Introduction

The power sector plays a crucial role in Bangladesh’s economic growth, ensuring energy
security and industrial development. This report evaluates the financial and operational
performance of major power generation and distribution companies, including United
Power Generation & Distribution Company Limited (UPGDCL), Summit Power Limited,
Baraka Power Limited, Titas Gas Transmission and Distribution Company Limited, and
Power Grid Bangladesh PLC, for the fiscal years 2023–2024 and 2022–2023. The analysis
focuses on their compliance with International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS), highlighting key financial metrics,
operational efficiency, and reporting gaps.

Ensuring compliance with IAS and IFRS is essential for maintaining transparency,
financial accuracy, and investor confidence. The report examines whether these companies
adhere to core standards such as IAS 1 (Presentation of Financial Statements), IAS 16
(Property, Plant, and Equipment), IFRS 9 (Financial Instruments), and IFRS 16 (Leases).
Additionally, the assessment identifies areas requiring improvement, including inventory
valuation (IAS 2), provisions and contingent liabilities (IAS 37), fair value disclosures
(IFRS 13), and revenue recognition (IFRS 15).

The findings highlight that while most companies have strong financial reporting practices,
some, like Titas Gas, have notable non-compliance issues, particularly in inventory
valuation. Despite challenges such as revenue declines and economic uncertainties,
companies have demonstrated resilience through cost optimization and operational
efficiency, maintaining high plant availability rates exceeding 85%. This report provides
insights into financial performance trends, key compliance issues, and strategic
recommendations for improving reporting standards and ensuring sustainable growth.
Addressing these gaps will not only strengthen corporate governance but also enhance the
long-term stability of Bangladesh’s power sector.

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 Objective of the Report

The primary objective of this report is to assess the compliance of major power generation
and distribution companies in Bangladesh with International Accounting Standards (IAS)
and International Financial Reporting Standards (IFRS) in their corporate financial
reporting.

Specific Objectives:

1. Assess Compliance with IFRS and IAS

Evaluate adherence to IAS 1 (Presentation of Financial Statements) in terms of
structured financial reporting and disclosure practices. Analyze the treatment of
Property, Plant, and Equipment (IAS 16), including valuation, depreciation policies,
and asset impairment (IAS 36). Examine how companies manage financial instruments
(IFRS 9 and IAS 39) and ensure fair value measurement (IFRS 13). Verify the
recognition of leases (IFRS 16) and revenue (IFRS 15) in line with international
standards.
2. Identify Key Non-Compliance Issues
Highlight reporting deficiencies, such as Titas Gas’s non-compliance with IAS 2
(Inventory Valuation) and inadequate contingent liability disclosures (IAS 37). Assess
whether companies provide sufficient sensitivity analyses and valuation assumptions
for fair value calculations.
3. Evaluate Financial Performance and Operational Efficiency
Analyze revenue trends, cost structures, profit margins, and key financial ratios to
determine overall financial health.
4. Provide Recommendations for Improvement
Recommend strategies for improving financial transparency, sustainability reporting,
and long-term stability in the power sector.

By fulfilling these objectives, the report aims to enhance the quality of corporate financial
reporting in Bangladesh’s power sector and ensure alignment with global best practices in
accounting and financial management.

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 Finding and Analysis

United Power Generation & Distribution Company Limited

Analysis of IAS & IFRS Standards in UPGDCL Annual Reports (2023-2024)

1. IAS 1: Presentation of Financial Statements

Compliance: Both reports comply with the requirements, presenting the financial
statements in a structured format, including the statement of financial position,
comprehensive income, cash flows, and equity.

Total Assets (2023–24): BDT 73,003 million (2022–23: BDT 81,188 million).
Shareholders' Equity: BDT 34,818 million (2022–23: BDT 31,353 million).

Materiality: Similar items are aggregated and presented based on their materiality.
Comparative Information: Prior-year data is presented alongside current year values for
transparency.
Comment: The clarity and structure align with international standards, but future reports
could benefit from enhanced detail in segment reporting.

2. IAS 16: Property, Plant, and Equipment

Compliance: The companies applied IAS 16 in valuing property, plant, and equipment
(PPE) at cost, less accumulated depreciation and impairment. Depreciation rates and asset
lives were adjusted prospectively in line with the power purchase agreements (PPAs).

