ANNUAL REPORT 2017-2018 AFC Acro Biotech Limmep @ AFC Acro Biotecs Linrren i| Table of Contents ‘Transmittal Letter Notice of the 8th Annual General Meeting 2 Our Vision 3 Our Mission 4 Our Objectives 5 Performance at a Clance 6 Corporate Directory 7 Financial Highlights 9 Introduction the Directors 10 Message from Chairman 12 Message from Managing Director 13 Repott of the Board of Directors to the Sharehalders 14 Corporate Governance 16 CEO/MD-& CFO Declaration to the Board 27 Auditor's Report & Audited Financial Statements 28 Proxy Form 52 ‘Attendance Slip 52 @ AFC Acao Biotec LinenTransmittal Lotter4, Date: 8th November, 2018 ‘The Valued Shareholders Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange Limited, Chittagong Stock Exchange Limited Subject: Annual Report for the year ended 30” June, 2018. Dear Sir, We are pleased to enclose a copy of the Annual Report together with the Audited Financial Statements for the year ended 30th June, 2018 along with the Auditor's Report and Director's Report for your record. Yours Sincerely, Babolo Nob Sabekun Nahar Company Secretary @® AFC Acro Biorec Lime {otNotice is hereby given that the 8th Annual General Meeting ofthe Shareholders of AFC Agro Biotech Limited will be held ‘on Thursday, 13 December 2018 at 11.00 AM at Institution of Diploma Engineers, 160/A, Kakrail VIP Road, Dhaka-1000 to transact the following busines 1. To peceive, consider and adopt the Directors’ and Auditors’ Report and Audited Financial Statements forthe year ended 30th june, 2018, 2. To approve Dividend for the year ended 30% June, 2018, 3.To appoint Auditor of the Company and fixation of their remuneration for the year 2018-2019, 4.To approve re-appoint of the Managing Director of the Company. 5. To elect the Directors of the Company. 6. To approve appointment of Independent Directors, 7.To approve Directors remuneration, £8.To approve appointment of Compliance Auditor. Date: Dhaka 278 October, 2018 By order ofthe Board of Directors Sabekun Nahar Company Secretary Er 1, The Shareholders, whose names shall appear in the Share Register of the Company or in the Depository Register on the “Record Date” ie 15th November, 2018 will be entitled to attend the AGM and receive the Dividend. 2. AMember eligible to attend at the Annual General Meeting may appoint a proxy to attend on his/her behall. The proxy form must be affixed with requisite revenue stamp and submitted to the Registered Office of the Company not later than 48 (Forty eight) hours before the time fixed for the Annual General Meeting. 3, Admission to the meeting will be strictly on production of the attendance slip attached with the Annual Report. 4, Shareholders and Proxies are requested to record their entry in time, 5. In case of non-receipt of Annual Report of the Company sent through courier, Members may collect the same from the Company's Share Office within 11th December, 2018. No additional Annual Report will be distributed at the AGM venue. No food or gift will be served in the meeting in compliance of Bangladesh Securities and Exchange Commission notification # SEC/SRMI/2000-953/1950 dated 24/10/2000 and subsequent circular # SEC/CMRRCD/2009-193/154 dated October 24, 2013. |o2| @ AFC Acro Biotech LimireoTo be the leader in biotech sector ARNUAL REPORT AFC Acro Biotech Limiteo pa 2017-2018To establish AFCABL as a major biotech products manufacturer on the world map. AFCABL will be emerging as a backward supply chain industry to local pharma sector, food sector etc. fo ero os AFC Acro Biorecs LimirepAFC Acro Biotec Linureo 05 oo 2018 2017-2018Net turnover 2017-2018 Tk. 103.5 crore ny Net turnover 2016-2017 Tk. 99.25 crore Operating Profit 2017-2018 Tk. 34.37 crore A Operating Profit 2016-2017 Tk. 32.59 crore Gross profit 2017-2018 Tk, 40.41 crore A Gross profit 2016-2017 Tk. 37.86 crore Net profit before tax 2017-2018 Tk.31.62 crore A Net profit before tax 2016 -2017 Tk.30,23 crore Net profit after tax 2017 - 2018 Tk. 35.67 crore A Net profit after tax 2016 - 2017 Tk. 26.46 crore © AFC Acro Biorech LinirepCorporate & Registered Office ‘AFC Agro Biotech Limited Navana Osman@Link 214/D, Gulshan-Tejgaon Link Road, Dhaka-1208. Phone: 8836830, 8836843,8836875 Fax; 088-02-8836825. Web Site: Share Office Tanaka Tower (2°! Floor), 42/1/Gha, Segun Bagicha, Dhaka, Phone: 9531023, 9550250 Factory ‘Uttar Shoilmary, Koiya Bazar, Batiaghata, Khulna ‘Memorable events Date of Incorporation, ‘31 August, 2010 Date of Commercial Production 7% October, 2012 Consent for IPO from SEC 27% October,2013, Listing with Stock Exchanges(DSE & CSE): 3"! February, 2014 Business Line ‘Manufacturer of antibiotics, proteins, vaccines, enzymes ete Capital Structure ‘Authorized Capital BDT 100 Crore Paid-up Capital BDT 91.08 Crore Tast AGM Held 14% December, 2017 ‘Auditor M/S Shafiq Basak & Co. Legal Advisor Haque, Ahasan & Associates, Advocate & Consultants Bankers Janata Bank Ltd. Eastern Bank Ltd, South Bangla Agriculture & Commerce Bank Ltd, Premier Bank Ltd, Dutch Bangla Bank Ltd, Islami Bank Bangladesh Ltd. AFC Aero Biotech Limited “A ANNUAL REPORT 2017-2018ABM Ghulam Mostafa Mad. Afval SM. Saifur Rahman Mad. Zia Uddin jewel Khan. Tanvir Shariar Ghani Mad. Sohel Nazmul Anwar Nazmul Anwar Ma. Zia Uddin jewel Khan Mad. Sohel ee Ma. Zia Uddin — jewel Khan Sabekun Nahar Debasish Das Gupto Chairman Managing Director Director Director Director Director Independent Director Independent Director Chairman Member Member Chairman Member Member Chief Financial Officer Ma. Khalilur Rahman Head of Internal Audit ‘Arun Kumar Kanulal Kakadia Head of Plant Operation Kutub Uddin, ‘Manager-Production Mad. Yaseer Arafat ‘Asst. Manager of Microbiology ‘Aktaruzzaman khan Asst. Manager of Quality Control Mir Md. Harun-or-Rashid Head of Marketing. ‘Abul Kashem SrManager-Admin ‘Mosammod Rowson Ara China Head of Human Resources ig © AFC Acro Biotech LinrepNon-Current assets. 1,311,747,579 | 1,089,801,660 | 835,709,292 | 619,895,484 419,752,820 Investment 72,600,000 43,820,000 31,573,839 | 22,993,365 499,680 Current Assets 542,431,157 | 419,250,384 | 364,366,907 | 166,974,227 | 6,737,034,557 Total Assets 1,926,778,736 | 1,552,872,044 1,231,650,038) 809,863,076 7,157,287,056 Share Holders' Equity | 1,682,597,994 | 1,325,704,095 | 1,061,294,922 | 737,362,340 468,796,173 Non-Current 16,968,035 22,798,895, 16,968,035 = | Liabilities Current Liabilities 227,212,708 | 204,369,054 | 1,53,387,081| 72,569,801 | 6,688,490,883 Total Share Holders’ | 1,926,778,736 | 1,552,872,044 1,231,650,038 809,863,076 7,157,287,056 Equity & Liabilities Net Turnover 992,501,929 | 864,155,813 | 599,617,852 359,781,674 1,035,593,945 Gross Profit 378,618,697 | 329,602,732 | 196,895,337 112,428,794 404,165,886 Net Profit before Tax 316,224,334 | 302,374,227 | 263,472,594 | 148,594,693 80,714,529 Net Profit after Tax 356,775,412 264,601,358 | 224,328,456 | 148,566,166 77,192,615 Earnings Per Share: (Restated): i, Normal Operation 3.47 3,32 2.96 235 2.03 ii. Considering Tax Reversal Impact as per 3.92 2.91 Govt. Gazette No, 26.00.0000.100.42.008. 