Annual Report · 2014-06-05 · IFIC Bank Ltd. National Bank Ltd. United Commercial Bank Ltd....

Annual Report2013

Notice of the 15th Annual General MeetingCorporate Information & Key MilestonesOur Vision & GoalOur MissionOur Core ValuesOur ObjectivesCode of Conduct & Ethical PrincipalsCorporate Social ResponsibilityShareholding StructureProducts & ServicesOur DepartmentsBankersDirectors' ProfilesFinancial HighlightsManagement TeamMessage from the ChairmanMessage from the Managing DirectorDirectors' Report to the ShareholdersAudit Committee ReportReport on Financial Statements byManaging Director/CEO and CFOReport on Corporate GovernanceCertificate on Compliance of Corporate Governance GuidelineAuditors' ReportStatement of Financial PositionStatement of Comprehensive IncomeStatement of Changes in EquityStatement of Cash FlowsLiquidity StatementNotes to the Financial StatementsOccasions and EventsProxy Form

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Table of Contents

Notice of the

15thAnnual General Meeting

04 Annual Report 2013

Notice of the 15th Annual General Meeting

National Housing Finance And Investments LimitedRegistered Office: National Plaza (7th & 8th Floor)

109, Bir Uttam C.R. Datta Road, Dhaka-1205

Notice is hereby given that the 15th Annual General Meeting of National Housing Finance And Investments Limited will be held at Lakeshore Hotel, Road: 41, House: 46, Gulshan 2, Dhaka-1212 on Wednesday, 28 May, 2014 at 11.00 a.m. to transact the following business:

Agenda

1. To receive, consider and adopt the audited financial statements of the Company for the year ended 31 December, 2013 together with reports of the Directors and Auditors.

2. Declaration of dividend for the year ended 31 December, 2013

3. To elect Directors in accordance with the relevant provisions of the Articles of Association of the Company.

4. To appoint Auditors and fix their remuneration for the year 2014.

By order of the Board

, S(Md. Sarwar Kamal AC ) Company Secretary Dated: April 21, 2014

Notes:

i) The record date will be 4 May, 2014 to determine the rights of Shareholders to current dividend and to attend & vote at the meeting.

ii) Pursuant to Section 85 of the Companies Act, 1994, the Company gives notice that only the shareholders whose names are entered on the Register or Depository Register of Shareholders on record date will beentitled to attend and vote at the meeting and at any adjournment thereof.

iii) A shareholder may, as per Article 98 of the Articles of Association of the Company, appoint Proxy to attend and on a pool, to vote instead of him/her. The instrument appointing a Proxy and the Power of Attorney, where applicable, must be deposited at the Corporate Office at National Plaza (7th & 8th Floor),109, Bir Uttam C.R. Datta Road, Dhaka-1205 at least 48 hours before the time of holding the meeting. The Proxy Form must be affixed with revenue stamps of Tk. 20.00.

iv) The Notice together with the Annual Report and Proxy Form are being sent to all shareholders through courier service. Shareholders may collect Proxy Form, if so required, from the registered office of the Company at or before 48 hours before the meeting.

v) Members are requested to notify change of address, if any, through their respective Depository Participants well in time.

vi) For convenience, the Shareholders/Proxy are requested to record their entry at the entrance of the AGM on 28 May, 2014 in between 9.00 a.m. to 11.00 a.m.

N.B: In compliance with the Bangladesh Securities and Exchange Commission's Circular No. SEC/CMRRCD/2009-193/154 dated October 24, 2013, no Gift/Gift Coupon/Food Box shall be distributed at the AGM.

sd/-

Annual Report 2013 05

Registered Name

Legal Form

Incorporated on

Registration Number

Authorized Capital

Paid-up Capital

Certificate of Commencement

Date of Bangladesh Bank License

First Mortgage Loan

Opening of Motijheel Branch

First Lease Finance

Opening of Chittagong Branch

Opening of Gulshan Branch

Date of Listing:-

Dhaka Stock Exchange

Chittagong Stock Exchange

Opening of Bogra Branch

National Housing Finance And Investments Limited

Public Limited Company under Companies Act, 1994

August 18, 1998

C-36097(397)/98

BDT 2,000 Million

BDT 1063.92 Million

August 18, 1998

December 29, 1998

June 16, 1999

August 18, 2001

February 22, 2004

April 06, 2004

June 01, 2004

December 23, 2008

November 11, 2008

April 19, 2009

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Membership:Bangladesh Leasing & Finance Companies Association (BLFCA)

Metropolitan Chamber of Commerce & Industry (MCC))

International Chamber of Commerce-Bangladesh (ICC)

Bangladesh Association of publicly Listed Companies (BAPLC)

Contact Details:Head Office: 109, Bir Uttam C.R. Datta Road (Ex-Sanargaon Road), National Plaza (7th & 8th Floor), Dhaka-1205

Tel: 9670612-4, 9677181-2, 9669800 Fax: 9671016

Web: www.nationalhousingbd.com

E-mail: [email protected]

Auditors:

Governance Compliance AuditorSA Rashid & Associates

Chartered Secretary in Practice

Noakhali Towar (10th Floor, 11-F), 55/B Purana Paltan, Dhaka-1000.

Legal Advisor:

Tax Advisor:Syful Shamsul Alam & Co., Chartered Accountants and Tuheen & Associates,

Corporate Information & Key Milestones

Syful Shamsul Alam & Co., Chartered Accountants, Corporate office: Paramount Heights (Level-6)65/2/1/ Box

Culvert Road, Purana Paltan, Dhaka-1000, Bangladesh.

Barrister Masubur Rahman, (Masudur Rahman & Associates), Barrister ASM Abdur Razzaque, (Abdur Razzaque &

Associates), Barrister Nuruzzaman (Justiciars), Advocate Abdul Kuddus, (Law and Remedy)


Our Goal

Build up excellent client relationship

and thereby add long-term value to

the shareholders.

Our VisionBecome the role-model financial institution with a keen sense of corporate social responsibility through maintaining the highest standards of business ethics. In doing so, the Company would add value to the wealth of the customers, employees, shareholders and society as a whole.


Our Mission

Be equal Housing Lender to all, irrespective of caste, creed and sex. Provide quality services with care and sophisticated technology. Create innovative products to cater to the requirement of the competitive market. Build a high quality employee team by providing job satisfaction and prospect of outstanding career development. Maximize steady return on shareholders' equity by quality investment of funds.

Protect national interest and be part of national

growth and prosperity.

Create good leaders rather than typed managers.

Give high priority on honoring trust, fairness,

confidentiality, rules and regulations, objectivity,

transparency, integrity, and corporate, individual

and social responsibility.

Always keep pace with state of the art technology

and innovative ideas.

*

**

*

Our Core Values


OurObjectives


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ngth

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ood

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prac

tices

.

Maximizeshareholders'value throughdevelopment ofstringent investmentstrategy and controlprocedures.

Create

balanced portfolio

in p

otential sectors

for enhan

cemen

t

of corporate

strength

Pursue

w

ays to

redu

ce

cost

and a

pply

extre

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vigilant

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isks an

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to o

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te m

ost

effic

ient

ly

Provide

diversified products

and uninterrupted

services to the

valued clients.

Code of Conduct & Ethical Principles

Comply with all applicable laws, rules and regulations.

National Housing is always straightforward in disclosing any conflict of interest.

Apply professional judgment and high quality care in all cases.

Apply own corporate policies and appropriate technical and professional standards forrendering services to the client.

Encourage and act against falsification, dishonesty, fraud, trickery and forgery.

Uphold the Company's good name and integrity.

Maintain strict professional integrity, proficiency, decency and self-esteem withthe customers and related parties.

Maintain stringent confidentiality of customers' information unless otherwise directed by competent regulatory authority.

Courtesy and cooperation to the client is our manifesto. Encourage employees toact in a professional and ethical manner so as to create a good impression ofNational Housing and its employees. Trustworthy commitment to customers tobuild long-term relationship.


Corporate Social Responsibility

The business and economic environments have undergone dramatic changes all over the world. Escalation of poverty and climate changes have become great hurdles for economic growth of the world. Considering these, the concept of Corporate Social Responsibility (CSR) is the demand of the current era. CSR has become a concept that frequently overlaps similar approaches, such as corporate sustainability, corporate sustainable development and corporate responsibility.

To meet CSR, the sponsors of National Housing Finance And Investments Limited formed a Public Limited Company under the Companies Act, 1994 and licensed by Bangladesh Bank under the Financial Institutions Act, 1993 to meet the most important basic need of housing of urban people. National Housing is a socially responsible organization and always keen to promote the interest of customers, employees, shareholders and communities as a whole. National Housing has upheld its CSE in the following ways,

National Housing has provided 4,364 Home Mortgage Loans over the years at comparatively low interest rate on reasonable terms, and for long durations.

A good number of clients got waiver of interest due to their inability to pay the loan because of permanent disability or through death. Furthermore, their loans are rescheduled for reasonable durations with installments commensurate with their ability to pay their loans.

National Housing is always strict on principle about not providing any lease/loanfacilities for any environmentally hazardous or child labor oriented company.



Shareholding Structure

Sponsor Shareholders 87.21%

14.15%

33.15%

32.74%

7.17%

12.79%

Banks

IFIC Bank Ltd.

National Bank Ltd.

United Commercial Bank Ltd.

Insurance Companies

Local Corporate/Business Groups

Non-Resident Bangladeshi Investors

General Shareholders

Overseas Investors Forum (UK)

Overseas Investors Forum (Zambia)

Eastern Insurance Company Ltd.

Eastland Insurance Company Ltd.

Jiban Bima Corporation.

National Life Insurance Company Ltd.

Pragati Insurance Ltd.

Reliance Insurance Ltd.

Sadharan Bima Corporation

Bangladesh Lamps Ltd.

Borak Travels (Pvt.) Ltd.

HRC Bangladesh Ltd.

Shaw Wallace Bangladesh Ltd.

Square Pharmaceuticals Ltd.

Summit Industrial and Mercantile Corporation (Pvt.) Ltd.

Unicorn Equities Ltd.


Products & Services

Home Mortgage Loan

Project Mortgage Loan

Lease Finance

Term Loan for Industies

SME Finance

Deposit Schemes With Attractive Return

Self construction of own home

Purchase of apartment or house

Renovation of existing house/apartment

Housing plots purchase

Commercial space and chamber for professionals

Any purpose mortgage loan

Project mortgage loan for Property development

Medical/Hospital equipments

Acquisition of industrial machineries, equipment, generator, power plant etc.

Car purchase

Work order finance

Factoring

Agro based processing industrial loan

Women Entrepreneur Loan

Cluster financing

Term Deposit Account

Double Money Account

Income Account

Monthly Savings Scheme (MSS)

Millionaire Savings Account


Our Departments

NHFIL

InternaIControl &

Compliance

CompanySecretariat

Engineering

TreasurySME

CreditAdministration

Department

LeaseFinance

Recovery& Collection

ShareDepartment

InformationTechnology

Accounts& Finance

MarketingHuman

Resource

HousingFinance

Legal


Bankers

Bank Al-Falah Limited

Bank Asia Limited

Eastern Bank Limited

Islami Bank Bangladesh Limited

Jamuna Bank Limited

Mercantile Bank Limited

National Bank Limited

Prime Bank Limited

Pubali Bank Limited

Shahjalal Islami Bank Limited

The Hongkong and Shanghai Banking Corporation Limited

The Premier Bank Limited

The Trust Bank Limited

United Commercial Bank Limited

Midland Bank Ltd.


Mr. Latifur RahmanChairmanRepresenting Bangladesh Lamps Limited

Mr Latifur Rahman is the Chairman and CEO of Transcom Group, with annual turnover of around Taka 36 billion, employing over 10 thousand people. The business originated with tea plantations in 1885.

Group companies dealing with beverages, electronics, lighting, pharmaceuticals, newspapers, tea plantations and KFC & Pizza Hut Restaurants. Major stakeholder in Reliance Insurance and National Housing Finance And Investments Ltd.

He is Chairman of Nestlé Bangladesh Limited and Holcim Cement (Bangladesh) Limited and Director of Linde Bangladesh Limited. He is also a member of the Governing Body of BRAC, world's largest NGO.

Mr Rahman is currently the Vice President of ICC - Bangladesh.

He is a former President of Metropolitan Chamber of Commerce, the position he held for seven terms and also a former President of Bangladesh Employers' Federation (two terms).

Mr Latifur Rahman was Chairman, Tradebody Reforms Committee, Member - Bangladesh Better Business Forum, Advisory Committee on WTO. He was Member of the Executive Board of Bangladesh Bank (Central Bank).

Mr. Rahman is an Honouree of "Oslo Business for Peace Award 2012".

Directors' Profile

Mr. Latifur Rahman


Mr. Jalal AhmedDirectorRepresenting IFIC Bank Ltd.

Mr. Jalal Ahmed completed both his Masters and Bachelors in Social Science from the University of Dhaka.

Mr. Ahmed has served the Government of Bangladesh for nearly 3 decades in various positions such as Deputy Commissioner of Thakurgaon and Faridpur District; Joint Secretary, Energy Division during which period he also served as the PD of the Hydrocarbon Unit, a technical wing of the Division and headed the Geological Survey of Bangladesh for a brief period; Chief Metropolitan Magistrate of Dhaka; Chairman of Bangladesh Oil, Gas & Mineral Corporation (Petrobangla); and Vice Chairman of Export Promotion Bureau (EPB). He is now serving as Additional Secretary, Finance Division, Ministry of Finance. Mr. Ahmed is committed to community service and involved in various social organizations.

He is nominated Director from GoB of IFIC Bank Ltd., Bangladesh Telecommunication Company Ltd. (BTCL), Bangladesh Submarine Cable Company Ltd. (BSCCL), Bangladesh Service Ltd., British American Tobacco Ltd. and Industrial Promotion and Development Co. Ltd. (IPDC)

Mr. Jalal Ahmed

Mr. Akhtar AhmedDirectorRepresenting Reliance Insurance Ltd

After completing B.A. (Honours) and M.A. from Dhaka University in 1970, Mr. Akhtar Ahmed joined Eastern Federal Union Insurance Company, the largest insurance company in the then Pakistan, as an Executive Officer. Following the nationalization of insurance industry in Bangladesh in 1972, his services were absorbed in Sadharan Bima Corporation. In 1981 he joined Asian Reinsurance Corporation and served there Managerial position till 1989. In 1989 he joined Arab Insurance Group, the largest insurance organization of the Middle East and served for 14 years in various positions as Chief Manager, Regional General Manager and Chief Executive of its Far East operations, based in Hong Kong and Kuala Lumpur. Mr. Ahmed returned back home in 2003 and served as Managing Director of Sadharan Bima Corporation till February 2004. In 2005 he completed an assignment as Consultant to KPMG, Abu Dhabi, on a project for setting up a large reinsurance company in the Middle East. Mr. Ahmed is advisor of Reliance Insurance Ltd. Mr. Ahmed is an Associate of Chartered Insurance Institute, UK.

Mr. Akhtar Ahmed


Mr. Morshed AlamDirector Representing National Life Insurance Co. Ltd.

Mr. Morshed Alam, is the founder Chairman of the Bengal Group. After completion of his education he established Bengal Plastic Industries Ltd., the largest plastic processing industry in the country. Mr. Alam is declared as Commercially Important Person (CIP) by the Government of Bangladesh (GOB) for his remarkable contribution in the economy.

Mr. Alam is the Chairman, National life Insurance Co. Ltd., National Television (RTV), Designer Jeans Ltd. Director and Member of EC committee, Mercantile Bank Ltd., Director, National Housing Finance And Invesments Ltd., Bangal Television Ltd. (Channel 52), the People's University of Bangladesh. With his dynamic leadership the Bengal Group received the Export Trophy from the Prime Minister of Bangladesh for our contribution in exports. Mr. Alam was elected a Parliament Member (MP) from Noakhali - 2 in the year 2014.

Mr. Morshed Alam

Mr. AKM Shafiqur RahmanDirectorRepresenting National Bank Limited

An eminent Banker Mr. AKM Shafiqur Rahman is the Managing Director of National Bank Limited (NBL). Prior to his appointment, he was Additional Managing Director of the same Bank. Mr Rahman started his career as Probationary Officer in Bangladesh Krishi Bank in the year 1974 and worked as head of different Branches & Divisions up to 1988. He joined NBL on July 30, 1988. He worked in various capacities in the Bank.

Mr A K M Shafiqur Rahman is an M. A. with Honours in Economics. He completed a Certificate Course on 'Program on Investment Appraisal and Management' from Harvard University, USA in 1999. During his long banking career Mr. Rahman widely traveled home & abroad and attended different seminars, symposiam and also received training over there.

Mr. AKM Shafiqur Rahman


Mr. Muminul Haque ChowdhuryDirector Representing Borak Travels (Pvt.) Limited

Mr. Muminul Haque Chowdhury holds an M.S. in Economics from University of Darmstadt of New York. He also holds a Post Graduate Diploma in Energy Management from the State University of New York.

His area of specialization includes Business Administration, Negotiation, Financial and Economic Analysis, Monitoring and overall Management. Mr. Chowdhury is also an Advisor of Unique Group of Companies Limited. He has actively participated in many professional seminars at home and abroad.

Mr. Muminul Haque Chowdhury

Mr. Azmal HossainDirectorRepresenting Eastern Insurance Co. Ltd.

Mr. Azmal Hossain, Director of National Housing Finance And Investments Limited and Vice Chairman of Eastern Insurance Co. Ltd. He is also Managing Director of Hashem Paper Mills Ltd. He has been involved in manufacturing of electric goods, paper, housing beside insurance.

Mr. Azmal Hossain

Mr. Mizanur RahmanDirectorRepresenting Shaw Wallace Bangladesh Ltd.

Mr. Mizanur Rahman is Former Managing Director of Shaw Wallace Bangladesh Ltd and Nominated Director of Shaw Wallace Bangladesh Limited on the Board of National Housing Finance And Investments Ltd. He is also Director of SW Shipping Ltd.

Mr. Rahman holds a BA (Hons) degree in Economics from University of Dhaka and is an Associate of the Chartered Institute of Bankers (UK). He is also Honorary Advisor to the Bangladesh Container Shipping Association and Trustee of the NBR-registered charity, A F Mujibur Rahman Foundation.

Mr. Mizanur Rahman


Mr. Mahbubur Rahman

Mr. Md. Kabir Reza FCMADirectorRepresenting Square Pharmaceuticals Ltd.

Md. Kabir Reza is the Group Finance Director of Square Pharmaceuticals Ltd and Managing Director of United Financial Trading Company Limited. He is a Fellow Member of Institute of Cost and Management Accountant of Bangladesh. He obtained B.Com (Hons.) M. Com. from Rajshahi University. A man of strong personality and unbendable principle, his long business and private service careers are decorated with unmatchable success.

Mr. Kabir Reza started his carrier with Rafkhat Group of Companies as an Assistant Manager (Accounts) from 1991 to 1993. Then he took the responsibility of Chief Accountant of Bangladesh Engineering & Technological Services Limited during the period from 1993 to 1995. At the height of his professional career, he became the Director of Accounts and Finance of Square Pharmaceuticals Limited in the year 2000. In addition to that he is a Director of Strategic Equity Management Limited (Asset Mgt. Company), Eastern Logistic Services Limited.

Mr. Md. Kabir Reza FCMA

Mr. Mahbubur RahmanChairmanEastland Insurance Co. Ltd.

Mr. Mahbubur Rahman, President, International Chamber of Commerce (ICC) - Bangladesh, The world business organization entered into business in early sixties.

He is the founder of ETBL Holdings Ltd., Eastern Trading (Bangladesh) Ltd., ETBL Development Construction Ltd., ETBL Securities & Exchanges Ltd., Progressive Investments Ltd. (successors to the National Rubber Industries), Century Cold Storage Ltd., Mr. Rahman is also a leading Sponsor of the Eastland Insurance Co. Ltd., International Publications Ltd. (Publisher of the Daily Financial Express), National Bank Ltd and National Housing Finance And Investments Ltd.