Additions to PPE (2023–24): Not explicitly stated but noted as part of asset revaluation
adjustments.
• Plant and machinery: 3.33%-8.33%
• Office equipment: 10%-15%
• Furniture and fixtures: 10%
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Depreciation: PPE is depreciated on a straight-line basis over the estimated useful lives of
assets:

• Buildings and civil works: 20-50 years

• Plant and machinery: 5-30 years
• Office equipment and furniture: 3-10 years

Carrying Value: The financial statements reported significant investments in property,

plant, and equipment, with a detailed breakdown of costs across asset categories.

Derecognition: Assets are removed from the balance sheet upon disposal or when no future
economic benefits are expected.

Comment: The alignment with the PPAs is appropriate, but periodic reviews of residual
values could improve asset management practices. Depreciation policies reflect
compliance, but considering residual values might enhance accuracy.

3. IAS 36: Impairment of Assets

Compliance: Impairment assessments for non-financial assets ensure carrying values do

not exceed recoverable amounts. Any losses are recognized immediately.

Policy: Assets are impaired if their carrying value exceeds recoverable amounts.
Recoverable amounts are assessed as the higher of fair value less costs to sell or value in
use.

 Impairment Testing: The company reviews the carrying amount of PPE and other assets
for impairment indicators at each reporting date.
 Impairment Loss: No specific impairments reported for FY 2023-24, indicating that
recoverable values met or exceeded the carrying amounts.

Comment: Regular stress testing under varying scenarios could enhance early detection
of impairment triggers.

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4. IAS 37: Provisions, Contingent Liabilities, and Contingent Assets

Compliance: Provisions are recognized for probable obligations and reliable estimates of
liability, including asset retirement obligations.

Total Liabilities: BDT 38,185 million (2022–23: BDT 49,835 million).

• Provisions: Established for obligations where reliable estimates can be made.

• Contingent Liabilities: Disclosed but not recognized due to uncertainties.

Comment: The approach is in compliance; however, disclosure of discount rate

assumptions could improve transparency.

5. IAS 38: Intangible Assets

Compliance: IAS 38 was not applicable to both reports as no material intangible assets
were reported.

Comment: Future focus on intangible assets like intellectual property may require
adoption.

6. IAS 39 and IFRS 9: Financial Instruments

Compliance: The companies transitioned to IFRS 9, covering financial asset classification

and impairment using the expected credit loss (ECL) model.

 Recognition and Measurement:

• Financial assets are classified at fair value through profit or loss (FVTPL) or
amortized cost.
• Marketable securities measured at fair value.

 Derivatives and Hedging:

• No disclosures indicate derivative use or hedge accounting.

Fair Value Disclosure:

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 • Trade and other receivables: BDT 7,638.1 million
• Receivables from related parties: BDT 17,941.5 million
• Payables: BDT 29,832.7 million.

ECL allowances: Not separately disclosed but accounted for in financial expenses.

Comment: Implementation aligns with global norms, but integrating advanced credit risk
models could optimize ECL assessments.

7. IAS 40: Investment Property

Compliance: The standard is not applicable. No explicit mention of investment property

classification or disclosures. UPGDCL appears to primarily operate in power generation
and does not hold investment property.

Comment: Future acquisitions of investment properties would need adherence to IAS 40.

8. IFRS 13: Fair Value Measurement

Compliance: Fair value measurement principles are consistently applied for financial
instruments, with disclosures highlighting valuation methods.

• Valuation Techniques: Market prices and observable inputs are used for
measuring fair value.

• Fair Value Hierarchy: Disclosures align with levels based on observable and non-
observable inputs.

Comment: Providing sensitivity analyses for significant estimates could strengthen

investor confidence.

9. IFRS 16: Leases

Compliance: Both companies recognized right-of-use assets and lease liabilities, with
lease expenses on a straight-line basis for short-term leases.

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 Right-of-Use Assets and Liabilities: Leases are capitalized unless low-value or short-
term. Lease liabilities are valued at amortized cost using effective interest rates.
 Impact on Financials: Specific amounts related to lease obligations and payments are
not detailed in extracted sections.

Lease Liabilities: Included in long-term liabilities, but exact amounts not specified.

Comment: The incremental borrowing rate determination method is well-documented;

periodic reassessment is advisable.

