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ANNUAL REPORT

2009

Contents
2 4 6 7 8 9 10 12 16 21 22 23 24 24 25

BOARD OF DIRECTORS NOTICE OF MEETING

COMPANY INFORMATION PRODUCT DEVELOPMENT & MERCHANDISING MARKETING OPERATIONS HUMAN RESOURCES MANUFACTURING

CHAIRMAN'S STATEMENT DIRECTORS' REPORT

AUDITORS' REPORT BALANCE SHEET

CHANGES IN EQUITY

PROFIT AND LOSS ACCOUNT

CASH FLOW STATEMENT

NOTES TO THE ACCOUNTS

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

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

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

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

Mr. Rajeev Gopalakrishnan Vice Chairman & Managing Director (Appointed on 28 January 2010)

Mr. Rokanuddin Mahmud Bar-at-law Independent Director

Previous positions Managing Director, Bata Shoe of Thailand Public Company Limited Vice President, Retail Operations, Bata India Limited Vice President, Wholesale Operations, Bata India Limited Sales / Marketing Manager, Bata Limited, Canada Retail Manager, Bata India Limited

Senior Advocate in the Supreme Court and High Court in Bangladesh

Mr. Mike Middleton Director

Current Position CFO, Global Footwear Services Limited, Singapore

Previous positions Deputy Managing Director & Finance Director, Bata India Ltd.

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Company Secretary Md. Hashim Reza

Compnay Information

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Auditors Rahman Rahman Huq Chartered Accountants 9, Mohakhali C/A (11th Floor) Dhaka-1212

Legal Advisers B. Ahmed & Co. Syed Ishtiaq Ahmed & Associates Malik Law Associates Bankers Eastern Bank Ltd. Dutch Bangla Bank Ltd. HSBC Islami Bank (Bangladesh) Ltd. Standard Chartered Agrani Bank Ltd. Factories 1. Tongi Industrial Area Tongi, Gazipur 2. Dhamrai, Dhaka Tannery Dhamrai, Dhaka

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

Notice of Annual General Meeting

1.

Notice is hereby given that the 38TH ANNUAL GENERAL MEETING of Bata Shoe Co. (Bangladesh) Limited will be held at Dhamrai Factory, Dhaka on 24 June 2010, Thursday at 10:30 a.m. to transact the following business: 2. 3. 4. 5. To receive, consider and adopt the audited accounts of the Company and the Auditors Report thereon for the year ended 31 December 2009. To declare Dividend as recommended by the Directors. To elect Directors. To appoint Auditors for the year 2010 and fix their remuneration. By order of the Board Tongi, 20 April 2010 NOTES: 1. Md. Hashim Reza Company Secretary To receive, consider and adopt the Directors Report for the year ended 31 December 2009.

Product Development & Merchandising

2009 was as very significant year for product development & marketing for Bata Bangladesh. During the year Bata Bangladesh introduced many exclusive new lines of shoes the majority of which were during festival periods. These new arrivals were introduced in different Bata brands. Some of them are as follows:

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

2. 3. 4.

11 May 2010 is the RECORD DATE. Shareholders whose names will appear in the share register of the Company or in the depository register on that date will be eligible to receive dividend as approved in the AGM. A member eligible to attend and vote at the General Meeting is entitled to appoint a proxy to attend the meeting and vote on his/her behalf. A Proxy Form is enclosed. Form of Proxy, duly completed, must be deposited at the Companys Registered Office at least 48 (fortyeight) hours before the appointed time for the Meeting.

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

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

For all things ingenious, and all things bright, B.First represents children at their most curious years. Children who are more than willing to pick up, to try and to venture into the world of trial and error, B.First challenges and inspires these students to outdo themselves.

In a day, I sit, stand, walk, run, chase, follow, play, study... and Id most likely need a pair of sturdy-soled, sporty, & padded shoes to see me through it all! That is our B First branded shoe for all children out there who go to school & love to be in study & play all day.

Non Retail
Power is the sports & athletic- leisure shoe brand of Bata it has got products that has been specially designed for activity like running, training, outdoor, soccer & lifestyle. No other sports brand can give you the value for money like Power. These shoes help you to perform comfortably any particular outdoor activity. Non Retail business played a vital role in the companys total turnover in 2009. This business channel includes 5 different divisions namely Dealers Support Program (DSP), Wholesalers, Rural Sales, Department Stores and Industrial & Institutions. The Company discontinued business with low volume dealers and focused on the high contribution dealers to minimize business risks and operating expenses. In addition, emphasis was given to open new dealers. Around 66 new dealers were opened last year which contributed around Tk. 74 million in turnover. Currently, the company has 512 DSPs and 364 wholesalers running under a sound meaningful business policy focused on development of good relationship. For retaining market leadership, the company focuses on appropriate show design and product development, to meet the needs of the market. In communication with partners, the company organized a national Road Show of new products and received suggestions from customers to develop the right products and services.

Marketing Operations
Retail
In 2009 our Retail Channel sold 8.6 million pairs of shoes 104% growth against 2008 and turnover Tk. 3.2 billion which is 114% growth against last year. To achieve this outstanding growth in spite of global recession, company took different initiatives like product innovation, aggressive marketing programmes, market expansion, human resource development, operational efficiency, team work etc.

Bata Industrials

In expansion program, company opened 23 new stores including the largest Bata shoe store in Asia (11,000 sq ft) at Bashundhara City Mall, Dhaka and 3 exclusive Hush Puppies stores. In addition we renovated 29 potential stores in 2009. The new stores generated additional turnover of Tk. 252 million. 250 new lines were introduced before the biggest festival Eid-ul-Fitre, which created sensation among our valued customers.

The company has established a new business channel under brand Bata Industrials to serve the industrial growth. In January 2009, the company launched Bata Industrials shoes and received very encouraging feedback from different industrial groups who focus on quality and safety such as petrochemicals, food Industries, machineries, automobile parts, electrical equipments etc. It is anticipated that this new business will add approximately Tk. 5 million of turnover in 2009.

Manufacturing

The company operates two manufacturing facilities one in Tongi and the other in Dhamrai. With a production capacity of 110,000 pairs of shoes daily, the company also has a modern tannery facility with an output of 5 million square feet of leather annually. In 2009 company produced over 26 million pairs. Currently company continues producing quality & fashionable shoes to respond to customers demand.

Human Resources
TEAM BUILDING WORKSHOP As a part of Team Building activities, Bata Shoe Company (Bangladesh) Ltd. and the International Labor Organization (ILO) organized a day long Team Building Workshop on November 07, 2009. Resource persons from Sri Lanka and Bangladesh conducted the workshop where 25 managers of Bata Bangladesh participated. The main objective of the workshop was to bring synergy between the departments to achieve accelerated business goals by identifying measurable business targets.

STOREMANCO

With a view to improve management and operational skills of Store Managers, a number of STOREMANCO have been organized in 2009. The course covers - Duties & Responsibilities of Store Managers, Product Knowledge, Marketing, Distribution & Customers Claim, Books of Accounts, Remittance, Store Audit, Effective Utilization of Point of Sales (POS), Staff Productivity Analysis, Store Profile and Customer Service.

