008

191,852,419 98,946,396

Sales

Gross sales (Local)

Gross sales (Export)

Total Sales

Less: SupplementaryDuty

VATNet sales

Cost of sales

Materials consumed:

Opening stock as at I January

Add: Purchase during the year

Less: Closing stock as at 3l December

Manufacturing overhead:

Direct labour (Note 22.1.1)Direct expenses:

Power and gas

Repairs and indirect materials (Note 22.1.2)Rental charges

Moulds and punches

Depreciation

Royalty and technical know-hodassistance fees (22

Other production overhead Q.{ote 22.1.4)Movement in stock

22.1,1 Direct labour

Salary and wages

Overtime

Bonus

Incentive

Temporary labour wages

Gratuity

Employer's contribution to provident fundLeave encashment

Group life insurance

22.1.2 Repairs and indirect materials

Stores, spares, repair and maintenance

Packing expenses

1.3)

23,161,80t379,753,825

107,906,023

65,719,709

40,264,443

82,667

94,908,877

24,707,415

18,016,490

4,222,s95

16,012,4t1

354,613,598

8 1,547,008

66,079.8t8

34,404,958

3,8t7,61682,877,430

22,873,3t4t4,709,574

75,t73

(t67,995,667) (47,0t9,979)

__! 2s1 220 $e3_ ___1 2s2,0 s!25!_

315,97t,s61 244,761,00839,409,677 39,468,500

2,493,692 1,986,172

540,077,417 444,973,745

424,775,429 379,775,144389,339,788 309,s97,2188L4,115,217 699,372,362

A member firm of Ernst & Young Global LimitedEY refers to the Blobal organization, and/or one or more of the independent member firms of Ernst & young clobal Limited


2017 2016Taka Taka

8,926,9t3,551 7,086,463.91512,952,284 14,869,100

8,939,865,835 7,101,333,015693,440,t70 505,43 1,618

1,178,553,178 934,489,819

__J_,0 67,87 2,487_ _Uq4!,s?q_

831,012,396 847,867,9942,060,243,5t3 t,498,488,t422,891,255,909 2,346,356,t366s5,088,511 831,012,396

2,236,167,398 1,515,343,740

540,077,4t7 444,973,745

251,403,727 130,098,593

814,t15,2t7 689,372,362

910,643 1,033,670

22.1.3 Royalty and technical know-how/assistance fees

Royalty and technical know-hoWassistance fees

Less : Tar provision on disallowance of royalty paid for the year 2009

22.1.4 Other production overhead

Hotel fare and expenses for technician

Demurrage

Insurance

Hiring charges and transportation

Impairment loss on capital equipment

Provision for obsolescence ofraw material

Other expenses

0ther income

Dividend income

Miscellaneous income

Rental income

Profit on sale of fixed assets

Administrative expenses

Staffcost (note-24.1)

Annual General Meeting expenses

Telephone and postage

Office repair and maintenance (note 24.2)

Registration and renewal

Security and guard expenses

Electricity, gas and water

Depreciation on property, plant and equipment (note - 4.2)

Depreciation on investment property (4.2)

Amortisation

Legal and professional fees

Vehicle repair and maintenance

Rent, rate and tarBad debts

CSR expenses

Managing Director's remuneration (note-24.3)

Technical consultancy and others


2017 2016Taka Taka

107,906,023 96,s47,008- 15,000,000

107,906,023 81,547,008

13,281,623 5,532,692

_____ 6s{e! 0e_ ___66,0?%q!_

6,906,1067,287,420

r5,534,319

22,710,2-41

200

144,722

12,247,999

4,763,388t,644,495

16,262,644

7,686,577

16,311,214

13,878,807

23

250t7 4,266

2,400,000

- 534,844

12,392,921 3,109,360

24

165,890,015

13,225,385

5,261,10s15,501,487

1,565,286

12,973,032

6,278,993

36,121,760

8,865,523

5,587,8528,359,r52

12,333,797

6,129,273

5,500,000

45,725,t77

t56,832,063

1s.445,361

5,873,788

6,357,274

1,064,355

11,826,93s

7,882,910

3s,622,443221,918

12,345,339

8,678,487

11,354,916

5,512,554357,846

5,742,270

40,gfi,79528,792,318 29,374,192

378,110,155 355,404,446

30


EY refers to the global organization, and/or one or more o{ the independent member firms of Ernst & Young Global Limited