10. IAS 18/IFRS 15: Revenue Recognition

Compliance: Revenue is recognized upon the delivery of electricity, excluding taxes and
government levies. IFRS 15 was adopted for contract-specific allocations.

Revenue (2023–24): BDT 34,781 million

Revenue Recognition: Capacity revenues from leases are allocated on a straight-line basis
over the lease term. Non-lease components are accounted for in line with IFRS 15.

• Revenue Components: Include electricity sales and service income from steam
production.

Comment: Consider detailed disclosures about revenue streams for added granularity.

Operational Performance Indicators

• Revenue Trends:

o FY 2023-24 Revenue: BDT 34,781 million, a decline of 15.8% from FY

2022-23.

o Primary Revenue Source: Power generation services and related utility

income.

• Cost Structures:

o Operating expenses for FY 2023-24: BDT 24,529 million, reduced from

BDT 30,656 million in FY 2022-23.
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 • Profit Margins:

o Gross profit margin increased to 29% from 26% in the prior year.

o Net income ratio: Improved to 24% from 20%.

• Profitability:

o Total comprehensive income for FY 2023-24: BDT 8,259 million, a slight

increase from BDT 8,242 million in FY 2022-23.

Financial Metrics Summary (FY 2023-24)

Key Metrics Values (BDT in million) Change YOY

Revenue 34,781 -15.80%

Operating Expenses 24,529 -20.00%

Gross Profit 10,251 -3.78%

Operating Profit 10,039 -3.13%

Total Comprehensive Income 8,259 +0.20%

Shareholders' Equity 34,818 +11.06%

Total Assets 73,003 -10.08%

Earnings per Share (EPS) 14.01 +1.30%

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Recommendations and Observations

1. Valuation Precision: Enhanced transparency in fair value determination

techniques for PPE could improve stakeholder confidence.
2. Provisions Management: Detailed disclosures regarding environmental
provisions and other obligations would offer better risk management insights.
3. Operational Efficiency: The company shows solid operational efficiency despite
declining revenue, demonstrated by improved profit margins.
4. Leasing Optimization: Continued review and adjustment of lease liabilities to
balance operational flexibility and financial leverage is advisable.

Summit Power Limited

Analysis of IAS & IFRS Standards in SPL Annual Reports (2022-2023)

1. IAS 1: Presentation of Financial Statements

Compliance:
Summit Power Limited complies with IAS 1 by presenting financial statements in a
structured format, including:

• Statement of Financial Position

• Statement of Comprehensive Income
• Statement of Changes in Equity
• Statement of Cash Flows

Materiality:
Similar items are aggregated and presented based on materiality.

Comparative Information:
Prior-year data is presented alongside current-year values for transparency and analysis.

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Comment:
Summit Power Limited demonstrates clarity and alignment with international standards in
financial presentation. However, including more detailed segment reporting could enhance
transparency further.

2. IAS 16: Property, Plant, and Equipment (PPE)

Compliance:
Summit Power Limited applies IAS 16 by measuring PPE at cost less accumulated
depreciation and impairment. Depreciation rates and asset lives are consistent with the
company’s operational policies.

• Additions to PPE (2022–23): Summarized in the financial statement but not

explicitly highlighted in extracted sections.
• Depreciation Rates:
o Plant and machinery: 3.33%–8.33%
o Office equipment: 10%–15%
o Furniture and fixtures: 10%
o Buildings and civil works: 20–50 years

Derecognition:
Assets are derecognized upon disposal or when no future economic benefits are expected.

Comment:
The depreciation and valuation policies comply with IAS 16. Regular reviews of residual
values and useful lives are recommended for maintaining accuracy.

3. IAS 36: Impairment of Assets

Compliance:
Summit Power Limited reviews the carrying value of non-financial assets to ensure no
impairment occurs. Assets are impaired when the carrying value exceeds the recoverable
amount (higher of fair value less costs to sell or value in use).

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Impairment Testing:
Impairment assessments are conducted regularly. No impairment losses were reported in
the year 2022–23.

Comment:
The company complies with IAS 36. Stress testing under varied scenarios could further
strengthen its risk assessment.

4. IAS 37: Provisions, Contingent Liabilities, and Contingent Assets

Compliance:
Provisions are recognized for probable obligations where reliable estimates can be made.
Contingent liabilities are disclosed but not recognized due to uncertainties.

