ANLIMA Annual Report 2017-2018

Growth in the euro economy is projected to slow gradually from 2.4 percent in 2017 to 2.2 percent in 2018 and to 1.9 percent in 2019. The growth forecast for Japan has been marked down to 1.0 percent for 2018 following a contraction in the first quarter, owing to weak private consumption and investment. The economy is expected to strengthen over the remainder of the year and into 2019, aided by stronger private consumption, external demand and investment. Emerging market and developing economies have experienced powerful crosswinds in recent months due to rising oil prices, higher yields in the United States, dollar appreciation, trade tensions and geopolitical conflict. The outlook for regions and individual economies thus varies depending on how these global forces interact with domestic idiosyncratic factors. Financial conditions remain generally supportive of growth, though there has been differentiation across countries based on economic fundamentals and political uncertainty. With the updraft on oil exporters from higher oil prices largely offset by the combined drag on other economies from the forces described above, the group’s overall 2018 and 2019 growth forecasts remain unchanged at around 5.0%. Emerging and Developing Asia is expected to maintain its robust performance, growing at 6.5 percent in 2018–19. Growth in China is projected to moderate from 6.9 percent in 2017 to 6.6 percent in 2018 and 6.4 percent in 2019. However, India’s growth rate is expected to rise from 6.7 percent in 2017 to 7.3 percent in 2018 and 7.5 percent in 2019. Bangladesh Economy1 Currently, Bangladesh is one of the better performing economies in the world. The GDP growth was above 6% for previous decade and it made considerable progress in employment generation, agricultural production and export earnings despite some negative factors. Insufficient infrastructure, inadequate energy supply, and inefficient financial intermediation combined with high cost of doing business remained the key obstacles hindering the realization of Bangladesh’s vast economic potential. The economic progress has helped to achieve socio-economic stability as the country’s extreme poverty has been reduced to 12.8% from 17.6% in the last couple of years. The economy grew by 7.28% and 7.65% in 2016-17 and 2017-18 respectively. The projection for 2018-19 is 7.8%. 1 Future Prospects The outlook is expected to worsen slightly for advanced economies while it remains broadly unchanged in emerging markets and developing economies. The prospect of Bangladesh is expected to be good due to political stability and massive infrastructure development activities being carried out. The global Textile importers are also building their confidence on Bangladesh with improvements in the social and environmental compliances. Company Performance The overall performance remains more or less consistent with the previous year. As we know, the sales of the company mostly depend upon the woven and knit textiles export scenario of the country. Changes in product mix from yarn dyed fabrics to other diversified non yarn dyed fabrics in RMG export orders has reduced demand for our products in the recent years. As a result, the company’s sales did not improve as per our expectation. Hopefully with the gradual improvement of the Bangladesh’s RMG sector the company will do better in the future. Conclusion I am confident that with your support and confidence the company would be able to grow and create value for all stake holders. Our utmost endeavors are always there for restoration of better performance. I, on behalf of the Board, convey my sincere appreciation to our valued shareholders, regulators, suppliers, financing partners and all other stakeholders for their continued support. Our employees also deserve appreciation for their hard work and dedication to propel the Company towards betterment. May Allah help us to greater success in the coming years, “Ameen”. Hubbun Nahar Hoque Chairperson Bangladesh Economic Survey, Ministry of Finance, 2018. 10 Annual Report 2017-2018 ANLIMA YARN DYEING LIMITED

Directors' Report to the Shareholders Dear Shareholders, We welcome you to the 23rd Annual General Meeting of the Company. It is our privilege to place before you the Directors’ Report together with the Audited Financial Statements of the Company for the year ended June 30, 2018 along with the auditors’ report thereon. This report has been prepared in compliance with section 184 of the Companies Act 1994 and Bangladesh Securities and Exchange Commission Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018. Industry Outlook The Bangladesh textile industry is growing although it is yet to avail the full benefit of growth as buyers are continuing their pressure for lower price, shorter lead time and better quality. Some countries from East Asia are growing rapidly and gaining share in world apparel market. Export earnings from Knitwear and Woven sectors were US 15.18 billion and US 15.43 billion respectively in 2017-18. The export growth of Knitting and Woven RMG were 10.4% and 7.2% respectively. Achievement of target for Knit and Woven garments were 99.41% and 97.57% respectively. Bangladesh government has set export target of US 32.69 billion for the apparel sector for next year with a projected growth rate of 6.79%. If the present socio-political stability continues the textile sector is expected to achieve this growth despite many challenges. The company management therefore expects better performance in the year 2018-19. ANLIMA YARN DYEING LIMITED Annual Report 2017-2018 11

