Annual Report Malek Spinning Mills Ltd.

Transcription

1 Annual Report Malek Spinning Mills Ltd.

2 27TH ANNUAL REPORT INDEX 27 th ANNUAL REPORT Subject Page Transmi al Le er 2 No ce to the Shareholders 3 Corporate Governance 4 Audit Commi ee of Board 5 Execu ve Management 6 Corporate Review 7 Corporate opera onal Result for 5 years 8 Message from the Chairman 9 Directors Report Corporate Governance Compliance Report Consolidated Auditors Report 24 Consolidated Statement of Financial Posi on as at 30th June, Consolidated Statement of Profit or Loss and other Comprehensive Income for the year ended 30th June, Consolidated Statement of Changes in Equity 27 Consolidated Statement of Cash Flows for the year ended 30th June, Notes of Consolidated Financial Statement Auditors Report of Malek Spinning Mills Ltd. 42 Statement of Financial Posi on as at 30th June, Statement of Profit or Loss and other Comprehensive Income for the year ended 30th June, Statement of Changes in Equity 45 Statement of Cash Flows for the year ended 30th June, Notes of Financial Statement SUBSIDIARY REPORT Salek Tex le Limited Directors Report Auditors Report 58 Statement of Financial Posi on as at 30th June, Statement of Profit or Loss and other Comprehensive Income for the year ended 30th June, Statement of Changes in Equity 61 Statement of Cash Flow for the year ended 30th June, Newasia Synthe cs Limited Directors Report Auditors Report 65 Statement of Financial Posi on as at 30th June, Statement of Profit or Loss and other Comprehensive Income for the year ended 30th June, Statement of Changes in Equity 68 Statement of Cash Flow for the year ended 30th June, J.M. Fabrics Limited Directors Report Auditors Report 72 Statement of Financial Posi on as at 30th June, Statement of Comprehensive Income for the year ended 30th June, Statement of Changes in Equity 75 Statement of Cash Flows for the year ended 30th June, Form of Proxy 79 Malek Spinning Mills Limited Registered Office: 117/A, Tejgaon Industrial Area, Dhaka-1208, Bangladesh Corporate & Share Office: Mehnaj Monsur Tower House No-11A, Road No-130, Gulshan-1, Dhaka-1212 Tel: , , Fax: , allabj@dhaka.net, Website:

3 TRANSMITTAL LETTER The Shareholders Bangladesh Securi es and Exchange Commission Registrar of Joint Stock Companies & Firms Dhaka Stock Exchange Ltd. Chi agong Stock Exchange Ltd. Sub: Annual Report for the year ended 30th June, Dear Sir (s), We are pleased to enclose herewith a copy of Annual Report together with the Audited Financial Statements comprising Consolidated and Separate Statement of Financial Posi on as at June 30, 2016, Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year ended June 30, 2016 along with notes thereon of Malek Spinning Mills Limited and its Subsidiaries for your informa on and records. Yours sincerely Syed Saiful Haque Company Secretary Dated: November 16,

4 Annual Report 2016 Registered Office: 117/A, Tejgaon Industrial Area, Dhaka-1208, Bangladesh Corporate & Share Office: Mehnaj Monsur Tower House No-11A, Road No-130, Gulshan-1, Dhaka-1212 NOTICE OF THE 27TH ANNUAL GENERAL MEETING No ce is hereby given that the 27TH ANNUAL GENERAL MEETING of the shareholders of the Company will be held on Monday, 26th December, 2016 at a.m. at Trust Milonayaton, 545, Puraton Biman Bandar Sarak (Adjacent to Shahid Bir Shresta Jahangir Gate), Dhaka Cantonment, Dhaka-1206 to transact the following business: Agenda-1. To receive, consider and adopt the Audited Financial Statements for the year ended 30th June, 2016 together with the Report of the Directors and the Auditors thereon. Agenda-2. To declare dividend for the year ended 30th June, Agenda-3. Agenda-4. Agenda-5. To elect Directors in terms of the relevant provision of Ar cles of Associa on of the Company. To appoint Auditors for the year and to fix their remunera on. To re-appoint the Independent Director. By order of the Board Syed Saiful Haque Company Secretary Dated: November 16, 2016 Notes: (i) (ii) (iii) (iv) The Shareholders whose names would appear in the Share Register of the Company and/or Depository Register of CDBL on the record date i.e. November 10, 2016 would be en tled to a end at the AGM and to receive the dividend. The Proxy form must be affixed with requisite revenue stamp and be deposited at the Corporate & Share Office of the Company not less than 72 hours before the me fixed for the mee ng. Admi ance to the mee ng venue will be on produc on of the a endance slip sent with the Annual Report. The Annual Report is available in the Company s website at (v) Members are requested to submit to the Company s Share Office on or before 27th December, 2016 their wri en op on to receive dividend. In case of non-submission of such op on within the s pulated me, the dividend will be paid off as deemed appropriate by the Company. N.B: No gi or benefit in cash or kind shall be paid/offered to the hon ble Shareholders in the 27th AGM of the Company as per BSEC Circular under reference No.SEC/CMRRCD/ /154 dated

5 CORPORATE GOVERNANCE: Corporate Governance involves decision making processes for any corporate body as a going concern for the benefit of all concerned, present and future. These decisions may be categorized as policy & strategic, opera onal and execu ng, performance & evalua on and sharing of the accre onal assets between present and future cohorts. The involvement of the entrepreneur in all these areas invokes decisions making governance on a con nuous basis, the degree of involvement being variable with the extent of delega on of authority top down and repor ng for accountability bo om up of the management echelon. These aspects of governance are shared by the Board of Directors, Execu ve Management, opera onal par cipants, workers and others in fulfillment of the common goals that converge in increasing the benefits of the stakeholders. To this end en re corporate governance efforts are blended with good governance prac ces as ethically and morally acceptable standards under a given socio poli co environmental phenomenon of our society in which we work, live and exist. The organs through which the corporate governance func ons are carried out: BOARD OF DIRECTORS: (a) Cons tu on: The Board of Directors, the top Management echelon, consis ng of the founder entrepreneurs/ successors and two Independent Directors, provides the policy and strategic support and direc on for the en re range of the corporate ac vi es. The Board of Directors consist of Eight (8) members including two Independent Directors with varied educa on and experience which provides a balancing character in decision making process. The Board is re-cons tuted every year at each Annual General Mee ng when one-third of the members re re and seek reelec on. A director is liable to be removed if the condi ons of the Ar cles of Associa on and the provisions of the Companies Act 1994 are not fulfilled. (b ) Role & Responsibili es: The main role of the Board of Directors, which is the highest level of authority, is to provide general superintendence, oversee the opera ons and control the affairs of the Company through appropriate delega on and accountability processes via the lines of command. However the Board of Directors hold the ul mate responsibility & accountability with due diligence for conduc ng the ac vi es of the Company as per provisions of law in the interest of the shareholders, the stakeholders, the state and the society. The Board of Directors, in fulfillment of its responsibility hold periodic mee ngs, at least once a quarter and provides appropriate decisions/direc ons to the Execu ve Management. Such mee ngs usually consider opera onal performance, financial results, review of budgets, capital expenditure, proposals for BMRE or new projects/divisions/product lines, procurement of funds by issue of shares or borrowing, procurement of raw materials, plant & machinery, pricing of products/discounts, recruitment, training and promo on of officers, approval of audited accounts and distribu on of dividends and other interest of the stakeholders including the employees and workers. The Board of Directors take special care in designing and ar cula ng produc vity and compensa on plans of employees and workers and rewarding them appropriately on the basis of quality and quan ty of performance as an incen ve. Board also remains responsible for removal of opera onal hazards to life and health of workers, friendly environmental work condi on and social rela onship as demanded of good ci zen in a country. (c) Rela onship with Shareholders and Public: The shareholders as owners are required to be provided with material informa on on the Company s opera on quarterly, half-yearly and annually, the la er at the AGM. They are also provided rou ne services by the Company Secretary. The Board is, however, responsible to the public for publica on of any Price Sensi ve Informa on as per BSEC Regula on. A qualified & experienced person is in charge for all these responsibili es as Company Secretary. (d) Rela onship with Government: In its role on accountability to the government, the Board of Directors ensure payment of all dues to government in the form of import duty, custom duty and port charges, VAT, Corporate Taxes and other levies as and when they become due on the basis of actual opera ons and make sure to avoid corrup on. This has enabled the Company to contribute to the Na onal Exchequer. (e) Rela onship with Financiers/ Bankers: The Board of Directors oversees the financial transac ons and ensures to meet company s commitments to the lenders without default. (f) Rela onship with Suppliers: As the Company has to import almost all the raw materials from abroad, it maintains cordial and mutually beneficial interest with its interna onal as well as local suppliers. This has enabled the company to avoid any legal disputes in interna onal/local courts and enhanced the Company s image as a good customer. 4

6 Annual Report 2016 (g) Corporate Social Responsibili es (CSR): The Board of Directors is also aware of the Corporate Social Responsibili es (CSR) especially in the areas of gender equality, race-religion- regional equality, non- employment of child labour, human rights, environmental pollu on, social marke ng and social-ac vi es. SEPARATE ROLE OF THE CHAIRMAN AND MANAGING DIRECTOR: The posi ons of Chairman and Managing Director are held by separate persons. The Chairman is responsible for the func ons of the Board while the Managing Director serves as the Chief Execu ve Officer (CEO) of the Company. CHIEF FINANCIAL OFFICER, HEAD OF INTERNAL AUDIT AND COMPANY SECRETARY: The Company has appointed Mr. B. K. Chaki, as Chief Financial Officer, Md. Rakibul Islam, as Head of Internal Audit and Mr. Syed Saiful Haque, as Company Secretary of the Company as per requirement of Bangladesh Securi es and Exchange Commission. AUDIT COMMITTEE OF BOARD: The Board of Directors has cons tuted an Audit Commi ee of the Board consis ng of three Directors. The Audit Commi ee is headed by the Independent Director, Mr. M. Sekander Ali, an MBA and a Senior Development and Investment Banker of the Country. Other members are Dr. Shamim Ma n Chowdhury, Director and Mr. Azizur Rahim Chowdhury, Director. The Audit Commi ee carries out its responsibili es as per the provisions of law and submits its report to the Board of Directors from me to me. The Audit Commi ee shall also co-ordinates with the Internal and External Auditors as and when required. The Audit Commi ee ensures that adequate internal checks & balances supported by adequate MIS are in place for detec on of errors, frauds and other deficiencies. The other responsibili es include inter alia, not being limited to, the preven on of conflict of interest between the Company and its Directors, officials, customers, suppliers, government and any other interest groups and detect or remove any scope of insider trading in the Company s stock. The Audit Commi ee also ensures compliance of requirements of BSEC and other agencies. OTHER GOVERNANCE APPARATUS: The Company, in its efforts for Corporate Good Governance Prac ces, uses a series of top ranking professional service providers including Bankers, Insurers and Technical experts who con nuously assist the Board of Directors and the Execu ve Management in properly discharging their du es to all the shareholders, stakeholders, the Government, and the Public as highlighted below: (a) Independent Directors: In compliance of the BSEC Regula ons on Good Governance, the Board of Directors as empowered by the Regula ons, appointed Mr. M. Sekander Ali, one of the Senior Development/Investment Bankers of the country, former Managing Director of Bangladesh Shilpa Bank/Bangladesh Shilpa Rin Sangstha/Investment Corpora on of Bangladesh and Senior Adviser, the Bangladesh Securi es and Exchange Commission and Md. Qamrul Huda, one of the Senior Bankers of the country, former Managing Director of Pubali Bank Limited/Eastern Bank Limited and former Chief Execu ve of BCCI and addi onal Managing Director of U ara Bank Limited and General Manager of Janata Bank, as the non-shareholder Independent Directors. It is expected that their exper se would help contribute to the further disclosure and protect the interest of all investors in general and smaller investors in par cular. (b) Bankers: The degree of efficient business opera on largely depends on the quality of efficiency of banking services received by the company. Efficient banking service brings down cost of opera ons. On the other hand, cost of financial services and interest on the lending by the banks are also required to be the minimum. With this end of view, the company has established long term business rela onship with the banks namely Eastern Bank Limited, Dhaka Bank Limited, HSBC, One Bank Limited and Trust Bank Limited who provide most efficient service at minimum cost/interest that benefit the shareholders. The company has neither ever defaulted in any commitment with its Bankers nor did get entangled in legal dispute at any court premises. (c) Insurer: Insurance services cover certain opera onal risks which are required by law/business prac ces to be covered by legi mate insurance service providers for protec on of the interest of the company, the investors. To this end, the company has to select insurer with the most efficient, reputed and financially sound history so that claims, if any, are se led promptly and the premium rates are market compe ve. The Company, based on these considera ons, is maintaining insurance business rela onship with the highly reputed and publicly listed insurance companies namely Pioneer Insurance Co. Ltd, Eastland Insurance Co. Ltd. and Reliance Insurance Co. Ltd. 5

7 The company has not yet faced any dispute over any claims and the company enjoys special premium rates which protects the interest of the investors. (d) Auditors: The role of the auditors in cer fica on of the financial statement is the most significant aspect of Corporate Governance and protec on of interest of investors. As evident from the Annual Reports, the company rigidly follows the code of Interna onal Accoun ng Standards (IAS) and Interna onal Standard of Audi ng (ISA) with legally required disclosures of Accounts and Financial Statements. This has been possible due to the high level capability and integrity of M/s. Shiraz Khan Basak & Co., Chartered Accountants whose performance has played a very trustworthy role in the protec on of interest of the investors. EXECUTIVE MANAGEMENT: The Execu ve Management is led by the Managing Director (CEO) who is appointed by the Board of Directors for a term of 5 years (renewable) with the approval of shareholders in the Annual General Mee ng. The Managing Director is supported by professional, well educated, trained and experienced team consis ng of Mr. Moshiur Rahman, Director and Mr. Azizur Rahim Chowdhury, Director, Mr. Ghaus Mohammad, Director-HR & Admin, Mr. Hasan Mahmood, Execu ve Director and Mr. B. K. Chaki, Chief Financial Officer and a host of Senior Execu ves in the hierarchy of management. SEGMENT REPORT: The Company s business and its geographic loca on is single and as such no segment reports are applicable. The company has 3 (Three) subsidiary companies of which Salek Tex le Limited has been producing Yarn, Fabric & RMG products, J.M. Fabrics Limited has been producing fabric of RMG product and Newasia Synthe cs Limited has not yet gone to opera on. The financial statement of the subsidiary companies has been shown separately and a ached to this report. RISK PERCEPTION: The Company Management perceives investment risk within the na onal and interna onal economic situa on in rela on to legal and moral requirements involving inter alia, intellectual property right, scien fic inven on, WTO Regula ons etc. and monetary and fiscal investment policies and has prepared its produc on & marke ng strategy to meet the challenges from these risks. WE STRIVE FOR We in Malek Spinning Mills Ltd., strive, above all, for top quality products at an appropriate cost. We owe our shareholders and strive for protec on of their capital as well as ensure highest return and growth of their assets. We strive for best compensa on to all the employees who cons tute the back-bone of the management and opera onal strength of the Company. We strive for the best co-opera on of the creditors and debtors the banks & financial ins tu ons who provide financial support when we need them, the suppliers of raw materials & suppliers who offer them at the best prices at the opportune moments, the providers of u li es- power, gas & water etc. and the customers who buy our products and services by redeeming their claim in me by making prompt payment and by distribu ng proper product on due dates to our customers. We strive for fulfillment of our responsibility to the Government through payment of en re range of due taxes, du es and claims by various public agencies like municipali es etc. We strive, as responsible ci zen, for a social order devoid of malprac ces, an environmental behaviors, unethical and immoral ac vi es and corrup ve dealings. We strive for prac cing good-governance in every sphere of ac vi es covering inter alia not being limited to, disclosure & repor ng to shareholders, holding AGM in me, distribu on of dividends and other benefits to shareholders, repor ng/dissemina on of price sensi ve informa on etc. We strive for equality between sexes, races, religions and regions in all sphere of opera on without any discriminatory treatment. We strive for an environment free from pollu on and poisoning. 6

8 Annual Report 2016 CORPORATE REVIEW I. MANAGEMENT APPARATUS: (a) BOARD OF DIRECTORS: Mr. A.F.M. Zubair Chairman Mr. A. Ma n Chowdhury Managing Director Dr. Shamim Ma n Chowdhury Director Mr. Azizur Rahim Chowdhury Director Ms. Saima Ma n Chowdhury Director Mr. Moshiur Rahman Director (Nominee of Paragon Poultry Ltd.) Mr. M. Sekander Ali Independent Director Md.Qamrul Huda Independent Director (b) AUDIT COMMITTEE: Mr. M. Sekander Ali Chairman Dr. Shamim Ma n Chowdhury Member Mr. Azizur Rahim Chowdhury Member (c) MANAGEMENT COMMITTEE: Mr. A. Ma n Chowdhury Chairman Mr. Moshiur Rahman Member Mr. Azizur Rahim Chowdhury Member Mr. Ghaus Mohammad Member Mr. Hasan Mahmood Member Mr. B. K. Chaki Member (d) SENIOR CORPORATE OFFICIALS: Mr. Ghaus Mohammad Director HR & Admin Mr. Hasan Mahmood Execu ve Director Mr. B. K. Chaki Chief Financial Officer Mr. Syed Saiful Haque Company Secretary Md. Rakibul Islam Head of Internal Audit (e) AUDITORS: Shiraz Khan Basak & Co. Chartered Accountants (f) BANKERS: i. Eastern Bank Ltd. Principal Br, Dhaka ii. Dhaka Bank Ltd. Karwan Bazar Br, Dhaka iii. The Trust Bank Ltd. Sena Kalyan Br, Dhaka iv. HSBC Main Br, Dhaka v. One Bank Ltd. Principal Br, Dhaka vi. AB Bank Ltd. Principal Br, Dhaka vii. BRAC Bank Ltd. Head Office, Dhaka (g ) INSURERS: i. Pioneer Insurance Co. Ltd. ii. Reliance Insurance Co. Ltd. iii. Eastland Insurance Co. Ltd ( h) LISTING: (a) Dhaka Stock Exchange Ltd. (b) Chi agong Stock Exchange Ltd. (i) REGISTERED OFFICE: 117/A, Tejgaon Industrial Area, Dhaka (j) CORPORATE AND SHARE OFFICE: Mehnaj Monsur Tower, House # 11A, Road # 130, Gulshan-1, Dhaka. (k) INVESTORS RELATION DEPARTMENT: Md. Kamruzzaman Fax No , kamruzzaman@knitasia.com, Tel: , Ext-282, Cell: (l) FACTORY: Shafipur, Kaliakoir, Gazipur. 7

9 II. CORPORATE HISTORY: Year of Incorpora on : 02 November, 1989 Year of Commencement of Produc on : 01 January, 1991 Year of Conversion to Public Ltd. Co. : 14 September, 2008 Year of Ini al Public Offering (IPO) : 2010 Stock Exchange Lis ng date : 2nd August, 2010 (DSE & CSE) Authorized Capital : Tk.3,000 Million Paid Up Capital : Tk.1,936 Million Product Lines : Combed and carded yarn of various Counts Number of Employees (30th June 2016) : a. Execu ve & staff : 190 b. Workers : 1,061 Subsidiary Companies : a. Salek Tex le Ltd. b. Newasia Synthe cs Ltd. c. J.M. Fabrics Ltd. III. FIVE YEARS OPERATIONAL RESULTS: (Figures in thousand Tk.) Par culars Turnover 2,587,147 2,994,446 3,065,013 3,262,553 2,966,197 Gross Profit 336, , , ,463 10,727 Net Profit (Before Tax) 202, , , ,158 (351,237) Net Profit (A er Tax) 171, , , ,442 (351,237) Shareholder s Equity 5,327,440 5,387,791 *5,356,194 5,461,466 5,402,999 Total Assets 6,825,321 6,942,375 7,113,508 7,504,000 7,927,057 Total Current Assets 2,928,056 2,959,887 3,043,633 3,353,939 4,540,220 Total Current Liabili es 1,208,294 1,216,712 1,405,194 1,766,205 1,875,701 Current Ra o Number of shares outstanding 193,600, ,600, ,600, ,600, ,000,000 Face Value per share Shareholder s Equity per Share * Earning per share (MSML) (1.81) Earning per share (Consolidated) (1.31) Dividend Declared Per Share (Stock) Nil Nil Nil Nil 10% (s) Dividend Declared Per Share (Cash) Nil Net Opera ng Cash Flow per Share (MSML) (6.78) Number of Shareholders **19,585 23,249 27,537 30,699 30,947 Human Resources: Execu ves & Staff Workers ,342 1,356 * Shareholder s Equity and Shareholder s Equity per share for the year has been restated. ** Number of shareholders considered as on 30th June,

10 Annual Report 2016 MESSAGE FROM THE CHAIRMAN Dear Shareholders, It is a great pleasure for me to welcome you on behalf of the Board of Directors to the 27th Annual General Mee ng of Shareholders of the Company. The Directors Report containing inter alia Audited Accounts and Auditors Report thereon for the year ended 30th June 2016 is enclosed for your perusal. The net profit of the company for the year stood at Tk. 171,969,153 as against Tk. 225,196,724 during the previous year, as a result net profit (a er tax) decline of 23.64% over the previous year. During the year sales revenue of the company had decreased by 13.60% from Tk. 2,994,445,635 in to Tk. 2,587,146,675 in due to reduc on of selling price in the face of s ff compe on and consequent fall in prices in interna onal market. As a result Net Profit percentage had decreased by 0.87% on sales over the previous year (7.52% of sales in the year & 6.65% of sales in the year ). As you may be aware, the tex le sector in general, RMG sector in par cular, had faced various external difficul es,including, not being limited to,enhanced compliance standards from customers, new regula ons in regard to building and fire safety, nega ve publicity due to poli cal chaos, among others, which had direct impact on cost of produc on, price of products and export revenue. Our sincere efforts were rewarded posi vely through recogni on from our buyers who had ve ed our factories to be safe and compliant for which we had succeeded in retaining our produc on and export levels. We retained our share in the market by reducing the sale price within the tolerable limit. The Board of Directors in its mee ng held on 08th May, 2016 had passed a BMRE plan of Tk crore for re-structuring of the project by renova on/reconstruc on in civil works, replacement/installa on of new machinery and equipment for improving produc on & quality of products. In this regard we got sanc on of a loan of Tk crore from One Bank Ltd. and the implementa on of BMRE plan is under way. Bangladesh Securi es and Exchange Commission (BSEC) has introduced mandatory Guidelines on Corporate Governance. The Board of Directors of the Company is commi ed to provide good governance and exercise best prac ces in all respects, good governance is our core philosophy for managing the business effec vely and responsibly and in a way which is honest, transparent and abiding by the laws of the land. I would also like to take this opportunity to thank our Shareholders, Regulatory Bodies including Bangladesh Securi es and Exchange Commission, Dhaka Stock Exchange Ltd., Chi agong Stock Exchange Ltd., Central Depository Bangladesh Limited, our Bankers, Insurers and different facilitators for their coopera on and support to our Company. A. F. M. Zubair Chairman 9

11 DIRECTORS REPORT TO THE SHAREHOLDERS FOR THE YEAR Dear Shareholders, In terms of provisions of sec on 184 of the Companies Act 1994, Rule 12 of the Bangladesh Securi es and Exchange Rules 1987, BSEC No fica on dated 07 August, 2012 and IAS (Interna onal Accoun ng Standards) codes as adopted by the Ins tute of Chartered Accountants of Bangladesh (ICAB), it is the pleasure of the Board of Directors to submit its Report to the Shareholders for the year ended 30 June, 2016 in the following paragraphs: The company owns 3 (three) subsidiaries as follows: 1. Salek Tex le Limited- A composite mill of the Tex le sector with three opera onal units. The rotor unit produces open end yarn of various counts having a capacity of 14,621 tons yarn per annum. The fabric unit produces denim fabric of various size and grade having capacity of 9,600,000 yards and the RMG unit produces denim products having capacity of 3,600,000 pcs per annum. 2. J.M. Fabrics Limited- A kni ng, dyeing, finishing and garments factory located at South Nayapara, 6 No. Dogri, P.O. Bhawal, Mirzapur, Gazipur with a capacity of million pcs. T-Shirt & In mate garments per annum. 3. Newasia Synthe cs Limited- A project promoted for se ng up a polyester staple fibre and chips plant the implementa on of which has since been kept in abeyance due to non-availability of energy/fuel & gas. COMPANY S OPERATIONS (MSML): (i) Industry outlook and possible future developments in the industry: Our Company falls within the primary tex le sector producing world class yarn of various counts. Bangladesh do not produce raw co on, the basic raw materials of our company. So, we have to import 100% raw materials from outside. The success of the industry depends on availability of raw materials, world economy, interna onal price trend, market situa on of end product of export i.e. RMG export. Spinning mill is labour oriented industry. The growth & challenges of the company depends on: (a) Labor rela ons (b) Labor produc vity (c) Energy (d) Other infrastructures (e) Law and order (f) Financial costs If these issues are appropriately addressed in me, the growth is expected to improve substan ally as Bangladesh has already a ained the name for being a quality manufacturer with a very reasonably priced supplier CAPACITY/PRODUCTION (ii) Segment-wise or product wise performance: Our company produces 100% export oriented Knit Yarn. The installed produc on capacity of the company is 12,600,000 kg. yarn per annum with 63,624 Spindles. Compara ve posi on of its opera ng/financial performance for the year and are given below: Sl. No. Descrip on (Kg.) (Kg.) 01 Produc on capacity 12,600,000 12,600, Actual Produc on 11,233,237 10,858, Capacity U liza on 89.15% 86.18% 04 Quan ty Sold (kg) 10,888,355 11,420, Sales Revenue (Tk.) 2,587,146,675 2,994,445, Average selling price (Tk.) (iii) Risk and concerns: All sectors of the tex le industry face many of the similar challenges. These are lack of power, labor unrest, poli cal unrest with hartal causing disrup on of produc on and increased cost of fund. Since a Spinning Mill has to depend on imported raw materials and local supply of labour. Price varia on of raw material and labour due to poli cal turmoil are the main risk for this type of industry. Uninterrupted power supply due to irregular gas supply and price varia on also affects this type of industry. (iv) Analysis of Cost of Goods Sold, Gross Profit Margin and Net Profit Margin: (a) Cost of Goods Sold: The cost of goods sold was 86.99% during the year as compared to 87.54% during the previous year, an insignificant decrease of 0.55%. (b) Export: The company had achieved an export turnover of Tk.2, million during the year ended 30th June Last year s export turnover was Tk. 2, million. The turnover had decreased by 13.60% over the last year due to fall in export prices. (c) Gross Profit: Gross Profit earned during the year amounted to Tk million as against Tk million during the previous year. Gross profit decreased due to decrease of selling price compared to last year. (d) Net Profit/(Loss): The company had succeeded in earning a Net Profit of Tk million compared to last year s Net Profit of Tk million. The Net Profit decreased due to decrease in sales and other income. (v ) Extra-Ordinary gain or loss: During the year extra-ordinary gain of Tk.5,379,495 was earned from cash incen ve & interest income from banks as against Tk.34,730,375 during the previous year which has been shown as Other Income in the Statement of Profit or Loss and other Comprehensive Income and in the note no.21.1 in the Notes of Account. (vi) Related party transac ons: Related party transac ons are depicted in Note no.26.1 in the Notes of Account. 10