• Provisions: Established for asset retirement obligations and other obligations.

• Contingent Liabilities: Disclosed but lack detailed breakdowns in the extracted
sections.

Comment:
Summit Power adheres to IAS 37 but could improve by providing additional information
about discount rate assumptions and the nature of contingent liabilities.

5. IAS 38: Intangible Assets

Compliance:
IAS 38 is not applicable, as no material intangible assets are reported.

Comment:
Future operations involving intellectual property or software might necessitate the adoption
of IAS 38.

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6. IAS 39 and IFRS 9: Financial Instruments

Compliance:
Summit Power transitioned to IFRS 9, focusing on the classification, measurement, and
impairment of financial assets using the expected credit loss (ECL) model.

• Recognition and Measurement: Financial assets are measured at fair value or

amortized cost.
• Fair Value Disclosure:
o Trade and other receivables: BDT 5,329 million
o Payables: BDT 13,274 million

Comment:
While the implementation aligns with global norms, integrating advanced credit risk
models could optimize ECL assessments.

7. IAS 40: Investment Property

Compliance:
IAS 40 is not applicable, as Summit Power Limited does not hold investment properties.

Comment:
Should the company acquire investment properties; it must adhere to IAS 40.

8. IFRS 13: Fair Value Measurement

Compliance:
Summit Power consistently applies IFRS 13 by using market prices and observable inputs
for fair value measurement.

• Valuation Techniques: Market-based methods.

• Fair Value Hierarchy: Aligns with standards for observable and non-observable
inputs.

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Comment:
Providing sensitivity analyses for significant estimates could bolster investor confidence.

9. IFRS 16: Leases

Compliance:
Summit Power recognizes right-of-use assets and lease liabilities under IFRS 16, with lease
payments for short-term leases expensed on a straight-line basis.

• Right-of-Use Assets: Included in financial statements but not detailed in extracted

sections.
• Lease Liabilities: Incorporated in long-term liabilities.

Comment:
Summit Power should reassess incremental borrowing rates periodically to ensure
accuracy.

10. IAS 18/IFRS 15: Revenue Recognition

Compliance:
Revenue is recognized when electricity is delivered, excluding taxes and levies. Capacity
revenues are allocated over the lease term.

• Revenue (2022–23): BDT 11,423 million.

• Revenue Components: Include electricity sales and other income streams.

Comment:
Further disclosures on contract-specific allocations and revenue segmentation are
recommended for enhanced granularity.

Operational Performance Indicators (2022–23)

• Revenue Trends

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 o Total revenue declined by 15% YoY, from BDT 13,438 million (2021–22)
to BDT 11,423 million in 2022–23.
o Primary revenue sources: Electricity sales and utility income from power
plants.

• Cost Structures

o Operating expenses decreased by 10% YoY, reaching BDT 7,629 million,

reflecting effective cost management amid external challenges.

• Profit Margins

o Gross profit margin: Improved to 33.2% (up from 31.8% in 2021–22).

o Net income margin: Increased to 19.4%, showcasing stronger cost control
and operational efficiency.

• Power Plant Utilization

o Summit Power's plants operated with consistent reliability, maintaining

availability rates above 85%, ensuring steady power generation and supply
commitments.

• Key Financial Metrics

o Total Comprehensive Income: BDT 2,213 million (+2% YoY).

o Earnings Per Share (EPS): BDT 8.21 (+2% YoY).

• Operational Resilience

o Summit Power navigated challenges like fuel cost volatility and currency
devaluation effectively. Improved payment schedules from the Bangladesh
Power Development Board (BPDB) contributed to easing financial
pressures.

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Key Financial Metrics (2022–23)
Metrics 2022–23 (BDT in million) YoY Change
Revenue 11,423 -15.0%
Operating Expenses 7,629 -10.0%
Gross Profit 3,794 +3.5%
Operating Profit 3,561 +2.1%
Total Comprehensive Income 2,302 +2.0%
Earnings Per Share (EPS) 8.21 +1.8%

Recommendations and Observations

1. Revenue Diversification: Explore renewable energy and hybrid solutions for

stable income.
2. Fair Value Disclosures: Provide detailed valuation assumptions and sensitivity
analyses.
3. Operational Efficiency: Leverage advanced tools for predictive maintenance and
cost optimization.
4. Sustainability: Invest in renewable projects and enhance ESG reporting to attract
eco-conscious investors.
5. Segment Reporting: Introduce plant-wise performance metrics for better
transparency.
6. Risk Management: Strengthen credit risk assessments and address currency
volatility more robustly.