Directors' Report to the Shareholders (Contd.) Risk and Concerns Our garments and textile industry is vulnerable to global and domestic adversities and threats. International trade tensions, concern over BREXIT, working hazards of local textile industry and political unrest have contributed to business risks. As a deemed exporter the company is dependent upon direct export orders of the sector. The country’s exporters being accustomed to such risks have learned how to cope with the situation and have proven their worth so far. So, the Board of Directors assures its shareholders that the company has a competent risk management process to ensure that the system of internal control is sound in design and has been effectively implemented and monitored. The audit committee supports the board in monitoring activities of management and deals with risk management issues also. Being one of the pioneers of the sector the company is confident to minimize the risks and optimize the benefits. Performance of the company The company produces as per orders of the clients. In yarn dyeing segment the customers provide the yarn and the company provides the dyeing service. In case of sewing thread the company imports gray polyester yarn and sells the dyed yarn in its own brand name, “AN Thread”. Total revenue earnings of both products during the year was Tk 183 million against Tk 181 million of the previous year. The cost of goods sold was Tk 150 million against Tk 149 million of previous year. Net profit after tax was Tk 9.85 million, which is 1.62% lower than that of 2016-17. The management has taken aggressive marketing plan by increasing manpower. It is expected that the sales would increase considerably and the profitability would also improve accordingly. 12 Annual Report 2017-2018 Product-wise Performance 2017-18 2016-17 Particulars Yarn Dyeing Sewing Thread Yarn Dyeing Total Sewing Thread Total KG Production 733,878 205,797 939,675 837,019 167,253 1004,272 Sales 720,430 198,621 919,051 832,195 167,154 999,349 Sales Revenue (000 Tk.) 104,027 79,007 183,034 115,863 65,558 181,422 144 398 199 139 392 182 35,948 6,151 42,525 11,975 96,599 (1,069) 95,530 114 20,333 24 9,992 1,377 1,406 1505 6,053 20,341 3,480 24,061 6,776 54,658 (911) (229) 53,518 320 12,040 72 5,653 779 796 851 3,961 56,289 9,631 66,586 18,751 151,257 (1,980) (229) 149,048 148 32,373 32 15,645 2,156 2,202 2,356 10,014 Revenue (Tk. per kg) Cost of Goods Sold: Raw Materials Packing Material Manufacturing Expenses Depreciation Cost of Goods Manufactured Finished Stock adjustment WIP Stock adjustment Cost of Goods Sold Cost of Goods Sold Per Kg (Tk.) Gross Profit Gross Profit Per Kg (Tk.) Administrative Expenses Marketing Expenses Financing Cost WPPF & Income Tax Net Profit After Tax 35,097 5,000 37,334 9,926 87,357 (968) 86,389 120 17,638 24 9,170 1,399 1,031 1,318 4,720 26,656 3,797 28,354 7,538 66,345 (2,573) 292 64,064 323 14,943 75 6,965 1,062 783 1001 5,132 (000’ Tk.) 61,753 8,797 65,688 17,464 153,702 (3,541) 292 150,453 164 32,581 35 16,135 2,461 1,814 2,319 9,852 ANLIMA YARN DYEING LIMITED