He has been very active in various business forums & social organization. He represented Government of Sri Lanka in Bangladesh during 1972-79.

Mr. Mahbubur Rahman is also a Member of ICC World Council, Paris, Business Advisory Council (BAC) of UN-ESCAP (United Nations Economic and Social Commission for Asia and the Pacific), Chairman, Bangladesh International Arbitration Centre (BIAC), Member, Board of Governors, Institute of Business Administration (IBA), University of Dhaka, Founder Member, Independent University Bangladesh, Bangladesh Foreign Trade Institute (BFTI).

Mr. Rahman served FBCCI (Federation of Bangladesh Chambers of Commerce & Industry) as President during 1992-94, President of the Dhaka Chamber of Commerce & Industry (DCCI) 1985-86 & 1991-92, Member, Global Executive Board of ICC Paris (1997-99), Founder Vice President, SAARC Chamber of Commerce, Vice President (West Asia), Islamic Chamber of Commerce, Industry and Commodity Exchange (1993-95).


jointly made another valuable addition to the expanding Off-Dock industry of the Country by establishing Summit Alliance Port Limited (SAPL). SAPL is listed with the two major bourses of the country.

Mr. Rizvi, through AHL has substantial investments in Off-Dock, Beverage Manufacturing, Textile, Prefabricated Steel Building Manufacturing, Real Estate Development, Financial Institutions, Lubricant Blending, Telecommunications, Pharmaceuticals etc. In spite of his busy schedule, he still finds time to pursue his favorite passion and teaches on part time (Honorary) basis at different educational institions of the country.

Mr. Syed Ali Jowher RizviDirector

Mr. Jowher Rizvi, Director and Chairman Executive Committee of NHFIL completed his MBA degree in International Finance and Accounting from Indiana University, USA. He also earned MA in Economics with Honours from Dhaka University.

Mr. Rizvi started his professional career with Bank of Credit and Commerce International (BCCI) in 1977 and at the same time was engaged with Institute of Business Administration (IBA) as a part time (Honorary) Lecturer. From 1991 to 1997, he served Union Bank Zambia Ltd., Zambia as its founder Managing Director. Returning to Bangladesh he established Alliance Holdings Limited (AHL) and started his journey as an entrepreneur. In 1997, along with his friend Mr. Muhammed Aziz Khan of Summit Group, he entered the Off-Dock business where Mr. Rizvi has since served as the Managing Director of Ocean Containers Limited. (Later on merged with Summit Alliance Port Ltd.) Subsequently in 2003, the two sponsors

Mr. Syed Ali Jowher Rizvi

He ran a merchant bank for six years in the 1990s. Professor Rahman has a MBA from IBA and a B.Sc. Econ from the London School of Economics and Political Science. He was a Commonwealth Scholar and doctoral researcher at Manchester Business School. He is a member of Renaissance, a popular music band of the country.

Professor Imran RahmanIndependent Director

Professor Imran Rahman is the Vice Chancellor of the University of Liberal Arts Bangladesh (ULAB). He has twenty-eight years of teaching and consulting experience, including twenty-two years at the Institute of Business Administration (IBA) as a tcacher of investments, capital markets and corporate finance, in the MBA and BBA Programs. Professor Imran Rahman

Mr. Hussain has held the post of Secretary in several key ministries such as Housing and Public Works, Textile, Planning, the last being as Secretary, Ministry of Environment and Forests.

In 2001, Mr. Hussain was the National Census Commissioner and conducted the National census for that year. Prior to his being Secretary Mr. Hussain was the Chief Controller of Insurance.

Mr. Syed Tanveer HussainIndependent Director

Mr. Syed Tanveer Hussain is a retired senior bureaucrat with more than 35 years experience in Government. After retiring, he now heads "Climate Change Company", a climate and environmental services company. Mr. Syed Tanveer Hussain


Mr. Imtiaz MahmoodIndependent Director

Mr. Imtiaz Mahmood is a reputed Lawyer of Bangladesh Supreme Court. He has expertise in Company Law matters. He obtained his LL.B (Hons) from University of London UK in 1993.

He started his legal career as an Associate of House of Law, Barrister, Solicitors, Advocates and Tax Consultants. Later he worked as an Associate, in Dr. Kamal Hossain & Associates from September 1996 to May 2000. At present he is a partner of Mahmood Jabbar Khan, Barrister & Advocates, Dhaka.

Mr. Mahmood has experience in handling legal matters of Direct Foreign Investment, Petroleum, Mineral Resources, Power, Telecommunication and in Commercial Arbitration both foreign and local including ICC.

Mr. Imtiaz Mahmood

Mr. Md. Abdur RobManaging Director

Mr. Md. Abdur Rob is an eminent banking professional. He completed his M.Com from Dhaka University and is an Associate of Institute of Bankers Bangladesh (DAIBB). He started his banking career in early 1970's in State Bank of Pakistan as Trainee Officer and has extensive training at home and abroad. He held important positions in Janata Bank, National Bank, Prime Bank the last being Deputy Managing Director of Premier Bank. Since 2005 he is Managing Director of National Housing Finance And Investments Ltd.

Mr. Md. Abdur Rob

Financial Highlights

Outstanding Portfolio

Housing 59.35% Lease Finance 26.87% SME 13.78%



Figure in Million Taka

A. Financial Performance

Operating Revenue 892.94 729.57 754.67 689.01 674.78 737.52Operating Expenses 599.28 549.14 542.21 416.46 472.97 562.16Financial Expenses 524.72 480.62 476.46 362.84 425.69 511.6General & Administrative Expenses 59.65 55.80 52.26 42.63 36.42 30.33Profit Before Taxes 233.92 80.01 217.71 253.05 194.41 137.52Provision for Taxes 66.45 38.57 101.45 91.03 90.37 49.41Net Profit After Taxes 167.47 41.44 116.26 162.01 104.04 88.11

B. Financial Ratios

Earnings Per Share (Tk.)* 1.57 0.39 1.09 1.52 0.98 0.83

Dividend Per Share (Tk.) 12.50% 5.00%** 20.00%** 20.00%*** 17.50% 12.50%Net Asset Value Per Share (Tk.)* 13.40 8.60 8.21 7.61 6.94 6.58

Financial Expenses Coverage (Times) 1.45 1.17 1.46 1.46 1.46 1.27Profit Margin (Before Tax) 26.20% 10.97% 28.85% 28.85% 28.81% 18.65%Profit Margin (After Tax) 18.76% 5.68% 15.41% 15.41% 15.42% 11.95%Return on Equity 14.30% 4.63% 14.51% 14.42% 14.47% 13.35%Debt Equity Ratio 3.25 4.68 5.06 4.59 4.95 7.07

2013 2012 2011 2010 2009 2008



F. Net Asset Value Per Share

E. Sources of Fund

Call Money 50.00 Deposits 3,288.67 SOD/OD 1.11 Long Term Borrowings 956.27 Shareholders' Equity 1,426.08

5,722.13

D. Portfolio Mix

Investment in Share 20.58 Term Finance 1,246.52 Lease 602.28 Mortgage Loan 2,744.55 Others 30.83

4,644.76

C. Sectoral Portfolio(%)

Real Estate and Housing 59.31%RMG 0.23%Paper, Printing and Packaging 0.25%Iron, Steel and Engineering 5.37%Textile 3.32%Food and Allied Products 0.83%Transport & Communication 3.67%Telecommunications and IT 0.81%Electronics and Electrical Products 0.30%Ship Manufacturing Industry 1.91%Agriculture & Chemicals, Paper, Printing & Packaging 3.93%Power, Gas, Water, & Sanitation etc. 2.80%Others 17.27%

100.00%

2013 2012 2011 2010 2009

6.947.618.218.6013.40


Management Team


Management Team

Abu Nasser Md. Ahad Sarker Bogra

Sabiha Kashmiri Motijheel

Kabir Hossain Gulshan

Mohammad Qumrul Hassan Chittagong

Branch In-Charge

Message From the

Chairman


Message from the Chairman

Dear, Shareholders, Respected Guests, Ladies and Gentlemen,

Latifur RahmanChairman

I am delighted to welcome you to the 15th Annual General Meeting of National Housing Finance And Investments Limited. On behalf of the Board of Directors, I take the opportunity to thank you for your continuous support and cooperation.

You are aware that due to prolonged political turmoil and slow down of economic activities in 2013 real estate industry continued to face sluggish business throughout the year. The sluggish trend began in late 2010 due to various reasons like high inflation, liquidity crisis, stoppage of the housing refinance scheme, capital market meltdown, lack of utility connections and overall economic crisis. These have affected our Home Loan Financing Business. However on a positive note, the utility situation has relatively improved. Developers are getting power connection in their projects after fulfilling certain terms and conditions including installation of solar panel. Government has started giving fresh gas connections for residential users which will have a positive effect on demand for new apartments.

Since enlistment in the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) in January 2009, shares of the Company have been traded with reasonable stability, attesting to the solid and strong fundamentals of the Company. Despite volatility of the capital market the closing price of the Company's shares traded on the floors of DSE and CSE at the end of December 2013 stood at Tk. 32.80 and Tk. 32.90 respectively.

Considering the overall position of the Company, the Board has been pleased to recommend 12.50% Cash Dividend to the shareholders for the year 2013.

I would like to thank the members of the Board of Directors for their valuable guidance and inputs. I would also like to thank all employees of the Company at all levels for their sincere and dedicated services to the Company. My thanks are also due to regulatory bodies including Bangladesh Bank, Ministry of Finance, Bangladesh Securities and Exchange Commission (BSEC), Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), National Board of Revenue (NBR) and the Board of Investments (BoI) for their guidance and support.

I would like to conclude by expressing my thanks to our valued clients, shareholders and well-wishers for their continuous support.

Message From the

Managing Director


Message from the Managing Director

Dear, Shareholders, Respected Guests, Ladies and Gentlemen,

I welcome the respected shareholders and distinguished guests at the 15th Annual General Meeting of National Housing Finance And Investments Limited. I express my thanks and gratitude to you all for taking the trouble in attending this AGM.

I am pleased to inform you that despite prolonged nationwide political turmoil and various challenges including moderate liquidity constraint and continuous slowdown in the share market National Housing recorded a better performance in 2013 based mainly on its core business.

As you aware, BSEC vide their letter no. SEC/CI/RI-80/2012/2105 dated March 27, 2013 has approved Right Issue @ 01(one) [R]:02(two), i.e. one right share for every 02(two) shares of Tk.10/- each (at par) to meet the regulatory requirement for capital adequacy. The subscription closing period was 13/06/2013. We have credited the Right shares to the respective shareholders on July 03, 2013. I am glad to inform you that the proceeds of Right Shares have been utilized fully as per projection.

I take the opportunity to inform you that as per Bangladesh Bank guideline we are working to prevent money laundering and terrorist financing activities. National Housing has participated in the 2-days long Annual CAMELCO conference of Anti-Money Laundering which was held on 11 & 12 March 2014 at Coxs Bazar jointly organized by Bangladesh Bank and BLFCA. National Housing also participated in the REHAB Fair, SME Fair and other Fairs. We have continued to build up relationships with various developer companies through signing of MoU to procure our core business.

In conclusion, I would like to express my deep gratitude to the Chairman and the Directors of the Board and shareholders for their continuous support by providing valuable directives and guidelines to run the affairs of the Company and meet various challenges all through the year.

Thanking you all again and wishing you peace, prosperity and happiness in life.

Managing DirectorMd. Abdur Rob

Directors' Report to the Shareholders


Directors' Report

It is my great pleasure and privilege on behalf of the Board of Directors of National Housing Finance And Investments Limited to present the Annual Report and Audited Financial Statement of Accounts for the year ended December 31, 2013 together with the Auditors' Report thereon.

The Directors' Report has been prepared in compliance with section 184 of the Companies Act 1994, Corporate Governance notification of BSEC dated 7 August 2012, the Listing Regulation of DSE & CSE, Guideline of Bangladesh Bank and other applicable Rules and Regulations. As per BSEC's Corporate Governance notification a separate report titled 'Report on Corporate Governance' is furnished herewith which may be treated as part of this Directors' Report.

Bangladesh Economy

Despite our internal political turmoil and slowdown in global economy, Bangladesh economy achieved a growth of 6.0% during FY '13 which is 0.2% point lower than FY 12. It may be noted that macro-economic situation in Bangladesh has been quite stable in recent years. It proved resilient to global financial crisis & posted an average GDP growth of 6.2% during last five years. However, the government has again set a target for GDP growth in FY 14 at 7.2% with an expectation of accelerated growth in agriculture, industry and service sectors. It also expects that global economy shall improve further & internal political situation shall stabilize.

A major positive indication that, despite continued global economic slowdown, the flow of inward remittances from Bangladeshi nationals working abroad remained strong in FY13 and continued to play an important role in strengthening the current account balance. Remittance inflow increased by 12.6% to USD 14.3 billion in FY13. The gross foreign exchange reserve is also remaining at a higher level sufficient to meet more than five months import obligations. Current account balance is also at a satisfactory level.

Broad money (M2) recorded lower growth of 16.7% in FY 13 against targeted growth of 17.7% and 17.4% actual growth in FY 12. The export earnings increased in FY 13 to $265.66 b and import payment increased marginally to $335.76 b from $333.09 b.

Outstanding bank credit (excluding foreign bills and inter-bank items) during FY13 rose by 8.88% to Taka 4,482.15 b as against an increase of 18.40% in FY12. The gross NPLs ratios to total loans were recorded at 11.9% at the end of June 2013.

The credit/deposit ratio of the scheduled banks, excluding the specialized banks was 0.78 at the end of June 2013 and was 0.84 at the end of June 2012. Declining credit to deposit ratio points to declining investor appetite for credit during the year as well as tightening bank loan processing standards.

Bank deposits (excluding inter-bank items) increased by 16.91% to Taka 5728.91 b during FY13 against 19.38% increase in FY12. The rise in total bank deposits was mainly by time deposits.

Capital Market activities

The Dhaka Stock Exchange Limited launched its new two indices, which are known as the DSE Broad Index ("DSEX") and DSE 30 Index ("DS30") designed & developed by S&P Dow Jones on 28 January 2013. The National Parliament of Bangladesh passed "The Exchange Demutualization Act, 2013" on 29 April 2013 which was gazetted on 2 May 2013. The surveillance software of international standard has been installed to ensure transparency and accountability in the capital market through strengthening the monitoring of transactions.


Directors' Report

Liquidity

Currently the scheduled commercial banks have to maintain a Cash Reserve Ratio (CRR) averaging 6.0% with an obligation to maintain a daily minimum 5.5% cash against the Average Total Demand and Time Liability (ATDTL) hold by the bank. The current rate of Statutory Liquidity Reserve (SLR) for conventional banks is 19.0% including CRR of time and demand liabilities.

In case of Islamic Shariah-based commercial banks and conventional banks that have Islamic branches, the rate of SLR is 11.5% (inclusive of average 6.0 percent CRR) of their time and demand liabilities.

For FIs the CRR is 2.5% to be kept with Bangladesh Bank against customer deposit.

Cost of Fund Index for NBFIs

Cost of Fund Index commonly known as Base Rate define that 'The rate is the minimum rate below which it is not viable to lend in the domestic market. The base rate also serves as the reference benchmark rate for floating rate loan products, apart from other external market-based benchmark rates'. The base rate captures all those elements of the lending rates that are common across all categories of borrowers. However, actual lending rates charged to the borrowers would be the rate plus borrower-specific charges, which will include product-specific operating costs, credit risk premium and tenor premium.

Bangladesh Bank introduced this system with objective that (1) To ensure corporate governance and market efficiency in the financial sector of the country. (2) To provide a new dimension in the price-setting mechanism in the industry. (3) To make the financial market more transparent and informationally efficient.

Anti-money Laundering Surveillance

Pursuant to section 24 (1) of the Money Laundering Prevention Act, 2012, an independent unit named "Bangladesh Financial Intelligence Unit (BFIU)" has been established in Bangladesh Bank, abolishing the Anti-Money Laundering Department of Bangladesh Bank. Under the provision of the Money Laundering Prevention Act (MLPA) and Anti-Terrorism Act (ATA), BFIU has taken various initiatives and steps to prevent money laundering and terrorist financing throughout the country in FY13.

NBFI Sector in Bangladesh

Presently, out of 31 NBFIs, 3 are Government-owned, 10 are joint ventures and the rest 18 are locally private-owned. Meanwhile, the branch network increased to 170 as on 30 June 2013.

The asset base increased substantially in FY13. Aggregate industry assets stood at Taka 378.5 b at the end of June 2013 & it was Taka 333.9 b in 2012.

NBFIs are investing in different sectors of the economy, but their investments are mostly concentrated in the industrial sector. In June 2013, NBFIs investments in different sectors like industry, real estate, margin loans, trade and commerce, merchant banking, agriculture and others. NBFIs are allowed to invest in the capital market up to 25% of their capital.

Total deposits of the NBFI sector stood at Tk. 174 b in June 13 against Tk. 145 b in June 12.


Directors' Report

Industry Outlook

(a) Housing Finance

The situation in real estate sector remains tenuous and the developers are still finding it challenging to boost their sales volume. Some developers are offering to sell the flats at relatively discounted prices, but prospective buyers are slow to respond. The high cost already incurred for the joint venture development of private lands is also hindering the developers to reduce the price below a certain level. Most of the developers are now waiting for their sales volume to pick up.

Total housing loans from banks/ FIs as on 30 June 2013 amounted to Taka 421.1 b. In recent years, significant changes have been taken place in total housing loan portfolios. Private sector banks have been expanding their housing loan portfolios, and now have dominant market share. The state owned commercial banks have the second largest share. Besides, private sector specialized housing finance companies also provide a significant amount of loan.

However on a positive note, the utility situation has relatively improved. Developers are getting power connections in their projects after fulfilling certain terms and conditions including installing solar panel. Government has started giving fresh gas connections for residential users which will have a positive effect on demand for new apartments.

Operational Overview of National Housing

Despite depressed market conditions and subdued activity in the housing and construction sectors, NHFIL has been able to expand its business activities during 2013 which can be seen from the data furnished below:

The total portfolio of the Company increased by Tk. 349.98 million to Tk. 4624.18 million during 2013, registering a growth rate of 8.19%.

Particulars 2013 (Million Taka) 2012 (Million Taka)

Disbursement Outstanding Portfolio

Disbursement Outstanding Portfolio

Home mortgage loan 836.35 2,744.55 183.77 2,270.83 Lease & Term financeincluding SME and other

555.87 1,879.63 738.32 2,003.37

Total: 1,392.22 4,624.18 922.09 4,274.20

(Amount in BDT Million)


Directors' Report

Financial Performance during the Year 2013

The Company's financial performance over the 1st, 2nd and 3rd quarters and the yearly performances are given below on the view of its fair disclosure policy.

Credit Rating

On 05 August 2013 CRAB has assigned 'A2' (single A) rating in the Long Term and 'ST-3' in the Short Term to the Company based on financials up to December 31, 2012. Bank/FIs rated as 'A2' (Strong Capacity & High Quality) have strong capacity to meet financial commitments, maintains high quality, with low credit risk, but are susceptible to adverse changes in circumstances and economic conditions. In Short Term Rating Scales and Definitions ST-3 (Average Grade) means average capacity for timely repayment of obligations.

Dividend

NHFIL has earned a net profit after tax of TK. 167.47 million as against TK. 41.44 million in the previous year. In terms of Bangladesh Bank guidelines' we have increased our paid up capital to BDT 106.39 crore. The Board of Directors recommend 12.50% Cash Dividend i.e. Tk. 1.25 for every share for the year ended 31st December, 2013 subject to approval at the 15th Annual General Meeting.