Baraka Power Limited

Analysis of IAS & IFRS Standards in SPL Annual Reports (2023-2024)

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1. IAS 1: Presentation of Financial Statements

Compliance:
Baraka Power Limited complies with IAS 1 by presenting:

• Statement of Financial Position

• Statement of Comprehensive Income
• Statement of Changes in Equity
• Statement of Cash Flows

Materiality:
Similar items are aggregated, and non-material disclosures are omitted to maintain clarity.

Comparative Information:

All statements include prior-year figures for a year-over-year comparison.

Comment:
The presentation is clear and consistent. Additional disclosures on specific revenue streams
would improve transparency.

2. IAS 16: Property, Plant, and Equipment (PPE)

Compliance:

• PPE is measured at cost less accumulated depreciation and impairment losses.

• Depreciation methods and useful lives align with IAS 16.

Asset Details (2023–24):

• Power plants and related equipment form a significant portion of assets.

• Regular maintenance schedules and upgrades are disclosed.

Comment:
The depreciation policies are robust. However, sensitivity analyses of residual values and
useful lives would enhance reliability.

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3. IAS 36: Impairment of Assets

Compliance:
Impairment assessments are conducted regularly to ensure that carrying values do not
exceed recoverable amounts.

• No impairment losses were reported for 2023–24.

Comment:
Compliance with IAS 36 is adequate. Periodic stress testing could improve risk
management.

4. IAS 37: Provisions, Contingent Liabilities, and Contingent Assets

Compliance:

• Provisions are recognized for potential obligations with reliable estimates.

• Contingent liabilities are disclosed in the notes but are not recognized.

Key Provisions:

• Provisions for plant decommissioning and legal obligations.

Comment:
Baraka Power adheres to IAS 37 but should provide more details on the nature and timing
of contingent liabilities.

5. IAS 38: Intangible Assets

Compliance:
No significant intangible assets were reported in the financial statements.

Comment:
Compliance is not applicable for 2023–24.

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6. IAS 39 and IFRS 9: Financial Instruments

Compliance:

• Financial assets are categorized as fair value through profit or loss (FVTPL) or
amortized cost.
• Expected Credit Loss (ECL) model is applied for trade receivables.

Key Disclosures:

• Total receivables: BDT 3,456 million.

• Payables: BDT 9,832 million.

Comment:
Compliance with IFRS 9 is satisfactory. Advanced risk modeling for credit losses would
improve accuracy.

7. IAS 40: Investment Property

Compliance:
Not applicable as BPL does not hold investment properties.

Comment:
Future acquisitions in real estate should adhere to IAS 40.

8. IFRS 13: Fair Value Measurement

Compliance:
Fair value disclosures align with IFRS 13, focusing on observable market inputs.

Fair Value Hierarchy:

• Level 1: Quoted prices in active markets.

• Level 2: Inputs other than quoted prices directly observable.

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Comment:
Detailed sensitivity analyses and assumptions would strengthen disclosure.

9. IFRS 16: Leases

Compliance:

• Right-of-use assets and lease liabilities are recognized for long-term leases.
• Short-term lease payments are expensed on a straight-line basis.

Comment:
Periodic reassessment of lease terms and discount rates would ensure accurate valuation.

10. IAS 18/IFRS 15: Revenue Recognition

Compliance:

• Revenue from electricity sales is recognized when delivered to BPDB.

• Capacity charges are allocated over the lease term.

Revenue (2023–24):

• Total revenue: BDT 11,273 million.

Comment:
Adherence to IFRS 15 is strong, but segment-wise revenue disclosure could improve
clarity.

Operational Performance Indicators for Baraka Power Limited (2023–24)

• Revenue Trends
o Total Revenue: BDT 11,273 million from electricity generation and related
services, showcasing a marginal growth of 3% YoY.