12 Annual Report 2016 (vii) U liza on of proceeds from public issues and/or right issues: There were no public issues and/or right issues during the year. (viii) Financial results a er the company goes for Ini al Public Offering (IPO), Repeat Public Offering (RPO), Rights Offer, Direct Lis ng, etc.: Ini al Public Offering was made on the year There were no Repeat Public Offering, Rights Offer, Direct Lis ng, etc. in the history of the company. (ix) Variance between Quarterly Financial performance and Annual Financial Statements: The company s earnings per share (EPS) in all quarter were almost similar. There was no major fluctua on in EPS in between the quarters during the year. Profitability had marginally decreased in the 4th quarter due to selling price was decreased compared to previous quarter. (x) Remunera on to directors including independent directors: The remunera on of Directors including Independent Directors are depicted in Note no.3.35 in the Notes of Account. (xi) to (xvi) Statement of Directors on Financial Reports: The above reports are depicted in Annexure-I. (xvii) Significant devia ons from the last year s opera ng results: The company s Opera ng Profit ra o during the year , is 8% on sales as was during last years. Due to same percentage of opera ng profit ra o there is no significant devia ons. (xviii) Key opera ng and financial data of last 5 (five) years have been presented in summarized form in page no. 08 (xix) Dividend: Board of Directors has recommended for declara on of a Cash 10% i.e.tk.1.00 (one) per share of Tk each for ordinary shares held by the shareholders as on the Record Date. (xx) The number of Board Mee ng and the A endance of Directors during the year , stated in Annexure-I. (xxi) The pa ern of shareholding as required by clause 1.5 (xxi) of the BSEC No fica on dated 07 August 2012, stated in Annexure-II. (xxii) Appointment/re-appointment of the directors: Brief resume and other required informa on of the directors who seek re-appointed in the ensuing AGM are stated in Annexure-III. CAPITAL EXPENDITURES: The following Capital Expenditure was incurred during the years & Descrip on (Tk.) (Tk.) Land and Land Development ,415,760 Factory Building ,486 Plant & Machinery 13,324,704 10,760,640 Furniture & Fixtures --- 5,300 Office Equipments 571, ,500 Electrical Installa on ,800 Motor Vehicles 4,010, Total 17,905,857 25,101,486 The capital expenditures were financed by internal genera on of fund. SUBSIDIARY OPERATION: Salek Tex le Limited, Newasia Synthe cs Limited and J.M. Fabrics Limited are subsidiaries and as such Directors Report along with, Auditors Report and Audited Accounts containing Statement of Financial Posi on, Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows have been included as part of this report. (a) Salek Tex le Limited (STL): The Company (MSM) holds % share of Salek Tex le Limited i.e. 47,259,700 shares of Tk each amoun ng to Tk. 472,597, out of 48,260,870 shares of Tk each amoun ng to Tk.482,608, To comply the condi on No. 9 of capital raising consent order No.BSEC/CI/CPLC(Pvt)-333/2011/446 dated June 24, 2014 of Bangladesh Securi es and Exchange Commission (BSEC) and No fica on No. SEC/CMRRCD/ /36/Admin/03-44 dated May 05, 2010 published in the Bangladesh Gaze e dated the status of the Company was converted from Private Limited Company to Public Limited Company on 23rd August, Subsequently the par value of share was changed from Tk per share to Tk per share. The produc on capacity of STL is 14,621,000 kgs yarn, 9,600,000 yards fabric and 3,600,000 Pcs RMG products per annum. The company made addi onal investment of Tk.191,084,303 during the year The Company s opera ng results as on and are given below: Descrip on Produc on (Kg) Yarn 11,211,069 10,888,027 Produc on (Yards) Fabric 7,346,620 5,980,426 Produc on (Pcs) RMG *5,129,592 1,642,895 Sales Revenue (Tk.) 4,123,014,573 2,977,370,517 Gross Profit (Tk.) 450,416, ,923,436 Net Profit a er tax provision (Tk.) 87,742, ,564,540 Gross Margin 10.92% 12.63% Net Margin 2.13% 3.95% EPS (Tk.) NAV (Tk.) Produc on of RMG unit has been included sub- contract produc on. 11

13 (b) Newasia Synthe cs Limited (NSL): The Company (MSM) holds % share of the Newasia Synthe cs Ltd. i.e. 4,964,650 shares of Tk each amoun ng to Tk. 496,465, out of 5,000,000 shares of Tk each amoun ng to Tk.500,000, as on 30th June, The company had increased its paid up capital from Tk.93,715, to Tk.500,000, a er obtaining capital raising consent from Bangladesh Securi es and Exchange Commission (BSEC) vide their le er SEC/CI/CPLC-442/2013/2903 dated December 19, Due to non-availability of Gas connec on from Titas Gas Transmission & Distribu on Company Ltd. the project has been shelved un l the situa on changes regarding the availability of gas connec on. The Company made addi onal investment of Tk. 27,250, during the year under Land & Land Development. The Net Assets Value (NAV) per share of the company as on 30th June 2016 stood at Tk (c) J.M. Fabrics Limited (JMFL): The Company (MSM) holds % share of J.M. Fabrics Limited i.e. 3,999,900 shares of Tk each amoun ng to Tk. 399,990, out of 4,000,000 shares of Tk each amoun ng to Tk.400,000, The Company is engaged in the produc on of 100% export oriented garments and knit fabric with a produc on capacity of 15 Metric Tons dyed fabric and 68 (sixty eight) lines of cu ng and sewing opera on with all necessary facili es, storage etc. During the year addi onal investment of Tk million has been made. The investments made during the year as follows: Par culars Taka Factory Structures, Shades & Building 8,086,712 Plant & Machinery 47,996,344 Other Assets 16,426,062 Total 72,509,118 The Company s opera ng results as on and are given below: Descrip on Produc on (Pcs) 33,364,310 25,094,084 Sales Revenue (Tk.) 3,167,901,596 2,522,840,505 Gross Profit (Tk.) 192,515, ,981,663 Net Profit (Tk.) 40,287,089 57,800,157 Gross Margin 6.08% 6.06% Net Margin 1.27% 2.29% EPS (Tk.) NAV (Tk.) FINANCIAL RESULTS: The company s (MSM) opera ng financial results, as compared to the previous year are summarized as follows: (Tk. in million) Descrip on Sales 2, , Cost of goods sold 2, , Gross profit Opera ng expenses Financial expenses Opera ng profit Other Income Net Opera ng Profit/(Loss) Contribu on to WPPF Provision for Income Tax Net profit (a er tax) Gross Margin 13.01% 12.46% Net Margin 6.65% 7.52% Earning per share EPS (Tk.) Return on Equity (ROE) 3.23% 4.18% No. of shares outstanding 193,600, ,600,000 Face value per share (Tk.) Consolidated Earning per share EPS (Tk.) Observa on on Financial Result: 1. Turnover/Sales had decreased due to lower selling price in the interna onal market. 2. Net Profit had decreased due to increase in Opera ng expenses & decrease in sales & other income. 12

14 Annual Report 2016 APPROPRIATION OF PROFIT: The Board of Directors recommended for appropria on of profit as follows: Retained Earnings brought forward from previous year : Tk. 392,247, Less: Dividend Distribu on for the year :( Tk.232,320,000.00) Balance surplus brought forward : Tk. 159,927, Add: Net Profit (a er tax) during the year : Tk. 171,969, Add: Transfer of excess deprecia on of revalued assets : Tk. 60,884, Total net free surplus available for appropria on :Tk. 392,780, Appropria on Proposed: (a) Cash 10% i.e. Tk.1.00 (one) per share of Tk each :(Tk. 193,600,000.00) Retained Earnings a er payment of Dividend Tk. 199,180, DECLARATION OF DIVIDEND: In the line of proposed appropria on of profit, the Board of Directors proposed and recommended for declara on of Cash Dividend at the rate of 10% i.e Tk.1.00 (one) per share of Tk each for the year This will involve an amount of Tk.193,600, out of Reserve & Surplus/Retained Earnings (free reserves). The cash dividend will be available to the Shareholders whose names would appear in the Share Register of the Company or in the Depository on the record date. CONSOLIDATION OF ACCOUNTS: In terms of BSEC Regula ons, the Company has consolidated the Accounts following the codes of Interna onal Accoun ng Standard -28 & IFRS-10 reflec ng shareholders gross benefits/value of investments. ELECTION OF DIRECTORS: Rota on of Directors: Pursuant to Ar cle 110 of the Ar cles of Associa on of the Company Ms. Saima Ma n Chowdhury, Director and Mr. Moshiur Rahman, Director would re re by rota on and being eligible as per Ar cle 112 of the Ar cles of Associa on of the Company they offered themselves for re-elec on. Brief resume and other informa on of the above men oned directors as per clause 1.5 (xxii) of BSEC no fica on dated 7th August, 2012 are depicted in ANNEXURE III. APPOINTMENT OF AUDITORS: M/s. Shiraz Khan Basak & Co., Chartered Accountants, exis ng auditor of the Company declined in wri ng to act as external auditor of the company for the year M/s. Malek Siddiqui Wali, Chartered Accountants (a panel auditor of BSEC), have offered themselves for appointment as external auditor of the company for the year The Board recommended M/s. Malek Siddiqui Wali, Chartered Accountants, 9-G, Mo jheel C/A, Dhaka-1000 for appointment as auditors of the Company of the year with fixa on of their remunera on. RE-APPOINTMENT OF INDEPENDENT DIRECTOR: The Board of Directors in its mee ng held on 08th May, 2016 decided to re-appoint Md. Qamrul Huda as Independent Director of the Company for a further period of 3 (three) years with effect from 19th June, 2016 as per BSEC Regula ons and recommended for approval by the shareholders in the ensuing Annual General Mee ng. Brief resume and other informa on of the above men oned director is depicted in ANNEXURE-III. CORPORATE GOVERNANCE: Corporate Governance is the prac ce of good ci zenship, through which the Company is governed by the Board, keeping in view its accountability to the stakeholders and to the society. A statement in pursuance to clause 1.5, report of compliance, audit commi ee report as per clause 3.5, cer ficate from professional accountant as per clause 7(i) and a status of compliance as per clause 7(ii) of the BSEC No fica on No.SEC/CMRRCD/ /134/Admin/44 dated 07th August 2012 are depicted/disclosed in the ANNEXURE -I, II, III, IV, V, VI and VII respec vely. ACKNOWLEDGEMENT: The Board of Directors are pleased to record with apprecia on and gra tude the co-opera on and support provided by Shareholders, Customers, Bankers, Insurance Companies, Suppliers, BSEC, DSE, CSE, CDBL, RJSC and dedica on by Workers and Employees of the company without whose ac ve support the result achieved would not have been possible. Looking forward for a bright future for all of us. On behalf of the Board of Directors, A. F. M. Zubair Chairman In the event of conflict between English text and Bangla text of this report, English text shall prevail. 13

15 FINANCIAL PERFORMANCE SALES & PROFITABILITY OVER 2 YEARS TIME 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Sales Gross Profit Net Profit (Tk. in,000) Par culars Sales 2,994,446 2,587,147 Gross Profit 372, ,612 Net Profit 225, ,969 PRODUCTION VS. SALES FIGURES TABLE 11,500 11,400 11,300 11,200 11,100 11,000 10,900 10,800 10,700 10,600 10,500 Produc on Sales (Quantity in, 000 Kg.) Par culars Produc on 10,859 11,233 Sales 11,421 10,888 EARNING PER SHARE (EPS) Earning Per Share Par culars Earning Per Share

16 Annual Report 2016 m vwbz kqvi nvìvie `t gv jk w úwbs wgjm& wjwg UW eq ii Rb kqvi nvìvie `i cöwz cwipvjbv cl `i cöwz e`b cwipvjbv cl ` Avb `i mv _ Kv úvbx AvBb 1994 Gi 184 bs cwi Q`, wmwkdwiwur GÛ G PÄ i jm& 1987 Gi 12 bs wewa Ges Zdwmj Abyhvqx kz vbymv i, wegmbwm bvwuwd Kkb ZvwiL 07 AvMó 2012 Ges w` BbwówUDU Ae PvUvW GKvD U v Um Ae evsjv `k (AvBwmGwe) KZ K M nxz AvB.G.Gm (Avš RvwZK wnmve gvb`û) Abymv i 30 k Ryb, 2016 Zvwi L mgvß Avw_ K eq ii cöwz e`b m vwbz kqvi nvìvie `i Kv Q wb gœv³ cwi Q` jv Z ck Ki Qb:- Kv úvbxi wb œ ewy Z 3wU mvewmwwqvix Kv úvbx Av Q t 1) mv jk U UvBj wjwg UW- U UvBj m± ii GKwU K úvwru wgjm& hvi wzbwu cwipvjb BDwbU Av Q ivui BDwb Ui e vrmwik Drcv`b gzv I cb G Û Bqvb Ub myzv dweªkª BDwb Ui e vrmwik Drcv`b gzv 9,600,000 MR dweªk Ges AviGgwR BDwb Ui e vrmwik Drcv`b gzv 3,600,000 wcm Wwbg cy 2) R. Gg. dweª wjwg UW- hv GKwU wbwus, WvB, wdwbwks Ges Mv g Um d v±ix `w Y bqvcvov, 6bs WMix, cvt fviqvj, wgr vcyi, MvRxcy i Aew Z hvi evrmwik Drcv`b gzv wgwjqb wcm wu-kvu I Bw U gu Mv g Um 3) wbd Gwkqv wmb _wu wjwg UW- c j vi vcj dvbevi Ges wpcm c v U vc bi Rb cö R±wU ev evq bi cwikíbv Kiv n ji R vjvbx/m v mi Ach vßzvi Rb cö R±wU wmz ivlv n q Q Kv úvbxi Kvh µg (GgGmGgGj) t 1. wkí m úwk Z avibv Ges GB wk íi fwel r Dbœq bi m vebvt Avgv `i Kv úvbx U UvBj m± ii cöv_wgk wk íi Aš f~ ³ niqvq wek gv bi wewfbœ KvD Ui myzv Drcv`b Ki Q evsjv ` k Zzjv Drcbœ nq bv hv Avgv `i Kv úvbxi g~j KvPvgvj GRb Avgv `i K 100% KvPv Zzjv we `k _ K Avg`vbx Ki Z nq GB wk íi mdjzv wbf i K i KvPv gv ji chv ßZv, wek A_ bxwz, AvšÍ RvwZK g~j aviv Ges PzovšÍ cy Z_v Mv g Um c Y i evrv ii Dci w úwbs wgjm kög wbf ikxj wkí GB wk íi we Z wz Ges P v jä mg~n wb œ ewy Z wel qi Dci wbf ikxjt (K) köwgk m úk (L) köwgk Drcv`bkxjZv (M) R vjvbx I we`ÿ r (N) Ab vb AeKvVv gv (O) AvBb k Ljv cwiw wz (P) Avw_ K e q Dc iv³ welq jv ` Zvi mv _ guv bv m e n j G m± i e emv cömv ii m vebv wecyj, h nzz evsjv `k BwZg a YMZ gvbm úbœ cy m vg~ j DrcbœKvix Ges mieivnkvix `k wn m e cwiwpz jvf K i Q Drcv`b gzv/drcv`bt 2. LvZIqvix A_ev cb wfwë djvdj t Avgv `i Kv úvbx 100% ißvbxgylx bxu myzv Drcv`b Ki Q Kv úvbxi evrmwik Drcv`b gzv 12,600,000 KwR Bqvb 63,624 w úûjm&g Ges mv ji Kv úvbxi cwipvjbvmz/avw_ K Kvh µ gi ZzjbvMZ Ae v wb œ ck Kiv nj t µ.bs weeib ( KwR) ( KwR) 1 Drcv`b gzv 12,600,000 12,600,000 2 cök Z Drcv`b 11,233,237 10,858,524 3 Drcv`b gzvi e envi 89.15% 86.18% 4 weµ qi cwigvb ( KwR) 10,888,355 11,420,968 5 weµqg~j (UvKv) 2,587,146,675 2,994,445,635 6 gvu weµq (Mo UvKv) SuzwK I DwØMœZv mg~nt U UvBj m± i mkj wkí K GKB ikg mgm v gvkv ejv Ki Z n Q hvi g a we`ÿ r NvUwZ, köwgk Am š vl, ivr bwzk Aw wzkxjzv djkö wz Z nizvj Drcv`b wewnœz niqvq Znwej e q evwo q w` Q w úwbs wgj Avg`vbxK Z KvPvgvj I vbxqfv e mieivnk Z kªwg Ki Dci wbf ikxj ivr bwzk Aw nizvi Kvi Y KvPvgvj Ges kªg g~ j i DVv-bvgv Gai Yi wk íi Rb cöavb SzuwK AwbqwgZ we`ÿ Z mieivn, AwbqwgZ M vm mieivn Ges g~ j i DVv-bvgvI Gai Yi wkí K wzmö K i 4. wewµz c b i e q we k ly, gvu cövwš K gybvdv Ges bxu cövwš K gybvdv t (K) wewµz c b i e q t PjwZ eq i wewµz c b i e q wqj 86.99% hv wemz eq i wqj 87.54%, hv n«vm c q Q 0.55% hv LyeB AZvrch cyy (L) ißvbx t 30 k Ryb 2016 Zvwi L mgvß eq i ißvbx Uvb Ifvi n q Q 2, wgwjqb UvKv, hv wemz eq i wqj 2, wgwjqb UvKv wemz eq ii Zzjbvq Uvb Ifvi n«v mi nvi 13.60% hv wewµz c Y i weµq g~j n«vm cviqvi Rb n q Q (M) gvu gybvdv t PjwZ eq i gvu gybvdv AwR Z n q Q wgwjqb UvKv hv wemz eq i wqj wgwjqb UvKv wemz eq ii Zzjbvq gvu gybvdv n«vm cviqvq KviY wewµz c b i weµq g~j n«vm cviqv 15

17 (N) bxu gybvdv/( wz) t PjwZ eq i Kv úvbx bxu gybvdv K i Q wgwjqb UvKv hlv b wemz eq i bxu gybvdv wqj wgwjqb UvKv bxu gybvdv n«vm cviqvi KviY wemz eq ii ZzjbvB weµq K g hviqv Ges Ab vb Avq n«vm cviqv 5. A ^vfvwek jvf ev wz t PjwZ eq i Kv úvbx 5,379,495 UvKv bm` cö Yv`bv Ges e vs Ki mỳ eve` bb-acv iwus BbKvg wn m e DcvR b K i Q hv wemz eq ii wqj 34,730,375 UvKv, hv Ab vb Avq wnmv e Avq-weeiYx Z I wnmv ei bvu bs 21.1G cö`k b Kiv n q Q 6. Avš tm úwk Z Kv úvbxi jb `b mg~n t wnmv ei bvu bs 26.1 Z Avš tm úwk Z jb `bmg~n eb bv Kiv n q Q 7. cvewjk Bmÿ A_ev ivbu Bmÿ n Z cövß Znwe ji e envi t G eqi Kvb cvewjk Bmÿ A_ev ivbu Bmÿ Kiv nq bvb 8. Bbwmqvj cvewjk Advwis (AvBwcI), wiwcu cvewjk Advwis (AviwcI), ivbu Advi, WvB i± wjw s BZ vw` _ K A_ ev Znwej cövwßi ci Kv úvbxi Avw_ K Ae v t Bbwmqvj cvewjk Advwis (AvBwcI) m úbœ n q Q 2010 mv j ciez x Z Kvb wiwcu cvewjk Advwis (AviwcI), ivbu Advi, WvB i± wjw s BZ vw` Kiv nq bvb 9. evwl K Avw_ K weeibx I ˆÎgvwmK Avw_ K Ae vi weeibxi g a cv_ K t mkj KvqvU v i Kv úvbxi kqvi cöwz Avq cövq GKB ikg wqj PjwZ eq i wewfbœ cªvwš Ki KvqvU v i kqvi cöwz Av q D j L hvm ZviZg nqwb 4_ KvqvU v i gybvdv mvgvb n«vm cviqvi KviY weµq g~j c~e ezx KvqvUvi A c v K g hviqv 10. ^Zš cwipvjkmn cwipvjk `i cvwiköwgk t wnmv ei bvu bs 3.35G ^Zš cwipvjkmn cwipvjk `i cvwiköwgk eb bv Kiv n q Q 11. Avw_ K cöwz e` bi Dci cwipvjkm Yi wee wz t Dc iv³ wi cvu mg~n G b vi-1 G eb bv Kiv n q Q 12. MZ eq ii cwipvjbvmz djvd ji mwnz PjwZ eq ii e eavb t Kv úvbxi cwipvjbv gybvdvi nvi PjwZ eq i weµ qi 8% hv wemz eq i GKB wqj cwipvjvi gybvdvi nvi GKB _vkvq cwipvjbv MZ djvd j D j L hvm ZviZg ev e eavb bvb 13. wemz 05 (cuvp) eq ii gyl cwipvjb Ges Avw_ K WvUvmg~n msw ß AvKv i c ôv bs 08 G eb bv Kiv n q Q 14. jf vsk t cwipvjbv cl ` 10% bm` jf vsk A_ vr cöwz UvKvi mvaviy kqv ii wecix Z 1.00 UvKv bm` jf vsk Nvlbvi Rb AÎ mvavib mfvq mycvwik K i Qb, ikw W U h mkj kqvi nvìvie ` kqvi aviy Ki eb Zv `i Rb eq ii evw wgwus qi msl v Ges cwipvjk `i Dcw wz G b vi-1g eb bv Kiv n q Q 16. kqvi nvwìs msµvš weeiy aviv 1.5 Abyhvqx wegmbwm bvwuwd Kkb ZvwiL 07 AvMó 2012 Abyhvqx G b vi-2 G eb bv Kiv n q Q 17. Kv úvbxi cwipvjke `i wb qvm/cybtwb qvm msµvš cwipvjk `i msw ß Rxeb e Ëvš G b vi-3 G eb bv Kiv n q Q gyjabx e q: Ges eq ii gyjabx e q wbgœiæc n q Q: weeiy (UvKv) (UvKv) Rwg I Rwg Dbœqb -- 12,415,760 d v±ix wewìs ,486 c v U I gwkbvix 13,324,704 10,760,640 dvwb Pvi I wd Pvi -- 5,300 Awdm mvgmöx 571, ,500 B jkwuªk vcbv ,800 gvui Mvox 4,010, gvu 17,905,857 25,101,486 Dc iv³ g~jabx e q Kv úvbxi Avf š ixy Avw_ K Drm n Z wbe vn Kiv n q Q Aaxb Kv úvbx: mv jk U UvBj wjwg UW, wbd Gwkqv wmb _wukm wjwg UW Ges R, Gg, dweªkm wjwg UW mvewmwwqvwi Kv úvbx niqvq cwipvjke `i cöwz e`b GKB mv _ wbix Ki cöwz e`b, Avw_ K weeibx, Avq-weeiYx, K vk- d v weeiyx I BKÿ BwU cwiez b m úwk Z weeiyx GB wi cv U i Ask wn m e mshy³ Kiv n q Q (K) mv jk U UvBj wjwg UW (GmwUGj): Kv úvbx (GgGmGg) mv jk U UvBj wj: Gi % kqvi A_ vr gvu 482,608, UvKvi cöwzwu 10/- UvKv gyj gv bi 48,260,870 kqvi _ K 472,597, UvKvi cöwzwu 10/- UvKv gyj gv bi 47,259,700 wu kqvi avib K i wegmbwmi g~jab e w i m wz cî bs BSEC/CI/CPLC (Pvt)-333/2011/446 ZvwiL Ryb 24, 2014 Gi 09 (bq) bs kz vbyhvqx Ges evsjv `k wmwkdwiwur GÛ GK PÄ Kwgk bi (wegmbwm) bvwuwd Kkb bs SEC/CMRRCD/ /36/Admin/03-44 ZvwiL g 05, 2010 hv evsjv `k MÖ R U cökvwkz ZvwiL Abyhvqx Kv úvwb K cövb fu wjt Kv úvbx n Z cvewjk wjt Kv úvbx Z i cvš i Kiv n q Q 23 k AvMó 2014 Zvwi L GKB mv _ Kv úvbxi cöwzwu UvKvi kqvi g~j K UvKvq cwiez b Kiv n q Q Kv úvbxi (GmwUGj) evrmwik Drcv`b gzv myzv 14,621,000 KwR, dweªk 9,600,000 MR Ges AviGgwR cb 3,600,000 wcm eq i Kv úvbx gvu wewb qvm K i Q 191,084,303 UvKv 16

