Corporate Financial Reporting of BOC Bangladesh Ltd

Corporate Financial Reporting of BOC Bangladesh Ltd.

CORPORATE VISION:

We shall be recognized as the leader in all business sectors in which we compete in Bangladesh

Our success will be build on our absolute dedication to the satisfaction of our customer through constant

Innovation, operational efficiency cost effectiveness and the talent of our people.

We shall always apply high standard integrity and responsibility of our activities.

INTRODUCTION:

Corporate Annual reports are widely used in understanding the Quality of corporate Governess. A well-designed annual report is an attempt to express, as much as possible, the 365 days activities of a company. In general a corporate annual report contains information’s such a statement of the chief executive officer, a statement from the chairman, composition of the board of directors, and financial statements vise , income statements, statements of retained earnings, balance sheet and a cash flow statement. It also includes notes and supporting schedules such as schedule of long-term assets, five to ten years performance statistics, information on human resources development and the auditor’s report.

The chief executive officer or the chairman’s report usually states the current operations of and future challenges for the company. The reports contain both opportunities and threats for the company and the shareholders. The disclosers of the composition of the board of directors are important. The directors in the board and their contribution and importance in the society are considered important by the shareholders. Most importantly the presence of outside independent directors in the board is considered necessary for good governance. Financial statements are considered the most important part of an annual report. Income statements quantifies the operation of a business and gain or loss from these operations, balance sheets the assets and liabilities of the business, and cash flow statement shows the liquidity position of the business. These three financial statements show the financial health of the business. In any particular year, these statements disclose the company’s current year end and the immediate previous state of financial performance. A company also discloses historical performance statistics for a period of five to ten years. Performance is measured in terms of profitability, liquidity, and solvency.

In guiding the preparation of the above financial statements, there is International accounting standards. so far the International accounting standard committee(IASC) has developed 40 accounting standards(IASC 2002).The purpose of these standards is to facilitate harmony in accounting practices by companies so that performance evaluation and investment decisions become easier for the shareholders. One of these standards is adequate disclosure, which says that financial statements shall disclose all material information important for decision making.

The chairman’s report usually covers a short review of current activities, salient features of organization performance, strength of the organization and potential threats that may hamper the organizations future. A well designed report can help investors and other stakeholders in their investment decisions. A good report is one which can capture the past, present and future. It contains not only the achievements of the organization but also its weaknesses and opportunities lost. It also contains the policies and strategies under consideration to sustain the strengths and removes the barriers in the way of targeting the future opportunities

While financial statements are historical in nature, they can still provide users with valuable insights. These users rely on financial statement analysis, which involves examining trends in key financial data, comparing financial data across companies, and analyzing financial ratios to assess the financial health and future prospects of a company. Here we focus our attention on the most important ratios and other analytical tools that financial analysts use.

In addition to stockholders and creditors, managers are also vitally concerned with the financial ratios. The ratios provide indicators of how well the company and its business units are performing. The specific ratios selected depend on the company’s strategy. For example, a company that wants to emphasize responsiveness to customers may closely monitor the inventory turnover ratio. Since managers must report to stockholders and may want to raise funds from external sources, managers must pay attention to the financial ratios used by external investors.

Historical Background BOC Bangladesh Ltd.:

Theoretical view:

BOC Bangladesh Ltd. Is a member of the Linde Group, a multinational company that has been present in Bangladesh for over 50 years with continuous expansion in operation and business with a modest appearance at the beginning BOC Bangladesh Ltd. Products are now part and parcel of all the industrial and economic activities of the country. Today the turnover of the company has exceeded tk.1.25 billion.BOC Bangladesh Ltd. Is a listed company in our market? This company listed in 1976.The registered office in 285 tejgoan I/A, Dhaka-1213.BOC Bangladesh Ltd is a member of the Linde Group having its head office in Munich, Germany has been present in Bangladesh for over 50 years with continuous expansion in operation and business.

Year	Particulars
1879	Foundation Linde AG ,Germany
1880	Barium oxide parents
1885	Linde british co, London
1886	Brings oxygen company
1895	Parent to cart van linde
1906	Oxygen purity
1907	Linde Air products,co
1914	BOC Purates
1929	Linde take over the groundless
1935	BOC buys controlling stake
1969	BOC opens research facility
1991	Foundation of Linde joint venture
2002	Joint venture linde-BOC plants
2006	Linde and BOC now at Linde group

Performance at a glance:

· Financial History

Particulars	Taka	2005	2006	2007	2008
Revenue		1553430	2358955	2000172	2498583
PAT		220783	336425	350155	457740
Earnings		155985	246252	263651	359651
Dividend		76091	106528	106528	269364
General Reserve		839605	1051366	1195914	1312546
Net Fixed Assets		1257046	1087131	1004121	966509
EPS		10.25	16.18	17.32	23.61
DPS		5	7	7	17.70
Net assets per share		76.53	82.12	91.62	99.28

Methodology:

The financial statement analyses of BOC need for some method .There are five parts of the financial statements. And each statement is analyzed by using different tools. The balance sheet and the income statement are analyzed by using common size statement and also prepare the comparative balance sheet. We also consider which items are relative with the IAS 1(PRESENTATION OF FINANCIAL STATEMENT) and notification if SEC. A common size the cash flow statements are analyzed by using the tools such as

Cash average ratio
Quality of income ratio
Capital expenditure ratio
Cash flow return ratio.

The director report and the chairman report are also analyzed because the two items are used for the taking decision of present, past and the future. The chairman report indicates the strength of financial position in future and the future probability of the firm’s growth. The director’s report also indicates the works are performed by the director and their necessary steps that have been used for the future development of the firm. The ratio analysis on the basis of the common shareholder, short term creditor and the long term creditor helps to understand

ANALYSIS OF THE REPORT:

Qualitative report:
Compliance if IAS 1:

· Presentation of Financial Statements:

· Objective:

This Standard prescribes the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirement for their content.

· Scope:

An entity shall apply this Standard in preparing and presenting general purpose financial statements in accordance with International Financial Reporting Standards (IFRSs).

Other IFRSs set out the recognition, measurement and disclosure requirements for specific transactions and other events.

This Standard uses terminology that is suitable for profit-oriented entities, including public sector business entities. If entities with not-for-profit activities in the private sector or the public sector apply this Standard, they may need to amend the descriptions used for particular line items in the financial statements and for the financial statements themselves.

· Definitions:

The following terms are used in this Standard with the meanings specified:

General purpose financial statements (referred to as ‘financial statements’) are those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs. Material Omissions or misstatements of items are material if they could, individually or collectively; influence the economic decisions that users make on the basis of the financial statements. The components of other comprehensive income include:

(a) Changes in revaluation surplus (see IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets);

(b) Actuarial gains and losses on defined benefit plans recognized in accordance with paragraph 93A of IAS 19 Employee Benefits;

(c) Gains and losses arising from translating the financial statements of a foreign operation (see IAS 21 the Effects of Changes in Foreign Exchange Rates);

(d) Gains and losses on re-measuring available-for-sale financial assets (see IAS 39 Financial Instruments: Recognition and Measurement);

(e) The effective portion of gains and losses on hedging instruments in a cash flow hedge (see IAS 39).

Owners are holders of instruments classified as equity.

Profit or loss is the total of income less expenses, excluding the components of other comprehensive income.

Total comprehensive income is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners.

Total comprehensive income comprises all components of ‘profit or loss’ and of ‘other comprehensive income’.

Although this Standard uses the terms ‘other comprehensive income’, ‘profit or loss’ and ‘total comprehensive income’, an entity may use other terms to describe the totals as long as the meaning is clear. For example, an entity may use the term ‘net income’ to describe profit or loss.

Purpose of financial statements:

Financial statements are a structured representation of the financial position and financial performance of an entity. The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an entity’s:

(a) Assets;

(b) Liabilities;

(d) Income and expenses, including gains and losses;

(e) Contributions by and distributions to owners in their capacity as owners; and

(f) Cash flows.

This information, along with other information in the notes, assists users of financial statements in predicting the entity’s future cash flows and, in particular, their timing and certainty. The BOC Bangladesh Ltd maintains all items above in their financial statements.

Complete set of financial statements:

A complete set of financial statements comprises:

(a) A statement of financial position as at the end of the period;

(b) A statement of comprehensive income for the period;

(d) A statement of cash flows for the period;

(e) Notes, comprising a summary of significant accounting policies and other explanatory information; and

(f) a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

BOC Bangladesh Ltd has the all five items in their statements.

As permitted by paragraph 81, BOC Ltd may present the components of profit or loss either as part of a single statement of comprehensive income or in a separate income statement. When an income statement is presented it is part of a complete set of financial statements and shall be displayed immediately before the statement of comprehensive income.