17-54 Dated 14.05.2018. @ AFC Acro Biotec Limite oaIntroducing the Directors * ABM Ghulam Mostafa, Chairman Mr. ABM Ghulam Mostafa is an ex-minister and ex-member of parliament of Government of Bangladesh. He was the chairman of parliamentary standing committee. He joined the former Civil Service of Pakistan in 1956. He was the member-secretary of the first Pay Commission in 1972 and was secretaries in various ministries and represented Bangladesh Government at numerous international Organizations and Conferences like - WHO, ITU, GATT, ITO etc, and became a Minister in 1988 and held the portfolios of Energy and Natural Resources and Flood Control and Water Resource ministry. ‘+d. Afzal, Managing Director Ma. Afzal is a Managing Director of the Company. He was born In 1976 at Dhaka, He completed his bachelor degree in Business Administration, major in marketing and minor in Management from Independent University Bangladesh in 2001."This Company is looking forward to utilize his experience and insight in marketing and management. He is also a Director of Active Fine Chemicals Limited, and Director of AFC Capital Limited & AFC Health Limited. *SM. Saifur Rahman, Director SM Saifur Rahman is a Director of the Company. He was born in 1979 at Dhaka in a reputed business family. The key visionary founder of this company has a very strong background in scientific research in chemicals technology. He holds the position of Managing Director and Chief Scientist at Active Fine Chemicals Ltd. Mr. Rahman completed his bachelor degree from University of Rochester, USA on Chemical Engineering in 2000, and a master degree on Chemical Engineering in 2001. He was enlisted in the Dean of Engineering School's honor list for his outstanding academic achievements. He also won 2001 prestigious Forbes Young Entrepreneur award for his high-tech Business proposal on a futuristic drug discovery system, He worked on a collaborative research program with Merck Pharmaceuticals and University of Rochester as a PhD candidate for 3 years until before he left for Bangladesh. The concept of this project was generated during his tenure as a Process Development Scientist at UofR. Over there he worked to improve the manufacturing process of critical drugs. Later on he got selected as a PhD research scientist at University of Rochester, where he published many research articles in scientific journals. To explore the great potential of such a high-tech project requires leadership with cutting edge knowledge in relevant technology. ‘The leadership's in-depth knowledge in future of, therapeutic industry, vision and hard work will propel this organization to a 21st century's standard true global company. He is also a Managing Director of AFC Health Limited & Intelligent Design & Dynamics Limited and Director of AFC Capital Limited. ‘"Md. Zia Uddin, Director ‘Mr: Md, Zia Uddin has been the Chairman of Active Fine Chemicals Limited since 2012. Soon after graduation in Business ‘Administration; he started his career with diversified business and took control of his family business, Hamid Industrial Corporation (Pvt) Ltd. which has been running successfully with excellent reputation since 1970. He concurrently serves as a Chairman of Nakazia Holdings (Pvt. Ltd., Managing Director of Faijun Industries (Pvt, Limited, Director of AFC Agro Biotech Limited, AFC Capital Limited and Hamid Industrial Corporation (Pvt) Ltd. as well as Proprietor of Ziauddin Metal Industries, ‘Mr: Zia is a prominent business magnate, investor and philanthropist within the business community. He is serving the position of Secretary General in Bangladesh API & Intermediaries Manufacturing Association (BAIMA) and as Convener in Standing Committee on Industrial Relations, Factory Compliance, Dhaka Chamber of Commerce & Industries (DCCI). He is also the Integration Chair of Entrepreneur's Organization Bangladesh, the biggest global network exclusively for entrepreneurs and Is a Life Member of SAARC CCI, The Federation of Bangladesh Chambers of Commerce and Industry (Bcc). He has participated various national and international seminars and workshops in the UK, German, India, Singapore, Dubai, China, Korea. 10) ® AFC Acro Biotec Line“Mr, Jewel Khan, Director He is one of the Directors of AFC Agro Biotech Limited. Mr. Jewel completed his BBA from University of Windsor, Windsor, Canada and has been associated with Jewel Khan Traders the Textile Chemical Seller and played a key role at Jewel Sons Garments the Kids Wear Manufacturer as an entrepreneur and enriched the garments sector with his business background and valuable professional experience in the exciting space of Garments sector. He has a deep commitment to ‘making a difference in this sector: The creation of strategic alliances, and strategic planning of his, to indicator of our continuous efforts to develop the core team to help achieve the mission of the Company. He is also director of Intelligent Design & Dynamics Limited, “Mr. Tanvir Shahriar Ghant, Director ‘Tanvir Shahriar Ghani is a highly accomplished investment banker, He has been working in investment banking sector from many years. He served as an investment banker at Goldman Sachs, USA. He served as Head of Asian Hedge fund & Private Equity Capital Market Group. He graduated from Colombia University USA. He worked as a speech writer of Kofi ‘Anan (the then General Secretary of UN), ‘*Mr. Md, Sohel, Independent Director Ma. Sohel is an Independent Director of AFC Agro Biotech Ltd. He obtained BBA degree, major in Accounting and minor in Management from Independent University Bangladesh (IUB). He is a very dynamic and resourceful person for the company. He is the Managing Director of M/S Sohel Enterprise, Director of Super Grip Plastic Ind, (Pvt.) Ltd. and also an independent Director of Active Fine Chemicals Ltd. He is the prestigious member of Rotary Club of Dhaka, Moulovi Bazar Merchant Association and Dhaka Chamber of Commerce and Industry. *Mr. Nazmul Anwar, Independent Director Nazmul Anwar is an Independent Director of AFC Agro Biotech Ltd, He completed his Masters of Business Administration (MBA) from University of Dhaka, He has a vast experience and visible achievements in business development which adding a great value to the board and company. He is the Adviser of RAK Ceramics (Bangladesh) Limited and an Independent Director of Active Fine Chemicals Ltd. @ AFC Acro Biorecs Limite in|’ MESSAGE FROM THE CHAIRMAN Dear Shareholders, On behalf of the Board of Directors, I welcome you all and take immense pleasure in addressing the gth Annual General Meeting of the company. I would like to take this opportunity to present before you the Annual Report together with the Audited Financial Statements and Auditors Report thereon for the financial year July 2017 to June 2018 for your kind consideration and approval. Not only to diversify our business to fast growing supply and provide customer a wider range of products, we also aim to reap the benefits of friendlier mobilization of capital and labor. Further development of our employees will continue to be our priority. Through organized feedback systems, career planning, training & development, we are fast progressing to achieve our strategic objective of “forming the best team’. As you know, AFC Agro Biotech Ltd. is a first and only agro biotech company in Bangladesh has been facing challenges from its inception and finding