18 Annual Report 2016 Kv úvbxi I mv ji cwipvjbv djvdj wbgœiæc: ey bv Drcv`b ( KwR) Bqvb 11,211,069 10,888,027 Drcv`b (MR) dweª 7,346,620 5,980,426 Drcv`b (wcm) AviGgwR *5,129,592 1,642,895 weµq iwfwbd (UvKv) 4,123,014,573 2,977,370,517 MÖm jvf (UvKv) 450,416, ,923,436 wbu jvf Ki cöwfkb ciez x (UvKv) 87,742, ,564,540 MÖm gvwr b 10.92% 12.63% wbu gvwr b 2.13% 3.95% BwcGm (UvKv) GbGwf (UvKv) AviGgwR BDwb Ui Drcv` bi g a mve KbUªv± AšÍ fz³ Av Q L) wbdgwkqv wmb _wuk wjwg UW (GbGmGj): Kv úvbx (GgGmGg) wbdgwkqv wmb _wuk wjwg UW Gi % kqvi aviy K i A_ vr cöwzwu 100/- UvKv gyj gv bi 5,000,000 wu kqv ii g a cöwzwu 100/- UvKv gyj gv bi 4,964,650 kqvi avib K i evsjv `k wmwkdwiwur GÛ GK PÄ Kwgk bi (wegmbwm) m wzcî bs SEC/CI/CPLC-442/2013/2903 ZvwiL ww m ^i 19, 2013 Abyhvqx Kv úvbxi cwi kvwaz g~jab 93,715, UvKv n Z e w K i 500,000,000,00 UvKvq DwbœZ Kiv n q Q wzzvm M vm UªvÝwgkb GÛ www ªweDkb Kv úvbx _ K M vm ms hvm bv cviqvi Rb cökíwu wmz i q Q Kv úvbxwu eq i f~wg I f~wg Dbœqb I i bv e b eve` 27,250,210 UvKv wewb qvm K i Q 30 k Rb 2016 Zvwi L Kv úvbxi cöwz kqv ii bxu G mu f vjy UvKv (M) R. Gg. dweªkm wjwg UW ( RGgGdGj) t Kv úvbx (GgGmGg) R. Gg. dweªkm wjwg UW Gi % kqvi aviy K i A_ vr cöwzwu 100/- UvKv gyj gv bi 4,000,000 kqv ii g a cöwzwu 100/- UvKv gyj gv bi 3,999,900 kqvi avib K i Kv úvbxwu 100% ißvbxgylx Mv g Um Ges bxu dweªk Drcv` b wb qvwrz, hvi Drcv`b gzv 15 gwuªk Ub WvBW dweªk Ges 68 jvbb KvwUs I mÿ Bs Acv ikb mv _ cö qvrbxq mkj d vwmwjwur I `vgrvzkiy myweav we` vgvb Kv úvbxwu PjwZ eq i wewb qvm K i Q wgwjqb UvKv eq ii wewb qvm wb œi c : weeib UvKv d v±ix KvVv gv, kw I wewìs 8,086,712 c v U I gwkbvix 47,996,344 Ab vb m ú` 16,426,062 gvu 72,509, Ges mv ji Kv úvbxi cwipvjbv djvdj wb œiæc: ey bv Drcv`b (wcq) 33,364,310 25,094,084 weµq iwfwbd (UvKv) 3,167,901,596 2,522,840,505 MÖm jvf (UvKv) 192,515, ,981,663 wbu jvf (UvKv) 40,287,089 57,800,157 MÖm gvwr b 6.08% 6.06% wbu gvwr b 1.27% 2.29% BwcGm (UvKv) GbGwf (UvKv) Avw_ K djvdj : wemz eq ii mv _ Kv úvbxi (GgGmGg) ZzjbvgyjK Avw_ K djvdj wb œ msw ßKv i Dc vcb Kiv n jv: (wgwjqb UvKvq) weeiy weµq 2,587,147 2, wewµz c Y i e q 2,250,534 2, gvu jvf 336, cwipvjb e q 84, Avw_ K e q 45, cwipvjbv gybvdv 206, Ab vb Avq 5, bxu Acv iwus gybvdv/( jvkmvb) 212, Wwe DwcwcGd G Pvu`v 10, AvqKi cöwfkb 30, bxu jvf (Ki ciez x) 171, gvu Av qi nvi 13.01% 12.46% bxu Av qi nvi 6.65% 7.52% kqvi cöwz Avq-BwcGm (UvKv) wiuvb Ab BKÿ BwU 3.23% 4.18% AvDU vwûs kqvi msl v 193,600, ,600,000 kqv ii AwfwnZ g~j (UvKv) Kbmwj W UW kqvi cöwz Avq-BwcGm (UvKv)

19 Avw_ K cöwz e` bi Dci gš e t 1 AvšÍ RvwZK evrv i wewµz c Y i g~j K g hviqvi Rb weµq Kg n q Q 2 Acv iwus LiP e wø cviqvq I weµq Ges Ab vb Avq K g hviqvq bxu gybvdv n«vm c q Q gybvdv e Ub: cwipvjbv cl ` wb gœv³ Dcv q gybvdv e U bi mycvwik K i Qb: c~e ez x eq ii wi UBb Avwb sm UvKv 392,247, ev` : eq ii jf vsk weziy UvKv (232,320,000.00) DØ Ë vbvš i UvKv 159,927, hvm: bxu gybvdv (Ki ciez x) mv ji UvKv 171,969, hvm: m úwë cyb:g~j vq bi AePq mgš^q UvKv 60,884, Ave U bi Rb bxu wd«znwej UvKv 392,780, cö vwez jf vsk: bm` jf vsk 10% cöwz (`k) UvKvi mvavib kqv ii Rb 1.00 (GK `kwgk k~b ) UvKv UvKv (193,600,000.00) jf vsk cö`v bi ci DØ Ëc Î vbvš i UvKv 199,180, jf vsk Nvlbv: cö vwez gybvdv Ave Ub Abyhvqx cwipvjbv cl ` eq ii Rb 10% bm` jf vsk Nvlbvi Rb mycvwik K i Qb Gi Rb cöwzwu (`k) UvKvi mvaviy kqv ii wecix Z 1.00 (GK `kwgk k~b ) UvKv jf vsk cö`vb Ki Z n e hvi Rb cö qvrb n e 193,600, UvKv hv wi UBb Avwb s (wd«-wirvf ) n Z cö`vb Kiv n e ikw W U h mkj kqvi nvìvi `i bvg Kv úvbxi kqvi iwróvi A_ev ww cvwruwi iwróv i wjwce _vk e Zviv Dc iv³ jf vsk cv eb wnmv ei GKÎxKiY t wegmbwm Gi wewagvjv I B Uvib vkbvj G vkvdw Us vûvw -28 Ges AvB Gd Avi Gm -10 Gi wbqgvejx AbymiY K i kqvi nvìvie `i gvu myweav/wewb qvm g~j wba viy Kiv n q Q cwipvjk wbev Pb: Kv úvbxi AvwU Kjm Ae G mvwm qk bi 110 Aby Q` gvzv ek wgm mvqgv gwzb PŠayix, cwipvjk I Rbve gwkdi ingvb, cwipvjk, cwipvjbv cl ` n Z iv Ukb Abyhvqx Aemi wb Qb Ges hvm weavq 112 Aby Q` gvzv ek Zviv c~b: wbev wpz niqvi Rb AvMÖn cökvk K i Qb Dc i ewy Z cwipvjk e `i msw ß Rxeb e Ëvš I Ab vb Z_ vw` wegmbwm bvwuwd Kkb ZvwiL 07 AvMó, 2012 Gi aviv 1.5 Abyhvqx G b vi-3 G mwbœ ewkz Kiv n q Q wbix K wb qvm: gmvm wmivr Lvb emvk GÛ Kvs., PvU vw GKvD U v Um ez gvb wbix K mv ji Rb wbix v Kvh cwipvjbv Ki Z wjwlz fv e AcviMZv cökvk K i Qb gmvm gv jk wmwïkx Iqvjx, PvU vw GKvD U v Um (wegmbwm Gi c v bjf~³ AwWU dvg ) mv ji Rb wbix K n Z AvMÖn cökvk K i Qb cwipvjbv cl ` gmvm gv jk wmwïkx Iqvjx, PvU vw GKvD U v Um, 9-wR, gwzwsj ev/g, XvKv-1000 K mv ji Rb wbix K wn m e wb qvm Ki Z mycvwik K i Qb Ges Zv `i cvwiköwgk wbav i bi mycvwik K i Qb ^Zš cwipvj Ki cyb:wb qvm: cwipvjbv cl ` 8B g 2016 Zvwi L AbywôZ mfvq Rbve gv: Kvgiyj û`v mv ne K cybivq 3 (wzb) eq ii Rb ^Zš cwipvjk wn m e wegmbwmi i jkb Abyhvqx wb qv Mi wm vš MÖnb K i Qb hv Ryb 19, 2016 ZvwiL _ K Kvh Ki nq, hv AÎ evwlk mvavib mfvq kqvi nvìvie `i Aby gv` bi Rb mycvwik K i Qb Rbve gv: Kvgiyj û`vi Rxeb e Ëvš I Ab vb Z_ vw` msw ßKv i G b vi-3 G mwbœ ewkz Kiv n q Q K cv iu Mf bý cöwz e`b: wmwkdwiwur GÛ GK PÄ Kwgkb Gi bvwuwd Kkb bs GmBwm/wmGgAviAviwmwW/ /134/GWwgb/44 ZvwiL: 07 AvMó 2012 Gi wbwi L GKwU weeibx 1.5 aviv Abymv i cöwzcvjb cöwz e`b, AwWU KwgwU cöwz e`b 3.5 aviv Abymv i, aviv 7(1) Abymv i cö dkbvj GKvDb U U KZ K mvwu wd KU Ges K cv iu Mf bý cöwzcvjb 7(2) Gi Ae v h_vµ g mshyw³- I, II, III, IV, V, VI Ges VII Gi g a eb bv/cökvk Kiv n jv ab ev` Ávcb : cwipvjbv cl `i c _ K Kv úvbxi kqvi nvìvi, MÖvnK, e vsk, BÝÿ iý Kv úvbx, mieivnkvix, wegmbwm, wwgmb, wmgmb, wmwwwegj, Avi RGmwm I Ab vb cöwzôv bi mn hvmxzv I Dc ` ki Rb ab ev` Rvbvw Q ZvQvov Kv úvbxi kªwgk, Kg Pvix `i wbôv I HKvwš K Kg DÏxcbvi Rb m š vl cökvk Ges ab ev` Rvbvw Q cwipvjbv cl `i c, G. Gd. Gg. Rvev qi Pqvig vb 18

20 Annual Report 2016 ANNEXURE I The Directors also report that: Related Party Transac ons are depicted in Note no in the Notes of Account. Remunera on of Directors including Independent Director have been shown in Note no in the Notes of Account. The Financial Statement of the Company present true and fair view of the Company s state of affairs, result of its opera ons, cash flows and changes in equity. Proper books of accounts as required by the prevailing law have been maintained. Appropriate accoun ng policies have been followed in formula ng the financial statements and accoun ng es mates were reasonable and prudent. The financial statement was prepared in accordance with IAS/BAS/IFRS/BFRS. The internal control system is sound in design and is effec vely implemented and monitored. There is no significant doubt about the company s ability to con nue as a going concern. There is no significant devia on from the opera ng result compared to the last year is depicted in page no. 11 clause (xvii) above. Key opera ng and financial data of last five years have been presented in summarized form in page no.08 The number of Board Mee ng and the A endance of Directors during the year were as follows: Name of Directors Posi on Mee ng Held A ended Mr. A. F. M. Zubair Chairman Mr. A. Ma n Chowdhury Managing Director Dr. Shamim Ma n Chowdhury Director Ms. Saima Ma n Chowdhury Director Mr. Azizur Rahim Chowdhury Director Mr. Moshiur Rahman Director Mr. M. SekanderAli Independent Director Md. Qamrul Huda Independent Director The pa ern of shareholding as required by clause 1.5 (xxi) of the BSEC No fica on dated 07th August, 2012, stated in Annexure-II. Informa on of Directors who seek appointment/re-appointment as required by clause 1.5 (xxii) of the BSEC No fica on dated 07 August, 2012, stated in Annexure-III. Status of compliance with the condi ons imposed by the Bangladesh Securi es and Exchange Commission is enclosed as Annexure VII. ANNEXURE II Pa ern of Shareholding as on June 30, 2016 Name of the Shareholders Status Shares held % i. Parent/Subsidiary/Associated Companies and other related par es Nil Nil Nil ii. Directors: Mr. A.F.M. Zubair Chairman 8,470, % Mr. A. Ma n Chowdhury Managing Director 15,875, % Dr. Shamim Ma n Chowdhury Director 13,310, % Mr. Azizur Rahim Chowdhury Director 18,585, % Ms. Saima Ma n Chowdhury Director 15,004, % Mr. Moshiur Rahman Director (Nominated by Paragon Poultry Ltd.) 12,100, % Mr. M. Sekander Ali Independent Director Nil Nil Md. Qamrul Huda Independent Director Nil Nil iii. Chief Execu ve Officer, Chief Financial Officer, Company Secretary, Head of Internal Audit and their Spouses and Minor Childrens: Mr. A. Ma n Chowdhury Chief Execu ve Officer 15,875, % Mr. B. K. Chaki Chief Financial Officer Nil Nil Mr. Syed Saiful Haque Company Secretary Nil Nil Md. Rakibul Islam Head of Internal Audit Nil Nil iv. Execu ves Nil Nil Nil v. Shareholders holding 10% or more vo ng interest in the Company Nil Nil Nil 19

21 ANNEXURE-III Brief Resume of the Directors Directors who seek re-appointment: Ms. Saima Matin Chowdhury: Ms. Saima Ma n Chowdhury is a Director of the Company since 2007, daughter of Mr. A. Ma n Chowdhury. She is a bright young execu ve having High School gradua on from Concord Academy, Concord, Massachuse s, USA- B.Sc. from Swarthmore College, Pennsylvania, USA and MBA from Wharton Business School, University of Pennsylvania USA. She has work experience in the Unites States with Ernst & Young and Victoria s Secret. She has more than 09 (Nine) years working experience in the tex le sector. She is also the Director of Rahim Tex le Mills Limited (listed company), Salek Tex le Limited, J.M. Fabrics Limited, Fatehbagh Tea Company Limited and Design Asia Limited. Mr. Moshiur Rahman: Ms. Moshiur Rahman is a Director of the Company since 2008, aged about 60 years a er his gradua on has to his credit training experience from Heidelberg on modern and economical working methods on advance prin ng technology. He successfully ran for many years Udayan Press Limited a business enterprise of family. In 1989, Mr. Rahman launched his own prin ng & packaging industry named Paragon Press Limited-a press with high quality prin ng & packaging facility. Mr. Rahman also achieved tremendous growth in his ver cally integrated poultry business. Besides, Mr. Rahman ini ated and set up a bio fer lizer plant with the view to protect the environment and conserve nature. Mr. Rahman is associated with many businesses, social & sports associa ons. He is the Managing Director of Paragon Poultry Limited, Usha Poultry Limited, Usha Feed Limited, Chi agong Feed Limited, Jessore Feed Limited, Chi agong Chicks Limited, Sports Zone Limited, Paragon Press Limited, Rangpur Poultry Limited, Paragon Energy Limited, Paragon Plast Fiber Limited, Bangla Milk Limited and the Director of Paragon Agro Limited, Fatehbagh Tea Company Limited, Newasia Synthe cs Limited and nominated Director of Malek Spinning Mills Limited, Salek Tex le Limited and J.M. Fabrics Limited. Re- Appointment of Independent Director: Md. Qamrul Huda Md. Qamrul Huda, one of the Senior Bankers of the country former Managing Director of Pubali Bank Limited, Eastern Bank Limited and former Chief Execu ve of BCCI and addi onal Managing Director of U ara Bank Limited and General Manager of Janata Bank. Mr. Qamrul Huda has been re-appointed as Independent Director of the Company for a further period of 3 (three) years by the Board of Directors of Malek Spinning Mills Limited on 08th May 2016 with effect from 19th June, He is also the Independent Director of Rahim Tex le Mills Ltd., a listed company. ANNEXURE-IV AUDIT COMMITTEE REPORT For the Year Malek Spinning Mills Limited having an Audit Commi ee as a sub commi ee of the Board of Directors in order to assist the Board of Directors in ensuring and fulfilling its oversight responsibili es. The Audit Commi ee consists of the following persons: Mr. M. Sekander Ali, Independent Director Chairman Dr. Shamim Ma n Chowdhury, Director Member Mr. Azizur Rahim Chowdhury, Director Member Mr. Syed Saiful Haque, Company Secretary Secretary The scope of Audit Commi ee was defined as under: a. Review and recommend to the Board to approve the quarterly, half yearly and annual financial statements prepared for statutory purpose; b. Monitor and oversee choice of accoun ng policies and principles, internal control risk management process, audi ng ma er, hiring and performance of external auditors; c. Review statement of significant related party transac ons submi ed by the management; d. Carry on a supervision role to safeguard the system of governance and independence of statutory auditors; and e. Review and consider the report of internal auditors and statutory auditors observa ons on internal control. Ac vi es carried out during the year: The Commi ee reviewed the quarterly, half yearly and annual financial statements and recommended to the Board for considera on. The Commi ee had overseen, reviewed and approved the procedure and task of the internal audit, financial report prepara on and the external audit reports. The Commi ee found adequate arrangement to present a true and fair view of the ac vi es and the financial status of the company and didn t find any material devia on, discrepancies or any adverse finding/observa on in the areas of repor ng. M. Sekander Ali Chairman Audit Commi ee Date: 18th October,

22 Annual Report 2016 ANNEXURE-V AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE COMPLIANCE OF We have examined the compliance of the condi ons of corporate governance guidelines of the Bangladesh Securi es and Exchange Commission (BSEC) of Malek Spinning Mills Limited for the year ended on 30 June 2016 as s pulated in clause 7(i) of the BSEC No fica on No. SEC/CMRRCD/ /134/Admin/44 dated 07 August The compliance of the condi ons of corporate governance guidelines as stated in the aforesaid no fica on and repor ng of the status of compliance is the responsibility of the management of Malek Spinning Mills Limited. Our examina on for the purpose of issuing this cer fica on was limited to the checking the procedures and implementa on thereof as adopted by Malek Spinning Mills Limited for ensuring the compliance of condi ons of corporate governance and correct repor ng of compliance status on the a ached statement on the basis of evidence gathered and representa on received. To the best of our informa on and according to the explana ons given to us, we cer fy that, as reported on the a ached status of compliance statement, Malek Spinning Mills Limited has complied with condi ons of corporate governance s pulated in the above men oned BSEC no fica on dated 07 August 2012 and subsequent amendment made thereon. Dhaka, 15 November 2016 Das Chowdhury Du a & Co. Chartered Accountants ANNEXURE-VI The Board of Directors Malek Spinning Mills Limited 117/A, Tejgaon Industrial Area Dhaka CEO & CFO s DECLARATION TO THE BOARD OF DIRECTORS Subject: CEO & CFO s Declara on to the Board of Directors. Dear Sirs: In compliance with the condi on no.6 imposed by the Bangladesh Securi es and Exchange Commission s No fica on No. SEC/CMRRCD/ /134/Admin/44 dated 07 August 2012 issued under Sec on 2CC of the Securi es and Exchange Ordinance, 1969, we do hereby cer fy to the Board of Directors that; (i) We have reviewed the financial statements of the company for the year ended on 30th June 2016 and that to the best of our knowledge and belief: (a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; (b) these statements together present a true and fair view of the company s affairs and are in compliance with exis ng accoun ng standards and applicable laws. (ii) There are, to the best of knowledge and belief, no transac ons entered into by the company during the year which are fraudulent, illegal or viola on of the company s code of conduct. Sincerely yours, (B. K. Chaki) Chief Financial Officer (A. Ma n Chowdhury) Managing Director Dated: 05th October, 2016 Dhaka 21

23 ANNEXURE-VII Corporate Governance Compliance Report Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission s Notification No. SEC/CMRRCD/ /134/Admin/44 dated 07 August 2012.(Report under Condition No.7.00) Condition No. Title Complied Not Complied Remarks (if any) 1.1 Board Size : The number of the Board members shall not be less than 5 (Five) and more than 20 (Twenty) 1.2 Independent Directors: 1.2 (i) One fi h (1/5th) of the total number of directors 1.2 (ii) a) Does not hold any share or holds less than 1% shares of the total paid up shares 1.2 (ii) b) Not connected with any sponsor/ director/shareholder who holds 1% or more shares of the total paid up shares on the basis of family rela onship. 1.2 (ii) c) Does not have any other rela onship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies 1.2 (ii) d) Not a member, director or officer of any stock exchange 1.2 (ii) e) Not a shareholder, director or officer of any member of stock exchange or an intermediary of the capital market 1.2 (ii) f) Not a partner or an execu ve or was not a partner or an execu ve during the preceeding 3 (three) years of any statutory audit firm 1.2 (ii) g) Not be an independent director in more than 3 (three) listed companies 1.2 (ii) h) Not been convicted by a court of competent jurisdic on as a defaulter in payment of any loan to a bank or a NBFI 1.2 (ii) i) Not been convicted for a criminal offence involving moral turpitude 1.2 (iii) Appointed by the Board of Directors and approved by the shareholders in the AGM 1.2 (iv) Not remain vacant for more than 90 (ninety) days 1.2 (v) Board shall lay down a code of conduct of all Board members and annual compliance of the code to be recorded 1.2 (vi) Tenure of office of an Independent Director shall be for a period of 3(three) years, which may be extended for 1(one) term only 1.3 Qualifica on of Independent Director (ID) 1.3 (i) Knowledge of Independent Directors 1.3 (ii) Background of Independent Directors 1.3 (iii) Special cases for qualifica ons 1.4 Individual Chairman of the Board and Chief Execu ve Officer 1.5 The Director s Report to Shareholders: 1.5 (i) Industry outlook and possible future developments in the industry 1.5 (ii) Segment-wise or product-wise performance 1.5 (iii) Risks and concerns 1.5 (iv) Discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin 1.5 (v) Discussion on con nuity of any Extra-Ordinary gain or loss 1.5 (vi) Basis for related party transac ons 1.5 (vii) U liza on of proceeds from public issues, rights issues and/or through any others 1.5 (viii) Explana on if the financial results deteriorate a er the company goes for IPO, RPO, Rights Offer, Direct Lis ng 1.5 (ix) Explana on about significant variance occurs between Quarterly Financial performance and Annual Financial Statements 1.5 (x) Remunera on to directors including independent directors 1.5 (xi) Fairness of Financial Statements 1.5 (xii) Maintenance of proper books of accounts 1.5 (xiii) Adop on of appropriate accoun ng policies and es mates 1.5 (xiv) Followed IAS, BAS, IFRS and BFRS in prepara on of financial statements 1.5 (xv) Soundness of internal control system 1.5 (xvi) Ability to con nue as a going concern 1.5 (xvii) Significant devia ons from the last year s 1.5 (xviii) Key opera ng and financial data of at least preceding 5 (five) years 1.5 (xix) Reasons for not declared dividend 1.5 (xx) Number of Board mee ngs held during the year and a endance 1.5 (xxi) Pa ern of shareholding: 1.5 (xxi) a) Parent/Subsidiary/Associated Companies and other related par es 1.5 (xxi) b) Directors, CEO, CS, CFO,HIA and their spouses and minor children 1.5 (xxi) c) Execu ves 1.5 (xxi) d) 10% or more vo ng interest 1.5 (xxii) Appointment/re-appointment of director: 1.5(xxii) a) Resume of the director N/A N/A N/A N/A N/A N/A 22

24 Annual Report 2016 Condition No. Title Complied Not Complied Remarks (if any) 1.5(xxii)b) 1.5(xxii) c) Exper se in specific func onal areas Holding of directorship and membership of commi ees of the board other then this company 2.1 Appointment of CFO, HIA and CS: 2.2 A endance of CFO and CS at the mee ng of the Board of Directors 3.0 Audit Commi ee: 3 (i) Cons tu on of Audit Commi ee 3 (ii) Assistance of the Audit Commi ee to Board of Directors 3 (iii) Responsibility of the Audit Commi ee 3.1 Cons tu on of the Audit Commi ee: 3.1 (i) At least 3(three) members 3.1 (ii) Appointment of members of the Audit Commi ee 3.1 (iii) Qualifica on of Audit Commi ee members 3.1 (iv) Term of Service of Audit Commi ee members 3.1 (v) Secretary of the Audit Commi ee 3.1 (vi) Quorum of the Audit Commi ee mee ng 3.2 Chairman of the Audit Commi ee: 3.2 (i) Board of Directors shall select the Chairman 3.2 (ii) Chairman of the audit commi ee shall remain present in the AGM 3.3 Role of Audit Commi ee: 3.3 (i) Oversee the financial repor ng process 3.3 (ii) Monitor choice of accoun ng policies and principles 3.3 (iii) Monitor Internal Control Risk management process 3.3 (iv) Oversee hiring and performance of external auditors 3.3 (v) Review the annual financial statements before submission to the board for approval 3.3 (vi) Review the quarterly and half yearly financial statements before submission to the board for approval 3.3 (vii) Review the adequacy of internal audit func on 3.3 (viii) Review statement of significant related party transac ons 3.3 (ix) Review Management Le ers/le er of Internal Control weakness issued by statutory auditors 3.3 (x) Disclosure about the uses/applica ons of funds raised by IPO/RPO/Rights Issue 3.4 Repor ng of the Audit Commi ee: Repor ng to the Board of Directors: (i) Ac vi es of Audit Commi ee (ii)a) Conflicts of interest (ii)b) Material defect in the internal control system (ii)c) Infringement of laws, rules and regula ons (ii)d) Any other ma er Repor ng to the Authori es 3.5 Repor ng to the Shareholders and General Investors 4 Engagement of External/Statutory Auditors: 4 (i) Appraisal or valua on services or fairness opinions 4 (ii) Financial informa on systems design and implementa on 4 (iii) Book-keeping 4 (iv) Broker-dealer services 4 (v) Actuarial services 4 (vi) Internal audit services 4 (vii) Services that the Audit Commi ee determines 4 (viii) Audit firms shall not hold any share of the company they audit. 4 (ix) Audit/cer fica on services on compliance of corporate governance 5 Subsidiary Company: 5 (i) Composi on of the Board of Directors 5 (ii) At least 1 (one) independent director to the subsidiary company 5 (iii) Submission of Minutes to the holding company 5 (iv) Review of Minutes by the holding company 5 (v) Review of Financial Statement by the audit commi ee of the holding company 6 Du es of Chief Execu ve Officer and Chief Financial Officer: 6 (i) a) Reviewed the materially untrue of the financial statement 6 (i) b) Reviewed about compliance of the accoun ng standard 6 (ii) Reviewed about fraudulent, illegal or viola on of the company s code of conduct 7 Repor ng and Compliance of Corporate Governance: 7 (i) Obtain cer ficate about compliance of condi ons of Corporate Governance Guidelines 7 (ii) Annexure a ached, in the director s report 23 N/A

