Directors Report

DIRECTORS’ REPORT TO THE SHAREHOLDERS

Dear Shareholders,

It is our privilege to welcome you all to the 16th Annual General Meeting of Intech Limited. We are pleased to present the results of operational activities and the audited financial statements of the Company for the 18 months period ended on June30, 2016 before the shareholders of the Company. We now report below on the performance of the company and other relevant aspects in accordance with the Notification on Corporate Governance dated 07 August 2012, issued by BSEC.

Industry outlook and possible future developments in the industry

As we already informed you last year, your company has diversified in other areas i.e. resort project and fisheries project, while also retaining the core business of internet service and software.

During the reporting period, your Company continued its fishery business on leasehold property. Subsequently, the Company has decided to purchase the said property. The Company is optimistic that the said property may be utilised, with shareholders’ approval, for more diversified business initiatives, e.g eco-tourism, agro-business etc.

Segment-wise or product-wise performance

Software remained the main source of revenue, representing 52% of the revenue earned during the period. The other sources of income were Fisheries (39%) and Internet Service (9%).

Risks and concerns

Considering the risk of stiff competition and high personnel turnover in the software business, we have already diversified our business in hospitality industry and fisheries.
As you may recall, we mentioned in our earlier reports that we would expand our business in the hospitality industry. Accordingly, your Company had fully undertaken the holiday resort project ‘Kothay’ of Intech Resorts Limited, with the approval of the shareholders of Intech Limited in a previous AGM. However, due to some local circumstances beyond our control, the project could not satisfactorily progress during the reporting period. As a result, the investments which have earlier been made, have remained unchanged. The Board has already started to explore various alternatives to address the situation. The alternatives will be presented to the esteemed shareholders in the AGM for their consideration.

Change in Accounting Year

As mentioned, the Finance Act 2015 passed by the Bangladesh parliament requires companies, excluding banks, insurance and NBFIs to follow July-June as their financial year. This change in the reporting period is effective from July 1, 2016. Consequent to the provision of the Finance Act, we need to adopt an accounting year that will commence from July 1 and conclude on June 30. To comply with the regulation, we propose that effective from July 1, 2016 our accounting year will be a 12-month period starting from July 1 and ending June 30 instead of January 1 to December 31.

Cost of Goods and Services Sold, Gross Profit Margin and Net Profit Margin

The Cost of Goods and Services Sold in 2015-16 amounted to 46% of Revenue, thereby resulting in Gross Profit Margin of 54%. This is fairly consistent with 59% Gross Profit Margin in 2014. The Net Profit Margin is 22% of Turnover (2014: 30%).

Key operating and financial data of preceding 5 (five) years

Particulars 2015-16 2014 2013 2012 2011
 Turnover

Gross Profit

Profit Before Tax

Tax

Profit After Tax

Total Asset

Shareholders Equity

Total Current Assets

Total Current Liabilities

 114,126,973

61,354,548

24,892,581

(127,681)

23,749,268

267,002,272

259,553,491

106,499,532

7,448,781

77,609,265

45,540,710

23,185,748

108,478

21,917,983

241,494,125

235,804,223

75,870,727

5,689,902

47,316,448

39,768,272

19,325,397

(314,935)

19,640,332

217,834,103

213,886,240

80,902,443

3,947,863

44,721,567

37,728,362

20,403,674

2,332,156

18,071,518

198,694,840

194,245,908

88,509,174

4,448,932

40,705,025

35,749,509

15,667,788

(591,891)

16,259,679

182,837,971

176,174,390

99,433,188

6,663,581

Remuneration of directors including independent directors

The Directors of the Company, including independent directors, have not received any remuneration during the year.

Directors’ Declaration as to Financial Statements

As part of preparation and presentation of the financial statements, the Directors also report that:

  1. The financial statements prepared by the management of the company present fairly its state of affairs, the result of its operation, cash flows and changes in equity.
  2. Proper books of account of the Company have been maintained.
  3. Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment.
  4. Bangladesh Accounting Standards (BAS)/Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements.

System of internal control

The Company’s internal control is sound is designed and has been effectively implemented and monitored during the year.

Going Concern

There are no significant doubts upon the issuer company’s ability to continue as a going concern.

Other Regulatory Disclosures

There was no extra-ordinary gain or loss during this year or the preceding year.

There was no public issue of shares of any other instruments during this year.