The BOC Bangladesh Ltd present, outside the financial statements, a financial review by management that describes and explains the main features of the entity’s financial performance and financial position, and the principal uncertainties it faces. Such a report may include a review of:

(a) the main factors and influences determining financial performance, including changes in the environment in which the entity operates, the entity’s response to those changes and their effect, and the entity’s policy for investment to maintain and enhance financial performance, including its dividend policy;

(b) Its sources of funding and its targeted ratio of liabilities to equity; and

The BOC Bangladesh Ltd also present, outside the financial statements, reports and statements such as environmental reports and value added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group. Reports and statements presented outside financial statements are outside the scope of IFRSs

General features:

Fair presentation and compliance with IFRSs:

Financial statements of The BOC Bangladesh Ltd present fairly the financial position, financial performance and cash flows of an entity. Fair presentation requires the faithful with the definitions and recognition criteria for assets, liabilities, income and expense.

The BOC Bangladesh Ltd in a prior period from a requirement in an IFRS for the measurement of assets or liabilities and that departure affects the measurement of changes in assets and liabilities recognized in the current period’s financial statement.

Material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, the entity shall disclose those uncertainties.

IAS 18 Revenue defines revenue and requires an entity to measure it at the fair value of the consideration received or receivable, taking into account the amount of any trade discounts and volume rebates the entity allows. An entity undertakes, in the course of its ordinary activities, other transactions that do not generate revenue but are incidental to the main revenue-generating activities. An entity presents the results of such transactions, when this presentation reflects the substance of the transaction or other event, by netting any income with related expenses arising on the same transaction

In addition, an entity presents on a net basis gains and losses arising from a group of similar transactions, for example, foreign exchange gains and losses or gains and losses arising on financial instruments held for trading. However, an entity presents such gains and losses separately if they are material. These rules are maintained by The BOC Bangladesh Ltd

Frequency of reporting:

The BOC Bangladesh Ltdpresent a complete set of financial statements (including comparative information) at least annually. When an entity changes the end of its reporting period and presents financial statements for a period longer or shorter than one year, an entity shall disclose, in addition to the period covered by the financial statements:

It consistently prepares financial statements for a one-year period. However, for practical reasons, some entities prefer to report, for example, for a 52-week period. This Standard does not preclude this practice

Comparative information:

The BOC Bangladesh Ltddiscloses comparative information in respect of the previous period for all amounts reported in the current period’s financial statements. An entity shall include comparative information for narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements.

Consistency of presentation:

The BOC Bangladesh Ltd retains the presentation and classification of items in the financial statements from one period.

A significant acquisition or disposal, or a review of the presentation of the financial statements, might suggest that the financial statements need to be presented differently. The BOC Bangladesh Ltd changes the presentation of its financial statements only if the changed presentation provides information that is reliable and more relevant to users of the financial statements and the revised structure is likely to continue, so that comparability is not impaired.

Identification of the financial statements:

The BOC Bangladesh Ltd clearly identifies the financial statements and distinguishes them from other information in the same published document.

IFRSs apply only to financial statements, and not necessarily to other information presented in an annual report, a regulatory filing, or another document. Therefore, it is important that users can distinguish information that is prepared using IFRSs from other information that may be useful to users but is not the subject of those requirements.

(j) the total of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations;

(k) Trade and other payables;

(l) Provisions;

(m) Financial liabilities (excluding amounts shown under (k) and (l));

(n) Liabilities and assets for current tax, as defined in IAS 12 Income Taxes;

(o) Deferred tax liabilities and deferred tax assets, as defined in IAS 12;

(p) Liabilities included in disposal groups classified as held for sale in accordance with IFRS 5;

(q) Non-controlling interests, presented within equity; and

(r) Issued capital and reserves attributable to owners of the parent.

The BOC Bangladesh Ltd present additional line items, headings and subtotals in the statement of financial position when such presentation is relevant to an understanding of the entity’s financial position.

It also presents current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position; it shall not classify deferred tax assets (liabilities) as current assets (liabilities).

· Current/non-current distinction:

The BOC Bangladesh Ltd present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position in accordance with paragraphs 66–76 except when a presentation based on liquidity provides information that is reliable and more relevant. When that exception applies, an entity shall present all assets and liabilities in order of liquidity.

It also disclose the amount expected to be recovered or settled after more than twelve months for each asset and liability line item that combines amounts expected to be recovered or settled:

(a) No more than twelve months after the reporting period, and

(b) More than twelve months after the reporting period.

It supplies goods or services within a clearly identifiable operating cycle, separate classification of current and non-current assets and liabilities in the statement of financial position provides useful information by distinguishing the net assets that are continuously circulating as working capital from those used in the entity’s long-term operations. It also highlights assets that are expected to be realized within the current operating cycle, and liabilities that are due for settlement within the same period.

Current assets:

The BOC Bangladesh Ltdclassifies an asset as current when:

(a) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;

(b) It holds the asset primarily for the purpose of trading;

(d)The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The BOC Bangladesh Ltd classifies all other assets as non-current.

It uses the term ‘non-current’ to include tangible, intangible and financial assets of a long-term nature. It does not prohibit the use of alternative descriptions as long as the meaning is clear.

Current liabilities:

The BOC Bangladesh Ltd classifies a liability as current when:

(a) It expects to settle the liability in its normal operating cycle;

(b) It holds the liability primarily for the purpose of trading;

(d) The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

It also classifies all other liabilities as non-current.

Some current liabilities, such as trade payables and some accruals for employee and other operating costs, are part of the working capital used in the entity’s normal operating cycle.

Information to be presented either in the statement of financial position or in the notes:

BOC Bangladesh ltd disclose its information in the statement of financial position in the notes, further sub classifications of the line items presented, classified in a manner appropriate to the entity’s operations.

The detail provided in sub classifications depends on the requirements of IFRSs and on the size, nature and function of the amounts involved.

(a) Items of property, plant and equipment are disaggregated into classes in accordance with IAS 16;

(b) Receivables are disaggregated into amounts receivable from trade customers, receivables from related parties, prepayments and other amounts;

(c) Inventories are disaggregated, in accordance with IAS 2 Inventories, into classifications such as merchandise, production supplies, materials, and work in progress and finished goods;

(d) Provisions are disaggregated into provisions for employee benefits and other items; and

(e) Equity capital and reserves are disaggregated into various classes, such as paid-in capital,

Share premium and reserves.

BOC Bangladesh ltd discloses the following the statement of changes in equity, or in thenotes:

(a) For each class of share capital:

(i) The number of shares authorized;

(ii) The number of shares issued and fully paid, and issued but not fully paid;

(Iii) par value per share, or that the shares have no par value;

(iv)A reconciliation of the number of shares outstanding at the beginning and at the end of the period;

(v) The rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital;

(vi) Shares in the entity held by the entity or by its subsidiaries or associates; and

(vii) Shares reserved for issue under options and contracts for the sale of shares, including terms and amounts; and

(b) A description of the nature and purpose of each reserve within equity.

(b) Total comprehensive income for the period attributable to:

(i) Non-controlling interests, and

(ii) Owners of the parent.

It also presents in a separate income statement (see paragraph 81) the line items in paragraph 82(a)–(f) and the disclosures in paragraph 83(a).

They present additional line items, headings and subtotals in the statement of comprehensive income and the separate income statement (if presented), when such presentation is relevant to an understanding of the entity’s financial performance.

Profit or loss for the period:

BOC Bangladesh ltd shall recognize all items of income and expense in a period in profit or loss unless an IFRS requires or permits otherwise.

Some IFRSs specify circumstances when an entity recognizes particular items outside profit or loss in the current period. IAS 8 specifies two such circumstances: the correction of errors and the effect of changes in accounting policies. Other IFRSs require or permit components of other comprehensive income that meet the Framework’s definition of income or expense to be excluded from profit or loss (see paragraph 7)

Other comprehensive income for the period:

BOC Bangladesh ltd disclose the amount of income tax relating to each component of other comprehensive income, including reclassification adjustments, either in the statement of comprehensive income or in the notes.

Its present components of other comprehensive income either:

(a) Net of related tax effects, or

(b) Before related tax effects with one amount shown for the aggregate amount of income tax relating to those components.

It presents reclassification adjustments in the statement of comprehensive income or in the notes. An entity presenting reclassification adjustments in the notes presents the components of other comprehensive income after any related reclassification adjustments.

Reclassification adjustments arise, for example, on disposal of a foreign operation (see IAS 21), on the recognition of available-for-sale financial assets (see IAS 39) and when a hedged forecast transaction affects profit or loss (see paragraph 100 of IAS 39 in relation to cash flow hedges).