25 SHIRAZ KHAN BASAK & CO CHARTERED ACCOUNTANTS (An associate firm of D.N.Gupta & Associates) AUDITOR S REPORT TO THE SHAREHOLDERS OF R.K Tower (Level-10) 86, Bir U am C.R Da a Road (312, Sonargaon Road) Dhaka-1205 Tel: , Fax: Mobile: , , shirazkhanbasak@yahoo.com INTRODUCTION We have audited the accompanying Consolidated Financial Statements of Malek Spinning Mills Limited, which comprise the Consolidated Statement of Financial Posi on as at June 30, 2016, and the Consolidated Statement of Comprehensive Income, Consolidated Statement of Cash Flows and the Consolidated Statement of Changes in Equity for the year then ended, and a summary of significant accoun ng policies and other explanatory informa on. MANAGEMENT S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the prepara on and fair presenta on of these consolidated financial statements in accordance with Bangladesh Financial Repor ng Standards (BFRSs), the Companies Act 1994 and other relevant laws and regula ons and for such internal control as management determines is necessary to enable the prepara on of consolidated 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 Consolidated Financial Statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Audi ng (BSA).Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment, of the risks of material misstatement of the consolidated financial statement, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the en ty s prepara on and fair presenta on of the consolidated 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 effec veness of the en ty s internal control. An audit also includes evalua ng the appropriateness of accoun ng policies used and the reasonableness of accoun ng es mates made by management as well as evalua ng the presenta on of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the consolidated financial statements gives a true and fair view of the state of the company s affairs as at June 30, 2016, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Bangladesh Financial Repor ng Standards (BFRSs) and comply with Companies Act 1994, the Securi es and Exchange Rules 1987 and other applicable laws and regula ons. We also report that: a) We have obtained all the informa on and explana ons which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verifica on 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 examina on of those books; c) The statement of financial posi on and statement of comprehensive income dealt with by the report are in agreement with the books of accounts and returns; d) The expenditure incurred and payments made were for the purpose of the Company s business for the period. Dated: Dhaka, October 19, 2016 SHIRAZ KHAN BASAK & CO. CHARTERED ACCOUNTANTS An associate firm of D.N Gupta & Associates 24

26 Annual Report 2016 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2016 Notes JUNE'16 JUNE'15 Taka Taka ASSETS : Non-Current Assets : 8,299,682,304 8,424,462,567 Property, Plant and Equipment 4 8,240,525,304 8,335,293,067 Capital Work-in-Progress 5 59,157,000 89,169,500 Current Assets : 7,572,897,695 6,949,968,530 Inventories 6 3,674,958,784 3,219,844,567 Accounts Receivable 7 2,990,668,997 2,861,288,832 Advances,Deposits and Pre-payments 8 525,525, ,222,015 Cash and Cash Equivalents 9 381,744, ,613,116 TOTAL ASSETS : 15,872,579,999 15,374,431,097 SHAREHOLDER'S EQUITY AND LIABILITIES: Total Equity : 8,796,174,969 8,732,455,591 Equity a ributable to owners of the company 8,740,979,397 8,679,053,244 Share Capital 10 1,936,000,000 1,936,000,000 Share Premium 11 1,500,000,000 1,500,000,000 Tax Holiday Reserve ,883, ,883,871 Re-valua on Surplus of Fixed Assets 13 3,850,028,366 3,955,129,899 Retained Earnings 14 1,244,067,160 1,077,039,474 Non Controlling Interest 15 55,195,572 53,402,347 Non Current Liabili es: 2,046,634,443 2,512,915,215 Long Term Loan 16 1,599,990,186 2,053,740,431 Deferred Tax Liabili es ,644, ,174,784 Current Liabili es : 5,029,770,587 4,129,060,291 Short Term Loan 18 1,110,516, ,117,440 Current Por on of Long Term Loan ,317, ,622,933 Loan from Director 20 50,000,000 50,000,000 Bank Acceptance Liabili es 21 2,321,471,534 1,982,303,036 Creditors and Accruals ,464, ,016,882 TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES : 15,872,579,999 15,374,431,097 Net Assets Value Per Share (NAV) Par Value Tk.10 The annexed notes 1 to 32 form an integral part of these financial statement. A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 25

27 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30TH JUNE 2016 Notes JUNE'16 JUNE'15 Taka Taka Sales 23 9,779,925,200 8,297,896,015 Cost of Goods Sold 24 (8,800,381,234) (7,396,018,441) Gross Profit : 979,543, ,877,574 Opera ng Expenses 25 (231,968,317) (157,736,957) Financial Expenses 26 (418,834,601) (380,668,943) Opera ng Profit/(Loss) : 328,741, ,471,674 Other Income/(Loss) 27 52,400, ,117,994 Net Opera ng Profit/(Loss) : 381,141, ,589,668 Provision for Contribu on to WPPF 28 (18,338,127) (23,209,411) Profit/(Loss) before Tax : 362,803, ,380,257 Provision for Income Tax : (66,764,149) (63,626,790) Current Tax 29 (79,294,676) (77,517,808) Deferred Tax 30 12,530,527 13,891,018 Profit/(Loss) a er tax for the year 296,039, ,753,467 Other Comprehensive Income - - Total Comprehensive Income for the year 296,039, ,753,467 (Transferred to the Statement of Changes in Equity) Profit a ributable to: Owners of the company 294,246, ,979,482 Non-controlling interest 31 1,793, , ,039, ,753,467 Total comprehensive income a ributable to: Owners of the company 294,246, ,979,482 Non-controlling interest 31 1,793, , ,039, ,753,467 Earnings Per Share (EPS) Par Value Tk.10 Number of Shares used to compute EPS 193,600, ,600,000 The annexed notes 1 to 32 form an integral part of these financial statement. A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 26

28 Annual Report 2016 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30TH JUNE 2016 Par culars Share Share Revalua on Tax holiday Retained Non Controlling Capital Premium Surplus of Reserve Earnings Interest Total Fixed Assets Balance as at 1st July ,936,000,000 1,500,000,000 3,955,129, ,883,871 1,077,039,474 53,402,347 8,732,455,591 Total Comprehensive Income 294,246,153 1,793, ,039,378 Transfer of excess deprecia on of Revalued Assets (105,101,533) 105,101,533 - Cash Dividend for (232,320,000) (232,320,000) As at 30th June ,936,000,000 1,500,000,000 3,850,028, ,883,871 1,244,067,160 55,195,572 8,796,174,969 FOR THE YEAR ENDED 30TH JUNE 2015 Par culars Share Share Revalua on Tax holiday Retained Non Controlling Capital Premium Surplus of Reserve Earnings Interest Total Fixed Assets Balance as at 1st July ,936,000,000 1,500,000,000 4,069,912, ,883, ,865,865 52,628,362 8,548,290,702 Net Profit/(Loss) during the year 396,979, , ,753,467 Transfer of excess deprecia on of Revalued Assets (114,782,705) 114,782,705 - Deferred Tax Adjustment (J.M. Fabrics Ltd.) (802,865) (802,865) Advance Income Tax adjustment (J.M. Fabrics Ltd.) (19,185,713) (19,185,713) Cash Dividend for (193,600,000) (193,600,000) As at 30th June ,936,000,000 1,500,000,000 3,955,129, ,883,871 1,077,039,474 53,402,347 8,732,455,591 A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 27

29 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2016 JUNE'16 JUNE'15 Taka Taka CASH FLOW FROM OPERATING ACTIVITIES : Collec on from Turnover & Bills Receivable 9,650,545,035 8,240,634,285 Other Income/(Loss) 52,460, ,455,008 Payment for Raw Materials, Indirect Materials and other expenses (8,678,161,383) (7,072,602,520) Payment for Opera ng Expenses (219,111,277) (146,696,159) Payment for Financial Expenses (418,834,601) (380,668,943) Payment for Income Tax (61,809,853) (44,799,734) Net Cash provided/(used) by Opera ng Ac vi es 325,088, ,321,937 CASH FLOW FROM INVESTING ACTIVITIES : Acquisi on of Fixed Assets (392,270,158) (254,255,999) Acquisi on of Capital work in progress - (89,169,500) Disposal of Fixed Assets 35,000 5,866,200 Net cash provided/(used) in Inves ng Ac vi es (392,235,158) (337,559,299) CASH FLOW FROM FINANCING ACTIVITIES : Bank Loan Increase/(Decrease) 147,343,665 (244,129,385) Loan from Directors - 50,000,000 Refundable IPO Share Money paid (32,500) (92,507) Dividend Paid (230,033,602) (191,035,331) Net cash provided/(used) in Financing Ac vi es (82,722,437) (385,257,224) Increase/(Decrease) in Cash and Cash Equivalents (149,869,100) (3,494,586) Cash & Cash Equivalents at 1st July ,613, ,107,702 Cash and Cash Equivalents at 30th June ,744, ,613,116 Net Opera ng Cash Flow Per Share (NOCFPS) Par Value Tk.10 A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 28

30 Annual Report 2016 NOTES OF CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 30TH JUNE COMPANY AND ITS ACTIVITIES: Malek Spinning Mills Limited was incorporated as a Private Limited Company on 2nd November, 1989 under Companies Act It was converted into Public Ltd. Company in the year The share of the company is denominated from Tk.100/- to Tk.10/- per share as on 14th September, Its subsidiary companies are Salek Tex le Limited, Newasia Synthe cs Limited and J.M. Fabrics Limited. Titas Spinning & Denim Company Ltd.one of the subsidiary company has been Merged and Amalgamated with another subsidiary company Salek Tex le Ltd. as per order of the Hon ble High Court Division of the Supreme Court of Bangladesh dated in the Company Ma er No. 248 of 2013.All of the companies are incorporated with registrar of joint stock companies and firms, Dhaka, except J.M. Fabrics Limited which is registered with RJSC Chi agong, Bangladesh under Companies Act Registered office of the Companies are at 117/A, Tejgaon I/A, Dhaka-1208,while Factories are situated at Shafipur, Kaliakoir, Bhawal Mirzapur, Gazipur & Mahna Bhabanipur, Gazipur respec vely. 2. NATURE OF BUSINESS: The Company has got the capacity of 63,624 spindles to spin high quality Co on hosiery yarns by using modern machinery including state-ofthe-art yarn tes ng laboratory. Annual produc on capacity of the company is 12,600,000 Kgs. 3. SIGNIFICANT ACCOUNTING POLICIES: 3.1 Basis of Accounting: The financial statements of the company under repor ng have been prepared under historical cost conven on,except land, Building and Machinery which is stated at revalued amount, in a going concern concept and on accrual basis other than Cash Incen ve Income which is recognized on cash basis in accordance with generally accepted accoun ng principles and prac ce in Bangladesh in compliance with the Companies Act 1994, The Securi es and Exchange Rules 1987, Lis ng Regula ons of Dhaka Stock Exchange Ltd (DSE) & Chi agong Stock Exchange Ltd. (CSE) and Interna onal Accoun ng Standards (IAS) as adopted by the Ins tute of Chartered Accountants of Bangladesh (ICAB), as Bangladesh Accoun ng Standard (BAS). 3.2 Principal Accounting Policies: Specific accoun ng policies were selected and applied by the company s management for significant transac ons and events that have a material effect within the framework of BAS-1 Prepara on of Financial Statement in prepara on and presenta on financial statements. The previous year s figures were presented according to the same accoun ng principles. 3.3 Basis of Consolidation: The consolidated financial statements incorporate the financial statements of the company and en ty controlled by the company. Control is achieved where the company has the power to govern the financial and opera ng policies of an en ty so as to obtain benefits from its ac vi es. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accoun ng policies into line with those used by other member of the group. All intra group transac on, balances, income and expenses are eliminated in full on consolida on. Minority interests in the net assets of consolidated subsidiaries are iden fied separately from the group equity therein. These consolidate financial statements have been prepared in consolida on with the audited accounts of the company and the audited accounts of Salek Tex le Limited, Newasia Synthe cs Limited and J.M. Fabrics Limited for the period ended June 30, 2016, according to the relevant IFRS or IAS. 3.4 Percentage of Holding on Subsidiary Company: Name of Company Total No. Shares Total Holding Percentage of Holding Salek Tex le Ltd. 48,260,870 47,259, % Newasia Synthe cs Ltd. 5,000,000 4,964, % J.M. Fabrics Ltd. 4,000,000 3,999, % 3.5 Application of Bangladesh Accounting Standards (BAS): The following BAS are applicable for the financial statements for the year under review BAS 1 Presenta on of Financial Statement BAS 2 Inventories BAS 7 Statementof Cash Flows BAS 8 Accoun ng Policies, Changes in Accoun ng Es mates and Errors BAS 10 Events a er the Balance Sheet Date BAS 12 Income Tax BAS 16 Property, Plant & Equipment BAS 18 Revenue BAS 20 Accoun ng for Government Grants and Disclosure of Government Assistance BAS 21 The effect of changes in Foreign Exchange rate BAS 23 Borrowing Cost BAS 24 Related Party Disclosure BAS 27 Consolidated Financial Statements and Accoun ng for Investment in Subsidiary BAS 33 Earnings per share BAS 37 Provisions, Con ngent Liabili es and Con ngent Assets BAS 38 Intangible Assets 29

31 3.6 Recognition of Property, Plant & Equipment and Depreciation: Property, Plant & Equipment are stated at cost less accumulated deprecia on in accordance with BAS-16 Property, Plant & Equipment. Cost represents cost of acquisi on or construc on and include purchase price and other directly a ributable cost of bringing the as sets to working condi ons for its intended use. Revalua on of Land, Building, Plant & Machineries were made by registered renowned Company Asian Surveyors Ltd. as on Deprecia on on all other fixed assets is computed using the reducing balance method in amount sufficient to write-off depreciable assets over their es mated useful life.deprecia on on Current year addi on is charged as and when the assets are ready for opera on. The annual deprecia on rates applicable to the principal categories are: Building 5% Plant & Machinery 7.5% Generator 10% Furniture & Fixture 10% Motor Vehicles 15% Office Equipments 15% Electrical Installa on 15% Gas Line Installa on 15% Fire Installa on 15% Loose Tools 15% 3.7 Inventories: Inventories comprise of Raw Materials, Raw Materials in Transit, Work-In-Process, Finished Goods and Stores and Spare Parts. They are stated at the lower of cost or net realizable value in accordance with the Para of 21 & 25 of BAS-2 Inventories a er making due allowance for any obsolete or slow moving item. 3.8 Accounts Receivable: Accounts Receivable represents the amounts due from export sales both to local and foreign buyers.all transac on related to export sales is performed through le er of credit, they are secured and collec ble. 3.9 Cash and Cash Equivalents: According to BAS-7 Cash flow Statements cash comprises of cash-in-hand and demand deposits. BAS-1 Presenta on of Financial Statements provides that cash and cash equivalents are not restricted in use. Considering the provisions of BAS-7 and BAS-1, Cash in hand and Bank balances have been considered as cash and cash equivalents 3.10 Creditors and Accruals: Liabili es are recognized for amounts to be paid in the future for goods and services received, whether or not billed by the supplier Income Tax: a) Current Tax: The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported is the statement of Profit or Loss and other Comprehensive income because it excludes items of income or expenses that are taxable or deduc ble in other years and it further excludes items that are never taxable or deduc ble. The Group s liability for current tax is calculated using tax rates that have been enacted on date of Statement of Financial Posi on. b) Deferred Tax: The company has recognized deferred tax using balance sheet method in compliance with the provisions of IAS-12 Income Taxes. The company s policy of recogni on of deferred tax assets/liabili es is based on temporary difference (Taxable or deductible) between the carrying amount (Book Value) of assets and liabili es for Financial Repor ng purpose and its tax base, and accordingly, deferred tax income/expenses has been considered to determine net profit a er tax and earnings per share (EPS) Statement of Cash Flows: Statement of Cash Flows is prepared in accordance with BAS-7 under direct method as outlined in the Securi es and Exchange Rules Risk and Uncertainties for use of Estimates in Preparation of Financial Statements: The prepara on of financial statements in conformity with the interna onal accoun ng standards requires management to make es mates and assump on that affect the reported amounts of assets and liabili es and disclosure of con ngent assets and liabili es at the date of affec ng financial statements and revenues and expenses during the reported year. Actual results could differ from those es mates. Es mates are used for accoun ng of certain items such as long-term contracts; deprecia on and employees benefit plans, taxes, reserves and con ngencies Compliance with Local Laws: The financial statements have been prepared in compliance with requirements of the Companies Act 1994, Securi es and Exchange Rules 1987 and other relevant local laws and rules Compliance with Bangladesh Accounting Standards: The financial statements have been prepared in compliance with requirement of BAS as adopted by The Ins tute of Chartered Accountants of Bangladesh (ICAB) and applicable in Bangladesh Contingent Liabilities and Assets: Current or possible obliga ons or assets arising from past events and whose existence is due to the occurrence or non-occurrence of one or more uncertain events which are not within the control of the group Transaction with Related Parties: In the period under review the company has transac ons with related party in the normal course of business. 30

32 Annual Report Reporting Year: Financial statements of the company cover from 1st July 2015 to 30thJune Reporting Currency and Level of Precision: The figures in the financial statements represent Bangladesh Currency (Taka), which have been rounded off to the nearest Taka except where indicates otherwise Comparative Information: Compara ve informa on have been disclosed in respect of year June 2015 for all numerical informa on in the financial statements and also the narra ve and descrip ve informa on when it is relevant for understanding of the current years financial statements. Figures of the year 2015 have been rearranged whenever considered necessary to ensure comparability with the current year Foreign Currency Transaction: Transac ons in foreign currencies are translated into Bangladeshi taka in accordance with BAS-21 The Effects of Changes in Foreign Exchange Rate. Foreign Currencies are converted into taka at the rates ruling on the transac on dates. Monetary assets and liabili es are converted at the rates prevailing at the balance sheet date, non-monitory assets and liabili es are reported using the exchange rate at the date of transac on. Exchange currency difference if anyin the comprehensive income Revenue Recognition: The Company recognizes revenue when risk and rewards associated with ownership has been transferred to buyer, which sa sfied all the condi on for the revenue recogni on as provided in BAS-18 Revenue Recogni on Accounting for Government Grants and Disclosure of Government Assistance: Cash Incen ve recognize as per BAS-20 as other income Responsibility for Preparation and Presentation of Financial Statements: The Board of Directors is responsible for the prepara on and presenta on of Financial Statements under Sec on 183 of the Companies Act 1994 and as per the provision of The Framework for the Prepara on and Presenta on of Financial Statements issued by the Interna onal Accoun ng Standards Board (IASB) Components of the Financial Statements: According to the Bangladesh Accoun ng Standard BAS-1 Presenta on of Financial Statements the complete set of Financial Statements includes the following components: (i) Statement of Financial Posi on as at 30th June2016. (ii) Statement of Profit or Loss and other Comprehensive Income for the period from 1st July 2015 to 30th June (iii) Statement of Cash flows for the period from 1st July 2015 to 30th June (iv) Statement of changes in Equity for the period from 1st July 2015 to 30th June (v) Accoun ng Policies and Explanatory Notes Earnings per Share: Earnings per share (EPS) is calculated in accordance with the Bangladesh Accoun ng Standard BAS-33 Earnings per share. Basic Earnings per Share: Basic Earnings per share is calculated by dividing the net profit or loss for the year a ributable to ordinary shareholders by the number of ordinary shares outstanding during the year Share Premium: The balance in share premium account shall be u lized in accordance with provisions of the Companies Act 1994 and as directed by the Bangladesh Securi es and Exchange Commission in this respect Lease Assets: In Compliance with the BAS-17, Leases, cost of assets acquired under finance lease along with related obliga on has been accounted for as assets and liabili es respec vely of the company Subsequent Disclosure of Events occurring after the Financial Position date: Event a er the repor ng date that provide addi onal informa on about the company s posi on at repor ng date reflected in the financial statements. Events a er the repor ng date that are not adjus ng events are disclosed in the notes when material Impairment of Assets: The company reviews the recoverable amount of its assets at each repor ng date. If there exist any indica on that the carrying amount of assets exceeds the recoverable amount, the company recognizes such impairment loss in accordance with BAS-36 Impairment of Assets Credit Facility Not Availed: There was no credit facility available to the company under any contract, other than trade credit available in the ordinary course of business Segment Reporting: As there is a single business and geographic segment within the company operates as such no segment repor ng is felt necessary for Malek Spinning Mills Ltd. But its subsidiaries Salek Tex le Ltd. has geographic and product segment by Rotor, Fabrics & RMG unit and the financial statement has reported according to BFRS-8. The disclosure of segment repor ng is also disclosed in financial of Salek Tex le Ltd General Comments & Observations: a. Previous year s figures is regrouped/reclassified wherever considered necessary to confirm to current year s presenta on. There has no such effect during year. Figures have been rounded off to the nearest taka, as the currency represented in this financial statement. b. All shares have been fully called and paid up. c. There was no preference share issued by the company. d. The company has not incurred any expenditure in foreign currency against royal es and technical fees. 31

33 e. Auditors are paid only statutory audit fees. f. No foreign exchange remi ed to the relevant shareholders during the year under audit. g. No amount of money was expended by the company for compensa ng any members of the Board for special service rendered. h. No brokerage was paid against sales during the year under audit. i. There was no bank guarantee issued by the company on behalf of directors Attendance Status of Board Meeting of Directors: During the year seven Board Mee ngs were held. The a endance status of all the mee ngs is as follows: Name of Directors Posi on Mee ng Held A ended Mr. A.F.M Zubair Chairman 7 7 Mr. A. Ma n Chowdhury Managing Director 7 7 Dr. Shamim Ma n Chowdhury Director 7 7 Mr.Azizur Rahim Chowdhury Director 7 6 Ms. Saima Ma n Chowdhury Director 7 2 Mr.Moshiur Rahman Director 7 7 Mr. M. Sekander Ali Independent Director 7 6 Mr. Qamrul Huda Independent Director Disclosure as per requirement of Schedule XI, Part II of Company Act 1994 Employee Posi on for Malek Spinning Mills Ltd. (as per 30th June 2016) Salary Range Officer & Staff Worker Total Employee Head Office Factory Below 3, Above 3, Total Employee Posi on for Salek Tex le Ltd. (as per 30th June 2016) Salary Range Officer & Staff Worker Total Employee Head Office Factory Below 3, Above 3, Total Employee Posi on forj.m. Fabrics Limited(as per 30th June 2016) Salary Range Officer & Staff Worker Total Employee Head Office Factory Below 3, Above 3, Total Disclosure as per requirement of schedule XI, part II, Para 4 Payment to Directors including Independent Director (From 1ST July 2015 to 30th June 2016) Tk. 6,547,500 Name of Directors Remunera on Mr. A.F.M Zubair 4,252,500 Mr. A. Ma n Chowdhury 1,350,000 Mr. Azizur Rahim Chowdhury 945,000 Mr. M. Sekander Ali Nil Mr. Qamrul Huda Nil Disclosure as per requirement of schedule XI, part II, Para 7 Detail of Produc on Capacity U liza on of Malek Spinning Mills Limited Par culars Licence Capacity Installed Capacity Actual Produc on Capacity U liza on Annual Produc on Capacity Not Men oned 12,600,000 11,233, % of Yarn in KG. in the Licence Disclosure as per requirement of schedule XI, part II, Para 8 Value of Raw Co on, Spare Parts, Packing Materials and Capital Machinery (BDT) of Malek Spinning Mills Limited Par culars Local Purchase Import Total Purchase Consumed Raw Co on - 1,565,676,332 1,565,676,332 1,725,339,951 Spare Parts - 33,946,396 33,946,396 22,891,800 Packing Materials 28,295,187-28,295,187 28,295,187 Capital goods - 13,324,704 13,324,704-32

34 Annual Report 2016 NOTES OF CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 30TH JUNE 2016 Amount in Taka 4. CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT: 8,240,525,304 JUNE'16 JUNE'15 COST: Opening Balance 7,012,691,885 6,670,388,867 Addi on during the year 308,749, ,097,049 7,321,441,372 7,029,485,917 Sales/Adjustment during the year 117,000 16,794,032 Closing Balace 7,321,324,372 7,012,691,885 Accumulated Deprecia on: Opening Balance 2,867,037,079 2,576,315,792 Adjustments during the year 22,033 8,590,818 Deprecia on during the year 298,320, ,312,105 Closing Balace 3,165,335,797 2,867,037,079 Wri en Down Value at cost: 4,155,988,575 4,145,654,805 REVALUATION: Opening Balance 4,814,879,388 4,814,879,388 Addi on of Revaluated Assets - - Total Revaluated Assets: 4,814,879,388 4,814,879,388 Accumulated Deprecia on: Opening Balance 625,241, ,458,421 Deprecia on during the year 105,101, ,782,705 Closing Balace 730,342, ,241,126 Wri en Down Value of Revaluated Assets: 4,084,536,729 4,189,638,262 Total Wri en Down Value: 8,240,525,304 8,335,293,067 Alloca on of deprecia on charges for the year has been made in the accounts as follows: Factory Overhead 390,565, ,054,012 Administra ve Overhead 12,857,040 11,040, ,422, ,094,810 Details of Fixed Assets and Deprecia on are shown in the Annexure-1 5. CONSOLIDATED CAPITAL WORK-IN-PROGRESS: 59,157,000 89,169, CONSOLIDATED INVENTORIES : 3,674,958,784 Raw Materials 1,395,971,811 1,347,535,686 Stock-in-Transit 149,656,891 20,944,949 Work-in-Process 538,395, ,819,295 Finished Goods 1,425,413,013 1,226,304,070 Stores and Accessories 165,522, ,240,567 3,674,958,784 3,219,844, CONSOLIDATED ACCOUNTS RECEIVABLE : 2,990,668,997 i) Malek Spinning Mills Limited 1,150,551,231 1,136,946,335 ii) Salek Tex le Limited 1,570,423,304 1,504,486,243 iii) J.M. Fabrics Limited 619,599, ,140,003 3,340,574,500 3,152,572,581 Less: Inter Company Receivable 349,905, ,283,750 Total: 2,990,668,997 2,861,288, CONSOLIDATED ADVANCE, DEPOSIT & PRE-PAYMENTS: 525,525,897 Advance against construc on materials, Suppliers & Others 222,192, ,113,325 Security Deposit on REB 178, ,875 Security Deposit on Titas Gas T&D Co. 29,844,237 24,462,211 Advance against Income Tax (Note: 8-A) 208,553, ,167,244 Security Deposit to CDBL 500, ,000 Advance to EME Consultants & Engineers - 150,000 Advance to Hoque Trade Interna onal 5,104,820 - Advance to M/S Barkat Enterprise 5,650,977 - Advance to M/S Maznu Traders(For Land purchase) 73,073 73,073 Advance against Office Rent 750,000 4,350,000 33

