2 T his document provides you with detailed and comprehensive information about the overall performance of Bangladesh Online Limited in 2003. A printable version is also available at the BOL web site : www.bol-online.com Table of Contents 03 Corporate Directories 04 Mission Statement 05 Overall Highlights of BOL 06 Selected Data for Shareholder, Investor & Customer 07 Creating Shareholder Value 08 3 Years Statistics 09 Engine of Growth 10 Notice 11 Annual General Meeting of 2002 12 Chairman's Statement 16 Directors' Report 17 Statement on Corporate Governance 18 Auditors' Report to the Shareholders 20 Balance Sheet 21 Profit and Loss Account 22 Statement of Changes In Equity 23 Cash Flow Statement 24 Index of Notes to the Financial Statements 25 Notes to the Financial Statements Annexed Proxy Form BANGLADESH ONLINE LIMITED 3 Corporate Directories Board of Directors CHAIRMAN A S F Rahman Management Committee MANAGING DIRECTOR Chowdhury Hafizur Rahman CHIEF OPERATING OFFICER Syed Samiul Wadood VICE CHAIRMAN Salman F Rahman MANAGING DIRECTOR Chowdhury Hafizur Rahman DIRECTOR Iqbal Ahmed Osman Kaiser Chowdhury CHIEF INFORMATION OFFICER Ershad Shafi Chowdhury COMPANY SECRETARY Md. Asad Ullah, FCS ANNUAL REPORT 2003 4 BANGLADESH ONLINE LIMITED 5 highlights highlights Overall Highlights of the Company company Our Products & Services ◆ ◆ ◆ ◆ Dial-up Internet Services Corporate Dedicated Broad Band Internet Web Base software Computer Peripherals Our Service Areas Major Competitors ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ Gulshan Banani Baridhara Dhanmondi Eskaton Maghbazar Kawran Bazar Motijheel Dilkhusa ISN Ltd. Agni Systems Ltd. Proshika Net Ltd. Aftab IT Ltd. AccessTel Ltd. Grameen Cybernet Ltd. Global Online Service Ltd. Our Customers Market Leadership ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ BOL is still the proven Market Leader in the Internet Service business. BOL has the largest number of telephone lines for any ISP in Dhaka City and this large capacity has enabled it to meet demand for its services. BOL has also aggressively expanded its Points of Presence (POP's) to provide Broadband Services in different areas of Dhaka City, including Gulshan, Tejgaon and Motijheel. Our dedication to customer satisfaction is unmatched by our competitors. Government bodies Shipping Lines Air Lines Financial Institutions Corporate Groups Multinational Companies Foreign Missions Universities Individuals ANNUAL REPORT 2003 6 Selected Financial and Statistical Data for Shareholder, Investor & Customer We recommend that the following information be read in conjunction with our financial statement, the accompanying notes and other information included in this report. Particulars Financial Total Revenue Total Expenses Gross Profit Gross Profit to sales Net Profit Net Profit to sales Capital Expenditure Depreciation & amortization Cash and cash equivalents Total assets Total debts & Liabilities Shareholder' equity Operating Data Network Operating Centers No. Dial-up Telephone Lines Number of employees - closing Investment information Number of Shareholders Stock price - closing Shareholder' equity per share Earning per share Proposed Dividend 2003 2002 Changes Amount % 106,761 69,293 50,395 47.20% 37,469 35.10% 15,838 18,705 802 393,403 162,058 231,345 96,481 60,836 47,350 49.08% 35,644 36.94% 22,283 17,640 3,737 368,265 152,264 216,001 10,280 8,457 3,045 (1.88) 1,825 (1.84) (6,445) 1,065 (2,935) 25,138 9,794 15,344 10.65 13.90 6.43 (3.83) 5.12 (4.98) (28.92) 6.04 (78.54) 6.83 6.43 7.10 2 573 49 2 573 50 (1) (2) 841 25.42 15.68 2.54 15% 781 22.32 14.64 2.39 15% 60 3.10 1.04 0.15 - 7.68 13.89 7.10 6.28 - (Financial result & investment information in nearest '000 Taka except percentage & ratio) BANGLADESH ONLINE LIMITED Creating Shareholders Value 7 We assume it will never stop ... ANNUAL REPORT 2003 Years STATISTICS 3 8 BANGLADESH ONLINE LIMITED 3 Years Statistics Particulars 2003 2002 2001 Results of operations Turnover Gross Profit Net Profit Cash inflow from operating activities Basic earnings per share Equity per share Dividend per share 106,761 50,395 37,469 20,182 2.54 15.68 15% 96,481 47,350 35,644 32,154 2.39 14.64 15% 69,733 30,776 18,572 34,680 1.46 13.26 10% Financial Positions Total Assets Total Current Assets Total Current Liabilities Paid up capital Shareholders' equity 393,403 108,466 49,558 147,500 231,345 368,265 80,461 39,764 147,500 216,001 334,537 53,621 26,510 147,500 195,527 Key Financial Ratios & Figures Return on paid up capital Return on Investment Price Earning Ratio Current Ratio Acid Test Ratio 25.40% 9.52% 10.01% 2.19 : 1 1.21: 1 24.17% 9.68% 9.35% 2.02 : 1 0.89 : 1 12.59% 5.55% 13.50% 2.02 : 1 0.44 : 1 841 25.42 49 781 22.32 50 1083 19.70 51 Other Key Data Number of Shareholders Stock price - closing Number of Employee (Financial result & investment information in nearest '000 Taka except percentage & ratio) Engine of Growth ANNUAL REPORT 2003 9 NOTICE 10 BANGLADESH ONLINE LIMITED BANGLADESH ONLINE LIMITED 17 DHANMONDI R.A., ROAD NO. 2 DHAKA - 1205 NOTICE OF THE SEVENTH ANNUAL GENERAL MEETING Notice is hereby given that the SEVENTH ANNUAL GENERAL MEETING of the Shareholders of Bangladesh Online Limited will be held on Wednesday, the 30th June, 2004 at 3.30 p.m. at 1, Shahbag C/A, Dhaka to transact the following business : AGENDA 1. To confirm the proceedings of the Sixth Annual General Meeting of the Company held on 30th June, 2003. 2. To receive, consider and adopt the Audited Accounts as of 31st December, 2003 together with reports of the Auditors and the Directors thereon. 3. To elect Directors. 4. To declare dividend @15%. 5. To appoint Auditors for the year 2004 and to fix their remuneration. 6. To transact any other business of the Company with the permission of the Chair. Dated : April 27, 2004 By order of the Board, Sd/(Md Asad Ullah, FCS) Company Secretary NOTES: (1) The Register of Members and Share Transfer Book of the Company will remain closed from 7th June, 2004 to 30th June, 2004 (both days inclusive). During that period no share transfer will be effected. The Shareholders whose names will appear in the Share Register of the Company at the close of business on 6th June, 2004 will be entitled to the dividend. (2) A member entitled to attend and vote at the General Meeting may appoint a Proxy to attend and vote in his/her stead. The Proxy Form, duly stamped, must be deposited at the Registered Office of the Company not later than 48 hours before the time fixed for the meeting. (3) Members are requested to notify change of address, if any, to the Company. (4) Admission to the meeting room will be strictly on production of the attendance slip sent with the Notice. Sixth Annual General Meeting The Sixth Annual General Meeting (AGM) of shareholders of Bangladesh Online Limited was held on 30 June 2003 at 3.30 pm at 1, Shabagh C/A, Dhaka. A good number of shareholders attended the AGM. In absence of Mr. A S F Rahman, Chairman of the company, MR. Salman F Rahman, Vice Chairman of the Company, presided over the meeting. Verses from the Holy Quran along with its translation in bengali were recited at the very outset of the meeting. The Chairman welcomed the shareholders in the AGM. With the permission of the chair the meeting began and the shareholders expressed their valued opinion on the audited financial statements of the Company for the year ended 31 December 2003 and also on other affairs. A GM Mr. Salman F Rahman, Vice-Chairman of the board of directors, replied to the queries and explained various comments of distinguished shareholders. After approving the audited financial statements, electing directors, proposed dividend @15% and fixing the remuneration of the auditors by the shareholders, the