Directors' Report to the Shareholders (Contd.) Product wise Performance Remuneration of Directors Due to drop of order production during the year has declined by 6.43%. Product wise, production of yarn dyeing declined by 12.32% and that of sewing thread increased by 23.05%. Accordingly the total sales volume has declined by 8.04%. For yarn dyeing the decline in sales volume is 13.43% and in sewing thread the sales volume has increased by 18.83%. Due to reduction in sales volume the yarn dyeing sales revenue has declined by 10.22%. The sewing thread sales revenue has increased by 20.51% due to increase in volume. Reduction in yarn dyeing sales was offset by increase in sewing thread sales. The cost of goods sold for all products during the year remained almost the same (82% of revenue) as previous year. The costs for sewing thread was 81% as compared to 82% of previous year and that of yarn dyeing were almost same in both the years. In view of higher sales revenue the profit from sewing thread is better than previous year. Directors including the Independent Director were paid remuneration during the year for the service rendered by them. The details may be seen from Note 29 of the Audited Accounts enclosed with this report. Extra-Ordinary Gain or Loss As per IAS 1: Presentation of Financial Statements, no item of income and expenses are to be presented as extra-ordinary gain or loss in the financial statement. There was no extra-ordinary gain or loss in the financial statements under report, during the year ended June 30, 2018. Related Party Transactions Disclosure of all related party transactions, including basis for such transaction during the financial year has been provided in Note No 28 of this Annual Report. Accounting Policies Appropriate accounting policies have been applied consistently in preparation of these financial statements and the accounting estimates are based on reasonable and prudent judgments. Preparation of the financial statements The Financial Statements were prepared in accordance with the applicable International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB). Significant variance between quarterly and annual financial statements Due to operational issues and seasonal impacts the company experienced some fluctuations in the third quarter of the year. However the company recovered in the fourth quarter and as a result of that no significant variances were observed between the Annual results. Internal Control System Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Share Offer The company had no Initial Public Offering (IPO) during the financial year 2017-18. There is no plan of Repeat Public Offering (RPO), Rights Share Offer in the near future. Utilization of proceeds from public issues, rights issues The company had no Initial Public Offering (IPO) or Repeat Public Offering (RPO) or Rights issues during the financial year 2017-18. ANLIMA YARN DYEING LIMITED The Board has ultimate responsibility for establishing an effective system of internal control. It is designed to manage rather than eliminate the risk of failure to achieve the business objectives and to provide reasonable but not absolute assurance that assets are safeguarded against unauthorized use or material loss and those transactions are properly authorized and recorded. The ultimate owner of the internal control system is the Board of Directors as it ensures that the importance of internal controls is understood across the Company. Annual Report 2017-2018 13

Directors' Report to the Shareholders (Contd.) Protection of Minority Shareholders The board took necessary care to protect the rights of minority shareholders through dealing fairly and by not taking any decision or action benefitting only the controlling shareholders. Pattern of Shareholding as on June 30, 2018 Name of Shareholders Status Significant doubt upon the ability to continue as a going concern The company has adequate resources to continue its operation without interruptions thus adopted going concern basis for preparation of financial statements. Dividend The Board of Directors have recommended 10% Cash Dividend i.e; Tk. 1.00 per share for the year 2017-18 for all shareholders except Board of Directors. In view of insufficient profit and considering shareholders interest, the sponsor directors have volunteered not to take any dividend. The proposal would be placed for approval in the Annual General Meeting. No. of Share Percentage Holding a) Other Related Parties: Parent Company/Subsidiary/ Nil Associated Companies b) Directors, Chief Executive Officer, Chief Financial Officer, Company Secretary, Head of Internal Audit and Compliance and their spouses and minor children: Mr. Mahmudul Hoque Managing Director 5,040,900 28.21% Mrs. Hubbun Nahar Hoque Chairperson 2,665,000 14.91% Interim dividend Mrs. Aniqa Haque Director 360,000 2.01% No interim dividend was declared by the Board of Directors during the year 2017-18. Mr. Alwi M Haque Director 360,000 2.01% Mr. Mr. Ahmad Ullah Independent Director Nil - Mr. M. Abul Kalam Mazumdar Chief Financial Officer Nil - Mr. M. Jahangir Alam Company Secretary Nil - Mr. Mohammad Arif Hossain Head of Internal Audit Nil - Mr. M. Abul Kalam Mazumdar Chief Financial Officer Nil - Mr. A.S.M. Jubaer Vice President (Production) Nil - Mr. Mr. Mohd. Nurun Nabi AVP (A & F ) Nil - Mr. Zahadul Islam FAVP (Commercial) Nil - Mr. Md. Mizanur Rahman Chow. FAVP (Marketing) Nil - Nil - Number of Board meetings held during the year During the year ended 30th June 2018, a total of five Board Meetings were held. The attendance of the members in the meeting are as follows: Name of the Members Mrs. Hubbun Nahar Hoque Mr. Mahmudul Hoque Mr. M. Abul Kalam Mazumdar Mrs. Aniqa Haque Mr. Alwi M Haque Mr. Ahmad Ullah Mr. M. Jahangir Alam 14 Annual Report 2017-2018 Position Chairperson Managing Director Chief Financial Officer Director Director Independent Director Company Secretary No. of Meetings Held Attending the Board Meetings 05 05 05 05 05 05 05 05 05 05 04 03 05 05 c) Executives: d) Voting Interest: Shareholders holding 10% or more Nil voting interest in the company ANLIMA YARN DYEING LIMITED