A.Qlsrm&Co.Chartered Accountants Since 1953

2017 2016

Taka Taka

tt7,630,92815,797,510

792,382

8,266,289

6,585,677

4,202,563

878,275

5,374,2t11,553,998

2,580,064

t,787,0_05

105,028,514

14,438,616

3,16 1,893

7,983,3s3

3,873,t452t0,439587,102

7,230,364

2,392,'174

9,969,236

1,429,061

88,280

24.1 Staffcost

Salary and wages

Bonus

Incentive

Gratuity

Employer's contribution to provident fundLeave encashment

Group lile insurance

Canteen and conveyance expenses

Staffuniform expenses

Travelling expenses

Medical expenses

Accommodation expenses

Other employee benefit

24.2 OIIice repair and maintenance

Repairs office equipment

Office maintenance

24.3 ManagingDirector'sremuneration

Provision made during the year

Markefing and selling expenses

Staff cost (note-25. 1)

Advertisement

Freight and transportation

Performance rebates (note-25.2)Business promotion

Depreciation

Discount

Travel, entertainment and otlers

Staff cost

Salary and wages

Bonus

Incentive

Gratuity

Employer's contribution to provident fundLeave Encashment

Group life insuranceConveyance and tbod expenses

44t,tt3 439,286165,890,015 156,932,063

1,892,313

13,609,174 6,022,88215,501,487 6,357,27 4

334,392

Managing Director's remuneration represents provision made 3% of net profit before tax of RAK Ceramics (Bangladesh) Ltd

45,725,177

45,725,177

39,792,097

5,0s8,868

270,993,192

374,200,36646,776,857

2,027,549

29,882,507

3,230,020

33,20s

2,257,6t41,793,970

300,848

t54,3t7

40,91t,79s40,911,795

30,053,780

3,300,823

228,405,545

260,753,69315,108,279

2.027.549

22,1t8,1t52,999,899

t,134,929

1,636,563

835,966

125,620

25

t21,75t,796 t36,t50,66229,434,219 30,561,804

890,034,944 706,362,1352s.l

2,139,6t6 1,202,68839,192,097 30,053,790



2017 2016Taka Taka

11,668,958 6.6t6.203136,98 1,015

140,966,334

8,791,396I 1,871,082

1,503,375

46,233,598

51,532,438

84,584,0s9 32,621,s88

___ 3T 209 36 6_ _260 J s3,693_

'r<, Performance rebates

Compensation to customerDealers' commission

Breakage commission

Dealers' incentive and bonus

Finance income

lnterest on bank account (SND)Interest on FDRExchange gain

Un-winding gain

Financialexpenses

Interest expenses

Foreign exchange loss

.Bank charges

Contribution to worker's profit participation and welfare fund

Provision made during the year

Current tax

Current year

22,165,853 21,029,995

26

102,695,348

I I 8,820,554

3,356,834

t3,781,8723,89t,t_79

38,237,651

,o

3,258,900 r,777,010

__l u,02 4 w_ ______n,u 4,661_

67,441,264 6 1,056,166

67,441,264 61,056,166

346,190,210 302,798,649346,190,210 302,798,649

A member firm of Ernst & Young clobal LimitedEY refers to the global organization, and/or one or more of the independent member firms of Ernst & young Global Limited

A.Qnsrm&Co.chartered Accountants Since 1953

fl-1111

N\6No

$

€ON

rONo

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32 Segment reporting

The company has three reportable segments which offer different products and services ald re mmaged separately because they require differenttechnology and marketing strategles. The following summary describes the operations ofeach segrnent:

Ceramics & Sanitary Ware: Engages in mmufacturing md maketing of ceramics tiles, bathroom sets md all types of sanitary wre.

@ Set-up power utilities and operate power-generating plahts, transmission system and distribution system md to sell the generated electricpower to any legal entity.

Securitv and services : Engages in providing securiry guard, cleaning services, temite md pest control seruices md set up mmpower technicaltraining.

2017 Business Sesments

Revenue - extemal customers

Revenue - inter segment

Total segment revenue

Cost ofsales- extemal customer

Cost of sales- inter segrrent

Total segment cost of sales

Gross profit

Other income

Dividend income

Rental income

Unwinding gain on receivable (note - 26)

Finmcial income

Financial expenses

Depreciation

Other operating expenses

Segrnent profit before tarIncome tax expense

Defened tax

Non -Controllmg interest

Profit for the year

2016

Revenue - extemal customers

ReYenue - inter segment

Total segment revenue

Cost ofsales- extemal customer

Cost ofsales- inter segment

Total segnent cost of sales

Gross profit

Other income

Diudend income

Rental income

Finmcial income

Financial expenses

Depreciation

Other operating expenses

Segrrent profit before tax

lncome tax expense

Defened tax

Non -Controlling interest

Profit for the year

Ceramic &sanitary ware

Taka

6,968,838"073 2,740,415

6,968,838,073 381,122,602

(3,858,045,015) (244,342,16s)

(47e,514,160) (1,822,317)

(4,337,619,17 5) (246,164,482)