meeting ended with a vote of thanks from the chair. ANNUAL REPORT 2003 11 ßY ~J r oqJ Pj r 12 ßY~JroqJPjr k´KfPmhj xÿJKjf ßv~JrPyJflJrVe, IJkjJPhr ßTJŒJjLr x¬o mJKwtT xJiJre xnJ~ IJkjJPhr xTuPT ˝JVf \JjJPf ßkPr IJKo IJjKªfÇ FA xMPpJPV 2003 xJPu ßTJŒJjLr TJptâPor FT xÄK㬠KmmreL IJkjJPhr xÿMPU Ck˙Jkj TrPf YJAÇ TJptiJrJ 2003 xJPu IJorJ pJ KTZM I\tj TPrKZ fJ KjP~ IJorJ VKmtfÇ FaJ KZu FTaJ TKbj mZr pUj ßhvL~ S IJ∂\tJKfT Cn~ mJ\JPrA fgq S ßpJVJPpJV k´pKM Ür ßãP© IgtQjKfT IPiJVKf kKruKãf yP~PZÇ ÊiM IJ\PTr KhPjr \Pjq IJorJ mqmxJ TrKZ jJ, IJorJ IJVJoL KhPjr \Pjq mKuÔ k´fqJvJ ßrPU nKmwqfS KjotJe TPrKZÇ 2003 xJPu A≤JrPja FmÄ xlaS~qJr Cn~ ßãP©A IJoJPhr Kmâ~ pgJâPo 9.27% S 6.06% mOK≠ ßkP~PZÇ IJoJPhr ßoJa aJjtSnJr hÅJKzP~PZ 10 ßTJKa 67 uJU 61 yJ\Jr 342 aJTJ, pJ 2002 xJu IPkãJ 10.66% ßmKvÇ Kmâ~ mOK≠r TJrPe IJorJ 2003 xJPu 3 ßTJKa 74 uJU 68 yJ\Jr 771 aJTJr ßrTct kKroJe oMjJlJ I\tj TPrKZ pJr lPu IJorJ ßhvL fgq k´pKM Ü mJ\JPr IJoJPhr vLwt˙Jj m\J~ ßrPUKZÇ YJTKrr xMPpJV xOKÓ mJÄuJPhv IjuJAj KuKoPac xmxo~A TJ\ xOKÓ TPrPZ, fJr xPñ uãq ßrPUPZ nKmwqf ßkvJVf x÷JmjJ, xMÔá TJP\r kKrPmv FmÄ \LmjpJ©Jr mq~ mOK≠r xPñ xñKfkNet IJTwteL~ ßmfj TJbJPoJr k´KfÇ \JfL~ rJ\˝ ImhJj IJPuJYq mZPr ßTJŒJjL oNuq xÄPpJK\f TPrr IJTJPr 66 uJU 80 yJ\Jr aJTJ \JfL~ rJ\˝ fyKmPu k´hJj TPrPZÇ BANGLADESH ONLINE LIMITED k´ Kf Pm h j 13 KmKjP~JV fgq S ßpJVJPpJV k´pKM Ür ßhvL~ S IJ∂\tJKfT mJ\JPr IgtQjKfT IPiJVKfr TJrPe IJorJ F mZr ßTJj CPuäUPpJVq KmKjP~JV TKrKjÇ IJAKa kJTt Cjú~Pj IJoJPhr k´iJj mÅJiJ yP~ hÅJzJu fgq S ßpJVJPpJV k´pKM Ür ßãP© k´KfTëu Kmvõ kKrPmvÇ oKfK^u/KhuTávJ FuJTJ~ mscmqJ¥ m≤Pjr \jq FTKa IKlx ßUJuJr oJiqPo IJorJ IJoJPhr A≤JrPja ßjaS~JTt xŒsxJre TPrKZÇ unqJÄv kKrYJuT kKrwh ßTJŒJjLr hLWtPo~JhL ˝JPgtr TgJ KmPmYjJ TPr 2003 xJPur \Pjq k´KfKa 10 aJTJr ßv~JPr 1.50 aJTJ jVh unqJÄv xMkJKrv TPrPZÇ CkpMkt Kr FA KÆfL~mJPrr oPfJ dJTJ S Y¢V´Jo ˆT FéPYP†r fJKuTJnáÜ IJAKa k´KfÔJjèPuJr oPiq xPmtJó unqJÄv ßWJweJ TPrPZÇ CkxÄyJr kKrPvw IJKo F TgJA kMjmtqÜ Trm ßp, IJkjJPhr ßTJŒJjLr \Pjq 2003 xJu Ifq∂ xlu k´oJKef yP~PZÇ FA xJlPuqr ßkZPj IJPZj IJoJPhr IJ˙JnJ\j V´JyTmOª, IJoJPhr hã ToLtmJKyjLr IJ∂KrT S Kjrux TotxJijJ FmÄ IJoJPhr mqJÄT, xrmrJyTJrL k´KfÔJj S xyPpJVL mqmxJ~L ßVJÔLr xyPpJKVfJÇ xPmtJkKr IJorJ Tífù IJoJPhr ßv~JrPyJflJrPhr k´Kf, fÅJrJ xmxoP~A IJoJPhr KhPT xJyJpq S xyPpJKVfJr yJf mJKzP~PZj- pJr lPu IJ\PT IJoJPhr ßTJŒJjL mftoJj kptJP~ ßkÅRPZPZÇ FA xMPpJPV IJKo xÄKväÓ xTPur k´Kf IJoJr IJ∂KrT ijqmJh \JjJA FmÄ nKmwqPfS fÅJPhr xJyJpq-xyPpJKVfJ ImqJyf gJTPm, FA IJvJ rJKUÇ F Fx Fl ryoJj ßY~JroqJj fJKrU ” 27 FKk´u 2004 dJTJÇ ANNUAL REPORT 2003 CHAIRMAN'S 14 Chairman's Statement Dear Shareholders, It is my pleasure to welcome you all to the 7th Annual General Meeting of your company. I take this opportunity to lay before you a brief resume of the affairs of the company for the year 2003. Operations We are proud of what we have achieved in 2003, even in a difficult environment marked by the economic downturn, in both international and local market of Information and Communication Technology sector. We are just not running our business for today, we are also building our future with the vision for tomorrow. In the year 2003 our sales increased in both for Internet and software sales by 9.27%% and 6.06 % respectively. Our total turnover stood at 106,761,342 which have increased 10.66% with compared to 2002. Due to the sales growth, we have achieved a record profit of Tk. 37,468,771 in 2003, and as a result we have retained our leading position in local IT market. Creating Employment Opportunity Bangladesh Online Limited always offer jobs with career prospects, excellent working environment with attractive remuneration package taking consideration of cost of living and reducing unemployment situation of the country . BANGLADESH ONLINE LIMITED STATEMENT 15 Contribution to the National Exchequer During the year under report the company has contributed an amount Tk. 6.68 million to the National Exchequer in form of Value added Tax . Investment Due to economic downtrend in local and international ICT market we have not made any significant investments this year. Adverse situation of global ICT market is our main obstacle for the development of the IT park. We have expanded our internet network by opening a broadband distribution office in the Motijheel/ Dilkusha area. Dividend The board of directors has recommended a cash dividend Tk. 1.50 per share of Tk. 10.00 each for the year 2003, considering it prudent and in the long term interest of the company. This is the second consecutive year we are declared highest dividend as a listed IT firm of Dhaka and Chittagong Stock Exchanges . Acknowledgement Finally, I would like to reiterate that, 2003 has been a very successful year for your company. This result has been possible because of our loyal customers, the sincere and tireless efforts of our staff and the support received from our bankers, suppliers and business associates. Above all, we are grateful to our shareholders for extending at all times their invaluable support and co-operation to bring the company to the level it has reached today. I avail this opportunity to express my sincere thanks to all concerned and look forward for the continued support and co-operation in the future. A S F Rahman Chairman Dated : 27 April 2004 Dhaka. ANNUAL REPORT 2003 16 Directors' Report to the Shareholders Dear Shareholders, The Directors have pleasure in submitting their report and the audited financial statements of the Company for the year ended 31st December, 2003 together with the Auditors Report thereon. (Figure in 000 Taka) 2002 2003 Financial Reports and Profit Appropriations Net Profit before providing Income Tax Less: Provision for Income Tax Net Profit after Tax Add: Un-appropriated profit from the previous year Profit available for appropriation 37,469 37,469 17,709 55,178 35,644 (420) 35,224 18,868 54,092 14,988 22,125 2,213 (39,326) 15,852 14,258 22,125 Recommended for appropriations Transfer to Tax-holiday reserve Proposed Dividend (For 2003-15% and 2002-15%) Dividend Distribution Tax Un-appropriated Profit (36,383) 17,709 Note : Proposed Dividend has not been accounted for in the audited financial Statement. Dividend The Board of Directors have recommended a cash dividend of taka 1.50 per share of taka 10.00 each fully paid up for your approval for the year ended 31st December, 2003. Directors In accordance with Articles 125 and 126 of the Articles of Association of the Company, Mr. A S F Rahman retires by rotation and being eligible offers himself for re-election. Auditors The retiring Auditors M/S M J Abedin & Co., Chartered Accountants, National Plaza (6th Floor) 1/G, Free School Street, Sonargaon Road, Dhaka-1205, being eligible offer themselves for reappointment as Auditors of the Company for the year 2004. A S F Rahman Chairman Dated : 27 April 2004 Dhaka. BANGLADESH ONLINE LIMITED 17 Statement on Corporate Governance Bangladesh Online Limited (BOL) is committed to uphold the highest standard of corporate governance. Proper accountability at each level of corporate management and transparency in every sphere of business activities is our key focus. We are pleased to report our compliance with the core corporate governance issues as set out in our ethical business guidelines. Board of Directors Going Concern The board of directors is the highest level of authority in the organization which comprises of five members with Mr. A S F Rahman as Chairman and Mr. Salman F Rahman as Vice Chairman . Board is responsible to the shareholders for attainment of strategic objects of the company and stewardship of the company s resources. After making appropriate enquires at the time of approving the financial statements the directors are confident that the company has adequate resources to carry out its