Reclassification adjustments do not arise on changes in revaluation surplus recognized in accordance with IAS 16 or IAS 38 or on actuarial gains and losses on defined benefit plans recognized in accordance with paragraph 93A of IAS 19. These components are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. Changes in revaluation surplus may be transferred to retained earnings in subsequent periods as the asset is used or when it is derecognized (see IAS 16 and IAS 38). Actuarial gains and losses are reported in retained earnings in the period that they are recognized as other comprehensive income (see IAS 19).

Information to be presented in the statement of comprehensive income or in the notes:

When items of income or expense are material, it discloses their nature and amount separately.

There are some Circumstances that would give rise to the separate disclosure of items of income and expense includes:

(a) Write-downs of inventories to net realizable value or of property, plant and equipment to recoverable amount, as well as reversals of such write-downs;

(b) Restructurings of the activities of an entity and reversals of any provisions for the costs of restructuring;

(d) Disposals of investments;

(e) discontinued operations;

(f) Litigation settlements; and

(g) Other reversals of provisions.

Expenses are sub classified to highlight components of financial performance that may differ in terms of frequency, potential for gain or loss and predictability. They provided in following way

This analysis is the ‘function of expense’ or ‘cost of sales’ method and classifies expenses according to their function as part of cost of sales or, for example, the costs of distribution or administrative activities. At a minimum, an entity discloses its cost of sales under this method separately from other expenses. This method can provide more relevant information to users than the classification of expenses by nature, but allocating costs to functions may require arbitrary allocations and involve considerable judgment. An example of a classification using the function of expense method is as follows:

Revenue X Cost of sales (X) Gross profit X Other income X Distribution costs(X) Administrative expenses (X) Other expenses (X) Profit before tax X

Statement of cash flows:

Cash flow information provides users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilize those cash flows. IAS 7 sets out requirements for the presentation and disclosure of cash flow information.

Notes:

(a) The notes of the company present information about the basis of preparation of the financial statements and the specific accounting policies used in accordance with paragraphs 117–124;

(b) Disclose the information required by IFRSs that is not presented elsewhere in the financial statements; and

(c) Provide information that is not presented elsewhere in the financial statements, but is relevant to an understanding of any of them.

They normally present notes in the following order, to assist users to understand the financial statements and to compare them with financial statements of other entities:

(a) Statement of compliance with IFRSs (see paragraph 16);

(b) summary of significant accounting policies applied (see paragraph 117);

Accounting polices:

They disclosure of particular accounting policies, including choices made by management between different policies they allow. For example, IAS 16 requires disclosure of the measurement bases used for classes of property, plant and equipment.

They also consider the nature of its operations and the policies that the users of its financial statements would expect to be disclosed for that type of entity. For example, users would expect an entity subject to income taxes to disclose its accounting policies for income taxes, including those applicable to deferred tax liabilities and assets. When an entity has significant foreign operations or transactions in foreign currencies, users would expect disclosure of accounting policies for the recognition of foreign exchange gains and losses.

An accounting policy may be significant because of the nature of the entity’s operations even if amounts for current and prior periods are not material. It is also appropriate to disclose each significant accounting policy that is not specifically required by IFRSs but the entity selects and applies in accordance with IAS 8.

BOC Bangladesh ltd disclose in the summary of significant accounting policies or other notes, the judgments, apart from those involving estimations (see paragraph 125), that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements.

In the process of applying its accounting policies, management makes various judgments, apart from those involving estimations, that can significantly affect the amounts it recognizes in the financial statements. For example, management makes judgments in determining:

(a) Whether financial assets are held-to-maturity investments;

(b) When substantially all the significant risks and rewards of ownership of financial assets and lease assets are transferred to other entities;

(c) Whether, in substance, particular sales of goods are financing arrangements and therefore do not give rise to revenue; and

(d) Whether the substance of the relationship between the entity and a special purpose entity indicates that the entity controls the special purpose entity.

Sometimes it is impracticable to disclose the extent of the possible effects of an assumption or another source of estimation uncertainty at the end of the reporting period. So they discloses that it is reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year that are different from the assumption could require a material adjustment to the carrying amount of the asset or liability affected. In all cases, the entity discloses the nature and carrying amount of the specific asset or liability (or class of assets or liabilities) affected by the assumption.

Other IFRSs require the disclosure of some of the assumptions that would otherwise be required in accordance with paragraph 125. For example, IAS 37 requires disclosure, in specified circumstances, of major assumptions concerning future events affecting classes of provisions. IFRS 7 requires disclosure of significant assumptions the entity uses in estimating the fair values of financial assets and financial liabilities that are carried at fair value. IAS 16 requires disclosure of significant assumptions that the entity uses in estimating the fair values of revalued items of property, plant and equipment.

Capital:

BOC Bangladesh Ltd. discloses information that enables users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital.

They disclose the following:

Qualitative information about its objectives, policies and processes for managing capital including:

(i) a description of what it manages as capital;

(ii) when an entity is subject to externally imposed capital requirements, the nature of those requirements and how those requirements are incorporated into the management of capital; and

(iii) How it is meeting its objectives for managing capital.

(b) Summary quantitative data about what it manages as capital. Some entities regard some financial liabilities (e.g. some forms of subordinated debt) as part of capital. Other entities regard capital as excluding some components of equity (e.g. components arising from cash flow hedges).

(d) Whether during the period it complied with any externally imposed capital requirements to which it is subject.

(e) When the entity has not complied with such externally imposed capital requirements, t he consequences of such non-compliance.

The entity bases these disclosures on the information provided internally to key management personnel.

They manage capital in a number of ways and be subject to a number of different capital requirements. For example, a conglomerate may include entities that undertake insurance activities and banking activities and those entities may operate in several jurisdictions. When an aggregate disclosure of capital requirements and how capital is managed would not provide useful information or distorts a financial statement user’s understanding of an entity’s capital resources, the entity shall disclose separate information for each capital requirement to which the entity is subject

Other disclosures:

BOC Bangladesh Ltd disclose in the notes:

(a)the amount of dividends proposed or declared before the financial statements were authorized for issue but not recognized as a distribution to owners during the period, and the related amount per share; and

(b) The amount of any cumulative preference dividends not recognized.

They also disclose the following, if not disclosed elsewhere in information published with the

Financial statements:

(a) The domicile and legal form of the entity, its country of incorporation and the address of its registered office (or principal place of business, if different from the registered office);

(b) A description of the nature of the entity’s operations and its principal activities; and

Board of directors:

Board size:

SEC notified that the Board of directors of a company should not be less than 5[five] and more than 20[twenty]. The BOC Company has maintained these rules.

provided, however, that in the case of banks and non-bank financial institutions, insurance companies and statutory bodies for which separate primary regulations like Bangladesh Bank, Department of insurance etc. exist, the Board of those companies are not inconsistent with the aforesaid condition.

Independent directors:

(1)SEC notification was the independent directors must be 1/10 of total directors and BOC has two independent directors.

Explanation: for the purpose of this clause “independent director” means a director who does not hold any share in the company or who holds less than one percent (1%) shares of the total paid-up shares of the company, who is not connected with the company’s promoters or directors. Or shareholders who holds one percent (1%) or more one percent (1%) shares of the total paid-up shares of the company on the basis of family relationship; who does not have any other relationship, whether pecuniary of otherwise, with the company or its subsidiary/ associated companies, who are not a member, director or officer of any stock exchange; and who is not a shareholder, director of officer of any member of stock exchange of an intermediary of the capital marke

Corporate Financial Reporting of BOC Bangladesh Ltd

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CORPORATE VISION:

We shall be recognized as the leader in all business sectors in which we compete in Bangladesh

Our success will be build on our absolute dedication to the satisfaction of our customer through constant

Innovation, operational efficiency cost effectiveness and the talent of our people.

We shall always apply high standard integrity and responsibility of our activities.