To create awareness about fire accidents, the company organizes comprehensive training on fire fighting on a regular basis. The course covers fire fighting methods, evacuation procedures, introduction to fire fighting equipments and physical demonstration.

FIRE FIGHTING TRAINING PROGRAMME

10

11

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Chairman's Statement
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Fernando Garcia Restrepo

Chairman

Dream" and several brand promotions for "North Star", "Marie Claire, "Power", "Bengali New Year (Boishakhi)" promotion, "Be Surprised", "Monsoon", "Eid-ul-Fitre" "Puja". We have also continued to sponsor the Bangladesh National Cricket team as their Official Clothing sponsor and the nationwide Bata School Handball Tournament for boys and girls. To strengthen the quality of products your company also organised a quality contest among the departments for 4 weeks. The contest aimed at improving quality awareness, reducing product cost, achieving production targets, ensuring timely delivery, promoting quality as a culture and developing the habit of working as a team. To motivate the employees and associates each wining team received prizes from the company.

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12

Dear Shareholders

On behalf of the Board of Directors of the Company, it is my privilege and honour to present to you the Directors Report together with the Annual Accounts and Auditors Report thereon, for the year ended 31 December 2009. In the face of the challenges posed by the global economic recession the growth in the country was significantly affected in 2009. As a result consumers concentrated more on essential consumable items instead of footwear. Moreover electricity shortage throughout the country has interrupted our production and it was also difficult to keep our outlets open throughout the business hours.

Your company has contributed Tk. 1,195 million to the countrys National Exchequer for the year 2009 which is 8% more than the previous year. Your company continues to be highest tax payer in leather and footwear sector in the country as in previous years. During 2009 your company was awarded the Superbrand Award, popularly known as the Oscar of Branding from Bangla Superbrands Limited. Superbrands is acclaimed as a highly reputed international authority on branding since its launch in 1994 in United Kingdom. It is an independent organization that promotes the discipline of branding across the globe. Bata being a global brand, has also won Superbrand awards in Chile, Czech Republic & India. Winning the Superbrand award proves Bata's excellence in all aspects of branding (Production, Distribution, Communication, Retailing, Customer Acceptance etc.). Bata Bangladesh participated in the Global Dog Art Competition organised by Hush Puppies International in Michigan, U.S.A. recently. Out of 74 contestants the entries from your company won the 1st place (Best in show) award along with two other awards. Your company also received an award for Best Multinational Company in 2008. Under the Corporate Social Responsibilities (CSR) programme your company provided shoes to the poor students of Shishu Polli Plus, (translated as Childrens Village Plus) a non-religious, non-political organization

Despite these adverse conditions, your company, however, continued to achieve commendable growth during 2009. During the year your company achieved total profit before tax of Tk.630 million, an increase of Tk. 10 million against 2008. In 2009 your company achieved a turnover of Tk. 4,995 million representing growth of 8 % against 2008. We have continued to expand our market share especially in the medium to upper end of the market. During the year we opened three outlets of the world famous shoe brand Hush Puppies. We have 257 retail outlets which are strategically located in different parts of the country. In addition to the retail chain we have a formidable network of dealer outlets. We opened 66 dealer stores in 2009. We now have near to 1,000 dealer outlets serviced by 13 depots throughout Bangladesh. During the year we organised various promotional activities like "Back to School", "B.first Colour Your

13

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based in Sreepur and to under privilege children at the Annual Street Childrens Party, organized by the BWA (British Womens Association). During the year your company trained 555 employees via 32 domestic training courses and 10 employees attended 7 overseas training programmes. We have continued to award Employee of the Month certificates and provide recognition to bolster the spirits of the workforce in the factories.

In 2009 your company presented awards to 62 employees who have completed 25 years of service in this company. Jorge Carbajal, President Bata Emerging Market attended the ceremony and praised all the award recipients for their loyalty and hard work. He also thanked everyone for their valuable contribution to Bata.

Your companys share, with a face value of Tk. 10 each was traded at Tk. 528.30 on the Dhaka Stock Exchange Ltd. and Tk. 522.90 on the Chittagong Stock Exchange Ltd. respectively on 30 December 2009.

Your Board continues its intention to recommend the payment of dividends commensurate with the maintenance of a stable financial position of the company. The Board has, therefore, proposed for approval at the Annual General Meeting the payment of a final dividend of Tk 10.50 per share which, together with an interim dividend of Tk. 11.50 per share paid on 16 November 2009, will make a total dividend of Tk.22.00 per share for the financial year ended 31 December 2009. In accordance with the Articles of Association of the Company all the directors, except the Managing Director, Mr. Rajeev Gopalakrishnan, will retire at the Annual General Meeting and, being eligible, offer themselves for re-election. In conclusion, on behalf of the Board of Directors, I would like to express our appreciation to you, our shareholders, as well as to our valued customers, suppliers, employees and the Government of the Peoples Republic of Bangladesh for the support and cooperation extended to the Company.

lJjtJPJ VJKxt~J rxPasPkJ Y~JroqJj 20 FKku 2010

14

Fernando Garcia Restrepo Chairman 20 April 2010

15

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

Your Directors have pleasure in submitting their Report and Audited Accounts of the Company for the year ended 31 December 2009 along with the preceding three years below: 2009 TAKA 2008 TAKA 2007 TAKA 2006 TAKA

The Directors also report that:

u

Statutory Information on the Financial Statements

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

u u

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

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

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

408,248,059 131,226,000 277,022,059 499,595,302

Unappropriated profit, brought forward

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

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

u u u u

1,174,154,520 1,025,708,075

917,292,171

776,617,361

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

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

157,320,000 300,960,000

143,640,000

157,320,000

143,640,000

873,194,520

300,960,000

198,360,000

143,640,000

724,748,075

342,000,000

177,840,000

27,360,000

On behalf of the Board Rajeev Gopalakrishnan Managing Director

575,292,171

205,200,000

571,417,361

For the year ended 31 December 2009 the Board of Directors recommended an interim dividend of Tk. 11.50 to Tk. 143,640,000, thus making a total dividend of Tk. 22.00 per share amounting to Tk. 300,960,000. DIRECTORS

per share amounting to Tk 157,320,000 and now recommends a final dividend of Tk.10.50 per share amounting

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

Rahman Rahman Huq, Chartered Accountants, retire and being eligible offer themselves for re - appointment as auditors of the Company.
16

17

Annexure - I

The information regarding Board Meetings, Audit Committee and Shareholding Position of the Company for the year 2009 are mentioned below in Compliance with Securities and Exchange Commissions Notification No.SEC/CMRRCD/2006-158/Admin/02-08 dated 20 February 2006. Board Meetings The Board met four times during the year 2009. The Company Secretary and the Chief Financial Officer were also present in the Meetings. The attendance by each Director is mentioned below: Name of Director Mr. Fernando Garcia Restrepo Mr. Mike Middleton Mr. Rashidul Hasan Mr. Rokanuddin Mahmud Mr. J D Hearns Mr. Rajeev Gopalakrishnan No. of Attendance 1 Meeting 2 Meetings 4 Meetings 1 Meeting 4 Meetings (retired on 28 January 2010) (appointed on 28 January 2010)