operational existence for the near future and that it is therefore appropriate to adopt going concern basis in preparing the financial statement. Rights and Relations with shareholders The board meets at periodical interval to deal with the issues that require board s approval and directives . The key activities of the business are reviewed and strategic policy directives are given to the management. Full and timely information are provided to enable the directors to give decisions on issues placed before them. Management Committee A three member management committee headed by the Managing Director is responsible for implementation of strategic and operating plans of the business . The company has a well defined management structure with appropriate hierarchy manned with committed professional managers who carry out the day to day operational activities of the business. Internal Control BOL has deployed a internet control system including internal financial control to ensure transparency and compliance of its activities at all levels. The effectiveness of the control mechanism already in place is periodically reviewed. There are systems for careful monitoring of the activities to make sure that the standard and procedures set out for each business function is being effectively complied with. The annual general meeting are uses as an important opportunity for communication with both institutional and general shareholders. In addition, the Company maintains relations with its shareholders through the corporate affairs secretarial department. The following information can be addressed through the secretarial department : ◆ ◆ ◆ ◆ ◆ Dividend payment enquires Dividend mandate instruction Loss of share certificate / dividend warrants Notification of changes of address Transfer of Shares The board believes that it is important to respond adequately to all the queries of both institutional and general shareholders. At the AGM the shareholders are afford an opportunity to raise with the board any specific question the have concerning the Company. In addition, meetings are also held between individuals directors and institutional shareholders at various times during the year. BOL has a well-defined management structure with clearly identified responsibilities and appropriate chain of accountabilities. The operational units are required to prepare annual budgets and actual performance against the budget is actively monitored throughout the year at the management level. ANNUAL REPORT 2003 18 AUDITORS' REPORT To the Shareholders of Bangladesh Online Ltd. We have audited the accompanying Financial Statements of Bangladesh Online Limited consisting of a balance sheet, a profit and loss account and the statements of changes in equity and cash flows as well as the notes to the financial statements for the business year from January 1 to December 31, 2003. The preparation and the content of the financial statements according to International Accounting Standards are the responsibility of the Company's board of directors. Our responsibility is to express an opinion, based on our audit. We conducted our audit in accordance with International Standards on Auditing adopted by the Institute of Chartered Accountants of Bangladesh. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Evidence supporting the amounts and disclosures in the financial statements is examined on a test basis within the framework of the audit. An audit also includes assessing the accounting principles used and significant estimates made by the board of directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit, the financial statements referred to above give a true and fair view of the financial position, the results of operations and cash flows of the company, in all material respects, for the business year referred to above, in accordance with the Companies Act 1994, the Securities and Exchange Rules 1987 and the International Accounting Standards adopted by the ICAB. We also report that : (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; (b) in our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of those books ; (c) the Company's Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts ; and (d) the expenditures incurred were for the purpose of the Company's business. National Plaza (6th Floor) 1/G, Sonargaon Road Dhaka - 1205 27 April, 2004 BANGLADESH ONLINE LIMITED M J Abedin & Co. Chartered Accountants FINAN Financials CIALS FINANCIALS 20 BANGLADESH ONLINE LIMITED Balance Sheet As at 31 December, 2003 Note 2003 2002 284,936,362 279,109,996 10,848 1,495,978 1,819,540 2,500,000 108,466,402 2,658,298 59,394,857 45,611,451 801,796 287,803,819 280,924,809 21,696 2,537,774 1,819,540 2,500,000 80,461,498 1,029,978 31,717,585 43,976,715 3,737,220 TK. 393,402,764 368,265,317 231,345,040 147,500,000 43,653,230 40,191,810 112,500,000 112,500,000 49,557,724 49,557,724 - 216,001,269 147,500,000 28,665,722 39,835,547 112,500,000 112,500,000 39,764,048 39,344,353 419,695 Tk. 393,402,764 368,265,317 ASSETS Non-Current Assets Property, Plant and Equipment - Carrying Value Preliminary Expenses, net of amortisation Pre-operating Expenses, net of amortisation Long Term Security Deposits Investment in Shares of Beximco Zenith Ltd. Current Assets Inventories - At cost Accounts Receivable - Considered good Advances, Deposits and Prepayments Cash and Cash Equivalents 16 17 18 19 20 21 22 23 24 TOTAL ASSETS EQUITY AND LIABILITIES Shareholders' Equity Issued Share Capital Tax- Holiday Reserve Retained Earnings Non-Current Liabilities 10% Debenture Current Liabilities and Provisions Accounts Payable & Other Liabilities Income Tax Payable 25 26 27 28 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Contingent Liabilities and commitments. 37, 38 & 39 Accounting Policies 7 The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the board of directors on 27 April 2004 and signed for and on behalf of the Board : C H Rahman Managing Director Iqbal Ahmed Director Md. Asad Ullah Company Secretary Per our report of even date. Dhaka 27 April 2004 BANGLADESH ONLINE LIMITED M J Abedin & Co. Chartered Accountants BANGLADESH ONLINE LIMITED Profit and Loss Account 21 For the year ended 31 December, 2003 Note Revenue ( Turnover ) from Net Sales Operating Expenses Gross Profit Administrative and Selling Expenses Amortisation of Preliminary Expenses Amortisation of Pre-operating Expenses 29 30 31 Net Profit Before Tax Provision for Income Tax Net Profit After Tax Transferred to Statement of Changes in Equity Basic Earnings Per Share ( Par value Tk 10/- ) Number of shares used to compute EPS Accounting Policies 32 2003 2002 106,761,342 (56,366,290) 50,395,052 11,873,637 10,848 1,041,796 (12,926,281) 37,468,771 37,468,771 2.54 14,750,000 96,480,570 (49,131,053) 47,349,517 10,652,540 10,848 1,041,796 (11,705,184) 35,644,333 (419,695) 35,224,638 2.39 14,750,000 7 Figures in brackets indicate deductions. The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the board of directors on 27 April 2004 and signed for and on behalf of the Board : C H Rahman Managing Director Iqbal Ahmed Director Md. Asad Ullah Company Secretary Per our report of even date. Dhaka 27 April 2004 M J Abedin & Co. Chartered Accountants ANNUAL REPORT 2003 22 BANGLADESH ONLINE LIMITED Statement of Changes in Equity Particulars At the beginning of year Net Profit after tax for 2003 Transfer to Tax Holiday Reserve (Note 33) Cash dividend of prior period At the end of year Total Number of Shares Shareholders' Equity per share Share Capital 147,500,000 147,500,000 Tax holiday Reserve 28,665,722 14,987,508 436,532,230 For the year ended 31 December, 2003 Retained Earnings 39,835,547 37,468,771 (14,987,508) (22,125,000) 40,191,810 Total 216,001,269 