35 Security Deposit against LC margin/ Bank Guarantee 420,285 4,679,570 Advance to M/S MR Traders (Land purchase-ashugonj) 31,874,735 1,065,148 Advance to M/S Habib Enterprise 18,260,082 - Advance to Mr. Abdus Salam(Land) 2,122, ,569 Advance to Mr. Karim(For Land purchase) - 9,142,000 Total: 525,525, ,222,015 8-A. CONSOLIDATED ADVANCE INCOME TAX: 208,553,427 Opening Balance 156,167, ,025,656 Payment/Adjustment for prior year Income 9,423,670 25,658,146 Last year Balance a er adjustment- 146,743, ,367,510 Advance Income Tax paid (Against Export Proceeds) 59,618,155 40,503,374 Advance Income Tax paid (Against Interest Income) 211, ,667 Advance Income Tax paid (Against Cash Incen ve) 1,532,585 3,659,693 Advance Income Tax paid (Against Vehicle Fitness) 447, ,000 Total AIT paid for the year: 61,809,853 44,799,734 Total: 208,553, ,167, CONSOLIDATED CASH AND CASH EQUIVALENTS: 381,744,017 Cash in Hand: 3,794,424 1,510,255 Cash at Banks : AB Bank Ltd. STD A/C: (MSML) 236, ,057 Brac Bank STD A/C: (Deposit with IPO) MSML 42,975 42,450 Brac Bank A/C: (MSML) Dividend 7,239,346 14,228,893 The City Bank Ltd.-CD A/c(JM) 3,328, ,943 The City Bank Ltd.-FBPAR A/c(JM) 67,705,350 18,708,335 The City Bank Ltd.-ERQ A/C(JM) 778,226 45,657 Dhaka Bank Ltd A/C: (STL) 1,722,335 - Dhaka Bank USD Margin A/C:0032 (STL) 203,085 10,852 Dhaka Bank Ltd A/C: (NSL) 278, ,733 Dhaka Bank Ltd. CD A/C: (MSML) - 5,651,390 Dhaka Bank Ltd. STD A/C: (MSML) 16,699,066 22,039,257 Dhaka Bank Ltd.- Margin Account: (MSML) 12,370,521 2,787,893 Eastern Bank CD A/C: 5745 (NSL) 69,382 92,856 Eastern Bank Ltd.- Margin Account: USD (MSML) 19,056, ,603 Eastern Bank USD Margin A/C: (STL) 41,579,960 4,435,620 Eastern Bank CD A/C: (STL) 213,273 11,122 Eastern Bank Ltd. ERQ A/C: (STL) 2,809,730 - Eastern Bank FC A/C: (Deposit-NRB IPO) MSML 1,233,351 1,233,351 Eastern Bank STD A/C: BDT (Deposit IPO) MSML 8,166,467 25,548,215 HSBC Bank CD A/C: (NASL) 3,703,046 1,058,762 HSBC Bank CD A/C: (STL) 6,142,774 - HSBC Bank USD Margin A/C: 091 (STL) 13,083, ,391,291 HSBC Bank USD Margin A/C: 047 (STL) 3,319,248 12,052,665 HSBC Bank-Margin A/C:091 USD (MSML) 41,677, ,714,761 HSBC Bank-R.Q A/C:095 USD (MSML) - 1,758,952 Islami Bank-CD A/C: (STL) 2, ,658 Islami Bank-CD A/C: (STL) 88, ,033 Islami Bank-Margin A/C: 58(STL) - 60,296 Islami Bank-Margin A/C: 59(STL) - 89,331 Islami Bank-Margin A/C: 119(STL) - 128,663 Islami Bank-FC A/C: 80 (USD)(STL) - 149,375 Islami Bank-FC A/C: 84 (USD)(STL) - 8,214,668 Islami Bank-FDR A/C: (STL) 11,365,222 10,748,245 Islami Bank-FDR A/C: 3301(STL) 1,246,438 1,177,280 Islami Bank-ERQ A/C: 71(STL) - 30,577 Islami Bank-ERQ A/C: 74(STL) - 77,462 One Bank- Margin Account : USD (MSML) 712,313 22,471,078 Pubali Bank-CD A/C: (STL) 2,416,778 42,445 Shahjalal Islami Bank A/C: (MSML) 13,698 14,848 Trust Bank CD A/C: (MSML) 437,088 39,236 Trust Bank Ltd A/C: (STL) 847, ,158 Trust Bank Ltd - Margin A/C: (MSML) 42,342 42,069 Trust Bank Ltd - Margin A/C: (STL) 370, ,266 Trust Bank Ltd.- CD A/C: (NSL) 540, ,233 Eastern Bank Limited FC- Margin-JM 50,141, ,296,629 34

36 Annual Report 2016 Eastern Bank Ltd. CD A/C: (JM) ,168 Eastern Bank Ltd. CD A/C: (JM) 15,453,318 - Eastern Bank Ltd. ERQ A/C (JM) 703, ,713 HSBC Ltd. CD A/C(JM) 38,280 38,430 HSBC Ltd.Margin A/C(JM) 18,988 18,988 UCBL- FC Margin(JM) 32,986,547 10,601,359 UCBL- ERQ A/C, Banani Branch(JM) 342,577 2,175, ,949, ,102,861 Total: 381,744, ,613, CONSOLIDATED SHARE CAPITAL: 1,936,000,000 1,936,000,000 It represents 19,36,00,000 ordinary shares of Tk.10 each 11. CONSOLIDATED SHARE PREMIUM: 1,500,000,000 1,500,000,000 It represents premium of 100,000,000 ordinary shares of Tk.15 each. 12. CONSOLIDATED TAX HOLIDAY RESERVE: 210,883,871 Opening Balance 210,883, ,883,871 Add: Provided during the year - - Closing Balance 210,883, ,883, CONSOLIDATED RE-VALUATION SURPLUS OF FIXED ASSETS: 3,850,028,366 Opening Balance 3,955,129,899 4,069,912,604 Less: Transfer to Retained Earnings of excess deprecia on 105,101, ,782,705 Net Wri en Down Value: - 3,850,028,366 3,955,129,899 Detail of Re-valua on Surplus of Fixed Assets is given in the annexed Annexure CONSOLIDATED RETAINED EARNINGS: 1,244,067,160 Opening Balance 1,077,039, ,865,865 Add: Net Profit/(Loss) during the year 294,246, ,979,482 1,371,285,627 1,175,845,347 Add: Transfer of excess deprecia on of revaluated assets 105,101, ,782,705 Less: Declared Cash Dividend 232,320, ,600,000 Less: Advance Income Tax adjustment - 19,185,713 Less: Adjustment of Deferred Tax - 802,865 Total: 1,244,067,160 1,077,039, NON CONTROLLING INTEREST: 55,195,572 Non Controlling Interest details as follows: Paid-up Capital- (i) Salek Tex le Ltd % 10,011,700 10,011,700 (ii) Newasia Synthe cs Ltd % 3,535,000 3,535,000 (iii) J.M Fabrics Ltd % 10,000 10,000 Total: - 13,556,700 13,556,700 Retained Earnings- (i) Salek Tex le Ltd % 19,257,588 16,575,598 (ii) Newasia Synthe cs Ltd % (95,896) (67,906) (iii) J.M Fabrics Ltd % 7,112 6,038 Total: 19,168,804 16,513,729 Tax Holiday reserve- (i) Salek Tex le Ltd % 4,470,368 4,470,368 Total: - 4,470,368 4,470,368 Revalua on Surplus- (i) Salek Tex le Ltd % 8,510,413 9,372,196 (ii) Newasia Synthe cs Ltd % 9,485,468 9,485,468 (iii) J.M Fabrics Ltd % 3,819 3,885 Total: 17,999,700 18,861,550 Total Non Controlling Interest: 55,195,572 53,402,347 This represents non controlling interest of Salek Tex le Limited, Newasia Synthe cs Limited, J.M. Fabrics Limited 16. CONSOLIDATED LONG TERM LOAN: 1,599,990,186 Eastern Bank Limited 819,703, ,037,986 Dhaka Bank Limited 224,274, ,948,493 Trust Bank Limited 16,510,083 - HSBC Limited 542,832, ,246,661 The City Bank Ltd. 439,542, ,263,945 35

37 United Commercial Bank Ltd. 257,444, ,866,280 2,300,307,481 2,695,363,365 Less: Current Por on of Long Term Loan Note: ,317, ,622,933 Total Long Term Loan: 1,599,990,186 2,053,740, DEFERRED TAX LIABILITIES: 446,644,257 Opening Balance 459,174, ,262,936 Addi on during the year for prior year adjustment - 802,865 Add: Provision for the year (12,530,527) (13,891,018) Total: 446,644, ,174, CONSOLIDATED SHORT TERM LOAN: 1,110,516,989 Import Loan & Working Capital: Eastern Bank Ltd. 282,332, ,168,697 HSBC Ltd. 165,000,000 - The City Bank Ltd. 226,679,212 47,555,091 United Commercial Bank Ltd. 346,824, ,819,429 Sub-total: 1,020,836, ,543,217 Bank Overdra : Eastern Bank Ltd A/C: & 11 (MSML) 33,543,972 4,976,473 Eastern Bank Ltd A/C: (STL) - 10,662,859 Eastern Bank Ltd A/C:(J.M) - 8,706,054 Dhaka Bank Ltd A/C: (MSML) 19,246,703 - Dhaka Bank Ltd A/C: (STL) - 5,565,225 The city Bank Ltd. A/C:(JM) - 10,346,025 United Commercial Bank Ltd.(J.M) - 41,160,703 One Bank Ltd A/C: (MSML) 8,460,652 4,158,904 HSBC OD A/C : (MSML) 28,429,581 17,791,511 HSBC A/C: (STL) - 37,206,468 Sub-total: 89,680, ,574,223 Total: 1,110,516, ,117, CONSOLIDATED CURRENT PORTION OF LONG TERM LOAN : Eastern Bank Ltd. 254,090, ,863,753 Dhaka Bank Ltd. 114,999, ,162,560 HSBC Ltd. 90,702, ,403,458 Trust Bank Ltd. 3,300,000 - The City Bank Ltd. 118,061, ,333,302 United Commercial Bank Ltd. 119,163, ,859,860 Total: 700,317, ,622,933 According to Bangladesh Accoun ng Standard (BAS) 1 "Prepara on of Financial Statements", Current por on of Long Term Loan that are due for se lement within twelve month a er the balance sheet date are current liabili es, therefore, the above amount has been shown in current liabili es. 20. LOAN FROM DIRECTOR: 50,000,000 50,000, CONSOLIDATED BANK ACCEPTANCE LIABILITIES: 2,321,471,534 Raw Materials: Eastern Bank Limited 1,233,639, ,273,145 HSBC Ltd. 820,009, ,103,775 The City Bank Ltd. 3,966,407 30,398,049 One Bank Ltd. 30,795,059 - Islami Bank Ltd. - - United Commercial Bank Ltd. 16,428,440 39,393,694 Dhaka Bank Limited 207,253, ,222,519 Sub-total: 2,312,092,850 1,859,391,181 Machinery: Dhaka Bank Limited - 3,054,440 Eastern Bank Ltd. 9,378, ,857,415 Sub-total: 9,378, ,911,855 Total: 2,321,471,534 1,982,303, CONSOLIDATED CREDITORS & ACCRUALS: 847,464,770 Gas Bill Payable 25,208,043 14,152,509 Electricity Bill Payable - 587,766 36

38 Annual Report 2016 Audit Fee Payable 290, ,500 Office Rent Payable - 98,800 Tax Deduc on at Source 6,464,897 4,459,570 Vat Deduc on at Source 3,457,802 1,463,258 Income Tax Payable (Note: 22-A) 255,380, ,509,326 Salary & Wages Payable 2,529,873 76,361,588 Contribu on to WPPF Payable 182,878, ,539,960 Director's Remunera on Payable - 553,479 Payable for Goods Suppliers & Others 80,749, ,455,770 Payable for Waste Co on Purchase 244,763, ,104,571 Dividend Payable 32,826,948 30,540,550 Refundable IPO Share money 12,915,735 12,948,235 Total: 847,464, ,016, A. CONSOLIDATED TAX PAYABLE: Opening Balance 185,509, ,463,952 Provision for this period (Current Tax): (Note: 29) 79,294,676 77,517, ,804, ,981,759 Payment/Adjustment for prior year balance: 9,423,670 6,472,433 Total Payment/Adjustment for last year Income: 9,423,670 6,472,433 Total Payable- 255,380, ,509, CONSOLIDATED SALES: 9,779,925,200 Export Sales 9,878,062,844 8,494,656,657 Less: Inter Co. Sales 98,137, ,760,642 Total: 9,779,925,200 8,297,896, CONSOLIDATED COST OF GOODS SOLD: 8,800,381,234 Raw Material Consumed (Note: 24-A) 6,698,351,145 5,627,715,894 Direct Expenses (Note: 24-B) 1,108,781, ,991,631 Factory Overhead (Note: 24-C) 1,379,071,116 1,191,391,022 Total Manufacturing Cost 9,186,203,591 7,639,098,547 Add: Work-in-Process- Opening 449,819, ,931,478 Cost of Goods available for use 9,636,022,886 7,914,030,025 Less: Work-in-Process- Closing 538,395, ,819,295 Cost of Produc on 9,097,627,821 7,464,210,731 Add: Finished Goods- Opening 1,226,304,070 1,354,057,196 Cost of Goods Available for Sales 10,323,931,891 8,818,267,927 Less: Finished Goods- Closing 1,425,413,013 1,226,304,070 Less: Finished Goods Closing- Inter Company 98,137, ,760,642 Add: Loss on Fire - 815,226 Cost of Goods Sold: 8,800,381,234 7,396,018, A. CONSOLIDATED RAW MATERIALS CONSUMED: 6,698,351,145 Opening Inventory of Raw Materials 1,347,535,686 1,454,364,012 Add: Purchase of Raw Materials 6,746,787,270 5,520,887,569 Less: Closing Stock of Raw Materials 1,395,971,811 1,347,535,686 Total Raw Materials Consump on: 6,698,351,145 5,627,715, B. CONSOLIDATED DIRECT EXPENSE: 1,108,781,330 Direct Wages/Labour 1,058,157, ,710,911 Over me Wages 50,623, ,280,720 Total 1,108,781, ,991, C. CONSOLIDATED FACTORY OVERHEAD: 1,379,071,116 Factory Salary and Allowances 170,653, ,401,921 Fes val Bonus 6,759,864 5,069,421 Electricity Charges 7,969,704 4,966,880 Gas Charges 241,542, ,711,309 Gardening Expenses 92,472 50,722 Repairs & Maintenance 75,081,623 94,681,930 Air Freight/Courier charges 8,375,532 1,997,253 Packing Materials 71,834,128 68,424,646 Fuel, Oil & Lubricant 35,254,491 30,100,794 Insurance Premium- Fire 11,237,187 14,815,256 Insurance Premium- (Group) 55,040 48,440 Stores & Accessories consump. (Note: 24-C-i) 111,202, ,803,531 37

39 Entertainment 15,794,843 11,710,742 Telephone, Mobile & Fax 2,158,464 1,829,077 Sta onery expenses 3,980,693 3,240,496 Prin ng Charges 2,055,761 2,248,625 Other Carrying Charges 10,927,530 12,867,468 Factory Office Expenses others 347, ,691 Dyeing, Prin ng, Washing, Embroidary, Finishing Exp. 110,274,592 63,051,179 C&F and others expenses 10,395,013 6,154,824 Lab test & Inspec on charges 44,789,777 21,754,954 Security Service charges 5,058,907 - Factory Rent 15,990,000 15,600,000 Vehicles Maintenance 12,868,580 8,417,098 Medical Expenses 761, ,016 Uniform & Leverage 140, ,455 Miscellaneous 3,652,681 3,116,540 Conveyances 5,302,895 3,210,609 House Rent for Worker Shed 3,948,319 1,060,133 Deprecia on 390,565, ,054,012 Total: 1,379,071,116 1,191,391,022 24(C )-i. CONSOLIDATED CONSUMPTION OF STORES AND ACCESSORIES: Opening Stock of Stores and Accessories 175,240, ,306,844 Add: Purchase during the year 101,483, ,737,255 Less: Closing Stock of Stores and Accessories 165,522, ,240,567 Total Stores and Accessories Consumed 111,202, ,803, CONSOLIDATED OPERATING EXPENSES: 231,968,317 Salaries & Allowances 69,357,521 62,138,039 Fes val Bonus 13,780,649 7,923,755 Director's Remunera on 9,247,500 8,220,000 Fees, Forms & Others 9,891,852 4,773,205 Audit Fees 290, ,500 Legal Fees 152, ,945 Prin ng & Sta onery 1,997,736 1,320,549 Telephone,Mobile & Internet Expenses 2,451,162 2,078,478 Postage & Stamp 491, ,501 Vehicle Maintenance 7,835,832 9,500,531 Miscellaneous Expenses 9,280,476 13,264,380 Business Development expenses 49,163,922 4,435,130 Office Rent 2,195,899 2,511,706 Rates & Taxes 2,710,045 2,095,695 Carriage Outward, Selling & Distribu on, C&F, Sample charges 25,316,096 11,745,233 Travelling & Conveyance 3,499,558 3,671,738 Entertainments 1,464,573 1,486,181 Office Expenses 107, ,315 Fuel & Oil for Head Office 53, ,000 Adver sement/ Publicity Expenses 685, ,227 AGM Expenses 1,779,026 2,192,494 Marke ng Expenses 4,539,065 3,163,538 Security Charges 470, ,400 Gardening Expenses - 12,101 Uniform & Leverage Security 30, ,734 Repairs & Maintenance 2,139,089 3,198,284 So ware Maintenance Expenditure 46,000 60,000 Credit Ra ng Charges 132, ,500 Deprecia on 12,857,040 11,040,798 Total: 231,968, ,736, CONSOLIDATED FINANCIAL EXPENSES : 418,834,601 EASTERN BANK LTD.: Interest on Long Term Loan 99,764,610 74,133,368 Interest on Short Term Loan 16,119,178 8,644,363 Interest on Overdra 2,997,874 2,598,026 Bank Charges & Commission 30,842,259 24,531,749 Export L/C Nego a on Commission 11,786,865-38

40 Annual Report 2016 Interest on Bill Discount 15,157,586 13,481,270 Total: 176,668, ,388,777 HSBC LTD.: Interest on Long Term Loan 72,446,560 55,010,088 Interest on Overdra 2,604,045 3,828,407 Bank Charges & Commission 18,096,396 14,798,351 Export L/C Nego a on Commission 858,259 - Interest on Bill Discount 4,939,625 15,969,773 Total: 98,944,884 89,606,619 DHAKA BANK LTD. : Interest on Long Term Loan 36,884,033 51,449,814 Interest on Overdra 342,081 69,462 Bank Charges & Commission 1,674,426 7,193,583 Export L/C Nego a on Commission 4,226, ,418 Interest on Bill Discount 7,721,771 3,108,025 Total: 50,848,922 62,699,302 ONE BANK LTD. : Interest on Overdra 503, ,332 Bank Charges & Commission 25, ,452 Export L/C Nego a on Commission 33,204 - Total: 562, ,783 TRUST BANK LTD. : Interest on Long Term Loan 10,083 3,016,228 Bank Charges & Commission 32,785 35,205 Interest on Overdra - 3,174,790 Total: 42,868 6,226,223 SHAHJALAL ISLAMI BANK LTD. : Bank Charges & Commission 1,150 2,300 TOTAL 1,150 2,300 ISLAMI BANK BANGLADESH LTD.: Interest on Long Term Loan - 24,213,555 Interest on Short Term Loan - 5,940,400 Bank Charges & Commission 95,140 3,015,372 Export Bill Nego a on Commission - 97,142 Interest on Bill Discount - 6,039,579 Total: 95,140 39,306,048 AB BANK LTD : Bank Charges & Commission 9,985 1,899 TOTAL 9,985 1,899 BRAC BANK LTD: Bank Charges and Commission 1,530 11,150 Total: 1,530 11,150 THE CITY BANK LTD.: Bank Charges and Commission 2,771,247 1,739,769 Interest on Long Term Loan 36,049,526 26,134,524 Interest on Short Term Loan 3,026,093 3,022,473 Total: 41,846,866 30,896,765 PUBALI BANK LTD.: Bank Charges & Commission 4,430 - Total: 4,430 - UCBL: Interest on Short Term Loan 23,187,356 1,685,664 Interest on Term Loan 24,387,543 24,412,978 Bank Charges & Commission 2,233,284 2,090,434 Total: 49,808,183 28,189, ,834, ,668,943 39

41 27. OTHER INCOME/(LOSS): 52,400,607 CASH INCENTIVE: 51,086, ,095,230 OTHER INCOME/(LOSS): Interest Received from Dividend A/C with BRAC Bank Ltd. 509, ,534 Interest Received from Dividend A/C with Dhaka Bank Ltd. 909,049 1,188,249 Interest Income from STD A/C with AB Bank Ltd. 7,746 7,935 Interest Income from STD A/C wi h BRAC Bank Ltd ,345 Interest Income from STD A/C wi h Eastern Bank Ltd. 433,549 1,076,586 Interest Received from FDR A/C-Islami Bank 758, ,358 2,619,136 3,802,006 Foreign currency exchange Gain/(Loss) (1,244,711) (442,227) Gain/(Loss) on Sale of Assets (59,967) (2,337,014) (1,304,678) (2,779,241) Other Income/(Loss) 1,314,458 1,022,765 Total Non-opera ng Income/(Loss) 52,400, ,117, CONSOLIDATED PROVISION FOR WORKER'S PROFIT PARTICIPATION FUND: Provision for Contribu on to WPPF(MSML) 10,100,084 13,057,751 Provision for Contribu on to WPPF(STL) 5,323,403 6,795,386 Provision for Contribu on to WPPF(JM) 2,914,640 3,356,274 Total: - 18,338,127 23,209, CONSOLIDATED INCOME TAX PROVISION (CURRENT TAX): On Opera ng Income: Malek Spinning Mills Ltd. 35,703,365 40,851,986 Salek Tex le Ltd. 24,665,007 24,229,094 J.M Fabrics Ltd. 16,752,917 7,568,521 77,121,288 72,649,601 On Cash Incen ve: Malek Spinning Mills Ltd. 109, ,613 Salek Tex le Ltd. 80, ,932 J.M Fabrics Ltd. 1,342,015 1,855,149 1,532,586 3,659,693 On other Income: Malek Spinning Mills Ltd. 429,339 1,017,988 Salek Tex le Ltd. 211, ,525 J.M Fabrics Ltd ,801 1,208,514 Total: 79,294,676 77,517, CONSOLIDATED INCOME TAX PROVISION (DEFERRED TAX): Malek Spinning Mills Ltd. (6,210,036) (6,888,289) Salek Tex le Ltd. (6,231,270) (6,904,375) J.M Fabrics Ltd. (89,221) (98,354) Total: (12,530,527) (13,891,018) 31. NON CONTROLLING INTEREST: 1,793,225 On Net Profit/(Loss) a er tax Salek Tex le Ltd % 1,820,208 2,438,872 Newasia Synthe cs Ltd % (27,990) (19,852) J.M. Fabrics Limited % 1,007 1,445 1,793,225 2,420,465 On Revalua on Reserve Salek Tex le Ltd % - (1,645,944) J.M. Fabrics Limited % - (536) - (1,646,480) Total: 1,793, , CONSOLIDATED BASIC EARNINGS PER SHARE (EPS): 1.52 (a) Consolidated Net Profit/(Loss) a er tax for the year 296,039, ,753,467 (b) Non Controlling Interest for the year 1,793, ,985 Consolidated Net Profit/(Loss): (a-b) 294,246, ,979,482 (c) Number of total share 193,600, ,600,000 Basic Earnings per Share (EPS): [(a-b)/c]