Annexure II

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

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

Complied

Not Complied

Explanation for non compliance with the condition

1.2(i) 1.2(ii) 1.3 1.4

Audit Committee Meeting

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

The Audit Committee is a sub-committee of the Board. All members of the Audit Committee were appointed by the Board of Directors among their members. They met once during the year 2009. Except for Mr. Fernando Garcia Restrepo and Mr. Rokanuddin Mahmud all the members were present in the meeting of the committee. The Company Secretary was as the Secretary of the Committee. The Audit Committee comprise of: Mr. Mr. Mr. Mr. Mr. Mr. Fernando Garcia Restrepo Rajeev Gopalakrishnan Mike Middleton Rashidul Hasan Rokanuddin Mahmud J D Hearns Chairman Member (appointed on 28 January 2010) Member Member as Independent Director Member as Independent Director Member (retired on 28 January 2010)

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

Shareholdings

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

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

% OF HOLDING 70.00

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

iii)

iv) iv)

Other Shareholders, who holds less than 10% u Other Non Resident (Institutions) u Institutions (Local) u Individuals Total

Shareholders, who holds 10% or more.

13,680,000

1,343,320 822,854 1,937,762

Nil

Nil

1.4(k)

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

100.00

9.82 6.02 14.16

Nil

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

19

18

Condition No. 3.1(ii) 3.2(i)

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

Complied

Compliance Status

Not Complied

Explanation for non compliance with the condition

3.2(iii) 3.2(ii)

N/A

3.3.1(i)

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

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

N/A

We have audited the accompanying balance sheet of Bata Shoe Company (Bangladesh) Limited as at 31 December 2009 and the related profit and loss account, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and explanatory notes. The preparation of these financial statements is the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

N/A

4.00(i)

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

N/A N/A

We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements, prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company's affairs as at 31 December 2009 and of the results of its operations and its cash flows for the year then ended and comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. We also report that: (a) (b) (c) (d) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;

4.00(ii)

Non-engagement in appraisal or valuation

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

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

in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of those books; the company's balance sheet and profit and loss account dealt with by the report are in agreement with the books of account; and the expenditure incurred was for the purposes of the company's business.

Dhaka, 20 April 2010

20

Rahman Rahman Huq Chartered Accountants

21

Bata Shoe Company (Bangladesh) Limited Balance Sheet as at 31 December 2009

Assets Property, plant and equipment Capital work in progress Investment in subsidiary Deferred tax assets Total non-current assets Notes 4 5 6 7 8 9 10 11 508,297,292 13,860,671 19,970,000 16,000,000 558,127,963 2009 Taka

Inventories Accounts receivable Advances, deposits and prepayments Cash and cash equivalents Total current assets Total assets Equity Share capital Reserves and surplus Total equity

1,433,325,407 100,987,926 278,455,551 352,067,178 2,164,836,062 2,722,964,025 136,800,000 983,687,323 1,120,487,323 131,959,233 131,959,233

1,460,138,433 79,493,676 210,086,869 263,407,792 2,013,126,770 2,483,380,658 136,800,000 835,240,878 972,040,878 127,064,575 127,064,575

457,967,888 12,286,000 470,253,888

2008 Taka

Bata Shoe Company (Bangladesh) Limited Profit and Loss Account for the year ended 31 December 2009
Notes 19 20 2009 Taka

12 13 14 15 16 17 18

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

23 24

21 22

18 7

4,995,356,942 (3,237,854,140) 1,757,502,802 7,103,518 (1,108,521,211) 656,085,109 10,669,463 (3,920,419) 662,834,153 (33,141,708) 629,692,445

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

Liabilities Deferred liability Total non-current liabilities

Basic earnings per share (par value Tk 10)

The annexed notes 1 to 36 form an integral part of these financial statements.

278,984,626 518,429,047 173,433,804 454,922,477 44,747,515 1,470,517,469 1,602,476,702 2,722,964,025

387,613,341 353,562,172 129,715,417 432,674,318 80,709,957 1,384,275,205 1,511,339,780 2,483,380,658

Profit after tax from manufacturing and trading has been shown in attached Exhibit - I.

31

184,000,000 (3,714,000) 180,286,000 449,406,445 32.85

4,623,312,077 (3,030,618,923) 1,592,693,154 7,241,407 (951,660,940) 648,273,621 9,016,498 (5,043,064) 652,247,055 (32,612,353) 619,634,702

2008 Taka

180,000,000 (9,781,000) 170,219,000 449,415,702 32.85

The annexed notes 1 to 36 form an integral part of these financial statements.

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.
Rajeev Gopalakrishnan
Managing Director

Rashidul Hasan
Director

As per our report of same date.

Md. Hashim Reza

Company Secretary

Rajeev Gopalakrishnan
Managing Director

Rashidul Hasan
Director

As per our report of same date.

Md. Hashim Reza

Company Secretary

Dhaka, 20 April 2010

22

Rahman Rahman Huq Chartered Accountants

Dhaka, 20 April 2010

Rahman Rahman Huq Chartered Accountants

23

Bata Shoe Company (Bangladesh) Limited Statement of Changes in Equity for the year ended 31 December 2009
Share capital 136,800,000 136,800,000 Taka Reserve on revaluation of land 60,631,183 60,631,183 Taka Nondistributable special reserve Taka Reserves and surplus General reserve 48,863,000 48,863,000 Taka Unappropriated profit 575,292,171 Taka

1.
Total

Bata Shoe Company (Bangladesh) Limited Notes to the Financial Statements as at and for the year ended 31 December 2009
Bata Shoe Company (Bangladesh) Limited (the "company") is a listed company limited by shares and was incorporated in Bangladesh in 1972 under the Companies Act 1913. The address of the registered office of the company is Tongi, Gazipur, Bangladesh. The company is one of the operating companies of worldwide Bata Shoe Organization (BSO). The shares in the company are mostly held by Baffin (Netherlands) B.V. The financial period of the company covers one year from 1 January to 31 December. Reporting entity

Particulars Balance as at 1 January 2008 Final dividend of 2007 Profit for the year Unclaimed dividend Profit for the year Interim dividend of 2008 Balance as at 31 December 2008 Final dividend of 2008 Interim dividend of 2009

Total 685,784,974 Taka

998,620 998,620 -

(143,640,000) (157,320,000) (143,640,000) (157,320,000) 449,406,445 449,415,702 1,000,202

(143,640,000) (157,320,000) (143,640,000) (157,320,000) 449,406,445 449,415,702 1,000,202

(143,640,000) (157,320,000) (143,640,000) (157,320,000) 449,406,445 449,415,702 1,000,202

822,584,974

Taka

724,748,075

835,240,878

972,040,878

2.