Net interest income

Total operating income

Total operating expenses

Profit before provisions

Provision for loans/Investments

Profit before taxes

Provision for taxes

Net profit after taxation

72.53

61.76

15.03

61.76

(57.49)

4.36

(3.82)

0.54

83.38

69.35

18.39

69.35

(2.55)

66.82

1.13

67.96

81.48

65.13

18.94

65.13

0.80

65.93

(23.78)

42.66

352.61

293.66

74.56

293.61

(59.73)

233.92

(66.45)

167.47

242.40

180.43

68.52

180.43

(100.43)

80.01

(38.57)

41.44

Particulars2013 2012

Q1 Q2 Q3 Yearly

(Amount in BDT Million)


Directors' Report

SL#

01

02

03

04

Directors to Retire


Mr. Azmal Hossain

Mr. Mizanur Rahman


Organization Represented


Eastern Insurance Co. Ltd.


Investors Forum (Zambia)

SL#

01

02

03

04

Directors to be Elected/Re-elected


Mr. Azmal Hossain

Mr. Aziz Khan


Organization Represented



Summit Ind. & Mercantile Corp. (Pvt) Ltd.

Investors Forum (Zambia)

Directors

In terms of the Shareholders' Agreement, the following Directors are to retire at the 15th Annual General Meeting.

The following shareholders being eligible for election/ re-election expressed their interest to be elected as Directors in the 15th AGM:

Auditors

The Company's Auditors, M/s Syful Shamsul Alam & Co., Chartered Accountants shall retire at the 15th AGM. Having completed three years of audit work they are not eligible for re-appointment for the year 2014. Many of "A" graded audit firms have expressed their interest to act as auditor. Upon appraisal by the Audit Committee, the Board recommended the appointment of M/s Howladar, Yunus & Co., Chartered Accountants for the year 2014.

Appreciation

On behalf of the Board of Directors, I take this opportunity to express our gratitude and sincere thanks to the Company's shareholders and clients for their continuous patronage and support. The Directors also express their gratitude to Bangladesh Bank and other regulatory authorities for their valuable guidance. The Board records its appreciation to employees at all levels for their sincere and dedicated service.

For and on behalf of the Board.



Audit Committee ReportFor the year ended 31st December, 2013

Professor Imran Rahman, Independent Director

Mr. Md. Kabir Reza, Director

Mr. Akhtar Ahmed, Director

Mr. Azmal Hossain, Director

Mr. Syed Tanveer Hussain, Independent Director

Mr. Md. Abdur Rob, Managing Director

Chairman

Member

Member

Member

Member

Ex-officio member

The Audit committee consist of the following members:

Mr. Md. Sarwar Kamal ACS, Company Secretary, acts as the Secretary of the Committee.

Functions and Activities:

The Committee

met 4 (four) times in the year 2013 on 18.04.2013, 13.05.2013, 22.07.2013 and 28.10.2013;

reviewed the internal control system and financial statements and the external audit report;

conducted a formal evaluation of the effectiveness of the external audit process;

considered the tenure, quality and fees of the auditors and recommended to the Board for appointment of M/s Howladar Yunus & Co, Chartered Accountants, at the 15th AGM on May 28, 2014;

reviewed internal control and risk management systems;

considered the effectiveness of the Company's internal controls over financial reporting;

reviewed impairment methodologies;

reviewed reports from the Chief Financial Officer on the quarterly and annual financial statements, including other financial statements and disclosures prior to their publication;

reviewed the Annual Report, these reviews incorporated the accounting policies and key judgments and estimates underpinning the financial statements as disclosed in Notes to the Account.

received reports from the internal auditors;

monitored the performance of the Internal Audit function;

reviewed the Internal Audit Plan;


Audit Committee Report

Professor Imran RahmanChairmanAudit Committee

Reporting by the Audit Committee:

reviewed appropriate systems and controls are in place for effectiveness of internal audit function;

monitored independence of audit work.

reviewed the effectiveness and independence of the statutory auditors;

recommended appointment, remuneration of the statutory auditor;

reviewed the annual audit activities and audit report.

reviewed issues concerning inspection report of Bangladesh Bank;

reviewed compliance with existing laws & regulations;

reviewed its Terms of Reference to satisfy itself that they enable the Committee to fulfill its responsibilities.

reviewed Credit Risk Management Manual;

reviewed Anti Money Laundering and Combating Terrorist Financing Policy;

reviewed IT policy;

monitored prevailing of appropriate administration culture as prevailing;

monitored the steps taken against findings of inspection team of regulatory authority.

The Committee reports directly to the Board of Directors on its activities.

The Committee did not find any material deviation, discrepancies or any adverse observations in the areas of reporting.


The Financial Statements of the National Housing Finance And Investments Limited are prepared in compliance with International Accounting Standards (IAS)/Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRS) and other applicable laws, rules and regulations.

The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view. The form and substance of transactions and the Company's state of affairs reasonably presented. To ensure this, the Company has taken proper and adequate care in installing a system of internal control and accounting records. Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed. However, there are inherent limitations that should be recognized in weighing the assurance provided by any system of internal controls and accounting.

In this regard, we also certify to the Board that:-

Report on Financial Statements by Managing Director/CEO and CFO

Sayed Ahmed ACMAChief Financial Officer

Md. Abdur RobManaging Director

We have reviewed financial statements for the year ended 2013 and that to the best of our knowledge and belief:

i.

There are, to the best of knowledge and belief, no transaction entered into by the Company during the year which are fraudulent, illegal or violation of the Company's code of conduct.

ii.

a)

b)

these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

these statements together present a true and fair view of the Company's affairs and are in compliance with existing accounting standards and applicable laws.


Report on Corporate Governance

[Report on Corporate Governance as per the guidelines of the BSEC's notification dated 07 August 2012 and a part of the report of the Director Report]

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way an organization (or company) is directed and administered. Corporate Governance also includes relationships among the stakeholders involved and achievement of the goals for which the organization is formed. The principal stakeholders of a FIs are depositors, shareholders, board, management, employees and borrowers. Other stakeholders include suppliers, regulators, other banks, and the community at large.

Corporate governance is the acceptance by management of the inalienable rights of shareholders as the true owners of the company and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company. Fairness, Transparency, Accountability and Responsibility are the minimum standards of acceptable corporate behavior.

Corporate governance is also to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent conflict. A related discussion of corporate governance focuses the system of economic efficiency with a strong emphasis on enhancement of shareholders' value and welfare.

Since inception, NHFIL's corporate governance policies recognize the importance of the transparency to all its constituents; including employees, customers, investors, and the regulatory authorities demonstrating that the shareholders are the ultimate beneficiaries of the Company's economic activities.

In addition to the primary role of monitoring corporate performance, the function of the Board includes approving a business plan, reviewing and approving annual budgets and borrowing limits, fixing exposure limits and ensuring that our shareholders are kept informed about our plans, strategies and performance. To enable the Board of Directors to discharge these responsibilities effectively, the management provides detailed reports on performance to the Board on quarterly basis. The Board of Directors also functions through various committees such as the Audit Committee and the Executive Committee.

We are performing ethically and efficiently to generate long-term value and wealth for all its stakeholders. The Corporate Governance principles of the Company ensures that the Board remains informed, independent and involved in the Company and there are ongoing efforts towards better corporate governance to mitigate "non business" risks. The Board periodically reviews the compliance of all applicable laws and gives appropriate directions, wherever necessary.

Risk and Concern

Investment always associates with some internal/external risk factors and among factors, some can be averted, others are beyond control. The risk of NHFIL is defined as the possibility of losses, financial or otherwise. The risk management of the company covers core risk areas of the company, viz, interest rate risk, credit risk, liquidity risk, industry risk, market and technology related risk, exchange rate risk, operational risk, capital adequacy risk, risk from the competitors, change in regulatory policies, change in government policies, Change in economic and political conditions, assets quality risk, history of non-operation, if any etc. The prime objective of the risk management is that, the company evaluates and takes well calculated business risks and thereby safeguarding the company's capitals, its financial resources and profitability from various business risks through its own measures and through implementing Bangladesh Bank's guidelines and with the best practices.



Internal Control and Compliance

NHFIL made relevant mandatory disclosure in its financial statements under the regulatory framework, including compliance with the provisions of International Accounting Standards (IAS) and Bangladesh Accounting Standards (BAS). The annual financial statements are audited by reputed chartered accountants firms who issue unqualified audit reports. There is an independent Internal Control & Compliance Department, which looks after compliance with the organizational policies by different departments.

Delegation of Authority

There is clearly spelled out delegation of authority in sanctioning loan as well as operational and capital expenditure with specific task authority relationship.

Board of Directors & Role of the Board

The Board of Directors is in full control of the Company's affairs and is also accountable to the shareholders. The Board is committed to achieve greater financial performance and long term prosperity, while meeting stakeholders' expectations of sound corporate governance practices.

The Board duly complies with the guidelines issued by Bangladesh Bank regarding the responsibility and accountability of the Board, its Chairman and Chief Executive/Managing Director, vide DFIM Circular No. 7 dated September 25, 2007.

The Board's main roles are to define the Company's strategic objectives, to provide entrepreneurial leadership for the Company, to create value for shareholders and to ensure that the necessary financial and other resources are available to enable the Company and the Board to meet these objectives. The specific responsibilities reserved to the Board include the approval of all information supplied to shareholders in the annual and interim accounts; the setting of Company strategy; approving annual budgets; reviewing operational and financial performance; approving capital expenditure; setting of borrowing limits; treasury policy; reviewing the Company's systems of financial control and risk management; ensuring that appropriate management development and succession plans are in place; approving appointments to the Board and ensuring that a satisfactory dialogue takes place with shareholders over the Company's results and its aspirations for the future. The CG principles of the Company ensure that the Board remains informed, independent and involved in the affairs of the Company and ensures that there are ongoing efforts towards better CG to mitigate "non business" risks. Directors of NHFIL possess the highest personal and professional ethics, integrity, and values and are committed to representing the long-term interests of the stakeholders.

The basic responsibility of the Board is to provide effective governance over the Company's affairs exercising its reasonable business judgments on behalf of the Company. The Company's business is conducted by its employees under the direction of the Managing Director and the overall supervision and guidelines of the Board. The management ensures that all provisions of law are complied with. The management develops Company's strategy, coordinates it with the Board, and ensures its implementation. It ensures appropriate risk management and risk controlling measures by relevant officers of the Company. The Board members have collective experience in diverse fields like finance, banking, insurance, economics, corporate laws and administration.

Short Bio-data of all the Directors are given in pages 16 to 22 of this Annual Report.



Changes of the Board

National Life Insurance Co. Ltd. a sponsor shareholder of the Company had changed its representative, Mr. Mahmudul Huq Taher, and in his place had nominated Mr. Morshed Alam, who was subsequently appointed as Director by the Board in its 143rd meeting held on 11th September, 2013.

Eastland Insurance Co. Ltd. a sponsor shareholder of the Company had changed its representative, Mr. M. Azmal Hoque, and in his place had nominated Mr. Mahbubur Rahman, who was subsequently appointed as Director by the Board in its 147th Meeting held on 10th February, 2014.

National Bank Ltd. a sponsor shareholder of the Company had also changed its representative, Mr. Neaz Ahmed, and in his place had nominated Mr. AKM Shafiqur Rahman, who was subsequently appointed as Director by the Board in its 148th meeting held on 19th March, 2014.

Including Independent Directors, the Board of NHFIL comprises eleven non-executive Directors of whom ten are nominated Directors, one individual and three Independent Directors and the Managing Director who is ex-officio Director. They encompass a range of talents, skills and expertise to provide prudent guidance with respect to the operations of the Company.

There are two committees constituted by the Board members to assist the Board in discharging its responsibilities, namely, the Audit Committee and the Executive Committee. The Board fixes the terms of reference for each Committee and also delegates power from time to time. Various recommendations of the Committees are submitted to the Board for approval.

Board Meetings

The Board of Directors meet at regular intervals with a formal schedule of matters specifically reserved for its attention to ensure that it exercises full control over significant strategic, financial, operational and compliance matters. The Board is regularly briefed and updated on key activities of the business and is provided with briefings and presentations on other matters concerning the Company on a need basis. Besides, information about statutory compliance, minutes of the sub-committees of the Board and information as required under listing guidelines are also provided to the Directors on a regular basis. The dates of the Board meetings are fixed in advance and notices are served adequately ahead of the meeting to facilitate proper attention and maximum attendance of the Directors. During the year 2013, 12 (twelve) meetings of the Board of Directors were held. A detail of the Board Meetings is given on page 48 of this Annual Report.

Role of the Chairman

The Chairman serves as the primary link between the Board and Management, and works with the CEO and Company Secretary to set the agenda of the Board Meetings. He provides leadership to the Board and ensures that the Board works effectively and discharges its responsibilities efficiently.

Role of the Managing Director

The Managing Director is the key person and is responsible for running the business of the Company. He is also responsible for formulating as well as implementing Board strategy and policy. The Managing Director is responsible for establishing and executing the Company's operating plan that is necessary to achieve the Company's objectives. He has the overall control of the Company's day-to-day affairs and is accountable to the Board for the financial and operational performance of the Company.



Role of the Company Secretary

Company Secretary is responsible for advising the Board through the Chairman on all governance matters. He is also responsible for ensuring proper information flow to the Board and its Committees and between the management and the non-executive directors. He is also acting as bridge between the regulators/stakeholders and the Company.

Role of the Head of Internal Control & Compliance

The head of Internal Control and Compliance is responsible for reporting to the Board Audit Committee regarding deviations from accounting and internal control system. He is also leading the internal audit team of the Company.

Chairman & Managing Director of the Company are different person

Chairman of the Board and Managing Director of the Company are different persons with different roles and responsibilities, defined by the Board and thereby preventing unregulated powers of decision making in a single hand. The Chairman is a non-executive Director while the Managing Director is an Executive Director.

Remuneration paid to Directors including Independent Directors

The Board members get only fees for attending Board/Committee meetings and they are not allowed other remuneration or incentive. According, to the ceiling fixed by the Bangladesh Bank the Directors get an amount of Tk. 5,000 per meeting. Total remuneration including VAT for Board of Directors Meeting, Audit Committee Meeting and Executive Committee Meeting paid to Directors during 2013 is shown at page 50 of this Annual Report.

Board Committees

There are two committees constituted by the Board members to assist the Board in discharging its responsibilities, namely, the Audit Committee and the Executive Committee. The Board fixes the terms of reference for each Committee and also delegates power from time to time. Various recommendations of the Committees are submitted to the Board for approval.

Audit Committee

The primary role of the Audit Committee is to oversee the financial reporting process and disclosure of financial information, review the financial statements before submission to the Board, review adequacy of internal control systems as well as findings of internal investigations besides recommending appointment/ removal of statutory auditors and fixing their remuneration. The Committee holds discussions with the statutory auditors, to review the annual financial statements before submission to the Board with special emphasis on accounting policies, compliance of Accounting Standards and other legal requirements relating to financial statements. The Committee reviews all issues which are required to be reviewed by the Audit Committee pursuant to guidelines issued by the BSEC as well as those recommended by the Board, if any.

The Audit Committee was reconstituted on 1st June, 2013 and the members were:

Professor Imran Rahman, Independent Director as the Chairman Md. Kabir Reza, FCMA representing Square Pharmaceuticals Ltd.Akhtar Ahmed representing Reliance Insurance Ltd.Azmal Hossain representing Eastern Insurance Co. Ltd.Syed Tanveer Hussain, Independent Director.

Mr. Md. Abdur Rob, Managing Director acts as its ex-officio member. Mr. Md. Sarwar Kamal, ACS, Company Secretary, acts as Secretary of the Committee. During the year 2013, 4 (four) meetings of the Audit Committee of the Board of Directors were held.



Executive Committee

The Executive Committee is authorized to review and approve the proposals of loans and advances within prescribed limits set by the Board. The EC reviews all other proposals relating to loans and advances above the limits as well as other matters for Board approval.

The EC was reconstituted on 1st June, 2013 and the members are:

Following the expiry of contract Mr. Neaz Ahmed is no longer MD of National Bank Ltd. In the circumstances Board decided to include Mr. Syed Tanveer Hussain, Independent Director in place of Mr. Neaz Ahmed in the Executive Committee.

Mr. Md. Abdur Rob, Managing Director acts as its ex-officio member. Mr. Md. Sarwar Kamal, ACS, Company Secretary, acts as Secretary of the Committee. During the year 2013, 11 (eleven) meetings of the Executive Committee of the Board of Directors were held.

Related Party Transactions

Transactions with related parties are made on arm's length basis and are in the ordinary course of business. Detailed transactions with related parties are described at notes 45 of the Financial Statements at page 92 of this Annual Report.

Statement of Managing Director/CEO and CFO

A separate statement as to the fairness and presentation of the Financial Statements of the Company is given at page 40 of this report.

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

Key operating and financial data of last preceding 5 (five) years is shown under the heading of Financial Highlights at page 24 of this Annual Report.

Corporate and Financial Reporting Framework

The Members of the Board, in accordance with the Securities & Exchange Commission's Notification no. SEC/CMRRCD/2006-158/Admin/129/43 dated 07 August 2012; confirm compliance with the financial reporting framework for the following:

Mr. Syed Ali Jowher Rizvi as the Chairman.Mizanur Rahman representing Shaw Wallace Bangladesh Ltd.Neaz Ahmed representing National Bank Ltd.Muminul Haque Chowdhury representing Borak Travels (Pvt.) Ltd.Md. Kabir Reza, FCMA representing Square Pharmaceuticals Ltd.

The financial statements prepared by the Management of NHFIL present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

Proper books of account of the issuer company have been maintained.

Appropriate accounting policies have been consistently applied in preparation of the financial statements and the accounting estimates are based on reasonable and prudent judgment.



Going Concern

The financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Board of Directors of NHFIL has made annual assessment about whether there exists any material uncertainty which may cast significant doubt upon the Company's ability to continue as a going concern, including review of budget and future outcome of inherent uncertainties in existence.

Based on the different indications, Directors feel it appropriate to adopt going concern assumptions and no material uncertainty exists in preparing the financial statements.

Shareholding Pattern

Shareholding patterns of the Company as at the end of the year 2013 is shown at page 51 of this report.

Right Offer

BSEC vide their letter no. SEC/CI/RI-80/2012/2105 dated March 27, 2013 has approved the Right Issue @ 01(one) [R]:02(two), i.e. one right share for every 02(two) shares of Tk.10/- each (at par) to meet regulatory requirement for capital adequacy. Accordingly, schedule of subscription was as follows:

NHFIL received the right application as per the schedule. After all legal compliance the Company used the entire fund as per given schedule in the Right offer Documents. Accordingly the schedule of the status reported to the concerned regulatory authority.

International Accounting Standards (IAS)/ Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure therefrom has been adequately disclosed.

The system of internal control is sound in design and has been effectively implemented and monitored.

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

Record date for entitlement of Right Share

Subscription opening date

Subscription closing date

: 24-04-2013

: 19-05-2013

: 13-06-2013


Report on Corporate GovernanceAnnual General Meeting (AGM)

NHFIL holds an Annual General Meeting (AGM) of shareholders once each year in due time and the Company ensures effective interaction with the shareholders at the AGM. The Directors pay special attention to answering the various queries raised by the shareholders at the AGM.

The Company's operational outcome/results and official news release are displayed on the Company's website and on the websites of the Dhaka and Chittagong Stock Exchanges. The Company also publishes the news required to be published in the daily newspapers.

Resolutions passed at the previous AGM, i.e., 14th AGM held on 1st June 2013

Details of the previous AGM are as follows:

Particulars

14th AGM

Date & Time Venue

1st June 2013at 12.00 p.m.

Venue

Samarai Convention Center, 23/G/7, Panthapath(Opposite Bashundhara City Market), Dhaka.

Approval given by the shareholders;

Date : 28th day of May 2014; Time 11.00 am Venue: Lakeshore Hotel, Road: 41, House: 46, Gulshan 2, Dhaka-1212. .Financial Reporting Calendar : 1st January 2013 to 31st December 2013

Dates of Book Closure/Record date : 4th day of May 2014

Agenda to be discussed:

Dividend Payment Date: The dividend if declared by the shareholders at the AGM shall be paid on or before 28 June 2014, i.e. within 30 days from the date of declaration.

Listing on Stock Exchanges: (i) Dhaka Stock Exchange Ltd. (ii) Chittagong Stock Exchange Ltd.