innovative ways to sort them out too. Despite such a challenge, your company turned in a good performance and was able to manage and operate the business and to keep the growth rate upward. Your company has not slipped away from its mission and vision, furthermore remained committed to achieving a satisfactory rate of growth. Itis apparent from the performance of this year upto June 2018. Net Turnover stand on Tk. 103.5 crore, Net Profit after Tax is Tk. 35.67 crore which isa satisfactory benchmark for years to come. Finally I would like to express my gratitude to you, the shareholders for rendering support and believing in the strengths of our management team as we continue our path towards sustainable and profitable growth. Sincerely, Dore ABM Ghulam Mostafa Chairman [re @ AFC Acro Biorecu Limrreo‘* MESSAGE FROM MANAGING DIRECTOR *? At AFC Agro Biotech Limited, we are guided by our commitment to facilitate growth of our stakehold- ers, the industry and the nation, promoting ‘Inclusive Growth’. We have achieved BDT 35.67 crore in Profit after Tax in Financial year July 2017 to June 2018 for your kind consideration and approval. Your Company's innovation-led business approach helped improve market access, convert market challenges into opportunities and weather the storm of uncertainty. With only few years that we have ventured into the pharmaceutical industry in Bangladesh, we have made very good progress. Facility up gradation and expansion projects at other sites and locations have also been undertaken during the fiscal year 2017-18. To keep us ahead of competition, we expand our product range and have set up a R&D division in Khulna. Development and safety of our employees continue to be our priority. We are proud to be able to maintain high standards of environment, health and safety at all our manufacturing sites, offices and warehouses. Overall, your Company has made good progress and is poised to grow and expand in future, On behalf of the entire AFC Agro Biotech Limited team, I would like to thank you for your valuable trust and seek your continued support for all future endeavors. Sincerely Yours, $s. Md. Afzal Managing Director ® AFC Acro Biotec Line 8Report of the Board of Directors to the Shareholders Dear Shareholders, Welcome to the 8th Annual General Meeting of AFC Agro Biotech Limited, The Directors are immensely pleasured to present the Annual Report together with Directors’ Report and the Audited Financial Statements for the year ended 30th June, 2018 in accordance with the prevailing Rules and Regulations. Corporate Status and Background: AFC Agro Biotech Limited (AFCABL) was established on 31st August, 2010 as a public limited company with a vision to produce the antibiotics, proteins, vaccines, enzymes etc. AFCABL has set up a multi-purpose chemicals manufacturing facility at Uttar Shoilmary, Kolya Bazar, Batiaghata, Khulna. The plant Is established on the 3.00 acre land. The company hhas started its commercial production on 7th October, 2012. Business Activities AFCABL has been established with the target to manufacture antibiotics, proteins, vaccines, enzymes etc. from agricultural ingredients like molasses, glucose, potato starch and other nutrients and to sell those products to local ‘markets, Raw materials will be procured mostly from local suppliers. The company is producing following products as Biological Assets. Macrolide Protein ‘Acetic Acid L-lysine ‘Mono sodium Glutamate Methonione Industrial Enzyme Net Tummover for the year ended 30th June, 2018 is Taka 103.5 crore and last year's turnover of Taka 99.25 crore. Profit after tax for the year ended 30th june, 2018 is Taka 35.67 crore and last year’s profit after tax was Taka 26.46 crore, Industry outlook and possible future development in the industry: Biotech sector has a very strong outlook in the world economy in the coming days. Bangladesh imports a very large amount of biotech products every year ranging from pharmaceuticals, food, textile etc. Estimated Bangladesh markket size of biotech products are over Tk. 5000 crore. Since raw materials to manufacture these products are locally and readily available, this sector seems to hold very strong potentials, Particularly pharma products are very important to emphasize All biological products such as macrolide group antibiotics, cephalosporin group antibiotics, penicillin group antibiotics, all kind of steroids, most of the cancer drugs, human insulin, human growth hormone, immunosuppressive drugs, and vaccines are born out of fermentation or single cell biotechnology. We need to realize trips treaty will put us in very difficult situation after 2031 if we do not have our own robust manufacturing sector of these products. Hence it is important to invest into these critical industries and make it sustainable, Biopesticides and Biofertilizers will launch very soon which has very great agricultural potentiality. Risks and Concerns Ability to achieve every milestone on time is a concern. Financial risks are associated if each goal is not achieve on time. ‘The market is mature and ready to be served. Delivering the right products on time is a big challenge. Building up large pool of knowledge work force is also a matter of concern. Success of such knowledge based industry largely depends on strong force. We will put a lot of emphasize build our human resource to achieve our goals on time. Discussion on Cost of Goods Sold, Gross Profit Margin and Net Profit Margin: ‘The Statement of Comprehensive Income shows that the Cost of Goods Sold for the year ended 30th June, 2018 is Tk. 63.14 crore against Tk. 61.38 crore for the last year. Gross Profit for the year ended 30th June, 2018 is Tk. 40.41 crore against Tk. 37.86 crore for the last year. Net Profit after tax for the year ended 30th June, 2018 is Tk. 35.67 crore against ‘Tk. 26.46 crore for the last year. Continuity of any Extra-Ordinary Gain or Loss: FC Agro Biotech Limited has no any Extra-Ordinary Gain or Loss for the year ended 30th June, 2018, “ ® AFC Acro Biotecs LinenRelated Party Transaction (a) Related party transaction took place for investment in shares and short term loan this year by AFC Agro Biotech Limit- ed with AFC Health Ltd. The name of the related parties transaction have been set out in accordance with the provision of BAS - 24: Related party details are as follows: Name of the Company _ | No, OfShares ‘Total Tk. Date AFC Health Ltd. (investment) 11,00,000 11,000,000 AFC Health Ltd, (Short term loan) 50,000,000 | 30.06.2018 Total 61,000,000 (b) Further Active Fine Chemicals Limited is one of the customer of AFC Agro Biotech Limited. During this year AFC Agro Biotech Limited sold products Tk. 8,97,27,560/- to Active Fine Chemicals Limited and received Tk. 8,92,28,877 /- against sales after adjusting due balance of Tk. 35,44,315/- and balance due from Active Fine Chemicals Limited as on 30.06.2018 was Tk. 40,42,998/-. (0) Related party transaction took place during normal course of business with Active Fine Chemicals Limited. (@) Transaction with Key management personal Key management personal compensation comprised the followings: Directors’ Remuneration 5,200,000.00 Board meeting fees 255,000.00 Total 5.45: ‘The company's key management personal includes the Company's directors. Compensation includes salaries, festival bonus and meeting attendance fees, Directors Remuneration: Only four Directors take remuneration from the company. Total remuneration expenses of the Directors have been losed as an expense under the head of Administrative Expenses in the notes 21.00 of financial statements. Independent Directors do not take any remuneration from the company. Corporate and Financial Reporting: The Directors are pleased to confirm the following: 1) The financial statements prepared by the management of the company present fairly its statements state ofaffalrs, the result ofits operations, cash flows and changes in equity. 