42 Annual Report 2016 SL PARTICULARS CONSOLIDATED FIXED ASSETS SCHEDULE AS AT 30TH JUNE 2016 ANNEXURE : 1 COST RATE DEPRECIATION WRITTEN DOWN AS AT ADDITION ADJUSTMENT AS AT AS AT THIS PERIOD ADJUSTMENTS AS AT VALUE AS AT A. Malek Spinning Mills Ltd., Salek Tex le, Newasia Synthe cs Ltd. & JM Fabrics Ltd 1 Land and Land Development 831,073,071 35,266, ,339,431 0% ,339,431 2 Factory Building 1,268,761,069 26,938,054-1,295,699,123 5% 435,528,689 42,368, ,897, ,802,063 3 Plant and Machinery 4,321,167, ,169, ,000 4,521,219, %,10% 2,100,541, ,573,897 22,033 2,321,093,529 2,200,125,737 4 Electrical Installa on 137,140,528 13,832, ,973,400 10%,15% 84,651,390 6,569,774-91,221,163 59,752,237 5 Tubewell and Water Pump 10,185,308 74,000-10,259,308 15% 6,708, ,008-7,235,931 3,023,377 6 Furniture and Fixtures 37,862,447 3,707,644-41,570,091 10% 10,879,668 2,885,342-13,765,010 27,805,081 7 Office Equipments 31,732,506 8,233,193-39,965,699 15% 12,891,885 3,336,384-16,228,269 23,737,430 8 Gas Line Installa on 28,046,109 2,000,000-30,046,109 15% 17,000,437 1,881,851-18,882,288 11,163,821 9 Cargo Li 5,552, ,552,823 10% 1,333, ,923-1,755,512 3,797, Loose Tools and Equipment 16,085, ,085,041 15% 6,924, ,618-7,848,835 8,236, Motor Vehicle 82,731,007 12,256,312-94,987,319 15% 31,617,857 7,794,569-39,412,426 55,574, Telephone (PABX) Installa on 790, ,975 15% 497,882 43, , , Crockaries and Cutlaries 141,371 5, ,774 15% 71,281 11,121-82,402 64, Generator 236,629, ,629,429 15% 157,978,383 9,860, ,838,876 68,790, Fire Installa on 4,793,091 6,266,494-11,059,585 15% 411,214 1,121,435-1,532,649 9,526,936 Total (A) 7,012,691, ,749, ,000 7,321,324,372 2,867,037, ,320,751 22,033 3,165,335,797 4,155,988,575 AND ITS SUBSIDIARIES CONSOLIDATED REVALUATED ASSETS SCHEDULE AS AT 30TH JUNE 2016 SL PARTICULARS COST RATE DEPRECIATION WRITTEN DOWN AS AT ADDITION ADJUSTMENT AS AT AS AT THIS PERIOD ADJUSTMENTS AS AT VALUE AS AT B. Malek Spinning Mills Ltd., Salek Tex le, Newasia Synthe cs Ltd. & JM Fabrics Ltd. 1 Land and Land Development 2,859,354, ,859,354, ,859,354,760 2 Factory Building 348,907, ,907,426 5% 73,119,234 13,789,410-86,908, ,998,783 3 Plant and Machinery 1,448,886, ,448,886, % 488,899,805 81,075, ,975, ,911,377 4 Generator 157,730, ,730,295 10% 63,222,088 10,236,398-73,458,485 84,271,809 Total (B) 4,814,879, ,814,879, ,241, ,101, ,342,659 4,084,536,729 GRAND TOTAL ( A+B ) 11,827,571, ,749, ,000 12,136,203,760 3,492,278, ,422,284 22,033 3,895,678,456 8,240,525,304 Deprecia on Charges to: Factory Overhead: 390,565,244 Opera ng Expenses: 12,857,040 Tk. 403,422,284 41

43 SHIRAZ KHAN BASAK & CO CHARTERED ACCOUNTANTS (An associate firm of D.N.Gupta & Associates) AUDITOR S REPORT TO THE SHAREHOLDERS OF R.K Tower (Level-10) 86, Bir U am C.R Da a Road (312, Sonargaon Road) Dhaka-1205 Tel: , Fax: Mobile: , , shirazkhanbasak@yahoo.com INTRODUCTION We have audited the accompanying Financial Statements of Malek Spinning Mills Limited, which comprise the Statement of Financial Posi on as at June 30, 2016, and the Statement of Comprehensive Income, Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of significant accoun ng policies and other explanatory informa on. MANAGEMENT S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the prepara on and fair presenta on of these financial statements in accordance with Bangladesh Financial Repor ng Standards (BFRSs), the Companies Act 1994 and other relevant laws and regula ons and for such internal control as management determines is necessary to enable the prepara on 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 Audi ng (BSA).Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about 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 the auditor s judgment, including the assessment, of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the en ty s prepara on and fair presenta on 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 effec veness of the en ty s internal control. An audit also includes evalua ng the appropriateness of accoun ng policies used and the reasonableness of accoun ng es mates made by management as well as evalua ng the presenta on 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 give a true and fair view of the state of the company s affairs as at June 30, 2016, and its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Repor ng Standards (BFRSs) and comply with Companies Act 1994, the Securi es and Exchange Rules 1987 and other applicable laws and regula ons. We also report that: a) We have obtained all the informa on and explana ons which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verifica on 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 examina on of those books; c) The statement of financial posi on and statement of comprehensive income dealt with by the report are in agreement with the books of accounts and returns; d) The expenditure incurred and payments made were for the purpose of the Company s business for the period. Dated: Dhaka, October 19, 2016 SHIRAZ KHAN BASAK & CO. CHARTERED ACCOUNTANTS An associate firm of D.N Gupta & Associates 42

44 Annual Report 2016 STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2016 Notes JUNE'16 JUNE'15 Taka Taka ASSETS : Non-Current Assets: 3,897,265,320 3,982,488,140 Property, Plant and Equipment 1.1 2,230,900,320 2,316,123,140 Investment in Subsidiary Company 2.1 1,666,365,000 1,666,365,000 Current Assets : 2,928,055,935 2,959,886,900 Inventories 3.1 1,354,780,813 1,417,928,634 Accounts Receivable 4.1 1,150,551,231 1,136,946,335 Advances, Deposits and Pre-payments ,615, ,926,877 Cash and Cash Equivalents ,107, ,085,054 TOTAL ASSETS : 6,825,321,255 6,942,375,040 SHAREHOLDER'S EQUITY AND LIABILITIES : Shareholder's Equity : 5,327,440,209 5,387,791,055 Share Capital 7.1 1,936,000,000 1,936,000,000 Share Premium 8.1 1,500,000,000 1,500,000,000 Re-valua on Surplus of Fixed Assets 9.1 1,498,659,595 1,559,543,803 Retained Earnings ,780, ,247,252 Non-Current Liabili es: 289,587, ,871,806 Long Term Loan ,779,384 48,853,970 Deferred Tax Liabili es ,807, ,017,836 Current Liabili es : 1,208,293,863 1,216,712,179 Short Term Loan ,680,907 26,926,889 Current Por on of Long Term Loan ,037,848 27,113,548 Bank Acceptance Liabili es ,360, ,711,562 Creditors and Accruals ,215, ,960,180 TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES : 6,825,321,255 6,942,375,040 Net Assets Value Per Share (NAV) Par Value Tk.10 The annexed notes 1.1 to 26.1 form an integral part of these financial statement. A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 43

45 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30TH JUNE 2016 Notes JUNE'16 JUNE'15 Taka Taka Sales ,587,146,675 2,994,445,635 Cost of Goods Sold 18.1 (2,250,534,349) (2,621,473,160) Gross Profit/(Loss) : 336,612, ,972,475 Opera ng Expenses 19.1 (84,747,294) (76,225,631) Financial Expenses 20.1 (45,142,757) (57,264,445) Opera ng Profit/(Loss) : 206,722, ,482,399 Other Income/(Loss) ,379,495 34,730,375 Net Opera ng Profit/(Loss) : 212,101, ,212,774 Provision for Contribu on to WPPF 22.1 (10,100,084) (13,057,751) Profit/(Loss) before tax : 202,001, ,155,023 Provision for Income tax : (30,032,532) (35,958,298) Current Tax 23.1 (36,242,568) (42,846,587) Deferred Tax ,210,036 6,888,289 Profit/(Loss) a er tax for the Period 171,969, ,196,724 Other Comprehensive Income - - Total Comprehensive Income for the Period 171,969, ,196,724 (Transferred to the Statement of Changes in Equity) Earnings Per Share (EPS) Par Value Tk.10 Number of Shares used to compute EPS 193,600, ,600,000 The annexed notes 1.1 to 26.1 form an integral part of these financial statement A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 44

46 Annual Report 2016 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30TH JUNE 2016 Par culars Share Share Revalua on Surplus Retained Total Capital Premium of Fixed Assets Earnings Balance as at 1st July ,936,000,000 1,500,000,000 1,559,543, ,247,252 5,387,791,055 Net Profit/(Loss) during the year 171,969, ,969,153 Transfer of excess deprecia on of Revalued Assets (60,884,208) 60,884,208 - Declared Cash Dividend for financial year (232,320,000) (232,320,000) As at 30th June ,936,000,000 1,500,000,000 1,498,659, ,780,614 5,327,440,209 FOR THE YEAR ENDED 30TH JUNE 2015 Par culars Share Share Revalua on Surplus Retained Total Capital Premium of Fixed Assets Earnings Balance as at 1st July ,936,000,000 1,500,000,000 1,625,366, ,827,434 5,356,194,331 Net Profit/(Loss) during the year 225,196, ,196,724 Transfer of excess deprecia on of Revalued Assets (65,823,094) 65,823,094 - Declared Cash Dividend for financial year (193,600,000) (193,600,000) As at 30th June ,936,000,000 1,500,000,000 1,559,543, ,247,252 5,387,791,055 A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 45

47 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2016 JUNE'16 JUNE'15 Taka Taka CASH FLOW FROM OPERATING ACTIVITIES : Collec on from Turnover & Accounts Receivable 2,573,541,779 3,009,591,912 Payment for Raw Materials, Indirect Materials and other expenses (2,203,449,711) (2,463,594,333) Other Income/(Loss) 5,379,495 34,766,013 Payment for Opera ng Expenses (82,613,007) (74,342,307) Payment for Financial Expenses (45,142,757) (57,264,445) Payment for Income Tax (15,643,796) (18,642,284) Net Cash provided/(used) by Opera ng Ac vi es 232,072, ,514,555 CASH FLOW FROM INVESTING ACTIVITIES : Acquisi on of Fixed Assets (17,905,857) (32,456,151) Disposal of Fixed Assets - 2,125,000 Net cash used in Inves ng Ac vi es (17,905,857) (30,331,151) CASH FLOW FROM FINANCING ACTIVITIES : Bank Loan Increase/(Decrease) (81,077,175) (159,268,208) Refundable IPO Share Money paid (32,500) (92,507) Dividend Paid (230,033,602) (191,035,331) Net Cash provided/(used) by Financing Ac vi es (311,143,277) (350,396,046) Increase/(Decrease) in Cash and Cash Equivalents (96,977,131) 49,787,358 Cash & Cash Equivalents at 1st July ,085, ,297,696 Cash and Cash Equivalents at 30th June ,107, ,085,054 Net Opera ng Cash Flow Per Share (NOCFPS) Par Value Tk.10 A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary As per our report of same date Dhaka October 19, 2016 SHIRAZ KHAN BASAK & CO Chartered Accountants An associate firm of D.N Gupta & Associates 46

48 Annual Report 2016 NOTES OF FINANCIAL STATEMENT FOR THE PERIOD ENDED 30TH JUNE 2016 Amount in Taka JUNE'16 JUNE' PROPERTY, PLANT AND EQUIPMENT: Tk. 2,230,900,320 COST: Opening Balance 1,948,915,785 1,929,041,689 Addi on during the year 17,905,857 25,101,486 1,966,821,642 1,954,143,175 Sales/Adjustment during the year - 5,227,390 Closing Balance 1,966,821,642 1,948,915,785 Accumulated Deprecia on: Opening Balance 1,319,239,272 1,277,801,983 Deprecia on during the year 42,244,468 44,504,040 Adjustments during the year - 3,066,752 Closing Balance 1,361,483,740 1,319,239,272 Wri en Down Value at cost: 605,337, ,676,513 REVALUATION: Opening Balance 2,148,818,646 2,148,818,646 Addi on of Revaluated Assets - - Total Revaluated Assets 2,148,818,646 2,148,818,646 Accumulated Deprecia on: Opening Balance 462,372, ,548,926 Deprecia on during the year 60,884,208 65,823,094 Closing Balance 523,256, ,372,019 Wri en Down Value of Revaluated Assets: 1,625,562,418 1,686,446,626 Total Wri en Down Value: 2,230,900,320 2,316,123,140 - Alloca on of deprecia on charges for the period has been made in the accounts as follows: i) Factory Overhead 100,994, ,443,810 ii) Administra ve Overhead 2,134,287 1,883,324 Total 103,128, ,327,134 - Land, Building, Plant & Machinery are registered Mortgage (Pari Passu charges among the exis ng lender Bank, Eastern Bank Ltd., HSBC, Dhaka Bank Ltd. & One Bank Ltd.) Details of Fixed Assets and Deprecia on are shown in the Annexure INVESTMENT IN SUBSIDIARY COMPANY : Tk. 1,666,365,000 Salek Tex le Limited (3,900,100 and 825,870 Share of Tk.460 each including Premium Tk.360) 46% 769,910, ,910,000 Newasia Synthe cs Limited (4,964,650 Shares of Tk.100/- each) 30% 496,465, ,465,000 J.M. Fabrics Limited (3,999,900 Shares of Tk.100/- each) 24% 399,990, ,990,000 Total: 100% 1,666,365,000 1,666,365,000 Share holding posi on in Subsidiary Company % of Salek Tex le Ltd., % of Newasia Synthe cs Ltd. & % of J.M Fabrics Ltd. 3.1 INVENTORIES: Tk. 1,354,780,813 Raw Materials (Note: 3.1-A) 501,638, ,302,375 Stock-in-Transit (Note: 3.1-B) 149,656,891 - Work-in-Process (Note: 3.1-C) 42,191,215 50,302,658 Finished Goods (Note: 3.1-D) 572,208, ,292,521 Stores and Accessories (Note: 3.1-E) 89,085,675 78,031,079 Total: 1,354,780,813 1,417,928,634 (i) The inventory coun ng was taken place at the year end in the presence of company management and auditors. (ii) Inventories were hyphothecated to Dhaka Bank Ltd., HSBC Ltd., Eastern Bank Ltd., Trust Bank Ltd. and One Bank Ltd. as security of workings capital loan. 3.1-A RAW MATERIALS : Tk. 501,638,757 Raw Co on USA 3,609,220 Kg 501,638, ,302,375 Total: 501,638, ,302, B STOCK IN TRANSIT : Tk. 149,656,891 Raw Material 149,656,891 - Total: 149,656, C WORK-IN-PROCESS : Tk. 42,191,215 Direct Materials 279,434 Kg 38,838,007 47,550,376 Direct Labour 1,117, ,160 Factory Overhead 2,235,472 1,809,122 Total: 42,191,215 50,302,658 47

49 3.1-D FINISHED GOODS INVENTORY: 2,475,056 Kg 572,208, ,292, E STORES & ACCESSORIES: Tk. 89,085,675 Spare Parts & Accessories 89,085,675 78,031,079 Total: 89,085,675 78,031, ACCOUNTS RECEIVABLE: Tk. 1,150,551,231 1,136,946,335 (i) A/C Receivable occurred in the ordinary course of business. (ii) The A/C Receivable are secured against confirmed Export L/C (Deferred period is 120 days). (iii) Aging of the Receivables: Below 120 Days: Tk. 943,452,009 Above 120 Days: Tk. 207,099,222 (iv)receivable from other company: Tk. 714,339,600 (v) Receivable from related party:- Knit Asia Limited: Tk. 86,306,128 Salek Tex le Ltd.: Tk. 216,890,675 J.M. Fabrics Ltd.: Tk. 133,014, ADVANCES, DEPOSITS & PRE-PAYMENTS: Tk. 314,615,968 Advance against materials, suppliers and others 42,585,539 28,140,244 Advance to Newasia Syntha cs Ltd. 154,100,000 69,500,000 Security Deposit on REB 178, ,875 Security Deposit on Titas Gas T&D Co. 7,038,761 7,038,761 Advance Income Tax (Note-5.1-A) 110,212,793 94,568,997 Security Deposit to CDBL 500, ,000 Total: 314,615, ,926,877 a) All the advances & deposits amount is considered good and recoverable. b) In the opinion of Directors, all current assets, investments, loans and advance have, on realiza on in the ordinary course of business, a value at least equal to the amount at which they are stated in the Financial Posi on. c) There is no amount due from Directors or officers of the Company. d) Advance against materials, supplies and others various party and other Indirect materials procurement. e) Par al advance given to Subsidiary Co. shall be realised in future. f) From the above advance security deposit to Titas Gas, REB and CDBL will be realised a er one year. 5.1-A. ADVANCE INCOME TAX: Opening Balance 94,568,997 75,926,712 Payment/Adjustment for prior year Income - - Last year Balance a er adjustment- 94,568,997 75,926,712 Advance Income Tax paid (Against Export Proceeds) 15,152,319 17,144,004 Advance Income Tax paid (Against Cash Incen ve) 109, ,613 Advance Income Tax paid (Against Vehicle Fitness) 170, ,000 Advance Income Tax paid (Against Interest Income) 211, ,667 Total AIT paid for the year: 15,643,796 18,642,284 Closing Balance 110,212,793 94,568, CASH AND CASH EQUIVALENTS: Tk. 108,107,923 Cash in Hand: 180, ,000 Cash at Banks: AB Bank Ltd.-STD Account: , ,057 BRAC Bank STD A/C: ,975 42,450 BRAC Bank CD A/C: ,239,346 14,228,893 Dhaka Bank Ltd. CD A/C: ,651,390 Dhaka Bank Ltd. STD A/C: ,699,066 22,039,257 Dhaka Bank Ltd. Margin A/C: ,370,521 2,787,893 Eastern Bank Ltd.-Margin A/C: ,056, ,603 Eastern Bank Ltd.-FC A/C: (NRB IPO) 1,233,351 1,233,351 Eastern Bank Ltd.-STD A/C: ,166,467 25,548,215 HSBC Ltd.-Margin A/C: ,677, ,714,761 HSBC Ltd.-R.Q A/C: ,758,952 One Bank Ltd.- Margin A/C: ,313 22,471,078 Shahjalal Islami Bank Ltd.-CD A/C: ,698 14,848 Trust Bank Ltd.-CD A/C: ,088 39,236 Trust Bank Ltd.-Margin A/C ,342 42,069 Sub-total: 107,927, ,905,054 Total: 108,107, ,085,054 a) Cash balance was physically counted at the year ended and Bank balances were reconciled and found in order. b) Export proceeds are realised in the Margin A/C and is u lized for Payment of Deferred L/C Payment for Raw Co on. 48

50 Annual Report SHARE CAPITAL : Tk. 1,936,000,000 AUTHORISED CAPITAL: Tk. 3,000,000,000 3,000,000, ,000,000 Tk. 10/- each ISSUED, SUBSCRIBED AND PAID-UP CAPITAL: Tk. 1,936,000,000 1,936,000,000 19,36,00,000 Ordinary Tk.10/- each issued and paid-up. Share Holding Composi on of Malek Spinning Mills Ltd. as at are as follows: Shareholder's Group No. of Shares held % of Shares No. of Shareholders Sponsors & Directors 83,344, % 6 Government % 0 Ins tu ons 47,395, % 249 Foreign Shareholders 6,922, % 6 General Public 55,936, % Total 193,600, % 19,585 Classifica on of shareholders by holding: Distribu on schedule of each class of equity security se ng out the number of holders and percentage as at Range of Holdings No. of Holders Holdings Percentage Less than 500 shares 4, , % 500 to 5,000 shares 13,722 14,432, % 5,001 to 10,000 shares 637 4,651, % 10,001 to 20,000 shares 354 5,102, % 20,001 to 30,000 shars 131 3,284, % 30,001 to 40,000 shares 75 2,587, % 40,001 to 50,000 shares 47 2,186, % 50,001 to 100,000 shares 74 5,465, % 100,001 to 1,000,000 shares 71 20,230, % Over 1,000,000 shares ,032, % Total 19, ,600, % 8.1 SHARE PREMIUM: 1,500,000,000 1,500,000,000 This represents issuance of 10,000,000 ordinary shares in September 2008 for Tk.25 each including premium of Tk. 15/- each in compliance with The Securi es and Exchange Commission (SEC) consent No.SEC/CI/CPLC (PVT.)-95/06/337 dated on and further Placement issuance of 50,000,000 ordinary shares October 2009 for Tk.25/- each including premium of Tk.15 each in compliance with The Securi es and Exchange Commission (SEC) consent No. SEC/CI/CPLC(PVT.)-95/ dated on June 03, 2009 and further issuance of IPO of 4,00,00,000 ordinary shares on July 2010 for Tk. 25/- each including Premium of Tk. 15/- each in compliance with the Securi es and Exchange Commission (SEC) consent No. SEC/CI/IPO-118/2010/462 dated April 15, RE-VALUATION SURPLUS OF FIXED ASSETS: Tk.1,498,659,595 Opening Balance 1,559,543,803 1,625,366,896 Addi on of Revaluated Assets - - Less: Transfer to Retained Earnings of excess deprecia on 60,884,208 65,823,094 Wri en Down Value: 1,498,659,595 1,559,543,803 Details of Re-valua on Surplus of Fixed Assets is given in the Annexure RETAINED EARINGS: Tk. 392,780,614 Opening Balance 392,247, ,827,434 Add: Net Profit/(Loss) for the year 171,969, ,196, ,216, ,024,159 Add: Transfer of excess deprecia on of revaluated assets 60,884,208 65,823,094 Less: Declared Cash Dividend 232,320, ,600,000 Less: Declared Stock Dividend ,780, ,247, LONG TERM LOAN: Tk. 6,779,384 Eastern Bank Limited 21,817,232 75,967,518 Total 21,817,232 75,967,518 Less: Current Por on of Long Term Loan (Note-14.1) 15,037,848 27,113,548 Total Long Term Loan: 6,779,384 48,853, DEFERRED TAX LIABILITIES: Tk. 282,807,800 Opening Balance 289,017, ,906,125 Add: Provision for the year (6,210,036) (6,888,289) Total Liabili es: 282,807, ,017,836 49

51 Deferred Tax Calcula on: Par culars Accounts Base (WDV) Tax Base (WDV) Excess/(Short) value Wri en Down Value of Fixed Assets at cost 605,337, ,514, ,822,912 WDV of Revalua on Surplus of Fixed Assets 1,625,562,418-1,625,562,418 Total 2,230,900, ,514,990 1,885,385,330 Deferred Tax 15% 282,807, SHORT TERM LOAN : Tk. 89,680,907 Bank Overdra : Eastern Bank Ltd A/C:180 & ,543,972 4,976,473 Dhaka Bank Ltd OD A/C: ,246,703 - One Bank Ltd OD A/C: ,460,652 4,158,904 HSBC OD A/C: ,429,581 17,791,511 Total: 89,680,907 26,926,889 The above Import Loan and Overdra loans are secured against hypotheca on of Stocks and Book Debts CURRENT PORTION OF LONG TERM LOAN: Tk. 15,037,848 Eastern Bank Limited 15,037,848 27,113,548 Total: 15,037,848 27,113, BANK ACCEPTANCE LIABILITIES: 797,360,006 Raw Co on: Eastern Bank Limited 303,707, ,070,913 Dhaka Bank Limited 76,435, ,258,220 One Bank Ltd. 30,795,059 - HSBC Limited 378,977, ,666,290 Machinery: 789,915, ,995,422 Dhaka Bank Limited - 3,054,440 Eastern Bank Limited 7,444,111 7,661,700 7,444,111 10,716,140 Total: 797,360, ,711,562 Acceptance liability represents the deferred payment of L/C for Imported Raw Materials for the period of 180 Days CREDITORS AND ACCRUALS: Tk.306,215,102 Gas Bill Payable 10,161,681 4,614,918 Electricity Bill Payable - 114,084 Audit Fees Payable 115,000 86,250 Office Rent Payable - 98,800 Salary & Wages Payable - 15,027,013 Tax Deduc on at Source Payable 1,681, ,434 Vat Deduc on at Source Payable 260,752 39,701 Income Tax Payable (Note:16.1-A) 135,016,245 98,773,677 Contribu on to WPPF Payable (Note: 16.1-D) 105,155,173 95,055,088 Directors Remunera on Payable - 395,146 Payable for Goods Supplies & Others 8,082,256 12,422,284 Dividend Payable (Note-16.1-C) 32,826,948 30,540,550 Refundable IPO Share money (Note-16.1-B) 12,915,735 12,948,235 Total: 306,215, ,960,180 a) Payable for Goods Supplies and others represents regular suppliers of packing materials, ball-bearing, belts, fuel & lubricants, sta onery items and others. b) Factory Salary and Wages payable for the month of 30th June A. INCOME TAX PAYABLE: Opening Balance 98,773,677 55,927,090 Provision for the year (Current Tax): (Note-23.1) 36,242,568 42,846, ,016,245 98,773,677 Total Payment/Adjustment for prior year income: - - Total Payable- 135,016,245 98,773, B. REFUNDABLE IPO SHARE MONEY: Eastern Bank FC A/C 1,233,351 1,233,351 Eastern Bank STD A/C 11,682,385 11,714,885 Total- 12,915,735 12,948, C. DIVIDEND PAYABLE: Brac Bank 10,215,605 10,226,255 Dhaka Bank 22,611,342 20,314,295 Total- 32,826,948 30,540,550 50

