Information Memorandum

TABLE OF CONTENTS

Particulars Page No.

SECTION I: STATUTORY CONDITIONS 08-12Disclosure in Respect of Issuance of Security in Demat Form 09 Conditions for Price Discovery for Public Issuance under Rule-8(B), sub clause 16(4) of the Securities and Exchange Commission (Public Issue) Rules, 2006 09

Eligible Institutions Participating in Price Discovery Process for Determining Indicative Price 11General Information 12

SECTION II: RISK FACTORS AND MANAGEMENT PERCEPTION 13-17

SECTION III: ISSUE SIZE AND PURPOSE OF THE PUBLIC OFFERING 18-20Financial Structure of the Company 19 Use of IPO Proceeds and Schedule of Implementation 19

SECTION IV: INFORMATION ABOUT THE COMPANY 21-36Company Profile 22Nature of Business 23Principal Products and Services 23Product/Service that accounts for more than 10% of the Company’s total revenue 23Associates, Subsidiary/Related Holding Company and their core areas of business 24Distribution of Products/Services 25Industry Outlook 25Competitive Condition of Business 28Sources and availability of Raw Materials and Principal Suppliers 31Sources of and requirement for Power, Gas and Water or any other utilities 31Name of the Customers who purchase 10% or more of the Company’s Product/Services 31Description of Contract with Principal Suppliers/Customers 32Description of any Material Patents, Trademarks, Licenses or Royalty Agreements 36Number of Employees 36Production/Service Rendering Capacity and Current Utilization 36

SECTION V: DESCRIPTION OF PROPERTY 37-38 Location of the Principal Plants and Other Property of the Company and Their Condition 38

SECTION VI: PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION 39-44Internal and External Sources of Cash 40Material commitments for Capital Expenditure 40Causes for Material Changes from period to period 40Seasonal aspect of the Company’s Business 41Known trends, events or uncertainties 41Change in the assets of the Company used to pay-off liabilities 41Loan taken from or given to Holding/Parent Company or subsidiary Company 42Future Contractual Liabilities 42

Particulars Page No.

Future Capital Expenditure 42Vat, Income Tax, Customs duty or other tax liability 42Operating Lease Agreements during the last five years 43Financial lease commitments during the last five years 43Personnel related Scheme 44Revaluation of Company’s Assets and Summary thereof 44Transaction between Subsidiary/Associate/Holding Company and the Issuer 44

SECTION VII: INFORMATION ABOUT DIRECTORS AND OFFICERS 45-61Directors of the Company 48 Information regarding Directors and Directorship 48Directors’ Involvement in other Organizations 48Family relationship among Directors 52Family relationship among Directors and top five Officers 52

Short Bio-data of Directors 52Credit Information Bureau (CIB) report 54Description of Top Executives and Departmental Heads 55Involvement of Directors and Officers in Certain Legal Proceedings 55Certain relationships and Related Transactions 56Executive Compensation 57Options granted to Directors, Officers and Employees 58Transaction with the Directors and Subscribers to the Memorandum 58Tangible Assets per Share 59Ownership of Company’s Securities 60Shareholder shareholding of 5% or more of the Company’s Securities 60Securities of the Company owned by the Officers 60Securities of the Company owned by Top Ten Salaried Officers 61

SECTION VIII: MARKET AND SECURITIES BEING OFFERED 62-64Market for the Securities being Offered 63Declaration about Listing of Shares with Stock Exchange(s) 63Description of Securities Outstanding or being Offered 63Debt Securities 64

SECTION IX: HISTORICAL FINANCIAL PERFORMANCE 65-67

SECTION X: CORPORATE DIRECTORY 68-69

SECTION XI: AUDITORS’ REPORT AND RELATED CERTIFICATES 70-107Auditors’ Report to the Shareholders 71Auditors' Report under Section 135(1) and Paragraph 24(1) of part-II of Third Schedule of the Companies Act 1994 105

Auditors’ Certificate regarding Statement of Ratio Analysis 107

SECTION XII: CREDIT RATING REPORT 108-120

ACRONYMSA Issue Public Issue of United Power Generation ACGU Annual Contract Gas Usage and Distribution Company Limited AGM Annual General Meeting Issuer United Power Generation andAllotment Letter of Allotment of Shares Distribution Company LimitedArticles Articles of AssociationAPSCL Ashuganj Power Station Company Limited L

LLA Land Lease Agreement BBAS Bangladesh Accounting Standards MBDT Bangladeshi Taka MCQ Monthly Contract Quantity BERC Bangladesh Energy Regulatory Commission Memorandum Memorandum of Association BEPZA Bangladesh Export Processing Zone Authority MHL Malancha Holdings Limited BFRS Bangladesh Financial Reporting Standards MHQ Max Hourly QuantityBO Beneficiary Owners Account MMGU Maximum Monthly Gas Usage BPDB Bangladesh Power Development Board MPO Minimum Purchase Obligation BSEC Bangladesh Securities and Exchange MW Mega Watt

Commission N

C NAV Net Asset Value CDBL Central Depository Bangladesh Limited NRB Non-Resident BangladeshiCertificate Share Certificate NWPGCL North-West Power Generation Company CEPZ Chittagong Export Processing Zone LimitedCIB Credit Information Bureau Commission Bangladesh Securities and Exchange O

Commission Offering Price The Price of the each share offered Companies Act Companies Act 1994 CSE Chittagong Stock Exchange Limited P

PSA Power Supply AgreementD PPA Power Purchase AgreementDepository Act Depository Act, 1999 PGCB Power Generation Company of DEPZ Dhaka Export Processing Zone BangladeshDESA Dhaka Electric Supply AuthorityDESCO Dhaka Electric Supply Company Limited RDSE Dhaka Stock Exchange Limited REB Rural Electrification Board

RJSC Registrar Joint Stock Companies and E FirmsEII Eligible Institutional Investor RPCL Rural Power Company LimitedEGM Extra-ordinary General Meeting Rules Securities and Exchange Commission EPS Earnings per Share (Public Issue) Rules, 2006EPZ Export Processing Zone EGCB Electricity Generation Company of S

Bangladesh SCM Standard Cubic MetersSIPP Small Independent Power Producer

FFC Account Foreign Currency Account TFY Financial Year Tk. / Taka Legal Currency of Bangladesh

G UGOB Government of Bangladesh USD United States Dollar GSA Gas Supply Agreement UPGDCL United Power Generation and

Distribution Company Limited IIM Information Memorandum VIPO Initial Public Offering VAT Value Added TaxIPP Independent Power Producer

STATUTORY CONDITIONS Section: I

DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM

As per provision of the Depository Act, 1999 and regulation made there under, shares will only be issued in dematerialized condition. All transfer/transmission/splitting will take place in the Central Depository Bangladesh Limited (CDBL) system and any further issuance of shares (rights/bonus) will be issued in dematerialized form only.

CONDITIONS FOR PRICE DISCOVERY FOR PUBLIC ISSUANCE UNDER RULE-8(B), SUBCLAUSE 16(4) OF THE SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2006

Book Building is a process through which an issuer attempts to determine the price to offer its security based on demand from institutional investors. Under the process, the price of an IPO share will be determined through an automated bidding to be participated by different financial institutions and then the share will be opened for the IPO participant at the cut-off price determined during the book building process. The bidding will be handled through a uniform and integrated automated system of the stock exchanges, or any other organizations as decided by the Commission, especially developed for book building method. The entire procedure of price discovery under book building method is delineated below:

(a) The issuer/issue manager shall issue invitation to the eligible institutional investors, both in writing and through publication in at least 5 (five) widely circulated national dailies, giving at least 10 (ten) working days time, to the road show/presentation/seminar indicating time and venue of such event. The invitation letter shall accompany an Information Memorandum (IM) containing all relevant information covering the proposed issue of the issuer and 5 (five) years audited financial statements of the issuer or such shorter period during which the issuer was in commercial operation. The eligible institutional investors shall submit indicative price to the issuer/issue manager, signed jointly by the Chief Executive Officer (CEO) and the Financial Analyst, highlighting the factors taken into consideration in support of the indicative price, within the next 3(three) working days of the said road show/presentation/seminar;

(aa) Representatives from the stock exchanges shall participate in the road show as observers;

(b) The issuer, in consultation with the issue manager, shall quote its own indicative price in the draft prospectus based on the indicative prices so obtained from the eligible institutional investors;

Provided that the issuer and the issue manager shall send the Information Memorandum to eligible institutional investors (EIIs) without mentioning the indicative price. The Indicative Price should be disclosed by the Issuer and Issue Manager after the quotation received from the EIIs. The said indicative price should be supported by at least 20 EIIs including at least 3 (three) quotations from each of the following category:

a. Merchant Bankers

b. Commercial Banks

c. Asset Management Companies

d. Non-Banking Financial Institutions (NBFIs)

e. Insurance Companies

f. Stock Dealers

EIIs who support the indicative price should participate in the electronic bidding process, at least with their intended quantity and indicative price. However, as long as the total intended quantity by the EIIs, who support the indicative price, does not reach 10% of the total issue size, the indicative price shall not be treated as discovered.

Further provided that while submitting the indicative price the concerned EIIs will also mention the number of shares they are willing to buy at that price.

(c) The draft prospectus shall simultaneously be submitted to the Commission and the stock exchanges along with the due diligence statements issued by all concerned;

10 I n f o r m a t i o n M e m o r a n d u m

(d) Rationale for the indicative price must be included in the draft prospectus i.e. the issuer is required to disclose in detail about the qualitative and quantitative factors justifying the indicative price;

(e) The indicative price shall be the basis for formal price building with an upward and downward band of 20% (twenty percent) of indicative price within which eligible institutional investors shall bid for the allocated amount of security;

(f) Eligible institutional investors bidding shall commence after getting consent from the Commission for this purpose;

(g) If institutional quota is not cleared at 20% (twenty percent) below indicative price, the issue will be considered cancelled unless the floor price is further lowered within the face value of security: Provided that, the issuer’s chance to lower the price shall not be more than once;

(h) Prospectus will have to be posted on the Websites of the Commission, stock exchanges, issue manager and issuer at least two weeks prior to the start of the bidding to facilitate investors to know about the company and all aspect of offering;

Provided that hard copy of Information memorandum without mentioning the indicative price shall physically be sent to the following institutions/associations at least 5 (five) working days prior to the Road Show:

a. Stock Exchanges

b. Bangladesh Merchant Bankers’ Association (BMBA)

c. Bangladesh Association of Banks (BAB)

d. Bangladesh Leasing & Finance Companies Association (BLFCA)

e. Bangladesh Insurance Association (BIA)

f. Association of Asset Management Companies

Associations shall ensure dissemination of hard copy of draft prospectus among their respective members;

(i) No institutional investor shall be allowed to quote for more than 5% (five percent) of the total security offered for sale, subject to maximum of 5 (five) bids;

(j) Institutional bidding period will be 48 (forty eight) hours which may be changed with the approval of the Commission;

(jj) The Company and The Issue Manger shall submit the status of bidding and the Cut Off price along with the final draft prospectus, simultaneously to the Commission and the stock exchanges within 5 working days from the closing day of the bidding.

(k) The bidding will be handled through a uniform and integrated automated system of the stock exchanges, or any other organization as decided by the Commission, especially developed for book building method;

(l) The volume and value of bid at different prices will be displayed on the monitor of the said system without identifying the bidder;

(m) The institutional bidders will be allotted security on pro-rata basis at the weighted average price of the bids that would clear the total number of securities being issued to them;

(n) Institutional bidders shall deposit their bid with 20% (twenty percent) of the amount of bid in advance to the designated bank account and the rest amount to settle the dues against security to be issued to them shall be deposited within 5 (five) working days prior to the date of opening subscription for general investors;

(o) In case of failure to deposit remaining amount that is required to be paid by institutional bidders for full settlement of the security to be issued in their favor, 50% (fifty percent) of bid money deposited by them shall be forfeited by the Commission. The securities earmarked for the bidder who defaulted in making payment shall be added to the general investor quota.

(p) General investors, which include mutual funds and NRBs, shall buy at the cut-off price;

11I n f o r m a t i o n M e m o r a n d u m

(q) There shall be a time gap of 15 (fifteen) working days or as may be determined by the Commission between closure of bidding by eligible institutional investors and subscription opening for general investors;

(r) Subscription for general investors shall remain open for the period as specified by the Commission;

(s) General investors shall place their application through banker to the issue; and

(t) All application money shall be kept in a separate escrow account opened with a designated bank with prior intimation to the Commission. Issuer will not be allowed to utilize such money until all the process of issue is completed and Commission’s consent to this effect is obtained.

Lock-in:

There shall be lock-in of 4 (four) months from the first trading day on the security issued to the eligible institutional investors.

ELIGIBLE INSTITUTIONS PARTICIPATING IN PRICE DISCOVERY PROCESS FOR DETERMINING INDICATIVE PRICE

The price discovery process for determining indicative price of security will involve the following institutional investors registered with or approved by the Commission in this regard:

(a) Merchant bankers excepting the issue manager concerned to the proposed issue;

(aa) Asset Management Companies;

(b) Foreign institutional investors registered with or approved by the Commission;

(c) Recognized pension funds and provident funds;

(d) Bank and non-bank financial institutions under regulatory control of Bangladesh Bank;

(e) Insurance companies regulated under Insurance Act, 1938 (Act No. IV of 1938);

(f) Institutional venture capital and institutional investors registered with or approved by the Commission;

(g) Stock Dealer registered with the Commission; and

(h) Any other artificial juridical person permitted by the Commission for this purpose

GENERAL INFORMATION

1. LankaBangla Investments Limited, the Issue Manager, has prepared this Information Memorandum based on information provided by United Power Generation and Distribution Company Limited (The Company/Issuer) andseveral discussions with Chairman, Managing Director, Directors and concerned executives of the Issuer. The Directors, including the Managing Director of United Power Generation and Distribution Company Limited and LankaBangla Investments Limited collectively and individually, having made all reasonable inquiries, confirm that to the best of their knowledge and belief, the information contained herein is true and correct in all material respects and that there are no other material facts, the omission of which would make any statement herein misleading.

2. No person is authorized to give any information or to make any representation not contained in this Information Memorandum, and if given or made, any such information or representation must not be relied upon as having been authorized by the Company or the Issue Manager.

3. The issue as contemplated in this Information Memorandum is made in Bangladesh and is subject to the exclusive jurisdiction of the Courts of Bangladesh. Forwarding this Information Memorandum to any person resident outside Bangladesh in no way implies that the issue is made in accordance with the laws of that country or is subject to the jurisdiction of the laws of that country.

4. A copy of this Information Memorandum may be obtained from the websites of United Power Generation andDistribution Company Limited (www.united.com.bd) and LankaBangla Investments Limited (www.lankabangla-investments.com).

RISK FACTORS AND MANAGEMENT PERCEPTION Section: II

Investment in equity shares involves various levels of risk. Consequently, the return of the investment is dependent on the functioning of the risk factors. United Power Generation and Distribution Company Limited operates in an industry which is exposed to a number of internal and external risk factors over which the Company has little or no control. The occurrence of the risk factors as delineated hereunder, and if the management fails to avoid or mitigate those, can have significant bearing on the operational and financial performance of the Company, which, in turn, may negatively impact on the value of share of the Company. Therefore, it is imperative to thoroughly understand the risk profile of the Company along with management’s perception of the risks for taking an informed investment decision.

INTEREST RATE RISK

Interest rate risk refers to the likely changes in the cash flows or future value of a firm on account of changes in the interest rates in the market. Increase in interest rate increases the cost of borrowed funds for a company in case of floating rate loans. Interest/financial charges are paid against the Company’s borrowed funds. In the event of unfavorable movement in money markets, rising interest rates could increase the cost of debt and negatively impact profitability.

The management of the Company is well aware of the volatility in the money market of our country. Management of the Company believes that rising interest rates will not substantially affect the Company. UPGDCL’s finance cost to revenue ratio has improved sharply from 10.54% in 2011 to 9.51% in 2012 as well as the interest coverage ratio was more than 7 times during the fiscal year of 2012.

EXCHANGE RATE RISK

The Company imports machinery and equipment against payment of international currencies (USD and EURO).Unfavorable volatility or currency fluctuations may increase import cost and thus affect the profitability of the Company.

Management of UPGDCL is aware of the risks related to currency fluctuations. Major imported machinery and equipment purchases from abroad have been settled. Currently, spare parts are being procured from suppliers from various countries. However, costs of these imported parts are a small component of revenues (i.e. only 3.40%) generated by the Company. Therefore, Management believes exchange rate risk is not going to hamper business of the Company.

INDUSTRY RISK

Industry risks refer to the impact that the country's industrial policy can have on the performance of a specific industry. Current Government of Bangladesh is mandated to ensure long-term energy security for the country. The Energy Ministry plans to add 15,000 MW generation by 20161 according to the Energy Ministry. This may create new competition in the industry that in turn could adversely affect the Company’s business.

Over the last decade, energy demand grew heavily with little reliable supply addition. Therefore, the demand and supply gap for the industry is increasing at an alarming rate. Management believes power security is critical to the Country’s industrial growth and its citizens’ standard of living and hence, favors the Government’s power generation initiatives and eagerly anticipates additional supply of electricity for the Country. However, it must be noted that the additional supply driven by the Government’s plans will only narrow the immense gap between supply and demand. It is difficult to meet or surmount demand to create competition in the market.

Furthermore, it must be recognized that United Power Generation and Distribution Company Limited is the only power company mandated to build, operate and own power plants within the Export Processing Zones of Bangladesh by

1http://www.powerdivision.gov.bd

BEPZA. Therefore, UPGDCL has no competition in the markets in which it operates and sells electricity and possible entry of a new power company would not create any industry risk for the Company.

MARKET AND TECHNOLOGY RELATED RISK

Market and technology-related risks arise for any industrial concern as it keeps itself aligned with innovation. Capacity of generating power is dependent largely on the capacity of its generator. The demand for new and cost effective technology may render the existing technology obsolete, which may cause negative impact on the performance of the Company.

Management of the Company has utilized state-of-the-art technology and modern machinery for its power plants. The Company’s DEPZ plant has 4 units of generator sets from the world renowned gas powered engine manufacturer, Wärtsilä Finland OY and 3 units of generator sets from MTU, Germany Pte Ltd. The Company’s CEPZ power plant has 5 units of generator sets from Wärtsilä, Finland OY as well. In order to ensure uninterrupted generation of electricity, UPGDCL’s highly experienced and efficient team performs and carries out timely maintenance work for both the plants as per the manufacturer’s guidelines and requirements. Management has safeguarded against potential disruptions in operations by procuring spare parts and lube oil from suppliers at lead times managed by professionals of the company.

POTENTIAL OR EXISTING GOVERNMENT REGULATIONS

The Company conducts its business under the Companies Act 1994 and operates its power plants under policies framed by the Government of Bangladesh. The existing Government rules and regulations are favorable for the Company. Any abrupt changes in the policies may adversely affect profitability and operation of the Company.

The management highly believes it is unlikely that the Government will initiate any fiscal measure having adverse effect on the growth of the industry. On the contrary, the Government has moved towards greater natural gas exploration, reserve building and power capacity generation and distribution. So any potential risks caused by changes in existing government regulation, is improbable in the near future. It is worthwhile to mention that the Company’s primary off -taker, BEPZA is a statutory and independent statutory entity, which generates 10% service fee on the electricity it distributes to the privately owned enterprises housed within the EPZs. Therefore, the Company is effectively an utility provider to the private sector and is not supposed to be affected by public sector regulations on the sector in general.

POTENTIAL CHANGES IN THE GLOBAL OR NATIONAL POLICIES

Changes in the existing global or national policies can have either positive or negative impact on the Company’s profitability. The performance of the Company may be affected due to unavoidable circumstances in Bangladesh, as such any structural change in power generation industry, war, terrorism, political unrest in the country which may adversely affect the economy in general.

The risk due to changes in global or national policies is beyond control of any company. Yet the Company is well prepared to adopt new policies and preventive measures as and when required to reduce such risks. Furthermore, political unrest due to strikes and mass protests may have a negative impact on any business. However, electricity service being considered a daily necessity is most often kept out of obstruction. Most importantly, adequate risks are covered under the insurance agreement with Green Delta Insurance Company Limited, to compensate for all the potential damages.

HISTORY OF NON OPERATION

If a Company becomes non-operative for some period in its operating life, risk of becoming non-operative may exist in future for the same reasons.

There is no history of non-operation for United Power Generation & Distribution Company Limited.

OPERATIONAL RISK

Operational risk is measured against the ability of the Company’s power projects to generate and distribute stipulated electricity to its off-takers. Limitation of technology used, fuel supply arrangement, operational and maintenance (O&M) arrangement, political or force majeure in the form of natural disasters like floods, cyclone, tsunami and earthquake may hamper normal performance of power generation.

The routine & proper maintenance of the own generating unit and distribution networks undertaken by BEPZA reduces the chance of major disruptions. However, severe natural calamities which are unpredictable and unforeseen have the potential to disrupt normal operations of UPGD. Management believes that prudent rehabilitation schemes and quality maintenance will lessen the damages caused by such natural disasters. Most importantly, all the above risks are covered under the insurance agreement with Green Delta Insurance Company Ltd., to compensate for all potential damages caused in such situations.

RISK ASSOCIATED WITH POWER PROJECT DURATION

The power projects under the Company have limited tenure periods, thereby exposing the Company to the risk of inadequate operation period.

The Power Supply Agreement (PSA) between the Company and BEPZA is for 30 years and there are provisions for renewal of the agreement for an additional 30 years thereafter. The Land Lease Agreement (LLA) between UPGDCL and BEPZA is also for 30 years and is valid based on the tenure of the PSA. Upon mutual consent, these agreements are renewable and hence the risk of inadequate operational years can be mitigated. It can be noted that other IPP power companies operating in the country are between 15 to 22 years whereas the Company’s power project life spans for 60 years in total (i.e. 30 years initially and another 30 years extendable) for out of which the Company has exercised only 4 years of its project life.

RISK ASSOCIATED WITH SUPPLY OF RAW MATERIALS

The main raw material used for generating electricity is Natural Gas. Any interruption of supplies of the gas to the power plants will hamper the generation of electricity, the only product of the company.

The Company has a Gas Supply Agreement with Karnaphuli Gas Distribution Company Limited for the life of the projectand Titas Gas Transmission & Distribution Company Limited for 15 years that is renewable every 5 years thereafter. So, there is no threat of interruption of supplies of gas to the power plants that may hamper the generation of electricity, the only product of the company. Furthermore, new gas is being explored and discovered in many areas of the countrysuch as Narayanganj, Narshindi and the Bay of Bengal. The Government of Bangladesh plans to add these discoveries to the national grid. Therefore, management does not expect gas supply interruption in the future.