2) Proper books and accounts of the company have been maintained. 3) Appropriate accounting policies have been consistently applied in preparation of the financial statements and the Accounting estimates are based on reasonable and prudent judgment. 4) International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS) as applicable in Bangladesh have been followed in preparation of the financial statements and any departure there from has been adequately disclosed. 5) The system of Internal Control is sound in design and has been effectively implemented and monitored. 6) There are no significant daubts upon the Company's ability to continue as a going concern. 7) There are no significant deviations from last year in operating results but normal growth is there. 8) The financial data for the last five years are annexed, 9} Minority shareholders have been protected from abusive actions by, or in the interest of, controlling shareholders acting elther directly or indirectly and have effective means of redress. 10) No bonus shares or stock dividend has been or shall be declared as interim dividend. Acquisition of Assets: During the year under review, the Company invested a sum of Tk. 39.38 crore for acquisition of Fixed Assets such asland, building, piant and machinery, furniture & fixture and lab equipment. Investment: ‘This is made up as follows: Investment in Securities-Listed Company(Fair Value)-Annex-A 11,600,000 7,220,000 Investment in Securities-Unlisted Company Annex-A 11,000,000 17,600,000 Short term loan to AFC Health Ltd 50,000,000 5 Share money deposit with AFC Health Ltd. 19,000,000 Total 72,600,000 43, @ AFC Acro Biorecu Limite {1Shareholding Pattern: Shareholding patterns of the company for the 2017-2018 is shown in Annexure-II of this report. Minority Shareholders: Minority shareholders interest always looked after by the Board. Corporate Governance Compliance Report: AFC Agro Biotech Limited adheres to appropriate Corporate Governance principles. ‘The Company has also complied with all requirements of Corporate Governance as required by the Bangladesh Securities & Exchange Commission. Accordingly to Bangladesh Securities and Exchange Commission's notification no. SEC/CMRRC- 1D/2006-158/207/Admin/80: dated 3rd June, 2018 a Corporate Governance Compliance Report is shown Annexure-V of this report. Credit Ratings: ‘The summery of the up to date credit rating done by National Credit Ratings Limited (NCR) is presented below: We express our warm thanks to all our customers and stakeholders for their continued support and cooperation Financial Result: The Directors are pleased to report the financial results for the year 2017-2018: Particulars July 2017 July 2016 To To June 2018 June 2017 Net Profit After Tax 356,775,412 264,601,358 ‘Add: Profit brought forward from previous year 256,475,292 181,174,347 Less: Dividend 151,800,000 126,500,000 Less: Tax Holiday Reserve (62,800,413) 62,800,413 Profit Available for Appropriation 524,251,117, 256,475,292 Less: Proposed Dividend. 136,620,000 151,800,000 ‘Un-appropriated Profit Carried Forward 387,631,117 104,675,292 Dividend: During the year company earned Net Profit after Tax is Tk. 35.67 crore. The earning per share (EPS) is Tk. 3.47. Considering the satisfaction of shareholders, the Board of Directors has recommended 15% Stock Dividend (15 Bonus Shares for existing 100 Shares) for the year ended 30th June, 2018. Interim Dividend: No dividend was declared during the period under review as interim dividend. Capital Structure: Authorized capital of AFC Agro Biotech Limited is Tk, 100,00,00,000/- divided into 10,00,00,000 Ordinary shares of ‘Tk.10.00 each. Paid up capital of the Company as on 30th June 2018 is Tk. 91,08,00,000/- divided into 9,10,80,000 Ordinary shares of Tk10.00 each. After considering proposed 15% Stock Dividend the capital will be at Tk 104,74,20,000/- divided into 10,47,42,000 Ordinary shares of Tk.10.00 each. ‘Management Discussion and Analysis: Management's discussion and analysis has been highlighted in the Chai Director's Report. .an and Managing Director's statement and in Appointment of Auditor: ‘The auditor M/S Shafiq Basak & Co. Chartered Accountants expressed their interest to continue as auditor for the year 2018-2019. The Board recommended the proposal to appoint M/S Shafiq Basak & Co. Chartered Accountants, as the auditor of the Company for the year 2018-2019 subject to the approval of shareholders in 8th Annual General Meeting of 1e company. {16 @ AFC Acro Biotec LimrreoAppointment of Professional Firm for the certificate on compliance with the Corporate Governance Code of BSEC: M/S Mazumdar Sikder and Associates, Cost and Management Accountants, expressed their interestto continue as auditor forthe year 2018-2019. The Board recommended the proposal for appointment of M/S Mazumdar Sikder and Associates, Cost and Management Accountants, as the auditor of the Company for the year 2018-2019 subject to the approval of shareholders in 8th Annual General Meeting of the company. Environmental Role: The company maintains a high standard of pollution free environment as per Government laws. The company doesn’t hhave any activity which is harmful to the environment or society. Human Resources Development: ‘The human resources are actual asset of the company and the Board recommended maintaining regular training and development of the company personnel. The company also provides continuously relevant training for the employees to encourage self-development and to improve their efficiency as well as productivity. Excellent intermingle of young and skilled people ensure their est efforts towards growth of business. Compliance with Laws and Regulations: ‘The company always trying to comply the provision of the applicable laws and regulations of the country. Re-appoint the Managing Director of the Company The Board of Directors recommended to appointment Mr. Md. Afzal as the Managing Director for the period of S (Five) ‘years with effect from 30th June, 2018 which will be confirmed by the shareholders in the 8th Annual General Meeting. Board Meetings & Attendance: During the year, 20 (Twenty) Board Meetings were held. The attendance record of the Directors is shown in Annexure-I of this report. The Board of Directors did not take attendance fees for the year 2017 -2018. Going Concern: ‘The Board of Directors has reviewed & analyzed the Company's business plans and {s satisfied that the Company has adequate resources to continue its operations in the foreseeable