Directors' Report to the Shareholders (Contd.) Retirement and Re-election Mrs. Aniqa Haque, Director of the Company retires by rotation as per Article 127 and 128 of the Articles of Association of the Company. She being eligible, offers herself for re-election as Director of the Company. Appointment of Independent Director As per BSEC Notification No. BSEC/CMRRCD/2006-158/207/Admin/80 dated June 03, 2018 Mr. Ahmad Ullah, Independent Director has completed his tenure. The Board of Directors as per the said notification has recommended for appointing Mr. Md. Khurshed Hossain as Independent Director. His appointment would be considered in next AGM. The Board believes that his experience and knowledge would provide effective and constructive contribution to the Board. Profile of Directors & CFO i. Mr. Mahmudul Hoque, Director Mr. Mahmudul Hoque was born in a respectable Muslim family of Chittagong. He obtained Bachelor of Commerce Degree from Chittagong University. He is a born businessman as he started his business since early days of his career. Over the past thirty five years of his business career he gained significant experience in import and export trade, power plant, real estate and textile sector. Apart from Managing Director of the company, Mr. Hoque is also the Managing Director of Anlima Textile Limited, Precision Energy Limited, Anlima Energy Limited, Anlima Petroleum Limited, Allied Enterprise (Pvt.) Limited and Anlima Buildtech (Pvt.) Limited. He is also one of the sponsors Directors of Jamuna Bank Limited and International Holdings Ltd. He is very widely travelled person and visited most countries of the world. He is involved in different social development works through a host of social organizations. Anlima Energy Limited, Anlima Petroleum Limited, Allied Enterprise (Pvt.) Limited and Anlima Buildtech (Pvt.) Limited. iii. Mrs. Aniqa Haque, Director Mrs. Aniqa Haque hails from a respectable Muslim family. She is LL.M Masters in International Commercial Law and Graduate Diploma holder in Law. She completed Bar Professional Training Course (BPTC) from Cardiff University, United Kingdom. Prior to this she graduated in Master of Arts in Economics from the University of St. Andrews, Scotland, UK. In legal practice front, she has considerable experience in Apex Court Chambers, Cardiff and Circuit Court judges in Myrthr Tydfil, Wales, UK. In the corporate management arena, Mrs. Aniqa works for operations, business development, sales, client acquisition and other areas in foreign companies in UK in addition to her exposure in Anlima group companies. She has also excellent knowledge of supporting the group company’s strategic management programs. iv. Mr. Alwi M Haque, Director Mr. Alwi M Haque was born in a respectable Muslim family in Dhaka. He has completed IB Diploma in UWC Atlantic College, Wales, UK. He qualified in IBDE examinations with Edexcel High Achievers Award. He is a young man with friendly disposition. He has keen interest in business affairs and is planning to build his career accordingly. Currently he is studying Graduation in computer science in McGill University, Canad

Anlima's products are Azo-free ensuring total safety against that health-hazard. The products are Oeko Tex Standard 100 certified. . Chairman, Audit Committee Annexure-D 30 Annual Report 2017-2018 ANLIMA YARN DYEING LIMITED. 31 Financial report ANLIMA YARN DYEING LIMITED Annual Report 2017-2018. We have audited the