RISK ASSOCIATED WITH SINGLE PARTY EXPOSURE

Risks associated with Single Party Exposure exist when the Company sells its products to a Single buyer. The Company’s revenues may be in danger if/when its single buyer is under financial strain.

Besides guaranteed sale to BEPZA, UPGDCL also sells electricity to other buyers such as PDB and REB. UPGDCL has agreements with REB in DEPZ and PDB in CEPZ to supply any surplus electricity that is generated by the Company. So,

the Company’s ability to service its both existing and future financial obligations, does not solely rest on BEPZA’s ability to make its tariff payments under the PSA. Therefore, UPGDCL is out of the single party exposure.

RISK ASSOCIATED WITH TARIFF OF ELECTRICITY

Risk associated with pricing/tariff of electricity may arise if buyers have control over price/tariff determination.

Aside from UPGDCL, no other power plant in Bangladesh sells electricity under variable tariff rates that can be revised by the Government. UPGDCL has agreements with BEPZA, REB, PDB that provision predetermined and contracted terms and conditions regarding the tariff of electricity. Tariff is based on delivered MW/h for each year which is adjusted and indexed from time to time in accordance with the PSA and the said reference tariff. Reference tariff is also adjusted in accordance with the changes in Government tariff rate. During the year 2012, UPGDCL’s tariffs have been increased by 32.49% for DEPZ, 32.79% for CEPZ, 11.15% for REB, 42.49% for BPDB. Therefore, the Company enjoys higher earnings based on increased selling rates expected to be adjusted upwards in the future.

ISSUE SIZE AND PURPOSE OF THE PUBLIC OFFERING Section: III

FINANCIAL STRUCTURE OF THE COMPANY

Particulars No. of Shares Amount (BDT)

Authorized Capital 1,000,000,000 10,000,000,000.00

Paid-up Capital as per audited accounts (as on December 31, 2012) 197,966,484 1,979,664,840.00

Raising of Capital through bonus issue2 98,983,242 989,832,420.00

Pre-IPO Paid-up Capital 296,949,726 2,969,497,260.00

Initial Public Offering through Book Building Method3 33,000,000 330,000,000.00

Post-IPO Paid-up Capital 329,949,726 3,299,497,260.00 2United Power Generation and Distribution Company Limited raised its paid up capital from BDT 1,979,664,840 to BDT 2,969,497,260 by way of issuance of 50% bonus shares in the form of stock dividend as approved by its shareholders at the AGMheld on February 28, 2013 which is subject to the consent of the Bangladesh Securities and Exchange Commission (BSEC). The Paid-up capital will be increased in the following way:

Particulars Allottee No. of Shares Paid-up Capital (BDT)

50% Stock Dividend based on the Audited Financial Statements of December 31, 2012

Existing Shareholders as of December 31, 2012 98,983,242 989,832,420.00

3The Company is planning to issue 33,000,000 ordinary shares of BDT 10.00 each through initial public offering (IPO) under Book Building Method subject to approval from BSEC.

USE OF IPO PROCEEDS AND SCHEDULE OF IMPLEMENTATION United Power Generation and Distribution Company Limited will raise the capital through Initial Public Offering (IPO) in order to meet increasing need for fund for the purpose of expansion and repayment of its debt. Increase in turnover and savings of financial cost will lead to higher profitability of the Company.

Capacity Enhancement Plan

Dhaka Export Processing Zone Power Plant

To cater to the ever increasing electricity demand of Dhaka Export Processing Zone, BEPZA & UPGD have signed an agreement to expand the capacity of currently operating Natural Gas fired 41 MW power plant in Dhaka EPZ, Savar, Dhaka up to 100 MW.

Agreement has been signed with Rolls-Royce, world renowned genset manufacturer on 30th May, 2012 for supplying 5units of Rolls-Royce B35:40V20AG2 Engines. The machines were selected on the basis of Price, Delivery Schedule & Efficiency. They are gas-fired engine generating sets with capacity of 9340 kWh each, for a total expansion capacity of 46700 kWh. Thus the total capacity of DEPZ Power Plant would be 88 MW.

Chittagong Export Processing Zone Power Plant

To cater to the ever increasing electricity demand of Chittagong Export Processing Zone, BEPZA & UPGD have signed an agreement to expand the capacity of currently operating Natural Gas fired 44 MW power plant in Chittagong EPZ, South Halishahar, Chittagong up to 100 MW.

Agreement has been signed with Rolls-Royce, world renowned genset manufacturer, on 30th May, 2012 for supplying 3units of Rolls-Royce B35:40V20AG2 Engines. The machines were selected on the basis of Price, Delivery Schedule & Efficiency. They are gas-fired engine generating sets with capacity of 9340 kWh each, for a total expansion capacity of 28020 kWh. Thus, the total capacity of CEPZ Power Plant would be 72 MW.

Estimated Project Cost for Expansion:

Particulars Amount in BDT Amount in BDT

Project Expansion Cost: Power Plant 5,031,383,000

5,246,383,000Gas Line 82,500,000 Transportation 100,000,000 Office Equipment & Furniture 22,500,000 Office Vehicle 10,000,000

Working Capital Requirement: 150,000,000

Total Project Cost 5,396,383,000

Sources of Fund:

Sl. No. Particulars Amount in BDT

1. IPO Proceeds/Debt Financing4 3,000,000,000

2. Own Financing and Issuance of Preference Shares5 2,396,383,000

Total 5,396,383,000 4BDT 300.00 Crore will be utilized in project expansion purpose and if there is any surplus or shortage of fund that will be financed and/or adjusted with bank loan. 5Own financing will be partially arranged by realizing the loans to inter-companies/sister concerns, as decided in the meeting of the Board of Directors dated January 31, 2013. The balance amount of fund arranged through loan realization will be utilized for repayment of outstanding Bank Loans. Moreover, the Company has an arrangement with NDB Capital Limited to raise BDT 200.00 Crore through issuance of preference shares which may also be utilized in project expansion and/or repayment of debt.

As UPGDCL was determined to complete the new project within May 2013, it started the project works by bridge finance and/or term finance from Dutch-Bangla Bank Limited, Trust Bank Limited , Eastern Bank Limited and Dhaka Bank Limited because waiting for IPO fund would have delayed the project expansion. Therefore, to get the project done within the stipulated time, UPGD has availed bridge finance and/or term finance from Dutch-Bangla Bank Limited, Trust Bank Limited, Eastern Bank Limited and Dhaka Bank Limited to temporarily finance the project cost of project expansion that will be immediately adjusted from IPO proceeds.

Any surplus of IPO proceeds will be utilized for repayment of existing outstanding loan as shown in the audited financial statements of the year 2012.

All civil works, erection of power house building & mechanical/fabrication (EPC- Erection, Procurement & Construction) works are going on at full swing. Most of the equipments have been procured and are already at site. The Gensets are also at the Power Plant site. With the current momentum of progress, the commercial operation of the projects may start from May 2013.

TERMS OF CONTRACT As per rule 8B-4(C) of Securities and Exchange Commission (Public Issue) Rules, 2006 there is no contract covering any of the activities of the Issuer Company for which the proceeds of sale of securities from IPO are to be used.

INFORMATION ABOUT THE COMPANY Section: IV

COMPANY PROFILE United Power Generation and Distribution Company Limited (hereinafter referred to as “The Company”, “UPGDCL”)formerly known as Malancha Holdings Limited (MHL) was incorporated in Bangladesh as a private limited company on January 15, 2007 under the Companies Act 1994. The Company changed its name from Malancha Holdings Limited to United Power Generation and Distribution Company Limited on October 01, 2009. Subsequently, UPGDCL was converted to a Public Limited Company on December 30, 2010. The registered office of the Company is situated at United Centre, House # NW (J)-6, Road # 51, Gulshan - 2, Dhaka - 1212, Bangladesh. UPGDCL started its commercial operation on December 26, 2008 with its 1st power plant located at Dhaka Export Processing Zone, which had an installed capacity of 328,000,000 KWH. Subsequently, the Company enhanced its production capacity by installing its 2nd power plant on August 12, 2009 located at Chittagong Export Processing Zone with an installed capacity of 352,000,000 KWH.

The natural gas fired power plants of UPGD consist of Wärtsilä and MTU engine generator terminal with 30 years of expected useful life, which form the major part of the power generation companies. This gas-powered generating set consists of auxiliaries, exhaust gas silencer, and electrical, mechanical & civil construction and erection. Each power plant has fourteen (14) integrated systems named fuel, lubrication oil, compressed air, cooling, charge air, exhaust, water treatment, fire protection, emission control, automation, electrical, station service, DC and high voltage systems.

The Power Plants of UPGDCL:

DEPZ Plant

The DEPZ Power Plant is set up on 5,920.13 sq. meters at Dhaka Export Processing Zone (DEPZ) premises, under the agreement with Bangladesh Export Processing Zones Authority (BEPZA) signed on May 6, 2007, having core engine facilities from Wärtsilä, Finland of 41 MW capacities. UPGDCL uses gas as fuel for the generators. This gas-powered generating set consists of Auxiliaries, Exhaust Gas Silencer, and Electrical, Mechanical & Civil Construction and Erection. The power plant has 14 (fourteen) integrated systems named fuel, lubrication oil, compressed air, cooling, charge air, exhaust, water treatment, fire protection, emission control, automation, electrical, station service, DC and high voltage systems. The plant has 04 (four) gas fired engines with the capacity of 8.73 MW each and three (3) gas fired engines with the capacity of 2 MW each for the generation of electricity. The plant gets gas supply from Titas Gas Transmission and Distribution Company Limited. The plant started to generate electricity from December 26, 2008.

CEPZ Plant

The CEPZ Power Plant is set up on 6,033.80 sq. meters at Chittagong Export Processing Zone (CEPZ) premises, under agreement with Bangladesh Export Processing Zones Authority (BEPZA) signed on May 16, 2007, having core engine facilities from Wärtsilä, Finland of 44 MW capacities. The Company uses gas as fuel for the generators. This gas-powered generating set consists of Auxiliaries, Exhaust Gas Silencer, and Electrical, Mechanical & Civil Construction and Erection. The power plant has 14 (fourteen) integrated systems named fuel, lubrication oil, compressed air, cooling, charge air, exhaust, water treatment, fire protection, emission control, automation, electrical, station service, DC and high voltage systems. The plant has 05 (five) gas fired engines with the capacity of 8.73 MW each. The plant gets gas supply from Karnaphuli Gas Distribution Company Limited. The plant started to generate electricity from August 12, 2009.

Capacity Increase:

The Company has undertaken expansion project at Dhaka Export Processing Zone (DEPZ) to increase its capacity from 41 MW to 88 MW and another project at Chittagong Export Processing Zone (CEPZ) to increase capacity from 44 MW to 72 MW. The DEPZ project will install 2 (two) Heat Recovery Boilers to produce 8 ton/h of steam & CEPZ project will install 3 (three) Heat Recovery Boilers to produce 12 ton/h of steam to sell to other customers.

Important Dates:

Particulars Date

Date of incorporation as Private Limited Company January 15, 2007

Signing Date of PSA: BEPZA - DEPZ May 6, 2007

Signing Date of LLA: BEPZA - DEPZ May 6, 2007

Signing Date of PSA: BEPZA - CEPZ May 16, 2007

Signing Date of LLA: BEPZA - CEPZ May 16, 2007

Signing Date of GSA: Titas Gas Transmission & Distribution Co. Ltd. November 16, 2008

Date of Commercial Operation of DEPZ Power Plant December 26, 2008

Signing Date of PSA: Oli Knitting & Fabrics Limited April 2, 2009

Signing Date of PPA: REB May 13, 2009

Signing Date of GSA: Karnaphuli Gas Distribution Co. Ltd. July 9, 2009

Date of Commercial Operation of CEPZ Power Plant August 12, 2009

Signing Date of PPA: BPDB September 23, 2009

Conversion date from Private Limited Company to Public Limited Company December 30, 2010

Signing Date of PSA: BEPZA - KEPZ April 4, 2012

IPP License no. BERC/POWER/CIPP-0001/L/006 (Part-1)/2991 for CEPZ renewed on December 3, 2012

IPP License no. BERC/POWER/CIPP-0002/L/0004 (Part-3)/57 for DEPZ renewed on January 10, 2013

NATURE OF BUSINESS The Company is engaged in the business of establishing power plants for generation and distribution of electricity. The principal activity of the Company is to set up two gas fired power plants, one at DEPZ with 41 MW capacity and the other at CEPZ with 44 MW capacity to generate and sell electricity to the export processing industries located inside DEPZ and CEPZ with the provision of selling surplus power outside the EPZ after fulfilling their requirement. The Company is supplying electricity to the national grid of Bangladesh through selling the same to Dhaka PBS -1 (Polli Biddut Shomity) of REB and Bangladesh Power Development Board (BPDB).

Process Flow:

PRINCIPAL PRODUCTS AND SERVICES & MARKET FOR THE PRODUCTS Generation and distribution of electricity is the principal products and services of the Company. The electricity produced from the Company’s power plants is sold to Bangladesh Export Processing Zone Association (BEPZA). In turn, BEPZA distributes the generated electricity to industries in Dhaka Export Processing Zone and Chittagong Export Processing Zone. UPGDCL also supplies surplus electricity to Rural Electrification Board and Bangladesh Power Development Board.

PRODUCT/SERVICE THAT ACCOUNTS FOR MORE THAN 10% OF THE COMPANY’S TOTAL REVENUE The principal activity of the Company is to produce and sell electricity. Therefore, selling electricity is accounted for 100% of the Company’s total revenue.

Gas Input Processed Inside the Generator

Generated Electricity Distribution

ASSOCIATES, SUBSIDIARY/RELATED HOLDING COMPANY AND THEIR CORE AREAS OF BUSINESS

Name of the Compa ny Relationship with UPGDCL Core Area of Business

United Enterprise & Company Limited Holding Company

The Company is engaged in Power generation, sub-stations, broadcasting and telecommunications, maritime transportation and freights and the turnkey solutions and system management through its subsidiaries.

Holding Company Profile – United Enterprise and Company Limited

United Group is a widely known Business conglomerate in the Country. It started its operations in the late seventies with its flagship Company named “United Enterprises and Company Limited”. The Group has been a strong, capable and dynamic business conglomerate over the last few decades proven by origination, execution and completion of large and pioneering projects. The group has expanded its business in various sectors in the economy such as the following one:

Manufacturing Real Estate and Construction Energy& Power generation Healthcare and HospitalBroadcasting and communications EducationPort & Maritime transportation Civil & Hydro EngineeringTextile mills Polymer Industries

United Enterprise and Company Limited (hereinafter referred as “UECL”) was incorporated on December 31, 1979 as a Private Limited Company under Companies Act 1994 having its registered office at House # SW(I) - 10, Road # 05, Gulshan # 1, Dhaka - 1212 and Corporate Office at United Centre, House # NW (J)-6, Road # 51, Gulshan - 2, Dhaka - 1212. Authorized Capital of the Company is Tk. 5,000,000,000 divided into 50,000,000 Shares of Tk. 100 each. United Enterprise and Company Limited raised its paid-up capital from Tk. 10,000,000 to Tk. 2,000,000,000 by way of issuance of bonus shares in the form of stock dividend as approved by its shareholders at the Board Meeting held on September 15, 2012 subject to the consent of the Bangladesh Securities and Exchange Commission (BSEC). The intent letter for raising paid-up capital to Tk. 2,000,000,000 from the BSEC was received on March 24, 2013 (ref: SEC/CI/CPLC (Pvt.)-451/2012/2094). Thus, the Paid-up Capital of UECL stood at Tk. 2,000,000,000 consisting of 20,000,000 Ordinary Shares of Tk. 100 each.

Shareholding Structure of United Enterprise Company Limited

Sl. No. Name of the Shareholders Status No. of Shares

Subscribed

Subscribed Amount (BDT)

% of Shareholding

1. Mr. Moinuddin Hasan Rashid Managing Director 6,880,000 688,000,000 34.40%2. Mr.Ahmed Ismail Hossain Shareholder 3,400,000 340,000,000 17.00%3. Mr.K.M.A.Shamim Director 3,440,000 344,000,000 17.20% 4. Mr.Akhter Mahmud Rana Shareholder 2,580,000 258,000,000 12.90% 5. Mr. Faridur Rahman Khan Director 1,000,000 100,000,000 5.00% 6. Mr. Abul Kalam Azad Director 1,000,000 100,000,000 5.00% 7. Mrs.Hafiza Mahmood Shareholder 320,000 32,000,000 1.60% 8. Mrs.Shirin Ahmed Shareholder 160,000 16,000,000 0.80% 9. Mrs.Khaleda Ahsan Shareholder 160,000 16,000,000 0.80%

10. Mrs.Nasrin Mahmud Shareholder 160,000 16,000,000 0.80% 11. Mr. Malik Talha Ismail Bari Director 40,000 4,000,000 0.20% 12. Mr. Nasiruddin Akhter Rashid Director 860,000 86,000,000 4.30%

Total 20,000,000 2,000,000,000 100.00%

United Enterprise and Company Limited holds equity in the following Companies:

Name of the Company Nature of Business % of Ownership held by UECL

United Ashuganj Energy Limited (UAEL) Power Producer 99.97%United Ashuganj Power Limited (UAPL) Power Producer 90.00% United Hospital Limited Managed Care and Healthcare Service

Provider 65.00%

United Polymers Limited Manufacturer of Polyethylene (PET) Products

63.74%

United Makkah Madina Travel & Assistance Co. Ltd. Travel Agency 56.25% United Power Generation & Distribution Co. Ltd. Power Producer 52.31% Gunze United Limited Manufacture and Dyeing of Sewing

Threads and Garments Accessories 50.00%

United Land Port Teknaf Limited Developer of Infrastructural and Civil Projects for Exporters, Importers and

the Government

49.00%

Khulna Power Company Limited (KPCL) Power Producer 37.50% Khanjahan Ali Power Company Limited (KJAPCL) Power Producer & Subsidiary of KPCL 37.50% Khulna Power Company Unit II Limited (KPCL-II) Power Producer & Subsidiary of KPCL 35.28% Westmount Power Company (Bangladesh) Limited Power Producer 30.00%

DISTRIBUTION OF PRODUCTS/SERVICES United Power Generation and Distribution Company Limited has signed a Power Supply Agreement (PSA) with BEPZA to ensure uninterrupted quality supply of electricity to Dhaka EPZ and Chittagong EPZ under Private Sector Power Generation Policy of Bangladesh. The Company has arranged and connected feeders from the DEPZ and CEPZ power systems to its own plants in order to provide the stipulated loads to the DEPZ and CEPZ power systems.

Additionally, UPGDCL has a Power Purchase Agreement (PPA) with the Rural Electrification Board (REB) and Bangladesh Power Development Board (BPDB). The Company’s power plants maintain interconnection lines and sub-station equipment with the national transmission grid through which it distributes electricity to REB and BPDB.

INDUSTRY OUTLOOKCurrent State of the Industry:

As a developing country, Bangladesh needs the energy sector to flourish and to sustain the growth momentum. To become a middle-income country by 2021, we need to reduce the gap of supply and demand in energy sector. Experts say that energy sector of a country has to progress at 1.5 times of the targeted GDP of that country.

Considering the above facts, Government of Bangladesh has taken various steps in reducing the gap of supply and demand of electricity. Government of Bangladesh (GOB) adopted the Private Sector Power Generation Policy (PSPGP) in 1996 to promote private sector participation in the generation of electricity with a view to promote economic growth i.e., to promote private participation in the power sector, harness competition, ensure optimal use and conservation of country’s limited natural gas resources, develop new power plants as well as rehabilitate some of its old and inefficient power plants through Public Private Partnership.

So far, 57 contracts for new power plants with a capacity of about 7649 MW have been awarded among the private entrepreneurs, of which 31 plants with a capacity of about 2601 MW have already been commissioned and 28 plants with capacity of about 5048 MW are under construction. Around 24 projects with a capacity of about 3744 MW are under tendering process and expected to be awarded within 6 months. Highest generation so far was recorded on August 04, 2012, which was 6350 MW and it is increasing gradually. With proper load management, irrigation for agriculture was given the fullest support that contributed to bumper harvests during the last crop seasons.

Present Electricity Generation Capacity (MW) as on December 2012:

Public Sector Generation Capacity (MW) % of Generation Capacity BPDB 3700 43.40% APSCL 682 8.00% EGCB 210 2.46%

NWPGCL 150 1.76% RPCL 52 0.61%

Subtotal 4794 56.23%

Private Sector Generation Capacity (MW) % of Generation Capacity

IPPs 1297 15.21% SIPPs (BPDB) 99 1.16% SIPPs (REB) 226 2.65%

15 YR. Rental 169 1.98% 3/5 YR. Rental 558 6.55% Quick Rental 1382 16.21%

Subtotal 3731 43.77%

Total 8525 100.00%

From the above table, we have seen that currently the contribution of private sector in total power generation is almost 44%, among which the contribution from the Independent Power Producers (IPPs) is more than 15%. Considering the current scenario and the future prospect of this sector it is apparent that the participation of private sector in power sector will flourish in near future.

Market Size and Growth Rate:

Taking the completed projects, ongoing projects and signed agreements into consideration Power Division of Government made a projection about future addition of power plants that is given below:

YEAR 2009(MW)

2010(MW)

2011(MW)

2012(MW)

2013(MW)

2014(MW)

2015(MW)

2016(MW)

Public - 255 800 632 1467 1660 1410 750% of Total - 32.9% 45.4% 31.8% 43.9% 50.3% 64.6% 31.9%

Private 356 270 125 1354 1372 1637 772 1600% of Total 100.0% 34.8% 7.1% 68.2% 41.1% 49.7% 35.4% 68.1%

Quick Rental - 250 838 - 500 - - -

% of Total - 32.3% 47.5% - 15.0% - - -

Total 356 775 1763 1986 3339 3297 2182 2350

From the above table we can see that the participation of the private sector in power sector will continue to increase in forthcoming years. This is an opportunity for the private entrepreneurs to engage in this sector and contribute to the national economy.

Source: www.bpdb.gov.bd

Source: www.powerdivision.gov.bd

In the Power Sector Master Plan, a preliminary demand was forecasted based on 7 % GDP growth rate. The actual demand could not be supplied for the last few years. The maximum demand served so far is 6350 MW. The electricity development is required to be accelerated to increase access and attain economic development. The desirable economic growth rate would be about 7% p.a. Based upon this preliminary study the anticipated peak demand would be about 10,283 MW in FY2015, 17,304 MW in FY2020 and 25,199 MW in 2025.