INTRODUCTION:

Historical Background BOC Bangladesh Ltd.:
Theoretical view:

Year	Particulars
1879	Foundation Linde AG ,Germany
1880	Barium oxide parents
1885	Linde british co, London
1886	Brings oxygen company
1895	Parent to cart van linde
1906	Oxygen purity
1907	Linde Air products,co
1914	BOC Purates
1929	Linde take over the groundless
1935	BOC buys controlling stake
1969	BOC opens research facility
1991	Foundation of Linde joint venture
2002	Joint venture linde-BOC plants
2006	Linde and BOC now at Linde group

Ø Performance at a glance:

· Financial History

Particulars	Taka’000	2005	2006	2007	2008
Revenue		1553430	2358955	2000172	2498583
PAT		220783	336425	350155	457740
Earnings		155985	246252	263651	359651
Dividend		76091	106528	106528	269364
General Reserve		839605	1051366	1195914	1312546
Net Fixed Assets		1257046	1087131	1004121	966509
EPS		10.25	16.18	17.32	23.61
DPS		5	7	7	17.70
They show that last year they faced several problems on price hike rather their turnover was increased by 25% this is matched by an increase of 31% in per-tax profit. This is very typical task when there was as slow metric growth in the principal product & they done this because of the good pricing decision & the stringent control over cost. Good working capital management & the timely treasury action helps to introduce the interim dividend. And this result last year they paid dividend Tk. 7 per share & this year they paid Tk. 17.7 per share including the interim dividend Bulk: Bulk is a liquid industrial gas. Except the liquid Nitrogen all these types of product sale was increased. A significant improvement had been noticed in the consumption of liquid oxygen in the ship breaking sector Safety matter is the main priority of the firm & that’s way thy launching a safe programmed al transport. For this safety they introduce the safety convict, sit safety committee, Transport safety cercal, SHEQ & so on. Human Resource: Code of ethics, Excellence Awards, spot decongestion scheme helps the employee to work accurately. Internal Control: For creating good internal control system they carried several engineering audit. Audit committee & the vexing SAP also make the internal control more strong. Corporate Social Responsibility: =1207552/348455 =3.47 For consolidated current Ratio=1207550/347827 =3.47 It measures that current assets is 3.47 times greater than current liabilities. That means to pay the current obligations the amount of current assets is more than enough. Short term creditor normally measures this ratio before extending any short term loan to the company. If this ratio is satisfactory to them they would lend money The debt-to-equity ratio indicates the relative proportion of debt and equity on the company’s balance sheet. Debt-to-Equity ratio=Total liabilities/Stockholders equity =663151/1510910 =.44

Corporate Financial Reporting of BOC Bangladesh Ltd

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CORPORATE
VISION:

We
shall be recognized as the leader in all business sectors in which we compete
in Bangladesh

Our
success will be build on our absolute dedication to the satisfaction of our
customer through constant

Innovation,
operational efficiency cost effectiveness and the talent of our people.

We
shall always apply high standard integrity and responsibility of our
activities.

INTRODUCTION:

Corporate
Annual reports are widely used in understanding the Quality of corporate
Governess. A well-designed annual report is an attempt to express, as much as
possible, the 365 days activities of a company. In general a corporate annual
report contains information’s such a statement of the chief executive officer,
a statement from the chairman, composition of the board of directors, and
financial statements vise , income statements, statements of retained earnings,
balance sheet and a cash flow statement. It also includes notes and supporting
schedules such as schedule of long-term assets, five to ten years performance
statistics, information on human resources development and the auditor’s
report.

The
chief executive officer or the chairman’s report usually states the current
operations of and future challenges for the company. The reports contain both
opportunities and threats for the company and the shareholders. The disclosers
of the composition of the board of directors are important. The directors in
the board and their contribution and importance in the society are considered
important by the shareholders. Most importantly the presence of outside independent
directors in the board is considered necessary for good governance. Financial
statements are considered the most important part of an annual report. Income
statements quantifies the operation of a business and gain or loss from these
operations, balance sheets the assets and liabilities of the business, and cash
flow statement shows the liquidity position of the business. These three
financial statements show the financial health of the business. In any
particular year, these statements disclose the company’s current year end and
the immediate previous state of financial performance. A company also discloses
historical performance statistics for a period of five to ten years.
Performance is measured in terms of profitability, liquidity, and solvency.

In
guiding the preparation of the above financial statements, there is
International accounting standards. so
far the International accounting standard committee(IASC) has
developed 40 accounting standards(IASC 2002).The purpose of these standards
is to facilitate harmony in accounting
practices by companies so that performance evaluation and investment decisions become easier for the
shareholders. One of these standards is adequate disclosure, which says that
financial statements shall disclose all material information important for
decision making.

The
chairman’s report usually covers a short review of current activities, salient
features of organization performance, strength of the organization and
potential threats that may hamper the organizations future. A well designed
report can help investors and other stakeholders in their investment decisions.
A good report is one which can capture the past, present and future. It
contains not only the achievements of the organization but also its weaknesses and
opportunities lost. It also contains the policies and strategies under
consideration to sustain the strengths and removes the barriers in the way of
targeting the future opportunities

While
financial statements are historical in nature, they can still provide users
with valuable insights. These users rely on financial statement analysis, which
involves examining trends in key financial data, comparing financial data
across companies, and analyzing financial ratios to assess the financial health
and future prospects of a company. Here we focus our attention on the most
important ratios and other analytical tools that financial analysts use.

In
addition to stockholders and creditors,
managers are also vitally concerned with the financial ratios. The ratios
provide indicators of how well the company and its business units are
performing. The specific ratios selected depend on the company’s strategy. For
example, a company that wants to emphasize responsiveness to customers may
closely monitor the inventory turnover ratio. Since managers must report to
stockholders and may want to raise funds from external sources, managers must
pay attention to the financial ratios used by external investors.

Historical
Background BOC Bangladesh Ltd.:
Theoretical
view:

BOC
Bangladesh Ltd. Is a member of the Linde Group, a multinational company that
has been present in Bangladesh for over 50 years with continuous expansion in
operation and business with a modest appearance at the beginning BOC Bangladesh
Ltd. Products are now part and parcel of all the industrial and economic
activities of the country. Today the turnover of the company has exceeded
tk.1.25 billion.BOC Bangladesh Ltd. Is a listed company in our market? This
company listed in 1976.The registered office in 285 tejgoan I/A, Dhaka-1213.BOC
Bangladesh Ltd is a member of the Linde Group having its head office in Munich,
Germany has been present in Bangladesh for over 50 years with continuous
expansion in operation and business.

Year	Particulars
1879	Foundation Linde AG ,Germany
1880	Barium oxide parents
1885	Linde british co, London
1886	Brings oxygen company
1895	Parent to cart van linde
1906	Oxygen purity
1907	Linde Air products,co
1914	BOC Purates
1929	Linde take over the groundless
1935	BOC buys controlling stake
1969	BOC opens research facility
1991	Foundation of Linde joint venture
2002	Joint venture linde-BOC plants
2006	Linde and BOC now at Linde group

Ø
Performance at a glance:

·
Financial History

Particulars	Taka’000	2005	2006	2007	2008
Revenue		1553430	2358955	2000172	2498583
PAT		220783	336425	350155	457740
Earnings		155985	246252	263651	359651
Dividend		76091	106528	106528	269364
General Reserve		839605	1051366	1195914	1312546
Net Fixed Assets		1257046	1087131	1004121	966509
EPS		10.25	16.18	17.32	23.61
DPS		5	7	7	17.70
	76.53	82.12	91.62	99.28

Ø
Methodology:

The financial statement analyses of BOC need for some
method .There are five parts of the financial statements. And each statement is
analyzed by using different tools. The balance sheet and the income statement
are analyzed by using common size statement and also prepare the comparative
balance sheet. We also consider which items are relative with the IAS
1(PRESENTATION OF FINANCIAL STATEMENT) and notification if SEC. A common size the cash flow statements are
analyzed by using the tools such as

Cash average ratio
Quality of income
ratio
Capital expenditure
ratio
Cash flow return
ratio.

The director report and the chairman report are also
analyzed because the two items are used for the taking decision of present,
past and the future. The chairman report indicates the strength of financial
position in future and the future probability of the firm’s growth. The
director’s report also indicates the works are performed by the director and
their necessary steps that have been used for the future development of the
firm. The ratio analysis on the basis of the common shareholder, short term
creditor and the long term creditor helps to understand

Ø
ANALYSIS OF THE REPORT:

Qualitative report:
Compliance if IAS 1:

·
Presentation of Financial Statements:

·
Objective:

This Standard
prescribes the basis for presentation of general purpose financial statements to
ensure comparability both with the entity’s financial statements of previous
periods and with the financial statements of other entities. It sets out
overall requirements for the presentation of financial statements, guidelines
for their structure and minimum requirement for their content.

·
Scope:

An
entity shall apply this Standard in preparing and presenting general purpose
financial statements in accordance with International Financial Reporting
Standards (IFRSs).

Other IFRSs set out the recognition,
measurement and disclosure requirements for specific transactions and other
events.

This Standard uses terminology that
is suitable for profit-oriented entities, including public sector business
entities. If entities with not-for-profit activities in the private sector or
the public sector apply this Standard, they may need to amend the descriptions
used for particular line items in the financial statements and for the
financial statements themselves.