future. Accordingly the Financial Statements is prepared based on the going concern concept. Election of Directors: Mr. Md. Zia Uddin and Mr. Tanvir Shahriar Ghani retired from the position of Director by rotation and Mr. Mad, Zia Uddin and Mr. Tanvir Shahriar Ghani were re-elected as Directors of the company. Acknowledgements: ‘The Board of Directors expresses their sincere gratitude and appreciation for the assistance, cooperation and guidance received by the Company from Drug Administration, Bangladesh Securities & Exchange Commission, Dhaka Stock Exchange Limited, Chittagong Stock Exchange Limited, Bangladesh Bank, Commercial Banks, all other regulators, suppliers, clients, shareholders and employees of AFC Agro Biotech Limited for their contribution and their continued support and confidence. ‘Thank you all On behalf of the Board of Directors dacto ABM Ghulam Mostafa Chairman ® AFC Acro Biorecs Line ”Name of Directors Position Mecting Held “Attendance ‘ABM Ghulam Mostafa , (Rep: By AFC Capital Ltd.) coalian ey zu ‘Ma. Afzal Managing Director 20 20 S.M. Saifur Rahman Director 20 20 Md. Zia Uddin Director 20 20 Jewel Khan. Director 20 20 Tanvir Shariar Ghani Director 20 14 Md. Sohel Independent Director 20 17 17 Razaul Helal Independent Director 20 (Resign rom the Board date 19/06/2016) 2 2 Nazmul Anwar Independent Director ere eereatian Director dated: 19/06/2018) Name of Directors Position No, of Shares % of Shares eo son 30-06-2018, 30-06-2018 1. Parent/Subsidiary/Associate companies and other related parties. era Ee Cites el 1.09.38708, 201 2Directors, CEO, CS, CFO, HiA and thelr spouses and minor children: 2A, Directors ‘ABM Ghulam Mostafa ce 732,400 300 (Rep: By AFC Capital Ltd) ‘Md, Afzal | Managing Director 20,12,868 2.21 SM. Saifur Rahman Director 21S7A4S 303 Md. Zin Uddin Director 20,1268 221 Jewel Khan Director 29.14,560 320 “Tanvir Sharia Ghani Director 18.21.60 2.00 Md. Sohel Independent Director - - Nazar Anwar Independent Director : : ZB. CEO, 5, CFO, HIAG: Debasish Das Gupto Chief Financial Officer - - Sabekun Nahar Company Secretary = = Md. Khalilur Rahman Fiead of Internal Audit = = 3, Executive (Top & persons other Cez0/¢s/cFO/HIAC) ‘Arun Kakadia Sr Vice President : ‘Kutub Uddin AVP (Production) ~ ~ Mir Md. Harun-or-Rashid_ AVP (Marketing) ~ ~ ‘Md. Abul Kashem Sr, Manager (Admin) ~ ~ 4, Shareholding 10% or more voting - - right ‘Active Fine Chemicals United 10938708 i201 18 ® AFC Acro Biotecs Linen* Md, Zia Uddin, Director Mr. Md. Zia Uddin has been the Chairman of Active Fine Chemicals Limited since 2012. Soon after graduation in Business Administration; he started his career with diversified business and took control of his family business, Hamid Industrial Corporation (Pvt) Ltd. which has been running successfully with excellent reputation since 1970. He concurrently serves as a Chairman of Nakazia Holdings (Pvt) Ltd., Managing Director of Faijun Industries (Pvt.) Limited, Director of AFC Agro Biotech Limited, AFC Capital Limited and Hamid Industrial Corporation (Pvt) Ltd. as well as Proprietor of Ziauddin Metal Industries. Mr. Zia is a prominent business magnate, investor and philanthropist within the business community. He is serving the position of Secretary General in Bangladesh API & Intermediaries Manufacturing Association (BAIMA) and as Convener in Standing Committee on Industrial Relations, Factory Compliance, Dhaka Chamber of Commerce & Industries (DCC), He is also the Integration Chair of Entrepreneur's Organization Bangladesh, the biggest global network exclusively for entrepreneurs and is a Life Member of SAARC CCl, The Federation of Bangladesh Chambers of Commerce and Industry (FBCCH), He has participated various national and international seminars and workshops in BSCIC and LME (London Metal Exchange) in the UK, * Mr. Tanvir Shahriar Ghani, Director Tanvir Shahriar Ghani isa highly accomplished investment banker. He has been working in investment banking sector from many years. He served as an investment banker at Goldman Sachs, USA. He served as Head of Asian Hedge fund & Private Equity Capital Market Group. He graduated from Colombia University USA. He worked as a speech writer of Kofl ‘nan (the then General Secretary of UN), * Mr, Nazmul Anwar, Independent Director ‘Nazmul Anwar is an Independent Director of AFC Agro Biotech Ltd. He completed his Masters of Business Administration (MBA) from University of Dhaka, He has a vast experience and visible achievements in business development which adding a great value to the board and company. He is the Adviser of RAK Ceramics (Bangladesh) Limited and an Independent Director of Active Fine Chemicals Ltd, @ AFC Acro Biorecn Limireo {19A MAZUMDAR SIKDER AND ASSOCIATES OSS Cost & Management Accountants Report to the Shareholders of AFC Agro Biotech Limited on compliance on the Corporate Governance Code We have examined the compliance status 10 the Corporate Governance Code by AKC Agro Biotech Limited for the year ended on Tune 30, 2018. This Code relates 10 the Notifieation No. BSEC/CMRRCD?2006-158207/Admin/80, Dated: 3 June 2018 of the Bangladesh Securities and Exchange Commission Such compliance with the Corporate Governance Code is the responsibility of the Company. Our ‘examination was limited to the procedures and implementation thereof as adopted by the Management in ‘ensuring compliance tothe conditions ofthe Corporate Govemance Code, ‘This ig scrutiny and verification and an independent sudit on compliance of the conditions of the ‘Corporate Governanee Code as well as the provisions of relevant Bangladesh Secretarial Standards (BSS) 285 adopted by Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as thase standards sre not inconsistent with any condition ofthis Corporate Governance Code, ‘We state thet we have obtained all the information and explanations, which we have required, and after due serutiny and veriflation thereof, we report that, in our opinion: (2) The Company has complied with the cond tions of the Corporate Governance Cade as stipulated in the above mentioned Corporate Governance Code issued by the Commission. (b) The Company hes complice with the provisions of the relevant Bangladesh Sceretarial Standards (BSS) as adopted by the Insitute of Chaetered Secretaries of Bangladesh (ICSB) as required by this Codes (¢} Proper books and reconls have been kept by the company as required under the Companies Act, 1994 the securities laws and other relevant laws; und (2) The governance of the company is satisacoy. For Marumdar ler and Associates a Place -Dhaka. Md. Silanddin Sikder FCMA Date- November 08 ,2018 Cost & Management Accountants 1105/4 (3rd Floor), Kakrail, Ohaka ~ 128300376, Fax:02-8300375 fo @ AFC Acro Biorecn LimreoCondition Title Compliance Status | Remarks No. Not (any) Complied | complied 1 | Board of Directors: 11 | Boatals Size: The number of te board members shall not be Jess than 5 (five) and more than 20 (twenty) Vv 12 | Independent Directors: 12 (| One fifth (1/5) ofthe total number of directors T Does not hold any share or holds less than 1% shares of the 120) | total paid-up shares. v Not connected with any Sponsor/Director] shareholder who 1.2 G1)) | hold 1% or more shares of the total paid-up shares onthe basis | of family relationship. as not an executive ofthe company in immediately preceding 12002 | 2fnancial years. v Does not have any other relationship, whether pecuniary or 12(ia) | otherwise, with the company or its subsidiary/associated| companies. Not a member TREC holder, director or officer of any stock 120) | exchange. v Who is not a shareholder, director excepting independent 1.24) | director or officer of any member or TREC holder of stock | exchange or an intermediary ofthe capital market Not a partner or an executive or was not a partner or an 1.2(0)@) | executive during the preceding 3 (Cree) years of any statutory Vv audiefirm. 