37,468,771 (22,125,000) 231,345,040 14,750,000 Tk. 15.68 Accounting Policies (Note 7). Figures in brackets indicate deductions. The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the board of directors on 27 April 2004 and signed for and on behalf of the Board : C H Rahman Managing Director Iqbal Ahmed Director Md. Asad Ullah Company Secretary Per our report of even date. Dhaka 27 April 2004 BANGLADESH ONLINE LIMITED M J Abedin & Co. Chartered Accountants BANGLADESH ONLINE LIMITED Cash Flow Statement 23 For the year ended 31 December, 2003 Note Cash Flows from Operating Activities : Cash receipts from customers and others Cash paid to suppliers and employees Cash Generated from Operations Income Tax paid & deducted at source Net cash Generated From Operating Activities Cash Flows from Investing Activities : Acquisition of Property, Plant and Equipment Investment in Shares of Beximco Zenith Ltd. Long Term Security Deposit Net cash Used in Investing Activities Cash Flows from Financing Activities : Dividend paid Short term loan given Net cash Used in Financing Activities Net (Decrease)/Increase in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year 34 2003 2002 79,084,071 (58,807,098) 20,276,973 (95,100) 20,181,873 73,891,984 (41,532,383) 32,359,601 (206,000) 32,153,601 (4,587,892) (4,587,892) (10,861,400) (2,500,000) 255,000 (13,106,400) (18,529,405) (18,529,405) (2,935,424) 3,737,220 Tk. 801,796 (12,810,350) (5,000,000) (17,810,350) 1,236,851 2,500,369 3,737,220 Accounting Policies (Note 7). Figures in brackets indicate deductions. The Notes are an integral part of the Financial Statements. Approved and authorised for issue by the board of directors on 27 April 2004 and signed for and on behalf of the Board : C H Rahman Managing Director Iqbal Ahmed Director Md. Asad Ullah Company Secretary Per our report of even date. Dhaka 27 April 2004 M J Abedin & Co. Chartered Accountants ANNUAL REPORT 2003 24 BANGLADESH ONLINE LIMITED Index to the Notes to the Financial Statement - 2003 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Corporate History of the Reporting Entity Corporate Business Corporate Financial Statements And Reportings Corporate Accounting Standards Practiced Related Party Transactions Financial Instruments Corporate Accounting Policies Concentrations Profit and Loss Account Reporting Currency Comparative Amount Segments Reporting Recognized Gains and Losses Historical Cost Profit and Losses Appropriation of Proposed Dividend of Previous Year (2002) Property, Plant and Equipment Preliminary Expenses Pre-operating Expenses Long Term Security Deposits Investment in Shares of Beximco Zenith Ltd. Inventories Accounts Receivable Advances, Deposits and Prepayments BANGLADESH ONLINE LIMITED 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Cash and Cash Equivalents Issued Share Capital Tax - Holiday Reserve 10% Debenture Accounts Payable & Other Liabilities Revenue (Turnover) Operating Expenses Administrative and Selling Expenses Basic Earnings Per Share (EPS) Tax-Holiday Reserve (for the year) Cash flow from Operation Under Indirect Method Payment / Perquisites to Directors Financial Instruments And Related Disclosures Contingent Liabilities Capital Expenditure Commitment Operating Lease Commitments Claims Not Acknowledged Credit Facility Not Availed Foreign Exchange Earned Commission, Brokerage or Discount against Sales Payment in Foreign Currency Related Party Transactions Post Closing Events 25 BANGLADESH ONLINE LIMITED Notes to the Financial Statement 1 31 December, 2003 Corporate History of the Reporting Entity The Bangladesh Online Ltd. (the "Company"), a member of BEXIMCO Group, is a company incorporated and domiciled in Bangladesh as a public limited company. It commenced commercial operation in December 1, 1999 and went for public issue of shares in 2000. The shares of the Company are listed in the Dhaka and Chittagong stock exchanges of Bangladesh. The registered office of the Company is located at House No. 17, Road No. 2, Dhanmondi Residential Area, Dhaka. The sales and administrative office of the company located at 32, Kazi Nazrul Islam Avenue of Dhaka. 2 Corporate Business The company is primarily engaged as an Internet Service Provider (ISP) and Web Page Software Developer in Bangladesh. BOLs ISP service includes Dial-up Internet Access, Leased Port Internet Access, Web Designing & Web Hosting Services, corporate Network Solutions and Computer Peripherals, 3 Corporate Financial Statements And Reportings This comprises of balance sheet, profit and loss account, statement of changes in equity, cash flow statement and explanatory notes covering accounting policies. This is prepared under the historical cost convention and in accordance with the requirements of the Companies Act 1994, the Securities and Exchange Rules 1987, the Listing Regulations of Dhaka and Chittagong Stock Exchanges and the International Accounting Standards (IASs) adopted by the Institute of Chartered Accountants of Bangladesh (ICAB). The Board of Directors are responsible for preparing and presenting the financial statements including adequate disclosures, who approved and authorized for issue of these financial statements. The preparation of financial statements in conformity with International Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses, assets and liabilities, and the disclosure of contingent assets and liabilities at the date of and during the reporting period. Due to the inherent uncertainty involved in making estimates, actual result reported could differ from those estimates. 4 Corporate Accounting Standards Practiced The ICAB has adopted to date the following IASs for Bangladesh : IAS IAS IAS IAS IAS IAS IAS 1 2 7 8 10 11 12 Presentation of Financial Statements Inventories Cash Flow Statements Net Profit or Loss for the period, Fundamental Errors and Changes in Accounting Policies Events after the Balance Sheet Date Construction Contracts Income Taxes ANNUAL REPORT 2003 IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS IAS 26 14 16 17 18 19 20 21 22 23 24 25 26 27 30 31 33 34 36 37 Segment Reporting Property, Plant and Equipment Leases Revenue Employee Benefits Accounting for Government Grants The effects of Changes in Foreign Exchange Rates Business Combinations Borrowing Costs Related Party Disclosures Accounting for Investments Accounting and Reporting by Retirement Benefit Plans Consolidated Financial Statements and Accounting for Investments in Subsidiaries Disclosures in the Financial Statements of Banks and Similar Financial Institutions Financial Reporting of Interests in Joint Ventures Earnings Per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Of the IASs referred above, IASs 1, 2, 7, 8, 10, 12, 16, 18, 21, 23, 25, 33 and 37 are applicable for the accompanied financial statements and, the remaining IASs either are not relevant for the financial statements under review or not effective for the year under review. 5 Related Party Transactions All the related party transactions have been accounted for, considering these on arms' length basis, the details of which are disclosed in Note 45. 6 Financial Instruments Following information relating to the company's financial instruments have been disclosed in Note 36: (a) primary and derivative financial instruments; (b) exposures related to credit risk, interest rate risk and foreign currency risk; and fair value and market value of financial instruments 7 Corporate Accounting Policies (a) Recognition of Income Sales are accounted for on preparation of invoices after delivery of services & hardware goods. (b) Property, Plant and Equipment These are initially stated at cost of acquisition and subsequently stated at cost less accumulated depreciation. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes. In respect of major projects involving construction, related pre-operational expenses form part of the value of asset capitalized. Expenses capitalized also includes pre-operational borrowing cost. Expenditure incurred after the assets have been put into operation, such as repairs & maintenance is normally charged off as revenue expenditure in the period in which it is incurred. In situation where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefit expected to be obtained from the use of the fixed assets, the expenditure is capitalized as an additional cost of the assets. Software and all up gradation / enhancement are generally charged off as revenue expenditure unless they bring similar significant additional benefits. Fixed Assets do not include any assets held under lease. On retirement or otherwise disposal of fixed assets, the cost and accumulated depreciation are eliminated and any gain or loss on such disposal is reflected in the profit and loss account which is determined with reference to the net book value of the assets and the net sales proceeds. BANGLADESH ONLINE LIMITED (c) Depreciation 27 No depreciation is charged on IT in progress and Telephone Line Cost. In respect of all other fixed assets, depreciation is provided to amortize the cost of the asset after commissioning, over their expected useful economic lives. Depreciation is calculated using the straight-line method. Half year s depreciation is charged on additions and no depreciation is provided on retirement, irrespective of date of addition or retirement respectively. The annual depreciation rate applicable to the principal categories are : Internet System Hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18% Furniture & Fixture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10% Air Conditioner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18% Office Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20% V-Sat Tower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10% Under Ground Cable Installation . . . . . . . . . . . . . . . . . . . . . . . . .10% Generator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15% Transport & Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20% (d) Preliminary Expenses This is being amortized over 5 years commencing from the year 2000. (e) Pre-operating Expenses This is being amortized over 5 years commencing from the year 2000 in respect of Dhanmondi Center and from the year 2001 in respect of Eskaton Center. (f) Investment in Shares of Beximco Zenith Limited This is valued at cost. (g) Promotional Expenses All costs associated with promoting services are expenses in the year incurred. (h) Borrowing Costs Debentures were issued for IT Park, which is still under progress, and therefore, interest on debenture is being capitalized to IT Park in progress. The Company does not have any other borrowing, and therefore, no other borrowing cost was incurred. (i) Leasing Fixed Assets acquired under leases are considered as operating lease, and therefore, lease rentals are charged as expenses when it is incurred, instead of accounting as the company s fixed assets. (j) Inventories Inventories are stated at the lower of cost and net realizable value. The cost is calculated on weighted average method consistently. Costs comprise expenditure incurred in the normal course of business in bringing such inventories to its location and conditions. Where necessary, provision is made for obsolete, slow moving and defective inventories (if any) identified at the time of physical verification of inventories. Net realizable value is based on estimated selling price less any further costs expected to be incurred to make the sale. (k) Accounts Receivable These are carried at original invoice amount which represents net realizable value only. This is considered good and collectible, and therefore, no amount was written off as bad debt and no debt was considered doubtful to provide for. ANNUAL REPORT 2003 28 (l) Cash and Cash Equivalents This represents only cash which consists of cash in hand and at banks. (m) Other Current Assets Other current assets have a value on realisation in the ordinary course of the company's business which is at least equal to the amount at which they are stated in the balance sheet. (n) Income Taxes The Company is enjoying tax holiday for five years commencing from the date of commercial operation on 1st December, 1999. However, tax claim by the income tax authority under section 30 of the Income Tax Ordinance 1984 for not deducting income tax at source on certain payments is provided after completion of income tax assessment. (o) Other corporate debt, accounts payable, trade and other liabilities. These liabilities are carried at the anticipated settlement amount in respect of goods and services received, whether or not billed by the supplier. (p) Provisions Provisions are liabilities of uncertain timings or amount. Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. (q) Tax - Holiday Reserve This is being created out of tax holiday profit to invest in the same undertaking or in any new industrial undertaking or in stocks and shares of listed companies or in government bonds or securities or for other purposes as required by the Income Tax Ordinance 1984. (r) Proposed Dividend and Dividend Distribution Tax Dividend proposed by the board of directors for the year under review and dividend Distribution Tax (10% of total cash dividend declared ) shall be accounted for after the approval of the shareholders in the annual general meeting. (s) Earnings Per Share (EPS) This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the year. Basic Earnings This represents earnings for the year attributable to ordinary shareholders. As there was no preference dividend, minority interest or extra ordinary items, the net profit after tax for the year has been considered as fully attributable to the ordinary shareholders. Weighted Average Number of Ordinary Shares Outstanding During the year This represents the number of ordinary shares outstanding at the beginning of the year plus the number of ordinary shares issued during the year multiplied by a time-weighting factor. The time-weighting factor is the number of days the specific shares are outstanding as a proportion of the total number of days in the period. Diluted Earnings Per Share No diluted EPS is required to be calculated for the year as there was no scope for dilution during the year under review. BANGLADESH ONLINE LIMITED (t) Foreign Currencies 29 Foreign Currency transactions are recorded at the applicable rates of exchange ruling at the transaction date. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange ruling at that date. Exchange differences are dealt with in the profit and loss account. The rate of relevant foreign exchange at year end is : 1 U S Dollar ($) 8 2003 2002 Tk. 58.73 59.12 Concentrations As of 31 December 2003, the Company does not have any significant concentration of business transacted with a particular customer, supplier or lender that could, if suddenly eliminated, severely impact the company's operations. The company also does not have a concentration of available sources of labor, services, or licenses or other rights that could, if suddenly eliminated, severely impact the operations of the company. 9 Profit and Loss Account The results for the year were not materially affected by : (a) transactions of a nature not usually undertaken by the company; (b) circumstances of an exceptional or non-recurring nature; (c) charges or credits relating to prior years; and (d) changes in accounting policies. 