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

Balance as at 31 December 2009

136,800,000

60,631,183

998,620

48,863,000

873,194,520

983,687,323 1,120,487,323

2.1

These financial statements have been prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. The financial statements were approved by the Board of Directors on 20 April 2010. Basis of measurement

Bata Shoe Company (Bangladesh) Limited Cash Flow Statement for the year ended 31 December 2009
Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operating activities Interest paid Income tax paid Net cash from operating activities 4,975,613,305 (4,260,313,181) 715,300,124 (3,920,419) (176,623,158) 534,756,547 10,655,115 4,140,332 (123,970,165) (109,174,718) (336,922,443) (336,922,443) 2009 Taka

2.2

Cash flows from investing activities Interest received Proceed from sales of property, plant and equipment Acquisition of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Repayment of finance lease Dividend paid Net cash used in financing activities

5,254,387,256 (4,743,663,211) 510,724,045 (5,043,064) (151,522,192) 354,158,789 8,979,530 1,719,912 (92,122,169) (81,422,727) (226,328) (309,215,569) (309,441,897)

2008 Taka

2.3

These financial statements have been prepared on the historical cost basis except revaluation of land at Tongi made in 1979. Functional and presentational currency These financial statements are presented in Bangladesh Taka (Taka/Tk), which is the company's functional currency. All financial information have been rounded off to the nearest Taka except the information presented in revenue in note 19 and related party transactions in note 33 have been rounded off to the nearest thousand Taka. The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Use of estimates and judgments

2.4

Information about significant areas of estimation uncertainty and critical judgement in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes: Note Note Note Note Note Note 3.3 3.5 7 14 18 35 Inventories Bad debts provision Deferred tax assets Deferred liability Provision for tax Contingent liabilities

Net cash increase/(decrease) in cash and cash equivalents Cash and cash equivalents as at 1 January Cash and cash equivalents as at 31 December (Note 11)

263,407,792

88,659,386

(36,705,835) 263,407,792 300,113,627

2.5

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.
24

352,067,178

The company has adequate resources to continue in operation for the foreseeable future. For this reason the directors continue to adopt going concern basis in preparing the financial statements. The current resources of the company provide sufficient fund to meet the present requirements of the existing business. 25

Going concern

3.

3.1

The accounting policies set out below have been applied consistently to all periods presented in these financial statements. Foreign currencies are translated into Taka at the rates prevailing on the transaction date. Monetary assets and liabilities are translated at the rates prevailing at the balance sheet date. Non-monetary assets and liabilities are reported using the exchange rate prevailing at the date of transaction. Differences arising on conversion are charged or credited to the profit and loss account. Property, plant and equipment Foreign currency

Significant accounting policies

3.3

Inventories except raw material in transit are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The carrying amounts of the assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the recoverable amount of the asset is estimated. Impairment losses, if any, are recognised in profit and loss account. Accounts receivables are initially recognised at cost which is the fair value of the consideration given in return. After initial recognition these are carried at cost less impairment losses due to uncollectibility of any amount so recognised. Accounts receivable Impairment

Inventories

3.4

3.2

3.2.1 Recognition and measurement

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

3.5

3.2.2 Subsequent costs

Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the location and condition necessary for it to be capable of operating in the intended manner. The cost of self construed asset included the cost of material and direct labour, any other cost directly attributable to bringing the assets to a working condition for their intended use.

3.6 3.7

Provision for doubtful debts is made based on the company policy. Bad debts are written off on consideration of the status of individual debtors. Cash and cash equivalents Share capital Cash and cash equivalents comprise cash on hand, cash in transit and cash at bank including fixed deposits having maturity of three months or less which are available for use by company without any restriction. Paid up capital represents total amount contributed by the shareholders and bonus shares issued by the company to the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation. The company maintains an unfunded gratuity scheme, provision in respect of which is made annually for the employees other than managerial staff. Gratuity payable at the end of each year has been determined on the basis of existing rules and regulations of the company. Actuarial valuation of the gratuity fund is carried out by a professional actuary. Employee benefit

3.2.3 Depreciation

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. No depreciation is charged on land and capital work in progress. Depreciation is charged on all other items of property, plant and equipment of Tongi factory on reducing balance method while straight line method is followed in respect of Dhamrai factory. The rates of depreciation are as follows: Tongi 20% 10% 15% 20% 10% Dhamrai 2.5% 2.5% 7.5% 20% 10%

3.8

3.2.4 Leased assets

Building - Factory - General Plant and machinery Motor vehicles Furniture, fixtures and equipment

The company also maintains three contributory provident funds for its permanent employees categorised as managers, officers and supervisors and workers. These are administered by the Board of Trustees

3.2.5 Capital work in progress

Leases in terms of which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and the leased assets are not recognised on the company's balance sheet. Property, plant and equipment that is being under construction/acquisition is accounted for as capital work in progress until construction/acquisition is complete and measured at cost.

3.9

A funded management pension fund is also in operation. Actuarial valuation of the gratuity fund is carried out by a professional actuary. A provision is recognized if, as a result of past event, the Company has a present legal or constructive obligation that can reliably be estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Income tax expense comprises current and deferred taxes. Income tax expense is recognised in the profit and loss account. 27 Tax Provisions

3.10

26

3.10.1 Current tax Income tax expense is recognised in profit and loss account. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The Company qualifies as a "Publicly Traded Company"; hence the applicable tax rate is 27.50 %. It enjoys 10% rebate on income tax payable so calculated for declaring dividend more than 20% of paid up capital.

4.

Property, plant and equipment

As at 1 January 2009 Taka Additions during the year Taka

Particulars

Cost/Valuation

3.10.2 Deferred tax Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they are reversed, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.

Disposals/ transfers during the year Taka

As at 31 December 2009 Taka

As at 1 January 2009 Taka

Charged for the year Taka

Depreciation

Adjustment for disposals/ transfers Taka

As at 31 December 2009 Taka

Written down value as at 31 December 2009 Taka

Land (increased by Tk 60,631,183 by revaluation in 1979) Building

Plant and machinery 573,893,788 Motor vehicles Furniture, fixtures and equipment 22,540,651

248,260,456

86,057,856

19,916,638 1,400,000

17,736,318

(37,422,435) (3,860,400)

268,177,094

86,057,856

554,207,671 20,080,251

139,838,274

472,029,796 11,917,151

16,387,327 2,103,794

9,822,588

(34,249,194) (2,355,869)

149,660,862

454,167,929 11,665,076

100,039,742 8,415,175

118,516,232

86,057,856

3.11

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Revenue Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, Value Added Tax and trade discount. Revenue from sale of goods is recognised when the significant risks and rewards of ownership has been transferred to the buyer, the company has no managerial involvement of ownership for the goods, the amount of the revenue and the cost of the transaction can be measured reliably, and it is probable that the economic benefit associated with the transactions will flow to the company. Duty drawback Duty drawback claimed on export sales are adjusted against cost of imported raw materials.