·
Definitions:

The following
terms are used in this Standard with the meanings specified:

General
purpose financial statements (referred to
as ‘financial statements’) are those intended to meet the needs of users who
are not in a position to require an entity to prepare reports tailored to their
particular information needs. Material
Omissions or misstatements of items are material if they could, individually or
collectively; influence the economic decisions that users make on the basis of
the financial statements. The components of other comprehensive income include:

(a)
Changes in revaluation surplus (see IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets);

(b)
Actuarial gains and losses on defined benefit plans recognized in accordance
with paragraph 93A of IAS 19 Employee
Benefits;

(c)
Gains and losses arising from translating the financial statements of a foreign
operation (see IAS 21 the Effects of
Changes in Foreign Exchange Rates);

(d)
Gains and losses on re-measuring available-for-sale financial assets (see IAS
39 Financial Instruments: Recognition
and Measurement);

(e)
The effective portion of gains and losses on hedging instruments in a cash flow
hedge (see IAS 39).

Owners are holders
of instruments classified as equity.

Profit or loss is the
total of income less expenses, excluding the components of other comprehensive
income.

Total comprehensive income is the change in equity during a period resulting from transactions and
other events, other than those changes resulting from transactions with owners
in their capacity as owners.

Total
comprehensive income comprises all components of ‘profit or loss’ and of ‘other
comprehensive income’.

Although this
Standard uses the terms ‘other comprehensive income’, ‘profit or loss’ and
‘total comprehensive income’, an entity may use other terms to describe the
totals as long as the meaning is clear.
For example, an entity may use the term ‘net income’ to describe profit
or loss.

·
Purpose of financial statements:

Financial
statements are a structured representation of the financial position and
financial performance of an entity. The
objective of financial statements is to provide information about the financial
position, financial performance and cash flows of an entity that is useful to a
wide range of users in making economic decisions. Financial statements also show the results of
the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements
provide information about an entity’s:

(a) Assets;

(b) Liabilities;

(d) Income and expenses,
including gains and losses;

(e) Contributions by
and distributions to owners in their capacity as owners; and

(f) Cash flows.

This information, along with other
information in the notes, assists users of financial statements in predicting
the entity’s future cash flows and, in particular, their timing and certainty.
The BOC Bangladesh Ltd maintains all items above in their financial statements.

·
Complete set of financial statements:

A complete set
of financial statements comprises:

(a) A
statement of financial position as at the end of the period;

(b) A statement of comprehensive income for the
period;

(d) A statement of cash flows for the period;

(e) Notes, comprising a summary of significant accounting
policies and other explanatory information; and

(f) a statement of financial position as at the
beginning of the earliest comparative period when an entity applies an
accounting policy retrospectively or makes a retrospective restatement of items
in its financial statements, or when it reclassifies items in its financial
statements.

BOC
Bangladesh Ltd has the all five items in their statements.

As permitted by paragraph 81, BOC Ltd
may present the components of profit or loss either as part of a single
statement of comprehensive income or in a separate income statement. When an income statement is presented it is
part of a complete set of financial statements and shall be displayed
immediately before the statement of comprehensive income.

The BOC Bangladesh Ltd present,
outside the financial statements, a financial review by management that
describes and explains the main features of the entity’s financial performance
and financial position, and the principal uncertainties it faces. Such a report
may include a review of:

(a)
the main factors and influences determining financial performance, including
changes in the environment in which the entity operates, the entity’s response
to those changes and their effect, and the entity’s policy for investment to
maintain and enhance financial performance, including its dividend policy;

(b) Its sources of funding and its targeted ratio
of liabilities to equity; and

The BOC
Bangladesh Ltd also present, outside the financial statements, reports and
statements such as environmental reports and value added statements,
particularly in industries in which environmental factors are significant and
when employees are regarded as an important user group. Reports and statements
presented outside financial statements are outside the scope of IFRSs

·
General features:

·
Fair presentation and compliance with IFRSs:

Financial statements of The BOC Bangladesh Ltd present fairly the financial position, financial performance and cash
flows of an entity. Fair presentation requires the faithful with the
definitions and recognition criteria for assets, liabilities, income and
expense.

The BOC
Bangladesh Ltd in a prior period from a requirement in an IFRS for the
measurement of assets or liabilities and that departure affects the measurement
of changes in assets and liabilities recognized in the current period’s
financial statement.

Material uncertainties related to events or conditions that may cast
significant doubt upon the entity’s ability to continue as a going concern, the
entity shall disclose those uncertainties.

IAS 18 Revenue defines revenue and requires
an entity to measure it at the fair value of the consideration received or
receivable, taking into account the amount of any trade discounts and volume
rebates the entity allows. An entity undertakes, in the course of its ordinary
activities, other transactions that do not generate revenue but are incidental
to the main revenue-generating activities. An entity presents the results of
such transactions, when this presentation reflects the substance of the
transaction or other event, by netting any income with related expenses arising
on the same transaction

In addition, an entity
presents on a net basis gains and losses arising from a group of similar
transactions, for example, foreign exchange gains and losses or gains and
losses arising on financial instruments held for trading. However, an entity presents such gains and losses
separately if they are material. These rules are maintained by The BOC
Bangladesh Ltd

·
Frequency of reporting:

The BOC
Bangladesh Ltd present a
complete set of financial statements (including comparative information) at
least annually. When an entity changes the end of its reporting period and
presents financial statements for a period longer or shorter than one year, an
entity shall disclose, in addition to the period covered by the financial
statements:

It consistently
prepares financial statements for a one-year period. However, for practical
reasons, some entities prefer to report, for example, for a 52-week period.
This Standard does not preclude this practice

·
Comparative information:

The BOC
Bangladesh Ltd discloses
comparative information in respect of the previous period for all amounts
reported in the current period’s financial statements. An entity shall include
comparative information for narrative and descriptive information when it is
relevant to an understanding of the current period’s financial statements.

·
Consistency of presentation:

The BOC
Bangladesh Ltd retains the presentation
and classification of items in the financial statements from one period.

A significant
acquisition or disposal, or a review of the presentation of the financial
statements, might suggest that the financial statements need to be presented
differently. The BOC Bangladesh Ltd changes the presentation of its
financial statements only if the changed presentation provides information that
is reliable and more relevant to users of the financial statements and the
revised structure is likely to continue, so that comparability is not impaired.

·
Identification of the financial statements:

The BOC
Bangladesh Ltd clearly identifies the
financial statements and distinguishes them from other information in the same
published document.

IFRSs apply only
to financial statements, and not necessarily to other information presented in
an annual report, a regulatory filing, or another document. Therefore, it is
important that users can distinguish information that is prepared using IFRSs
from other information that may be useful to users but is not the subject of
those requirements.

(j) the total of assets classified as held for sale
and assets included in disposal groups classified as held for sale in
accordance with IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations;

(k) Trade and other payables;

(l) Provisions;

(m) Financial liabilities (excluding amounts shown
under (k) and (l));

(n) Liabilities and assets for current tax, as
defined in IAS 12 Income Taxes;

(o) Deferred tax liabilities and deferred tax
assets, as defined in IAS 12;

(p) Liabilities included in disposal groups
classified as held for sale in accordance with IFRS 5;

(q) Non-controlling interests, presented within
equity; and

(r) Issued capital and reserves attributable to
owners of the parent.

The BOC
Bangladesh Ltd present additional line
items, headings and subtotals in the statement of financial position when such
presentation is relevant to an understanding of the entity’s financial
position.

It also presents current and non-current assets, and
current and non-current liabilities, as separate classifications in its
statement of financial position; it shall not classify deferred tax assets
(liabilities) as current assets (liabilities).

·
Current/non-current distinction:

The BOC
Bangladesh Ltd present current and
non-current assets, and current and non-current liabilities, as separate
classifications in its statement of financial position in accordance with
paragraphs 66–76 except when a presentation based on liquidity provides
information that is reliable and more relevant. When that exception applies, an
entity shall present all assets and liabilities in order of liquidity.

It also disclose the amount expected to be recovered or settled after
more than twelve months for each asset and liability line item that combines
amounts expected to be recovered or settled:

(a) No more than twelve months after the reporting
period, and

(b) More than twelve months after the reporting
period.

It supplies
goods or services within a clearly identifiable operating cycle, separate
classification of current and non-current assets and liabilities in the
statement of financial position provides useful information by distinguishing
the net assets that are continuously circulating as working capital from those
used in the entity’s long-term operations.
It also highlights assets that are expected to be realized within the
current operating cycle, and liabilities that are due for settlement within the
same period.