Fiscal Year Peak Demand (MW) Growth Rate (%)2010 6,454 - 2011 6,765 4.82% 2012 7,518 11.13% 2013 8,349 11.05%2014 9,268 11.01%2015 10,283 10.95% 2016 11,405 10.91% 2017 12,644 10.86% 2018 14,014 10.84% 2019 15,527 10.80%2020 17,304 11.44% 2021 18,838 8.87% 2022 20,443 8.52% 2023 21,993 7.58%2024 23,581 7.22%2025 25,199 6.86% 2026 26,838 6.50% 2027 28,487 6.14% 2028 30,134 5.78% 2029 31,873 5.77%2030 33,708 5.76%

A comparison of GDP growth rate and energy growth rate based on historical data extended up to year 2020 is given below:

This comparison is in alignment with the relationship between GDP growth rate and Energy growth rate.

Source: www.bpdb.gov.bd

Source: PSMP-2010

COMPETITIVE CONDITION OF BUSINESS

Comparative Advantages of UPGDCL:

Variable Tariff Rate:

United Power Generation and Distribution Company Limited (UPGDCL) sells electricity in Bangladesh under variable tariff rates that can be increased from time to time as per the Government Tariff Policy.

Only Power Company to operate within BEPZA under BOO (Build Own & Operate) System:

UPGDCL is the only Independent Commercial Power Company mandated to build, operate and own power plants within the Export Processing Zones of Bangladesh by BEPZA;

UPGDCL has no competition in the markets in which it operates and sells electricity and possible entry of New Power companies won’t create any industry risk for the company.

Longer Tenure of Agreement:

The Power Supply Agreement (PSA) between the Company and BEPZA is for 30 years and there are provisions for auto-renewal of the agreement for an additional 30 years thereafter;

The Land Lease Agreement (LLA) between UPGDCL and BEPZA is also for 30 years and is valid based on the tenure of the PSA;

Upon mutual consent, these agreements are renewable and hence, risk of inadequate operational years can be mitigated. It can be noted that other IPP power companies operating in the country are between 15 to 22 years whereas the Company’s power project life spans for 30 years and is extendable for another 30 years out of which the Company has exercised only 4 years of its project life.

Longer Tenure of Gas Supply Agreement (GSA) with Karnaphuli Gas Distribution Company Limited:

The Gas Supply Agreement (GSA) between UPGDCL and Karnaphuli Gas Distribution Company Limited is valid for the life of the power project and as per the signed Power Supply Agreement (PSA) with BEPZA.

Growth Opportunities of the Company:

Growth opportunity of Export Processing Zones in Bangladesh:

Increasing labor cost in other countries and shifting of Chinese manufacturing industry towards production of high tech goods leaves a void space in manufacturing goods of various types;

Bangladesh has huge potential in filling the void space. EPZ’s will get huge foreign investment if Bangladesh can capitalize the opportunity. Further foreign investment in EPZ’s will increase the demand of energy;

As UPGDCL has the only mandate in operating power plants within BEPZA, increased demand will create growth opportunity for the company.

Competitors of UPGDCL:

United Power Generation and Distribution Company Limited is the only Independent Commercial Power Company mandated to build, operate and own power plants within the Export Processing Zones of Bangladesh by BEPZA.

UPGDCL has no competition in the markets in which it operates and sells electricity and possible entry of New Power companies won’t create any industry risk for the company. However, other power producers are contributing to the national grid rather than selling it for commercial purpose. Unlike other IPPs, UPGDCL sells electricity directly to its customers without the help of intermediaries.

Year Wise Tariff Increasing Rate:

Project (Power Plant) Buyer

Tariff Increasing Rate (Tk./KwH) % December 2012 December 2011 December 2010

DEPZBEPZA 32.49% 22.97% -

REB 11.15%7 51.07% 9.50%

CEPZ BEPZA 32.79% 24.49% -

BPDB 42.49% 36.64% -

7In 2011, tariff rate of REB has been increased by three times of the prevailing rate, whereas tariff of REB rate increased only once in 2012.

Environmental Impact:

The environmental impact of a gas power plant is low; it is both efficient and environmentally sound. These gas power plants have the highest simple-cycle efficiency in the market. Natural gas has the lowest CO2 emissions compared to other fossil fuels. The SO2 and PM emissions are relatively low for power plants running on natural gas. The NOx emissions are also lower than with fuel oil-fired diesel/HFU engines. The engine cooling arrangement using closed-circuit radiator cooling reduces plant process water consumption to almost zero, minimizing the effect on local water resources. Effective sound-proofing allows the plant to be operative even in densely populated areas.

Challenges and Critical Issues of the Business

1. To achieve the best mix of energy supply including imported resources, it would be required to use economical and stable power source in consideration of environmental protection. Especially coal will be an important resource as the primary energy supply in Bangladesh hereafter, due to -

its price stability and lower volatility compared with oil and natural gas;

larger reserve to production ratio compared with oil and natural gas; and

Its widespread availability throughout the world and is expected to be supplied stably.

The major primary energy supply forecast in Bangladesh states that natural gas supply will decrease after 2017 while coal supply will increase as an alternative source of natural gas. According to the Power Sector Master Plan 2010, the target composition of power supply as of 2030 is set at 50% for domestic and imported coal, 25% for domestic and imported (in the form of LNG) natural gas and 25% for other sources such as oil, nuclear power and renewable energy. According to this plan, the government is planning to reduce the dependency upon gas based power plants and increasing the usage of coal based power generation.

2. Another problem that the gas based power plants are recently facing is inadequacy and low pressure in gas supply in a number of power plants. Though it is expected that the gas supply situation would improve with the completion of the pipelines now under construction and development of new gas fields by the international oil companies, long term expectation is not very impressive.

3. Bangladesh has recently been facing difficulties in mobilizing further private capital, as is the case in otherdeveloping countries. A worldwide trend shows that private investors’ interest in IPPs in developing countries has fallen off, and the number and value of transactions sponsored by these investors are well below their peak in 2008. Several factors are generally considered to contribute to the fall-off, including:

Financial crises;

Conditions in international capital markets and the drop in investors’ market capitalization values affected their ability to raise capital for new investments; and

Concerns have been raised about the stability and enforceability of the legal and regulatory framework in power sector reform.

4. Among these, enforceability of the legal and regulatory framework is needed to be strengthened in Bangladesh. Several attempts to award contracts for new IPP projects in the last few years have not been very successful, partly because of insufficient competition with few international participants under unfavorable capital market conditions, and partly because of perceived irregularities in procurement procedures. Local investors also tend to be discouraged from participating in IPP bidding in the absence of an appropriate regulatory framework and because of requirements of high capital investment.

SOURCES AND AVAILABILITY OF RAW MATERIALS AND PRINCIPAL SUPPLIERS

Items of Raw Materials Name of Supplier/Manufacturer Terms of Procurement

Natural Gas Supplier: Titas Gas Transmission and Distribution Co. Limited (TGTDL) and Karnaphuli Gas Distribution Company Limited (KGDCL)

The major raw material for generating electricity is natural gas. Gas Supply Agreements (GSA) have been made and entered into to receive required gas supplies for generation of electricity.

Generators Manufacturer: Wärtsilä, Finland OY and MTU Pte Ltd, Germany with capacity per genset of 8.73 MW and 3.00 MW respectively.

Equipment Supply Agreements have been made and entered into regarding supply, delivery, and installation of its generators.

Spare Parts Manufacturer: Wartsila Finland Oy, Areva T&D France, ABB Ltd India, Tognum Asia Pte Ltd (MTU Pte Ltd) Singapore and Energy Pack Bangladesh.

Spare parts and others are purchased from engine providers at agreed rates year to year.

Lubricant Oils Supplier: Mobil Jamuna Limited Lubricant oils are purchased from Mobil Jamuna Limited as and when required.

SOURCES OF AND REQUIREMENT FOR POWER, GAS AND WATER OR ANY OTHER UTILITIES

Particulars Sources & Requirement

POWER BEPZA is required to deliver energy to UPGDCL for the construction, commissioning, testing and other emergencies of the plants at the prevailing tariff rate. The operational power requirement of both the power plants is met from its own generation.

GAS UPDGCL’s plants require natural gas for generation and distribution of electricity. BEPZA facilitates necessary gas connection for required quantity and specifications from the nearest District Regulatory Station (DRS) of Titas Gas Transmission and Distribution Company Limited and Karnaphuli Gas Distribution Company Limited and maintains such connection.

WATER BEPZA provides necessary water supply to UPGDCL’s power stations and a monthly water bill is paid accordingly in favor of BEPZA.

MEDICAL Medical bills are paid monthly to DEPZ Medical Center and CEPZ Hospital located near the power stations to ensure free treatment of plant employees.

NAME OF THE CUSTOMERS WHO PURCHASE 10% OR MORE OF THE COMPANY’S PRODUCTS/SERVICES

DEPZ, CEPZ, BPDB and REB are the buyers who purchase more than 10% of the net electrical output of the Company -

SL. No. Name of Customers Contribution to Sales (%)

1. Dhaka Export Processing Zone (DEPZ) 34%

2. Chittagong Export Processing Zone (CEPZ) 32%

3. Bangladesh Power Development Board (BPDB) 18%

4. Rural Electrification Board (REB) 14%

DESCRIPTION OF CONTRACT WITH PRINCIPAL SUPPLIERS/CUSTOMERS

Contract with Principal Suppliers:

Contract Nature of Transaction

Name of the

Principal Supplier

Description of Contract

Gas Supply Agreement(GSA)

Supplier Titas Gas Transmission &Distribution Company Limited

Signing Date:

Tenure:

Supply Quantity:

Purchase Quantity:

Purchase Rate:

Payment:

Extra Charges:

Compensation for Supply Failure:

Termination by Supplier:

16 th November 2008 for UPGDCL’s DEPZ Plant;

Valid for 15 years and renewable every 5 years thereafter (with 1 year prior notice received);

Maximum Monthly Contract Quantity (MCQ) of 5,281,200 Standard Cubic Meters (SCM);

Minimum Monthly Purchase Obligation (MPO) of 3,168,720 SCM or 60% of MCQ;

As per gas tariff price range set by Government of Bangladesh (GoB) and Bangladesh Energy Regulatory Commission;

Monthly gas purchase bill to be paid within 21 days of invoice, else 15% i nterest wil l be charged for late payment. If late payment is not made within 60 days, supply will be terminated;

If gas utilized for alternative purposes and more gas is secured than the meter registers, extra charges apply. To be paid in equivalent of max 50% of monthly bill (average of last three bills);

MPO will be reduced by an amount (i) hours of interruption (ii) 60% of Max Hourly Quantity (MHQ);

Upon 30 days of issuing a written notice for failure to pay gas bill by the Company.

Gas Supply Agreement(GSA)

Supplier Karnaphuli Gas Distribution Company Limited (KGDCL)

Signing Date:

Tenure:

Supply Quantity:

Purchase Quantity:

18 th November 2009 with BEPZA & KGDCL on account of CEPZ Power Project;

Valid for the life of the power project and as per the signed Power Supply Agreement (PS A) withBEPZA which is valid for 30 years and expires on May 15, 2037;

Maximum Monthly Gas Usage (MMGU) of 9,077,399 standard cubic meters (SCM) or Annual Contract Gas Usage (ACGU) of 108,928,788 SCM. May request excess supply with prior notification specified in the contract;

Minimum Purchase Obligation (MPO) is 50% of ACGU. MPO may be reduced upon UPGD’s refusal, supplier’s failure to deliver;

Purchase Rate:

Payment:

Compensation for Supply Failure:

Termination by Supplier:

As per gas tariff price range set by Government of Bangladesh (GOB) or any authority assigned;

To be paid within 35 days of invoice, else interest will be charged at a rate prevailing in Bangladesh for late payments;

If gas is supplied less than MPO; only gas usage will be billed and annual deficiency payment will accrued; deferred supply could be utilized in the following contract year;

The failure by Project Company to make any payment required to be made by it to Gas Supplier under the Agreement within 60 (sixty) days after notification by Gas supplier to project company that the same is due and payable.

Contract with Principal Customers:

Contract Nature of Transaction

Name of the

Principal Supplier

Description of Contract

Power Supply Agreement(PSA)

Customer Bangladesh Export Processing ZoneAuthority (BEPZA) - DEPZ & CEPZ

Signing Date:

Tenure:

Supply Quantity:

Purchase Quantity:

Purchase Rate:

Payment:

6th May, 2007 for UPGDCL’s DEPZ Plant and 16th

May, 2007 for CEPZ Plant;

Valid for 30 years and renewable for additional 30 years as per Land Lease Agreement (LLA) which is valid until May 15, 2037;

Power quality (50 cycles, 11 KV +/- 5% voltage level, min 0.80 power factor), total power required by BEPZA to supply to industries located in DEPZ and CEPZ, UPGDCL has the right to sell surplus electricity to any organization or industry outside EPZs;

Total electric capacity and energy of UPGDCL’s power stations to meet total requirement of DEPZ and CEPZ; If UPDGCL is unable to supply the required amount, BEPZA can buy from other sources i.e. REB, BPDB, DESA, DESCO, PGCB;

A per reference tariff composed of energy component and demand charge component and tagged to prevailing 11KV electricity tariff of Dhaka PBS1 for DEPZ and 33KV General Category H rate of BPDB for CEPZ;

Monthly invoice is raised within 7 days after end of each month and must be paid by BEPZA within 15 days of invoice, else interest is charged on daily basis;

Compensation for Supply Failure:

Termination:

Liquidated charges are Tk. 5 lacs per day for delay in the plant’s Commercial Operation Date, Tk. 1lac per day for complete plant shutdown and Tk. 1 lac per day for outage of each unit per full day, charges if failure to supply lasts for more than 1 hour;

Failure to construct within 90 day s, COD (Commercial Operation Date) delay of 6 months, abandons operations for 30 days, land lease agreement termination.

Contract Nature of Transaction

Name of the

Principal Supplier

Description of Contract

Power Supply Agreement(PSA)

Customer Bangladesh Export Processing ZoneAuthority (BEPZA) - KEPZ

Signing Date:

Tenure:

Supply Quantity:

Purchase Quantity:

Purchase Rate:

Payment:

Termination:

4th April, 2012 for UPGDCL’s KEPZ Plant

Valid for 30 years and renewable for additional 30 years as per Land Lease Agreement (LLA) which is valid until May 15, 2037;

KEPZ will buy surplus power of the CEPZ power plant up to its total requirement.

Total electric capacity and energy of UPGDCL’s power stations to meet total requirement of DEPZ and CEPZ; If UPDGCL is unable to supply the required amount, BEPZA can buy from other sources i.e. REB, BPDB, DESA, DESCO, PGCB;

Reference tariff for each billing mo nth shall be equal to the prevailing flat tariff of 33KV General Category H rate of BPDB for CEPZ; in effect from time to time and without any reference to sanctioned load .

Monthly invoice is raised within 7 days after end of each month and must be paid by BEPZA within 15 days of invoice, else interest is charged on daily basis;

Any material breach by the project company of the agreement that is not remedied within 30 (thirty) days after notice from BEPZA, that could result in the termination of the agr eement.

Contract Nature of Transaction

Name of the

Principal Supplier

Description of Contract

Power Purchase Agreement(PPA)

Customer Rural Electrification Board (REB)

Signing Date:

Tenure:

Supply Quantity:

Purchase Quantity:

Purchase Rate:

Payment:

Termination:

May 09, 2012 for UPGDCL’s DEPZ Plant;

Agreement shall be renewed and valid for 3 years from the signing date or will expire on May 08, 2015;

Minimum supply of 5 MW to Dhaka PBS-1;

Max supply can be determined upon mutual agreement, Joint meter reading determines purchase quantity per month;

Total charges = operation & maintenance component + fuel cost component;

Within 15 days from submission of invoice;

Sustained Force Majeure, non-performance, non- compliance with policy guidelines of BERC.

Power Purchase Agreement(PPA)

Customer Bangladesh Power Development Board (BPDB)

Signing Date:

Tenure:

Supply Quantity:

Purchase Quantity:

Purchase Rate:

Payment:

Termination:

July 03, 2011, effective from September 23, 2009for UPGDCL’s CEPZ Plant

Agreement shall be renewed and valid for 3 years from the signing date or will expire on September 23, 2015.

Surplus generation of electricity after meeting CEPZ requirements;

Maximum supply can be determined upon mutual agreement, Joint meter reading determines purchase quantity per month;

Total energy payment includes bulk tariff set by BERC, net electrical energy supplied, power factor adjustment, import tariff;

No later than 45 days from submission of invoice; late payment shall bear interest;

Sustained Force Majeure, non-performance, non- compliance with policy guidelines of BERC.

Contract Nature of Transaction

Name of the Principal Supplier

Description of Contract

Power Purchase Agreement(PPA)

Customer Oli Knitting Fabrics Limited

Signing Date:

Tenure:

Contracted Load:

Purchase Quantity:

Purchase Rate:

Payment:

Termination:

2nd April, 2009 for UPGDCL’s DEPZ Plant;

Valid for 15 years or April 01, 2024;

1,000 KW and an additional 30% on demand

Minimum purchase obligation (MPO) is 70% of contracted load;

Energy charge at prevailing flat rate of Dhaka PBS1 and demand charge;

Within 15 days from submission of invoice, subject to 2% interest on late payments;

Upon 30 days written notice on failure to pay security deposit, failure to pay 3 consecutive invoices, outstanding bill exceeds 90% of security deposit.

DESCRIPTION OF ANY MATERIAL PATENTS, TRADEMARKS, LICENSES OR ROYALTY AGREEMENTS

United Power Generation and Distribution Company Limited does not have any material patents, trademarks, licenses or royalty agreements except Trade, Environment and Independent Power Producer (IPP) licenses to conduct its business in compliance with regulations.

NUMBER OF EMPLOYEES

The total number of employees of UPGDCL is 06 as on December 31, 2012. The details have been provided below:

Salary Range (Monthly) Officers & Staffs

Worker Total EmployeesHead Office Power Plant

Below Tk. 3,000 - - - - Above Tk. 3,000 7 - - 7

For the year ended December 31, 20128 7 - - 7 For the year ended December 31, 2011 15 57 46 118

8The Company has entered into a management agreement with United Engineering & Power Services Limited (UEPSL) for providing technical and operational support.

PRODUCTION/SERVICE RENDERING CAPACITY AND CURRENT UTILIZATION

Name of Plant

Installed Capacity (KWH)

Actual Production (KWH) Capacity Utilization (%)

2012 2011 2012 2011

DEPZ 328,000,000 276,463,636 267,155,998 84% 81%CEPZ 352,000,000 321,555,370 312,009,788 91% 89%Total 680,000,000 598,019,006 579,165,786 88% 85%

(As per Audited Accounts)

(As per Audited Accounts)

DESCRIPTION OF PROPERTY Section: V

LOCATION OF THE PRINCIPAL PLANTS AND OTHER PROPERTY OF THE COMPANY AND THEIR CONDITION 1. The Principal Plants and other properties of United Power Generation and Distribution Company Limited are all

located at the Company’s plant premises and registered office. The Company’s registered office is located at a leased premise in United Centre, House # NW (J)-6, Road # 51, Gulshan - 2, Dhaka - 1212, Bangladesh. The company has Land Lease Agreements with BEPZA for 30 years to establish both of its power plants. The details of land lease agreements have been provided in ‘Operating Lease Agreement during Last Five Years’ under the head of Plan of Operation and Discussion of Financial Condition of this Information Memorandum.

2. The Company owns the following assets at written down value as on December 31, 2012:

Sl. No. Particulars Written Down Value in BDT

December 31, 2012 December 31, 2011

1. Plant & Machinery 3,368,944,263 3,478,123,651

2. Gas Line 130,200,223 133,174,326

3. Equipment 4,463,532 3,545,475

4. Furniture and Fixtures 582,366 492,825

5. Transport and Vehicles 3,791,834 4,315,518

Total 3,507,982,218 3,619,651,795

3. The above-mentioned properties are situated at Company’s registered office and plant premises and are in good operational condition.

4. The above-mentioned properties are owned by the Company and purchased in brand new condition.

5. The generating set, engine, auxiliary modules, fuel system, station support system and electrical systems relating to the DEPZ power plant has been hypothecated in case of default of loan arranged by Dhaka Bank Limited in the form of fixed charges.

6. The generating set, engine, auxiliary modules, fuel system, station support system and electrical systems relating to the CEPZ power plant has been hypothecated in case of default of loan arranged by Dhaka Bank Limited in the form of fixed charges.

7. At present, the Company has no asset under lease agreement.

(As per Audited Accounts)

PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION Section: VI

INTERNAL AND EXTERNAL SOURCES OF CASH The internal sources of the cash of the company are the share capital and retained earnings. The external sources of cash are long-term and short-term borrowings. The details are given below:

Particulars As on Dec. 31, 2012(Amount in Taka)

As on Dec. 31, 2011(Amount in Taka)

As on Dec. 31, 2010(Amount in Taka)

Internal Sources of Cash:

Share Capital 1,979,664,840 1,979,664,840 1,070,089,100 Retained Earnings 3,266,713,247 1,246,234,967 1,093,544,217

Sub-Total 5,246,378,087 3,225,899,807 2,163,633,317

External Sources of Cash:

Long-term Loan 1,934,715,782 2,135,832,865 2,174,331,857 Short-term Loan* 542,668,476 267,843,911 132,128,143

Sub-Total 2,477,384,258 2,403,676,776 2,306,460,000

Grand Total 7,723,762,345 5,629,576,583 4,470,093,317 *Short-term loan includes the current portion of long-term loan

MATERIAL COMMITMENTS OF CAPITAL EXPENDITUREUnited Power Generation and Distribution Company Limited has no material commitment for capital expenditure as onDecember 31, 2012 other than as specified in ‘Utilization of IPO Proceeds’ under the head of Issue Size and Purpose of the Public Offering of this Information Memorandum.