1,200,844,991

270,092,240

110,109,494 93,191,138

71,056,538

(47,869,890) (22,245,033)

(6,587,055)

1,263,084,595 1,200,844,991

334,561,723

742,877,103 713,798,026

119,091,882

54,203,539 49,748,412

25,889,830

(42,293,339) (20,669,335)

(5,688,276)

754,787,303 742,877,103

139,293,436

508,297,292 457,967,888

195,268,287

2008

Building includes properties at 24 Bangabandhu Avenue, Dhaka which were purchased in 1985 from the Government of Bangladesh at a cost of Tk 5,344,417. Sale deed is yet to be executed. 4.1 Depreciation charged to: 2009 Taka 2008 Taka

1,129,898,886

3.12 3.13 3.14 3.15

4.2

Cost of goods sold (Note 20.1) Administration, selling and distribution expenses (Note 22)

Disposal of property, plant and equipment

Original cost Taka Taka

20,450,664 33,752,875 54,203,539 Book value 3,173,241 Taka 39,918 92,119 Sale value 1,768,378 Taka 65,000

20,087,639 29,660,773 49,748,412 Mode of disposal Auction Ins. Claim Auction Purchaser Various parties M.A. Matin, Gulshan Qader

Sales proceed from wastage, scrap etc. Sale of empty dram of chemicals, split leather and other wastage of materials have been adjusted with cost of raw materials consumed. Income from non-operating activities is recognised as other income.

Particulars Machinery Computer Furniture, fixtures and equipment Time clock for attendance Motor vehicles: Dhaka Metro GA 17-1935 Shop furniture and equipment

Accumulated depreciation 34,249,194 25,082

Workers' profit participation fund (WPPF) The company provides 5% of its profit before charging such expense as WPPF in accordance with The Bangladesh Labour Act 2006. Finance income and expense Finance income comprises interest income on funds invested, interest on shop managers account held with the company and foreign exchange gain on translation of foreign currency. Interest income is recognised on accrual basis. Finance expense comprises interest expense on overdraft, finance lease and interest on shop managers account held with the company and foreign exchange loss on translation of foreign currency. All finance expenses are recognised in the profit and loss account. Earnings per share The company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

37,422,435

Dhaka Metro Kha 12-3850 Dhaka Metro Kha 11-9254

1,796,000 1,115,000 949,400

150,000

277,300

65,000

119,930 1,207,014 57,881

157,370 588,986

133,642 435,000 86,000

747,455 5,155,951

401,400

201,945 552,154

713,600

189,620 614,679

535,963

Negotiation

Ins. Claim

Negotiation Auction Ins. Claim

Negotiation

B. Chowdhury Various parties

Fazli Ali

3.16

Shop furniture

5,708,105

4.3

CIF value of capital assets Capital assets

47,869,890

386,650

42,293,339

329,432

5,576,551

57,218

4,140,332

312,050

3.17

Events after the reporting period Events after the reporting period that provide additional information about the company's position at the reporting date are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material.

There were no capital assets imported during 2009 under CIF basis. However, import of capital assets during 2009 under C&F basis was as follows: Foreign currency USD 214,082 Local currency Taka 15,100,326 15,100,326

Plant and machinery

28

29

5.

Expenses in connection with import of machinery: Air blown injection machine Steam radiator Injection moulding machine

Capital work in progress

2009 Taka 16,629 8,361 39,255

2008 Taka -

8.

Expenses in connection with gas generator equipment

Expenses in connection with construction of CDC Dhamrai building 6. Investment in subsidiary

13,546,426

250,000

Raw materials Raw materials in transit Work in process Finished goods Accounts receivable Trade (unsecured) - considered good : Export customers - BSO companies Export customers - Non BSO companies Receivables from depots Receivables from institutional sale

Inventories

2009 Taka 282,406,473 28,922,384 88,710,604 1,033,285,946 1,433,325,407 8,659,308 58,596,776 31,399,966 98,656,050 1,229,210 108,480 339,664 654,522 2,331,876

2008 Taka 317,112,970 15,088,375 74,989,549 1,052,947,539 1,460,138,433 1,362,048 8,823,283 49,666,541 17,421,638 77,273,510 1,826,440 46,336 347,390 2,220,166

13,860,671

9.

7.

On 19 November 2009 the Company subscribed an amount of Tk 19,970,000 for 199,700 shares of Tk 100 each of its newly incorporated wholly owned subsidiary BB Export Limited. This subsidiary was incorporated in Bangladesh and did not commence its operation till 31 December 2009. Deferred tax assets recognized in accordance with the provisions of BAS 12, Income taxes, is arrived at as follows: Balance as at 1 January Addition/(reduction) during the year Balance as at 31 December 12,286,000 3,714,000 16,000,000 Carrying amount on balance sheet date As at 31 December 2009 Property, plant and equipment (excluding land and certain motor vehicles) Taka 12,286,000 Taxable/ (deductible) temporary difference Taka 2,505,000 9,781,000 Deferred tax assets

Others (unsecured) - considered good : Insurance claims VAT claims Claim receivable on import Duty drawback claim receivable

Tax base Taka

Accounts receivable as at 31 December 2009 as shown above has been arrived at after deducting provision for doubtful debts of Tk. 16,467,870 which was arrived at as follows: Balance as at 1 January 18,106,773 (1,638,903) 16,467,870 Taka 21,749,888 (4,341,859) 18,106,773 (79,854) 778,598 Taka

100,987,926

79,493,676

Provision made during the year Balance as at 31 December

Provision for staff gratuity (net of payment) Provision for bad and doubtful debts Net deductible temporary difference Deferred tax assets (a)

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

420,454,951

315,932,419 -

(131,959,233) (36,174,716) 16,000,000

104,522,532

Provision reversed during the year

Bad debt written off during the year

(63,611,417)

Accounts receivable are aged as below:

Net deductible temporary difference Deferred tax assets (b) Deferred tax credit (a-b) 30

Provision for staff gratuity (net of payment) Provision for bad and doubtful debts

As at 31 December 2008 Property, plant and equipment (excluding land and certain motor vehicles)

Below six months Export customers - BSO companies Export customers - Non BSO companies Receivables from depots Receivables from institutional sale Insurance claims VAT claims Claim receivable on import Duty draw back claim receivable 8,659,308 58,596,776 31,399,966 1,229,210 108,480 339,664 654,522 Taka

2009

Over six months Taka -

Below six months 1,362,048 8,823,283 49,666,541 17,421,638 1,826,440 46,336 262,952 79,409,238 Taka

2008

Over six months Taka 31

(127,064,575) (35,611,243)

369,605,827

256,571,908 -

(127,064,575) (35,611,243) (49,641,899) 12,286,000 3,714,000

113,033,919

100,987,926

10.

Advances, deposits and prepayments Advances (considered good) to : Landlords against rent Agents and employees Suppliers against materials and services

2009 Taka 64,592,330 599,592 1,844,729

2008 Taka 42,439,851 614,737 1,271,577

12.