10 Reporting Currency The amounts shown in these financial statements are presented in Bangladesh currency (Taka), which have been rounded off to the nearest Taka except where indicated otherwise. Figures in brackets indicate deductions. 11 Comparative amounts Certain amounts for previous year have been re-classified to conform with 2003 presentation. 12 Segment Reporting This is not relevant for the company as their is single industry segment and single Geographic Segment (Bangladesh). 13 Recognized Gains and Losses No gain or loss was directly dealt with through the shareholders' equity without being recognized in the profit and loss account. Therefore, net profit after tax for the year is the total recognized gains. 14 Historical Cost Profit and Losses As there was no extra-ordinary item, there was no difference in profit on ordinary activities before taxation and the net profit before tax. Furthermore, as there was no revaluation of fixed assets in previous years and during the year under review, there was no factor like the differences between historical cost depreciation and depreciation on revalued amount, realization of revenue surplus on retirement or disposal of assets etc. Therefore, no separate note of historical cost profit and loss has been presented. ANNUAL REPORT 2003 30 15 Appropriation of Proposed Dividend of Previous Year (2002) On 30th June 2003, the 6th Annual General Meeting of the Company decided that a dividend of Tk. 1.50 per share (15 %) would be paid in respect of 2002 earnings. Accordingly, total dividend amount of Tk. 22,125,000 in respect of 2002 has been provided in the accounts of 2003. 16 Property, Plant and Equipment : Tk. 279,109,996 Particulars IT Park in Progress Telephone Line Cost Internet Office Furniture, System Equipment & VSAT Tower Hardware & Motor Vehicles & Underground Air Conditioner Cable Installation Generator Total Cost At 31 December 2002 Additions in 2003 208,890,411 11,250,000 11,281,500 - 75,556,994 3,697,847 8,096,407 560,345 17,413,396 329,700 1,909,987 - 323,148,695 15,837,892 At 31 December 2003 220,140,411 11,281,500 79,254,841 8,656,752 17,743,096 1,909,987 338,986,587 Depreciation At 31 December 2002 Charged for 2003 - - 34,758,539 13,933,065 3,883,063 1,675,316 2,971,461 1,757,825 610,824 286,498 42,223,887 17,652,704 At 31 December 2003 - - 48,691,604 5,558,379 4,729,286 897,322 59,876,591 Carrying Value At 31 December 2003 Taka Carrying Value At 31 December 2002 Taka 220,140,411 11,281,500 30,563,237 3,098,373 13,013,810 1,012,665 279,109,996 208,890,411 11,281,500 40,798,455 4,213,344 14,441,936 1,299,163 280,924,809 16(a) IT Park In Progress : Tk. 220,140,411 This consists of as follows : (i) Payment against Land (ii) Capitalized Interest on Debenture 2003 180,000,000 40,140,411 Tk. 220,140,411 2002 180,000,000 28,890,411 208,890,411 (i) Payment Against Land : Tk. 180,000,000 To setup an IT Park facilitating the software development in Bangladesh and export thereof, the Bangladesh Online Limited (BOL) has agreed to purchase 44 Bighas of Land at Ashulia of Savar from Shinepukur Holdings Ltd. (SHL), a land developer and real. In accordance with the provisions of Agreement of Sale, the BOL has paid in advance of Tk. 18.00 crore against total cost of Tk. 22.00 crore (@Tk. 2.50 lakh per Katha). Schedule of Land All that piece and parcel of land containing by admeasurement an area of 44 (Forty Four) Bighas of land situated in the district of Dhaka P.S. & Sub Registry office, Savar, Mouza 560, Diakhali, Parts of C.S. Plot Nos. 143, 141, 139, 138, 108, 108/130 Title deed and registration thereof The ownership of the said land shall be transferred to BOL on payment of balance amount of Tk. 4.00 crore and thereafter, execution and registration of title deed shall be completed. Possession In terms of Agreement of Sale, the possession of the land has already been transferred to BOL alongwith an allotment letter issued by SHL on 15th October, 2000. Price Although the seller SHL is an associated / related company of BOL, the management of BOL negotiated the deal on an "Arm's Length" basis at a fair market price. In fact, SHL sold and was selling land in the same area with inferior location to other parties at the same price. BANGLADESH ONLINE LIMITED (ii) Interest on Debenture : Tk. 40,140,411 31 This has been capitalized to IT Park-in-progress as the debenture money was fully utilized for payment against acquisition of land for IT Park which has not gone into operation. This is arrived as follows: As on 01.01.2003 Interest Provided in 2003 17 28,890,411 11,250,000 Tk. 40,140,411 Preliminary Expenses : Tk. 10,848 This is arrived at as follows : Total Expenses Less : Opening Balance of Amortisation Amortised ( 1/5 ) during the year Tk. 2003 54,240 32,544 10,848 43,392 10,848 2002 54,240 21,696 10,848 32,544 21,696 The management has decided to amortise preliminary expenses over five years commencing from the year 2000. The balance amount of Tk. 10,848 shall be amortised in 2004. 18 Pre-operating Expenses : Tk. 1,495,978 This is arrived at as follows : Total Amount Less :Amortised upto year 2002 Balance as on 31.12.2002 Less : 1/5 th Amortized during the year 2003 Dhanmondi Center 2,938,071 (1,762,842) 1,175,229 (587,614) Tk. 587,615 Eskaton Center 2,270,909 (908,364) 1,362,545 (454,182) 908,363 Total 5,208,980 (2,671,206) 2,537,774 (1,041,796) 1,495,978 The management has decided to amortise Pre-operating expenses over five years commencing from the year 2000 and 2001 in respect of Dhanmondi and Eskaton Centers respectively. 19 Long Term Security Deposits : Tk. 1,819,540 These were deposited with : Telephone Line For Bandwidth Tk. 20 2003 1,370,000 449,540 1,819,540 2002 1,370,000 449,540 1,819,540 Investment in Shares of Beximco Zenith Limited : Tk. 2,500,000 This represents 2,50,000 shares of Tk. 10 each of Beximco Zenith Limited a Joint Venture company incorporated in Bangladesh. This represents 50% of total paid-up capital of Beximco Zenith Limited. This is a non-listed company, and therefore, no market value. ANNUAL REPORT 2003 32 21 Inventories : Tk. 2,658,298 This consists of : PIN Mailer's CD Rom Computer Peripheral Tk. 22 2003 208,843 100,157 2,349,298 2,658,298 2002 613,085 416,893 1,029,978 Accounts Receivable : Tk. 59,394,857 This is receivable within one year and is unsecured and considered good and is made up as follows : Internet Service Web Page Software Sales Computer Peripheral 2003 4,474,732 54,495,000 425,125 Tk. 59,394,857 2002 4,117,585 27,600,000 31,717,585 No amount was due by the Directors ( including Managing Director), Managing Agent, Managers and Other Officers of the Company and any of them severally or jointly with any other person. The amount due from the associated undertakings/related parties has been disclosed in the Note 45. 23 Advances,Deposits and Prepayments : Tk. 45,611,451 This consists of : Advances Advance to Shinepukur Holdings Ltd. Other Advances L/C Margin Deposits Lease Deposit Sundry Security Deposits Bank Guarantee Earnest Money Prepayments Rent - Network Operating Centers Group Insurance Office Insurance Other Prepaid 2003 42,507,683 40,000,000 1,266,109 1,241,574 2002 41,532,150 40,000,000 1,532,150 - 2,783,265 2,080,167 346,650 37,860 318,588 2,071,417 1,695,167 346,650 29,600 - 320,503 78,000 59,662 182,841 Tk. 45,611,451 373,148 44,000 35,227 185,921 108,000 43,976,715 No amount was due by the Directors ( including Managing Director), Managing Agent, Managers and Other Officers of the Company and any of them severally or jointly with any other person. No amount was due from any associated undertaking. The advances are good and unsecured. 