52 Annual Report D. CONTRIBUTION TO WPPF PAYABLE: Opening Balance 95,055,088 81,997,337 Add: Provision for the year 10,100,084 13,057,751 Less: Payment - - Closing Balance 105,155,173 95,055,088 **Provision for contribu on to WPPF was made as per Sec on-234 of Labour Law-2013 but no disbursement was made in the part. The due amount shall be disbursed within the next financial year SALES: Tk. 2,587,146,675 Export Sales 2,587,146,675 2,994,445, COST OF GOODS SOLD: Tk. 2,250,534,349 Raw Material Consumed (Note:18.1-A) 1,725,339,951 2,129,067,111 Direct Expenses (Note:18.1-B) 116,392, ,113,667 Factory Overhead (Note:18.1-C) 344,606, ,006,633 Total Manufacturing Cost 2,186,338,660 2,561,187,411 Add: Work-in-Process- Opening 50,302,658 51,406,004 Cost of Goods available for use 2,236,641,319 2,612,593,414 Less: Work-in-Process- Closing 42,191,215 50,302,658 Cost of Produc on 2,194,450,104 2,562,290,756 Add: Finished Goods- Opening 628,292, ,474,926 Cost of Goods Available for Sales 2,822,742,625 3,249,765,682 Less: Finished Goods- Closing 572,208, ,292,521 Cost of Goods Sold: 2,250,534,349 2,621,473, (A) RAW MATERIALS CONSUMED: 1,725,339,951 Opening Inventory Raw Materials 661,302, ,627,561 Add: Purchase during the year 1,565,676,332 2,069,741,925 Less: Closing Inventory of Raw Materials 501,638, ,302,375 Raw Materials Consumed 1,725,339,951 2,129,067, (B) DIRECT EXPENSES: TK. 116,392,101 Direct Labour/Wages 111,165, ,683,877 Over me Wages 5,226,194 2,429,790 Total 116,392, ,113, (C) FACTORY OVERHEAD: Tk.344,606,608 Factory Salary and Allowances 32,506,818 30,100,246 Festval Bonus Factory 6,759,864 5,069,421 Electricity Charges 2,229,728 1,374,019 Gas Charges 112,233,503 57,622,802 Repairs & Maintenance 22,583,584 28,791,948 Packing Materials 28,295,187 28,061,675 Fuel,Oil & Lubricant 9,798,538 10,911,857 Insurance Premium 1,447,100 1,927,274 Insurance Premium (Group) 32,940 32,940 Stores & Accessories consump. (Note:18.1-C-i) 22,891,800 47,086,900 Entertainment Factory 561, ,281 Telephone, Mobile & Fax 333, ,755 Sta onery Charges 538, ,328 Prin ng Charges 151, ,644 Other Carrying Charges 110,240 70,740 Other Factory Office Expenses 10,225 30,646 Vehicles Maintenance 2,093,371 1,938,377 Conveyances Factory 53,966 8,955 House Rent for Worker Shed 343, ,900 Medical Expenses 119,316 97,632 Uniform & Leverage 64,650 - Miscellaneous Exp. 453, ,482 Deprecia on 100,994, ,443,810 Total Factory Overhead- 344,606, ,006, ( C)-i STORES & ACCESSORIES CONSUMED: Tk.22,891,800 Opening Balance 78,031,079 98,284,256 Add: Purchase during the year 33,946,396 26,833,724 Less: Closing Balance 89,085,675 78,031,079 Total Consumed- 22,891,800 47,086,900 51

53 19.1 OPERATING EXPENSES: Tk. 84,747,294 Salaries & Allowances 35,298,734 34,696,057 Fes val Bonus 3,524,273 2,430,262 Director's Remunera on 6,547,500 5,820,000 Fees, Forms & Others 5,007,260 2,043,573 Audit Fees 115,000 86,250 Legal Fees - 6,620 Prin ng & Sta onery 813, ,242 Telephone,Mobile & Internet Expenses 1,775,882 1,473,380 Postage & Stamp 88, ,210 Vehicle Maintenance 5,384,759 5,066,618 Miscellaneous Expenses 2,961,715 4,501,767 Office Rent 1,578,634 1,414,666 Rate & Taxes 193, ,518 Carriage Outwards, Selling & Distribu on exp. 4,698,840 4,158,030 Entertainment 888, ,593 Fuel for Head Office Generator 53, ,000 Adver sement & Publicity Expenses 674, ,942 AGM Expenses 1,779,026 2,192,494 Security Charges 470, ,400 Gardening Expenses - 12,101 Travelling & Conveyance 2,211,314 2,472,768 Uniform / Leveries Security 25, Repairs & Maintenance 1,355,395 1,148,098 Business Development Exp. 7,091,102 3,279,068 Credit Ra ng Charges 74,750 74,750 Deprecia on 2,134,287 1,883,324 Total Opera ng expenses: 84,747,294 76,225, FINANCIAL EXPENSES: Tk.45,142,757 EASTERN BANK LTD.: Interest on Long Term Loan 8,104,286 11,369,880 Interest on Overdra 1,824, ,988 Bank Charges & Commission 4,081,426 7,307,969 Export L/C Nego a on Commission 3,502,383 - Interest on Bill Discount 6,021,503 3,908,140 Total 23,533,886 23,443,977 HSBC LTD.: Interest on Long Term Loan - 4,914,616 Bank Charges & Commission 8,515,904 6,597,918 Export L/C Nego a on Commission 600,861 - Interest on Overdra 32,895 45,008 Interest on Bill Discount 3,837,362 8,258,912 Total 12,987,021 19,816,455 DHAKA BANK LTD.: Interest on Long Term Loan 3,627 - Interest on Overdra 342,081 69,462 Bank Charges and Commission 584,513 4,576,721 Export L/C Nego a on Commission 3,268, ,272 Interest on Bill Discount 3,820,895 2,215,853 Total 8,020,063 7,429,308 ONE BANK LTD.: Interest on Overdra 503, ,332 Bank Charges & Commission 25, ,452 Export L/C Nego a on Commission 33,204 - Total 562, ,783 TRUST BANK LTD.: Interest on Long Term Loan - 3,016,228 Bank Charges and Commission 26,850 27,555 Interest on Overdra - 3,174,790 Total 26,850 6,218,573 SHAHJALAL ISLAMI BANK LTD.: Bank Charge and Commission 1,150 2,300 Total 1,150 2,300 52

54 Annual Report 2016 AB BANK LTD. Bank Charges and Commission 9,985 1,899 Total 9,985 1,899 BRAC BANK LTD. Bank Charges and Commission 1,530 11,150 Total 1,530 11,150 Total Financial Expenses- 45,142,757 57,264, OTHER INCOME/(LOSS): 5,379,495 CASH INCENTIVE: 3,662,137 30,658,422 OTHER INCOME/(LOSS): Interest Received from BRAC Bank Ltd., STD A/C ( ) 509, ,534 Interest Received from Dhaka Bank Ltd., STD A/C ( ) 909,049 1,188,249 Interest Received from AB Bank Ltd., STD A/C ( ) 7,746 7,935 Interest Received from BRAC Bank Ltd., STD A/C ( ) 794 1,345 Interest Received from Eastern Bank Ltd., STD A/C ( ) 433,549 1,076,586 1,860,870 3,257,648 Interest Received from Overdue Bill - - Foreign currency exchange Gain/(Loss) (143,512) 849,943 Gain/(Loss) on Sale of Assets - (35,638) (143,512) 814,305 Other Income/(Loss) 1,717,358 4,071,953 Total Other Income/(Loss): 5,379,495 34,730, (A). GAIN/(LOSS) ON SALE OF ASSETS: Sale Price - 2,125,000 Less: Wri en down value of Motor Vehicle: - 2,160,638 Gain/(Loss) on Sale of Motor Vehicle - (35,638) 22.1 PROVISION FOR WORKER'S PROFIT PARTICIPATION FUND: Provision for Contribu on to WPPF 10,100,084 13,057,751 10,100,084 13,057,751 This represents 5% of net profit before tax of the company and is payable to workers as per provision defined in the Labour Law INCOME TAX PROVISION (CURRENT TAX) : Tk. 36,242,568 Income Tax Tax i) On Opera ng Income 15% 238,022,431 35,703,365 40,851,986 ii) On Cash Incen ve 3,662, , ,613 iii) On Other Income 25% 1,717, ,339 1,017,988 Total 243,401,926 36,242,568 42,846,587 Taxable Opera ng Income Calcula on: Net Opera ng Profit before Tax 196,622,191 Add: Accoun ng Deprecia on 103,128,676 Less: Tax Deprecia on 61,728,436 Taxable Opera ng Income: 238,022, INCOME TAX PROVISION (DEFERRED TAX): Tk. (6,210,036) (6,888,289) 25.1 BASIC EARNINGS PER SHARE (EPS):Tk (a) Net Profit/(Loss) a er tax for the year 171,969, ,196,724 (b) Number of total Share 193,600, ,600,000 Basic Earnings per Share (a/b): RELATED PARTY TRANSACTION: Related Party Nature of Rela onship Nature of Transac on Transac on Amount Balance as at Knit Asia Limited Common Director Receivable 86,306,128 Sales 663,587,940 Salek Tex le Limited Subsidiary Investment in equity 769,910,000 Receivable 216,890,675 Sales 40,683,616 Newasia Synthe cs Limited Subsidiary Investment in equity 496,465,000 J.M. Fabrics Limited Subsidiary Investment in equity 399,990,000 Receivable 133,014,828 Sales 57,454,028 Directors Director Remunera on 6,547,500 Payable - 53

55 FIXED ASSETS SCHEDULE AS AT 30TH JUNE 2016 (A)- PARTICULARS ANNEXURE : 1.1 COST RATE DEPRECIATION WRITTEN DOWN AS AT ADDITION ADJUSTMENT AS AT AS AT THIS YEAR ADJUSTMENT AS AT VALUE AS AT Land and Land Development 84,647,187-84,647,187 0% ,647,187 2 Factory Building 313,690, ,690,859 5% 229,979,528 4,185, ,165,095 79,525,764 3 Plant and Machinery 1,324,782,415 13,324,704 1,338,107, % 929,218,551 30,180, ,398, ,708,185 4 Electrical Installa on 47,779,426-47,779,426 15% 39,094,381 1,302,757 40,397,138 7,382,288 5 Tubewell and Water Pump 2,463,406-2,463,406 15% 2,175,356 43,207 2,218, ,842 6 Furniture and Fixtures 3,340,478-3,340,478 10% 2,047, ,283 2,176,929 1,163,549 7 Office Equipments 11,200, ,153 11,771,240 15% 7,211, ,544 7,826,703 3,944,537 8 Gas Line Installa on 10,618,384-10,618,384 15% 7,234, ,526 7,742,402 2,875,982 9 Loose Tools and Equipment 1,254,088-1,254,088 15% 1,186,320 10,165 1,196,485 57, Motor Vehicle 21,652,992 4,010,000 25,662,992 15% 12,488,503 1,374,673 13,863,176 11,799, Telephone (PABX) Installa on 490, ,000 15% 399,787 13, ,319 76, Crockaries and Cutlaries 50,777-50,777 15% 42,415 1,254 43,669 7, Generator 126,692, ,692,586 10% 87,949,318 3,874,327 91,823,645 34,868, Fire Installa on 253, ,100 15% 211,432 6, ,682 35,418 Total (A) 1,948,915,785 17,905,857-1,966,821,642 1,319,239,272 42,244,468-1,361,483, ,337,902 REVALUATED FIXED ASSETS SCHEDULE AS AT 30TH JUNE 2016 PARTICULARS COST RATE DEPRECIATION WRITTEN DOWN AS AT ADDITION ADJUSTMENT AS AT AS AT THIS YEAR ADJUSTMENT AS AT VALUE AS AT (B)- REVALUATION OF FIXED ASSETS : 1 Land and Land Development 846,018, ,018, ,018,824 2 Factory Building 219,355, ,355,567 5% 54,643,811 8,235,588-62,879, ,476,169 3 Plant and Machinery 951,297, ,297, % 354,378,199 44,768, ,147, ,150,424 4 Generator 132,146, ,146,678 10% 53,350,009 7,879,667-61,229,676 70,917,001 Total (B) 2,148,818, ,148,818, ,372,019 60,884, ,256,227 1,625,562,418 GRAND TOTAL ( A+B) 4,097,734,431 17,905,857-4,115,640,287 1,781,611, ,128,676-1,884,739,967 2,230,900,320 Deprecia on Charged to: Opera ng Expenses: 2,134,287 Factory Overhead: 100,994,390 Tk. 103,128,676 54

56 Annual Report 2016 SALEK TEXTILE LIMITED DIRECTORS REPORT TO THE SHAREHOLDERS FOR THE YEAR ENDED 30TH JUNE, 2016 Dear Shareholders, In terms of provisions of sec on 184 of the Companies Act 1994 and IAS (Interna onal Accoun ng Standards) codes as adopted by the Ins tute of Chartered Accountants of Bangladesh (ICAB), the Board of Directors is pleased to submit its Report to the Shareholders together with Audited Accounts and Auditors Report thereon, containing Statement of Financial Posi on, Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year ended 30 June BACKGROUND: The Company was incorporated with RJSC on 9th day of September 2007 as a Private Limited Company. The Authorized Share Capital of the company was increased from Tk.500,000, divided into 5,000,000 ordinary shares of Tk each to Tk.3,000,000, divided into 30,000,000 ordinary shares of Tk each on 14th August, Subsequently the par value of share has been changed from Tk per share to Tk per share. The paid-up capital as on 30th June, 2016 stood at Tk.482,608, consis ng of 48,260,870 ordinary shares of Tk each. The Company obtained Consent for raising of Paid-up Capital from Bangladesh Securi es and Exchange Commission (BSEC) vide their le er No. BSEC/CI/CPLC(Pvt)-333/2011/446 dated June 24, To comply the condi on No. 9 of the Consent Le er of Bangladesh Securi es and Exchange Commission (BSEC) dated June 24, 2014 and to comply the provisions of the Commission s No fica on No.SEC/CMRRCD/ /Admin/03-44 dated published in the Bangladesh Gaze e dated though the paid up capital of the company exceeds Tk.400,000, (Forty crore) the status of the Company has been converted from Private Limited Company to Public Limited Company on 23rd August, 2014 and the face value of per share of the Company also changed from Tk each to Tk each per share. The Company is a subsidiary company of Malek Spinning Mills Limited which holds % share & other sponsors of Malek Spinning Mills Ltd. hold 2.08% share of the company as on 30th June As a subsidiary of Malek Spinning Mills Limited and to comply with the Corporate Governance Guidelines of the Bangladesh Securi es and Exchange Commission (BSEC) No fica on No. SEC/CMRRCD/ /134/Admin/44 dated 07 August 2012 the holding of posi ons of Chairman and Managing Director of the company has been separated. Mr. A.F.M. Zubairhas been elected as Chairman by the Board of Directors and Mr. A. Ma n Chowdhury has been retained as themanaging Director of the company. Mr. M. Sekander Ali, Independent Director of Malek Spinning Mills Limited has been appointed as Director (Non Shareholding). COMMERCIAL OPERATION: Salek Tex le Limited started its commercial opera on from 1st day of April The produc on capacity of the project is14,621,000 kgs of yarn,9,600,000 yards fabric and 3,600,000 Pcs RMG products per annum. The Company manufactures open end yarn for denim and home tex le markets and denim RMG. COMPANY S OPERATIONS: The posi on of its opera ng performance for the year ended 30th June, 2016compared to previous year is given below: Sl. No. Descrip on (Kg.) (Kg.) 01 Produc on capacity (Yarn) 14,621,000 14,621, Produc on capacity (Fabric) yds 9,600,000 9,600, Produc on capacity (RMG) Pcs 3,600,000 1,800, Actual Produc on (Yarn) 11,211,069 10,888, Actual Produc on (Fabric) yds 7,346,620 5,980, Actual Produc on (RMG) Pcs *5,129,592 1,642, Capacity U liza on (Yarn) 76.68% 74.47% 08 Capacity U liza on (Fabric) 76.53% 62.30% 09 Capacity U liza on (RMG) Pcs % 91.27% 10 Quan ty Sold (kg) Yarn 10,546,044 11,336, Quan ty Sold (yds) Fabric 6,709,324 5,980,426 55

57 12 Quan ty Sold (RMG) Pcs 4,862,836 1,642, Sales Revenue (Tk.) Yarn 1,508,833,697 1,843,211, Sales Revenue (Tk.) Fabric 1,025,027, ,824, Sales Revenue (Tk.) RMG 2,051,063, ,664, Average selling price (Tk.) Yarn Average selling price (Tk.) Fab Average selling price (Tk.) RMG Actual produc on in RMG unit included sub contract produc on. CAPITAL EXPENDITURES: The following Capital Expenditure was incurred during the last two years: Descrip on (Tk.) (Tk.) Land and Land Development 8,016,150 83,964 Factory Building 18,851,342 4,263,051 Plant and Machinery 138,848, ,555,578 Motor Vehicle ,634,000 Office Equipments 4,107,640 4,178,994 Furniture & Fixtures 2,493,703 7,154,100 Electrical Installa on 13,617,472 6,943,147 Gas Line Installa on 2,000, Fire Installa on 3,075,888 4,539,991 Tube well and Water Pump 74, Total 191,084, ,352,825 SHAREHOLDING: The Shareholding Posi on of different shareholders as at 30th June 2016 as follows: Name of Shareholders No. of share hold % of Holding Malek Spinning Mills Limited 47,259,700 shares % Mr. A. Ma n Chowdhury 489,780 shares % Dr. Shamim Ma n Chowdhury 339,340 shares % Mr. A.F.M. Zubair 169,830 shares % Ms. Saima Ma n Chowdhury 410 shares % Mr. Azizur R. Chowdhury 510 shares % Mr. Moshiur Rahman 650 shares % Mr. Shyan Zubair 650 shares % Total 48,260,870 shares 100% FINANCIAL RESULTS: The company s opera ng financial results, as compared to the previous year are summarized as follows: Tk. in million Descrip on Sales Cost of goods sold Gross profit Opera ng expenses Financial Expenses Opera ng profit Provision for WPPF Provision for Income Tax Net profit Gross Margin Ra o 10.92% 12.63% Net Margin Ra o 2.13% 3.95% Earnings per share (Tk.)

58 Annual Report 2016 APPROPRIATION OF PROFIT: The Board of Directors recommended for appropria on of profit as follows: Net Profit a er tax provision Tk. 87,742,152 Add: Balance of profit B/F from previous year Tk. 799,017,906 Add: Transfer of excess deprecia on of revalued assets Tk. 41,541,799 Total net free surplus available for appropria on Tk. 928,301,857 Appropria on Proposed: Proposed Dividend Nil Balance carried forward to Balance Sheet as Retained Earnings Tk. 928,301,857 DECLARATION OF DIVIDEND: In order to strengthen the financial posi on of the company no dividend be and is recommended by the Board for the year ended 30th June, APPOINTMENT OF DIRECTORS: Rota on of Directors: Pursuant to Ar cle 117 of the Ar cles of Associa on of the Company Ms. Saima Ma n Chowdhury, Director and Mr. Shyan- Zubair, Director will re re by rota on and being eligible as per Ar cle 119 of the Ar cles of Associa on of the Company they offered themselves for re-elec on. APPOINTMENT OF AUDITORS: The exis ng Auditor, M/s Malek Siddiqui Wali, Chartered Accountants would re re at the 9th Annual General Mee ng and being eligible, they offered themselves for re-appointment as Auditors for the year with re-fixa on of their remunera on. BOARD MEETINGS: During the period , Seven (07) Board mee ngs were held. The a endance record of the Directors is as follows: Name of Directors Posi on Mee ng held A ended Mr. A.F.M. Zubair Chairman Mr. A. Ma n Chowdhury Managing Director Dr. Shamim Ma n Chowdhury Director Mr. Azizur R. Chowdhury Director Ms. Saima Ma n Chowdhury Director Mr. Shyan Zubair Director Mr. Moshiur Rahman Director (Nominated by Malek Spinning Mills Ltd.) Mr. M. Sekander Ali Independent Director (Non Shareholding) ACKNOWLEDGEMENT: The Directors are pleased to record with apprecia on and gra tude the co-opera on and support provided by Shareholders, Customers, Bankers, Suppliers, Workers and Employees of the company without whose ac ve support the result would not have been possible. Looking forward for a bright future for all of us. On behalf of the Board of Directors, A.F.M. Zubair Chairman 57

59 Malek Siddiqui Wali PHONE: OFF : CHARTERED ACCOUNTANTS PABX: , Partners: Md. Waliullah, FCA FAX: Mr. Swadesh Ranjan Saha, FCA wali@satcombd.com Md. Habibur Rahman Sarker, FCA 9-G, Mo jheel C/A Mr. Anjan Mallik, FCA Dhaka-1000, Bangladesh AUDITORS REPORT to the shareholders of Salek Tex le Limited We have audited the accompanying Financial Statements of Salek Tex le Limited which comprises Statement of Financial Posi on as at 30th June 2016 and the related Statement of Profit or Loss and other Comprehensive Income, Statement of Cash Flows, Statement of Changes in Equity and Notes for the year then ended, and a summary of significant accoun ng policies and other explanatory notes. Management s Responsibility for the Financial Statements: The Management is responsible for the prepara on and fair presenta on of these financial statements in accordance with Bangladesh Accoun ng Standard(BAS)/Bangladesh Financial Repor ng Standards (BFRS), the companies Act 1994, Bangladesh Securi es Exchanges Commission Rules 1987 and other applicable laws and regula on and for such internal control as management determines is necessary to enable the prepara on of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility: Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Audi ng (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance where the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments the auditor consider internal control relevant to the en ty s prepara on and fair presenta on of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing and opinion on the effec veness of the en ty s internal control. An audit also includes evalua on the appropriateness of accoun ng policies used and the reasonableness of accoun ng es mates made by management, as well as evalua ng the overall presenta on 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 prepared in accordance with Bangladesh Accoun ng Standard/Bangladesh Financial Repor ng Standards (BFRS), give a true and fair view of the state of the company s affairs as of 30th June 2016 and of the results of its opera ons and its cash flows for the period then ended and comply with the Companies Act 1994, relevant schedule of Bangladesh Securi es Exchanges Commission Rules 1987 and other applicable laws and regula ons. We also report that: a) We have obtained all the informa on and explana ons which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verifica on thereof; b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examina on of those books; c) The Company s Statement of Financial Posi on and Statement of Profit or Loss and Other Comprehensive Income dealt with by the report are in agreement with the books of accounts; d) The expenditures incurred and payments made were for the purpose of the company s business. Dated: Dhaka Malek Siddiqui Wali 19 October, 2016 Chartered Accountants 58

60 Annual Report 2016 SALEK TEXTILE LIMITED STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2016 As at 30 June 2016 As at 30 June 2015 Par culars Taka Taka Assets : Non-Current Assets: Property, Plant and Equipment 2,615,351,359 2,616,061,524 Capital Work-in-Progress 59,157,000 89,169,500 Goodwill 168,600, ,600,020 2,843,108,379 2,873,831,044 Current Assets : Inventories 1,698,893,133 1,173,902,397 Advance, Deposit and Pre-Payments 220,693, ,701,637 Accounts Rceivable 1,570,423,304 1,504,486,243 Cash and Cash Equivalents 95,910, ,620,694 3,585,919,914 3,016,710,971 Total Asssets : 6,429,028,293 5,890,542,015 Equity & Liabili es: Equity : Share Capital 482,608, ,608,700 Share Premium 601,754, ,754,814 Re-valua on Surplus of Fixed Assets 410,239, ,781,759 Tax Holiday Reserve 215,491, ,491,736 Retained Earnings 928,301, ,017,906 2,638,397,067 2,550,654,915 Non-Current Liabili es: Long Term Loan 958,622,517 1,131,100,754 Deferred Tax Liabili es 141,473, ,704,669 1,100,095,917 1,278,805,423 Current Liabili es : Short Term Loan 177,151,515 53,434,552 Current Por on of Long Term Loan 336,358, ,610,395 Bank Acceptance Liabili es 1,485,796,857 1,006,789,322 Creditors and Accruals 691,227, ,247,408 2,690,535,309 2,061,081,677 Total Shareholders Equity & Liabili es: : 6,429,028,293 5,890,542,015 Net Assets Value Per Share (NAV) These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Date: Dhaka Malek Siddiqui Wali October 19, 2016 Chartered Accountants. 59

61 SALEK TEXTILE LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 For the Year For the Year ended June ended June 30, , 2015 Par culars Rotor Unit Fabrics Unit RMG Unit Total Total Taka Taka Taka Taka Taka Sales 1,508,833,697 1,025,027,041 2,051,063,017 4,123,014,573 2,977,370,517 Cost of Goods Sold (1,366,740,268) (874,208,235) (1,893,558,830) (3,672,598,151) (2,601,447,081) Gross Profit/(Loss) : 142,093, ,818, ,504, ,416, ,923,436 Opera ng Expenses (21,194,050) (32,195,442) (59,881,552) (113,271,045) (50,710,392) Financial Expenses (84,031,225) (106,660,065) (37,372,734) (228,064,024) (210,633,680) Opera ng Profit/(Loss) : 36,868,155 11,963,298 60,249, ,081, ,579,364 Other Income/(Loss) (163,705) 3,294,342 (420,530) 2,710,107 28,123,738 Net Opera ng Profit/(Loss) : 36,704,450 15,257,640 59,829, ,791, ,703,102 Provision for Contribu on to WPPF (1,747,831) (726,554) (2,849,018) (5,323,403) (6,795,386) Profit/(Loss) before Tax : 34,956,619 14,531,086 56,980, ,468, ,907,716 Provision for Income Tax : (5,268,049) (1,977,681) (11,480,177) (18,725,906) (18,343,176) Current Tax (9,124,639) (4,352,360) (11,480,177) (24,957,176) (25,247,551) Deferred Tax 3,856,591 2,374,679-6,231,270 6,904,375 Net Profit/(Loss) a er tax 29,688,570 12,553,406 45,500,176 87,742, ,564,540 Other Comprehensive Income Total comprehensive income 29,688,570 12,553,406 45,500,176 87,742, ,564,540 Earnings Per Share (EPS) Par Value Tk.10 Number of Shares used to compute EPS 48,260,870 48,260,870 These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by. A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Date: Dhaka October 19, 2016 Malek Siddiqui Wali Chartered Accountants 60

62 Annual Report 2016 SALEK TEXTILE LIMITED Statement Of Changes In Equity FOR THE YEAR ENDED 30 JUNE 2016 Par culars Share Capital Share Tax holiday Revalua on Retained Total Premium Reserve Surplus of Earnings Fixed Assets Balance as at 1st July ,608, ,754, ,491, ,781, ,017,906 2,550,654,915 Net Profit/(Loss) during the period 87,742,152 87,742,152 Transfer of excess deprecia on of Revalued Assets (41,541,799) 41,541,799 - As at 30th June ,608, ,754, ,491, ,239, ,301,857 2,638,397,067 SALEK TEXTILE LIMITED Statement of Changes in Equity For the Year Ended 30 June 2015 Par culars Share Capital Share Tax holiday Revalua on Retained Total Premium Reserve Surplus of Earnings Fixed Assets Balance as at 1st July ,608, ,754, ,491, ,810, ,424,199 2,433,090,375 Net Profit/(Loss) during this year 117,564, ,564,540 Transfer of excess deprecia on of Revalued Assets (46,029,167) 46,029,167 - As at 30th June ,608, ,754, ,491, ,781, ,017,906 2,550,654,915 These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by. A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Date: Dhaka October 19, 2016 Malek Siddiqui Wali Chartered Accountants 61