Share capital Authorised:

2009 Taka 200,000,000 28,507,230 108,292,770 136,800,000

2008 Taka 200,000,000 28,507,230 108,292,770 136,800,000

Advances (considered doubtful) to: Agents and employees Less: Provision against advances to agents and employees Advance income tax Security and other deposits

20,577,126 19,706,846 870,280 67,906,931 87,221,219 123,327,401 278,455,551 17,504,470 2,571,501 (369,125) 19,706,846

67,036,651

20,000,000 ordinary shares of Tk 10 each 2,850,723 ordinary shares of Tk 10 each issued for cash 10,829,277 ordinary shares (including 7,202,400 bonus shares) of Tk 10 each issued for consideration other than cash

44,326,165 17,532,594 17,504,470 28,124 44,354,289 72,390,175 93,342,405 16,319,903 1,184,567 17,504,470 2008 Over six months Taka 35,462,881 35,462,881 2008 Taka -

Issued, subscribed and paid up:

Provision against advances to agents and employees represents the following: Balance as at 1 January Provision made during the year Bad debts written off during the year Balance as at 31 December Ageing of advances are as follows:

210,086,869

The shares are listed both in the Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited and quoted at Tk. 528.30 (2008: Tk 320.70) and Tk 522.90 (2008: Tk 325.00) per share at 31 December 2009 respectively. Percentage of shareholdings: Bafin (Nederland) B.V. Local shareholders 2009 2008

Advances to:

Below six months Taka 31,495,164 33,939,485 1,844,729 599,592

2009

Over six months Taka -

Below six months Taka 6,976,970 8,863,284 614,737

Other non-resident shareholders

International Finance Corporation

70.00 20.18 0.03 9.79

Suppliers against materials and services

Agents and employees

Landlord against rent

33,097,166 33,097,166

1,271,577 2009 Taka

Classification of shareholders by holding: Holdings Less than 500 shares

100.00

136,800,000

13,390,800

95,760,000 27,606,800 42,400

Taka

70.00 21.86 0.03 8.11

95,760,000 29,895,800 11,098,800 45,400

Taka

100.00

136,800,000 % of total holding

11.

Cash and cash equivalents Cash balances: On hand In transit: From stores From depots From institutions

574,865 38,687,463 15,123,381 1,177,007 (48,603,002) 345,107,464 296,504,462 352,067,178

242,597 27,738,640 49,967,060 5,228,630 10,993,167 169,237,698 180,230,865 263,407,792

501 to 5,000 shares

6,152 525 35 15 6 6 1 4 4 6,749 1

2009

Number of holders

7,040 574 28 13 7 7 1 5 4 7,680 1

2008

91.16 7.78 0.52 0.22 0.09 0.09 0.01 0.06 0.06 100.00 0.01

2009

2008

6.96 6.01 1.54 1.43 1.26 1.82 0.32 2.88 7.78

5,001 to 10,000 shares

10,001 to 20,000 shares 20,001 to 30,000 shares 30,001 to 40,000 shares 40,001 to 50,000 shares 50,001 to 100,000 shares Over 1,000,000 shares

Balances with banks in: Current accounts Short term deposits

100,001 to 1,000,000 shares

The current accounts include book overdrafts from Eastern Bank Limited and HSBC for Tk 85,892,508 and Tk 1,296,359 respectively. 32

100.00 33

70.00

13.

Reserve on revaluation of land General reserve

Reserves and surplus

Non-distributable special reserve (Note 13.1)

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

2009 Taka

60,631,183 724,748,075 835,240,878 48,863,000 998,620

2008 Taka

17.

Unappropriated profit (Note 13.2) Non-distributable special reserve

13.1

This represents 90% of the cumulative post-tax profit in respect of certain categories of income up to 1992 as defined and directed by Bangladesh Bank. Since 1993, the requirement for continuing to create such special reserve is applicable only to the profit on sale of immovable assets such as land, buildings, etc Balance as at 1 January Unclaimed dividend reversed Final dividend -2008 Interim dividend -2009 Profit for the year Unappropriated profit

Creditors for other finance Workers' profit participation fund Personal accounts of employees and agents Security and other deposits Provident fund Tax deducted at source Pension fund VAT deducted at source Salary and wages payable Inter company payable Others Provision for tax Current year Earlier years (net of advance tax) Revenue

13.2

449,406,445 -

724,748,075

449,415,702 1,000,202

575,292,171

18.

33,141,708 50,156,293 15,160,500 6,626,798 38,401,508 1,323,668 2,778,039 4,907,315 19,864,000 1,073,975 173,433,804 184,000,000 270,922,477 454,922,477

2009 Taka

32,612,353 45,387,915 13,105,000 4,873,490 24,226,417 1,481,437 1,347,063 4,717,169 1,964,573 129,715,417 180,000,000 252,674,318 432,674,318 2008

2008 Taka

(157,320,000) (143,640,000) 873,194,520

(157,320,000) (143,640,000) 724,748,075

19.

Product category Shoe -

Unit

14.

Deferred liability represents provision for staff gratuity up to 31 December 2009. Add: Provision made during the year Less: Paid during the year Forfeited during the year Balance as at 1 January 127,064,575 144,213,941 12,254,708 131,959,233 260,583,634 278,984,626 73,648,500 18,400,992 17,149,366 140,265,275 140,265,275 12,159,718 1,040,982 127,064,575 371,977,702 387,613,341 97,465,769 158,260,087 353,562,172 97,836,316 15,635,639 -

Deferred liability

Plastic Thong

Rubber and canvas Hosiery Leather

Pair

Quantity in '000 15,044 8,754 2,072

2009

Amount '000 Taka 266,607 612,856

Quantity in '000 16,407 2,526

Amount '000 Taka 310,205 778,304

Balance as at 31 December 15. Payable to local suppliers Creditors for goods

Export -

Pair Sft.

Pair

Pair

Pair

1,327

2,062 135

3,439,060

446,504 158,116 13,554

1,910 228

8,248

1,387

2,916,341 119,816 23,332

403,360

Leather Shoes

Pair

177

Payable to BSO companies 16. Creditors for expenses

The above revenue has been arrived as follows: Gross Revenue Net of VAT Wholesale trade discount

4,995,357

58,660

208

4,623,312 2008 Taka

71,954

Payable to local suppliers Accrued liabilities

Payable to BSO companies

208,522,967 236,257,580 518,429,047

Less: Sales proceed from wastage, scrap, etc. Net revenue

5,149,352,312

2009 Taka

4,995,356,942

(145,677,736)

(8,317,634)

4,770,587,928

4,623,312,077

(136,531,196)

(10,744,655)

34

35

20.