CAUSES FOR MATERIAL CHANGES FROM PERIOD TO PERIOD The trend of the Company’s net profit after Tax, EPS and other business indicators are increasing due to the management effort and strategic action taken to face competition in the industry. The following table shows the year to year financial performance of the company which is increasing due to the Company’s long term vision in this sector, experienced top tier management, favorable economic and government rules and regulation, the commendable repayment culture is contributing to the growth of the company:

Particulars For the year ended on

Dec. 31, 2012(Amount in Taka)

For the year ended onDec. 31, 2011

(Amount in Taka)

For the year ended onDec. 31, 2010

(Amount in Taka)

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 Operating Expenses (884,552,090) (895,484,539) (673,310,436)

Gross Profit 2,388,935,967 1,332,148,870 1,105,181,432 Administrative Expenses (57,396,889) (36,371,340) (22,412,566)

Operating Profit 2,331,539,078 1,295,777,530 1,082,768,866 Other Operating Income/(Loss) 225,333 2,057,447 (338,384)

Profit before Interest & Tax 2,331,764,411 1,297,834,977 1,082,430,482 Financial Expenses (311,201,631) (234,795,944) (182,151,008)

Profit before Tax 2,020,562,780 1,063,038,033 900,279,474 Provision for Taxation (84,500) (771,543) -

Net Profit after Tax 2,020,478,280 1,062,266,490 900,279,474

(As per Audited Accounts)

(As per Audited Accounts)

Seasonal Aspect of the Company’s BusinessBEPZA is the prime customer of United Power Generation and Distribution Company Limited. BEPZA contributes almost 66% of the sales of UPGDCL. Other two consumers of UPGDCL followed by BEPZA are PDB (contributing 18% of sales) and REB (contributing 14% of sales). According to the power supply agreement (PSA) between BEPZA and UPGDCL, BEPZA will purchase total electric capacity and energy of UPGDCL’s power stations to meet total requirements of DEPZ and CEPZ. UPGDCL has the right to sell surplus electricity to any organizations or industry outside EPZs. From theprevious statistics we have seen that UPGDCL sold electricity to parties other than BEPZA. This states that UPGDCL has a risk exposure in case of lower demand of electricity by BEPZA. Power purchase agreements with the other parties are of short tenure in comparison to tenure of BEPZA. Tenure of PSA agreement with BEPZA is valid for 30 years and renewable for additional 30 years, whereas tenure of PPA agreement with REB is for 3 years, with BPDB is for 3 years and with Oli Knitting Fabrics Limited is for 15 years. This short tenure of PPA agreement partly offset benefits UPGDCL avails with longer PSA agreement with BEPZA (Other IPPs in Bangladesh generally have PPA agreements with a tenure of 15 years).

Seasonality factors that affect the electricity of BEPZA will also create fluctuations in the sales volume of UPGDCL to BEPZA. Short tenure with other customers and seasonality factors of those customers have a seasonal impact upon the sales of UPGD. Minimum supply quantity is applicable in the agreements with REB and Oli knitting Fabrics Limited. This partially reduces the seasonality impact upon UPGDCL. Long tenure of agreement with major buyer reduces the risk exposure of UPGDCL in comparison to other IPPs in terms of longevity of the business venture.

On the supplier side UPGDCL has Gas supply Agreement with Titas Gas Transmission and Distribution Company Limited (valid for 15 years and renewable every 5 years thereafter), which states that maximum monthly contract quantity is 5281200 SCM and minimum monthly purchase obligation of 3168720 SCM (60% of MCQ). This agreement contributes to the risk exposure of UPGDCL from supply side both in positive and negative ways. In positive way UPGDCL can have a steady flow of gas supply. On the other hand UPGDCL has an obligation to purchase a minimum amount of gas from the supplier regardless of their actual need of gas.

On another Gas Supply Agreement with Karnaphuli Gas Distribution Company Limited (valid for the life of Power project and as per the signed PSA with BEPZA) the maximum Monthly gas usage is 9077399 SCM and minimum purchase obligation is 50% of Annual contract Gas usage. This agreement contributes to the risk exposure of UPGDCLfrom supply side both in positive and negative ways. In positive way UPGDCL can have a steady flow of gas supply. On the other hand UPGDCL has an obligation to purchase a minimum amount of gas from the supplier regardless of their actual need of gas.

KNOWN TRENDS, EVENTS OR UNCERTAINTIES Entrance of new technology, increased competition, natural disaster, any abrupt change in policy of importing countries, labor unrest are known events that may affect the business of the Company. Due to being situated in Export Processing Zones of the country, political unrest does not affect the Company’s business significantly.

CHANGE IN THE ASSETS OF THE COMPANY USED TO PAY OFF ANY LIABILITIES No assets of the Company have been used to pay off any liabilities of the Company.

LOAN TAKEN FROM OR GIVEN TO HOLDING/PARENT COMPANY OR SUBSIDIARY COMPANY

United Power Generation and Distribution Company Limited does not have any subsidiary or associate company. However, the Company has its normal business transactions with its holding Company i.e., United Enterprise & Co. Limited as per audited financial statements as on December 31, 2012. The status of loans given to its holding Company is detailed below:

Name of the Party

Nature of Relationship

Nature of Transaction

Amount Given during the year ended on (BDT)

Outstanding Amount receivable/(payable)

(BDT)

Issue StatusDec. 31, 2012 Dec. 31, 2011

United Enterprise Co. Limited

Holding Company

Loan given to United

Enterprise Co. Limited

1,190,423,732 1,378,954,791 2,569,378,523 Debtor

FUTURE CONTRACTUAL LIABILITIES United Power Generation and Distribution Company Limited neither has any future contractual liabilities nor has any plan to enter into any contractual liabilities other than normal course of business within next one year that would impact the financial fundamentals of the Company.

FUTURE CAPITAL EXPENDITUREThe Company does not have any plan for capital expenditure in near future other than as specified in ‘Utilization of IPO Proceeds’ under the head of Issue Size and Purpose of the Public Offering of this Information Memorandum.

VAT, INCOME TAX, CUSTOMS DUTY OR OTHER TAX LIABILITY

Value Added Tax (VAT)

VAT is not applicable for the Company for sale of electricity under VAT Act 1991.

Income Tax

The Company is exempted from income tax for a period of 15 years from the date of commercial operation as per Private Sector Power Generation Policy. Therefore, no provision is required for income tax on the Company’s profit as the Company has received exemption from all such taxes from the Government of Bangladesh, vide SRO Ref.: 188-Law/Income Tax/2009-Income Tax Ordinance, 1984 (XXXVI of 1984) dated July 1, 2009.

Income Year Assessment Year Status Remarks

2007-2008 2008-2009 N/A NIL

2008-2009 2009-2010 The Company was enjoying Tax exemption

Assessment completed and no tax liability during the year

2009-2010 2010-2011 The Company was enjoying Tax exemption do

2010-2011 2011-2012 The Company was enjoying Tax exemption do

2011-2012 2012-2013 The Company was enjoying Tax exemption do

(As per Audited Accounts)

Customs Duty or other Tax Liability

The Company is exempted from customs duties while importing plant and machinery during construction and all other spare parts. However, duties and taxes are payable for other suppliers as per provision of the Private Sector Power Generation Policy of Bangladesh. The Company enjoys duty free import parts for the entire project life under the rules and regulations of BEPZA. Additionally, the Company enjoys tax benefits on its lube oil purchases for tenure of the project as well.

OPERATING LEASE AGREEMENT DURING LAST FIVE YEARS

The company has Land Lease Agreements with BEPZA for 30 years to establish both of its power plants. The details of land lease agreements are as follows:

Sl. No.

Particulars of Plants Location of the Land Area

(sq. meter) Status

1. DEPZ Power Plant

Plot No. 280, Extension Area, Dhaka Export Processing Zone, Ganakbari, Savar, Dhaka 5,979.55

Land Lease Agreement entered on 6th May, 2007with BEPZA for 30 years

2. CEPZ Power Plant

Plot No. 6 & 7, Sector 2/A, Chittagong Export Processing Zone, South Halishahar, Chittagong

5,964.00 Land Lease Agreement entered on 16th May, 2007with BEPZA for 30 years

The lease commitments as above are being liquidated through repayment of quarterly lease rental amounting to $3,256.07 for DEPZ and $3,318.59 for CEPZ power plant.

These power plants have been constructed on around 12000 sq. meters of land. UPGDCL has 2 (two) storied building located at these plant sites with different support and facilities for its employees. The company has 4 (four) generator sets for DEPZ and 5 generator sets for CEPZ. DEPZ has also added another 6 MW Power Plant on October 24, 2010 with 3 unit gas generators from MTU, Singapore. The Company has established pipelines for gas transmission from Titas Gas Transmission and Distribution Company Limited for DEPZ power plant and Karnaphuli Gas Distribution Company Limited for CEPZ power plant.

FINANCIAL LEASE COMMITMENT DURING LAST FIVE YEARSThe Company entered into lease commitment to purchase motor vehicles in 2009 with National Bank Limited (NBL) and in 2007 with United Leasing Company Limited (ULCL). The Company has paid off full its lease obligation by December 31, 2012. Details are as follows:

Name of Institutions

Lease Amount (BDT)

Rate of Interest

(%)

Sanction Date

Monthly Installment

(BDT)

Lease Period (monthly

basis)

Date of Expiry

Outstanding Balance as onDec. 31, 2012

(BDT)

ULCL 1,600,000 15.83% 07.10.2007 37,586 60 07.10.2012 NIL

NBL 1,642,000 13.50% 17.07.2009 55,722 36 17.07.2012 NIL

(As per Audited Accounts)

PERSONNEL RELATED SCHEME

Yearly Increment : Upon management approval and salary brackets/scales, annual increments on basic salaries may be given to employees;

Allowances : According to pay scales, allowances are given for such as house rent, conveyance, medical, car maintenance, special, and mobile phone facility;

Provident Fund : The Company has a provident fun facility in a Trust Fund named “United Power and Generation & Distribution Company Limited, Employee Provident Fund”. This Trust Fund deed has not been registered yet but all permanent employees after confirmation of service are eligible for the provident fund. The rate of contribution by employer is 10% of basic by both sides. Employees are eligible for the contribution once they have completed 2 years of service with the company and are eligible for full contribution with interest once they have completed 3 years of service. A managing committee is formed by the management, who will manage the Trust Fund with equal representation from both the employer and the employee;

Festival Bonus : Festival bonus is paid to each employee based on their religion and with 6 months of service completion;

Production Bonus : Entitled for those employees involved in the operational and maintenance process of the plant. The bonus will be paid on a quarterly basis for each month (at the rate of 30%) of achieving monthly target production for DEPZ and CEPZ power plant;

Performance Bonus : Bonus may be paid based on an individual employee’s annual performance which will be graded by the employee’s departmental head;

Other Benefits : Other benefits include hospital admittance fees, lunch benefit and corporate mobile phone reimbursement, scholarship for meritorious students, motorcar loan and general loans.

REVALUATION OF COMPANY’S ASSETS AND SUMMARY THEREOF

The company has not made revaluation of any of its assets since its inception.

TRANSACTION BETWEEN SUBSIDIARY/HOLDING/ASSOCIATE COMPANY AND THE ISSUER United Power Generation & Distribution Company Limited does not have any subsidiary or associate company. However, the Company has its normal business transactions with its holding Company i.e., United Enterprise & Co. Limited as per audited financial statements as on December 31, 2012. The details of transaction of last five years:

Name of the Party

Nature of Relationship

Nature of Transaction

Amount (BDT in million) Issue Status2012 2011 2010 2009 2008

United Enterprise Co.

Limited

Holding Company

Loan given to United Enterprise

Co. Limited2569.38 1378.95 425.88 (141.35) (19.80) Debtor/

(Creditor)

(As per Audited Accounts)

INFORMATION ABOUT DIRECTORS AND OFFICERS Section: VII

DIRECTORS OF THE COMPANY

Sl. No. Name Position Age

(Years) Qualification Experience (Years)

1. General Md. Abdul Mubeen (Retd.) Chairman10 58 SP, ndc, psc 362. Mr. Moinuddin Hasan Rashid Managing Director 29 B.Sc. in EEE 63. Mr. Hasan Mahmood Raja Director 54 B.Com 344. Mr. Ahmed Ismail Hossain Director 55 MSS (IR) 345. Mr. Khandaker Moinul Ahsan Shamim Director 54 B.Com 346. Mr. Akhter Mahmud Rana Director 51 ‘A’ Level 347. Mr. Faridur Rahman Khan Director 56 B.Sc. 348. Mr. Abul Kalam Azad Director 56 B.Sc. 35

10General Md. Abdul Mubeen (Retd.) has been nominated by United Enterprise and Company Limited as Chairman and Nominated Director of United Power Generation & Distribution Company Limited on February 02, 2013.

INFORMATION REGARDING DIRECTORS AND DIRECTORSHIP

Sl. No. Name Position

Date of becoming Director for the

first time

Date of Expiration of Current Term

1. General Md. Abdul Mubeen (Retd.) Chairman February 02, 2013 In the AGM of 2018 2. Mr. Moinuddin Hasan Rashid Managing Director January 10, 2008 In the AGM of 2016 3. Mr. Hasan Mahmood Raja Director January 15, 2007 In the AGM of 2014 4. Mr. Ahmed Ismail Hossain Director January 15, 2007 In the AGM of 2014 5. Mr. Khandaker Moinul Ahsan Shamim Director January 15, 2007 In the AGM of 2014 6. Mr. Akhter Mahmud Rana Director January 15, 2007 In the AGM of 2014 7. Mr. Faridur Rahman Khan Director January 15, 2007 In the AGM of 2014 8. Mr. Abul Kalam Azad Director January 15, 2007 In the AGM of 2014

DIRECTORS’ INVOLVEMENT WITH OTHER ORGANIZATIONS

Name Designation in the Company

Involvement with other OrganizationName of the Organization Position

MR. MOINUDDIN HASAN RASHID Managing Director

United Enterprise & Company Limited Managing Director United Ashuganj Power Limited Managing Director United Property Solutions Limited Managing DirectorShajahanullah Power Generation Co. Ltd. Managing Director United Ashuganj Energy Ltd. Managing Director UG Ship Management Ltd. Managing Director United Maritime Academy Ltd. Managing DirectorUnited Grains & Spices Ltd. Managing DirectorUnited Hospital Limited Director Novo Healthcare and Pharma Ltd. Director IPCO Developments (Bangladesh) Limited Director IPCO Hotels Limited Director Khulna Power Company Limited Director

Name Designation in the Company

Involvement with other OrganizationName of the Organization Position

MR. MOINUDDIN HASAN RASHID Managing Director

Khulna Power Co. Unit II Limited Director Khanjahan Ali Power Co. Limited Director United City Twin Tower Developers Limited DirectorUnited Makkah Medina Travel & Assistance Co. Limited Director Neptune Land Development Limited Director United Land Port Teknaf Limited Director Gunze United Limited Director United International University Member

MR. HASAN MAHMOOD RAJA Director

United Hospital Limited ChairmanUnited Enterprise & Company Limited ChairmanUnited Makkah Medina Travel & Assistance Co. Limited Chairman Khulna Power Company Limited Managing Director Khulna Power Co. Unit II Limited Managing Director Khanjahan Ali Power Co. Limited Managing DirectorIPCO Developments (Bangladesh) Limited Managing Director IPCO Hotels Limited Managing Director United Land Port Teknaf Limited Director United Ashuganj Power Limited Director United Elevator World Limited DirectorNeptune Land Development Limited DirectorNeptune Commercial Limited Director United Polymers Limited Director United Rotospin Limited Director Comilla Spinning Mills Limited DirectorUnited Property Solutions Limited Director United City Twin Tower Developers Limited Director Novo Healthcare and Pharma Limited Director Shajahanullah Power Generation Co. Limited Director Neptune Properties PartnerUnited International University Member

MR. AHMED ISMAIL HOSSAIN Director

United Hospital Limited Vice-Chairman Comilla Spinning Mills Limited Managing Director Novo Healthcare and Pharma Limited Managing DirectorUnited Rotospin Limited Managing DirectorUnited Ashuganj Power Limited Director IPCO Developments (Bangladesh) Limited Director IPCO Hotels Limited Director Khulna Power Company Limited DirectorKhanjahan Ali Power Co. Limited DirectorUnited International University Director Neptune Land Development Limited Director Neptune Commercial Limited Director United Polymers Limited DirectorUnited City Twin Tower Developers Limited DirectorUnited Elevator World Limited Director United Property Solutions Limited Director United Makkah Medina Travel & Assistance Co. Limited Director Neptune Properties Partner

Name Designation in the Company

Involvement with other Organization Name of the Organization Position

MR. AHMED ISMAIL HOSSAIN Director

United Enterprise & Company Limited Shareholder United Land Port Teknaf Limited MemberKhulna Power Co. Unit II Limited Member

MR. KHANDAKER MOINUL AHSAN SHAMIM Director

United Polymers Limited Managing DirectorUnited Enterprise & Company Limited Director United Hospital Limited Director United Ashuganj Power Limited Director Khulna Power Company Limited DirectorKhulna Power Co. Unit II Limited DirectorKhanjahan Ali Power Co. Limited Director United Land Port Teknaf Limited Director Comilla Spinning Mills Limited Director Neptune Land Development Limited DirectorNeptune Commercial Limited DirectorUnited Rotospin Limited Director United Property Solutions Limited Director United Makkah Medina Travel & Assistance Co. Ltd Director United City Twin Tower Developers Limited Director United Elevator World Limited DirectorNovo Healthcare and Pharma Limited Director Shajahanullah Power Generation Co. Limited Director UG Ship Management Limited Director United Maritime Academy Limited DirectorShajahanullah Power Generation Co. Limited DirectorNeptune Properties Partner United International University Member

MR. AKHTER MAHMUD RANA Director

United Elevator World Limited Managing Director United Enterprise & Company Limited DirectorUnited Hospital Limited Director United Ashuganj Power Limited Director Khulna Power Company Limited Director Khulna Power Co. Unit II Limited DirectorKhanjahan Ali Power Co. Limited DirectorUnited Land Port Teknaf Limited Director Comilla Spinning Mills Limited Director Neptune Land Development Limited Director Neptune Commercial Limited Director United Rotospin Limited DirectorUnited Property Solutions Limited Director United Makkah Medina Travel & Assistance Co. Ltd Director United City Twin Tower Developers Limited Director Novo Healthcare and Pharma Limited DirectorUnited Polymers Limited DirectorShajahanullah Power Generation Co. Limited Director United Maritime Academy Limited Director Neptune Properties Partner United International University Member

Name Designation in the Company

Involvement with other Organization Name of the Organization Position

MR. FARIDUR RAHMAN KHAN Director

Neptune Commercial Limited Managing Director United Hospital Limited Managing Director Neptune Properties Managing PartnerUnited Enterprise & Co. Limited DirectorUnited Polymers Limited Director IPCO Developments (Bangladesh) Limited Director IPCO Hotels Limited Director Neptune Land Development Limited DirectorUnited Land Port Teknaf Limited DirectorUnited Rotospin Limited Director Comilla Spinning Mills Limited Director Novo Healthcare and Pharma Limited Director Khulna Power Company Limited DirectorUnited Ashuganj Power Limited Director United Property Solutions Limited Director Khulna Power Co. Unit II Limited Director Khanjahan Ali Power Co. Limited Director United City Twin Tower Developers Limited DirectorShajahanullah Power Generation Co. Limited DirectorUG Ship Management Limited Director United Maritime Academy Limited Director United Grains & Spices Limited Director United International University Member

MR. ABUL KALAM AZAD Director

United Enterprise & Company Limited Vice Chairman & Director

Neptune Land Development Limited Managing DirectorUnited Land Port Teknaf Limited Managing DirectorUnited City Twin Tower Developers Limited Managing Director United Hospital Limited Director United Ashuganj Power Limited Director IPCO Developments (Bangladesh) Limited DirectorIPCO Hotels Limited DirectorKhulna Power Company Limited Director Khulna Power Co. Unit II Limited Director Khanjahan Ali Power Co. Limited Director Comilla Spinning Mills Limited DirectorNeptune Commercial Limited DirectorUnited Rotospin Limited Director United Property Solutions Limited Director Novo Healthcare and Pharma Limited Director United Makkah Medina Travel & Assistance Co. Ltd DirectorUnited Polymers Limited DirectorShajahanullah Power Generation Co. Limited Director UG Ship Management Limited Director United Maritime Academy Limited Director United Grains & Spices Limited DirectorNeptune Properties PartnerUnited International University Member

FAMILY RELATIONSHIP AMONG DIRECTORS

Name Position Relationship with other Directors

General Md. Abdul Mubeen (Retd.) Chairman Father-in-law of Mr. Moinuddin Hasan Rashid

Mr. Moinuddin Hasan Rashid Managing Director Son of Mr. Hasan Mahmood Raja and Nephew of Mr. Akhter Mahmud Rana

Mr. Hasan Mahmood Raja Director Brother of Mr. Akhter Mahmud Rana and Father of Mr. Moinuddin Hasan Rashid

Mr. Akhter Mahmud Rana Director Brother of Mr. Hasan Mahmood Raja and Uncle of Mr. Moinuddin Hasan Rashid

Note: Other than those on the above table, there is no family relationship between the Directors of the company.

FAMILY RELATIONSHIP AMONG DIRECTORS AND TOP FIVE OFFICERSThere is no family relationship between the Directors and top five officers of the Company.

SHORT BIO-DATA OF THE DIRECTORS

GENERAL MD. ABDUL MUBEEN (RETD.) Chairman & Nominated Director, United Power Generation and Distribution Company Limited

General Mubeen graduated from Bangladesh Military Academy in 1977 and in the next 36 years of his commendable and distinguished career service, he took several courses and underwent trainings, which include but are not limited to Nato Weapon Conversion Course, Infantry Weapon Course, Senior Command Course, National Defense Course etc. In the vast expand of his career he played several roles. He served as General- Chief of Army Staff, Bangladesh Army, Director of Military Training in Army Headquarters and many others. In his 36 years of active service, he received 16 operational, service and UN honors, medals and decorations for his distinguished service. He has attended numerous conferences, seminars and exercises’ at home and abroad and chaired in the panel in number of seminars and conferences. Some of his significant ex-officio assignments include being President of Bangladesh Olympic Association and being Chairman of Trust Bank Limited.

MR. MOINUDDIN HASAN RASHIDManaging Director, United Power Generation and Distribution Company Limited

Mr. Moinuddin Hasan Rashid was born in 1982 in Dhaka. On completion of his B.Sc. Engineering (Electrical & Electronics) from London, UK, he joined the United Group in 2007 as second generation Director. As a young and energetic entrepreneur, he marked his future through dedication, dynamism and foresight in shaping the Power Sector, one of the major enterprises of the Group. On 12 July 2011, he was appointed as Managing Director of United Enterprises & Co. Ltd (UECL), the parent Company of the Group, and the Managing Director of the United Group as a whole.

Presently, he is also the Managing Director of United Power Generation and Distribution Company Ltd. (UPGD), United Ashuganj Power Ltd (UAPL), United Property Solutions Ltd (UPSL) and in the Board of Directors of United Hospital Limited (UHL), Khulna Power Company Ltd (KPCL) and United Land Port Teknaf Limited (ULPTL), etc. He is also an active member of Board of Trustees of United International University (UIU).