·
Current assets:

The BOC Bangladesh Ltd classifies an asset as current when:

(a) It expects to realize the asset, or intends to
sell or consume it, in its normal operating cycle;

(b) It holds the asset primarily for the purpose of
trading;

(d)The asset is cash or a cash equivalent (as
defined in IAS 7) unless the asset is restricted from being exchanged or used
to settle a liability for at least twelve months after the reporting period.

The BOC
Bangladesh Ltd classifies all other
assets as non-current.

It uses the term
‘non-current’ to include tangible, intangible and financial assets of a
long-term nature. It does not prohibit
the use of alternative descriptions as long as the meaning is clear.

·
Current liabilities:

The BOC
Bangladesh Ltd classifies a liability
as current when:

(a) It expects to settle the liability in its normal
operating cycle;

(b) It holds the liability primarily for the purpose
of trading;

(d) The entity does not have an unconditional right
to defer settlement of the liability for at least twelve months after the
reporting period.

It also classifies all other liabilities as non-current.

Some current liabilities, such as
trade payables and some accruals for employee and other operating costs, are
part of the working capital used in the entity’s normal operating cycle.

·
Information to be presented either in the statement
of financial position or in the notes:

BOC Bangladesh ltd disclose its information in the statement of financial
position in the notes, further sub classifications of the line items presented,
classified in a manner appropriate to the entity’s operations.

The detail
provided in sub classifications depends on the requirements of IFRSs and on the
size, nature and function of the amounts involved.

(a) Items of
property, plant and equipment are disaggregated into classes in accordance with
IAS 16;

(b)
Receivables are disaggregated into amounts receivable from trade customers,
receivables from related parties, prepayments and other amounts;

(c)
Inventories are disaggregated, in accordance with IAS 2 Inventories, into classifications such as merchandise,
production supplies, materials, and work in progress and finished goods;

(d)
Provisions are disaggregated into provisions for employee benefits and other
items; and

(e)
Equity capital and reserves are disaggregated into various classes, such as
paid-in capital,

Share
premium and reserves.

BOC Bangladesh ltd discloses the following the statement of changes in
equity, or in the notes:

(a) For each class of share capital:

(i) The number of shares authorized;

(ii) The number of shares issued and fully paid, and
issued but not fully paid;

(Iii) par value per share, or that the shares have
no par value;

(iv)A reconciliation of the number of shares
outstanding at the beginning and at the end of the period;

(v) The rights, preferences and restrictions
attaching to that class including restrictions on the distribution of dividends
and the repayment of capital;

(vi) Shares in the entity held by the entity or by
its subsidiaries or associates; and

(vii) Shares reserved for issue under options and
contracts for the sale of shares, including terms and amounts; and

(b) A description of the nature and purpose of each
reserve within equity.

(b) Total comprehensive income for the period attributable
to:

(i) Non-controlling interests, and

(ii) Owners of the parent.

It also presents in a separate income statement (see paragraph 81) the
line items in paragraph 82(a)–(f) and the disclosures in paragraph 83(a).

They present additional line items, headings and subtotals in the
statement of comprehensive income and the separate income statement (if
presented), when such presentation is relevant to an understanding of the
entity’s financial performance.

·
Profit or loss for the period:

BOC Bangladesh ltd shall recognize all items of income and expense in a
period in profit or loss unless an IFRS requires or permits otherwise.

Some IFRSs
specify circumstances when an entity recognizes particular items outside profit
or loss in the current period. IAS 8 specifies two such circumstances: the
correction of errors and the effect of changes in accounting policies. Other IFRSs require or permit components of
other comprehensive income that meet the Framework’s definition of
income or expense to be excluded from profit or loss (see paragraph 7)

·
Other comprehensive income for the period:

BOC Bangladesh ltd disclose the amount of income tax relating to each
component of other comprehensive income, including reclassification
adjustments, either in the statement of comprehensive income or in the notes.

Its present
components of other comprehensive income either:

(a)
Net of related tax effects, or

(b)
Before related tax effects with one amount shown for the aggregate amount of
income tax relating to those components.

It presents
reclassification adjustments in the statement of comprehensive income or in the
notes. An entity presenting
reclassification adjustments in the notes presents the components of other
comprehensive income after any related reclassification adjustments.

Reclassification adjustments arise,
for example, on disposal of a foreign operation (see IAS 21), on the recognition
of available-for-sale financial assets (see IAS 39) and when a hedged forecast
transaction affects profit or loss (see paragraph 100 of IAS 39 in relation to
cash flow hedges).

Reclassification adjustments do not
arise on changes in revaluation surplus recognized in accordance with IAS 16 or
IAS 38 or on actuarial gains and losses on defined benefit plans recognized in
accordance with paragraph 93A of IAS 19. These components are recognized in
other comprehensive income and are not reclassified to profit or loss in
subsequent periods. Changes in
revaluation surplus may be transferred to retained earnings in subsequent
periods as the asset is used or when it is derecognized (see IAS 16 and IAS
38). Actuarial gains and losses are
reported in retained earnings in the period that they are recognized as other
comprehensive income (see IAS 19).

·
Information to be presented in the statement of
comprehensive income or in the notes:

When items of income or expense are material, it discloses their nature
and amount separately.

There
are some Circumstances that would give rise to the separate disclosure of items
of income and expense includes:

(a)
Write-downs of inventories to net realizable value or of property, plant and
equipment to recoverable amount, as well as reversals of such write-downs;

(b)
Restructurings of the activities of an entity and reversals of any provisions
for the costs of restructuring;

(d)
Disposals of investments;

(e)
discontinued operations;

(f)
Litigation settlements; and

(g)
Other reversals of provisions.

Expenses are sub
classified to highlight components of financial performance that may differ in
terms of frequency, potential for gain or loss and predictability. They
provided in following way

This analysis is
the ‘function of expense’ or ‘cost of sales’ method and classifies expenses
according to their function as part of cost of sales or, for example, the costs
of distribution or administrative activities. At a minimum, an entity discloses
its cost of sales under this method separately from other expenses. This method
can provide more relevant information to users than the classification of
expenses by nature, but allocating costs to functions may require arbitrary
allocations and involve considerable judgment.
An example of a classification using the function of expense method is as
follows:

Revenue X Cost
of sales (X) Gross profit X Other income X Distribution costs(X) Administrative
expenses (X) Other expenses (X) Profit before tax X

·
Statement of cash flows:

Cash flow information provides users
of financial statements with a basis to assess the ability of the entity to
generate cash and cash equivalents and the needs of the entity to utilize those
cash flows. IAS 7 sets out requirements for the presentation and disclosure of
cash flow information.

·
Notes:

(a) The notes of the company present
information about the basis of preparation of the financial statements and the
specific accounting policies used in accordance with paragraphs 117–124;

(b) Disclose the information required by IFRSs that is not presented
elsewhere in the financial statements; and

(c) Provide information that is not presented elsewhere in the financial
statements, but is relevant to an understanding of any of them.

They normally
present notes in the following order, to assist users to understand the financial
statements and to compare them with financial statements of other entities:

(a) Statement of compliance with IFRSs (see
paragraph 16);

(b) summary of significant accounting policies applied (see
paragraph 117);

·
Accounting
polices:

They disclosure
of particular accounting policies, including choices made by management between
different policies they allow. For
example, IAS 16 requires disclosure of the measurement bases used for classes
of property, plant and equipment.

They also
consider the nature of its operations and the policies that the users of its
financial statements would expect to be disclosed for that type of entity. For
example, users would expect an entity subject to income taxes to disclose its
accounting policies for income taxes, including those applicable to deferred
tax liabilities and assets. When an
entity has significant foreign operations or transactions in foreign
currencies, users would expect disclosure of accounting policies for the
recognition of foreign exchange gains and losses.

An accounting
policy may be significant because of the nature of the entity’s operations even
if amounts for current and prior periods are not material. It is also appropriate to disclose each
significant accounting policy that is not specifically required by IFRSs but
the entity selects and applies in accordance with IAS 8.

BOC Bangladesh ltd disclose in the summary of significant accounting
policies or other notes, the judgments, apart from those involving estimations
(see paragraph 125), that management has made in the process of applying the
entity’s accounting policies and that have the most significant effect on the
amounts recognized in the financial statements.

In the process of applying its
accounting policies, management makes various judgments, apart from those
involving estimations, that can significantly affect the amounts it recognizes
in the financial statements. For example, management makes judgments in
determining:

(a)
Whether financial assets are held-to-maturity investments;

(b)
When substantially all the significant risks and rewards of ownership of
financial assets and lease assets are transferred to other entities;

(c)
Whether, in substance, particular sales of goods are financing arrangements and
therefore do not give rise to revenue; and

(d)
Whether the substance of the relationship between the entity and a special
purpose entity indicates that the entity controls the special purpose entity.