63 SALEK TEXTILE LIMITED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30 JUNE 2016 For the Year ended For the Year ended June 30, 2016 June 30, 2015 Par culars Taka Taka Cash Flow From Opera ng Ac vi es Collec on from Turnover & Bills Receivable 4,057,077,512 3,005,879,934 Payment for Raw Materials,Indirect Materials and other expenses (3,504,104,382) (2,587,966,355) Other Income/(Loss) 2,710,107 28,103,488 Payment for Opera ng Expenses (106,955,547) (45,723,488) Payment of Financial Expenses (228,064,024) (210,633,680) Payment for Income Tax (28,028,624) (16,750,987) Net Cash provided/(used) by Opera ng Ac vi es 192,635, ,908,913 Cash Flow From Inves ng Ac vi es: Acquisa on of Fixed Assets (271,332,944) (53,157,110) Aquisi on of Capital work in progress - (89,169,500) Disposal of Fixed Assets - 2,175,000 Net cash used in Inves ng Ac vi es (271,332,944) (140,151,610) Cash Flow From Financing Ac vi es: Bank Loan Increase/(Decrease) (13,012,703) 15,936,832 Advance received from Malek Spinning Mills Ltd. - 93,380,440 Net cash provided/(used) by Financing Ac vi es (13,012,703) 109,317,271 Increase/(Decrease) in Cash and Cash Equivalents (91,710,605) 142,074,574 Opening Cash and Cash Equivalents 187,620,694 45,546,120 Closing Cash and Cash Equivalents 95,910, ,620,694 Net Opera ng Cash Flow Per Share (NOCFPS) Par Value Tk.10 These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by. A.F.M. Zubair A. Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Date: Dhaka October 19, 2016 Malek Siddiqui Wali Chartered Accountants 62

64 Annual Report 2016 NEWASIA SYNTHETICS LIMITED DIRECTORS REPORT TO THE SHAREHOLDERS FOR THE YEAR ENDED 30TH JUNE, 2016 Dear Shareholders, The directors are pleased to present their report on the ac vi es of the company together with the Audited Accounts and Auditors Report thereon containing Statement of Financial Posi on, Statement of Profit or Loss and other Comprehensive Income,Statement of Changes in Equity and Statement of Cash Flows for the year ended 30 June REFERRAL: In terms of the provisions of sec on 184 of the Companies Act 1994 and IAS (Interna onal Accoun ng Standards) codes as adopted by the Ins tute of Chartered Accountants of Bangladesh (ICAB), it is the pleasure of the Board of Directors to submit its report to the Shareholders for the year ended 30 June 2016 in the following paragraphs: BACKGROUND: The Company was incorporated with RJSC on 30th day of July 2008 as a Private Limited Company and subsequently on October 24, 2009 it has been converted into a Public Limited Company. The Authorized Share Capital of the company has also been increased from Tk. 500,000, to Tk.5,000,000, divided into 50,000,000 ordinary shares of Tk each. The paid-up capital as on 30th June, 2016 stood at Tk.500,000, consis ng of 5,000,000 ordinary shares of Tk each. The paid up capital of the company has been raised a er receiving capital raising consent from Bangladesh Securi es and Exchange Commission (BSEC) vide their le er No. SEC/CI/CPLC-442/2013/2903 dated December 19, The Company is a subsidiary company of Malek Spinning Mills Limited which holds % share & other sponsors of Malek Spinning Mills Ltd. hold 0.707% share of the company. As a subsidiary of Malek Spinning Mills Limited and to comply the Corporate Governance Guidelines of Bangladesh Securi es and Exchange Commission (BSEC) No fica on No. SEC/CMRRCD/ /134/Admin/44 dated 07 August 2012 the Chairman and Managing Director of the company has been separated. Mr. M. Sekander Ali, Independent Director of Malek Spinning Mills Limited has been appointed as Director (Non Shareholding). COMPANY OPERATION AND FINANCIAL RESULTS: The following capital expenditure was incurred in the year & Descrip on (Tk.) (Tk.) Land and Land Development 27,250,210 60,377,513 Total 27,250,210 60,377,513 IMPLEMENTATION SCHEDULE: The project was undertaken to set up a PET Granule (Bo le grade & Industrial grade) and Polyester Staple Fibre manufacturing unit in the name of Newasia Synthe cs Ltd. As on 30th June 2016, MSML is the holder of % shares of Newasia Synthe cs Limited i.e. 4,964,650 shares of Tk each total Tk.496,465, out of 5,000,000 shares of Tk each total Tk.500,000, Due to failure of Gas connec on by Titas Gas Transmission & Distribu on Company Ltd. the project has been shelved un l the Gas connec on is provided. APPOINTMENT OF DIRECTORS: Rota on of Directors: Pursuant to Ar cle 117 of the Ar cles of Associa on of the Company Mr. A. Ma n Chowdhury, Director and Mr. A.F.M. Zubair, Director will re re by rota on and being eligible as per Ar cle 119 of the Ar cles of Associa on of the Company they offered themselves for re-elec on. 63

65 APPOINTMENT OF AUDITORS: The exis ng Auditor, M/s. Malek Siddiqui Wali, Chartered Accountants would re re at the 8th Annual General Mee ng and being eligible, have offered themselves for re-appointment as Auditors for the year with re-fixa on of their remunera on. BOARD MEETINGS: During the year , Four (04) Board mee ngs were held. The a endance record of the Directors is as follows: Name of Directors Posi on Mee ng held A ended Mr. A. Ma n Chowdhury Chairman Dr. Shamim Ma n Chowdhury Managing Director Mr. A. F. M. Zubair Director Mr.Moshiur Rahman Director Mr. M. Sekander Ali Independent Director (Non Shareholding) FINANCIAL ACCOUNTS: As the Company did not commence produc on & marke ng but due to opera ng and financial expenses Net Loss incurred Tk.3,959,016 in the Statement of Profit or Loss and other Comprehensive Income for the year ended on 30th June, ACKNOWLEDGEMENT: The Directors are pleased to record with apprecia on and gra tude the co-opera on and support provided by Shareholders of the company. Looking forward for a bright future for all of us. On behalf of the Board of Directors, A. Ma n Chowdhury Chairman 64

66 Annual Report 2016 Malek Siddiqui Wali PHONE: OFF : CHARTERED ACCOUNTANTS PABX: , Partners: Md. Waliullah, FCA FAX: Mr. Swadesh Ranjan Saha, FCA wali@satcombd.com Md. Habibur Rahman Sarker, FCA 9-G, Mo jheel C/A Mr. Anjan Mallik, FCA Dhaka-1000, Bangladesh AUDITORS REPORT to the shareholders of Newasia Synthe cs Limited We have audited the accompanying Financial Statements of Newasia Synthe cs Limited which comprises Statement of Financial Posi on as at 30th June 2016 and the related Statement of Profit or Loss and other Comprehensive Income, Statement of Cash Flows, Statement of Changes in Equity and Notes for the year then ended, and a summary of significant accoun ng policies and other explanatory notes. Management s Responsibility for the Financial Statements: The Management is responsible for the prepara on and fair presenta on of these financial statements in accordance with Bangladesh Accoun ng Standard(BAS)/Bangladesh Financial Repor ng Standards (BFRS), the companies Act 1994, Bangladesh Securi es Exchanges Commission Rules 1987 and other applicable laws and regula on and for such internal control as management determines is necessary to enable the prepara on of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility: Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Audi ng (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance where the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments the auditor consider internal control relevant to the en ty s prepara on and fair presenta on of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing and opinion on the effec veness of the en ty s internal control. An audit also includes evalua on the appropriateness of accoun ng policies used and the reasonableness of accoun ng es mates made by management, as well as evalua ng the overall presenta on 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 prepared in accordance with Bangladesh Accoun ng Standard/Bangladesh Financial Repor ng Standards (BFRS), give a true and fair view of the state of the company s affairs as of 30th June 2016 and of the results of its opera ons and its cash flows for the period then ended and comply with the Companies Act 1994, relevant schedule of Bangladesh Securi es Exchanges Commission Rules 1987 and other applicable laws and regula ons. We also report that: a) We have obtained all the informa on and explana ons which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verifica on thereof; b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examina on of those books; c) The Company s Statement of Financial Posi on and Statement of Profit or Loss and Other Comprehensive Income dealt with by the report are in agreement with the books of accounts; d) The expenditures incurred and payments made were for the purpose of the company s business. Dated: Dhaka Malek Siddiqui Wali 19 October, 2016 Chartered Accountants 65

67 NEWASIA SYNTHETICS LIMITED STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2016 As at 30 June 2016 As at 30 June 2015 Par culars Taka Taka Assets : Non-Current Assets : Property, Plant & Equipment 1,913,936,162 1,887,845,945 1,913,936,162 1,887,845,945 Current Assets : Advance, Deposit and Pre-Payments 63,836,211 11,520,790 Cash and Cash Equivalents 4,591,144 2,319,584 68,427,355 13,840,374 Total Assets : 1,982,363,517 1,901,686,319 Equity & Liabili es: Equity : Share Capital 500,000, ,000,000 Re-valua on Surplus of Fixed Assets 1,341,650,365 1,341,650,365 Retained Earnings (13,563,816) (9,604,800) 1,828,086,549 1,832,045,565 Current Liabili es : Creditors & Accruals 154,276,968 69,640, ,276,968 69,640,754 Total Shareholders Equity & Liabili es: 1,982,363,517 1,901,686,319 Net Assets Value Per Share (NAV) Par Value Tk.100 These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by. A. Ma n Chowdhury Dr. Shamim Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Dated: Dhaka October 19, 2016 Malek Siddiqui Wali Chartered Accountants 66

68 Annual Report 2016 NEWASIA SYNTHETICS LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 For the year ended For the year ended June 30, 2016 June 30, 2015 Par culars Taka Taka Sales - - Cost of Goods Sold - - Gross Profit/(Loss) : - - Opera ng Expenses (3,950,446) (2,797,629) Financial Expenses (8,570) (10,325) Opera ng Profit/(Loss) : (3,959,016) (2,807,954) Other Income/(Loss) - - Net Opera ng Profit/(Loss) : (3,959,016) (2,807,954) Provision for Contribu on to WPPF - - Profit/(Loss) before Tax : (3,959,016) (2,807,954) Provision for Income Tax : - - Current Tax - - Deferred Tax - - Profit/(Loss) a er tax for the year (3,959,016) (2,807,954) Other Comprehensive Income - - Total Comprehensive Income for the year (3,959,016) (2,807,954) (Transferred to the Statement of Changes in Equity) Earnings Per Share (EPS) (0.79) (0.56) Par Value Tk.100 Number of Shares used to compute EPS 5,000,000 5,000,000 These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by. A. Ma n Chowdhury Dr. Shamim Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Dated: Dhaka October 19, 2016 Malek Siddiqui Wali Chartered Accountants 67

69 NEWASIA SYNTHETICS LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30TH JUNE 2016 Par culars Share Capital Revalua on Surplus of Share Money Retained Total Fixed Assets Deposit Earnings Balance as on 1st July ,000,000 1,341,650,365 - (9,604,800) 1,832,045,565 Net Profit/(Loss) during the year (3,959,016) (3,959,016) As at 30th June ,000,000 1,341,650,365 - (13,563,816) 1,828,086,549 FOR THE YEAR ENDED 30 JUNE 2015 Par culars Share Capital Revalua on Surplus of Share Money Retained Total Fixed Assets Deposit Earnings Balance as on 1st July ,000,000 1,341,650,365 - (6,796,846) 1,834,853,519 Net Profit/(Loss) during the year (2,807,954) (2,807,954) As at 30th June ,000,000 1,341,650,365 - (9,604,800) 1,832,045,565 These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by. A. Ma n Chowdhury Dr. Shamim Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Dated: Dhaka October 19, 2016 Malek Siddiqui Wali Chartered Accountants 68

70 Annual Report 2016 NEWASIA SYNTHETICS LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 For the year ended For the year ended June 30, 2016 June 30, 2015 Par culars Taka Taka Cash Flow From Opera ng Ac vi es: Payment for Opera ng Expenses (2,754,239) (1,334,076) Payment for Financial Expenses (8,570) (10,325) Net Cash provided/(used) by Opera ng Ac vi es (2,762,809) (1,344,401) Cash Flow From Inves ng Ac vi es: Acqusi on of Fixed Assets (79,565,631) (67,395,082) Net Cash used in Inves ng Ac vi es (79,565,631) (67,395,082) Cash Flow From Financing Ac vi es: Advance received from Malek Spinning Mills Ltd 84,600,000 68,500,000 Net cash provided/(used) by Financing Ac vi es 84,600,000 68,500,000 Increase/(Decrease) in Cash and Cash Equivalents 2,271,560 (239,483) Opening Cash and Cash Equivalents 2,319,584 2,559,067 Closing Cash and Cash Equivalents 4,591,144 2,319,584 Net Opera ng Cash Flow Per Share (NOCFPS) (0.55) (0.27) Par Value Tk.100 These financial statements were approved by the Board of Directors on October 19, 2016 and were signed on it's behalf by. A. Ma n Chowdhury Dr. Shamim Ma n Chowdhury B.K. Chaki Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Dated: Dhaka October 19, 2016 Malek Siddiqui Wali Chartered Accountants 69

71 J.M. FABRICS LIMITED DIRECTORS REPORT TO THE SHAREHOLDERS FOR THE YEAR ENDED 30TH JUNE, 2016 Dear Shareholders, In terms of provisions of sec on 184 of Companies Act 1994 and BAS (Bangladesh Accoun ng Standards) codes as adopted by the Ins tute of Chartered Accountants of Bangladesh (ICAB), the Board of Directors is pleased to submit its Report to the Shareholders together with Audited Accounts and Auditors Report thereon, containing Statement of Financial Posi on, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year ended 30 June BACKGROUND: The Company was incorporated with RJSC on 25th day of May 2005 as a Private Limited Company. The Authorized Share Capital of the company is Tk.500,000, divided into 5,000,000 ordinary shares of Tk each. The paid-up capital as on 30th June, 2016 stood at Tk.400,000, consis ng of 4,000,000 ordinary shares of Tk each of which 3,999,900 shares of Tk each was held by Malek Spinning Mills Limited. The Company is a subsidiary company of Malek Spinning Mills Limited which holds % share & another sponsor of Malek Spinning Mills Ltd. holds 0.002% share of the company as on 30th June As a subsidiary of Malek Spinning Mills Limited and to comply the Corporate Governance Guidelines of Bangladesh Securi es and Exchange Commission (BSEC) No fica on No. SEC/CMRRCD/ /134/Admin/44 dated 07 August 2012, Mr. M. Sekander Ali, Independent Director of Malek Spinning Mills Limited has been appointed as Director (Non Shareholding). COMMERCIAL OPERATION: J. M. Fabrics Limited started its commercial opera on from 18th day of August The Company is engaged in the produc on of 100% export oriented garments and knit fabric with a produc on capacity of 15 Metric Tons dyed fabric and 68 (sixty eight) lines of cu ng and sewing opera on with all necessary facili es, storage etc. COMPANY S OPERATIONS: The posi on of its opera ng performance for the year ended 30th June, 2016 is given below: ( 1 ) CAPACITY/PRODUCTION The Company s installed es mated produc on capacity is 43,680,000 Pcs. of Basic T-Shirt, Polo-Shirt & In mate Garments per annum. Due to increase of In mate products order quan ty, we had to re-arranged produc on line. As a result total number of produc on quan ty increase as well as capacity but produc on line was remain same. A compara ve posi on of its opera ng performance is given below: Sl. No. Descrip on (Pcs.) (Pcs.) 01 Produc on capacity 43,680,000 29,640, Actual Produc on 33,364,310 25,094, Capacity U liza on 76.38% 84.66% 04 Quan ty Sold (Pcs.) 32,296,148 22,936, Sales Revenue (Tk.) 3,167,901,596 2,522,840, Average selling price (Tk.) CAPITAL EXPENDITURES: The following Capital Expenditure was incurred during the year Descrip on (Tk.) (Tk.) Factory Building 8,086,712 9,120,131 Plant and Machinery 47,996,344 85,226,967 Office Equipments 3,554,400 5,878,013 Furniture & Fixtures 1,213,941 2,176,915 Electrical Installa on 215, ,969 Gas Line Installa on ,260 Fire Installa on 3,190, Tools and Equipment ,000 Cargo Li ,600 Motor Vehicle 8,246,312 3,380,000 Cookeries & Cutleries 5,403 22,370 Total 72,509, ,265,225 70

72 Annual Report 2016 SHAREHOLDING: The Shareholding Posi on of different shareholders as at 30th June 2016 as follows: Name of Shareholders Malek Spinning Mills Limited Mr. A.F.M. Zubair Total No. of share held 3,999,900 shares 100 shares 4,000,000 shares FINANCIAL RESULTS: The company s opera ng financial results, as compared to the previous year are summarized as follows: Tk. in million Descrip on Turnover 3, , Cost of goods sold 2, , Gross profit General and Administra ve Expenses Opera ng profit Other income Net Profit before provision of WPPF Provision for Worker s Profit Par cipa on Fund Net Profit before tax Provision for Income Tax Net profit a er tax Gross Margin Ra o 6.08% 6.06% Net Margin Ra o 1.27% 2.29% Earnings per share (Tk.) APPROPRIATION OF PROFIT: The Board of Directors recommended for appropria on of profit as follows: Net Profit (a er tax provision) during the year Tk. 40,287,089 Add: Profit brought forward from previous year balance sheet Tk. 241,512,227 Add: Transfer of excess deprecia on of revalued assets Tk. 2,675,526 Total net free surplus available for appropria on Tk. 284,474,842 Appropria on Proposed: Proposed Dividend Nil Balance carried forward to Balance Sheet as Retained earnings Tk. 284,474,842 DECLARATION OF DIVIDEND: In order to strengthen the financial posi on of the company no dividend be and is recommended by the Board for the year ended 30th June, APPOINTMENT OF AUDITORS: The exis ng Auditor, M/s. Das Chowdhury Du a & Co., Chartered Accountants would re re at the 11th Annual General Mee ng and being eligible, have offered themselves for re-appointment as Auditors for the year with re-fixa on of their remunera on. ACKNOWLEDGEMENT: The Directors are pleased to record with apprecia on and gra tude the co-opera on and support provided by Shareholders, Customers, Bankers, Suppliers, Workers and Employees of the company without whose ac ve support the result would not have been possible. Looking forward for a bright future for all of us. On behalf of the Board of Directors, A. Ma n Chowdhury Chairman 71

73 DAS CHOWDHURY DUTTA &CO. Offices: Chartered Accountants Well Tower (1st Floor), Flat - A/1 Jahan Building No. 5 (2nd Floor) 12/A Purana Paltan Line, Dhaka 74 Agrabad Com. Area, Chi agong Tel: Tel: Fax: Fax: dcddhaka@f-lix.net dcdctg@iolbd.net Auditors Report to the Shareholders of J. M. Fabrics Limited We have audited the accompanying Financial Statements of J. M. Fabrics Limited which comprises of the Statement of Financial Posi on as at 30 June 2016 and the related Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows for the year then ended together with a summary of significant accoun ng policies and other explanatory notes. Management's Responsibility for the Financial Statements: Management is responsible for the prepara on of financial statements that give a true and fair view in accordance with Bangladesh Financial Repor ng Standards (BFRS) and other applicable laws and regula ons and for such internal control as management determines is necessary to enable the prepara on of these financial statements that are free from material misstatement whether due to fraud or error. Auditor's Responsibility: Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Audi ng (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the en ty's prepara on 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 effec veness of the en ty's internal control. An audit also includes evalua ng the appropriateness of accoun ng policies used and the reasonableness of accoun ng es mates made by management, as well as evalua ng the overall presenta on 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 give a true and fair view of the financial posi on of J. M. Fabrics Limited as at 30 June 2016 and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Repor ng Standards, the Companies Act 1994 and other applicable laws and regula ons. We also report that: (a) we have obtained all the informa on and explana ons which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verifica on 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 examina on of those books; and (c) the company s statement of financial posi on and statement of comprehensive income dealt with by the report are in agreement with the books of account. (d) the expenditure incurred was for the purpose of the Company s business. Dhaka, 19 October 2016 Das Chowdhury Du a & Co. Chartered Accountants 72

74 Annual Report 2016 J. M. Fabrics Limited Statement of Financial Posi on as at 30 June 2016 Par culars Taka ASSETS: Non-Current Assets 1,480,337,463 1,515,262,459 Property, plant and equipment 1,306,169,518 1,338,418,988 Revalued fixed assets 174,167, ,843,471 Current Assets 1,494,499,995 1,320,314,034 Inventories 621,284, ,013,536 Advance, deposits and pre-payments 80,480,331 44,572,710 Accounts receivable 619,599, ,140,003 Cash and cash equivalents 173,134, ,587,785 Total 2,974,837,458 2,835,576,493 SHARE HOLDERS' EQUITY AND LIABILITIES: Shareholders' Equity 837,216, ,929,075 Share capital 400,000, ,000,000 Revalua on reserve 152,741, ,416,848 General reserve and surplus 284,474, ,512,227 Non-Current Liabili es 656,951, ,237,987 Long term loan from bank 634,588, ,785,708 Deferred tax liabili es 22,363,058 22,452,279 Current Liabili es 1,480,669,950 1,142,409,431 Short term loan 843,684, ,755,999 Current por on of long term loan 348,920, ,898,990 Accounts payable 158,006, ,529,990 Loan from director 50,000,000 50,000,000 Bank acceptance liabili es 38,314,672 83,802,152 Liabilies for expenditure 41,743,545 63,422,300 Total 2,974,837,458 2,835,576,493 Net Assets Value (NAV) Per Share (Including Revalua on surplus) A. Ma n Chowdhury Azizur R.Chowdhury Amit Kumar Saha Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Signed in terms of our report of even date annexed Dhaka, 19 October 2016 Das Chowdhury Du a & Co. Chartered Accountants 73

75 J. M. Fabrics Limited Statement of Comprehensive Income for the year ended on 30 June 2016 Par culars Taka Turnover Export earnings 3,167,901,596 2,522,840,505 Less: Cost of goods sold 2,975,386,378 2,369,858,842 Gross Profit / (Loss) 192,515, ,981,663 General and Administra ve Expenses 175,618, ,763,798 Administra ve expenses 25,460,468 24,839,767 Selling and distribu on expenses 4,539,065 3,163,538 Financial expenses 145,619, ,760,493 Opera ng Profit / (Loss) 16,896,436 12,217,865 Other income 44,311,005 58,263,882 Net profit Before provision of WPPF 61,207,441 70,481,746 Provision for WPPF 2,914,640 3,356,274 Net Profit Before Tax 58,292,801 67,125,473 Provision for Income Tax 18,005,712 9,325,315 Provision for tax - current year 18,094,933 9,423,670 Provision for deferred tax (89,221) (98,354) Net Profit A er Tax 40,287,089 57,800,157 Earnings Per Share (EPS) Number of shares used to compute EPS 4,000,000 4,000,000 A. Ma n Chowdhury Azizur R.Chowdhury Amit Kumar Saha Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Signed in terms of our report of even date annexed Dhaka, 19 October 2016 Das Chowdhury Du a & Co. Chartered Accountants 74

76 Annual Report 2016 J. M. Fabrics Limited Statement of Changes in Equity For the year ended 30 June 2016 Par culars Share Capital General Reserve Revalua on Total and Surplus Reserve Balance as at 01 July ,000, ,512, ,416, ,929,075 Net profit / (loss) for the year - 40,287,089-40,287,089 Transfer to general reserve and surplus for deprecia on charged on revalued assets - 2,675,526 (2,675,526) - Balance as at 30 June ,000, ,474, ,741, ,216,164 For the year ended 30 June 2015 Par culars Share Capital General Reserve Revalua on Total and Surplus Reserve Balance as at 01 July ,000, ,765, ,347, ,113,237 Net profit / (loss) for the year - 57,800,157-57,800,157 Tax adjustment - (12,181,455) - (12,181,455) Deferred Tax opening balance adjustment - (802,865) - (802,865) Transfer to general reserve and surplus for deprecia on charged on revalued assets - 2,930,444 (2,930,444) - Balance as at 30 June ,000, ,512, ,416, ,929,075 A. Ma n Chowdhury Azizur R.Chowdhury Amit Kumar Saha Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Signed in terms of our report of even date annexed Dhaka, 19 October 2016 Das Chowdhury Du a & Co. Chartered Accountants 75

77 Par culars J. M. Fabrics Limited Statement of Cash Flows for the year ended on 30 June Cash Flow from Opera ng Ac vi es: Collec on from turnover and bills receivable 3,103,812,606 2,389,128,150 Payment for purchase of raw materials (2,885,486,149) (2,309,735,316) Payment for opera ng expenses (26,752,270) (25,282,726) Payment for financial expenses (145,619,250) (112,760,493) Increase in advance, deposit and prepayment (35,907,621) (3,633,122) Decrease in provision of tax - (12,181,455) Decrease in liabili es (52,778,761) 36,844,964 Net Cash Provided/ (Used) by Opera ng Ac vi es (42,731,444) (37,619,998) Cash Flow from Inves ng Ac vi es: Acquisi on of fixed assets (72,509,118) (108,265,226) Disposal of fixed assets 35,000 1,566,200 Net Cash Used by Inves ng Ac vi es (72,474,118) (106,699,026) Cash Flow from Financing Ac vi es: Loan received from bank 151,752,637 (100,798,011) Loan received from Directors - 50,000,000 Net Cash Provided/(Used) by Financing Ac vi es 151,752,637 (50,798,011) Increase/(Decrease) in Cash and Cash Equivalents 36,547,076 (195,117,035) Opening balance of Cash and Cash Equivalents 136,587, ,704,820 Closing balance of Cash and Cash Equivalents 173,134, ,587,785 Net Opera ng Cash Flow Per Share (NOCFPS) (10.68) (9.40) Taka A. Ma n Chowdhury Azizur R.Chowdhury Amit Kumar Saha Syed Saiful Haque Chairman Managing Director Chief Financial Officer Company Secretary Signed in terms of our report of even date annexed. Dhaka, 19 October 2016 Das Chowdhury Du a & Co. Chatered Accountants 76

78 Annual Report th Annual General Mee ng 77

79 26 th Annual General Mee ng 78