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 o Diversification in revenue streams through subsidiaries like Baraka
Fashions Limited and associates.
• Energy Generation Capacity
o Combined electricity production capacity through direct ownership and
associates: 62.87 MW.
o Consistent supply to the Bangladesh Power Development Board (BPDB)
with above 90% plant availability rates.
• Profit Margins
o Gross Profit Margin: Stable at 32.6% across its core business and
subsidiaries.
o Net Profit After Tax: Reported at BDT 2,434 million, reflecting a 4%
increase YoY, attributed to operational efficiency and cost control
measures.
• Investments and Subsidiaries
o Continued investments in renewable energy and associate companies,
focusing on sustainable and cost-effective power generation.
o Significant contributions from subsidiaries like Baraka Fashions Limited
(BDT 996 million revenue) and Baraka Patenga Power Limited (BDT 3,649
million revenue).
• Financial Position
o Total Assets: Reached BDT 52,187 million, reflecting asset expansion in
power and RMG sectors.
o Debt-to-Equity Ratio: Improved to 0.76, indicating reduced financial
leverage.
• Operational Milestones
o Completion of the 15-year Power Purchase Agreement (PPA) with BPDB,
with ongoing negotiations for renewal.
o Adoption of advanced emission control technologies, including Flue Gas
Desulfurization (FGD) systems.

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Key Financial Metrics (2023–24)
Baraka Fashions Limited (Subsidiary)
Metrics 2023–24 (BDT in million) YoY Change

Revenue 996.42 N/A

Gross Profit 131.50 N/A

Net Profit After Tax 51.42 N/A

Total Comprehensive Income 51.42 N/A

Total Assets 564.68 N/A

Baraka Patenga Power Limited (Associate)

Metrics 2023–24 (BDT in million) YoY Change

Revenue 3,648.81 N/A

Gross Profit 422.06 N/A

Net Profit After Tax 121.48 N/A

Total Comprehensive Income 121.80 N/A

Total Assets 7,032.40 N/A

Karnaphuli Power Limited (Associate)

Metrics 2023–24 (BDT in million) YoY Change

Revenue 6,395.81 N/A

Gross Profit 1,321.89 N/A

Net Profit After Tax 165.42 N/A

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 Total Comprehensive Income 165.13 N/A

Total Assets 11,025.26 N/A

Baraka Shikalbaha Power Limited (Associate)

Metrics 2023–24 (BDT in million) YoY Change

Revenue 5,228.68 N/A

Gross Profit 1,588.95 N/A

Net Profit After Tax 91.43 N/A

Total Comprehensive Income 46.92 N/A

Total Assets 11,477.80 N/A

Recommendations and Observations

1. Revenue Diversification:
o Expand renewable energy projects and enhance subsidiary operations like
Baraka Fashions Limited.
2. Operational Efficiency:
o Invest in predictive maintenance systems to improve plant efficiency and
reduce costs.
3. Risk Management:

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 o Develop robust hedging strategies against currency and energy price
volatility.
4. Sustainability Initiatives:
o Strengthen renewable energy investments and ESG reporting to align with
global standards.
5. Fair Value Enhancements:
o Provide detailed assumptions and sensitivity analyses for fair value
estimates.

Titas Gas Transmission and Distribution Company Limited

Analysis of IAS & IFRS Standards in TITASGAS Annual Reports (2023-2024)

Reflection of IAS- 2

The carrying amount of inventories as disclosed in note # 10 to the financial statements of

the Company as at 30 June 2024 is Tk. 397.02 crore. But the accounting policies of the
Company state that inventories are valued at cost which is a non-compliance with
International Accounting Standard (IAS) 2: Inventories. IAS 2 requires valuation of
inventories at the lower of cost and net realizable value. Physical verification of inventories
done by the inventory committee as at 30 June 2013 identified dead stock worth Tk. 10.44
crore and obsolete stock worth Tk. 3.33 crore at that time, but no adjustments in respect of
this verification were given in the financial statements for these items. Further, the
Company has not made any further physical verification of inventories up to the financial
year 2023-2024. As alternative procedures, we conducted physical verification of
inventories of the Company as at 30 June 2024 and identified dead stock worth Tk. 31.37
crore and obsolete stock worth Tk. 4.62 crore. As a result, the carrying amount of
inventories of the Company as at 30 June 2024 included huge quantities of dead stock and
obsolete stock, and appears to be overstated for Tk. 35.99 crore.
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Inventory: The company maintains inventory of materials & spares for the construction
of Pipelines and for maintenance of existing transmission and distribution Pipelines for
uninterrupted customer services. Out of total inventory some are very emergency in need
and those are not available in the local market and also it is difficult to procure instantly
when needed. It is mentionable that these are slow moving items of inventory in the store.
The company has to maintain a huge stock of materials and other inventory for its
maintenance. It is also mentionable that there are some obsolete/dead stock items in the
inventory. For disposing those items the Company has an intention to conduct an auction
to write-off. Inventories of the Company are valued at cost.