He is also one of the active Trustees of the United Trust, a CSR organization of the Group. He is the eldest son of Mr. Hasan Mahmood Raja, the Chairman of United Group.

MR. HASAN MAHMOOD RAJA Director, United Power Generation and Distribution Company Limited

Mr. Hasan Mahmood Raja is one of the renowned businesspersons of the country. Born in 1957, he completed his graduation in commerce and got passionately involved in business. He is one of the Founding Directors of the country’s one of the leading business houses - ‘United Group’.

With a humble beginning in 1978, Mr. Raja displayed his excellence in business entrepreneurship in building his business domain. Milestone of his success is the courage to embark into new business ventures based on sound foresight, ingenuity and skillful execution. Dominant position of United Group in the Country’s Power and Real Estate sectors and creating unique establishments like United Hospital, United International University and United Maritime Academy are few of his landmark entrepreneurship.

At this moment, he is the Chairman or MD of more than 20 Concerns of the Group, notably United Enterprises & Company Ltd., Khulna Power Company Limited, Neptune Land Development Ltd, United City twin Towers Developers Ltd, Novo Healthcare and Pharma Ltd, United Hospital, United Maritime Academy Ltd etc. He is also the Chairman, Board of Trustees of United International University.

MR. AKHTER MAHMUD RANADirector, United Power Generation and Distribution Company Limited

Mr. Akhter Mahmud Rana is one of the Founding Directors of United Group. He was born in 1960 in a respectable family of Jmalapur. He is the younger brother of the Group Chairman, Mr. Hasan Mahmood Raja. With his entrepreneurial initiatives and administrative skills, United Group has added much to its current growth and streamlined administration and human resources development of the Group.

He is one of the Directors of all the corporate entities of United Group, notably United Enterprises & Co. Ltd., United Power Generation and Distribution Company Ltd., United Hospital Limited, Khulna Power Company Ltd., etc. Besides this, he is also a member, Board of Trustees of United International University.

Being one of the active Trustees of the United Trust, a CSR organization of the Group, he generously patronizes education, healthcare and various charitable activities in and around his village home, Malanch, Jamalpur.

MR. AHMED ISMAIL HOSSAIN Director, United Power Generation and Distribution Company Limited

Mr. Ahmed Ismail Hossain is a Founding Directors of country’s one of the leading business houses - United Group which marked its debut in business in 1978. He was born in June 1956. After schooling from Faujderhat Cadet College, he completed his Honours and Master’s degrees in International Relations from Dhaka University. He is one of the architects of United Group what it is today.

He undertook the responsibility as the Managing Director of United Enterprises & Co. Limited, the parent Company of United Group for many years, demonstrated his entrepreneurial skills, and used his experience to establish many corporate bodies of the Group notably in textile and Pharmaceutical sectors. He is the Vice-Chairman of United Hospital Ltd and Managing Director of Comilla Spinning Mill Ltd and Novo Healthcare and Pharma Ltd and performing diverse responsibilities of the Group as and when required. He is a Director of Khulna Power Company Ltd. He is also a member of the Board of Trustees, United International University.

Mr. Ahmed Ismail Hossain hails from Kishoregonj. Being one of the Trustees of the United Trust, the CSR wing of the Group, he enthusiastically undertakes considerable social works in his home area of Kishoregonj district.

MR. KHANDAKER MOINUL AHSAN SHAMIM Director, United Power Generation and Distribution Company Limited

Mr. Khadaker Moinul Ahsan Shamim is one of the Founding Directors of United Group. He was born in 1957 in a respectable Muslim family in Feni district. After completion of his Bachelor of Commerce, he joined the business together with a few like-minded friends. With his diligence and exceptional entrepreneurial skills, he played important roles in establishing firm footing and quick expansion of business of the Group.

At present, he is one of the Directors of all the corporate entities United Group, notably United Enterprises & Co. Ltd., United Power Generation and Distribution Company Ltd., United Hospital Limited, Khulna Power Company Ltd., etc. Besides this, he is also a member, Board of Trustees of United International University.

He plays key role in the social development sector of his home area. Being one of the active Trustees of the United Trust, a CSR organization of the Group, he generously patronizes education sector in his home village and surrounding areas.

MR. FARIDUR RAHMAN KHANDirector, United Power Generation and Distribution Company Limited

Mr. Faridur Rahman Khan, one of the Founding Directors of the United Group, was born in 1955. After completion of his Bachelor degree in Science, he engaged himself in Business. At present, he is the Managing Director of two vibrant Concerns of the Group: United Hospital Ltd. and Neptune Properties Ltd. Under his entrepreneurship and foresight, United Hospital developed its Medicare system at par with any international standard hospitals. Now, it is a health care asset of the country. He is also a member of the Board of Trustees, United International University who takes keen interest in the education matters.

Mr. Faridur Rahman Khan hails from Louhojang, Munshigonj. Being one of the honored Trustees of the United Trust, the CSR wing of the Group, he spontaneously patronizes and contributes substantially in social activities in his home village and surrounding areas. Notably, he set up “Younus Khan-Mahmuda Khanam Memorial Clinic’ in his village homewhich provides free treatment to the local people including free cataract Eye Surgery.

MR. ABUL KALAM AZAD Director, United Power Generation and Distribution Company Limited

Mr Abul kalam Azad was born in 1955. After completion of his Bachelor of Science, he joined United Group as one of the Founding Directors. Presently, he is the Vice-Chairman of United Group. Best known for his dynamism, he is a key entrepreneur of the Group especially in Real Estate sector.

At present, he is the Managing Director of almost all Real Estate Enterprises of the Group, notably Neptune Land development Ltd., United City Twin Towers Developers Ltd., United Purbachal Lands Ltd. etc. He is also the Managing Director of United Land Port Teknaf Ltd, one of the pioneering ‘Build Operate and Transfer” (BOT) project of the Govt. Besides being a member of the Board of Trustees of United International University, he is also the Director of Khulna Power Company Ltd and many other Concerns of the Group.

Well known for his benevolence within the Group, he is one of the Trustees of United Trust, an organ responsible for CSR. He is actively engaged in many social and charitable works at his village home in Bikrampur.

CREDIT INFORMATION BUREAU (CIB) REPORT Neither the Company nor any of its Directors or shareholders who hold 5% or more shares in the paid-up capital of the issuer is a loan defaulter in terms of the CIB Report of the Bangladesh Bank.

DESCRIPTION OF TOP EXECUTIVES AND DEPARTMENTAL HEADS

Name of the Executives Designation Date of Joining Educational

Qualification Last Five Years

Experience

Mr. Moinuddin Hasan Rashid

Managing Director January 10, 2008 B.Sc. in EEE United Group

Rear Admiral Bazlur Rahman

Chief Executive Officer

March 19, 2013 MCD, ndc, psc, BN (Retd.), AFNI

United Group

Mr. Syed Abdul Mayeed Advisor December 27, 2004 M.Sc. Engineering (EEE)

United Group

Mr. Md. Amir Khashru Project Director July 01, 2007 B.Sc. Engineering (Mech.)

United Group

Mr. Sheikh Ashraf Hossain

Senior General Manager (Power)

July 01, 2006 M.Sc. Engineering (EEE), MBA

United Group

Mr. Md. Ebadat Hossain Bhuiyan11

Chief Financial Officer

April 25, 2010 MBA (D.U.), FCA United GroupAbul Khaer Group

M&J GroupMr. Chandra Shekhar Barua

General Manager (Operation &Maintenance)

March 01, 2005 B.Sc. in EEE United Group

Mr. Md. Zainal Abedin Plant Manager May 01, 2011 B.Sc. in EEE United Group

Mr. Md. Mustafizur Rahman12

Company Secretary March 01, 2013 Hons. & Masters in English and B.B.A.

United Group

11,12Employed with Honorarium

INVOLVEMENT OF DIRECTORS AND OFFICERS IN CERTAIN LEGAL PROCEEDINGS

No director or officer of the Company was involved in any of the following types of legal proceedings in the last 10 (Ten) years:

a) Any bankruptcy petition filed by or against any company of which any officer or director of the issuer company filing the Information Memorandum was a director, officer or partner at the time of the bankruptcy;

b) Any conviction of director, officer in a criminal proceeding or any criminal proceeding pending against him;

c) Any order, judgment or decree of any court of competent jurisdiction against any director, officer permanently or temporarily enjoining, barring, suspending or otherwise limiting the involvement of any director or officer in any type of business, securities or banking activities;

d) Any order of the Securities and Exchange Commission, or other regulatory authority or foreign financial regulatory authority, suspending or otherwise limiting the involvement of any director or officer in any type of business, securities or banking activities.

Except from the above, The Company did not have any transaction during the last two years, or does not have any proposed transaction, between the issuer and any of the following persons:

a) Any director or executive officer of the issuer;

b) Any director or officer;

c) Any person owning 5% or more of the outstanding shares of the issuer;

d) Any member of the immediate family (including spouse, parents, brothers, sisters, children, and in-laws) of any of the above persons;

e) Any transaction or arrangement entered into by the issuer or its subsidiary for a person who is currently a Director or in any way connected with a Director of either the issuer company or any of its subsidiaries/holding company or associate concerns, or who was a Director or connected in any way with a Director at any time during the last three years prior to the issuance of the Information Memorandum;

f) The company did not take or give any loan from or to any Director or any person connected with any Director nor did any Director or any person connected with any Director;

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company does not have any transaction during the last two years or any proposed transaction between the Issuer and any of the following persons as under, except as mentioned in Note no. 42.00 of the notes to the financial statements.

The name of related parties, nature of these transactions and total value have been set in accordance with the provisions of BAS 24. Related party disclosure, details of related party transactions are given below:

Sl. No.

Related parties Relationship Nature of

transaction

Opening Balance as

on 01 January

2012

Addition Adjustment

Closing Balance as

on December 31, 2012

Closing Balance as

on December 31, 2011

Issuer Status

1. United Enterprises & Co Ltd.

Parent Company Loan 1,378,954,791 1,587,000,710 396,576,978 2,569,378,523 1,378,954,791 Debtor

2. United Ashuganj Power Ltd.

Sister concern Loan 29,138,000 50,000,000 30,000,000 49,138,000 29,138,000 Debtor

3. United Hospital Ltd. Sister concern Loan 4,493,265 - - 4,493,265 4,493,265 Debtor

4.

United Engineering & Power Services Ltd.

Sister concern Loan 696,963 19,936,183 18,847,971 1,785,175 696,963 Debtor

5.

Shahjanullah power Company Ltd.

Sister concern Loan - 71,600,000 - 71,600,000 - Debtor

6. Neptune Properties Sister concern Loan - 100,000,000 - 100,000,000 - Debtor

7.

Neptune Land Development Ltd.

Sister concern Loan - 50,000,000 30,000,000 20,000,000 - Debtor

8. Neptune Commercial Ltd.

Sister concern Loan 4,719,107 - - 4,719,107 4,179,107 Debtor

Total Related Party Transactions 2,821,114,070 1,418,002,126

(As per Audited Accounts)

g) Any Director holding any position, apart from being a Director in the issuer company, in any company, society, trust, organization, or proprietorship or partnership firm is already disclosed in involvement of directors with other organizations;

h) There were no interests and facilities whether pecuniary or non-pecuniary enjoyed by the Directors except as specified in ‘Executive Compensation’ under the head of Information about Directors and Officers of this Information Memorandum.

EXECUTIVE COMPENSATION

a) Remuneration paid to Top Five Salaried Officers

Remuneration paid to top five salaried officers of United Power Generation and Distribution Company Limited during last accounting year -

Sl. No. Name Designation December 31, 2012

(Amount in BDT) December 31, 2011

(Amount in BDT)

1. Mr. Moinuddin Hasan Rashid Managing Director 4,320,000 5,766,881 2. Syed Abdul Mayeed Chief Executive Officer13 2,625,000 1,800,000 3. Sheikh Ashraf Hossain Chief Operating Officer 1,200,000 1,440,000 4. Md. Amir Khashru Project Director 1,680,000 1,680,000 5. Md. Mojibul Islam Patoary Manager (F & A) 540,000 360,000

Total 10,365,000 11,046,881 13Rear Admiral Bazlur Rahman (Retd.) has been appointed as Chief Executive Officer of United Power Generation & Distribution Company Limited on March 19, 2013.

b) Aggregate amount of Remuneration paid to Directors and Officers

Particulars Nature of Payment December 31, 2012(Amount in BDT))

December 31, 2011(Amount in BDT)

Directors Board Meeting Fees - - Directors Remuneration 4,320,000 5,766,881 Officers & Executives Salary, Bonus & Other Allowances 10,686,383 23,648,572

Total 15,006,383 29,415,453

c) Remuneration paid to any Director who was not an Officer of the Company

The company did not pay any remuneration to any director who was not an officer of the Company during the last accounting year.

d) Contract for payment of future compensation

The Company has no contract with any Director/Officer for providing the payment of future compensation.

e) Pay Increase Intention

There is no material commitment for increase in the pay structure of the employees. However, the company provides annual increment to the employees considering business growth, rate of inflation, performance of the individuals etc.as per Company’s policy.

(As per Audited Accounts)

(As per Audited Accounts)

OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES The Company has not offered any option for issue of shares to any of the officers, directors and employees or to any other person involved with the Company.

TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

(a) Benefits received or given by the Company or the Issuer Company

The Directors and Subscribers to the Memorandum of the Company have not received any benefits directly or indirectly during the last five years except salary and allowances which are shown in the following table. The issuer also has not received any assets, services or other considerations from its Directors and subscribers to the memorandum except fund against allotment of shares.

Name of Directors &

Subscribers to the

Memorandum

DesignationNature of

Value Received

Amount in BDT

01.01.2012 to

31.12.2012

01.01.2011 to

31.12.2011

01.01.2010 to

31.12.2010

01.01.2009 to

31.12.2009

01.01.2008 to

31.12.2008

Mr. Hasan Mahmood Raja Chairman Salary &

Allowances - 3,292,500 5,556,000 5,903,000 360,000

Mr. Moinuddin Hasan Rashid

Managing Director

Salary & Allowances 4,320,000 2,474,381 1,339,615 702,799 50,000

(b) Directors’ and Subscribers’ Assets to the Company

The Directors and Subscribers to the Memorandum of the Company have not transferred any asset to the Company but deposited share money from time to time.

(As per Audited Accounts)

TANGIBLE ASSETS PER SHARE

Particulars Amount in BDT

ASSETS Non-Current Assets:

Property, plant and Equipment 3,507,982,218 Capital Work in Progress 368,104,364

Total Non-Current Assets [A] 3,876,086,582

Current Assets: Inventories 191,982,411 Trade Receivables 840,633,875 Inter-Company Balances 2,821,114,070 Advance, Deposits and Prepayments 48,964,387 Cash and Bank Balances 6,085,258

Total Current Assets [B] 3,908,780,000

Total Assets excluding Intangible Assets [C=A+B] 7,784,866,582

LIABILITIES Non-Current Liabilities:

Long-term Loan 1,934,715,782 Total Non-Current Liabilities [D] 1,934,715,782

Current LiabilitiesTrade payables 55,608,568 Other payables and accrual 5,411,169 Finance lease obligation (Current portion) -Long term loan (Current portion) 218,083,337Short term loan 324,585,139Provision for taxation 84,500

Total Current Liabilities [E] 603,772,713

Total Liabilities [F=D+E] 2,538,488,495

Net Tangible Assets [G=C-F] 5,246,378,087

No. of Ordinary Shares outstanding as on December 31, 2012 [H] 197,966,484

Net Tangible Asset Value per Share [I=G/H] 26.50

(As per Audited Accounts as on December 31, 2012)

OWNERSHIP OF THE COMPANY’S SECURITIES

Shareholding Structure

The shareholding position of the Company is as under:

Sl. No.

Name of the Shareholders Address Status

No. of Shares

Subscribed

Subscribed Amount (BDT)

% of Shareholding

1.

United Enterprise Company Limited (represented by General Md. Abdul Mubeen (Retd.)

House # NW (J)-6, Road # 51, Gulshan - 2,

Dhaka - 1212 Chairman 103,559,356 1,035,593,560 52.31%

2. Mr. Moinuddin Hasan Rashid

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212

Managing Director 16,993,286 169,932,860 8.58%

3. Mr. Hasan Mahmood Raja

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

4. Mr. Ahmed Ismail Hossain

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

5. Mr. Akhter Mahmood Rana

1/C Road # 35, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

6. Mr. Khandaker Moinul Ahsan Shamim

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

7. Mr. Faridur Rahman Khan

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 4,720,349 47,203,490 2.38%

8. Mr. Abul Kalam Azad House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 4,720,349 47,203,490 2.38%

Total 197,966,484 1,979,664,840 100.00%

Shareholders’ shareholding of 5% or more of the Company’s Securities

There are no shareholders owning 5% or more of the Company except the following Directors and holding Company of United Power Generation and Distribution Company Limited -

Sl. No.

Name of the Shareholders Address Status

No. of Shares

Subscribed

Subscribed Amount(BDT)

% of Shareholding

1.

United Enterprise Company Limited (represented by General Md. Abdul Mubeen (Retd.)

House # NW (J)-6, Road # 51, Gulshan - 2,

Dhaka - 1212 Chairman 103,559,356 1,035,593,560 52.31%

2. Mr. Moinuddin Hasan Rashid

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212

Managing Director 16,993,286 169,932,860 8.58%

3. Mr. Hasan Mahmood Raja

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

4. Mr. Ahmed Ismail Hossain

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

5. Mr. Akhter Mahmood Rana

1/C Road # 35, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

6. Mr. Khandaker Moinul Ahsan Shamim

House # 10, Road # 55, Gulshan - 2, Dhaka - 1212 Director 16,993,286 169,932,860 8.58%

Total 188,525,786 1,885,257,860 94.90%

Securities of the Company owned by the Officers

No officer/executive holds any share of the Company individually or as a group except the Managing Director who is a Director of United Power Generation and Distribution Company Limited.

Securities of the Company owned by the Directors

Sl. No. Name of the Shareholders Status No. of Shares Subscribed % of Shareholding

1. United Enterprise Company Limited (represented by General Md. Abdul Mubeen (Retd.)

Chairman 103,559,356 52.31%

2. Mr. Moinuddin Hasan Rashid Managing Director 16,993,286 8.58%

3. Mr. Hasan Mahmood Raja Director 16,993,286 8.58%

4. Mr. Ahmed Ismail Hossain Director 16,993,286 8.58%

5. Mr. Akhter Mahmood Rana Director 16,993,286 8.58%

6. Mr. Khandaker Moinul Ahsan Shamim Director 16,993,286 8.58%

7. Mr. Faridur Rahman Khan Director 4,720,349 2.38%

8. Mr. Abul Kalam Azad Director 4,720,349 2.38%

Total 197,966,484 100.00%

Securities of the Company owned by top Ten Salaried Officers

None of the salaried officer of the Company owns securities of the Company except the Managing Director who is a Director of the Company.

MARKET & SECURITIES Section: VIII

MARKET FOR THE SECURITIES BEING OFFERED

The issuer shall apply to all the stock exchanges in Bangladesh within 7 (seven) working days from the date of consent accorded by the Commission to issue Prospectus.

The issuer will apply at:

Dhaka Stock Exchange Limited (DSE)Stock Exchange Building9/F, Motijheel C/A, Dhaka - 1000

Chittagong Stock Exchange Limited (CSE)CSE Building, 1080, Sheikh Mujib Road, Chittagong - 4100

DECLARATION ABOUT LISTING OF SHARES WITH STOCK EXCHANGE(S)None of the stock exchange(s), if for any reason, grants listing within seventy five (75) days from the closure of subscription, any allotment in terms of this prospectus shall be void and the company shall refund the subscription money within fifteen days from the date of refusal for listing by the stock exchanges, or from the date of expiry of the said seventy five (75) days, as the case may be.

In case of non-refund of the subscription money within the aforesaid fifteen (15) days, the company’s directors, in addition to the issuer company, shall be collectively and severally liable for refund of the subscription money, with interest at the rate of 2% (Two Percent) per month above the bank rate, to the subscribers concerned.

The Issue Manager, in addition to the Issuer Company, shall ensure due compliance of the above mentioned conditions and submit compliance report, thereon, to the Commission within seven (7) days of expiry of the aforesaid fifteen (15) days time period allowed for refund of the subscription money.

TRADING AND SETTLEMENT Trading and settlement regulation of the stock exchanges shall apply in respect of trading and settlement of the shares of the Company.

The issue shall be placed in “N” Category with DSE and CSE.

DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED

Dividend, Voting, Preemption Right

The share capital of the company is divided into Ordinary Shares, carrying equal rights to vote and receive dividend in terms of the relevant provisions of the Companies Act 1994 and the Articles of Association of the company. All Shareholders shall have the usual voting right in person or by proxy in connection with, among others, election of Directors & Auditors and other usual agenda of General Meeting - Ordinary or Extra Ordinary. On a show of hand, every shareholder present in person and every duly authorized representative of a shareholder present at a General Meeting shall have one vote and on a poll every shareholder present in person or by proxy shall have one vote for every share held by him or her.

In case of any additional issue of shares for raising further capital, the existing shareholders shall be entitled to Issue of Rights shares in terms of the guidelines issued by the Bangladesh Securities and Exchange Commission from time to time.

Conversion and Liquidation Rights

The Company in its General Meeting may convert paid-up shares to any denomination. No special preferences or privileges shall be attached to this conversion.

If the Company at any time issue Preference Shares or Debentures or Bonds with the consent of BSEC, such holders of securities shall be entitled to convert such securities into ordinary shares if it is so determined by the Company.

In case of winding-up or liquidation of the Company, all shareholders have the same privileges and advantages as ordinary shareholders as regards participation in profits and voting at meetings of the Company.

Dividend Policy

a) The profit of the company, subject to any special right relating thereto created or authorized to be created by the Memorandum of Association and subject to the provisions of the Articles of Association, shall be divisible among the members in proportion to the capital paid-up on the shares held by them respectively.

b) The Company in General Meeting may declare dividend to be paid to the members according to their rights and interests in the profits and may fix the time of payment. No larger dividend shall be declared than is recommended by the Directors, but the Company in its General Meeting may declare a smaller dividend. The declaration of Directors as to the amount of Net Profit of the Company shall be conclusive.

c) No dividend shall be payable except out of profits of the Company or any other undistributed profits. Dividend shall not carry interest as against the Company.

d) The Directors may from time to time pay the members such interim dividend as in their judgment the financial position of the Company may justify.

e) A transfer of shares shall not pass the right to any dividend declared thereon before the registration of transfer.

f) There is no limitation on the payment of dividends to the common stockholders of the Company.