Sometimes it is impracticable to
disclose the extent of the possible effects of an assumption or another source
of estimation uncertainty at the end of the reporting period. So they discloses that it is reasonably
possible, on the basis of existing knowledge, that outcomes within the next
financial year that are different from the assumption could require a material
adjustment to the carrying amount of the asset or liability affected. In all
cases, the entity discloses the nature and carrying amount of the specific
asset or liability (or class of assets or liabilities) affected by the
assumption.

Other IFRSs require the disclosure of
some of the assumptions that would otherwise be required in accordance with
paragraph 125. For example, IAS 37
requires disclosure, in specified circumstances, of major assumptions
concerning future events affecting classes of provisions. IFRS 7 requires disclosure of significant
assumptions the entity uses in estimating the fair values of financial assets
and financial liabilities that are carried at fair value. IAS 16 requires
disclosure of significant assumptions that the entity uses in estimating the
fair values of revalued items of property, plant and equipment.

·
Capital:

BOC
Bangladesh Ltd. discloses information that enables users of its financial
statements to evaluate the entity’s objectives, policies and processes for
managing capital.

They disclose
the following:

Qualitative
information about its objectives, policies and processes for managing capital
including:

(i) a description of what it manages as capital;

(ii)
when an entity is subject to externally imposed capital requirements, the
nature of those requirements and how those requirements are incorporated into
the management of capital; and

(iii) How it is meeting its objectives for managing capital.

(b)
Summary quantitative data about what it manages as capital. Some entities regard some financial
liabilities (e.g. some forms of subordinated debt) as part of capital. Other entities regard capital as excluding
some components of equity (e.g. components arising from cash flow hedges).

(d) Whether during the period it complied with any externally
imposed capital requirements to which it is subject.

(e) When the
entity has not complied with such externally imposed capital requirements, t he consequences of such
non-compliance.

The entity bases
these disclosures on the information provided internally to key management
personnel.

They manage
capital in a number of ways and be subject to a number of different capital
requirements. For example, a
conglomerate may include entities that undertake insurance activities and
banking activities and those entities may operate in several
jurisdictions. When an aggregate
disclosure of capital requirements and how capital is managed would not provide
useful information or distorts a financial statement user’s understanding of an
entity’s capital resources, the entity shall disclose separate information for
each capital requirement to which the entity is subject

·
Other disclosures:

BOC Bangladesh Ltd disclose in the notes:

(a)the amount of dividends proposed or declared
before the financial statements were authorized for issue but not recognized as
a distribution to owners during the period, and the related amount per share;
and

(b) The amount of any cumulative preference
dividends not recognized.

They also disclose the following, if not disclosed elsewhere in
information published with the

Financial statements:

(a) The domicile and legal form of the entity, its
country of incorporation and the address of its registered office (or principal
place of business, if different from the registered office);

(b) A description of the nature of the entity’s
operations and its principal activities; and

Board
of directors:

Board
size:

SEC
notified that the Board of directors of a company should not be less than
5[five] and more than 20[twenty]. The BOC Company has maintained these rules.

provided,
however, that in the case of banks and
non-bank financial institutions, insurance companies and statutory bodies for
which separate primary regulations like Bangladesh Bank, Department of
insurance etc. exist, the Board of those companies are not inconsistent with
the aforesaid condition.

Independent directors:

(1)SEC
notification was the independent directors must be 1/10 of total directors and
BOC has two independent directors.

Explanation:
for the purpose of this clause “independent director” means a director
who does not hold any share in the company or who holds less than one percent
(1%) shares of the total paid-up shares of the company, who is not connected
with the company’s promoters or directors. Or shareholders who holds one
percent (1%) or more one percent (1%) shares of the total paid-up shares of the
company on the basis of family relationship; who does not have any other
relationship, whether pecuniary of otherwise, with the company or its
subsidiary/ associated companies, who are not a member, director or officer of
any stock exchange; and who is not a shareholder, director of officer of any
member of stock exchange of an intermediary of the capital market.

(2)The
independent directors elected by BOD.

Chairman of the Board and CEO:

The
BOC maintained the rules that the chairman of the Board and CEO is not the some
individual. Here –

Chairman: Mr. M Sayeduzzaman CEO: Mr.Waliur Rahman

Director’s
report:

The
director’s report of BOC shows the fairness of financial statement. Maintenance of proper books of account, adoption
of appropriate policy and estimates, compliance with IAS, soundness of internal
control system, ability to continue as a going concern, significance donation
Of last three years data, presentation of last three years data, dividend declaration, details of Board meeting and the
shareholding patter

CFO and Head of internal Audit
and company secretary:

Mr.
Azizur Rahman is the CFO and the company secretary as per SEC notification and
he attends 5 times of Board of directors meeting.

Audit committee:

Constitution of audit committee:

I.
There
are 5 members in the audit committee.

II.
The
BOD appoints Audit committee members where Mr. Lutfor Rahman is an independent
director.

The
option of audit committee was not happened. Chairman of audit committee:

I.
The
BOD selects the Ayub Quadri as a chairman of the audit committee.

II.
Mr.
Ayub Quadri is a professional expert we can understated by …. His background.

Reporting to the Audit committee:

The rules Says that the audit committee should report
to their activity to the BOD and if any unfavorable situation is occurred then
they also report to the BOD.

External Auditor:

The
BOC maintained the following services,

v Appraisal or valuation services
of fairness opinions

v Financial information systems design and
implementation

v Book-keeping or other services related to the
accounting records of financial
statements

v Broker-dealer services

v Internal audit services and

v Any other services that the Audit
committee determines

Ø Chairman’s report:

The chairman report usually covers a short
review of current activities, Silent features of organization performance, and
strengths of the organization & potential threats that may hamper the
organization future. A well design report can help investor & other
shareholders in their investment decision

Firstly the chairman report of the
BOC indicate that the environment of Bangladesh that the last two years passing
without a democratic government. They also indicate the energy. Infrastructures
& agriculture sector which are main focus of our country. Though Bangladesh
is not a good player in the international business but they also show the
global economic turn-moil. Several sectors like garments, frozen foods and
leather goods are facing severe pressure on their profit margin from their
customers because of the global economic recession.

They show that last year they faced
several problems on price hike rather their turnover was increased by 25% this
is matched by an increase of 31% in per-tax profit. This is very typical task
when there was as slow metric growth in the principal product & they done
this because of the good pricing decision & the stringent control over
cost. Good working capital management & the timely treasury action helps to
introduce the interim dividend. And this result last year they paid dividend
Tk. 7 per share & this year they paid Tk. 17.7 per share including the
interim dividend

Bulk:

Bulk is a liquid industrial gas.
Except the liquid Nitrogen all these types of product sale was increased. A
significant improvement had been noticed in the consumption of liquid oxygen in
the ship breaking sector

This burliness is mainly now for all
industrial compressed gas & welding products. The turnover of the last year
is quite good though the business environment & government activities are
slow.

Hospital care:

Hospital care business continued to
more good progress both in terms of volume and turnover.

Development:

Jalalabad land was not sale out but
the necessary procedure & Permission had been taken.

Safety matter is the main priority of
the firm & that’s way thy launching a safe programmed al transport. For
this safety they introduce the safety convict, sit safety committee, Transport
safety cercal, SHEQ & so on.

Human Resource:

Code of ethics, Excellence Awards,
spot decongestion scheme helps the employee to work accurately.

Internal Control:

For creating good internal control
system they carried several engineering audit. Audit committee & the vexing
SAP also make the internal control more strong.

Corporate Social Responsibility:

Board Matters:

The board member Mr. Dr. Forasuddin
& Mr. Huggon resigned. Dr. Forasuddin was replaced by Mr. Ayub Quadi, one
of the outstanding senior bureaucrats of the country & a former advisor to
the immediate past caretaker govt. MM Bou Hian Lee joined the board in place of
MM Huggau.

Prospectus:

They introduce a programmed called
HPO (High Performance Organization). They also introduce a safety programmed on
four pillars; they are customer fours, people excellence, process excellence
& the ability to executive. The chairman shows that due global economic
crisis the business is in profitable way & he is optimistic about the
improvement of this business.

Directors report:

The director’s report indicates the
directors in the board & their contribution & importance in the society
are considered important by the shareholders.