1.24) hy pata independent director in more than 5 (five) listed v Not been convicted By a court of competent jurisdiction as @ | 1201 _| defaulter in payment of any loan toa bank or a NBFI. Not been convicted for a criminal offence involving moral 12 (i) turpitude, v 41.2 (tt) | Nominated by the board of directors and approved by the ogra on shareholders in the AGM. v ‘epee sli 12) _ | Notremain vacant for more than 90 (ninety) days. Tv "Tenure of ofice ofan independent director shall be fora period 120) | of 3 (three) years, which may be extended for 1 (ane) term] V. only 13 | Qualification of Independent Director (1D): 13, _ | Knowledge of Independent Directors 3 (i _ | Background of Independent Directors Business leader who Is or was a promoter or director of an unlisted company of any listed company or a member of any I) national or international chamber of commerce or business v association ® AFC Acro Biorecs Line 2ee {i} | jeast educational background of bachelor degree in economics Soba thc A Boas 14 Director or Chief Executive Officer: UI eee ee cree 14(0) | another listed compan v Oe ae aol + eae the Chairperson and Managing Director or CEO v Fate (crore lec fever eniard ont otercetina| |e] See 150 | industry. vi oe u on y — 150%) | profit Margin. v Le u “Ls (ui) _ | Uillization of proceeds from public issues, rights issues and/or N/A LS (vil) | through any others. 15 (viii) ‘Explanation if the financial results deteriorate after the N/A company goes for IPO, RPO, Rights Offer, and Direct Listing. Explanation about significant variance occurs between N/A 15 (ix) Quarterly Financial performance and Annual Financial aa TS (ei) | Fairness of Financhal Satement v Atal genet ts zl TS(uii) | Adoption of appropriate accounting policies and estimates. TY 22 ® AFC Acro Biotecs Linenadopted by the Institution of Chartered Secretaries of Bangladesh @ AFC Acro Biorecs Limite (23) 1.5 (xiv) _| Followed [AS and IFRS in preparation of financial statements, v 15 (au) _| Soundness of internal control system. v Statement that minority shareholders have been protected 1561) | from abusive actions and have effective means of redress v 5 (wvil)_| Ability to continue as a going concern. v 1.5 (evs) | Sianificant deviations from the ast years N/A 15 ¢an)_| Rey erating nancial data fa las preceding (iv) v “ES (xx) _| Reasons for not declared dividend N/A Board's statement on the reason for not dedared interim 15 (0a) | dividend v 15 ¢aiy_| Number ofboard meetings eld uringheyearand v 15 Gait) | Pattern of shareholding 15 (xl). | Parent/Subsidiary/Assoclated Companies and other related v a) s. 15 (xl) | Directors, CEO, GS, CFO, HIAG and their spouses and minor] children Executives v 10% oF more voting interest. v ‘Appointment/re-appointment of director: Resume of the director Expertise in specific Functional areas Holding of directorship and membership of committees of the (sxiv)e)_| board other then this company. Management's discussion and analysis signed by CEO or MD 15Cav) || focusing on: ‘Accounting policies and estimation for preparation of financial scone) | Fetements pe “Lstanypy | changes accounting policies and estimation ands efects Comparative analysis of financial performance or results and | 1.5(v}e) | financial position as well as cash flows for current year with preceding five years explaining reasons thereof Lsgawa) | compare such financial performance or results and fnanclal position as wel as cash flows with the peer industry scenario Ee) ee eae a ee Risks and concerns issues related to the financial statements, | __ 15¢0~))) | explaining such risk and concerns mitigation plan of the company. Future plan or projection or forecast for company’s operation, | 1.500%)g) | performance and financial position shall be explained in the next AGM (au | Desaration o certification by the CEO and CFO tothe Board ‘The report as well as certificate regarding compliance of this | J 15Gcxvl) | code as required ‘Meetings of the Board of Directors shall comply with applicable ig | Provisions of the relevant Bangladesh Secretarial Standards as|1.7 | Gede of conduct for the Chairperson, other Board Members and i CEO/ Managing Director: Code of conduct determined by Nomination and Remuneration 170 | Committee( NRC) 17 (iy | Code ofconduct shall be posted onthe website 2, | Governance of Board of Directors of Subsidiary Company = ‘Composition of the Board of Directors: N/A ‘At Teast 1 (one) independent director to the subsidiary N/A ‘company. ‘Submission of Minutes to the holding company. N/A Review of Minutes by the holding company. N/A Review of Financial Statement by the holding company. N/A ‘Managing Director/ CEO, CFO, Head of Internal Audit and compliance (HIAC) and CS aging pl “tp a) _ | Appointed by the Board 3qpb) | Diflerent individuals appointed Tor only one position of MD/CEO, CFO, HIAC and CS ‘The MD/CEO, CFO, HIAC and CS of a listed company shall not 3().) | hold any executive position in any other company at the same time Defined respective roles, responsibilities and duties of MD/CEO, v 304) | cro, Hiacand cs ‘They shall not remove from their position without approval of 3G) 2) | the Board as well as immediate dissemination to the ‘commission and stock exchange(s) ‘Attendance of MD, CFO, CS and HIAC at the meeting of the Board of Directors. 30) Duties of MD or CEO and CFO: ‘They shall certify to the Board that they have reviewed 3(4H}a) | financial statements for the year and that to the best of our knowledge and belief ‘These statements do not contain any materially untrue (4(a) 1) | statement or omit any material fact or contain statements that might be misleading ; ‘These statements together present a true and fair view of the 3i(@) i) | company’s affairs and are in compliance with existing accounting standards and applicable laws. ‘They shall certify that there are, to the best of knowledge and belief, no transactions entered into by the company during the 3GDP) | year which are fraudulent, illegal or violation of the code of conduct for the company’s Board of Directors or its members. Seung) | cettiication of MD/CEO and CFO shall be disclosed in the ‘annual report. 4, | Board of Directors Committee: ‘Audit Committee 40) ‘4)_ | Nomination and Remuneration Committee z ‘Audit Committee: (9 _| Responsibility to the Board of Directors: 5(a)_| Constitution of Audit Committee 5 (0d) _ | Assistance of the Audit Committee to Board of Directors. 