Other Rights of Stockholders

In terms of provisions of the Companies Act 1994, Articles of Association of the Company and other relevant rules in force, the shares of the Company are transferable. The Company shall not charge any fee, other than Government duties for registering transfer of shares. No transfer shall be made to a minor or person of unsound mind.

The Directors shall present the financial statements as required under the law & International Accounting Standard. Financial statements will be prepared in accordance with the International Accounting Standards consistently applied throughout the subsequent periods and present with the objects of providing maximum disclosure as per law and International Accounting Standard to the shareholders regarding the financial and operational position of the company. The shareholders shall have the right to receive all periodical statement and reports, audited as well as unaudited, published by the company from time to time.

The shareholder holding minimum of 10% shares of paid-up capital of the company shall have the right to requisition Extra-Ordinary General Meeting of the company as provided under Section 84 of the Companies Act, 1994.

.DEBT SECURITIES

There is no debt securities issued or plan to issue by the Company within 6 (six) months.

HISTORICAL FINANCIAL PERFORMANCE Section: IX

The summary of the Audited Statement of Financial Position of the Company for the last five (5) years -

Particulars Year

31-Dec-12 31-Dec-11 31-Dec-10 31-Dec-09 31-Dec-08

Assets

Non-Current Assets 3,876,086,582 3,637,032,370 3,723,219,632 3,689,798,465 3,026,724,751

Current Assets 3,908,780,000 2,100,723,309 831,635,748 144,379,372 176,189,704

Total Assets 7,784,866,582 5,737,755,679 4,554,855,380 3,834,177,837 3,202,914,455

Liabilities & Equity

Non-Current Liabilities 1,934,715,782 2,135,832,865 2,175,006,619 1,191,860,000 1,150,000,000

Current Liabilities 603,772,713 376,023,007 216,215,444 1,378,963,994 1,210,678,394

Shareholders' Equity 5,246,378,087 3,225,899,807 2,163,633,317 1,263,353,843 842,236,061

Total Shareholders' Equity and Liabilities 7,784,866,582 5,737,755,679 4,554,855,380 3,834,177,837 3,202,914,455

The summary of the Audited Statement of Comprehensive Income of the Company for the last five (5) years -

Particulars Year

31-Dec-12 31-Dec-11 31-Dec-10 31-Dec-09 31-Dec-08

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599

Operating expenses (884,552,090) (895,485,539) (673,310,436) (378,978,719) (2,050,539)

Gross profit 2,388,935,967 1,332,147,870 1,105,181,433 459,268,779 2,927,060

Administrative expense (57,396,889) (36,371,340) (22,412,566) (20,270,393) (1,332,516)

Operating profit 2,331,539,078 1,295,776,530 1,082,768,866 438,998,386 1,594,544

Other non-operating income 225,333 2,057,447 (338,384) 521,100 -

Financial expenses (311,201,631) (234,795,944) (182,151,008) (245,022,204) (2,827,083)

Net profit before tax 2,020,562,780 1,063,038,033 900,279,474 194,497,282 (1,232,539)

Provision for income tax (84,500) (771,543) - - -

Net profit after tax 2,020,478,280 1,062,266,490 900,279,474 194,497,282 (1,232,539)

The summary of the Audited Statement of Cash Flows of the Company for the last five (5) years –

Particulars Year

31-Dec-12 31-Dec-11 31-Dec-10 31-Dec-09 31-Dec-08

Cash Flow from Operating Activities 1,685,133,685 1,035,855,957 811,365,508 147,612,410 288,643,063

Cash Flow from Investing Activities (386,263,610) (65,638,629) (181,570,896) (690,329,794) (2,899,671,694)

Cash Flow from Financing Activities (1,330,079,224) (1,007,258,649) (564,605,458) 551,441,265 2,603,978,991 Net (increase/ (decrease) in cash &

cash equivalents (31,209,149) (37,041,321) 65,189,155 8,723,881 (7,049,640)

Cash and cash equivalents at the beginning 37,294,406 74,335,728 9,146,573 422,691 7,472,332

Cash and Cash equivalents at the end 6,085,258 37,294,406 74,335,728 9,146,572 422,691

Amount in BDT

Amount in BDT

Amount in BDT

Key Financial Indicators of United Power Generation & Distribution Company Limited -

Name of Ratio 2012 2011 2010 2009 2008

LIQUIDITY RATIOS:

Current Ratio (Times) 6.47 5.59 3.85 0.10 0.15

Quick Ratio (Times) 6.16 5.03 3.44 0.08 0.15

DEBT RATIOS:

Times Interest Earned Ratio(Times) 7.49 5.53 5.94 1.79 0.56

Debt to Equity Ratio (Times) 0.47 0.75 1.07 1.92 2.63

Debt to Assets Ratio (Times) 0.32 0.42 0.51 0.63 0.69

ACTIVITY RATIOS:

Account Receivable Turnover Ratio ( Times) 5.29 6.28 7.70 10.73 1.44

Inventory Turnover Ratio (Times) 4.39 6.00 11.59 26.48 0.00

Asset Turnover Ratio (Times) 0.48 0.43 0.42 0.24 0.00

Fixed Asset Turnover Ratio (Times) 0.87 0.61 0.48 0.25 0.00

PROFITABILITY RATIOS:

Gross Margin (%) 72.98 59.80 62.14 54.79 58.80

Operating profit Margin (%) 71.22 58.17 60.88 52.37 32.03

Net Income Margin (%) 61.72 47.69 50.62 23.20 (24.76)

Return on Assets (%) 29.88 20.64 21.46 5.53 (0.07)

Return on Equity (%) 38.51 32.93 41.61 15.40 (0.15)

Earnings Per Share (EPS) 10.21 5.37 8.41 1.82 (0.02)

Analysis of Historical Performance of UPGDCL -

UPGDCL made considerable progress in creating buffer for servicing its short-term liabilities. In accordance with the financial statements of 2012, the company had Current Ratio of 6.47 times indicating substantial liquidity position. In addition, significant portion of the current assets was very liquid in nature as indicated by Quick Ratio.

Debt interest payment capacity of UPGDCL was increasing due to flourishing business condition. The company could pay seven times as much interest on financial leverage as it paid in 2012 with its Earnings before Interest and Tax (EBIT). Debt to equity ratio was also declining. So the company was decreasingly becoming dependent on financial leverage for financing its business.

To keep business momentum intact, the company had to invest significantly in working capital. Accordingly, both Account Receivable Turnover Ratio and Inventory Turnover Ratio of the company were going down year by year. However, the company remained efficient in utilizing its total assets and fixed assets as indicated by the improving Asset Turnover Ratio and Fixed Asset Turnover Ratio.

Due to production cost efficiency, Gross Margin of UPGDCL went up considerably from 58.80% in 2008 to 72.98% in 2012. At the same time, the company kept its general, marketing and administrative expenses in track considering its level of sales revenue and cost of production. Therefore, both Operating Profit Margin and Net Income Margin were consistent with the changes in gross profit margin.

The company witnessed rising profitability from the investment in total assets and equity amid little volatility. Return on assets of UPGDCL increased from - 0.07% in 2008 to 29.88% in 2012 where Return on Equity increased from -0.15% to 38.51% at the same time.

CORPORATE DIRECTORY Section: X

REGISTERED & CORPORATE OFFICE : United Power Generation & Distribution Company Limited United Centre, House # NW(J)-6, Road # 51, Gulshan - 2, Dhaka - 1212, Bangladesh

POWER PLANTS : Dhaka Export Processing Zone (DEPZ) Plot no. 280, Extension Area, Dhaka Export Processing Zone, Ganakbari, Savar, Dhaka

Chittagong Export Processing Zone (CEPZ) Plot no. 6 & 7, Sector 2/A, Chittagong Export Processing Zone, South Halishahar, Chittagong

AUDITOR : Hoda Vasi Chowdhury & Co. Chartered Accountants Independent Correspondent Firm to Deloitte Touche Tohmatsu BTMC Bhaban (Level # 7 & 8), Karwan Bazar C/A, Dhaka

MANAGER TO THE ISSUE : LankaBangla Investments Limited Eunoos Trade Center, Level - 21, 52-53, Dilkusha C/A, Dhaka - 1000

REGISTRAR TO THE ISSUE : ICB Capital Management Limited BDBL Bhaban (Level # 16), 8, Rajuk Avenue, Dhaka - 1000

LEGAL ADVISOR : Mr. Tanjib-ulAlam and Associates, Barristers, Advocates and Legal Consultants BSEC Bhaban (Level - 11), 102, Kazi Nazrul Islam Avenue, Karwan Bazar, Dhaka - 1215

COMPANY’S COMPANY SECRETARY & COMPLIANCE OFFICER

: Mr. Md. Mustafizur Rahman Company Secretary

All investors are hereby informed that the Company Secretary would be designated as Compliance Officer who willmonitor the compliance of the acts, rules, regulations, notifications, guidelines, conditions, orders/directions etc. issued by the Commission and/or stock exchange(s) applicable to the conduct of the business activities of the Company so as to promote the interest of the investors in the security issued by the Company, and for redressing investors’ grievances.

AUDITORS’ REPORT TO THE SHAREHOLDERS OFUNITED POWER GENERATION AND DISTRIBUTION COMPANY L TD. Section: XI

Introduction We have audited the accompanying financial statements of United Power Generation and Distribution Company Limited, which comprise the statement of financial position as at 31 December 2012, and statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information i.e. notes to the Financial Statements.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. This responsibility includes designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Audit ors’ ResponsibilityOur 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 (BSA).Those standards require that we comply with relevant 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 material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in 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 overall 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.

OpinionIn our opinion, the financial statements, prepared in accordance with Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the Company’s affairs as at 31 December 2012 and of the results of its operations and cash flows for the year then ended and comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

We also report that: a. we have obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purpose of our audit and made due verification thereof; b. in our opinion, proper books of account as required by law have been kept by the Company so far as it

appeared from our examination of those books; c. the Company's statement of financial position (balance sheet) and statement of comprehensive income (profit

and loss account) together with notes dealt with by the report are in agreement with the books of account and returns; and

d. the expenditure incurred and payments made were for the purposes of the Company’s business.

Dated: Dhaka February 05, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

United Power Generation and Distribution Company Limited Statement of Financial Position

As at 31 December 2012

Sd/-Md. Mustafizur Rahman

Company Secretary

Sd/-Abul Kalam Azad

Director

Sd/-Moinuddin Hasan Rashid

Managing Director

Dated: Dhaka February 05, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

2012 2011Note(s) Taka Taka

ASSETSNon-current assetsProperty, plant and equipment, net 4 3,507,982,218 3,619,651,795Capital work in progress 5 368,104,364 -Pre-operational expenses 6 - 17,380,575

3,876,086,582 3,637,032,370Current assetsInventories 7 191,982,411 211,164,353Trade receivables 8 840,633,875 396,056,054Inter-company balances 9 2,821,114,070 1,418,002,126Advance, deposits and prepayments 10 48,964,387 38,206,370Cash and bank balances 11 6,085,258 37,294,406

3,908,780,000 2,100,723,309TOTAL ASSETS 7,784,866,582 5,737,755,679

EQUITY & LIABILITIESShareholders' equityShare capital 12 1,979,664,840 1,979,664,840Retained earnings 13 3,266,713,247 1,246,234,967

5,246,378,087 3,225,899,807LIABILITIESNon-current liabilitiesLong term loan 14 1,934,715,782 2,135,832,865

1,934,715,782 2,135,832,865Current LiabilitiesTrade payables 15 55,608,568 66,590,189Other payables and accrual 16 5,411,169 40,142,602Finance lease obligation (Current portion) 17.01 - 674,762Long term loan (Current portion) 14.01 218,083,337 228,297,389Short term loan 18 324,585,139 39,546,522Provision for taxation 19 84,500 771,543

603,772,713 376,023,007TOTAL EQUITY & LIABILITIES 7,784,866,582 5,737,755,679

0.36 0.67

These financial statements should be read in conjunction with the annexed notes.

United Power Generation and Distribution Company LimitedStatement of Comprehensive Income

For the Year ended 31 December 2012

Sd/-Md. Mustafizur Rahman

Company Secretary

Sd/-Abul Kalam Azad

Director

Sd/-Moinuddin Hasan Rashid

Managing Director

Dated: Dhaka February 05, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

2012 2011Note(s) Taka Taka

Revenue 22 3,273,488,057 2,227,633,409Operating expenses 23 (884,552,090) (895,485,539)Gross profit 2,388,935,967 1,332,147,870Administrative expenses 24 (57,396,889) (36,371,340)Operating profit 2,331,539,078 1,295,776,530Other operating income 25 225,333 2,057,447Financial expenses 26 (311,201,631) (234,795,944)Net profit before tax 2,020,562,780 1,063,038,033Provision for taxation 19 (84,500) (771,543)Net profit after tax 2,020,478,280 1,062,266,490

Earning per share (EPS) 27 10.21 5.38Diluted earning per share 27.1 10.21 5.37

These financial statements should be read in conjunction with the annexed notes.

United Power Generation and Distribution Company LimitedStatement of Cash Flows

For the Period from 01 January 2012 to 31 December 2012

Sd/- Md. Mustafizur Rahman

Company Secretary

Sd/- Abul Kalam Azad

Director

Sd/- Moinuddin Hasan Rashid

Managing Director

Dated: Dhaka February 05, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

2012 2011Note(s) Taka Taka

A Cash flows from operating activitiesCash received from customers 28 2,828,910,236 2,139,444,878Cash received from other operating income 25 225,333 2,057,447Cash paid to suppliers and contractors 29 (620,621,685) (734,870,628)Cash paid for other operating expenses 30 (193,432,716) (146,211,610)Payment of financial expenses 31 (329,023,446) (224,564,129)Income tax payment (924,038) -Net cash flow from operating activities 1,685,133,685 1,035,855,957

B Cash flows from investing activitiesPayment for acquisition of property, plant and equipment 32 (386,263,610) (65,638,629)Proceeds from sale of property, plant and equipment - -Cash used for capital work - in - progress - -Investment in share - -Net cash used in investing activities (386,263,610) (65,638,629)

C Cash flows from financing activitiesLong term loan 33 (211,331,135) 57,670,254Short term loan received 34 285,038,617 39,546,522Cash paid for inter-company loan 35 (1,403,111,944) (1,103,519,560)Cash paid for lease finance 36 (674,762) (955,865)Net cash flow from financing activities (1,330,079,224) (1,007,258,649)

D Net changes in cash and cash equivalents (A+B+C) (31,209,149) (37,041,321)

E Opening balance 37,294,406 74,335,728

Closing balance (D+E) - Note 11 6,085,258 37,294,4066,085,258 37,294,406

0.050 0.130These financial statements should be read in conjunction with the annexed notes.

United Power Generation and Distribution Company LimitedStatement of Changes in Equity

For the Year ended 31 December 2012

Taka Taka Taka

Balance at 1 January 2011 1,070,089,100 1,093,544,217 2,163,633,317Net profit for the year 2011 - 1,062,266,490 1,062,266,490Dividend for the year 2010 909,575,740 (909,575,740) -Balance at 31 December 2011 1,979,664,840 1,246,234,967 3,225,899,807

Balance at 1 January 2012 1,979,664,840 1,246,234,967 3,225,899,807Net profit for the year 2012 - 2,020,478,280 2,020,478,280Balance at 31 December 2012 1,979,664,840 3,266,713,247 5,246,378,087

Retained earnings

These financial statements should be read in conjunction with the annexed notes.

Share capital TotalParticulars

Sd/- Md. Mustafizur Rahman

Company Secretary

Sd/- Abul Kalam Azad

Director

Sd/- Moinuddin Hasan Rashid

Managing Director

Dated: Dhakaebruary 05, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

United Power Generation and Distribution Company LimitedNotes to the Financial Statements

As at and for the Year ended 31 December 2012

1

1.1

1.2 Corporate Business

1.3 Capacity Increase

2 Basis of Presenting and Preparation of Financial Statements

2.1 Legal Compliance

2.2 Basis of Presentation

United Power Generation & Distribution Company Ltd. (UPGD) ("the Company") formerly known as MalanchaHoldings Ltd. (MHL) was incorporated in Bangladesh on 15th January 2007 as a subsidiary company of UnitedGroup in order to produce and supply electricity. The Company changed the existing name and style on 1stOctober 2009 as a private limited company under the Companies Act 1994 and converted into public limitedcompany by Shares on 30 December 2010.

The Company has developed two power plants. One of them with capacity of 41 MW at Dhaka ExportProcessing Zone (DEPZ) premises and another with capacity of 44 MW at Chittagong Export Processing Zone(CEPZ) premises, under two agreements with Bangladesh Export Processing Zones Authority (BEPZA) signed onMay 6, 2007 and May 16, 2007 respectively. Both plant DEPZ and CEPZ came into commercial operation on26th December 2008 and 12 August 2009 respectively. The address of the company's registered office is UnitedCenter, Road No. 51, and House No. NW (J) 6, Gulshan-2, Dhaka-1212, Bangladesh. The authorized sharecapital of the Company is Tk. 10,000,000,000 (Taka One Thousand crore) only divided into 1,000,000,000 (Onehundred crore) shares of Tk. 10 (Ten) each.

The Company has undertaken expansion project at Dhaka Export Processing Zone (DEPZ) to increase itscapacity from 41 MW to 88 MW and another project at Chittagong Export Processing Zone (CEPZ) to increasecapacity form 44 MW to 72 MW. The DEPZ project shall install 2 nos of Heat Recovery Boiler to produce 8ton/h of steam & CEPZ project shall install 3 nos of Heat Recovery Boiler to produce 12 ton/h of steam to saleto other customers.

Financial statements have been prepared in accordance with Bangladesh Financial Reporting Standards (BFRS),the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

The principal activity of the Company is to set up two gas fired power plants, one at DEPZ with 41 MW capacityand the other at CEPZ with 44 MW capacity for generation of electricity and to sell generated electricity to theexport processing industries located inside DEPZ and CEPZ with the provision of selling surplus power outsidethe EPZ after fulfilling their requirement. The Company is supplying electricity to the national grid ofBangladesh through selling the same to Dhaka PBS-1 of REB and Bangladesh Power Development Board(BPDB).

Presentation of financial statements have been maintained as per Bangladesh Accounting Standards - 1.

Reporting Entity

Corporate History of Reporting Entity

2.3 Basis of Measurements

2.4 Going Concern Assumption

2.5 Functional and Presentational Currency and Level of Precision

2.6 Critical Accounting Estimates, Assumptions and Judgment

Amortization of pre-operational expensesDepreciationInventory valuationAccrued expenses

2.7 Reporting Period

2.8 Authorization for Issue

The financial statements have been prepared under historical cost convention.

These financial statements are presented in Bangladesh Taka (Taka/Tk./BDT) which is both functional currencyand presentation currency of the Company. The amounts in these financial statements have been rounded offto the nearest Taka.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognized in the period in which the estimates are revised and in any future periods affected.

The financial statements has been prepared considering going concern assumption as per BAS-1(25). Themanagement did not find any significant uncertainties regarding going concern issue within the next twelvemonths from the end of the reporting period.

The preparation of financial statements in conformity with BAS and BFRS require management to makejudgments, estimates and assumptions that affect the application of accounting policies and the reportedamounts of assets, liabilities and expenses. Actual results may differ from these estimates.

Note 4

In particular, information about significant areas of estimation uncertainty and critical judgments in applyingaccounting policies that have the most significant effect on the amounts recognized in the financial statementsis included in the following notes.

Note 3.2

The preparation of the financial statements in conformity with BFRS requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgment in the process of applying theCompany’s accounting policies.

These financial statements cover the period from 1 January 2012 to 31 December 2012.

Note 7Note 15

These financial statements have been issued for authorization by the board of Directors on 02 February 2013.

3 Summary of Significant Accounting Policies

3.1 Property, Plant and Equipment

a) Recognition and Measurement:

b) Subsequent Costs:

c) Depreciation:

d) Leased Assets:

3.2 Pre-operational Expenses (note 6)

Property, plant and equipment (PPE) are stated according to BAS 16 (Property, Plant and Equipment) athistorical cost or revaluation less cumulative depreciation. The cost of asset includes expenses directlyattributable to bringing the asset to the location and condition necessary for use.

Plant and machinery 3.33%

Gas line (50 years) 2%

Furniture and fixtures

Category of assets Rate of depreciation

The cost of an asset is measured at the cash price equivalent at the date of acquisition.

Depreciation on the assets is calculated using the straight-line method to allocate their cost or revaluedamounts over their estimated useful lives. In respect of addition of fixed assets, depreciation is not charged inthe year of addition. Full year’s depreciation is charged in the year of disposal. Residual value is estimated tobe zero for all assets.

Transport and vehicles

10%

Equipment

10%

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to the Company andthe cost of the item can be measured reliably. All other repairs and maintenance are charged to the incomestatement during the financial period in which they are incurred.

Property, plant, and equipment which are financed by leases giving substantially all the risks and rewards ofownership are capitalized at the lower of the fair value of the leased asset or the present value of minimumlease payments at the inception of the lease, and depreciated in the same manner as other assets over theshorter of the lease term or their useful life. Leases in which a significant portion of the risks and rewards ofownership are retained by the lessor are classified as operating leases. These are charged to the incomestatement over the life of the lease, generally on a straight-line basis.

To comply with BAS 38 para 69, the management of the Company decided to charge remaining pre-operatingexpense in the current period .

15%

3.3 Inventories

3.4 Financial Instruments

3.4.1

a) Trade Receivables

b) Inter-company Balances

c) Cash and cash equivalent

3.4.2 Financial Liabilities:

It includes finance lease obligation, borrowings & trade and other payables.

a) Finance lease obligation

b) Borrowings

c) Trade and other payables

Leases in terms of which the entity assumes substantially all the risks and rewards of ownership are classifiedas finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of itsfair value and the present value of minimum lease payments. The discount rate used in calculating the presentvalue of the minimum lease payments is the interest rate implicit in the lessee, if this is practicable todetermine; if not, the lessee's incremental borrowing rate is used.

Financial Assets:

Inventories consisting of spare parts, fuel and lubricant are valued in accordance with BAS 2 (Inventories) atthe lower of cost or net realizable value. Net realizable value is based on estimated selling price in the ordinarycourse of business less any further costs expected to be incurred to make the sale. Inventories are measured atcost. The cost of inventories is based on the first in first out principle, and includes expenditure incurred inacquiring the inventories and other costs incurred in bringing them to their existing location and condition.When inventories are used, the carrying amount of those inventories is recognized in the period in which therelated revenue is recognized.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability orequity instrument of another entity. Accounting policies relating to different types of financial instruments aredescribed below.

Liabilities are recorded at the amount payable for settlement in respect of goods and services received by theCompany.