General Shareholders' Information for 15th AGM

Financial Statements for the year ended December 31, 2012

Dividend (Stock @ 5.00%)

Election/Re-election of Directors who were eligible for elected/re-election and expressed their interest to be elected as Director in the 14th AGM: Mr. Latifur Rahman representing Bangladesh Lamps Ltd., Mr. Mizanur Rahman representing Shaw Wallace Bangladesh Ltd., Mr. Neaz Ahmed representing National Bank Limited and Mr. Akhtar Ahmed representing Reliance Insurance Limited.

Appointment of Auditors; M/s Syful Shamsul Alam & Co., Chartered Accountants as external auditor of the Company.

Confirmation the appointment of Independent Director: confirmation the appointment of Professor Imran Rahman, Vice Chancellor, ULAB, Mr. Syed Tanveer Hussain, Former Secretary to the Government of Peoples Republic of Bangladesh and Mr. Imtiaz Mahmood, Advocate, Supreme Court as Independent Directors.

To receive, consider and adopt the audited financial statements of the Company for the year ended 31 December, 2013 together with reports of Auditors.

Declaration of dividend for the year ended 31 December, 2013.

To elect Directors, in accordance with the relevant provisions of the Articles of Association of the Company.

To appoint Auditors and fix their remuneration for the year 2014.

01

02

03

04



Board Meeting and attendance of DirectorsDuring the year 2013

Name of the Directors

Mr. Latifur Rahman Bangladesh Lamps Ltd.

National Bank Ltd.

IFIC Bank Ltd.

Reliance Insurance Limited

National Life Insurance Co. Ltd.



Eastland Insurance Co. Ltd.



Mr. Neaz Ahmed

Mr. Jalal Ahmed National

Mr. Akhtar Ahmed

Mr. Morshed Alam


Mr. Azmal Hossain

Mr. M. Azmal Hoque

Mr. Mizanur Rahman

Mr. Md. Kabir Reza

Mr. Syed Ali Jower Rizvi

Professor Imran Rahman

Mr. Syed Tanveer Hussain

Mr. Imtiaz Mahmood

Mr. Mahmudul Huq Taher

Mr. Rezaul Karim

Nominated by Designation

Chairman

Director

Director

Director

Director

Director

Director

Director

Director

Director

Director

DirectorIndependent

DirectorIndependent

Director

Director

Director

Independent

TotalMeeitngs

MeetingAttended

Change During2013

-

-

-

-

-

-

-

-

-

-

-

12

12

12

7

3

12

12

12

12

12

12

12

12

8

9

5

8

8

9

6

1

12

12

3

8

7

10

9

10

4

6

1

Appointed on14.05.2013

Resigned on11.09.2013



Shadharan Bima Corporation

Appointed on

01.06.2013

Appointed on

29.10.2013



Executive Committee Meeting and attendance of DirectorsDuring the year 2013

Name of the Directors Nominated by Designation

11

11

11

11

6

5

10

9

11

11

5

5

Chairman

Member

Member

Member

Member

Member

TotalMeetings

MeetingAttended

Change During2013

Appointed from17.06.2013



Mr. Mizanur Rahman

Mr. Neaz Ahmed


Mr. Md. Kabir Reza, FCMA

Mr. Azmal Hossain

-

-

-

-


National Bank Ltd.




Audit Committee Meeting and attendance of Directors During the year 2013

Name of the Directors


Mr. Md. Kabir Reza, FCMA

Mr. Akhtar Ahmed

Mr. Azmal Hossain


Mr. Neaz Ahmed


Nominated by Designation

Chairman

Member

Member

Member

Member

Member

Member

TotalMeetings

MeetingAttended

Change During2013

4

4

4

2

2

2

2

4

3

4

2

1

2

2

-

-

-

Independent Director





National Bank Ltd.

Borak Travels (Pvt.) Ltd. Resigned on13.05.2013


Appointed from 22.07.2013

Appointed from 22.07.2013



Remuneration Paid to Directors Including Independent Director (including VAT)During the year 2013

Name of theDirectors

Mr. Latifur Rahman

Mr. Neaz Ahmed

Mr. Jalal Ahmed

Mr. Akhtar Ahmed

Mr. Morshed Alam


Mr. Azmal Hossain

Mr. M. Azmal Hoque

Mr. Mizanur Rahman

Mr. Md. Kabir Reza

Mr. Syed Ali Jower Rizvi



Mr. Imtiaz Mahmood

Mr. Mahmudul Huq Taher

Mr. Rezaul Karim

Nominated by Designation BoardMeeting

AuditCommittee

ExecutiveCommittee Total

-

Pattern of Shareholding

Shareholding Pattern of the Company as on 31st December 2013 On the basis of shareholders types:

Group NameNo. of

Shareholder (S)

1646,793

611614374

7,089

No. ofShare (s)

Percentage(%)

CompanyGeneral PublicInvestor Account (Omnibus)Mutual FundNRB (Non Residential)Sponsor ShareUnite FundTotal :

3.637.780.320.680.02

87.210.36

100.00

3,860,5868,275,693341,087718,50824,291

92,783,709388,126

106,392,000

Bangladesh Lamps Ltd.

National Bank Ltd.

IFIC Bank Ltd.








National Life Insurance Co. Ltd

Shadharan Bima Corporation

Chairman

Director

Director

Director

Director

Director

Director

Director

Director

Director

DirectorIndependentDirector

IndependentDirector

IndependentDirector

Director

Director

40,000

40,000

45,000

30,000

5,000

60,000

60,000

15,000

40,000

35,000

50,000

45,000

50,000

20,000

30,000

5,000

40,000

105,000

45,000

35,000

5,000

125,000

105,000

15,000

85,000

75,000

100,000

65,000

60,000

20,000

30,000

5,000

-

10,000

-

5,000

-

10,000

20,000

-

-

15,000

-

20,000

10,000

-

-

-

-

55,000

-

-

-

55,000

25,000

-

45,000

25,000

50,000

-

-

-

-

-

Amount in Taka



Distribution schedule of each class of equity security setting out of the number of holders and percentage:

Shareholding status of Parent/Subsidiary/Associated Companies and other related parties, Directors* andCEO and their spouses & minor children.

ShareholdingRange

Number ofShareholder (s)

No.of SharesPercentage

(%)

1 - 500501 - 50005001 - 1000010001 - 2000020001 - 3000030001 - 4000040001 - 5000050001 - 100000100001 - 10000001000001 to aboveTotal :

4,6531,951233120362013172818

7,089

357,2033,358,4461,729,3631,768,846905,408697,490595,247

1,261,0267,686,511

88,032,460106,392,000

0.343.161.631.660.850.660.561.197.22

82.74100.00

Name of Director/Shareholder

Parent/Subsidiary/Associated Companies and other related parties

Represented by DesignationNo. of

Share (s)held

Percent(%)

Nil Nil

Bangladesh Lamps Ltd

National Bank Ltd.

IFIC Bank Limited




Eastern Insurance Co. Limited







Mr. Imtiaz Mahmood

Mr. Md. Abdur Rob

Shareholders holding ten percent (10%) or more voting interest in the company

Mr. Latifur Rahman

Mr. Neaz Ahmed

Mr. Jalal Ahmed

Mr. Akhtar Ahmed

Mr. Morshed Alam


Mr. Azmal Hossain

Mr. M. Azmal Hoque

Mr. Mizanur Rahman

Mr. Md. Kabir Reza

Chairman

Director

Director

Director

Director

Director

Director

Director

Director

Director

Director

IndependentDirector

IndependentDirectorIndependentDirector

ManagingDirector

5,123,276

5,123,295

4,808,100

5,123,295

5,123,295

5,213,276

5,123,295

5,123,295

4,808,100

5,023,450

2,884,860

Nil

Nil

Nil

Nil

Nil

4.82

4.82

4.52

4.82

4.82

4.82

4.82

4.82

4.52

4.72

2.71

Nil

Nil

Nil

Nil

Nil

* All the Directors except Mr. Syed Ali Jowher Rizvi & Independent Directors are Directors' nominated by institutions and they do not hold any share in their personal name.



Executive (Top five salaried persons other than CEO, CFO, CS & HIA)

Shareholding Status of CFO, CS and Head of Internal Audit and their spouse & minor children

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Name of the Executive DesignationNo.of

Share(s)held

Percent (%)

Compliance Status (" "in appropriate column)

Complied NotComplied

Remarks(If any)

[Report under Condition No.7.00]

Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange Commission's Notification No. SEC/CMRRCD/2006-158/134/ Admin/44 dated 07 August, 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

Mr. Md. Khalilur Rahman

Mr. Md. Kamal Pasha

Mr. Shital Chandra Saha

Mr. Md. Nazrul Islam

Mr. Md. Abdul Baten

Additional ManagingDirector

Vice President

Vice President & Head ofLease

AVP & Head of Recovery

AVP & Head of Marketing

BOARD OF DIRECTORS:

Board's Size [number of Board members to be 5 - 20]

Independent Directors

Number of Independent Directors [at least one-fifth]

Independent Director (ID) means a director:

Holding no share or holding less than 1% shares

Not being a sponsor and connected with any sponsor or director or

shareholder holding 1% or more shares

Not having any pecuniary or otherwise relationship with the company

or its subsidiary/associated companies

Not being member/director/officer of any stock exchange

Not being shareholder/director/officer of any member of stock exchange

or intermediary of capital market

Condition No.

1

1.1

1.2

1.2 (i)

1.2 (ii)

1.2 (ii) (a)

1.2 (ii) (b)

1.2 (ii) (c)

1.2 (ii) (d)

1.2 (ii) (e)

No.ofShare(s) held

Nil

Nil

Nil

Nil

Nil

Nil

Percent (%)Designation

CFO

Company Secretary

Head of Internal Audit

Mr. Syed Ahmed FCMA

Mr. Md. Sarwar Kamal ACS

Mr. Probir Sheel

Name of the Executive



Condition No. TitleCompliance Status (" "in appropriate column)


Remarks(If any)

Not being partner/executive at present or during the preceding 3 years

of the company's statutory audit firm

Not being an ID in more than 3 listed companies

Not convicted as defaulter in any loan of a bank or NBFI

Not convicted for a criminal offence

To be appointed by BOD and approved in the AGM

The post cannot remain vacant for more than 90 days -- -- N/A

Laying down of code of conduct of Board members and recording of

annual compliance of the code ?

Tenure of ID : 3 years, may be extended for one term ?

Qualification of Independent Director

Being knowledgeable, having integrity, ability to ensure compliance with

laws and make meaningful contribution ?

Being a Business Leader/ Corporate Leader/ Bureaucrat/ University

Teacher(Economics/Business/Law)/CA/CMA/CS having 12 years of

management/professional experience ?

Prior approval of the Commission in special cases -- -- N/A

Appointment of Chairman and CEO, defining their roles ?

The Director's Report to Shareholders shall include

Industry outlook and possible future developments

Segment-wise or product-wise performance

Risks and concerns

Discussion on COGS, Gross Profit and Net Profit Margins

Discussion on continuity of Extra-Ordinary gain or loss -- -- N/A

Basis for and a statement of related party transactions

Utilization of proceeds from issuing instruments

Explanation, if the financial results deteriorate after going for IPO, RPO -- -- N/A

Right Offer, Direct Listing, etc

Explanation about significant variance between Quarterly Financial -- -- N/A

performance and Annual Financial Statements

Remuneration to directors including IDs

Fair presentation in financial statements

Maintaining proper books of accounts

Consistent application of appropriate accounting policies

and accounting estimates being reasonable and prudent

Following applicable IAS/BAS/IFRS/BFRS, and adequate disclosure

for any departure there-from, if any

Soundness and monitoring of internal control system

Statement regarding ability to continue as going concern

Significant deviations from last year's operating results -- -- N/A

Summary of key operating/financial data of last 5 years

Reason for non declaration of Dividend -- -- N/A

Number of Board meetings and attendance of directors

1.2 (ii) (f )

1.2 (ii) (g)

1.2 (ii) (h)

1.2 (ii) (i)

1.2 (iii)

1.2 (iv)

1.2 (v)

1.2 (vi)

1.3

1.3 (i)

1.3 (ii)

1.3 (iii)

1.41.5

1.5 (i)1.5 (ii)

1.5 (iii)

1.5 (iv)

1.5 (v)

1.5 (vi)

1.5 (vii)

1.5 (viii)

1.5 (ix)

1.5 (x)

1.5 (xi)

1.5 (xii)

1.5 (xiii)

1.5 (xiv)

1.5 (xv)1.5 (xvi)

1.5 (xvii)

1.5 (xviii)

1.5 (xix)

1.5 (xx)





Remarks(If any)

Pattern of shareholding (along with name wise details) by-

Parent/Subsidiary/Associate Companies & related parties

Directors, CEO, CS, CFO, HOIA, their spouses & children

Executives (Top 5 salaried employees other than above)

Shareholders holding 10% or more voting interest

In case of the appointment/re-appointment of a director,

A brief resume of the director

Nature of his/her expertise in specific functional areas

Names of companies in which he/she holds directorship and the

membership of committees of the board

CFO, HEAD OF INTERNAL AUDIT AND CS:

Appointment of a CFO, a Head of Internal Audit and a CS and defining

their roles, responsibilities & duties

Attendance of CFO and CS in the meetings of the Board

AUDIT COMMITTEE:

Having Audit Committee as a sub-committee of the BOD

Audit Committee to assist the BOD in ensuring fairness of financial

statements and a good monitoring system

Audit Committee being responsible to the BOD; duties of Audit

Committee to be clearly set forth in writing

Constitution of the Audit Committee

Audit Committee to be composed of at least 3 members

Directors (at least one Independent Director), as Audit Committee

Members, to be appointed by BOD

Audit Committee members to be "financially literate" and at least one

to have accounting/financial experience

Vacancy in Audit Committee making the number lower than 3 to be -- -- N/A

filled up immediately and within 1 month

The CS to act as the secretary of the Audit Committee

No quorum in Audit Committee meeting without one ID

Chairman of the Audit Committee

Chairman to be Independent Director, selected by BOD

Chairman of audit committee to remain present in AGM

Role of Audit Committee

Oversee the financial reporting process

Monitor choice of accounting policies and principles

Monitor Internal Control Risk management process

Oversee hiring and performance of external auditors

Review the annual financial statements

Review the quarterly and half yearly financial statements

Review the adequacy of internal audit function

Review statement of significant related party transactions

Review Letters issued by statutory auditors

1.5 (xxi)

1.5 (xxi) (a)

1.5 (xxi) (b)

1.5 (xxi) (c)

1.5 (xxi) (d)

1.5 (xxii)

1.5 (xxii) (a)

1.5 (xxii) (b)

1.5 (xxii) (c)

2

2.1

2.2

3

3 (i)

3 (ii)

3 (iii)

3.1

3.1 (i)

3.1 (ii)

3.1 (iii)

3.1 (iv)

3.1 (v)3.1 (vi)

3.2

3.2 (i)

3.2 (ii)

3.3

3.3 (i)

3.3 (ii)

3.3 (iii)

3.3 (iv)3.3 (v)

3.3 (vi)

3.3 (vii)

3.3 (viii)3.3 (ix)





Remarks(If any)

Review disclosures/statements/declarations about uses of

funds raised through IPO/RPO/Rights Issue

Reporting of the Audit Committee

Reporting to the Board of Directors

Reporting on the activities of Audit Committee

Reporting on conflicts of interests -- -- N/A

Reporting on suspected/presumed fraud or irregularity or material -- -- N/A

defect in the internal control system

Reporting on suspected infringement of laws -- -- N/A

Reporting on any other matter to disclose immediately -- -- N/A

Reporting to BSEC -- -- N/A

Reporting to the Shareholders and General Investors

EXTERNAL / STATUTORY AUDITORS

Non-engagement in appraisal/valuation/fairness opinions

Non-engagement in designing & implementation of FIS

Non-engagement in Book Keeping or accounting

Non-engagement in Broker-Dealer services

Non-engagement in Actuarial services

Non-engagement in Internal Audit services

Non-engagement in services determined by Audit Com.

Possessing no share by any partner or employee of the external

audit firm during the tenure of assignment

Non-engagement in nudit/certification Scervices on compliance

of corporate governance as required under clause 1 of condition 7

SUBSIDIARY COMPANY

Composition of BOD to be similar to holding company -- -- N/A

One ID to be in both holding and subsidiary company -- -- N/A

Minutes of Board meetings of subsidiary company to be placed at -- -- N/A

following Board meeting of holding company

Minutes of respective Board meeting of holding company to state -- -- N/A

that affairs of subsidiary company be reviewed

Audit Committee of holding company to review financial -- -- N/A

statements / investments of subsidiary company

DUTIES OF CEO AND CFO:

To certify that they've reviewed FSs which contain no untrue or

misleading statement or omit no material fact

To certify that the statements present a true and fair view of affairs

and are in compliance with accounting standards and applicable laws

To certify that no transaction is fraudulent, illegal or violation

of company's code of conduct

REPORTING AND COMPLIANCE OF CORPORATE GOVERNANCE:

Obtaining certificate regarding compliance and sending it to

shareholders along with the Annual Report

To state, in accordance with annexure, in directors' report whetherthe conditions has been complied with

3.3 (x)

3.4

3.4.1

3.4.1 (i)3.4.1 (ii) (a)

3.4.1 (ii) (b)

3.4.1 (ii) (c)

3.4.1 (ii) (d)

3.4.2

3.5

4

4.00 (i)

4.00 (ii)

4.00 (iii)

4.00 (iv)

4.00 (v)

4.00 (vi)

4.00 (vii)

4.00 (viii)

4.00 (ix)

5

5 (i)

5 (ii)

5 (iii)

5 (iv)

5 (v)

6

6 (i) (a)

6 (i) (b)

6 (ii)

7

7 (i)

7 (ii)

Certificat on Compliance of Corporate Governance Guidelines

S. Abdur Rashid FCS


S. Abdur Rashid FCSBCom (Hons), MBS (Fin & Banking), MBA (Finance) PGD-HRM, AIPMChartered Secretary in PracticePrivate Practice Certificate No.: 003Phone # 01726-533 655,01193-095 297E-mail : [email protected]

Noakhali Tower (10th Floor, 11-F)55/B Purana Paltan, Dhaka-1000, Bangladesh

E-mail: [email protected]

Dhaka, 07 May 2014

SARashid & Associates(Chartered Secretaries)

Certificate on Compliance of Corporate Governance Guidelines[ Issued under Condition # 7(i) of Corporate Governance Guidelines of BSEC vide

Notification No.SEC/CMRRCD/2006-158/134/Admin/44 dated 07August 2012]

I have reviewed the Compliance of Conditions of the Corporate GovernanceGuidelines by National Housing Finance And Investments Limited("the Company"). Such compliance is the responsibility of the Companyas stipulated in the above mentioned notification issued by BangladeshSecurities and Exchange Commission ("BSEC").

I have conducted my review in a manner that has provided me a reasonablebasis for evaluating the compliances and expressing my opinion thereon.This review has been limited to the measures adopted by the Company inensuring such compliances and this has not been for expression of opinionon the financial statements or future viability of the Company.

According to the information and explanations provided to me by theCompany, I hereby certify that, the Company has complied with all theconditions of aforesaid Corporate Governance Guidelines of BSEC.


Auditors' Report &Financial Statements


INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERSOF

NATIONAL HOUSING FINANCE AND INVESTMENTS LIMITED

Report on Financial Statements

We have audited the accompanying financial statements of National Housing Finance And Investments Limited, which comprise the statement of financial position as at 31 December 2013 and

the related statement of comprehensive income, statement of changes in equity and statement of cash

flows and statement of liquidity for the year then ended, and a summary of significant accounting

policies and other explanatory notes.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with Bangladesh Financial Reporting Standards (BFRSs), Financial Institutions Act 1993, the

Companies Act 1994, the Securities and Exchange Rule 1987 and rules and regulations issued by the

Bangladesh Bank and other applicable laws and regulations, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with Bangladesh Standards on Auditing (BSAs). Those standards

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial statements. The procedures selected depend on the auditor's judgment, including the

assessment of the risks of the material misstatement of the financial statements, whether due to fraud

or error. In making those risk assessments, the auditors considers internal control relevant to the entity's

preparation of the financial statements is order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's

internal control. An audit also includes evaluating the appropriateness of accounting policies used and

the reasonableness of accounting estimates made by management, as well as evaluating the

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion.


