REPORT OF THE DIRECTORS Dear Shareholders, On behalf of the Board of Directors of Apex Footwear Limited, I welcome you all to this 26%" Annual General Meeting of your Company and have the pleasure of presenting the Annual Report along with the Audited Financial Statements for the year ended December 31, 2015. GLOBAL TRADE IS STAGNATING "Global trade, which was already growing slowly over the past few years, appears to have stagnated," said Angel Gurria, the OECD's secretary general, presenting its latest economic forecasts and predicting trade growth of around 2% this year."What happened in the past 50 years whenever there was such a slowdown in trade growth, it was a harbinger of a very sharp turn of the economy for the worse.” Gurria explained that the recent slowdown in emerging market economies, led by China, had been particularly damaging because it had come at a time when the advanced economies, in particular the Eurozone and Japan, were not yet growing at a robust enough pace to drive global growth. "A further sharp slowdown in emerging market economies is weighing down on activity and trade. At the same time, subdued investment and productivity growth are checking the momentum of the recovery in advanced economies. It's a double whammy," Gurria said. Eurozone Consumer Prices Fall for First Time in Five Years: Wall Street Journal, Jan 2015 "Consumer prices in the Eurozone fell annually for the first time since the depths of the global financial crisis more than five years ago, opening a new chapter in Europe's struggle to emerge from its lengthy economic slump." "The Eurozone is still struggling to find the building blocks for a more vibrant, job- rich recovery that would boost prices. Europe faces high unemployment in much of the region, weak business investment and geopolitical uncertainties.” The slide was fuelled by weak demand and plummeting oil prices, which are being passed on to consumers at the pump. The decline was bigger than expected and is the first sign of a much-feared deflation creeping into the 19-member currency union. Deflation is defined by prices falling over a longer period and has the side-effect of paralyzing spending as consumers wait for prices to dip even further. Apex 23More than 65% of Apex Footwear exports are destined for the Eurozone. The emergence of deflationary pressure right from the beginning of 2015 as well as the continued poor economic conditions meant also weak demand even as prices came down in Europe. Simply put, consumers were not willing or able to spend more on most goods and either deferred expenditure or did not spend as much as before. CONSUMERS ARE SPENDING LESS - LOWEST LEVEL SINCE 2011 Consumers spent less for clothing and footwear in 2015. Global expenditure on clothing and footwear was expected to decline by 1.5% in US dollar terms in 2015 to its lowest level since 2011, according to a report in Global Apparel Markets from the business information company Textiles Intelligence. The decline was largely due to depreciations of the currencies in a number of major supplying countries against the US dollar. Such depreciations have made exports from these countries cheaper in US dollar terms and this has enabled suppliers in these countries to remain competitive as sourcing locations. In China, for instance, the value of the renminbi fell against the US dollar by 4% between’ October 2014 and October 2015 after a sustained appreciation between July 2005 and October 2014. As a result, buyers who source from China hoped to be able to negotiate reduced prices. Chinese producers may also have to reduce their prices in order to remain competitive with their counterparts in Vietnam, given that the latter are set to gain from preferential access to the US market under the impending Trans-Pacific Partnership (TPP) agreement. In India, the rupee depreciated by 13% against the US dollar between 2012 and 2014. During the first nine months of 2015, it was down by 4%, compared with the corresponding period a year earlier, to its weakest level on record. The depreciation of the rupee made Indian products cheaper in US dollar terms and therefore more attractive to foreign buyers. The EURO depreciated against the US dollar by a sharp 18% in the first nine months of 2015. Exchange rate fluctuations represent one of a number of factors that weighed on the global economy in the first half of 2015. Other factors included a slowdown in demand for imports in China and a number of other emerging markets; and low prices of oil and a number of other commodities, including cotton. Furthermore, growth in goods trade, was hampered by a sharper than expected slowdown in economic growth in developing economies, the possibility of an interest rate rise in the USA, and unanticipated costs associated with the migration crisis in Europe. In China the world’s largest footwear producer and exporter in the first 8 months of 2015 total footwear exports declined. (Source China Leather Industries Association CLIA) 24© Total Footwear exports declined 3.5% from 35.957 billion USD to 34.713 billion USD. © — Rubber Shoes (MORE THAN 50%)declined 5.1% year on year. © Leather Shoe exports (ABOUT 40% of total) declined by 9% year on year. In India, the worlds second largest producer of footwear and a major competitor nation, in the first 5 months of fiscal 2015 (APRIL-AUGUST) Leather Footwear exports declined by 5%. With India's exports declining for the eleventh month running in October and no immediate recovery visible in the near future, the government decided to give a leg up to declining exports by announcing a three percent interest subsidy for five years providing that much head room for exporters to plan their strategy. This cheaper credit under the interest equalization scheme, approved by the cabinet committee on economic affairs was made available from April 2015 for both pre and post shipment rupee export credit. This timely bailout came at a time when India’s exports fell 17.5% year-on-year in October 2015 at $21.5 billion. "The decline in exports is worse than even that during the global slowdown. With this, reaching even $300 billion of exports this year looks difficult," said Ajay Sahai, director-general of the Federation of Indian Export Organisations. EXPORT GROWTH OF BANGLADESH SUFFERED A_ FAIRLY DRAMATIC DECLERATION IN THE FISCAL YEAR 2014-15 (FY15) "The growth rate plummeted to 3.3% - the lowest since FY02 when there was a negative growth. The deceleration is viewed as a matter of grave concern by various sections of society. It is of crucial importance that policy makers business people and the Economic analysts join together in identifying the determinants of export growth of Bangladesh and adopt appropriate remedial measures. Otherwise, the country's low middle income status to upper middle income country will be stunted." Source : Export Growth of Bangladesh : do we know the determinants Dr. Mirza Azizul Islam, Aug 19, 2015, Financial Express. BANGLADESH STARES AT EXPORTS REVENUE LOSS DUE TO REAELIN BDNEWS24.COM 2015-07-05 @ For the first time in Bangladesh's history, the Government accepts that annual exports will dip, blaming it on two major currencies that have lost value. The volume, says EPB chief Subhasish Bose, will not be down, but weaker Euro and Russian Rouble will mean the exporters will take home much less. Apex a 25