Borrowings are classified into both current and non-current liabilities. Moreover in compliance with therequirements of BAS 23 (Borrowing Costs), interest and other costs incurred by the Company in connectionwith the borrowing of funds are recognized as an expense in the period in which they are incurred.

Trade receivable are carried at original invoice amount.

These asset include inter-company (loan) receivables which are stated at cost. The Board of Directors andshareholders of related companies are same as United Power Generation & Distribution Company Ltd.

Cash and cash equivalent comprise cash in hand, bank deposits and other short term highly liquid investmentswith original maturities of three months or less which were held and available for use by the Company withoutany restriction.

3.5 Provisions

3.6 Impairment

3.6.1 Financial assets:

3.6.2 Non-financial Assets:

3.7 Revenue Recognition

1)

2) The amount of revenue can be measured reliably;

3)

Trade receivable is assessed at each date of statement of financial position to determine whether there isobjective evidence that it is impaired. Trade receivable is impaired if objective evidence indicates that a lossevent has occurred after the initial recognition of the asset, and that the loss had a negative effect on theestimated future cash flows of that asset that can be estimated reliably.

Provisions are liabilities of uncertain timings or amount. Provisions are recognized when the Company has apresent legal or constructive obligation as a result of past events, it is probable that an outflow of resourcesembodying economic benefits will be repaid to settle the obligation, and a reliable estimate of the amount ofthe obligation can be made.

The costs incurred and the costs to complete for the transaction can be measured reliably

Entity has transferred significant risks and rewards of ownership of the electric power to the buyer;

Revenue is recognized, excluding Value Added Tax and other Government levies, on the basis of net units ofenergy generated and transmitted to the authorized customer’s transmission systems and invoiced on amonthly basis upon transmission to the customers. Revenues are valued using rates in effect when services areprovided to customers. Accrued billed revenues are presented in current assets as trade receivables and thecorresponding cost is included in operating expenses.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Companyand the revenue can be reliably measured. Revenue measured at the fair value of the consideration received orreceivable. The following specific recognition criteria must be met before revenue is recognized:

At each reporting date, indicates of impairment are reviewed. For this review, the Company is considered as asingle cash generating unit and both tangible and intangible assets are reviewed. If any indication exits, theassets' recoverable amount will need to be estimated. As at 31 December 2012, the assessment of indicators ofimpairment reveals that impairment testing is not required for the Company.

United Power Generation and Distribution Company is a power generation company operating its ownedelectric generating plants. It produces gas generated electricity for sale to DEPZ, CEPZ, KEPZ, REB, BPDB and OliKnitting Fabrics Ltd. UPGD has primarily started its power plant in Dhaka EPZ and Chittagong EPZ. TheCompany’s revenues are derived from electric power generation and distribution services and include energysupplied and billed to the customers.

Provisions for employee benefits and similar other liabilities are determined in accordance with BAS 19. Allremaining provisions are recognized by making the best estimate of the amounts in accordance with BAS 37(Provisions, Contingent Liabilities and Contingent assets).

3.8 Statement of cash flows

3.9

a)

b) Operating lease

3.10 Foreign currency transaction

3.11 Employee benefits

3.11.1 Defined contribution plan (provident fund)

3.12

Finance lease

Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction date inaccordance with BAS 21 (The Effects of Changes in Foreign Exchange Rates).

The Company maintains defined contribution plan for its eligible permanent employees. The eligibility isdetermined according to the terms and conditions set forth in the respective deeds.

Leases in terms of which the entity assumes substantially all the risks and rewards of ownership are classifiedas finance leases. Minimum lease payments made under finance leases are apportioned between the financeexpense and the reduction of the outstanding liability. The finance expense is allocated to each period duringthe lease term so as to produce periodic rate of interest on the remaining balance of the liability.

All leases other than those which meet the definition of finance lease are treated as operating lease and arenot recognized in the statement of financial position.

Income tax has made for other operating income only and no provision is required for income tax on thecompany's business profits as the Company has received exemption from all such taxes from the Governmentof Bangladesh under the private sector power generation policy for a period of 15 years from start of itscommercial operation, vide SRO ref: 114-Law/Income Tax/1999—Income Tax ordinance, 1984 (XXXVI of 1984)dated 26 May 1999.

Income tax

Leases

Net cash inflow from financing activities mainly due to loan paid to related companies, repayment of bank loanand short term loan received from bank.

Net cash inflows from operating activities arrived after adjusting cash received from customers and otherincome with operating expenses paid and interest paid to suppliers during the period.

Net cash used in investing activities includes cash outflow for purchase of property, plant and equipment, and

Statement of cash flows is prepared principally in accordance with BAS 7 (Cash Flow Statement) shows how theCompany's cash and cash equivalents changed during the period through inflows and outflows and the cashflows from operating activities have been presented under direct method.

The Company operates contributory provident fund for all its permanent employees, which is definedcontribution plan. The provident fund is funded by contribution from both employees and the Company @10% of the basic pay.

3.13

3.14

Basic earnings per share

Diluted earnings per share

Weighted average number of shares outstanding during the year

3.15 Consolidation

3.16 Contingent Liabilities and Assets

Earnings per Share

Contingent liabilities and assets are current or possible obligations or assets, arising from past events andwhose existence is due to the occurrence or non-occurrence of one or more uncertain future events which arenot within the control of the Company. In accordance with BAS 37, they are disclosed in the notes to thefinancial statements.

Deferred tax

As there is considerable uncertainty with regard to the taxation of the Company after the expiry of the taxexemption period, management feels it is not possible to make a reasonable estimate of deferred taxassets/liabilities at this stage.

This represents earnings for the year attributable to the ordinary shareholders. As there was no preferencedividend, minority interest or extra ordinary items, the net profit after tax for the year has been considered asfully attributable to the ordinary shareholders.

As there is no prospective dilutive securities, diluted earning per share has been calculated based on the totalexisting number of shares as prescribed in the rule 8(B), 20(e) of Securities and Exchange Commission (PublicIssue) Rules, 2006.

This represents the number of ordinary shares outstanding at the beginning of the year plus the number ofordinary shares issued during the year multiplied by a time weighting factor. The time weighting factor is thenumbers of days the specific shares are outstanding as a proportion of the total number of days in the period.

The calculation of the Basic earnings per share is made in accordance with BAS 33 ( Earnings Per Share),dividing the profit for the period by weighted average number of ordinary shares outstanding during theperiod. Moreover, EPS of the period ending 31 December 2012 has been calculated based on the annualincome of the year 2012.

The financial statements comprised consolidated accounts of Dhaka EPZ project & Chittagong EPZ project.

4 Property, Plant and Equipment, note 3.1

Taka Taka Taka Taka Taka TakaCost:At 01 January 2011 3,731,380,309 148,705,152 2,345,733 315,325 5,236,836 3,887,983,355Addition during the period 42,332,136 - 1,733,221 230,358 - 44,295,715Disposal during the period - - - - - -31 December 2011 3,773,712,445 148,705,152 4,078,954 545,683 5,236,836 3,932,279,070

Depreciation:01 January 2011 171,333,830 12,556,723 181,619 21,326 397,634 184,491,132

Depreciation adjusted during the period - - - - - -31 December 2011 295,588,794 15,530,826 533,479 52,859 921,318 312,627,276

Net book value at 31 December 2011 3,478,123,651 133,174,326 3,545,475 492,825 4,315,518 3,619,651,795

Cost:At 01 January 2012 3,773,712,445 148,705,152 4,078,954 545,683 5,236,836 3,932,279,070Addition during the period 16,485,236 - 1,529,900 144,110 - 18,159,246Disposal during the period - - - - - -31 December 2012 3,790,197,681 148,705,152 5,608,854 689,793 5,236,836 3,950,438,316

Depreciation:01 January 2012 295,588,794 15,530,826 533,479 52,859 921,318 312,627,276Depreciation charged during the period, note 4.1

125,664,624 2,974,103 611,843 54,568 523,684 129,828,822

Depreciation adjusted during the period - - - - -31 December 2012 421,253,418 18,504,929 1,145,322 107,427 1,445,002 442,456,098

Net book value at 31 December 2012 3,368,944,263 130,200,223 4,463,532 582,366 3,791,834 3,507,982,218

Rate of Depreciation 3.33% 2% 15% 10% 10%

Furniture and fixtures

Total

523,684 128,136,14431,533

Transport and vehicles

351,860Depreciation charged during the period, note 4.1

Plant and machinery

Particulars Gas line

2,974,103124,254,964

Equipment

4.01 Power plant

a) Plant Description:

b) Environmental Impact:

4.02 Gas Line

2012 2011Taka Taka

4.1 Allocation of depreciation expenses, note 4Operating expenses 128,530,534 126,854,783Administrative expenses 1,298,288 1,281,361

129,828,822 128,136,144

5 Capital work in progress, note 1.3

Balance as at 01 January

Addition during the year

Transfer to PPE during this year

Closing balance

Taka Taka Taka TakaAs at 31 December 2011Plant and machinery 174,262 - 174,262 -

174,262 - 174,262 -

As at 31 December 2012Plant and machinery (note 5.1) - 368,104,364 - 368,104,364

- 368,104,364 - 368,104,364

The environmental impact of a gas power plant is low; it is both efficient and environmentally sound. These gas power plantshave the highest simple-cycle efficiency in the market. Natural gas has the lowest CO2 emissions compared to other fossilfuels. The SO2 and PM emissions are relatively low for power plants running on natural gas. The NOx emissions are also lowerthan with fuel oil-fired diesel/HFU engines. The engine cooling arrangement using closed-circuit radiator cooling reduces plantprocess water consumption to almost zero, minimizing the effect on local water resources. Effective sound-proofing allowsthe plant to be operated even in densely populated areas.

According to Power Supply Agreement, dated 6th and 16th May 2007 with Bangladesh Export Processing Zone Authority(BEPZA); BEPZA, at their own cost, shall provide necessary gas connection of required quantity and specification from thenearest District Regulatory Station (DRS) of Titas Gas Transmission and Distribution Company Limited and Bakhrabad Gassystem Limited, the former name of Karnaphuli Gas Distribution Company Ltd. BEPZA shall maintain such gas connection untilthe expire of a period of thirty (30) years unless extended or earlier termination. Although both parties agreed upon thiscondition but due to lack of initiative by concerned authority (BEPZA), UPGD has established this gas line back on 17November 2008 at its own cost.Gas line is valued at construction cost less depreciation and impairment loss. Cost includes ERW carbon steel pipe, tape forgas line, RMS, TBS, line accessories, and construction and commissioning expenditures. Cost are only included in the asset’scarrying amount when it is probable that economic benefits associated with this item will flow to the company and the costcan be measured reliably. All other repair and maintenance expenses are charged to the income statement during the periodin which they are incurred.

The natural gas fired power plants of UPGD consist of Wärtsilä and MTU engine generator terminal with 30 years expecteduseful life, which form the major part of the power generation companies. This gas-powered generating set consists ofauxiliaries, exhaust gas silencer, and electrical, mechanical & civil construction and erection. Each power plan has fourteen(14) integrated systems named fuel, lubrication oil, compressed air, cooling, charge air, exhaust, water treatment, fireprotection, emission control, automation, electrical, station service, DC and high voltage systems. At DEPZ there are four (4)gas fired engines with the capacity of 8.73 MW each and three (3) gas fired engines with the capacity of 2 MW each for thegeneration of electricity. At CEPZ there are five (5) gas fired engines with the capacity of 8.73 MW each. The total output ofthese stationary power plants at DPEZ and CEPZ is 41 MW & 44 MW respectively.

2012 2011Taka Taka

5.1 Plant and machinery (note 5)Engine 218,449,916 -Other machinery 93,490,411 -Advance to EPC Contractor 17,859,400 -Overhead 38,304,637 -Total 368,104,364 -

6 Pre-operational expenses, note 3.22012 2011 2010 2009 2008Taka Taka Taka Taka Taka

17,380,575 19,553,147 21,725,719 21,668,119 7,036,047

Expenses during the period - - - 57,600 16,558,432 Total pre-operational expenses 17,380,575 19,553,147 21,725,719 21,725,719 23,594,479

- - - - 1,926,361

Net pre-operating expenses 17,380,575 19,553,147 21,725,719 21,725,719 21,668,119

17,380,575 2,172,572 2,172,572 - -

Balance as at 31 December - 17,380,575 19,553,147 21,725,719 21,668,119

2012 2011Taka Taka

7 Inventories, note 3.3

Spare parts, note 7.01 185,062,362 205,372,601Fuel and lubricants, note 7.01 6,920,049 5,791,752

191,982,411 211,164,353

7.01 Movement of inventories, note 7 Spare parts Fuel and lubricants

Balance as at 01 January 2011 83,814,252 3,762,921Purchase during the year 2011 241,469,389 34,355,793Issued during the year 2011 (119,911,040) (32,326,962)Balance as at 31 December 2011 205,372,601 5,791,752

Balance as at 01 January 2012 205,372,601 5,791,752Purchase during the year 2012 73,066,269 38,360,130Issued during the year 2012 (93,376,508) (37,231,833)Balance as at 31 December 2012 185,062,362 6,920,049

7.02 Number of inventories (as at 31 December 2012)

2012 2011 2012 2011 2012 2011 2012 2011DEPZ 4,927 4,050 142,789,621 144,579,451 11,325 9,533 3,347,496 2,284,202CEPZ 2,098 2,980 42,272,741 60,793,150 14,060 14,788 3,572,553 3,507,550Total 7,025 7,030 185,062,362 205,372,601 25,385 24,321 6,920,049 5,791,752

Amount (Taka)

Less: Revenue income during pre COD up to 25.12.2008

Inventories comprises spare parts and fuel & lubricants which are used for maintenance of power plants machineries.

Balance as at 01 January

Spare parts

Less: Amortization of Pre-operational expenses

Fuel and lubricants

Quantity (Ltr.) Amount (Taka)Quantity (Nos)

2012 2011Taka Taka

8 Trade receivablesDhaka Export Processing Zone (DEPZ) 103,501,208 69,971,285Rural Electrification Board (REB) 242,089,340 122,714,755Oli Knitting Fabrics Ltd. 3,448,200 4,146,898Chittagong Export Processing Zone (CEPZ) 102,354,624 69,464,275Bangladesh Power Development Board (PDB) 378,750,680 129,758,841Karnaphuli Export Processing Zone (KEPZ) 10,489,824 -

840,633,875 396,056,054

2012 2011Taka Taka

8.01

The ageing of gross trade receivables as at 31 December was:

Invoiced 0-30 days 281,351,573 210,342,620 Invoiced 31-60 days 50,808,608 29,471,499 Invoiced 61-90 days 65,972,401 42,395,654 Invoiced 91-180 days 112,499,275 34,899,695 Invoiced 181-365 days 197,039,467 53,341,341 Invoiced over 365 days 132,962,551 25,605,245

840,633,875 396,056,054

9 Inter-company balances, note 3.4.1.b

United Enterprises & Co. Ltd. 2,569,378,523 1,378,954,791United Ashuganj Power Ltd. 49,138,000 29,138,000Neptune Commercial Ltd. 4,719,107 4,719,107Neptune Properties 100,000,000 -United Engineering & Power Services Ltd. 1,785,175 696,963United Hospital Ltd. 4,493,265 4,493,265Neptune Land Development Ltd. 20,000,000 -Shahjanullah Power Company Ltd. 71,600,000 -

2,821,114,070 1,418,002,126

As per Board decision, the arrangement of share purchase of United Ashuganj Power Ltd (UAPL) has been cancelled andthereby investment in share accordingly rearrange.

As decided in the meeting of the Board of Directors dated 01 January 2010, the company may provide interest free loannot exceeding 60% of the company's total equity to its parent company and its sister concerns and any amount exceedingthat limit will be interest bearing at 180 days treasury bill rate.

Ageing of trade receivables

Trade receivables were stated at their nominal value and considered good. Trade receivables were accrued in the ordinary course of business.

Moreover as decided in the meeting of the board of the directors dated January 31, 2013, out of Tk. 2,821,114,070,approximately 90% will be realized from the inter companies/ sister concerns by June 2013, to comply with the section 103of the Companies Act, 1994; and interest will be charged on the any remaining balances of the inter company accountsfrom July 2013

9.01 Ageing of inter- company balances 2012 2011Taka Taka

The ageing of inter- company balances as at 31 December was:

Invoiced 0-30 days 141,733,197 61,820 Invoiced 31-60 days 79,944,174 80,023,000 Invoiced 61-90 days 119,942,195 101,172,876 Invoiced 91-180 days 611,088,631 201,457,708 Invoiced 181-365 days 451,100,710 1,030,341,188 Invoiced over 365 days 1,417,305,163 4,945,534

2,821,114,070 1,418,002,126

2012 2011Taka Taka

10 Advance, deposits and prepayments

Advance paid to suppliers, employees and others ( Note 10.01) 25,995,875 16,330,538Security and other deposits ( Note 10.02 ) 18,400,179 18,915,165Prepaid expenses ( Note 10.03 ) 4,568,333 2,960,667

48,964,387 38,206,370

10.01 Advance paid to suppliers, employees and others, note 10Land lease rent 903,291 865,341Against salary 1,466,300 3,320,600Other advances 23,626,284 12,144,597

25,995,875 16,330,538

2012 2011Taka Taka

Invoiced 0-30 days 14,655,719 635,128 Invoiced 31-60 days 5,702,420 4,869,159 Invoiced 61-90 days 1,804,000 2,500,000 Invoiced 91-180 days 433,846 95,310 Invoiced 181-365 days 862,869 3,025,000 Invoiced over 365 days 2,537,021 5,205,941

25,995,875 16,330,538

10.02 Security and other deposits, note 10

LC Margin 4,671,139 5,147,360Bank guarantee margin 13,729,040 13,729,040Lease deposit - 38,765

18,400,179 18,915,165

10.01.1 Ageing of advance paid to suppliers, employees and others

Ageing of advance paid to suppliers, employees and others as at 31 December was:

Advance was paid to Bangladesh Export Processing Zone Authorities (BEPZA) which is equivalent to six month rental of thesaid land as security deposit in the form of guarantee against any possible loss of damage of the property or failure to payrental and other charges. Advance to employees includes advances made against salary. Other advances to various partiesagainst expenses including transportation, fabrication, other expenses, etc.

Management of the Company believes that all the amount due to inter company/ sister concerns are good as the shareholder of all the sister concerns & the parent company are same and will be recovered very soon.

2012 2011Taka Taka

10.03 Prepaid expenses, note 10Insurance premium 3,943,333 2,335,667BERC license fees 625,000 625,000

4,568,333 2,960,667

2012 2011Taka Taka

11 Cash and bank balances, note 3.8Cash in hand 207,572 170,687Cash at bank on current account with:Dhaka Bank Ltd. - Local Office (A/C # 201-100-17838) - 17,737Dhaka Bank Ltd. - F EX. Branch (A/C # 203-100-9944) 500,053 409,177Citi Bank-NA (A/C # G010000200555007) - 41,762Standard Chartered Bank (A/C # 01-3768643-01) 104,855 27,877One Bank Limited ( A/C # 18160931019) 20,910 22,180Mercantile Bank Limited ( A/C # 12911100001164) 47,941 51,341Dutch-Bangla Bank Ltd.-Gulshan Branch ( A/C # 116-110-5711) 3,286 4,206AB Bank Ltd.- Gulshan Branch ( A/C # 4019-758319-000) 6,792 7,942Standard Bank Ltd. - Principal Branch ( A/C # 10233011202) 15,559 15,559Bank -Al - Falah ( A/C # 0702-03700096) 18,744 19,784The City Bank Ltd. - Gulshan Branch ( A/C # 1305510011036610) 22,135 22,135Prime Bank Limited - Banani Branch ( A/C # 13211050007791) 1,477 1,477Dutch Bangla Bank Ltd. -Banani Branch ( A/C # 103-110-15683) 4,660,724 36,387,249Shahjalal Islami Bank Ltd. - Main Branch ( A/C #11100012562 ) 19,355 19,355National Bank Ltd. - Gulshan Branch ( A/C # 006733009033) 6,260 11,424Eastern Bank Ltd. - Gulshan branch ( A/C # 104-106-13236) 40,527 64,514Shahjalal Islami Bank Ltd. - Gulshan Branch (A/C # 11100008208) 85,747 -Brac Bank-GB (A/C # 1526202342122001) 148,088 -Jamuna Bank - Gulshan Branch ( A/C # 00100210015079) 170,234 -Trust Bank Ltd-Karwan bazar branch ( A/C # 0030-0210004176) 5,000 -

5,877,686 37,123,7196,085,258 37,294,406

12 Share capital

2012 2011Taka Taka

12.01 Authorized share capital1,000,000,000 ordinary shares of Tk. 10 each 10,000,000,000 10,000,000,000

10,000,000,000 10,000,000,000

12.02 Issued, subscribed and paid-up capital

1,979,664,840 1,979,664,8401,979,664,840 1,979,664,840

12.03 Movement of share capitalBalance as at 01 January (Face value of each share is Tk.10 each)Issuance of stock dividend during the year - -Balance as at 31 December 1,979,664,840 1,070,089,100Issuance of stock dividend during the year(Face value of each share is Tk.10 each)Balance as at 31 December 1,979,664,840 1,979,664,840

Prepaid expenses represents advance payments against insurance premium to Green Delta Insurance Company Ltd for CEPZand Pragati Insurance Ltd for DEPZ and Bangladesh Energy Regulatory Commission (BERC) for license fees.