Cost of goods sold Stock of finished goods as at 1 January Add: Cost of goods manufactured (Note 20.1) Finished goods purchased Less: Stock of finished goods as at 31 December

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

2009 Taka

832,680,083 2,823,960,512 426,925,867 4,083,566,462 1,052,947,539 3,030,618,923

2008 Taka

20.1.1 Cost of materials consumed

Description Imported: Unit Quantity

Opening stock

Value (Taka)

C&F value (USD) 1,545,468 1,610,504 576,585 -

Quantity

Purchase

Value (Taka) 107,410,000 111,930,000 40,072,641

Quantity

Closing stock

Value (Taka)

Quantity

Consumption

Value (Taka)

EVA resin PVC resin Wet Blue Others

Kg Kg Sft

102,325 176,950 113,586 -

The opening and closing stocks of goods produced as per category are shown below: Figures in '000 pairs Shoe Category Plastic Thong Rubber and Canvas Leather Closing stock 835 973 482 2,450

Opening stock 685 995 730 2,382

Local purchase

Sales proceed from wastage, scrap, etc. 2009 2008

203,144,674 113,968,296 -

152,703,462

20,465,000 18,579,750 11,396,462

961,000 1,599,000 556,684 -

1,052,807,386 (8,317,634)

622,784,024 882,196,665

77,725 150,375 66,197 -

111,488,135 135,555,107 -

8,549,750 10,526,250 4,990,972

985,600 1,625,575 604,073 -

146,851,366

1,019,924,316 (8,317,634)

663,999,351 949,786,232

119,325,250 119,983,500 46,478,131

4,740

20.1

Direct wages

Cost of goods manufactured Cost of materials consumed (Note 20.1.1)

1,961,392,914 2,313,494,148 114,222,980 47,776,047 74,843,881 3,875,547 903,246 13,818,831 5,679,643 384,666 1,695,029 1,866,587 2,266,094 20,450,664 74,989,549 88,710,604 352,101,234

2009 Taka

4,792

2,250,997,792 2,559,394,196 105,662,220 39,317,259 69,613,180 7,590,123 700,420 12,005,673 4,709,471 252,616 1,150,190 1,176,304 1,911,842 20,087,639 264,176,937 75,378,928 74,989,549 389,379 308,396,404

2008 Taka

20.1.2 Repairs and maintenance Repairs and maintenance amounting to Tk 74,843,881 includes Tk 34,646,563 (including C&F value of US$ 483,517 and EUR 12,008 of imported items) representing cost of spare parts, moulds and accessories consumed. 20.2 Statement of production Production capacity in pairs Figures in '000 23,431 30,104 6,673 2009 25,937 32,880 6,943 2008 Actual production in pairs Figures in '000 19,912 26,304 6,392 2009

Duty drawback of Tk. 2,306,041 claimed on export sales have been adjusted against cost of raw materials.

333,106,330

317,112,970

2,235,004,432

1,926,686,417

282,406,473

317,112,970

2,250,997,792

1,961,392,914

Tongi

Manufacturing overhead : Remuneration to employees Gas, water and electricity Repairs and maintenance (Note 20.1.2) Insurance Uniform to workers Health and other welfare expenses Travelling Postage Freight and transport Stationery Entertainment Depreciation (Note 4.1) Difference in work in process : Work in process as at 1 January Work in process as at 31 December Cost of goods manufactured 36

Dhamrai

22,732 28,859 6,127

2008

20.2.1 Production capacity and actual production of each category are given below: Category Installed capacity 18,560 30,104 3,340 1,531

Figures in '000 pairs

Shoe

Plastic Thong

Actual production 16,468 26,304 6,392 2,267 1,177 2008 Taka

Rubber and Canvas Leather

6,673

2,601,277,363 (13,721,055)

287,783,215

2,823,571,133

21.

2,587,556,308

2,823,960,512

Other income Profit/(loss) on disposal of property, plant and equipment Discount for early payment General trading

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation.

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

2009 Taka

144,214 6,786,217 310,976 7,241,407

37

22.

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

Administration, selling and distribution expenses

Notes

2009 Taka 360,350,283 8,646,380 38,975,461 6,551,142 62,177,793 12,286,535 9,595,338 9,977,547 6,839,209 20,991,682 93,203,114 23,040,859 68,000 418,000 5,128,947 2,454,104 431,678 44,568,980 56,997,081 123,413,785 8,655,078 2,477,165 32,174,700 31,625,199 107,215,954 6,504,322 33,752,875 1,108,521,211

2008 Taka 310,914,077 8,099,188 37,014,525 6,083,378 45,195,519 9,363,816 9,960,966 7,269,241 1,734,054 24,583,881 72,019,226 16,279,482 78,000 357,500 3,915,231 3,665,472 774,358 40,420,953 56,222,351 106,832,326 5,158,957 2,133,913 32,651,717 21,391,215 99,880,821 29,660,773 951,660,940

22.4

23.

Royalty on Hush Puppies brand , royalty on Dr. Scholl brand, Global Footwear Services fees and trade mark licence fees of Tk 8,655,078, Tk. 2,477,165, Tk. 32,174,700 and Tk 107,215,954 respectively represent equivalent foreign currency of USD 125,664 USD 35,966 SGD 660,000 and USD 1,556,674.24 provided during the year as provision for expenses. 2009 2008 Taka Taka Finance income Interest on: 4,226,193 2,230,871 Fixed deposit 6,159,715 4,971,087 Short term deposit Exchange gain Personal account 269,207 14,348 1,777,572 36,968

22.1 22.2

24.

Finance expenses Interest on: Overdraft Lease finance Personal account Emoluments to directors Remuneration Bonus Retirement benefit schemes Housing Emoluments to managers Remuneration Retirement benefit schemes Housing

10,669,463 766,401 3,154,018 3,920,419 14,606,145 17,465,488 1,041,880 2,160,000 35,273,513 81,312,938 10,337,137 9,713,959

9,016,498

2,480,692 8,672 2,553,700

22.3 22.4 22.4 22.4 22.4 4.1

25.

5,043,064

13,712,148 25,136,357 972,420 2,040,000 70,413,147 9,055,757 9,983,884

26.

41,860,925

22.1

Previous year's figures have been rearranged, wherever necessary, to conform to current year's presentation. General charges General charge represents security service, samples, bad debts, etc. Bad debts represent the following: Provision against advances to agents and employees Provision for bad debts reversed Bad debts previously write off now recovered Taka

(1,638,903) (126,136) 806,462

2,571,501

27.

Contribution to employees' provident fund and pension fund During the year 2009 the company contributed the following amounts to the employees' provident fund and pension fund: Provident fund : Managers Officers & supervisors Workers Pension fund 5,407,206 6,833,091 9,576,576 5,227,090 4,860,340 6,292,238 9,935,917 5,167,837

101,364,034

89,452,788

22.2

Legal and other professional fees

22.3

Legal and other professional fees include fees of Tk 3,956,813 (2008: Tk 2,147,215) of the statutory audit firm in connection with global reporting, tax certification and services regarding assessments/appeals and advisory services. Commission Retail Export 121,559,616 1,854,169 123,413,785 105,821,984 1,010,342 106,832,326 28.

21,816,873 27,043,963

21,088,495 26,256,332

Profit before tax This includes profit amounting to Tk 357,346,048 (2008 : Tk 387,266,038) of leather shoe factory and tannery at Dhamrai.

38

39

29.

Remittance of foreign currency

Name of party Bafin (Nederland) B.V. SSL International PLC Global Footwear Service Pte. Ltd, Singapore Wolverine World Wide Inc., USA

Nature of transaction Dividend

Currency USD

Amount in foreign currency 2,739,243

Royalty on Dr. Scholl Brand Footware services fees

SGD USD

GBP

445,500 66,884

8,625

189,604,800

Amount in local currency Taka

33.