SYFUL SHAMSUL ALAM & CO.

CHARTERED ACCOUNTANTS

Opinion:

In our opinion, the financial statements prepared in accordance with Bangladesh Financial Reporting Standards (BFRSs), give a true and fair view of the state of the affairs of the company as of 31 December 2013 and of their performance and cash flows for the year then ended and comply with the Financial Institutions Act 1993, the Companies Act 1994, the Securities and Exchange Ordinance 1969, the Securities & Exchanges Rules 1987 and other rules and regulations issued by the Bangladesh Bank and other applicable laws and regulations.

We also report that:

the information and explanations required by us have been received and found satisfactory;

we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;

(i)

in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books and proper returns adequate for the purpose of our audit have been maintained;

(ii)

the Company's statement of financial position and statement of comprehensive income together with the annexed notes 1 to 59 dealt with by the report are in agreement with the books of account and returns;

(iii)

the expenditure incurred and payments made were for the purpose of the Company's business;(iv)

the statement of financial position of the Company as at 31 December 2013 and the profit for the year then ended have been properly reflected in the Financial Statements;

(v)

the Financial Statements have been drawn up in conformity with the Financial Institutions Act 1993 and in accordance with the accounting rules and regulations issued by Bangladesh Bank;

(vi)

adequate provisions have been made for advances and other assets which are, in our opinion, doubtful of recovery;

(vii)

(viii)

the financial statements of the Company conform to the prescribed standards set in the accounting regulations issued by Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh;

(x)

We have reviewed over 80% of the risk weighted assets of the Company and we spent 1,020 man hours for the audit of books and Accounts of the Company.

(xi)

it appeared from our test checks that the internal control system was adequate and satisfactory;(ix)

Date: 21st April 2014

Place: Dhaka


NATIONAL HOUSING FINANCE AND INVESMENTS LIMITEDStatement of Financial Position

As at 31 December, 2013

PROPERTY AND ASSETSCash: 4.00In hand (including foreign currencies) 34,060 25,864 Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies)

92,292,143 48,935,649

92,326,203 48,961,513 Balance with banks and other financial institutions:

5.00

In Bangladesh 1,086,059,202 694,639,508 Outside Bangladesh - -

1,086,059,202 694,639,508 Money at call and on short notice 6.00 - - Investments: 7.00Government securities - - Others 20,582,396 10,056,392

20,582,396 10,056,392 Loans, advances and leases: 8.00Loans, cash credits, overdrafts etc. 4,624,177,530 4,274,202,930 Bills purchased and discounted - -

4,624,177,530 4,274,202,930 Fixed assets including premises, furniture and fixtures

9.00 34,676,537 35,980,730

Other assets 10.00 408,694,375 402,973,533 Non-financial institution assets 11.00 - - TOTAL ASSETS 6,266,516,243 5,466,814,606

LIABILITIES AND CAPITALLiabilities:

12.00 1,007,384,738 1,193,263,888

Deposits and other accounts: 13.00Current deposits and other accounts etc. 2,302,304,922 1,992,009,299 Bills payable - - Savings bank deposits - - Fixed deposits 950,000,000 700,000,000 Bearer certificate of deposits - - Other deposits 36,361,782 47,705,856

3,288,666,704 2,739,715,155 Other liabilities 14.00 544,387,469 618,430,287 Total Liabilities 4,840,438,910 4,551,409,330 Capital/Shareholders' equity:Paid up capital 15.00 1,063,920,000 686,400,000 Statutory reserve 16.00 223,489,587 189,995,175 Retained earnings 17.00 138,667,746 39,010,101 Total Shareholders' equity 1,426,077,332 915,405,276

6,266,516,243 5,466,814,606

Borrowing from banks, other financialinstitutions and agents

31 December, 2013Amount in Taka


Notes

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


December 31, 2013Amount in Taka


Notes

OFF BALANCE SHEET ITEMSContingent Liabilities: - - Acceptances and endorsements - - Letters of Guarantee - - Irrevocable letters of credit - - Bills for collection - - Tax liability - - Other contingent liabilities - -

- - Other Commitments: - - Documentary credits and short term trade related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance and revolving underwriting facilities - -

- - Undrawn formal standby facilities, credit lines and other commitments

- -

- -

The accompanying notes form an integral part of these financial statements and are to be read in conjunction therewith.

TOTAL OFF BALANCE SHEET ITEMS INCLUDING CONTINGENT LIABILITIES

Signed in terms of our separate report of even date annexed.

Dhaka, 21st April 2014Syful Shamsul Alam & Co. Chartered Accountants



Md. Kabir RezaDirector

Syed Tanverer HussainIndependent Director


NATIONAL HOUSING FINANCE AND INVESMENTS LIMITEDStatement of Comprehensive Income

For the year ended December 31, 2013

December 31,2013Amount in Taka

December 31,2012Amount in Taka

Notes

Interest Income 19.00 877,338,237 723,015,138Interest paid on deposits, borrowings etc. 20.00 524,724,133 480,617,182Net interest income 352,614,104 242,397,956Income from investment 21.00 554,932 (1,125,451)Commission, exchange and brokerage 22.00 122,650 226,250Other operating income 23.00 14,924,126 7,454,781

15,601,708 6,555,580Total operating income (A) 368,215,812 248,953,536Salaries and allowances 24.02 39,014,656 36,675,920Rent, taxes, insurance, electricity etc. 24.03 6,032,590 5,659,283Legal expenses 24.04 2,810,525 2,053,891Postage, stamps, telecommunication etc. 25.00 1,874,540 1,380,097Stationery, printing, advertisement etc. 26.00 3,065,570 3,585,940Managing Director's salary & fees 27.00 5,760,000 5,760,000Directors' fees and expenses 24.01 917,000 560,000Auditors' fees 28.00 172,500 126,500Depreciation on and repairs to institution's assets 29.00 5,395,988 5,325,412Other expenses 30.00 9,516,760 7,394,930Total operating expenses (B) 74,560,129 68,521,973Profit before provisions (C=A-B) 293,655,683 180,431,563Provisions for Loans, advances and leases 31.00 55,375,413 100,299,769Diminution in value of investments 4,357,991 126,480 Others - -Total provisions (D) 59,733,404 100,426,249Total profit before taxation (E=C-D) 233,922,279 80,005,314Provisions for taxation (F) 14.07 (66,450,222) (38,567,412) Net Profit after taxation (E-F) 167,472,057 41,437,902

Appropriations:Statutory reserve 16.00 33,494,411 8,287,580General reserve - -Proposed dividend - -

33,494,411 8,287,580Retained surplus 17.00 133,977,645 33,150,322

Earnings per share (restated) 32.00 1.57 0.39


Signed in terms of our separate report of even date annexed.

Dhaka, 21st April 2014Syful Shamsul Alam & Co. Chartered Accountants






NATIONAL HOUSING FINANCE AND INVESTMENTS LIMITEDStatement of Changes in Equity


TotalStatutoryReserve

Figures in Taka

RetainedEamings

Paid-upCapital

Particulars

As at January 01, 2012 572,000,000 120,259,779 181,707,595 873,967,374 Net profit for the year - 41,437,902 - 41,437,902 Cash dividend for the year 2011 - - - - Issue of Bonus share 114,400,000 (114,400,000) - - Transfer to statutory reserve - (8,287,580) 8,287,580 -

686,400,000 39,010,101 189,995,175 915,405,276

As at January 01, 2013 686,400,000 39,010,101 189,995,175 915,405,276 Changes in accounting policy - - - - Restated balance 686,400,000 39,010,101 189,995,175 915,405,276 Surplus/deficit on account of revaluation of properties

- - - -

Surplus/deficit on account of revaluation of Investments

- - - -

Currency transaction differences - - - - Net gain/loss not recognized in the income statement

- - - -

Net profit for the year - 167,472,057 - 167,472,057 Cash dividend for the year 2012 - - - - Issue of Bonus share (For 2012) 34,320,000 (34,320,000) - - Issue of right shares 343,200,000 - - 343,200,000 Transfer to statutory reserve - (33,494,411) 33,494,411 -

1,063,920,000 138,667,746 223,489,587 1,426,077,332


Balance as at December 31, 2012

Balance as at December 31, 2013








NATIONAL HOUSING FINANCE AND INVESTMENTS LIMITEDStatement of Cash Flows


Notes

The accompanying notes form an integral part of this financial statement and are to be read in conjunction therewith.

A. CASH FLOWS FROM OPERATING ACTIVITIES

Interest receipts in cash 33.00 818,138,023 734,493,231

Interest payments 34.00 (506,069,128) (437,183,098)

Dividend receipts 400,300 90,000

Fees and commissions receipts in cash 35.00 122,650 226,250

Cash payments to employees 36.00 (44,774,656) (42,435,920)

Cash payments to suppliers 37.00 (5,577,869) (5,571,574)

Income taxes paid (40,626,834) (79,283,626)

Cash receipts from other operating activities 38.00 15,078,758 6,239,330

Cash payments for other operating activities 39.00 (19,403,375) (15,762,154)

217,287,868 160,812,439

Increase/(decrease) in operating assets and liabilities:Loans, advances and leases to the client (422,646,676) (154,053,948)

Other assets 40.00 (52,763,418) (24,230,803)

Fixed deposits 41.00 250,000,000 (50,000,000)

Deposits from customers 42.00 310,295,624 594,411,675

Other deposits 42.00 (11,344,075) 7,890,192

Other liabilities 43.00 (1,059,070) (4,725,953)

Cash utilized in operating assets and liabilities (ii) 72,482,385 369,291,164

Net cash flow from operating activities (i+ii) 289,770,253 530,103,603

B. CASH FLOWS FROM INVESTING ACTIVITIES

Sale/(investment) in shares (10,526,004) (441,686)

Acquisition of fixed assets 9.00 (1,780,715) (3,892,174)

Net cash flow from investing activities (12,306,719) (4,333,860)

C. CASH FLOWS FROM FINANCING ACTIVITIES

Receipt from Issue of right shares 343,200,000 -

Loan from banks (185,879,150) (277,759,401)

Cash dividend for the year 2012 & 2011 - -

Net cash flow from financing activities 157,320,850 (277,759,401)

D. Net increase/(decrease) in cash and bank balances (A+B+C) 434,784,384 248,010,342

E. Effects of exchange rate changes on cash and cash equivalent - -

F. Cash and bank balances at beginning of the year 743,601,021 495,590,679

G. Cash and bank balances at closing of the year (D+E+F) 1,178,385,405 743,601,021

Cash in hand (including foreign currencies) 34,060 25,864

92,292,143 48,935,649

1,086,059,202 694,639,508 - -

1,178,385,405 743,601,021

Balance with banks and other financial institutionsMoney at call and on short notice

Cash and bank balances at end of the year:

Balance with Bangladesh Bank and its agent bank(s) (including foreign currency)

Cash generated from operating activities before changes in operating assets and liabilities (i)






Figures in Taka

NATIONAL HOUSING FINANCE AND INVESTMENTS LIMITEDLiquidity Statement

(Maturity Analysis of Assets & Liabilities)As at December 31, 2013

Net result of the liquidity statement represents the "Shareholders' Equity" of NHFIL


Particulars Up to 1 month 1-3 months 3-12 months Current Portion 1-5 years Above 5 years Total

AssetCash in hand 34,060 - - 34,060 - - 34,060

Balance with Bangladesh Bank and its agents 92,292,143 - - 92,292,143 - - 92,292,143

Balance with other banks and FIs 86,059,202 - 1,000,000,000 1,086,059,202 - - 1,086,059,202

Investments - 20,582,396 - 20,582,396 - - 20,582,396

Money at call and on short notice - - - - - - -

Loans, advances and leases 156,909,397 19,709,414 371,571,386 548,190,197 1,900,525,036 2,175,462,297 4,624,177,530

Fixed assets - - - - - 34,676,537 34,676,537

Other assets 293,022,077 - 114,917,837 407,939,915 - 754,460 408,694,375

Non-financial institution assets - - - - - - -

Total Asset 628,316,880 40,291,810 1,486,489,223 2,155,097,913 1,900,525,036 2,210,893,294 6,266,516,243

LiabilitiesBorrowing from banks, other financial institutions and agents

65,578,248 30,910,014 166,081,487 262,569,749 603,264,929 141,550,060 1,007,384,738

Deposits and other accounts 200,000,000 - 2,405,841,192 2,605,841,192 682,825,512 - 3,288,666,704

Provision & other liabilities 167,327,647 622,869 164,955,760 332,906,276 211,481,193 - 544,387,469

Total Liabilities 432,905,895 31,532,883 2,736,878,439 3,201,317,217 1,497,571,634 141,550,060 4,840,438,911

Net Liquidity Gap 195,410,984 8,758,927 (1,250,389,216) (1,046,219,304) 402,953,402 2,069,343,234 1,426,077,332






NATIONAL HOUSING FINANCE AND INVESTMENTS LIMITEDNotes to the Financial Statements


1.00 COMPANY AND ITS ACTIVITIES

1.01 Legal status and nature of the company

1.02 Principal Activities of NHFIL

2.00

2.01 Basis of Preparation of the Financial Statements

2.02 Basis of Accounting

The registered office of the Company is located at, National Plaza (7th & 8th floor), 109, Bir UttamC.R. Datta Road (Ex-Sonargaon Road), Dhaka -1205.

The financial statements of the Company have been prepared on accrual basis of accounting, underhistorical cost convention except marketable securities which have been accounted for on the basisof cost or market price whichever is lower at the balance sheet date.

National Housing Finance and Investments Limited (NHFIL) was incorporated on August 18, 1998 as apublic limited company under the Companies Act 1994, obtaining license from Bangladesh Bankunder the Financial Institutions Act 1993 on December 29, 1998. The main objectives of the Companyare to carry on the business of financing the acquisition, construction, development and purchase ofhouses, plots, apartments, real estates, commercial spaces, etc.

The Company has obtained permission from Bangladesh Bank on June 03, 2003 to enter into leasefinance operation keeping housing finance as its core business. The Company extends lease financefor all types of industrial, manufacturing and service equipments including vehicles to individualcompanies, and corporate houses.

The Company provides loan to the extent of 70.00% of the total purchase price of houses, plots andapartments under usual repayable terms varying from 5 years to 20 years. The properties for whichloans are disbursed are kept under registered / equitable mortgage as security. In addition to thisNHFIL also involves with other activities such as accepting deposits, SME, lease financing, projectfinancing etc.

BASIS OF PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS AND SIGNIFICANTACCOUNTING POLICIES

The financial statements of the Company have been prepared in compliance with the Section-38(First Schedule) of the Bank Companies Act 1991 and the subsequent amendment thereof, DFIMCircular no-11 dated 23 December 2009, Bangladesh Accounting Standard (BASs), BangladeshFinancial Reporting Standards (BFRSs), The Companies Act 1994, The Securities and ExchangeOrdinance 1969, The Securities and Exchange Rule 1987 and other applicable laws and regulations inBangladesh.


2.04 Functional and Presentation Currency

2.05 Use of Estimates and Judgments

2.06 Liquidity Analysis

i) Money at call and on short notice ii) Balance with Banks iii) Investments iv) Borrowing from Banks and Financial v) Public deposits vi) Other liabilities

2.07 Reporting Period

2.08 Cash Flow Statement

3.00 SIGNIFICANT ACCOUNTING POLICIES

The figures of the financial statements are presented in Bangladesh Currency (Taka) and have beenrounded off to the nearest Taka, which is the functional currency of NHFIL.

The preparation of Financial Statements requires management to make judgments, estimates andassumptions that may affect the application of accounting policies and the reported amounts ofassets, liabilities, income and expenses. The actual results may differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis and recognized in the period in which the estimates are reviewed.

The liquidity analysis have been made on the basis of assets and liabilities as on the reporting dateconsidering the residual maturity term as per the following basis:a) On the basis of residual maturity term:

b) Loans and advances on the basis of their repayment schedulec) Fixed assets on the basis of their estimated useful lives

These financial statements have been prepared for the period from January 01, 2013 to December31, 2013.

Cash Flow Statement has been prepared under direct method in accordance with BAS-07.

The accounting policies applied for preparation of this Financial Statements have been appliedconsistently for both the periods presented herein.

2.03 State of Going ConcernThe financial statements of the Company have been prepared on the basis of going concern whichreflects the realization of assets and satisfaction of liabilities in the normal course of business.


3.01 Authorized Capital

3.02 Paid up Capital

3.03 Statutory Reserve

3.04 Fixed Assets

3.05 Revenue Recognition

3.05.01 Interest Income

Mortgage Loans

Lease Finance

Term Finance

Fixed Deposits

The Company follows the finance lease method following BAS 17: Leases to account for leaseincome. Interest are recognized as and when accrued/earned on the basis of accrual basis ofaccounting. Interest outstanding more than 2 (two) months for 5 (five) years loan and more than 5(five) months for over 5 (five) years loan is not recognized as revenue but recognized as interestsuspense complying the requirements by the DFIM of Bangladesh Bank.

Income from term finance is recognized when interest is accrued, but no interest of installments istaken into account that becomes due for more than 2 (two) months for 5 (five) years loan and morethan 5(five) months for over 5 (five) years loan but recognized as interest suspense complying therequirements by the DFIM circular of Bangladesh Bank.

Fixed deposits, if not encashed on due date, is considered automatically renewed at the equivalentcurrent rate of interest. Interest on fixed deposits is recognized as income as and when accrued.

Authorized capital is the maximum amount of share capital that the Company is authorized by itsMemorandum and Articles of Association.

Paid up capital represents total amount of shareholders' capital that has been paid in full by ordinaryshareholders. Ordinary shareholders are entitled to vote at shareholders' meeting & receivedividends as declared from time to time.

Statutory reserve has been maintained @ 20.00% of profit after tax in accordance with provisions ofsection 9 of the Financial Institutions Act 1993 until such reserve equal to its paid up capital.

Fixed assets are capitalized at cost plus expenses incurred on installation, registration, etc.

Repayment of housing (mortgage) loans is made by way of Equated Monthly Installments (EMI)which consists of principal and interest. Interest is calculated annually on the outstanding balance atthe beginning of the year. EMI commences after disbursement of loan in full. EMI and Pre-EMIinterests are recoverable every month from the borrowers, interest on loan due for payment formore than 9 (nine) months are not taken into account.


3.05.02 Investment Income

3.05.03 Fees and Commission Income

3.05.04 Interest Paid and Other Expenses

3.05.05 Loan Loss Provision

3.05.06 Depreciation on Fixed Assets

3.06 Employee Benefits

3.06.01 Provident Fund

3.06.02 Gratuity Fund

3.07 Income Tax

3.07.01 Current Tax :

Fees and commission comprises application fees and administration fees computed on sanctioned loan amount.

Depreciation on fixed assets except land is provided on Reducing Balance Method and additionsmade during the year is charged for the whole year, while no depreciation is charged in the year ofdisposal. Details calculation of depreciation on Freehold Fixed Assets are shown in note: 9.00 of thisreport.

The Company has introduced a Contributory Provident Fund for its eligible employees with effectfrom January 2002, obtaining necessary approval from the National Board of Revenue, GoB.Provident Fund is administered by a Board of Trustee of the Company. All confirmed employees arecontributing 10.00% of their basic salary as subscription of the fund and the Company alsocontributed at the same rate to the fund. The contributions are invested in compliance with the PFTrust Deed. Members are eligible to get the both contribution after completion of 5(five) yearscontinuous service.

The Company has introduced a Funded Gratuity Scheme in the year 2004 obtaining necessary

approval from the National Board of Revenue, GoB. The Gratuity Scheme is administered by a Board

of Trustees. Members are eligible to get the gratuity benefit after completion of minimum 5(five)

years of confirmed service in the company. Gratuity is calculated on the basis of last basic salary and

is payable at the rate of one month's basic pay for every completed year of service.