2024
2023

IAS 16 : Property Plant and Equipment

As per decision taken by the Board of Directors in their 840th Meeting dated 08 October
2023, the Company established a policy on Accumulated Depreciation Fund which will be
maintained by a separate Board of Trustees. Any types of fund, i.e. Accumulated
Depreciation Fund, Depreciation Fund, should be established from the transfer of retained
earnings of a Company, not from the cash balance. Considering the said policy, the
Company also invested in Fixed Deposit Receipt 3 (FDR) for the purpose of Accumulated
Depreciation Fund amounting to Tk. 475.00 crore as disclosed in note # 7 to the financial
statements and the Depreciation Fund amounting to Tk. 28.13 crore as disclosed in note #

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23 to the financial statements without recognizing the said interest income in the statement
of profit or loss and other comprehensive income which resulted understatement of net
profit of the Company for the year ended 30 June 2024. The said policy is not appropriate
as per Para 30 & 31 of IAS 16: Property, Plant and Equipment and should be revised.

Property, plant and equipment (PPE) i) Recognition and Measurement Property, plant &
equipment are recognized if it is probable that future economic benefits associated with the
assets will flow to the company and the cost of the assets can be reliably measured. All
fixed assets are stated at cost less accumulated depreciation as per IAS-16 "Property, Plant
and Equipment" except land which is stated at cost only. The cost of acquisition of an asset
comprises its purchase price and any directly attributable cost of bringing the asset to its
working condition for its intended use inclusive of inward freight, duties and non-
refundable taxes.

Subsequent costs: The cost of replacing a part of an item of property, plant and equipment
is recognized in the carrying amount of the item if it is probable that future economic
benefits associated with the item will flow to the entity and the cost of the item can be
measured reliably. All other repairs and maintenance costs are charged to the Statement of
Profit or Loss and Other Comprehensive Income during the financial period in which they
incurred.

Depreciation is charged on property, plant and equipment (except land) using ‘Straight line
method’ to allocate the costs over this estimated useful lives. Depreciation on addition to
property, plant and equipment is charged from the date when the asset is put into use for
commercial operation. No depreciation is charged on the asset from the date the assets are
disposed.

Revaluation surplus: Revaluation reserve represents the difference between book value
and revalued value of land and land development. Revaluation is done with sufficient
regularity to ensure that the carrying amount does not differ materially from that which
would be determined using fair value at the end of the reporting period. The fair value is

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determined from market-based evidence by appraisal considering cut-off date at 30 June
2023 by ACNABIN Chartered Accountants and ZA Capital Advisory (in collaboration) as
consultants, who are professionally qualified consultant and valuer and the revaluation was
approved in 855th Board meeting dated 30 May 2024.

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IAS- 38: Intangible Asset

Intangible assets :

1. An intangible asset is recognized if it is probable that the future economic

benefits that are attributable to the asset will flow to the entity and the cost
of the assets can be measured reliably.
2. Software represents the value of computer application software licensed for
the use of the company. Intangible assets are carried at its cost, less
accumulated amortization and impairment loss (if any).
3. Initial cost comprises license fees paid at the time of purchase and other
directly attributable expenditure that are incurred in customizing the
software for its intended use.
4. Expenditure incurred on software is capitalized only when it enhances and
extends the economic benefits of computer software beyond their original
specifications and lives and such cost is recognized as capital improvement
and added to the original cost of software.
5. The web-based integrated customized software, commonly known as the
TGTDPLC System, was developed by the local vendor M/S. Divine IT Ltd.
It is being amortized using the straight-line method over an estimated useful
life of five (5) years. As of the end of the financial year 2022-23, the entire
value of the intangible assets has been fully amortized.