There was no significant variance in the business trend between Quarterly Financial performance and Annual Financial Statements.

There were no significant deviations from the last year’s operating results of the Company.

Dividend

The Board of Directors have the pleasure to recommend 10% Stock Dividend (10 Bonus Shares for each 100 shares held) for 2015-16 for your approval.

Directors

The Board of the Company consists of 5 (five) members, 1 (one) of whom (i.e 20%) is an Independent Director. Under section 60 Articles of Association of the Company Directors from the general shareholders retire by way of rotation.

By rotation, Mr. Md. Shahidul Alam, one of the Directors from the general shareholders, would retire in this AGM, and he has not expressed interest for re-election.

As of the date of this report, we have received an expression of interest from one of our shareholders, Mr. ATM Mahbubul Alam to be elected as a Director from the general shareholders. His brief resume is provided below:

Mr. Mahbub, a multi-faceted business persona, has received numerous leadership positions in different industries, specially the IT/ITeS sector and mobile value added services.

Mr. Mahbub currently is the Chairman of Wintel Limited, Managing Director of Solquest Limited, Win Sources Limited and Wintel Global (M) SDN. BHD, Director of Pyrowin Telecommunication Limited and Channel VAS Bangladesh Limited.

Mr. Mahbub is also a business leader of the country. He is currently President of Content Providers & Aggregators Association of Bangladesh (CPAAB), Chairman of FBCCI Standing Committee on ICT, Joint Secretary of Bangladesh Solar & Renewable Energy Association and Bangladesh Mobile Phone Importers Association.

The pattern of shareholdings is disclosed as follows:

  1. The Company has no Parents/Subsidiary/Associated Companies
  2. The shareholdings of Directors have been disclosed as follows:
Shareholdings by Designation No. of shares
Mosleh Uddin Ahmed

Md. Arifur Rahman

Md. Shahidul Alam

M. A. Haque

Mirza Aminul Islam Beg

General Shareholder Director

General Shareholder Director

General Shareholder Director

Independent Director

CEO

5,065

5,822

1,311

  1. CEO/Company Secretary/CFO/Head of Internal Audit and their spouse and minor children do not hold any shares of the Company.
  2. No Executive hold any share of the Company.
  3. No Shareholders hold 10% or more shares.

The number of Board meetings held during the period and attendance by each director (12 meetings were held in the period):

 Attendant’s Name   Designation Attendance
Mosleh Uddin Ahmed

Md. Arifur Rahman

Md. Shahidul Alam

Mr. M.A.Haque (till 23.06.15)

Md. Imtiaz Hossain (from 24.06.15)

Mirza Aminul Islam Beg

Chairman

Director

Director

Independent Director

Independent Director

CEO

12

12

12

3

6

12

Audit Committee

As per stipulation of the BSEC guidelines, the Board has constituted an Audit Committee for the Company. The Committee met six times during the reporting period, which was attended by all the members. The main activities of the Audit Committee during the reporting period were as follows:

  1. Review and recommend to the Board the quarterly and period-end financial statements for the period of 18   months in 2015-16.
  2. Review and appraise the performance of the internal control system.
  3. Review and consider the compliance with various Guidelines of BSEC.

Corporate Governance Compliance Statement

We are pleased to confirm that we have complied with BSEC Notification No. SEC/CMRRCD/2006158/134/Admin/44 dated 07 August 2012, and have included the Compliance Report in the Annual Report. Further, a Certificate of Compliance required under the said Notification, as provided by SAFE-Q Associates & Co., Cost and Management Accountants, has also been annexed to this Report.

Auditors

The Board recommends the appointment of Shahadat Rashid & Co. Chartered Accounts, as Auditors for 2016-17, for your approval.

The Board’s response to the Auditors’ Report 

The Auditors have raised a qualifying issue regarding Deferred Tax. The Board clarifies that the Company made the calculations in accordance with Company policy and rates of depreciation, and then compared the same with depreciation calculated as per methods and rates of the taxation authority, to calculate the impact of deferred tax.

The Auditors’ Report also contains a paragraph on Emphasis of Matter, which is based on facts.  However, as the auditors have themselves stated, this does not qualify their opinion on the financial statements.

Conclusion

The Board would like to thank you all for your participation in the AGM, and for your continued interest and support for the Company.

On behalf of the Board of Directors

Mosleh Uddin Ahmed
Chairman