Provision for current year's taxation has been made as per the provision of Income Tax Ordinance 1984 at the ruling rate prescribed in the Finance Act, 2009 and consistent with the past practice.

Income on investment is recognized on accrual basis.

Interest paid and other expenses are recognized on accrual basis.

General provision @ 1.00% & 0.25% on the unclassified loans are made as per policy prescribed by the Bangladesh Bank. In addition to Bangladesh Bank's policy for provision against non-performing loans, the Company follows a stringent policy to make provision against its non-performing loans.


3.07.02 Deferred Tax

Provision for Deferred Tax 31 December, 2013 Amount in Taka


Balance as on 1st January 367,567 367,567 Less: provision for deferred tax written back (298,540) -

69,027 367,567

3.08 Earnings Per Share (EPS)

3.09 Dividend

3.10 Regulatory & Legal Compliances

b) The Companies Act 1994; c) Rules and Regulations Issued by Bangladesh Bank;d) The Securities and Exchange Rules-1987;e) The Securities and Exchange Ordinance-1969;f) The Securities and Exchange Commission Act-1993;g) The Securities and Exchange Commission(Public Issue) Rules-2006;h) The Income Tax Ordinance 1984; i) The VAT Act 1991;

Deferred Tax has been accounted for as per Bangladesh Accounting Standard (BAS)-12: IncomeTaxes. It arises due to temporary difference, deductible or taxable, for the events or transactionrecognized in the income statement. A temporary difference is the difference between the tax baseof an asset or liability and its carrying amount/reported amount in the financial statement. DeferredTax asset or liability is the amount of income tax payable or recoverable in future period (s)recognized in the current period. The Deferred Tax asset/income or liability/expense does not createa legal liability/recoverability to and from the income tax authority.

Earnings Per Share (EPS) has been computed by dividing the basic earnings by the weighted averagenumber of ordinary shares outstanding as at 31 December, 2013. The Company calculates EPS inaccordance with IAS 33: Earnings Per Share, which has been shown on the face of Profit & LossAccount, and the computation of EPS is stated in note 32.00. This represents earnings for the yearattributable to ordinary shareholders. As there was no preference dividend, minority interest orextra ordinary items, the net profit after tax for the year has been considered as fully attributable tothe ordinary shareholders.

Dividend on ordinary shares are recognized as a liability and deducted from retained earnings afterdue approval by the shareholders in the respective Annual General Meeting (AGM). Dividendrecommended by the Board of Directors for approval of the shareholders for the year 2013 has beenstated as post balance sheet events in note 53.00.

a) The Financial Institutions Act 1993;

j) The 1st Schedule (under section 38) of Banking Companies Act 1991 for preparation of Financial Statements.

The Company has complied with the requirements of following regulatory and legal authorities:


3.11

Presentation of Financial Statements BAS-01Inventories BAS-02Cash Flow Statements BAS-07Accounting Policies, Changes in Accounting Estimates & Errors

BAS-08

Events after the Reporting Period BAS-10Construction Contract BAS-11Income Taxes BAS-12Property, Plant & Equipment BAS-16Leases BAS-17Revenue BAS-18Employee Benefits BAS-19Accounting for Government Grants and Disclosure of Government Assistance

BAS-20

The Effect of Changes in Foreign Exchange Rates BAS-21Borrowing Costs BAS-23Related Party Disclosure BAS-24Accounting and Reporting by Retirement Benefit Plans BAS-26Consolidated and Separate Financial Statements BAS-27Investments in Associates BAS-28Financial Instruments: Presentation BAS-32Earnings Per Share BAS-33Interim Financial Reporting BAS-34Impairment of Assets BAS-36Provisions, Contingent Liabilities and Contingent Assets

BAS-37

Intangible Assets BAS-38

Financial Instruments: Recognition and Measurement BAS-39

Investment Property BAS-40Agriculture BAS-41First Time adoption of IFRS BFRS-1Share Based Payment BFRS-2Business Combination BFRS-3Insurance Contracts BFRS-4Non-current Assets held for Sale and Discontinued Operations

BFRS-5

Explanation for and Evaluation of Mineral Resources BFRS-6Financial Instruments: Disclosures BFRS-7Operating Segments BFRS-8Joint Arrangements BFRS-11Disclosure of Interests in Other Entities Financial BFRS-12Fair Value Measurement BFRS-13

AppliedNot ApplicableNot ApplicableApplicable

The financial statements have been prepared in accordance with the applicable accounting andreporting standards i.e. BAS & BFRS as adopted by the Institute of Chartered Accountant ofBangladesh (ICAB). The following table shows the compliance status of BAS & BFRS for preparationand presentation of the financial statements:

BAS/BFRS Reference Status of Compliance

AppliedNot ApplicableApplied

Applied

AppliedNot ApplicableAppliedAppliedAppliedAppliedApplied

Not Applicable

Not ApplicableAppliedAppliedNot ApplicableNot ApplicableNot ApplicableApplicable

Applied

Not Applicable

Not Applicable

Applied

Applied

Applied

Applicable

Not ApplicableNot Applicable

Applicable

Compliance of Bangladesh Accounting Standard (BAS) & Bangladesh Financial Reporting Standard (BFRS)

Not ApplicableNot ApplicableNot ApplicableNot Applicable

Applied


4.00 CASH

Cash in hand:

Local currency

Foreign currencies

Balance with Bangladesh Bank and its agent Bank:

Local currency

Foreign currencies

4.01 Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR)

Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR) have been calculated and maintained in accordance with section 19 of the Financial Instructions Act 1993, rules 5 of the Financial Institutions Rules 1994 and FID circular #6 dated November 06,2003.

The CRR on the Company's term deposits received from public @2.5 has been calculated and maintained with Bangladesh Bank in current account and 5% SLR, including CRR, on the total liabilities has been maintained in the form of balance with banks and other financial instructions. Both the reserves maintained by the Company are in excess of the statutory requirements. Details of CRR & SLR maintained by the company are shown in the note: 4.01.01 & 4.01.02.

4.01.01 Cash Reserve Requirement (CRR)

Required reserve

Actual reserve held

Surplus/(deficit)

4.01.02 Statutory Liquidity Reserve (SLR)

Required reserve

Actual reserve held

Surplus/(defiant)

5.00 BALANCE WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

5.01 In Bangladesh

On current account (note: 5.01.01)

On Short Term Deposit (STD) Accounts (note: 5.01.02)

On Fixed Deposit Account (note: 5.01.03)

Outside Bangladesh

Amount in Taka2013

Amount in Taka2012

34,060 -

34,060

92,292,143 -

92,292,14392,326,203

25,864 -

25,864

48,935,649 -

48,935,64948,961,513

60,324,53892,292,143

31,967,605

185,372,0001,176,912,223

991,540,223

1,807,46684,251,737

1,000,000,0001,086,059,202

1,086,059,202

47,624,07248,935,649

1,311,577

151,207,456634,417,000

483,209,544

198,468134,441,039560,000,000

694,639,508

694,639,508- -


5.01.01 On Current Accounts

AB Bank Ltd. 184,466 7,696 EXIM Bank Ltd. 1,442,863 51,048 National Bank Ltd. 106,268 102,161 One Bank Ltd. 43,416 7,111 Standard Bank Ltd. 4,879 4,879 Trust Bank Ltd. 20,800 20,800 The City Bank Ltd. 4,774 4,774

1,807,466 198,468 5.01.02 On Short Term Deposit (STD) Accounts

Islami Bank Bangladesh Ltd. 123,467 48,090 AB Bank Ltd. 15,952 16,517 Bank Asia Ltd. 4,786,744 3,124,583 International Leasing and Financial Services Ltd. - 50,000,000 Dhaka Bank Ltd. 3,755 4,330 Eastern Bank Ltd. 10,202,208 5,973,360 Exim Bank Ltd. 5,564 6,551 Jamuna Bank Ltd. 9,903,605 7,562,434 National Bank Ltd. 40,781,991 148,034 Peoples Leasing and Financial Services Ltd. - 30,000,000 Premier Bank Ltd. 2,012,306 115,756 Pubali Bank Ltd. 1,919,079 1,692,073 Reliance Finance Ltd. - 20,000,000 Shahjalal Islami Bank Ltd. 151,717 960,431 Sonali Bank Ltd. 1,915 1,915 Southeast Bank Ltd. 7,924,119 7,636,588 Trust Bank Ltd. 1,412,887 316,567 United Commercial Bank Ltd. 5,050 5,990 Alfalah Islami Bank Limited 3,806,971 3,186,691 H.S.B.C Bank Ltd. 332,948 1,858,541 Mercantile Bank Ltd. 861,459 1,782,592

84,251,737 134,441,039 5.01.03 On Fixed Deposit Account

- 50,000,000 International Leasing and Financal Services Ltd. - 50,000,000 NRB Commercial Bank Ltd. 50,000,000 - Jamuna Bank Ltd. 600,000,000 330,000,000 Peoples Leasing and Financial Services Limited (PLFSL) 200,000,000 50,000,000 First Lease Finance 50,000,000 - Reliance Finance Ltd. 100,000,000 80,000,000

1,000,000,000 560,000,000

Bangladesh Industrial Finance Company Limited

Amount in Taka2013

Amount in Taka2012


2013Amount in Taka

2012Amount in Taka

5.02 Maturity Grouping of Balance with other Banks and Financial InstitutionsOn demand 86,059,202 134,639,508 Up to 3(three) months - - More than 3(three) months but not more than 1(one) year 600,000,000 300,000,000 More than 1(one) year but not more than 5(five) years 400,000,000 - More than 5(five) years - -

1,086,059,202 434,639,508

6.00 MONEY AT CALL AND ON SHORT NOTICEWith Banking Companies

- - - - - -

7.00 INVESTMENTS

Government securities - - Other investments (note: 7.01) 20,582,396 10,056,392

20,582,396 10,056,392 7.01 Other Investments

Preference Shares - - Ordinary Shares (note: 7.01.01) 20,582,396 10,056,392

20,582,396 10,056,392 7.01.01 Ordinary Shares

Number of

SharesMarket

Price 51 78.20

119 75.1010,000 266.7040,000 200.9069,000 78.00

Opening BalanceCharge during the yearBalance as on December 31, 2013

As per Bangladesh Bank FID Circular No. 08 dated August 03, 2002, Provision for diminution in value of share Tk. 4,357,991.00.

1,52887.94

90,3704,218,0005,382,000Unique Hotel & Resorts Ltd.

8,126,370Grameen Phone9,600,000

203.16 139.13

10,465

8,036,000

8,9373,988

Delta Life Insurance 2,841,320

Provision for diminution in value of share

253

Market Value Name of Company Cost Price Cost Value

4,484,47116,097,925 Total 20,582,396

4,484,471.00

2,667,000 174,320284.13

126,480.00 4,357,991.00

MI Cement 83.16 4,241MJBL BD Limited


7.01.02 Maturity-wise Grouping

On demand 20,582,396 10,056,392 Up to 3(three) months - - More than 3(three) months but not more than 1(one) year - - More than 1(one) year but not more than 5(five) years - -

20,582,396 10,056,392 8.00 LOANS, ADVANCES AND LEASES

Mortgage loans 2,738,980,218 2,257,240,545 Lease finance (note: 8.03) 602,282,628 378,884,518 Term loans 609,288,181 1,154,350,156 Small & Medium Enterprises Loan (note: 8.03) 637,229,923 441,990,565 Loan Against Fixed Deposits 13,511,336 15,303,750 Staff loan (note: 8.07) 22,885,244 26,433,396

4,624,177,530 4,274,202,930

8.01 Net Loans, Advances and Leases

Gross loans, advances and leases 4,624,177,530 4,274,202,930 Less: Interest suspense (note: 14.03) (82,057,919) (81,787,300) Less: Provision for loans, advances and leases (note: 8.13) (111,425,975) (164,130,199)

4,430,693,636 4,028,285,431 8.02 Maturity-wise Grouping

On demand 156,909,397 - Up to 3(three) months 19,709,414 148,217,688 More than 3(three) months but not more than 1(one) year 371,571,386 324,243,031 More than 1(one) year but not more than 5(five) years 1,900,525,036 1,760,274,751 More than 5(five) years 2,175,462,297 2,041,467,460

4,624,177,530 4,274,202,930

8.03 Lease Finance & SME Loan

Receivable within 3 months 141,627,238 120,165,413 More than 3(three) months but not more than 1(one) year 343,540,169 277,994,696 More than 1(one) year but not more than 5(five) years 748,323,544 1,456,774,295 More than 5(five) years 6,021,600 120,290,835

1,239,512,551 1,975,225,239

8.04 Loans, Advances and Leases

In BangladeshLoans 3,384,664,979 3,453,327,846 Leases 1,239,512,551 820,875,083 Overdraft - - Cash Credit - -

4,624,177,530 4,274,202,930 Outside Bangladesh - -

4,624,177,530 4,274,202,930

2013Amount in Taka

2012Amount in Taka


8.05 Geographical Location-wise Grouping

In BangladeshDhaka division 3,739,297,085 3,638,220,614 Chittagong division 324,919,027 220,918,917 Khulna division - - Sylhet division - - Barisal division - - Rajshahi division 559,961,418 415,063,399

4,624,177,530 4,274,202,930 Outside Bangladesh - -

4,624,177,530 4,274,202,930

8.06 Significant Concentration-wise Grouping

Directors & their related parties (Note: 45.00) 169,291 2,419,095 Staff: Managing Director - 3,911,297 Senior Executives 30,072,072 21,462,319 Others 1,343,447 1,497,438

31,415,519 26,871,054 Industries: Agricultural loan 182,558,218 208,724,743 Large and medium enterprises 637,229,923 675,770,511 Small and cottage 392,373,588 613,289,160

1,212,161,729 1,497,784,414 Mortgage Loan Home mortgage loan 2,177,467,239 2,128,542,670 Commercial mortgage loan 91,276,921 103,346,160 Project mortgage loan 470,066,767 25,076,990

2,738,810,927 2,256,965,820 Trade & commercial 641,620,064 490,162,547

4,624,177,530 4,274,202,930 8.07 Staff Loan

Personal loan 14,775,364 11,262,925 Car loan 2,543,447 1,581,440 House building loan 5,566,433 13,589,031

22,885,244 26,433,396

2013Amount in Taka

2012Amount in Taka


8.08 Details of Large Loan

8.09 Grouping as per Classification RulesUnclassified: Standard including staff loan 4,075,096,924 3,649,490,562 Special Mention Account 308,908,817 192,873,887 Classified: 4,384,005,741 3,842,364,449 Sub-standard 62,698,145 135,920,841 Doubtful 42,098,517 170,990,646 Bad/loss 135,375,127 124,926,994

240,171,789 431,838,481 4,624,177,530 4,274,202,930

8.10 Loan Type-wise Classified Loan

Mortgage loans 141,217,248 131,931,244 Lease finance 51,033,672 123,781,401 Term Finance - 122,912,510 Small & Medium Enterprises 47,920,869 53,213,326

240,171,789 431,838,481 8.11 Sector-wise Allocation of Loans, Advances and Leases

GovernmentPrivate: Mortgage loan 2,647,703,297 2,153,894,385 Industry 602,282,628 378,884,518 Term Finance 609,288,181 1,154,350,156 Commercial loan 91,276,921 103,346,160 SME Loan 637,229,923 441,990,565 Miscellaneous 36,396,580 41,737,146

4,624,177,530 4,274,202,930 8.12 Securities Against Loans, Advances and Leases

Collateral of moveable/immoveable assets 2,738,810,927 3,245,040,020 Fixed Deposit Receipts (FDR) 26,762,393 204,422,186 Fixed Deposit of other banks 431,673,911 - Personal guarantee 584,507,756 824,740,724 Others 842,422,543 -

4,624,177,530 4,274,202,930

As at 31st December 2013 there was no client with whom amount of outstanding and classified loans, advances and leases exceeded 30.00% of the total capital of the Company. Total capital of the Company was TK. 1,426.08 million and TK.915.41 million respectively as at 2013 & 2012 respectively (note:15.04).

2013Amount in Taka

2012Amount in Taka


8.13 Particulars of Required Provision for Loans, Advances and Leases

Required Provision

Required Provision

41,701,256 14,034,254 55,735,510

3,625,749 2,974,836 49,089,880 55,690,465 111,425,975

37,375,26410,091,237

47,466,501

10,726,838 54,680,422 51,256,438

116,663,698 164,130,199

8.14 Particulars of Loans, Advances and Leases

Loans considered good in respect of which the Company is fully secured 4,130,131,442 4,132,361,389

14,775,364 11,262,925

- -

479,270,724 130,578,616 4,624,177,530 4,274,202,930

23,054,535 26,708,121

169,291 1,473,052

- -

- -

- -

55,375,413 100,299,769 - -

640,420 - 49,089,880 51,256,438 (2,508,368) 36,013,686

Opening balance 85,510,318 13,363,749 124,786,877 72,146,569 210,297,195 85,510,318

(640,420) - Written off loans for which law suit filed 209,656,775 85,510,318

8.15

Rate of Required

Status Outstanding Loans, Advances and

Base for Provision

308,908,817 280,685,080 5.00% All unclassified Loans 4,075,096,924 4,174,980,557 0.25% & 1% Special Mention Account

For Loans, Advances and Unclassified-General

Classified-Specific Provision: Sub-total: 4,384,005,741 4,455,665,637

Doubtful 42,098,517 5,949,672 50.00% Sub-standard 62,698,145 18,128,746 20.00%

Loans adversely classified-no provision made thereof

Loans due by directors or officers of the bank or any of them either separately or jointly with any other persons

b) Loans written off

Bad/Loss 135,375,127 240,171,789

4,624,177,53073,168,298

4,528,833,935

49,089,880 100.00% Sub-total:

Grand-total:

Loans considered good in respect of which the Company holds no security other than debtors' personal guarantee Loans considered good secured by the personal undertaking of one or more parties in addition to the personal guarantee of the debtors

The directors of the Company have not taken any loan from National Housing during the year or there is no outstanding loan balances with any directors of the company.

d) Provision against the loan classified as bad/losse) Amount of interest credited to the interest suspense accountf) cumulative amount of the written off loans/Leases:

Amount written off during the yearCumulative to dateRecovery from write-off

c) Realized from previous written off

Loans due from companies or firms in which the directors or officers of the Company have interest as directors, partners or managing agents or, in case of private companies, as members

Maximum total amount of advance, including temporary advance made any time during the year to directors or managers or officers of the Company or any of them either separately or jointly with any other persons

Maximum total amount of advance, including temporary advances granted during the year to companies or firms in which the directors of the Company are interested as directors, partners or managing agents or, in case of private companies, as members.