5 Audit Committee shall be responsible to the Board. [2s) @ AFC Acro Biorecu Lime5(1)__| Constitution ofthe Audit Committee: S(iijay | Atleast 3 (three) members. v “The Board shall appoint members oF the Audit Committee who 592) | shail be non-executive directors excepting Chairperson of the | Board and shall include atleast ane independent director Sie) | Qualification of Audit Committee members v “Saya | Term of Service of Audit Committee members: v Stine) | Secretary of the Audit Committee T Stig | Quorum ofthe Audit Committe. v ‘53 __ | Chairman of the Audie Committe: $3 (| Boardof Directors shall select the Chairman: T In absence of Chairperson, the remaining members may elect Nosech 5300) | one of themselves as Chairperson. incidence arose ‘Chairman of the audit committee shall remain present in the T 5300 | ce. 54 __| Meeting of the Audit Committee 5.4())__ | Atleast four meetings ina financial year, v 54(H) _ | Quorum ofthe Audit Committee meeting. v 55 _| Role of Audit Committee: 55 ()_| Oversee the financial reporting process. v 55 (i) _| Monitor choice of accounting policies and Principles v S35 (ai _| Monitor Internal Control Risk management process T S35 iv) | Oversee hiring and performance of external auditors. T 55 (w) | Hold meeting withthe external or Watutory auditors Tor review *S() | of the annual financial statements before submission to the board for approval or adoption, 55.0 | Review the annual financial statements before submission to| J 0 the board for approval. Ss qviy | Review the quarteriy and half yearly financial satements | before submission tothe board for approval 55 (vit)_| Review the adequacy of internal audit function v 55 (i)_ | Review the Management's discussion and analysis v 5.509) Review statement of significant related party transactions. Vv Review Management Letters/ Letter of internal Control v 55s) | weakness isstied by statutory auditors. s5caiy | Oversee the determination of audi fees Based on scope and v ath magnitude. Disclosure about the uses/applications of funds raised by N/A 55 (xii) | tpoyro, Right issue. 5.6 __| Reporting ofthe Audit Committee: 5.61 _ | Reportingto the Board of Directors 561 ()_| Activities of Audie Committee, v 5.6.1 (W) a) | Confers of imerests. mi 5.61 (Wb) | Material defectin the internal control system oe EESTCET ey Rsetamensen oc ere aleseanal arco ee 5.61 (i) | Any other matter. oe $62 | Reporting to the Authorities N/A 57 | Reporting tothe Shareholders and General investors. © AFC Acro Biorech Limireo o‘Nomination and Remuneration Committee (NRC) 6 ety | Responsibility to the Board of Directors Gt) ay | Constitution ofthe NRC eq) b) | Assistance of the NRC wo the Board of Directors. {| The Terms of Reference (ToR) ofthe NRC (i | Constitution oF NRE Sil) ay | Atleast three members Gib) | All members shall be non-executive directors 6 (it)c) _| Nominated and appointed by the Board Gi a) | Board shall have authority to remove and appoint 6 ie) | Board shall ithe vacancy within T8Odays tan | Te Chairperson may appoint or co-opt any external expertand Nosuch for member(s) of staff to the committee incidence arose Stipe | Secretary of the Commitee. Guy ny | Quorum ofthe Commits. v (ii) | Nomembers shall receive any remuneration. a Chairperson af the NRG Board of Directors shall select the Chairman. absence of Chairperson, the remaining members may elect Sti ©) | one of themselves as Chairperson. Ely | Chairman ofthe NRCshal remain presentin the AGH 6(iv) Meeting of the NRC: Gtivyay | Atleast one meeting ina fnanclal year Tobe flowed (iv) by _| The Chalrperson may convene any emergency meeting v Give) | Quorum of the NRC meeting. v tiv) a) [EACH meeting shall be duly recorded in the minutes and "9 confirmed in the next meeting of NRC {uy __| Role ofthe NRC: (va) _| Stall be independent and responsible to the Board and to the shareholders {{¥)B)__| NRC shall oversee the Following matters: Formulating the criteria for determining qualifications, positive 6) )1)_ | attributes and independence of a director and recommend policy tothe Board by ay| The level and composition of remuneration is reasonable and 6090) 9) | sufficient «7 by1)6)| The Felatonship of remuneration to performance is clear and 00) P| meets appropriate performance benchmark «) 8)1)q | Remuneration to directors, top level executive reflecting short 60) | and Jong term performance objectives appropriate to the ‘tspoyin_| Devising a policy on Board's diversity s¢uypyiiy | Mentifving persons who are qualified to become directors and who may be appointed in top level executive position “ape | Evaluation of performance of independent directors and the SP) | Board Needs for employees at diferent Tevel and determine selection, HW) | transfer or replacement and promotion. Developing, recommending and reviewing annually the (PI) | company’s human resources and training policy Disclose the nomination and remuneration policy and| evaluation criteria and activites of NRC in the annual report. 28) @® AFC Acro Biorecs Limtren7 | External/Statutory Audito 7(@ | The issuer company shall not engage its external or statutory | V auditors to perform the following services 7 (a) _| Appraisal or valuation services or Faimess opinions. Financial information systems design and 70%) | implementation. " Td _| Bookkeeping. 7) d) | Broker-dealer services. 7 ()e) _ | Actuarial services| PCT siecle eects 7 ))g)__ | Services thatthe Audit Committee determines ree ee ee 7) | governance as required under clause (i) of condition no. 9(1). Zmp)_| Any other service that creates conflict of interest aaa 7 (uy __| Audit firms shall not hold any share ofthe company they audi Representative of extarnal oF strutory auditors shall remain ay present in the AGM/EGM. | Maintaining a website by the company The. company shall have an official website linked with the 80) stock exchange v BED __| Tie website shall Koop functional ram the date of listing ‘Available the detailed of disclosures on website as required acu | tinder the listing regulations of the concerted stock exchange ey 9:____ | Reporting and Compliance of Corporate Governance ‘Obiain certificate about compliance of conditions of Carparaby 9) Governance Guidelines. 9) | Compliance auditor shallbe appointed in the AGM. Walbeapponet (si [Ares era i rectorelrecce ‘The Board of Directors of AFC Agro Biotech Limited has constituted an Audit Committee according to the conditions of Bangladesh Securities and Exchange Commission's (BSEC) guidelines. All members of the Audit Committee are financially literate and are able to analyze and interpret financial statements to effectively discharge their duties and responsibilities as members of the Audit Committee, ‘The Audit Committee consists of the following members: ‘Name of the Directors: Designation Position of Audit Committee ‘Nazmul Anwar Tadependent Director Chairman of Audit Committee Ma. Zia Uddin Director Member Jewel Khan Director ‘Member “Sabekun Nahar ‘Company Secretary Secretary ‘The scope of Audit Committee was defined as under: a) Review and recommend to the Board to approve the financial statements prepared for statutory purpose; bb) Report to the Board of Directors on internal audit findings from time to time considering the significance of the issues; ©) Carry on a supervisory role to safeguard the systems of governance and independence of statutory auditors; and ) Review and consider