Operation:

The ASU product supports the demand
of the business. Ship breaking sector is a challenging sector because of the
huge demand. A second tunnel over for drying was added in the gear to the
electrodes production facility at Rupganj

Financial Result:

The turnover was increased by 25% at
Taka 2498583128 over the previous year’s turnover of Taka 200172007 & the
pre-tax profit for the year reached Tk. 457740076 compared to Tk. 350154878
realized in 2007.

Dividends:

The company pay dividend Tk. 7 last
year whereas this year dividend was paid 17.70 Tk. including the interim
dividend.

Reserve:

Tk. 16,001000 was credited to reserve
a/c as per BAS 19.

Directors:

Mr. Binod Patwari, Mr. Latifur Rahman
& Mr. Ayub Quadri retire in this meeting under article 81 of the a/A of the
company & being eligible offer themselves for re-election.

Ø Auditor’s
Report :

A well design report can help
investor & other shareholders in their investment decision. The Auditors,
Rahman Rahman Huq, being eligible offer themselves for reappointment. To make a
better decision regarding investment & credit decision Auditor’s report has
a great impact towards the users. In the 35^th AGM The Chairmen of
BOC Bangladesh Limited read out the name of audit firm Rahman Rahman Huq whom
is reappointed until the next general meeting at a fee 475000 excluding
expenses.

The Auditor’s Report to the
shareholders of Bangladesh Oxygen Limited firstly focused the responsibility
only express an opinion on the basis of Financial Statements just like stewardship
towards the management. The auditor tries to show the material misstatement and
give a reasonable assurance about the Financial Statements. All the procedure
based on (BSA) Bangladesh Standards on Auditing.

In the Auditor’s Report showed that all
the audit opinion based on BSA and BFRS which helps to determine the true and
fair view of the state of company’s affairs. In the report they commented that
proper books of accounts as required by law have been kept by the company.

But finally we can say that an
auditor’s report has a great impact towards general Investors and Creditors so
it may be more broadly like to support not only Law of accounts but also other
information which are not determined by law. In the Auditor’s Report it should
be mentioned that all the responded question and answer taken from selected
people (Mr. Salim Raza BO No-1201470000132709, Mr. Bishwajit Gosh BO No- 1202050004256108).

Common Stockholder:

Dividend
payout ratio:

The
dividend payout ratio explains the portion of current earnings being paid out
in dividends. Investors who seek market price growth would like small ratio but
dividend oriented investors prefer it to be large.

Dividend
payout ratio =Dividends per share/Earnings per share

=7.7/23.61

=32.61%

Here
management gave a high dividend from its earning. Generally companies have
available investment opportunities maintain low payout ratio and vice versa.
Investors always like to get more dividends for their investment. Investor must
analysis the dividend payout ratio or bonus pattern before investing.

Dividend
yield ratio:

Dividend
yield ratio measures the rate of return (in the form of cash) that would be
earned by an investor who buys stock at the market price.

Dividend
yield ratio = Dividends per
share/Market price per share

=7.7/306

=2.5%

Investors
normally consider how much return they will get as cash or through other way
before investing in a company.

Return
on total assets:

It
measures the operating performance of a company.

For
P/L account

Return
on total assets =Net income+ [Interest expense*(1-tax rate)]/Average total
assets

=359342+
[982*(1-.25)/2090140

=17.23%

For
consolidated P/L account

Return
on total assets =359301+ [982*(1-.25)]/2090118

=17.23%

The percentage shows the operating performance of the
company which is a considerable issue for an investor to invest in a company.
Here the percentage is better compared to average industries, which shows very
high progress of the company. So, investor would be satisfied for investing in
the company.

Short-Term Creditor:

Working
capital:

The
excess of current assets over current liabilities is known as working capital.

Working
capital= Current assets-current liabilities

Basically
it is a term on which short term creditors reach to a decision. Ample working
capital provides assurance to the creditors to be paid in time. Short term
creditors e.g. suppliers want to be paid in time. Moreover large amount of
working capital shows the inefficiency of the organization.

Current
Ratio:

Current
assets divided by its current liabilities is known as current ratio.

=1207552/348455

=3.47

For
consolidated current Ratio=1207550/347827

=3.47

It
measures that current assets is 3.47 times greater than current liabilities.
That means to pay the current obligations the amount of current assets is more
than enough. Short term creditor normally measures this ratio before extending
any short term loan to the company. If this ratio is satisfactory to them they
would lend money

It
is much more liquidity ability of a company to meet its short term debt. Here
inventories and prepaid expenses are excluded from the current assets.

Quick
ratio=Current assets-Inventories-advances and prepayments/ Current liabilities

=1207552 -541345-89599/348455

=1.65

For
consolidated quick ratio= 1207550 -541345-89599/347827

=1.66

Quick
ratio is more liquidity ability than current ratio. It ensures more payments to
creditors.

Ø Long- Term Creditor:

The
debt-to-equity ratio indicates the relative proportion of debt and equity on
the company’s balance sheet.

Debt-to-Equity
ratio=Total liabilities/Stockholders equity

=663151/1510910

=.44

=.44

Creditors
and stockholders have different view about the level of debt-to-equity ratio.
Stockholders always like a lot of debt to take advantage of positive financial
leverage.

Other
hand creditors would like to see more equity provides protection for the
creditor. In practice debt-to-equity ratio from 0 to3 is common.

Ø Cash Flow Analysis:

Cash
inflows and outflows represent the most fundamental and prevalent economic
events engaged in by companies. In fact, frequent surveys of business show a
single problem occupying increasingly greater and greater portion of most
manager’s time: cash flow management. Manager realizes that the “bottom line”
has little to do with staying solvent. Cash planning specially, understanding
the sources and uses of current & future cash flows-often makes the
difference between success and failure. Echoing this importance, Fortune
Magazine opines that “cash is king” and it will resign for a long time.

Cash
is also paramount for external users of financial statements. Stockholder and
creditors interests are seldom settled by mean other than cash. Therefore, cash
flow information is very important to enable these users to assess a company’s
ability.

v
To generate
future positive cash flow from operations.

v
To meet maturing
obligation and

v
To pay dividends.

Cash
flow information can also provide important insights regarding a company’s
continuing investment in productive assets and assessing the quality of its
earning.

The
positive CFFO & the negative CFFI & CFFF indicates that BOC increase
fixed assets & intangible asset & paid dividend & their other
liability by using the CFFO.

Ø
Recommendation:

Although financial statements
is a useful tool, it has two limitation that should be mentioned her. These two
limitations involve the comparability of financial data between companies and
the need to look beyond ratio.

Comparison of financial data:

Comparison of one company
with other can provide valuable clues about the financial health of an
organization. Unfortunately, differences in accounting methods between
companies sometimes make it difficult to compare their financial data. For
example if one company values its inventory by the FIFO method and another
company by the average cost method, then direct comparison of their financial
data such as inventory valuation and cost of goods sold may be misleading.
Sometimes enough data are presented in footnotes to the financial statement to
restate data to a comparable basis.
Otherwise the analyst should keep in mind any lack of comparability. Even with
this limitations in mind, comparison of key ratio with other companies and with
industry averages often suggest avenues for further investigation.

The need to look beyond ratio:

Ratios should not be viewed
as an end, but rather as a starting point. They raise many question and point
to opportunities for further analysis, but they rarely answer any questions by
themselves. In addition to ratio the analyst should be evaluated industry
trends, technological changes, changes in customer tastes, changes in broad
economic factors and changes within company itself.

Ø
Conclusion:

In
Financial Statements are historical documents. They summarize what has happened
during a particular period. Most investors of financial statements are
concerned with future earnings and dividends and creditors are concerned with
the company’s ability to pay its debts. While financial statements are
historical in nature, they can still provide users with valuable insights.
These users rely on financial statement analysis, which involves examining
trends in key financial data, comparing financial data across companies, and
analyzing financial ratios to assess the financial health and future prospects
of a company. Here we focus our attention on the most important ratios and
other analytical tools that financial analysts use.

Performance
reporting of the company had been aligned with that of that the Linde Group’s
lines of business. The data contained in financial statements represent a
quantitative summary of a company’s operation and activities. Someone whose
skillful at analyzing these statements can learn much about a company’s strengths,
weakness, emerging problems, operating efficiency, profitability and so forth.

Many
techniques are available to analyze financial statements and to assess the
direction and importance of trends and changes. In our report we have tried our
level best to analyze analytical techniques like common size statements, ratio
analysis and changes in statements. There also we consider both side of
Qualitative techniques like as Chairmen report and director’s report.

Ø Appendices:

Www. Corporate financial statement analysis. Com

www.BOCBangladesh.
com

Garrison H Ray, Noreen W Eric , Managerial
accounting

Chowdhury D ,Corporate governance

Theoretical view:

Disclaimer:

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