24 Cash and Cash Equivalents : Tk. 801,796 This consists of : Cash in hand Cash at Banks in Current Deposit Accounts BANGLADESH ONLINE LIMITED 2003 308,423 493,373 Tk. 801,796 2002 239,021 3,498,199 3,737,220 25 33 Issued Share Capital : Tk. 147,500,000 This represents : (a) Authorized 200,000,000 Ordinary Shares of Tk. 10/- each Tk. 2,000,000,000 2,000,000,000 (b) Issued, Subscribed and Paid-up 14,750,000 Ordinary Shares of Tk. 10/- each fully paid-up in cash Tk. 147,500,000 147,500,000 (c) Compositions of Shareholdings Sponsors Foreign Investors Local Financial Institutions General Public Total 2003 No. of Shares % 2002 No. of Shares % 4,500,000 6,846,000 109,500 3,294,500 30.51 46.41 0.74 22.34 4,500,000 8,465,500 405,000 1,379,500 30.51 57.39 2.75 9.35 14,750,000 100.00 14,750,000 100.00 (d) Distribution Schedule - Disclosure under the Listing Regulations of Stock Exchanges This distribution schedule showing the number of Shareholders and their Shareholdings in percentage has been disclosed below as a requirement of the "Listing Regulations of Dhaka & Chittagong Stock Exchanges : Shareholders Range in number of Shares Less than 500 shares 500 to 5,000 shares 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 100,001 to 1,000,000 shares Over 1,000,000 shares Total Number of Holders 675 74 68 5 5 1 4 5 4 841 % of Total Holders 80.26 8.80 8.09 0.59 0.59 0.12 0.48 0.59 0.48 100.00 Number of % of Share Shares Capital 834,000 5.65 581,000 3.94 964,000 6.54 127,500 0.86 176,000 1.19 46,500 0.32 276,000 1.87 1,662,000 11.27 10,083,000 68.36 14,750,000 100.00 (e) Option on unissued shares There is no option regarding authorized capital not yet issued but can be used to increased issued, subscribed and paid-up capital through the issuance of new shares (f) Market Price The shares of the Company are listed in the Dhaka and Chittagong stock exchanges and quoted at Tk. 25.46 per share and Tk. 25.38 per share in the Dhaka and Chittagong stock exchanges respectively on 31 December, 2003. (g) Voting Rights The rights and privileges of the shareholders are stated in the Bye-laws ( Articles of Association) of the Company. ANNUAL REPORT 2003 34 26 Tax - Holiday Reserve : Tk. 43,653,230 This is arrived at as follows : Opening Balance Add : 40% of profit for the year 2003 28,665,722 14,987,508 Tk. 43,653,230 2002 14,407,989 14,257,733 28,665,722 This is being provided for as per Income Tax Ordinance 1984 to invest in the same undertaking or in any new industrial undertaking or in stocks and shares of a public company or in govt. bonds or securities or for other purposes specified in this respect 27 10% Debenture : Tk. 112,500,000 This is arrived at as follows : 25,000 Debentures of Tk. 5,000 each Less : 10% converted into Ordinary Shares Term 2003 125,000,000 12,500,000 Tk. 112,500,000 2002 125,000,000 12,500,000 112,500,000 : 10 (Ten) years from the date of issue. Redemption : In one single payment for the entire principal amount at the end of term. Interest : 10% per annum payable at annual rest, first payment becoming due, twelve months from the date of issue and every twelve months thereafter until final redemption. Security : This is unsecured. The total amount was received in local (Taka) currency on July 30, 2000 through designated Bank, Standard Chartered Bank Plc., Dhaka, and shall be repayable alongwith interest in local currency. 28 Accounts Payable & Other Liabilities : Tk. 49,557,724 This consists of : Interest Payable on Debentures Audit Fee Payable ( 2003 ) Other Payable VAT Payable Total 29 2003 40,140,411 30,000 8,803,652 583,661 Tk. 49,557,724 2002 28,890,411 30,000 9,886,866 537,076 39,344,353 2003 2002 51,193,559 6,677,421 44,516,138 59,119,884 3,125,320 Tk. 106,761,342 46,848,377 6,110,658 40,737,719 55,742,851 96,480,570 Revenue (Turnover) : Tk. 106,761,342 Sales of Internet Services Less : VAT Net Sales After VAT Sales of Web Page Software Computer Peripheral BANGLADESH ONLINE LIMITED 30 VSAT Charge Depreciation Plant Lease Rental Telephone Line Rental Web Rental & SMS Charge Rent - Network Operating Centers Salaries & Allowances Cost of Computer Peripheral Cost of PIN Mailer & CD Rom Repairs & Maintenance Electricity,Gas and Water Insurance Premium Renewal, Rates, Registration 31 35 Operating Expenses : Tk. 56,366,290 2003 14,738,736 17,652,704 10,678,548 1,195,230 266,037 608,880 5,490,231 2,738,362 1,521,955 240,456 580,277 249,345 405,529 Tk. 56,366,290 2002 15,537,600 16,587,346 7,580,985 1,203,854 500,199 766,500 5,293,264 683,156 110,669 221,167 243,193 403,120 49,131,053 2003 3,921,879 570,000 364,598 196,623 618,122 183,458 482,984 447,425 392,371 277,009 1,127,400 247,504 250,000 22,280 107,589 200,460 30,000 2,433,935 Tk. 11,873,637 2002 3,098,117 840,000 158,645 173,309 719,853 137,342 470,769 303,927 227,083 258,667 1,127,400 257,369 257,850 7,471 83,176 214,296 30,000 2,287,266 10,652,540 Administrative and Selling Expenses : Tk. 11,873,637 Salaries & Allowances Office Rent Renewal, Rates, Registration Travelling & Conveyance Telephone,Internet,Fax, Pager,Postage Entertainment Printing and Stationery Charges for Security Guard Electricity,Gas and Water Car Running Expenses Car Lease Rental Repairs & Maintenance Legal & Professional fees General Expense Bank Charges Insurance Premium Auditors' Remuneration ( Audit Fee for 2003 ) Promotional Expenses The number of employees of the Company at 31 December, 2003 was 49 and all of them received salaries and allowances above Tk. 3,000 per month. 32 Basic Earnings Per Share (EPS) This Computation of EPS is given below : (a) Earning attributable to the Ordinary Shareholders (Net Profit After Tax) (b) Weighted average number of Ordinary Shares outstanding during the year 33 2003 37,468,771 14,750,000 Tk. 2.54 2002 35,227,638 14,750,000 2.39 Tax - Holiday Reserve : Tk. 14,987,508 This is provided as per provisions of the Income Tax Ordinance, 1984 as a condition of granting tax holiday which represents 40% of the net profit for the year. ANNUAL REPORT 2003 36 34 Cash flow from Operation Under Indirect Method 2003 37,468,771 2002 35,224,638 17,652,704 10,848 1,041,796 56,174,119 16,587,346 10,848 1,041,796 52,864,628 (1,628,320) (27,677,271) (1,634,736) (4,632,224) (419,695) (35,992,246) Tk. 20,181,873 433,156 (22,588,586) (3,448,245) 4,678,953 213,695 (20,711,027) 32,153,601 Net Profit After Tax for the year Adjustment to reconcile net profit to net cash provided by operating activities : (a) Non-Cash expenses Depreciation Preliminary Expenses Pre-operating Expense Fund from operation before charging working Capital (b) Changes in Working Capital Decrease / (Increase) in Inventories Decrease / (Increase) in Debtors Increase in Advance, Deposit and Pre-payment Increase in Accounts Payable and others Increase in Income Tax Payable Net cash Generated From Operating Activities 35 Payment / Perquisites to Directors No amount of money was spent by the Company for compensating any member of the Board for services rendered. 