Due from banks/financial institutionsClassified loan for which interest has not been charged:a) Increase/decrease of provision (specific)

2013Amount in Taka

2012Amount in Taka


9.00 FIXED ASSETS INCLUDING PREMISES, FURNITURE AND FIXTURES Figures in Taka

Written WrittenBalance Disposed Addition Balance Balance Adjust- Charged Balance down value down valueas on during during as on as on ments for during as on as on as on

01.01.13 the year the year 31.12.13 01.01.13 disposal the year 31.12.13 31.12.13 31.12.12

Land & building 41,565,093 - -

41,565,093 10% 19,344,899 -

1,994,412

21,339,311 20,225,782 22,220,194

Furniture 10,389,750 55,000 62,020

10,396,770 10% 3,648,498 42,713 679,097 4,284,882 6,111,888 6,741,252

Office equipment 10,594,615 916,237 642,332

10,320,710 20% 7,149,146 864,889 807,289 7,091,546 3,229,164 3,445,469

Motor vehicle 7,511,000 896,000 2,943,600 9,558,600 20% 3,937,185 765,719

1,277,431 4,448,897 5,109,703 3,573,815

Total:

70,060,458 1,867,237 3,647,952 71,841,173 34,079,728

1,673,321

4,758,229

37,164,636 34,676,537 35,980,730

C o s t D e p r e c i a t i o n

Particulars Rate


10.00 OTHER ASSETSIncome Generating Other Assets:Interest on mortgage loan (note: 10.01) 175,123,668 142,486,957

- - 175,123,668 142,486,957

Non-income Generating Other Assets:Advance against fixed assets 579,000 500,000 Security deposits 754,460 754,460 Advance income tax (note: 10.02) 113,654,837 163,608,842 Advance against branch office 7,061 5,966 Advance against office rent 684,000 1,530,000 Prepayment charge receivable - 17,567 Other receivables (note: 10.03) 117,891,348 94,069,741

233,570,707 260,486,576 408,694,375 402,973,533

10.01 Interest on Mortgage LoanHome mortgage loan 147,063,099 130,110,920 Project mortgage loan 18,623,663 2,841,967 Commercial mortgage loan 9,436,906 9,534,070

175,123,668 142,486,957

10.02 Advance Income Tax Balance as at 1st January 163,608,842 191,337,208 Add: Advance tax for the year: Tax paid during the year 30,354,658 46,806,476 Tax deducted at source 10,272,176 4,748,784 Less: Adjusted against provision for the year 2010 (90,580,839) (79,283,626)

(49,954,004) (27,728,366) Balance as at 31st December 113,654,837 163,608,842

10.03 Other Receivables

Delayed interest 66,019,738 59,667,948 Cheque dishonored charges 1,336,042 1,577,073 IDCP receivable 45,282 112,001 Accounts receivable 13,432,242 16,324,001 Interest on bank deposits 29,236,185 11,525,349 Receivable from Multi Securities 9,070 9,570 Receivable from ETBL Securities 9,283 30,915 Receivable from UFT Co. Ltd 319,968 91,840 Stamp & Security Paper 149,778 90,550 Legal charges receivable 6,869,383 4,018,052 Others 464,378 622,443

117,891,348 94,069,741

11.00 NON-FINANCIAL INSTITUTION ASSETS

No non-financial institution asset is under the possession of the Company which acquired as claim as at December 31, 2013.

2013 Amount in Taka

2012 Amount in Taka


12.00 BORROWING FROM BANKS, OTHER FINANCIAL INSTITUTIONS AND AGENTSSecuredIn Bangladesh: Secured Overdraft Banking companies:

Midland Bank Ltd. 730,158 - Bank Alfalah Ltd. - 1,342,360 Prime Bank Ltd. 197,174 457,371 Pubali Bank Ltd. - 79,882,905 United Commercial Bank Ltd. 185,477 657,523

1,112,810 82,340,159 Non-banking financial institution - -

1,112,810 82,340,159 Outside Bangladesh - -

Sub-total: 1,112,810 82,340,159 Term Loan : Banking companies:

Bank Al-Falah 38,203,553 - Jamuna Bank Ltd. 27,161,413 Mercantile Bank Ltd. - 94,957,309 Premier Bank Ltd. - 42,519,833 Prime Bank Ltd. 50,703,283 108,001,657 Pubali Bank Ltd. 150,677,413 83,211,628 Sahahjalal Islami Bank Ltd. - 197,656,614

239,584,250 553,508,453 Non-banking financial institution - -

239,584,250 553,508,453 Outside Bangladesh - -

Sub-total: 239,584,250 553,508,453 Bangladesh Bank Loan:

SME loan 337,574,380 150,112,162 HML Refinance Scheme 379,113,299 407,303,114

Sub-total: 716,687,678 557,415,276 Un-secured Money at call and on short notice: Banking companies:

South East Bank Ltd. 50,000,000 - 50,000,000 -

Non-banking financial institution - - 50,000,000 -

Outside Bangladesh - - Sub-total: 50,000,000 -

Total: 1,007,384,738 1,193,263,888 12.01 Remaining Maturity Grouping of Borrowing

Payable on demand 50,000,000 - Up to 1 (one) month 15,578,248 74,957,459 Over 1(one) month to 3(three) months 30,910,014 68,310,073 Over 3(three) months to 1(one) year 166,081,487 383,681,986 Over 1(one) year to 5(five) years 603,264,929 509,841,188 More than 5(five) years 141,550,059 156,473,182

1,007,384,737 1,193,263,888

2013Amount in Taka

2012Amount in Taka


13.00 DEPOSITS AND OTHER ACCOUNTSCustomer deposits other than Banks & FI's 2,302,304,922 1,992,009,299 Fixed deposits-Banks & FI's 950,000,000 700,000,000 Other deposits (note: 13.02) 36,361,782 47,705,856

3,288,666,704 2,739,715,155 13.01 Remaining Maturity Grouping of Deposits and Other Accounts

Payable on demand - - Within 1(one) month 200,000,000 42,504,157 Over 1(one) month to 6(six) months 1,633,689,382 1,572,751,246 Over 6(six) months to 1(one) year 772,151,810 758,199,652 Over 1(one) year to 5(five) years 682,825,512 320,998,310 Over 5(five) years to 10(ten) years - 45,261,790 More than 10(ten) years - -

3,288,666,704 2,739,715,155 13.02 Other Deposits

EMI deposit - 16,726 Home mortgage loan deposit 1,931,019 8,626,959 Margin deposit 2,914,690 4,724,900 Sundry Customer deposit - 1,000,000 Refundable share money deposit 6,230,394 6,230,394 Lease deposit 25,285,679 27,106,878

36,361,782 47,705,856 14.00 OTHER LIABILITIES

Provision for loans, advances and leases (note: 14.01 & 14.02) 118,767,502 164,130,199 Interest suspense (note: 14.03) 82,057,919 104,257,063 Provision for gratuity (note: 14.04) 1,846,405 1,626,085 Withholding tax payable 10,770 2,477,734 VAT payable 1,555,897 1,117,926 Provision for current tax (note: 14.05) 164,955,760 188,780,132 Provision for deferred tax (note: 14.06) 69,027 367,567 Interest payable 161,664,894 143,009,889 Accrued expenses (note: 14.09) 357,341 311,341 Unclaimed dividend 1,892,341 1,903,928 Provision for Loss on Assets 500,000 500,000 Sundry deposit 122,869 13,483 Sundry liabilities 10,586,745 9,934,940

544,387,469 618,430,287

2013Amount in Taka

2012Amount in Taka


14.01 Specific Provision on Loans, Advances/InvestmentsBalance as at 1st January 126,881,415 93,097,156 Less: Provision written off (105,096,101) (63,469,609) Provision after written off 21,785,314 29,627,547 Add: Provision made during the year 153,216,687 206,877,323 Less: Provision recovered (98,112,562) (109,623,455) Less: Written off of provision no longer required - - Net charge in the profit & loss account 55,104,125 97,253,868 Balance as at 31st December 76,889,439 126,881,415

14.02 General Provision on Loans, Advances and LeasesBalance as at 1st January 37,248,784 34,076,403 Add: Provision made during the year 20,971,871 23,969,201 Less: Provision recovered (16,342,592) (20,796,820) Balance as at 31st December 41,878,063 37,248,784

14.03 Interest Suspense AccountBalance as at 1st January 104,257,063 76,920,337 Add: Interest suspense charged during the year 92,239,530 94,321,302 Less: Interest suspense realized during the year (94,747,898) (58,307,616) Less: Interest written off (19,690,776) (8,676,960) Balance as at 31st December 82,057,919 104,257,063

Write-off of Loans/LeasesAs per FID Circular no. 03 dated 15th March 2007of Bangladesh Bank a financial institution shouldwrite-off its loans/leases to clean-up its financialstatements subject to fulfillment of the following under:criteria:

(Figures in BDT)Balance at 1st January 85,510,318 13,363,749 Net loans/leases written-off during the year 124,786,877 72,146,569 No. of agreements written-off 4 1 No. of clients written-off 4 1 Interest suspense against written-off loans/leases (19,690,776) (8,676,960)Provision adjusted against written-off loans/leases (105,096,101) (63,469,609)Recovery of loans/leases write-off loans/leases 640,420 - Balance of loans/leases written-off at 31st December 2013 209,656,775 85,510,318

14.04 Provision for GratuityBalance as at 1st January 1,626,085 1,600,020 Add: Provision made during the year 1,846,405 1,626,085 Less: Payment made during the year (1,626,085) (1,600,020) Less: Provision written back during the year - - Balance as at 31st December 1,846,405 1,626,085

As per Bangladesh Bank guidelines, Housing Fianance and Investments Limitedhas written-off its loans/leases as

2013Amount in Taka

2012Amount in Taka


14.05 Provision for Current TaxBalance as on 1st January 188,780,132 229,496,346 Add: Provision made during the year 66,445,571 38,567,412 Less: Excess provision for the year written back - - Add: Short provision 303,191 - Less: - - Less: Adjustment of advance tax for final settlement (90,573,134) (79,283,626) Balance as at 31st December 164,955,760 188,780,132

14.06 Provision for Deferred TaxBalance as at 1st January 367,567 367,567 Less: Provision for deferred tax (298,540) - Balance as at 31st December 69,027 367,567

14.07 Net Tax Charged in the Profit & Loss AccountCurrent tax (note: 14.05) 66,748,762 38,567,412 Less: Deferred tax (note: 3.07.02) (298,540) -

66,450,222 38,567,412 14.08

14.09 Accrued Expenses Promotion and publicity - - Audit fees 172,500 126,500 Sundry creditors 184,841 184,841

357,341 311,341

15.00 SHARE CAPITAL

15.01 Authorized Capital:200,000,000 ordinary shares of Tk.10 each 2,000,000,000 2,000,000,000

15.02 Issued, Subscribed and fully Paid-up Capital:

1,063,92000 ordinary shares of Tk.10 each 1,063,920,000 686,400,000

% of holding: % of holding % of holding

Sponsors 87.39% 88.95%General public 12.61% 11.05%

100.00% 100.00%

Number of holding: Number of holding Number of holding

Sponsors 92,779,949 61,055,308 General public 13,612,051 7,584,692

106,392,000 68,640,000

Assessment up to the year ended 31.12.2010 was completed.

Adjustment of advance tax for final settlement

2013Amount in Taka

2012Amount in Taka


15.03

% of holding0.34%3.16%1.63%1.66%0.85%0.66%0.56%1.19%7.22%

82.74%100.00%

15.04

1,426,077,332 915,405,276 Less: Required minimum capital (1,000,000,000) (1,000,000,000)

Surplus over minimum required capital 426,077,332 (84,594,724)

1,426,077,332 915,405,276 Add: Provision on good loan/leases 41,878,063 37,248,784 Total capital 1,467,955,395 952,654,060 Less: Required minimum capital (1,000,000,000) (1,000,000,000)

467,955,395 (47,345,940)

16.00 STATUTORY RESERVE

Balance as at 1st January 189,995,175 181,707,595 Reserve made during the year 33,494,411 8,287,580 Balance as at 31st December 223,489,587 189,995,175

Above 1,000,000 18 88,032,460

595,247 50,001 to 100,000 17

13

100,001 to 1,000,000 28 7,686,511 1,261,026

20,001 to 30,000 36 905,408 30,001 to 40,000 20 697,490 40,001 to 50,000

Statutory reserve has been created at the rate of 20.00% of the net profit of Tk.167,416,109 as perBangladesh Bank's guidelines.

Total: 7089 106,392,000

The shares of the Company are listed with Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd.

Capital Requirement

As per DFIM circular no. 05 dated July 24, 2011 of Bangladesh Bank, an NBFI requires to have Tk.100 crore as its minimum capital which shall be deemed to be adequate capital. When the core capital equals or exceeds its minimum capital then the capital shall be treated as adequate capital of NBFI. Core capital consists of paid-up capital, retained earnings, statutory reserve and balance of current year's profit but in case of total capital it includes core capital plus general provision on good loans/leases. Status of the capital has given bellow:

Core capital (paid-up capital, retained earnings & statutory reserve etc.)

Core capital (paid-up capital, retained earnings & statutory reserve etc.)

5,001 to 10,000 233 1,729,363 10,001 to 20,000 120 1,768,846

Less than 500 4653 357,203 501 to 5,000 1951 3,358,446

Number of shares No of shareholders No of shares

Classification of shareholders by holding as required by Regulation 37 of the Listing Regulations of Dhaka Stock Exchange Limited:

2013Amount in Taka

2012Amount in Taka


17.00 RETAINED EARNINGS

Balance as at 1st January

Less:Allocations: Transferred to statutory reserve Issue of Bonus Share Cash Dividend

Add: Net profit after tax for the Year

Balance as at 31st December

39,010,101

(33,494,411)(34,320,000)

-

167,472,057206,482,157

(67,814,411)138,667,746

120,299,779

(8,287,580)(114,400,000)

-

41,439,902161,697,681

(122,687,580)39,010,101

18.00Income:Interest, discount and other similar income (note: 19.00) 877,338,237 723,015,138 Dividend income (note: 21.01) 400,300 90,000 Fees, commission & brokerage (note: 22.00) 122,650 226,250 Gains less losses arising from investment in securities(note: 21.00) 154,632 20,405 Other operating income (note: 23.00) 14,924,126 7,454,781

892,939,945 730,806,574 Expenses:Interest on borrowing, fees and commission (note: 20.00) 524,724,133 480,617,182 Losses on loan, advances and leases (note: 31.00) 59,733,404 100,426,249 Administrative expenses 59,647,381 55,801,631 Other operating expenses (note: 30.00) 9,516,760 7,394,930 Depreciation on fixed assets (note: 29.00) 5,395,988 5,325,412

659,017,666 649,565,403 233,922,279 81,241,170

19.00 INTEREST, DISCOUNT AND OTHER SIMILAR INCOMEInterest on mortgage loan:Home mortgage loan 373,481,829 361,290,330 Commercial mortgage loan 19,807,526 18,725,944 Project mortgage loan 50,490,034 2,666,880

443,779,389 382,683,154 Add: Interest suspense recovery 3,650,484 (15,663,912)

447,429,873 367,019,242 Interest on lease finance:Industrial equipment 67,544,009 80,670,744 Vehicles 37,549,826 38,416,034 Delinquent interest 8,149,101 11,541,077

113,242,936 130,627,855 Less: Interest suspense (1,142,116) (20,349,774)

112,100,820 110,278,081 Interest on term finance 190,601,262 181,117,723 Interest on fixed deposits 117,452,365 47,767,433 Interest on short term deposit 5,846,020 12,116,764 Interest on loan against FDR 1,915,133 2,877,958 Interest on staff loan 1,992,764 1,837,937 Discount - -

877,338,237 723,015,138

INCOME STATEMENT

2013Amount in Taka

2012Amount in Taka


20.00 INTEREST PAID ON DEPOSITS AND BORROWINGS

Call money interest 4,283,125 - Secured overdraft interest 7,745,260 36,774,155 Term deposit interest 102,792,088 73,152,426 Term loan interest 65,261,151 115,453,536 Customer deposit interest - Term Deposit 267,987,803 187,603,792 Customer deposit interest - Income Account 19,868,759 15,767,184 Customer deposit interest - Double Money Account 22,039,414 20,518,617 Customer deposit interest - Triple Money Account 397,365 2,429,230 Customer deposit interest-MSS 488,605 578,653 Customer deposit interest-MLNR 1,161,980 904,586 HML refinance interest 19,914,929 21,417,677 SME loan interest 12,783,654 6,017,326

524,724,133 480,617,182

21.00 INCOME FROM INVESTMENTDividend on ordinary shares 400,300 90,000 Dividend on preference shares - - Gain on sale of shares 154,632 20,405 Loss on sale of shares - (1,235,856)

554,932 (1,125,451) 22.00 COMMISSION, EXCHANGE AND BROKERAGE

Fees 122,650 226,250 Brokerage - -

122,650 226,250

23.00 OTHER OPERATING INCOMEIncome from write-off 640,420 - Application,processing and documentation fees 13,324,065 7,002,539 Delinquent charge-MSS,MLNR etc. 4,623 11,213 Interest on call Money lending 144,792 292,778 Profit on sale of fixed Assets 146,084 10,176 Documentation charges 34,250 35,375 Cheque dishonored charges (4,450) 9,200 Other income 634,342 93,500

14,924,126 7,454,781 24.00 ADMINISTRATIVE EXPENSES 24.01 DIRECTORS' FEES AND EXPENSES

This represents fees paid for attending board meetings and other 917,000 560,000 committee meetings @ Tk.5,000/- per attendance per person. 917,000 560,000

24.02 SALARIES & ALLOWANCESSalary & allowances (note: 24.02.01) 32,545,357 30,615,526 Provident fund contribution 1,690,086 1,592,787 Gratuity 1,846,405 1,644,165 Bonus 2,932,808 2,823,442

39,014,656 36,675,920

2013Amount in Taka

2012Amount in Taka


24.02.01

24.03 RENT, TAXES, INSURANCE, ELECTRICITY ETC.Office occupancy cost 2,490,744 3,076,580Taxes 92,099 41,699 Electricity 1,125,025 1,059,021 Utilities 2,016,901 1,211,889 Insurance (note: 24.03.01) 307,821 270,094

6,032,590 5,659,283

24.03.01

24.04 LEGAL EXPENSESLegal and professional 633,750 684,350Legal charges 107,935 96,389 Membership fees and subscription 2,068,840 1,273,152 Fees and forms - -

2,810,525 2,053,891 25.00 POSTAGE, STAMPS, TELECOMMUNICATION ETC.

Courier 106,485 75,972 Postage 247,048 - Stamps & security paper 671,450 311,003 Telephone, fax & e-mail 849,557 993,122

1,874,540 1,380,097 26.00 STATIONERY, PRINTING, ADVERTISEMENT ETC.

Printing 923,240 270,962 Stationery 776,132 1,537,963 Promotion & publicity 1,366,198 1,777,015

3,065,570 3,585,940 27.00 MANAGING DIRECTOR’S SALARY & FEES

Salary & allowances 4,800,000 4,800,000 Provident fund contribution 360,000 360,000 Bonus 600,000 600,000

5,760,000 5,760,000

28.00 AUDITORS' FEES 172,500 126,500

This includes managerial remuneration of Tk.24.41 million and balance amount Tk.14.60 million is on account of staff salary,bonus and other allowances. During the year, there were 86 employees who individually received Tk. 7,000 or more permonth as remuneration. The number of employees including contract based employees were 89 and 78 for the year 2013 &2012 respectively.

Tk. 307,821 being premium paid for insurance coverage against damages/loss of the Company's fixed assets by fire, earthquake etc.

2013Amount in Taka

2012Amount in Taka


29.00 DEPRECIATION ON AND REPAIRS TO INSTITUTION'S ASSETSDepreciation:Building 1,994,412 2,216,018 Furniture 679,097 749,031 Office equipment 807,289 861,367 Motor vehicle 1,277,431 893,459

4,758,229 4,719,875 Repair and maintenance 637,759 605,537

5,395,988 5,325,412 30.00 OTHER EXPENSES

Traveling and conveyance 589,683 574,973 Training 54,000 89,500 Bank charges and excise duty 1,022,037 401,566 Books and periodicals 56,307 52,595 Office refreshments 785,729 786,278 Motor car 2,675,382 2,263,935 Sundries 1,410,887 1,618,522 Software expenses 22,000 29,200 Penal Interest 10,000 - Right share issue expenses 2,740,444 951,661 Investment expenses share 150,291 626,700

9,516,760 7,394,930 31.00 PROVISION FOR LOANS, ADVANCES/INVESTMENTS

For classified loans, advances and leases 48,074,945 97,127,388 For unclassified loans, advances and leases 4,629,279 3,172,381 For Legal Charges 2,671,189 - Provision for investments 4,357,991 126,480

59,733,404 100,426,249 32.00 EARNINGS PER SHARE

a) Earnings attributable to the ordinary shareholders(Tk) 167,472,057 41,437,902 b) Number of ordinary shares outstanding during the year 106,392,000 68,640,000 c) Weighted average number of ordinary shares outstanding during the year 106,392,000 68,640,000 d) Basic earnings per share (a/c) 1.57 0.60 e) Basic earnings per share (restated)* 1.57 0.39

33.00 INTEREST RECEIPTS IN CASH

Interest income from loans, advances & leases 874,829,869 759,028,824(Increase)/decrease in interest receivable on loans, advances and leases (32,636,711) (20,439,442) (Increase)/decrease in other receivable (24,055,135) (4,096,151)

818,138,023 734,493,231 34.00 INTEREST PAYMENTS

Total interest expenses (note: 20.00) 524,724,133 480,617,182 Add: Opening balance of interest payable 143,009,889 99,575,805 Less: Closing balance of interest payable (161,664,894) (143,009,889)

506,069,128 437,183,098 35.00 FEES AND COMMISSION RECEIPTS IN CASH

Fees, commission and brokerage (note: 22.00) 122,650 226,250 Add: Opening balance of fees, commission and brokerage - - Less: Closing balance of fees, commission and brokerage - -

122,650 226,250

*EPS for the year 2012 has been restated based on the new weighted average number of ordinary shares in accordance with para 64 of BAS 33.Earnings per share (EPS) has been computed by dividing the net profit after tax (NPAT) by the weighted average number of ordinary shares outstanding as on 31 December 2013 as per BAS-33" Earnings Per Share". No diluted EPS was required to be calculated for the year since there was no scope for dilution of shares during the year.