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 Power Grid Bangladesh PLC

Analysis of IAS & IFRS Standards in Power Grid Bangladesh PLC Annual Report
(2023-2024)

1. IAS 1: Presentation of Financial Statements Compliance: The financial statements

comply with IAS 1, presenting the statement of financial position, comprehensive income,
cash flows, and changes in equity in a structured manner.
● Total Assets (2023-24): BDT 392,143 million (2022-23: BDT 411,807 million)

● Shareholders' Equity: BDT 132,220 million (2022-23: BDT 123,198 million)

● Materiality: Items are aggregated based on materiality for better presentation.

● Comparative Information: Prior-year data is presented for transparency.

Comment: While compliance is achieved, enhanced segment reporting could
provide better insights.

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2. IAS 16: Property, Plant, and Equipment Compliance: PPE is valued at cost, less
accumulated depreciation and impairment. Depreciation policies align with operational
use.
● Depreciation Rates:

○ Plant and machinery: 3.33% - 20%

○ Office equipment: 10% - 15%

○ Furniture and fixtures: 10%

● Carrying Value: BDT 378,117 million

● Derecognition: Assets are removed upon disposal or loss of economic benefit.

Comment: Compliance is satisfactory, but periodic reviews of residual values
could improve accuracy.

3. IAS 36: Impairment of Assets Compliance: The company reviews assets annually to
ensure recoverable amounts exceed carrying values.
● Impairment Testing: Conducted annually for PPE and other assets.

● Impairment Loss: No impairments reported for FY 2023-24. Comment: Regular

sensitivity analysis can enhance impairment risk management.

4. IAS 37: Provisions, Contingent Liabilities, and Contingent Assets Compliance:

Provisions are recognized for obligations with reliable estimates.
● Total Liabilities: BDT 259,952 million (2022-23: BDT 288,609 million)

● Provisions: Established for known liabilities.

● Contingent Liabilities: Disclosed but not recognized. Comment: Disclosure of

discount rate assumptions could enhance transparency.

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5. IAS 38: Intangible Assets Compliance: No material intangible assets were reported.
Comment: The company may need to address intangible asset recognition for future
investments.

6. IAS 39 & IFRS 9: Financial Instruments Compliance: The company adheres to IFRS
9 with financial assets classified at fair value or amortized cost.
● Receivables: BDT 152,115 million

● ECL Allowances: Included in financial expenses. Comment: Advanced credit risk

models could improve expected credit loss calculations.

7. IAS 40: Investment Property Compliance: No investment properties reported.

Comment: Future acquisitions may require adherence to IAS 40.

8. IFRS 13: Fair Value Measurement Compliance: Fair value principles are applied with
appropriate disclosures.
● Fair Value Hierarchy: Disclosures align with observable and non-observable
inputs. Comment: Sensitivity analysis for key assumptions would enhance investor
confidence.

9. IFRS 16: Leases Compliance: Lease obligations are recognized as right-of-use assets.
● Lease Liabilities: Included in long-term liabilities. Comment: Reassessment of
incremental borrowing rates could improve financial planning.

10. IAS 18/IFRS 15: Revenue Recognition Compliance: Revenue is recognized upon
delivery of services, excluding taxes and levies.
● Revenue (2023-24): BDT 27,456 million (2022-23: BDT 24,401 million)

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 ● Revenue Components: Include service income and operational revenue.

● Comment: Detailed revenue stream disclosures could provide more clarity.

Operational Performance Indicators

● Revenue Trends:

○ FY 2023-24: BDT 27,456 million, a 12.5% increase from FY 2022-23.

● Cost Structures:

○ Operating expenses: BDT 15,556 million, a 3.3% increase from FY 2022-

23.

● Profit Margins:

○ Gross profit margin: 43% (2022-23: 38%)

● Profitability:

○ Total comprehensive income: BDT 11,240 million (2022-23: BDT 10,465

million)

Financial Metrics Summary (FY 2023-24)

Key Metrics Values (BDT in million) Change YOY

Revenue 27,456 +12.5%

Operating Expenses 15,556 +3.3%

Gross Profit 11,900 +9.2%

Operating Profit 11,240 +7.4%

Total Equity 132,220 +7.3%

Total Assets 392,143 -4.8%

EPS 12.45 +2.0%

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Recommendations and Observations
1. Valuation Precision: Improved disclosure of fair value calculations for PPE.

2. Provisions Management: More detailed disclosures on contingent liabilities.

3. Operational Efficiency: Cost control measures have improved margins.

4. Leasing Optimization: Periodic reassessment of lease obligations for flexibility.

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