2,631,218,898 134,958,120

- 144,722

83,9',79,600 20,000

1 8,3 18,956

18.507.175 2.013.801

(99,713,95s) (1,226,099)

(401,s03"49r) (18,170,999)

(895,921,895) 8,339,105, 1,348,825,288 126,078,650

(297,112,555) (41,210,074)

(52,058,981) 1,661,444

- 422

- Securitv and InterPower

-

Seiltces sesment

Taka I& Irk

96,293,999 - 7,067,872,487

96,943,333 (47s,32s)20) ________________

193,237,332 (47s,325,520) 7,067,872,487

(148,832,9 13)

(148,832,91 3)

44,404,419

200

r+r,ior(24,883)

(1,0e4,167)(2r,234,916)), lo? I {{

036rJ8r)

0.70

481,396,477

_strv+

(83,999,600)

(6,070,9_51)

Entitv total

Taka

(4,251,220,093)

----------------(4,2s1,220,093)

2,816,652,394

144,722

200

12,247,999

t,503,37520,662,478

(101,024,937)

(426,168,6s7)

(908,817,706)

1,414,599,869

(346,190,210)

(50,397,537)

423

1,018,011,699

Business Sesments

Ceramic &Power

sanitary wareTaka Taka

s,s7'7,443,970 26,937,134

347,049,244

5.5',77.443.970 373.986.318

469,194 239,916

103,489,500 10,000

9,291.,130

18,400,859 2,567 ,214(39,747,963) (256,318)

(374,020,896) (l8,oe3,eoe)(719,181,814) 8,824,166

1,221,123,312 140,991,432(253,189,74s) (45,393,782)

(53,671,s03) 1,066,474- 472

57,030,474 - 5,661,411,578

153,542,632 (443,561,402) 5,661,411,578

SesuatY and

seruices

Taka

)to

6 1,8 12

(i0,380)(370,703)

(19,979,s28)

12,043,207(4,21s,122)

0.38

Intersegment

Tala

(i03,499,500)(6,89 l,1 30)

Entitv total

Taka

709,1 10

2s02,400,000

21,029,885

(40,014,661)

(392,485,508)

(730,337,236)

1,270,658,449(302,798,649)

(52,605,029)

472

915,254,299

(2,906,473,929) (224,380,162) (121,200,876) - (3,252,0s4,966)

(3"355,020,608) (226,286,01s) (121,200,8'76) 4s0,4s2,s32 (3,252,054,966)

2,222,423,362 147,700,363 32,341,756 - 2,409,356,612

39


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2016Taka

1.018.01r,699 91s,254,299

353,693,141353,693,141

353,693,t41 353,693,t4t

2.88 2.59

2017

Taka33 Earnings per share (EPS)

Calculation of eamings per share (EPS) is as under:

Earnings attributable to the ordinary shareholders

Profit attributable to equity holders of the Company

No. of ordinary equity shares

Weighted average no. of equity shares outstanding (Note 33.1)

Earnings per share (EPS) for the year

33.1 Weighted average number of ordinary shares

Outstanding shares

Effect ofissue ofbonus shares for the year 2016

33.2 Diluted earning per share

The weighted average number ofordinary shares outstanding during the year is the number ofordinary shares outstanding at

the beginning of the year, adjusted by the number of ordinary shares issued during the year multiplied by a time-weighting

factor. The time-weighting factor is the number ofdays that the shares are outstanding as a proportion ofthe total number ofdays in the year. The weighted average number ofshares is calculated by assuming that the shares have always been in issue.

This means that they have been issued at the start ofthe year presented as the comparative figures.

2011

336,850,61l16,842,531

2016

336,850,611

16,842,531

353,693,141 353,693,r41

No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during these periods.

34 Contingentliabilities

There are contingent liabilities on account ofunresolved disputed corporate tax assessments and VAT claims by the authority

aggregatingto Tk 668,168,492 (31 Dec 2016: Tk541,950,341). 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 478,87 I, I 46 (3 I Dec 20 I 6: Tk 398,5 I 1,738)

and letterof guarantee of Tk 80,730,767 (31 Dec 2016: Tk 42,310,078).

35 Events after the reporting period

35.1 Declaration of dividend

The Board of Directors of RAK Ceramics (Bangladesh) Limited, in its meeting held on 28 Janruary 2018 recommended l0%stock dividend andl0%, cash dividend (i.e. Tk. I per share ofTk. 10.00 each) for the year ended on 31 December 2017. These

dividends are subject to final approval by the shareholders at the forthcoming 19th Annual General Meeting(AGM) of the

Company.



40

A.Qnsrm&Co. - RAK Ceramics€¦ · A.Qnsrm&Co. Charter€d Accountants Since 1953 RAK Ceramics...

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