36 Financial Instruments And Related Disclosures (a) Primary (On Balance Sheet) Financial Instruments Set out below is the year- end balance of carrying amounts (book values) of all financial assets and liabilities (financial instruments) as on 31.12.2003 : Interest Bearing Maturity within Maturity after one Year one Year Financial Assets Long-Term Security Deposits Accounts Receivable (Trade Debtors) Cash and Cash Equivalents Financial Liabilities Debenture Accrued Expenses Debenture Interest Tk. Net financial Assets / (Liabilities) Non-Interest Bearing Total - - 1,819,540 59,394,857 801,796 62,016,193 1,819,540 59,394,857 801,796 62,016,193 - 112,500,000 (112,500,000) (112,500,000) 9,417,313 40,140,411 49,557,724 12,458,469 112,500,000 9,417,313 40,140,411 162,057,724 (100,041,531) Details of the Company's financial risk management objectives and policies are as follows : Credit Risk Exposures The maximum exposure to credit risk in the event the counter parties fail to perform their obligations as at 31st December 2003 in relation to each class of recognized financial assets is the carrying amount of those assets as stated in the balance sheet. BANGLADESH ONLINE LIMITED Inspire of facts that a significant amount is receivable from the related parties, the company's management believe that there was no significant concentration of credit risk in trade debtors. The company monitors its exposure to credit risk on an ongoing basis. Trade debtors are evaluated for recoverability. Cash is placed with reputed financial institutions. Interest Rate Risk Exposure The rate of interest of debentures is 10% per annum. The company has no other long term borrowings. Foreign Currency Risk The company is not subject to significant foreign currency fluctuations as the amount of transactions in foreign currency is not significant. Fair Value of Primary Financial Instruments (i) Cash and Cash equivalents, security deposits, debtors, creditors and accruals The carrying amount of these balances approximate their fair values because of the immediate or short term maturity of these primary financial instruments. (ii) Debenture The carrying amount of this balance approximate their fair values, based on the fixed borrowing rate (10%) as agreed upon with the Debenture holder. Market Value of Primary Financial Instruments Market value is not available as the said financial instruments are not traded on organized markets in standardized form. (b) Derivative (Off Balance Sheet) Financial Instruments The Company is not a party to any derivative contract at the balance sheet, such as, forward exchange contract, currency swap agreement or interest rate option contract to hedge currency exposure related to import and others. 37 Contingent Liabilities There was no sums for which the Company is contingently liable as on 31 December,2003. 38 Capital Expenditure Commitment There was no capital expenditure contracted but not incurred or provided for at 31 December, 2003. There was no material capital expenditure authorized by the board but not contracted for at 31 December, 2003. 39 Operating Lease Commitments The future annual rentals payable are as follows : Expiring within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,211,638 Expiring after one year but not more than five years . . . . . . . . . . . . . 787,563 Expiring after five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nil 40 Claims Not Acknowledged There was no claim against the Company not acknowledged as debt as on 31 December, 2003. 41 Credit Facility Not Availed There was no credit facilities available to the company under any contract, but not availed of as on 31 December, 2003 other than trade credit available in the ordinary course of business. ANNUAL REPORT 2003 37 38 42 Foreign Exchange Earned In 2003, Company earned Foreign Exchange USD 6,180.85 which is equivalent BD Tk. 363,001 against service provide for software. 43 Commission, Brokerage or Discount against Sales Distributors' commission of Tk. 126,116 ( year 2002 : 592,544 ) was incurred and paid during the year 2003 to the city wide Distributors of the company on account of sales of Recharge Cards & I - Kit. 44 Payment in Foreign Currency In 2003, the company remitted foreign currency in respect of Bandwidth & Membership Fee amounting to USD 100,000 & 2,500 respectively which equivalent BD Taka 6,024,475. No other expenses including royalty, technical expert and professional advisory fee, etc. was incurred or paid by the company in foreign currency during the year 2003. 45 Related Party Transactions The Company carried out a number of transactions with related parties / associated undertakings in the normal course of business and on arms' length basis. The nature of transactions and their total value is shown below: Name of Related Parties Beximco Pharmaceuticals Ltd. Beximco Textiles Ltd. Beximco Knittings Ltd. Beximco Denims Ltd. Beximco Holdings Ltd. Beximco Synthetics Ltd. Beximco Infusion Ltd. Shinepukur Holdings Ltd. Padma Textile Mills Ltd. Shinepukur Ceramics Ltd. 46 Nature of Transactions Software Sales Software Sales Software Sales Software Sales Software Sales Software Sales Software Sales Software Sales Software Sales Software Sales Value of Transactions in 2003 4,000,000 3,800,000 1,950,000 1,650,000 2,750,000 1,850,000 1,950,000 3,200,000 3,500,000 2,750,000 Receivable at year end 585,000 475,000 375,000 450,000 395,000 655,000 350,000 1,865,000 455,000 525,000 Post Closing Events The directors recommended 15% cash dividend (Tk. 1.50 per share). The dividend proposal is subject to shareholders' approval at the forthcoming annual general meeting. Except the fact stated above, no circumstances have arisen since the balance sheet date which would require adjustment to, or disclosure in, the financial statements or notes thereto. C H Rahman Managing Director Dhaka 27 April 2004 BANGLADESH ONLINE LIMITED Iqbal Ahmed Director Md. Asad Ullah Company Secretary BANGLADESH ONLINE LIMITED Registered Office : 17, Dhanmondi R/A, Road # 2, Dhaka-1205 PROXY FORM I/We............................................................................... of....................................................................... being a member of Bangladesh Online Limited hereby appoint Mr./Ms................................................................................................................... of.......................................... as my proxy to attend and vote for me on my behalf at the 7th Annual General Meeting of the Company to be held on Wednesday, the 30th June, 2004 at 3.30 p.m. at 1 Shahbag C/A, Dhaka and at any adjournment thereof. As witness my hand this................................. day of June 2004 signed by the said in presence of................................................ .............................................................................................................................................................................................. Revenue Stamp Tk. 8.00 .......................................... (Signature of the Proxy) Date:.................................. ..................................................... Signature of the Shareholder(s) Register Folio No. :......................... Date:............................................. ......................................... (Signature of Witness) NOTE : A member entitled to attend and vote at the General Meeting may appoint a proxy to attend and vote in his/her stead. The proxy form, duly stamped, must be deposited at the Registered Office of the Company not later than 48 hours before the time appointed for the meeting. Signature Verified ............................. Authorized Signatory h BANGLADESH ONLINE LIMITED Registered Office : 17, Dhanmondi R/A, Road # 2, Dhaka-1205 S H A R E H O L D E R ' S AT T E N D A N C E S L I P I/We hereby record my attendance at the 6th Annual General Meeting being held on Wednesday, the 30th June, 2004 at 3.30 p.m. at 1 Shahbag C/A, Dhaka. Name of Member/Proxy............................................................................................................................................................ Register Folio No......................................... holding of................................. ordinary Shares of Bangladesh Online Limited. ....................................... Signature of Shareholder(s) N.B. 1. Please note that AGM can only be attended by the honorable shareholder or properly constituted proxy. Therefore, any friend or children accompanying with honorable shareholder or proxy cannot be allowed into the meeting. 2. Please present this slip at the reception Desk.