Related party transactions

Name of the party Bata, Singapore Bata, Czech Nature of relationship Group company Group company Nature of transaction Purchase Claim Service received Sales

Transactions during the year (Taka '000) (259,497) 1,678 (555) (1,362) (867) (14) (105)

Receivable/ (payable) as at 31 Dec 2009 (Taka '000) (17,165) (382) -

21,793,900 4,643,061

1,005,621

Bata, Sri Lanka Bata, Thailand

The figures represent net of tax. 30. Earnings in foreign currency

Puppies Brand

Royalty on Hush

Bata (Malaysia) Berhad

Group company Group company

Service received

Group company

Service received Service given Purchase Service received Purchase Claim Service received Trade mark licence fees

(163) 16

(715) 340 (139) -

P.T. Sepatu Bata, Jakarta Global Footwear Service Pte. Ltd., Singapore

Group company Group company Group company Group company Group company Subsidiary company

Service received

(32,136) (107,216) (6,573) 33

(1,362) 343 (139)

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

Export of

Finished leather Shoes

Unit Pair Sft

Quantity 135,104 177,469

198,529

858,592

USD

C&F value

Bata Brand S.a.r.l., Luxembourg

13,553,601

58,660,228

Taka

Compass S.P.A., Italy BB Export Limited

Euro Footwear Holdings s.a.r.l.

Service received Liability for

Service received Subscription of shares

19,970,000 (19,970,000) (35,274) (101,364) 106

19,970,000 (19,970,000) 106 -

31. 31.1

Earnings per share Basic earnings per share (EPS)

subscription of shares Key management employee Directors Key employees Salary and other

Incorporation expenses benefits -do-

The computation of EPS is given below: Earnings attributable to the ordinary shareholders (net profit after tax) Weighted average number of ordinary shares outstanding during the year Basic earnings per share (EPS) 31.2 Diluted earning per share

449,406,445 13,680,000 32.85

2009 Taka

449,415,702 13,680,000 32.85

2008 Taka

34. 35.

Transactions with related companies are priced on arm's length basis and are in the ordinary course of business. Capital expenditure and financial commitment There were no capital expenditure and financial commitments as at 31 December 2009 (2008: Nil)

No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during the year. The number of employees for the whole year or part thereof who received a total remuneration of Tk 36,000 and above was 1,510 (2008: 1,519). Number of employees 36.

Contingent liabilities There are contingent liabilities on account of unresolved disputed corporate tax assessments and VAT claims by the authority aggregating to Tk. 654,219,000 (2008: Tk 763,492,000). Considering the merits of the cases, it has not been deemed necessary to make provisions for all such disputed claims. However, the company has so far made provision for Tk 368,852,000 (2008: 335,083,000) against the above contingent liabilities. There is also contingent liability in respect of outstanding letters of credit of Tk. 103 million and letter of guarantee of Tk. 4.2 million.

32.

Events after the reporting period For the year 2009 the Board of Directors recommended a final dividend of Tk 10.50 per share amounting to Tk 143,640,000 at the board meeting held on 20 April 2010.

40

41

Bata Shoe Company (Bangladesh) Limited Profit and Loss Account for the year ended 31 December 2009
Manufacturing Taka Revenue 4,383,915,615 Trading Taka 611,441,327 2009 Total

kK lro
2008 Total Exhibit - I

IjMVy TPr CPuU Tj

v~JrPyJJPrr lKuS / KmS j v~Jr xUqJ

Taka

Taka

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

(2,879,540,111)

1,504,375,504 7,103,518 (948,864,579) (3,355,774) 9,132,776

(358,314,029)

253,127,298 -

(3,237,854,140) 7,103,518

4,995,356,942

1,757,502,802

(3,030,618,923) 7,241,407

4,623,312,077

IJKo/IJorJ KbTJjJ mJaJ xM TJJjL (mJuJPhv) KuKoPac-Fr v~JrPyJJr KyxJPm \jJm / mVo T IJoJr / IJoJPhr kKfKjKi KyxJPm IJVJoL mOyKfmJr, 24 \Mj 2010fJKrPU IjMKfmq TJJjLr IJaKvfo mJKwtT xJiJre xnJ~ Fm Fr oMufmL WJKwf xnJ~ IJoJr / IJoJPhr kP CkKf gJTJr Fm nJa khJj TrJr \jq KjpM TruJo Jq KyxJPm IJ\ 2010 fJKrPU IJKo / IJorJ FA hKuPu xJPj Jr TruJo

1,592,693,154 (951,660,940) (5,043,064) 9,016,498

562,614,443

(159,656,632) 93,470,666 1,536,687 (564,645)

(1,108,521,211) 656,085,109 (3,920,419) 10,669,463

648,273,621

(28,419,573)

568,391,445

539,971,872 (3,714,000)

(4,722,135)

94,442,708

89,720,573 8,067,097 -

(33,141,708)

662,834,153

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

(32,612,353)

652,247,055

619,634,702 (9,781,000)

v~JrPyJJPrr Jr

kKfKjKir Jr

175,932,903 172,218,903 367,752,969

184,000,000 449,406,445 180,286,000

180,000,000 449,415,702 170,219,000

fJKrU 10.00 aJTJr rJ\ KaPTa (TJJjLPf xrKf v~JrPyJJPrr Jr ImvqA KouPf yPm)

JLr Jr

81,653,476

8,067,097

CkKKf
IJKo/IJorJ FfJrJ 24 \Mj, 2010 mOyKfmJr xTJu 10:30aJ~ iJorJA TJrUJjJ, dJTJ~ IjMKfmq mJaJ xM TJJjL (mJuJPhv) KuKoPac-Fr IJaKvfo mJKwtT xJiJre xnJ~ IJoJr/IJoJPhr CkKKf KuKkm TruJo v~JrPyJJPrr jJo Jr

kKfKjKir jJo Jr v~JrPyJJPrr lKuS / KmS j xnJTP kPmPvr kNPmt CkKKf kUJjJ khvtPjr IjMPrJi TrJ pJP

Form of Proxy

Shareholder's Folio / BO No. I/We

Please Quote

No. of Shares held

being shareholder(s) BATA SHOE COMPANY (BANGLADESH) LIMITED, entitled to vote hereby appoint Mr./Ms. as my/our proxy to attend and vote for me/us and on my/our behalf at the 38th Annual General Meeting of the Company to be held on Thursday 24 June, 2010 and adjournment thereof and the poll that may be taken in consequence thereof. As witness my/our hand this day of 2010

of

Signature of Shareholder (s) Date

Signature of Proxy Signature of Witness

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

Revenue Stamp of Tk. 10.00

I/We hereby record my/our presence at the 38th Annual General Meeting of Bata Shoe Company (Bangladesh) Limited at Dhamrai Factory, Dhaka on Thursday 24 June, 2010 at 10:30 a.m. Full name of the Shareholder (in block letter) Full name of the Proxy (in block letter) Signature Signature

ATTENDANCE

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

SHOE COMPANY (BANGLADESH) LIMITED TONGI, GAZIPUR TEL: +880-2-9800501-5 FAX: +880-2-9800511 E-MAIL: bata518@batabd.com www.batabd.com

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