the internal auditor's report and statutory auditor's observations on internal control. Activities carried out during the year ‘The Committee reviewed the internal audit reports, quarterly, half yearly, annual financial statements and the external audit report and recommended to the board for consideration. The Committee did not find any material deviation, discrepancies or any adverse finding observation in the areas of reporting. sd/- Nazmul Anwar Chairman Audit Committee @ AFC Acro Biorecn Limireo ler‘The Board of Directors of AFC Agro Biotech Limited has constituted a Nomination and Remuneration Committee according to the conditions of Bangladesh Securities and Exchange Commission's (BSEC) guidelines. ‘The NRC Committee consists of the following members: ‘Name of the Directors. Designation Position of NRC Committee Mr. Md. Sohel Independent Director Chairman of the Committee Mr. Md. Zia Uddin Director Member Mr. Jewel Khan Director Member Ms. Sabekun Nahar Company Secretary Secretary ‘The scope of NRC was defined as under: a) NRC shall be independent and responsible or accountable to the Board and to the Shareholders; b) NRC shall oversee, among others, the following matters and make report with recommendation to the Board; {) formulating the criteria for determining qualifications, positive attributes and independence of a director and recom- mend a policy to the Board, relating to the remuneration of the directors, top level executives, considering the following: a) the level and composition of remuneration js reasonable and sufficient to attract, retain and motivate suitable directors torun the company successfully; b) the relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and ) remuneration to directors, top level executive involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to working of the company and its goals; ii) devising a policy on Board's diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality; i) Identifying persons who are qualified to become directors and who may be appointed in top level executive position in accordance with the criteria laid down, and recommend their appointment and removal to the Board; iv) formulating the criteria for evaluation of performance of independent directors and the Board; v) developing, recommending, and reviewing annually the company’s human resources and training policies; Activities carried out during the year ‘The Committee assists the Board in formulation of the nomination criteria or policy for determining qualifications, positive attributes, experiences and independence of directors and top level executives as well as a policy for formal process of considering remuneration of directors, top level executives. Sd/- Ma. Sobel Chairman Nomination and Remuneration Committee (2s @ AFC Acro Biorecu Lime27th October, 2018 ‘The Board of Directors AFC Agro Biotech Limited Navana Osman@Link 214/D, Gulshan-Tejgaon Link Road Tejgaon, Dhaka-1208. Sub: Declaration on Financial Statements for the year ended on 30th June, 2018, Dear Sir, Pursuant to the condition No. 1(5) (xxvi) imposed vide the Commission's Notification No. BSEC/CMRRCD/2006- 158/207 /Admin/80 dated 3rd June, 2018 under section 2CC of Securities and Exchange Ordinance, 1969, we do hereby declare that: 1) The Financial Statements of AFC Agro Biotech Limited for the year ended on 30th June, 2018 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed; 2) The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view; 3) The form and substance of transactions and the Company's state of affairs have been reasonably and fairly presented in its financial statements; 4) To ensure above, the company has taken proper and adequate care in installing a system of internal control and maintenance of accounting record 5) Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the company were consistently followed; and. 6) The management's use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern, In this regards, we also certify that:- 4) We have reviewed financial statements for the year ended on 30th June, 2018 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 presenta true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws. ii) There are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violation of the code of conduct for the company’s Board of Directors or its members. fo wy Md. Afzal Debasish Das Gupto Managing Director Chief Financial Officer [29 @ AFC Acro Biorecu LimeWe have audited the accompanying financial statements of AFC AGRO BIOTECH LIMITED, which comprise the statement of financial position as at 30 june 2018, and the statement of profit or loss and ather comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of this financial statements in accordance with Bangladesh Financial Reporting Standards (BFRSs), the Companies Act1994, Securities and Exchanges rules 1987 and for such internal control as management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, Auditor's Responsibility Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSAs). Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about wether the financial statements are free from material misstatement. ‘An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements, The procedures selected depend on our judgment, including the assessment of the risks of material misstate- ments ofthe financial statements, whether due to fraud or error. In making those risks assessments, we consider internal control relevant to the entity's preparations and fair presentations of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effective- ness ofthe entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentations of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit Basis for Qualified Opinion Provision for current income tax and deferred tax required as per para 12 & 15 of BAS 12 has not been made, as disclosed in note # 15, based on gazette No- 26,00.0000.100.42.008.17-54 dated 14-05-2018 by Commerce Ministry under the caption “National Active Pharmaceutical Ingredients (API) & Laboratory Reagents Production and Export Policy” regard- Ing tax exemption against which SRO from National Board of Revenue (NBR) is yet to be obtained. Qualified Opinion In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of ARC AGRO BIOTECH LIMITED as at 30 June 2018 and its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRSs). Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994 and the securities and exchanges rules 1987, we also report the following: (@) We have obtained all the information, explanations and documents which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof. (i The Company management has followed relevant provision of law and rules in managing the affairs of the Company and that proper books of account, records and other statutory books have been properly maintained. (Gli) The Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income dealt with by the report are in agreement with the books of account and returns; and (iv) The expenditure incurred and payments made were for the purpose of the Company's business for the year. Ha jweeDs Dated - Dhaka SHAFIQBASAK & CO, October 29, 2018 Chartered Accountants ® AFC Acro Biorecs Line a0