2013Amount in Taka

2012Amount in Taka


36.00 PAYMENTS TO EMPLOYEES Staff salaries and allowances (note: 24.02) 39,014,656 36,675,920 Managing Director's salaries and allowances (note: 27.00) 5,760,000 5,760,000 Add: Opening balance of staff dues - - Less: Closing balance of staff dues - -

44,774,656 42,435,920 37.00 PAYMENTS TO SUPPLIERS

Printing, stationary and advertisement etc. (note: 26.00) 3,065,570 3,585,940 Postage, stamps, telecommunication etc. (note: 25.00) 1,874,540 1,380,097 Repair & maintenance (note: 29.00) 637,759 605,537 Add: Opening balance of suppliers dues - - Less: Closing balance of suppliers dues - -

5,577,869 5,571,574 38.00 RECEIPTS FROM OTHER OPERATING ACTIVITIES

Other operating income (note: 23.00) 14,924,126 7,454,781 Profit on sale of share (note: 21.00) 154,632 20,405 Loss on sale of share (note: 21.00) - (1,235,856)

15,078,758 6,239,330 39.00 PAYMENTS FOR OTHER OPERATING ACTIVITIES

Detectors' fees 917,000 560,000 Legal expenses 2,810,525 2,053,891 Auditor's fees 172,500 126,500 Office occupancy cost 2,490,744 3,076,580 Taxes 92,099 41,699 Electricity 1,125,025 1,059,021 Utilities 2,016,901 1,211,889 Insurance 307,821 270,094 Other expenses (note: 30.00) 9,516,760 7,394,930 Add: Opening balance of outstanding payable 311,341 278,891 Less: Closing balance of outstanding payable (311,341)

19,403,375 15,762,154 40.00 (INCREASE)/DECREASE OF OTHER ASSETS

Closing balance:Loan against fixed deposits 13,511,336 15,303,750 Advance against fixed assets 579,000 500,000 Security deposits 754,460 754,460 Advance income tax 113,654,837 163,608,842 Advance against branch office 7,061 5,966 Advance against office rent 684,000 1,530,000 Advance against legal and professional fees - 17,567 Other receivables 22,440,366 22,673,894

151,631,060 204,394,478

2013Amount in Taka

2012Amount in Taka


Opening balance:Loan against fixed deposits 15,303,750 17,961,085 Advance against fixed assets 500,000 1,900,000 Security deposits 754,460 352,320 Advance income tax 163,608,842 191,337,208 Advance against branch office 5,966 2,783 Advance against office rent 1,530,000 2,430,000 Advance against legal and professional fees 17,567 - Other receivables 22,673,894 14,641,885

204,394,478 228,625,281 (52,763,418) (24,230,803)

41.00 INCREASE/(DECREASE) OF DEPOSITS FROM BANKSClosing balance:Fixed deposits 950,000,000 700,000,000 Term deposits - -

950,000,000 700,000,000 Opening balance:Fixed deposits 700,000,000 750,000,000 Term deposits - -

700,000,000 750,000,000 250,000,000 (50,000,000)

42.00 INCREASE/(DECREASE) OF OTHER DEPOSITS Closing balance:Customer deposits 2,302,304,922 1,992,009,299 Other deposits 36,361,782 47,705,856

2,338,666,704 2,039,715,155 Opening balance:Customer deposits 1,992,009,299 1,397,597,624 Other deposits 47,705,856 39,815,664

2,039,715,155 1,437,413,288 298,951,549 602,301,867

43.00 INCREASE/(DECREASE) OF OTHER LIABILITIESClosing balance:Provision for gratuity 1,846,405 1,626,085 Withholding tax payable 10,770 2,477,734 VAT payable 1,555,897 1,117,926 Unclaimed dividend 1,892,341 1,903,928 Sundry deposit 122,869 13,483 Sundry liabilities 10,586,745 9,934,940

16,015,026 17,074,096 Opening balance:Provision for gratuity 1,626,085 1,600,020 Withholding tax payable 2,477,734 4,554,872 VAT payable 1,117,926 912,057 Unclaimed dividend 1,903,928 3,838,721 Sundry deposit 13,483 959,438 Sundry liabilities 9,934,940 9,934,940

17,074,096 21,800,049 (1,059,070) (4,725,953)

2013Amount in Taka

2012Amount in Taka


44.00 SANCTION AND DISBURSEMENTSanction 1,537,100,000 1,069,200,000 Disbursement 1,392,221,939 922,096,274

45.00 RELATED PARTY DISCLOSURE : DISCLOSURE UNDER BAS-24 "RELATED PARTY DISCLOSURE"

Receivable as on 31.12.2013

169,291

46.00 AUDIT COMMITTEE OF THE BOARD

SL No

01

0203

04

05

The audit committee was formed by the Board of Directors of National Housing Finance And Investments Limited. Themembers of the committee are as under:

Status with the Committee

Chairman

B.Com

Status with the Company

Nature of relationship: Director related

Director Director

Mr. Syed Zaki Haider Rizvi

Member M.Com (Acc.), FCMA

Nature of transaction

MBA (IBA), BSC (Eco.) in Math. Economics

Educational Qualification

Name of the related parties


Member

During the year under review, the Company carried out a number of transactions with related parties in there normal course of business. The name of related parties, the nature of transactions and their total value have been set out below:

Name

Member

Member B.A (Hons), M.A.(DU), ACII (UK)

Home Mortgage Loan



Director

Director M.A. In Development Economics (USA)

Mr. Md. Kabir RezaMr. Azmal Hossain

Mr. Md. Akhtar Ahmed

During the year the committee meet 4(four) times in which among others, the following issues were discussed: 01 Audit and inspection report of Bangladesh Bank Inspection Team and External Auditors of National Housing.02 Ensuring an effective Internal Control System and Risk Management System.03 Review the findings of auditors and management response thereto.04 Stressing on the importance of the regulatory compliance.05 Review of conflict of interests.06 Review of the credit policy of the Company.07 Any other matters which deems necessary.

2013Amount in Taka

2012Amount in Taka


47.00 EXTERNAL AUDITOR'S COVERAGE

48.00 HIGHLIGHTS OF OVERALL ACTIVITIES

SL # 2013 201201 1,063,920,000 686,400,000 02 1,426,077,332 915,405,276 03 426,077,332 (84,594,724)04 6,266,516,243 5,466,814,606 05 3,288,666,704 2,739,715,155 06 4,624,177,530 4,274,202,930 07 - - 08 140.61% 156.01%09 5.19% 10.10%10 167,472,057 41,437,902 11 240,171,789 431,838,481 12 55,690,465 116,663,698 13 - - 14 12.84% 14.53%15 5,998,269,000 5,170,347,300 16 268,247,244 296,467,306 17 8.20% 6.55%18 2.85% 0.79%19 554,932 (1,125,451)20 1.57 0.60 21 1.57 0.72 22 20.84 62.12 23 14.30% 4.63%24 13.40 13.34

The external auditor of the Company worked about 1,020 man hour and they reviewed more than 80% of Company's Risk Weighted Assets on the Balance Sheet date.

Details

Profit after tax and provisions

Cost of fundInterest earnings assets

Paid-up Capital

Capital surplus/(deficit)

Non-interest earnings assets

Provisions kept against classified loansProvisions surplus/(deficit)

Amount of classified loans during the year

Return on investments (ROI)

Income from investmentsWeighted average earnings per share

Return on equity (ROE)Price earning ratio

Total loans, advances and leasesTotal deposits

Highlights of the overall activities of the Company as at and for the year ended 31 December, 2013 are furnished bellow:

Total assets

Total contingent liabilities and commitmentsCredit deposit ratio

Net income per share

Total Capital

% of Classified loans against total loans and advances

Net asset value per share (NAV)

Return on assets (ROA)


49.00 COMPARATIVE INFORMATION

50.00 GEOGRAPHI CAL AREA OF OPERATION

51.00 CAPITAL EXPENDITURE COMMITMENT

52.00 CONTINGENT LIABILITIES

53.00 SYBSEQYEBT EVEBTS-DUSCKISYRES YBDER BAS 10; "EVENTS AFTER THE BALANCE SHEET DATE"

54.00 CLAIMS AGAINST THE COMPANY NOT ACKNOWLEDGED AS DEBT

55.00 CREDIT FACILITY NOT AVAILED

56.00 CLOSING PRICE OF SHARE

57.00 The Company had no receivable from the directors no 31.12.2013.

58.00 Decimal discrepancies adjusted as an where required.

Last year's figures and account heads have been rearranged to Conform current year's presentation inAccordance with the Bangladesh Bank DFIM Circular # 11 dated December 23, 2009.

Company's geographical area of operation was in Dhaka, Chittagong and Bogra in the year 2013

There was neither any outstanding contractor nor any Board authorization for capital expenditure as atDecember 31, 2013.

There were no contingent liabilities at the balance sheet date.

There is no claim at the Balance Sheet date, which has not been acknowledged by the Company.

No material event has been occurred after the Balance Sheet date, which could materially affect the value of the financial statements except the Board of Directors in its 149th Meeting held on 21st April 2014 has recommended 12.50% cash dividend subject to the approval of the shareholders at the 15th Annual General Meeting.

There was no credit facility available to the Company under any contracts no Balance Sheet date other than trade credit available in the ordinary course of business.

The Company traded its ordinary shares in CDBL through DSE & CSE on 1st January 2009. The closing market price on the closing of the year was Tk. 32.80 and Tk. 32.90 respectively in the DSE & CSE.






59.00 Financial risk management

a) Credit riskb) Liquidity riskc) Market risk

59.01 Credit risk

a) Exposure to credit risk

Trade receivable-Local customer 175,123,668 142,486,957 Other Receivables 117,891,348 94,069,741 Loans, advances and leases 4,624,177,530 4,274,202,930 Bank balances 1,178,351,345 743,575,157

6,095,543,892 5,254,334,785

b) Ageing of receivables

Dues within 3 months 561,845,426 353,914,887 Dues over 3 months but less than 6 months 971,571,386 624,243,031 Dues over 6 months 4,475,987,333 3,801,742,211

6,009,404,145 4,779,900,129

International Financial Reporting Standard IFRS 7 - Financial Instruments: Disclosures - requires disclosure ofinformation relating to: both recognized and unrecognized financial instruments, their significance andperformance, accounting policies, terms and conditions, net fair values and risk information- the company'spolicies for controlling risks and exposures.

The management has overall responsibility for the establishment and oversight of the company's risk managementframework. The company's risk management policies are established to identify and analyze the risks faced by thegroup, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk managementpolicies, procedures and systems are reviewed regularly to reflect changes in market conditions and the company'sactivities. This note presents information about the company's exposure to each of the following risks, thecompany's objectives, policies and processes for measuring and managing risk, and the company's management ofcapital. The company has exposure to the following risks from its use of financial instruments.

Credit risk is the risk of a financial loss to the group if a customer or counterparty to a financial instrument fails tomeet its contractual obligations, and arises principally from the group's receivables from distributors, institutionaland export customers etc.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

In monitoring credit risk, debtors are grouped according to their risk profile, i.e. their legal status, financialcondition, ageing profile etc. Accounts receivable are related to sale of steels (MS Rod and allied products).

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in thestatement of financial position.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to creditrisk at the reporting date was:

2013Amount in Taka

2012Amount in Taka


c) Credit exposure by credit ratingCredit rating Amount in Taka (%)

Trade receivable NR 175,123,668 2.87%Other receivables NR 117,891,348 1.93%Advance, deposit and prepayments NR 4,624,177,530 75.86%Cash and bank balances

Cash in hand 34,060 0.00%Cash at bank 1,178,351,345 Agrani Bank Limited AAA - 0.00%AB Bank Limited AA3 200,418 0.00%Al - Arafa Islami Bank Limited AA3 - 0.00%Bank Asia Limited AA3 4,786,744 0.08%Bangladesh Bank 92,292,143 7.83%BRAC Bank Limited AA3 - 0.00%Bank Alfalah Limited AA 3,806,971 0.06%Basic Bank Limited A2 - 0.00%Commercial Bank of Ceylon AAA - 0.00%Dhaka Bank Limited A1 3,755 0.00%Dutch Bangla Bank Limited AA1 - 0.00%Eastern Bank Limited AA 10,202,208 0.17%Exim Bank Limited 1,448,427 0.12%First Lease Finance Limited 50,000,000 4.24%Habib Bank Limited AA- - 0.00%HSBC Bank AAA 332,948 0.01%IFIC Bank Limited AA2 - 0.00%Islami Bank Bangladesh Limited AA+ 123,467 0.00%International Leasing AA2 - 0.00%Jumana Bank Limited A1 609,903,605 10.01%Mercantile Bank Limited AA 861,459 0.01%National Bank Limited AA- 40,888,259 0.67%NRB Commercial Bank Limited 50,000,000 4.24%National Credit and Commerce Bank Limited AA3 - 0.00%One Bank Limited A+ 43,416 0.00%Peoples Leasing and Financial Services Limited (PLFSL) 200,000,000 16.97%Primier Bank A- - 0.00%Prime Bank Limited AA+ 2,012,306 0.03%Pubali Bank Limited AA3 1,919,079 0.03%Reliance Finance Limited 100,000,000 8.49%Standard Bank Limited 4,879 0.00%Shajalal Islami Bank Limited AA 151,717 0.00%Social Islami Bank Limited AA- - 0.00%Sonali Bank Limited AAA 1,915 0.00%Southeast Bank Limited AA- 7,924,119 0.13%Standard Chartered Bank AAA - 0.00%State Bank of India AA3 - 0.00%The City Bank Limited AA3 4,774 0.00%The Trust Bank Limited AA- 1,433,687 0.02%United Commercial Bank Limited A+ 5,050

- 0.00%

Uttara Bank Limited AA3 0.00%

As on 31 December 2013


59.02 Liquidity risk

Category of LiabilitiesCarrying amount

As on31.12.2013

Maturity period

(estimated)

Nominal Interest rate

Contractual cash flows

Within 6 months or less

Within 6-12 months

Taka Taka Taka Taka

Expenses and other liabilities

96,488,262 Mar-14 11.50%~11.75% 96,488,262 200,000,000 -

Short term bank loan 166,081,487 Jun-14 14.50%~17% 166,081,487 - -

Current portion of long term loan 744,814,988 Dec-14 10.00%~15.00% 744,814,988 1,633,689,382 1,454,977,322

Contribution to WPPF & WF 1,690,086 Mar-14 N/A 1,690,086 -

59.03 Market risk

a) Currency risk

As the company does not have any foreign currency asset or liability as on 31.12.2013. The company is not exposed to currency risk.

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The company's approach tomanaging liquidity (cash and cash equivalents) is to ensure, as far as possible, that it will always have sufficient liquidity to meet itsliabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to thecompany's reputation. Typically, the company ensures that it has sufficient cash and cash equivalents to meet expected operationalexpenses, including financial obligations through preparation of the cash flow forecast, based on time line of payment of financialobligations and accordingly arrange for sufficient liquidity/fund to make the expected payments within due dates. Moreover, thecompany seeks to maintain short term lines of credit with scheduled commercial banks to ensure payment of obligation in the event thatthere is insufficient cash to make the required payment. The requirement is determined in advance through cash flow projections andcredit lines with banks are negotiated accordingly.

The following are the contractual maturities of financial liabilities:

Market risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect the company's incomeor the value of its holdings of financial instruments

b) Interest rate risk

(i) Profile

Interest rate risk is the risk that arises due to changes in interest rates on borrowings. Short term bank borrowings are, however, notsignificantly affected by fluctuations in interest rates. The group has not entered into any type of derivative instrument in order to hedgeinterest rate risk as at the reporting date.

As at 31 December, the interest rate risk profile of the group's interest bearing financial instruments was:

Type of instruments Carrying amount (BDT)

2013 2012

Fixed rate instrumentFinancial asset 1,000,000,000

560,000,000

Financial liability 950,000,000

700,000,000

Variable rate instrumentFinancial asset 4,710,236,733

4,408,842,438

Financial liability 3,346,051,441 3,232,979,043

(ii) Cash flow sensitivity analysis for variable rate instruments

There being no variable rate instruments, sensitivity analysis has not presented.


Accounting classification and fair value

Carrying amount Fair value(Taka) (Taka)

Nil Nil

Held to maturity assets

FDR with banks 1,000,000,000 1,000,000,000

Accounts and other receivable 117,891,348 117,891,348 Security deposit 754,460 754,460 Current account with associate Nil Nil

Cash and bank balances 1,178,385,405 1,178,385,405

Available for sale financial assets Nil Nil

Liabilities carried at fair value through profit and loss Nil Nil

Accounts and other payables 544,387,469 544,387,469 Short term bank borrowing 1,007,384,738 *N/ACurrent portion of long term borrowing 950,000,000 *N/AContribution to WPPF & WF 1,690,086 *N/A

Receivables and other assets

Assets carried at fair value through profit and loss

Fair value of financial assets and liabilities together with carrying amount shown in the statement of financialposition are as follows:

* Determination of fair value is not required as per the requirements of BFRS 7 : Financial Instruments: Disclosures(ref: Para 29). However, fair value of such instruments is not likely to be significantly different from the carrying amounts of such instruments.

Liabilities carried at amortized cost





14th Annual General Meeting is in Progress

MOU signed with the developers

Women EntrepreneurshipSME Fair-2014

arranged by Bangladesh Bank

REHAB Fair-2014

Celebration of New Year-2014 in Corporate Head Office, National Housing.

www.nationalhousingbd.com

Corporate OfficeNational Plaza (7th & 8th Floor), 109, Bir Uttam C.R. Datta Road(Ex-Sonargaon Road), Dhaka-1205Tel : 9670612-4, 9677181-2, 9669800, Fax: 88 02 9671016Website: www.nationalhousingbd.comE-mail : [email protected]

Motijheel BranchFazlur Rahman Center (2nd Floor), 72, Dilkusha C/A, Dhaka-1000Tel : 9567103, 9550071, Fax: 88 02 9565493, Cell: 01817 042212E-mail : [email protected]

Gulshan BranchBashati Avenue (4th Floor), House # NW (H)-10Road # 53, Gulshan-2, Dhaka-1212Tel : 8818236, 8811652, Fax: 88 02 8811652, Cell: 01817 042210E-mail : [email protected]

Chittagong BranchModina Tower (3rd Floor), 805/A, CDA Avenue, ChittagongTel : 88 031 2863007, Fax: 88 031 2863009, Cell: 01817 042215E-mail : [email protected]

Bogra BranchJamil Shoping Center (3rd Floor), Borogola, Bogra-Rangpur RoadBogra-5800, tel: 051-62696, 051-63994, Fax: 051-62696, Est-106Cell : 01714 049478E-mail : [email protected]

Rangpur Branch(Proposed)Cell : 01712 840808

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