197,966,484 ordinary shares of Tk. 10 each

909,575,740

As per the disclosure requirements laid down in schedule under the rule 12(2) of the Securities and Exchange Rules 1987, thefollowings are the part and parcel of share capital:

-

1,070,089,1001,979,664,840

12.04 Position of shareholding

2012 2011 2012 2011Name of Shareholders:Hasan Mahmood Raja 8.58% 8.58% 169,932,860 169,932,860 Ahmed Ismail Hossain 8.58% 8.58% 169,932,860 169,932,860 Akhter Mahmud Rana 8.58% 8.58% 169,932,860 169,932,860 Khandaker Moinul Ahsan Shamim 8.58% 8.58% 169,932,860 169,932,860 Faridur Rahman Khan 2.38% 2.38% 47,203,490 47,203,490 Abul Kalam Azad 2.38% 2.38% 47,203,490 47,203,490 Moinuddin Hasan Rashid 8.58% 8.58% 169,932,860 169,932,860 Mahmuduzzaman Khan - 0.31% - 6,167,900 United Enterprises & Co. Ltd 52.31% 52% 1,035,593,560 1,029,425,660

100% 100% 1,979,664,840 1,979,664,840

12.05 Classification of shareholders' by holding

2012 2011 2012 20115,001 to 20,000 shares - - - -20,001 to 50,000 shares - - - -50,001 to 1,000,000 shares - 1 - 616,7901,000,001 to 10,000,000 shares 2 2 9,440,698 9,440,698over 10,000,000 shares 6 6 188,525,786 187,908,996

8 9 197,966,484 197,966,484

12.06 Option on un-issued shares

There is no option on un-issued share capital

2012 2011Taka Taka

13 Retained earnings

Opening balance 1,246,234,967 1,093,544,217 Net profit for the year 2,020,478,280 1,062,266,490

3,266,713,247 2,155,810,707 Less: Dividend for the year 2010 - 909,575,740

3,266,713,247 1,246,234,967

2012 2011Taka Taka

14 Long term loan

Dhaka Bank Limited 895,494,452 988,919,355Dutch-Bangla Bank Ltd. 1,039,221,330 1,146,913,509

1,934,715,782 2,135,832,865

14.01 Long term loan (Current portion)

Dhaka Bank Limited 105,895,871 103,710,429Dutch-Bangla Bank Ltd. 112,187,466 124,586,960

218,083,337 228,297,389

Percentage of holding Value of shares (Tk.)

No. of sharesNo. of shareholders

Accumulated profit transferred to Statement of Financial Position

a) Dhaka Bank Limited

a) Interest rate:

For Non-IPFF Syndicated Loan: 15.50% p.a.b) Tenor: For IPFF Door -to-Door 120 months (10 years) from the date of disbursement. c)d) e) Security:

b) Dutch-Bangla Bank Limited

a) Interest rate:

For Non-IPFF Syndicated Loan: 15.50% p.a.b) Tenor: For IPFF Door - to - Door 120 months (10 years) from the date of disbursement. c) Repayment: 28 equal quarterly installments. d)e) Security:

2012 2011Taka Taka

15 Trade payables

Trade payables, note 15.01 55,608,568 66,590,18955,608,568 66,590,189

2012 2011Taka Taka

15.01 Trade payables, note 15

Gas bill - Titas Gas Transmission & Distribution Company Ltd. 17,191,155 34,693,214 Gas bill - Karnaphuli Gas Distribution Company Ltd. 38,417,413 31,896,975

55,608,568 66,590,189

16 Other payables and accrual

Finance charge payables (note 16.1) - 17,821,815 Other payables (note 16.2) 5,411,169 22,320,787

5,411,169 40,142,60216.01 Finance charge payables (note 16)

Dutch Bangla Bank Ltd. - 17,821,815- 17,821,815

Purpose: To implement the power project.

Repayment: For IPFF- 34 equal quarterly installments and for non-IPFF- 21 equal installments.

Trade payables consists of gas bills payable to Titas Gas Transmission & Distribution Company Limited for DEPZ power plantand Bakhrabad Gas Systems Limited, the former name of Karnaphuli Gas System Ltd. for CEPZ power plant.

For IPFF loan: 360 days Bangladesh Bank Treasury bill rate plus 0.50% (IPFF margin) plus 2.10% (PFI's margin).

Gas bill - Titas Gas Transmission & Distribution Company Ltd. Provision has been made for the interest on term loan for the month of December 2011.

For IPFF loan: 360 days Bangladesh Bank Treasury bill rate plus 0.50%(IPFF margin) plus 2.50%(PFI's margin).

Purpose: To pay off the Syndicated Term Loan arranged by SCB and IDLC.

This is a syndicated loan arranged by Dhaka Bank Ltd. Total facility amount is Taka 115.00 crore, out of which InvestmentPromotion and Financing Facility (IPFF) fund was Taka 92.00 crore and the remaining Taka 23.00 crore was syndicated termloan.

Hypothecation of all fixed and floating assets including but not limited to machinery, book debts, furniture andequipment on first ranking pari passu basis creating present and future charge with the RJSC.

Hypothecation of all fixed and floating assets including but not limited to machinery, book debts, furniture, fixture andequipment on first ranking pari passu basis creating present and future charge with the RJSC.

This is arranged by Dutch-Bangla Bank Ltd. Total facility amount is Taka 135.00 crore, out of which Investment Promotionand Financing Facility (IPFF) fund was Taka 108.00 crore and the remaining Taka 27.00 crore was term loan.

2012 2011Taka Taka

16.02 Other payables (note 16)

Mobile bill 14,163 21,779Salary and allowances - 2,076,624Directors remuneration - 300,000Utility bill 31,105 10,527Security expenses - 274,450Service charge on gas bill 3,841,741 3,189,697Medical expenses 14,175 11,745Audit fees 253,000 229,900TDS payable 199,000 -Internet expenses 24,000 -House rent - 6,000,000C & F Bill - 340,696R. J. M Corporation - 1,829,500Minimum load charge - 6,727,299VAT deduction at source payable 557,939 483,659Payable to provident fund 476,046 824,911

5,411,169 22,320,787

17 Finance Lease obligation

2012 2011 2012 2011Finance lease obligation - 353,219 - 321,543Less : Current portion, Note 17.01 - 353,219 - 321,543

- - - -

2012 2011 2012 2011i) Within 1 Year - 353,219 - 321,543ii) Two to five years - - - -ii) More than five years - - - -

2012 2011Taka Taka

17.01

United leasing Company Limited - 353,219National Bank Limited - 321,543

- 674,762

Finance lease obligation (Current portion)

Current portion of finance lease obligation represents the principal amount of lease obligation included in the minimumlease payments falling due in next 12 month period from the end of the reporting period.

National Bank Ltd United Leasing Company

Ltd

Finance lease obligation as at 31 December 2012 and 31 December 2011 are as follows:

Obligation under finance lease was initially measured at cost.

United Leasing Company Limited

United Power Generation and Distribution Company Ltd entered into two lease agreement respectively with United LeasingCompany and National Bank Limited for the right to use the vehicles for an agreed period of time.

National Bank Limited

a)

Transfer fee:Interest rate: Interest will be charged @ 15.83% per annum.

Security : i. Ownership of the lease asset;ii. Demand Promissory Note for gross rent; and iii. Letter of Continuity and Trust Receipt.

Lease term: Lease term will be 60 months with effect from the lease execution date (07 October 2007)

b)

Transfer fee:Interest rate: Interest will be charged @ 13.50% per annum.

Security : i. Ownership of the lease asset;ii. Personal Guarantee of all the Directors and their spouse of the company;iii. Corporate Guarantee of United Enterprise & Co. Ltd.

Lease Term: Lease term will be 36 months with effect from the lease execution date (17 July 2009)

2012 2011Taka Taka

18 Short term loan

Bank overdraft-Dhaka Bank Ltd. 74,585,139 39,546,522Eastern Bank Ltd 250,000,000 -

324,585,139 39,546,522

a)

Limit: Taka 100 MillionInterest rate: 15% p.a.Security: Personal guarantee of all the Directors of the company

b) Eastern Bank Limited

Limit: Taka 250 MillionInterest rate: 15.50% p.a.Tenor: 270 days from the date of creation (including moratorium period of 180 days)

Security: i. An undated cheque;ii. Personal guarantee of all the Directors of the company;iii. Corporate guarantee of United Enterprise & Co. Limited and Neptune Land Development Limited;iv. Standard charge document, as per Bank's format

Dhaka Bank Limited

National Bank Limited (NBL)

The Company has received one time credit facility in the form of Demand Loan to finance the EPC (Erection Procurement and Commissioning) cost against expansion of both DEPZ & CEPZ projects.

National Bank Limited (NBL) has financed the acquisition of one unit of Reconditioned Toyota Premio, 1,500 CC Model 2008.The terms and conditions of the facility are as follows:

Overdraft facilities was provided to the Company to meet up working capital requirement for the Business of Power Generation and other construction and trading.

United Leasing Company Limited (ULCL)

Taka 100

Acquisition cost:

Acquisition cost:Taka 1,600,000

Taka 1,642Taka 1,642,000

United Leasing Company Limited (ULCL) has financed the acquisition of one unit of Toyota Voxy Microbus, 2,000 CC Model2003. The terms and conditions of the facility are as follows:

2012 2011Taka Taka

19 Provision for taxation (3.12) 84,500 771,54384,500 771,543

20 Contingent assets

2012 2011Taka Taka

21 Contingent liabilities and commitments

i) Contingent liabilities

117,000,000 117,000,000

78,790,400 78,790,400

ii) Financial CommitmentsConfirmed irrevocable letters of credit 87,815,200 7,194,550

283,605,600 202,984,950

The company has raised a claim to BEPZA amounting to Taka 388,521,161 due to losses caused to it by the claimant'sobligation to provide vacant possession of land and gas connection which resulted in delayed commercial operation date.

Bank Guarantees issued by Shahjalal Islami Bank Ltd. with 5% margin in favorof Bangladesh Export Processing Zone (BEPZA).

Bank Guarantees issued by One Bank Ltd. with 10% margin in favor of TITASGas Transmission and Distribution Company Limited.

2012 2011Taka Taka

22 Revenue, note 3.7

Sale of electricity (note 22.1) 3,273,488,057 2,227,633,4093,273,488,057 2,227,633,409

22.1 Sale of electricity (note 22)

Name of the Customers:

Dhaka Export Processing Zone (DEPZ) 1,100,824,551 811,560,068Rural Electrification Board (REB) 452,632,775 278,124,747Oli Knitting Fabrics Ltd. 18,398,990 18,973,701Chittagong Export Processing Zone (CEPZ) 1,062,951,049 732,136,351Bangladesh Power Development Board (BPDB) 578,378,919 386,838,541Karnaphuli Export Processing Zone (KEPZ) 60,301,773 -

3,273,488,057 2,227,633,409

2012 2011Taka Taka

23 Operating Expenses

Personnel Costs:Salary, wages and bonus (note 38.1) - 13,932,922Welfare and other benefits (note 38.1) - 4,407,971

- 18,340,893Fuel and energy 498,213,666 478,448,785Operation and maintenance expenses, note 23.1 182,255,959 179,306,915Depreciation expenses, note 4.1 128,530,534 126,854,783Minimum load charge 60,947,201 75,591,254Liquidity damage charge 270,010 29,552Land lease rent 2,907,626 1,958,723Traveling and conveyance 393,603 227,998Carrying charge 230,095 58,800Entertainment 1,401,391 2,309,482Uniform and leverage 19,900 392,100Telephone, mobile, internet & dish line bill 661,910 526,230Printing and stationery 238,767 222,271Newspaper, postage and courier 53,020 1,175Vehicle running and maintenance 226,056 207,892Rent, rates and taxes - 377,850Utility bill 158,681 141,046Insurance premium 4,372,334 4,502,333Fire fighting expenses 134,500 -Medical expenses 428,811 225,672Beautification and gardening expenses 6,915 29,459License and other fees 1,027,500 1,389,595Environmental expenses 305,000 459,000House rent 703,924 259,563Site office expenses 641,884 238,083Security expenses 422,803 3,386,086

884,552,090 895,485,539

In 2012 electricity sale of the company increased by tk. 104,58,54,648/- as compared to the period 2011 due to theincreasing production and increasing electricity tariff rate per unit. Net sales increased by 46.95% during the periodunder review. During the year the Company produced electricity totally 59,80,19,006 kwh (DEPZ project produced27,64,63,636 kwh & CEPZ project produced 32,15,55,370 kwh).

2012 2011Taka Taka

23.1 Operation and maintenance expenses

Operational expenses (note 38.1) 19,328,252 -Stores and spares consumed 130,608,341 152,238,001Repair and maintenance 32,319,366 27,068,914

182,255,959 179,306,915

24 Administrative expenses

Personnel costsSalary, wages and bonus 7,375,994 8,629,211Welfare and benefits 798,000 1,373,000

8,173,994 10,002,211Depreciation expense, note 4.1 1,298,288 1,281,361Amortization of pre-operational expenses, note 6 17,380,575 2,172,572Directors' remuneration 4,320,000 5,766,881Rent, rates and taxes 152,495 355,358Traveling and conveyance 2,101,053 1,102,311Postage, telephone and telex 318,235 320,936Entertainment 616,987 376,930Printing and stationery 1,197,758 546,904Newspaper bill 20,942 15,344Computer maintenance 15,100 74,150Audit fee 253,000 570,300Advertisement 10,000 625,000Medical expenses 2,177,654 601,204Vehicle running expenses 1,209,374 310,983Office rent 12,720,000 6,000,000Office expenses 79,963 51,704Legal & Consultancy fees 4,530,038 1,794,000PF expenses 270,468 -Other administrative expenses 550,965 4,403,191

57,396,889 36,371,340

25 Other Operating IncomeSale of drams and burned lube oil etc. 225,333 2,057,447

225,333 2,057,447

2012 2011Taka Taka

26 Financial ExpensesInterest on lease finance: United Leasing Company Limited 23,819 70,386 National Bank Limited 12,789 86,827 IDLC Finance Limited - 6,618Syndication loan expenses - 1,806,797Interest on long term loan: Dhaka Bank Limited 147,340,766 102,895,112 Dutch Bangla Bank Limited 157,191,198 117,088,978Interest on overdraft: Dhaka Bank Limited 6,213,538 10,144,932 Shajalal Islamic bank - 2,080,433Bank charge and commission 419,521 615,862

311,201,631 234,795,944

Other operating income derived from sale of scrap drums and burned lube oil which is directly related with the normalcourse of business activities.

Year wise breakup of Financial charges:

2012 2011 2010 2009 2008Taka Taka Taka Taka Taka

Interest capitalized 18,819,154 - - 102,938,926 263,741,366Interest charged to revenue 311,201,631 234,795,944 182,151,008 245,022,204 2,827,083Total: 330,020,785 234,795,944 182,151,008 347,961,130 266,568,449

2012 2011Taka Taka

27 Earnings per share ( Basic earnings per share - BAS 33.10)

Basic EPS

Net profit from core business 2,020,788,113 1,065,095,480Weighted average number of shares outstanding during the period 197,966,484 197,966,484Basic EPS on Core business (previous year restated) 10.21 5.38

Extra ordinary income ( Other operating income) 140,833 1,285,905Weighted average number of shares outstanding during the period 197,966,484 197,966,484Basic EPS on extra ordinary business (previous year restated) 0.001 0.006

27.1 Diluted earning per share

Net profit after tax 2,020,478,280 1,062,266,490Total existing number of shares as on date 197,966,484 197,966,484Diluted earning per share 10.21 5.37

28 Cash Received from Customers

2012 2011Taka Taka

Net Sales 3,273,488,057 2,227,633,409 Add: Opening balance of trade receivables 396,056,054 307,867,523 Less: Closing balance of trade receivables (840,633,875) (396,056,054)

2,828,910,236 2,139,444,878

29 Cash Paid to Suppliers & Contractors

2012 2011Taka Taka

Cost of purchase (spare parts and gas bill) 628,822,007 630,686,785 Changes in inventories (19,181,942) 123,587,180 Add: Opening balance of trade payables 66,590,189 47,186,851 Less: Closing balance of trade payables (55,608,568) (66,590,189)

620,621,685 734,870,628

Cash paid to various suppliers arrived after adjusting cost of gas consumption and cost of spare parts consumed withtrade payable.

Gross cash received from customers arrived after adjusting trade receivables with revenue for the period.

2012 2011Taka Taka

30 Cash paid for other Operating Expenses

Total expense 941,796,484 931,856,879Fuel and energy (498,213,666) (478,448,785)Stores and spares consumed (130,608,341) (152,238,001)

312,974,477 301,170,094Changes in advance deposits and prepayments 10,758,018 (9,166,390)Depreciation (129,828,822) (128,136,144)Amortization of pre-operational expenses (17,380,575) (2,172,572)Add: Opening balance of other payables 22,320,787 6,837,409 Less: Closing balance of other payables (5,411,169) (22,320,787)

193,432,716 146,211,610

31 Payment of Financial Expenses

2012 2011Taka Taka

Interest expense 311,201,631 234,795,944 Add: Opening balance of interest payable (other payable) 17,821,815 7,590,000 Less: Closing balance of interest payable (other payable) - (17,821,815)

329,023,446 224,564,129

32 Payment for Acquisition of Property, Plant and Equipment

2012 2011Taka Taka

Total addition of property, plant and equipment 18,159,246 44,295,715 Less: Disposal of property, plant and equipment - - Add: Work in progress 368,104,364 (174,262)Add: Opening balance of capex liability - 21,517,176

386,263,610 65,638,629

33 Long-term Loan

2012 2011Taka Taka

Opening balance of long term loan 2,364,130,254 2,306,460,000 Less: Closing balance of long term loan (2,152,799,119) (2,364,130,254)

211,331,135 (57,670,254)

Cash paid for other operating expenses arrived after adjusting non-cash items and other payables for revenue expenses.

Investment related to outflows of cash and cash equivalents for tangible fixed assets.

During the period under review the Company paid long term loan amounting to Taka 211,331,135/-(2011: the Companyreceived long term loan amounting to Taka 57,670,254/-).

The interest paid has been shown separately in accordance with BAS 7 (Cash Flow Statements). This amount is calculatedby adjusting the interest expenses for accruals and deferrals from the balance sheet.

2012 2011Taka Taka

34 Short-term Loan Received

Opening balance of short term loan 39,546,522 -Less: Closing balance of short term loan (324,585,139) (39,546,522)

(285,038,617) (39,546,522)

35 Cash Paid for Inter-company Loan

2012 2011Taka Taka

Opening balance of Inter-company balances 1,418,002,126 314,482,566Less: Closing Balance of Inter-company balances (2,821,114,070) (1,418,002,126)

(1,403,111,944) (1,103,519,560)

36 Cash Paid for Lease Finance

2012 2011Taka Taka

Opening balance of lease finance 674,762 1,630,627Less: Closing balance of lease finance - (674,762)

674,762 955,865

During the period under review the Company has given Inter-company loan amounting to Taka 1,403,111,944/- (2011:the Company has given Inter-company loan amounting to Taka 1,103,519,560/-).

During the period under review the Company paid lease finance amounting to Taka 674,762/- (2011: the Company paidlease finance amounting to Taka 955,865/-).

During the period under review the Company received short term loan amounting to Taka 285,038,617/- (2011: theCompany received short term loan amounting to Taka 39,546,522/-).

37 Bank Facilities

The Company has got the following loan facilities from the followings financial institutions:

Term loan -Limit (million)

Short Term Loan Limit (million)

Letter of credit-limit

(million)

LTR - limit (million)

Overdraft Limit

(million)

Bank Guarantee

Facilities - limit (million)

1,150 - - - - -Dhaka Bank Ltd. 1,350 - 100 95 100 50Eastern Bank Ltd. - 250 - - - -Trust bank Ltd. 700 - 250 237 - -Total 3,200 250 350 332 100 50

38 Number of Employees2011

Head office factory- - - - -

7 - - 7 1187 - - 7 118

38.1

2012 2011Taka Taka

39

Foreign travel for Company's business purpose 1,018,017 415,9201,018,017 415,920

Expenditure in Equivalent Foreign Currency

Employee remuneration includes all types of benefits paid and provided both in cash and in kind other than the re-imbursement of expenses incurred for the Company's business.

WorkerOfficers & staffs Total employees

The Company has entered into an management agreement with United Engineering & Power Services Ltd. (UEPSL) forproviding technical and operational support.

Total

Total employees

2012

Above Tk. 3,000

Name of the bank (s)

Dutch-Bangla Bank Ltd.

Salary Range

Below Tk. 3,000

40 Disclosure of Managerial Remuneration

40.01

2012 2011Taka Taka

Designation

Moinuddin Hasan Rashid Managing Director 4,320,000 5,766,8814,320,000 5,766,881

40.02

2012 2011Taka Taka

Designation

Moinuddin Hasan Rashid Managing Director 4,320,000 5,766,881Syed Abdul Mayeed Chief Executive Officer 2,625,000 1,800,000Sheikh Asraf Hossain Chief Operating Officer 1,200,000 1,440,000Md. Amir Khasru Project Director 1,680,000 1,680,000Md. Mojibul Islam Patoary Manager (Finance and Accounts) 540,000 360,000

10,365,000 11,046,881

2012 2011Taka Taka

Nature of paymentBoard meeting fees - -Remuneration 4,320,000 5,766,881Salary, bonus & other allowances 10,686,383 23,648,572

15,006,383 29,415,453

41

* Credit risk* Liquidity risk* Market risk

41.01 Risk Management Framework

40.03

The Company has exposure to the following risks from its use of financial instruments:

The total amount of remuneration paid to the top five executives of the Company in the accounting year is as follows:

Name

2. Directors

Aggregate amount of remuneration paid to all Directors and Officers during the accounting year is as follows:

Particulars1. Directors

The total amount of remuneration paid to the director of the Company in the accounting year is as follows:

Name

3. Officers & executives

Financial Risk Management

Board of Directors has overall responsibility for the establishment and oversight of the company's risk management framework.The company's risk management policies are established to identify and analyze the risks faced by the company, to setappropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems arereviewed regularly to reflect changes in market conditions and the company's activities. The company, through its training andmanagement standards and procedures aims to develop a disciplined and constructive control environment in which allemployees understand their roles and obligations.

41.02 Credit Risk

2012 2011Taka Taka

Exposure to Credit Risk:

Trade receivables 840,633,875 396,056,054Security & other deposits 18,400,179 18,915,165Cash and bank balances 6,085,258 37,294,406Inter-company balances 2,821,114,070 1,418,002,126

3,686,233,381 1,870,267,751

41.03 Liquidity Risk

41.04 Market Risk

41.05 Interest Rate Risk

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

The Company held cash and cash equivalents of Taka at 31 December 2012 is 6,085,258 (2011: Taka 37,294,406), whichrepresents its maximum credit exposure on these assets.

Market risk is the risk that any change in market conditions, such as interest rates that will affect the Company's income or thevalue of its holdings of financial instruments. The objective of market risk management is to manage and control market riskexposures within acceptable parameters, while optimizing the return.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company'sapproach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilitieswhen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company'sreputation. Typically, the Company ensures that it has sufficient cash and cash equivalent to meet expected operationalexpenses, including the servicing of financial obligation through preparation of the cash forecast, prepared based on time line ofpayment of the financial obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment withindue date. Moreover, the Company seeks to maintain short term lines of credit with scheduled commercial bank (Note:18) toensure payment of obligations in the event that there is insufficient cash to make the required payment. The requirement isdetermined in advance through cash flows projections and credit lines facilities with bank is negotiated accordingly.

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

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet itscontractual obligations, and arises principally from the company's receivable from customers. The company's sales is made toDhaka Export Processing Zone Authority (DEPZ), Chittagong Export Processing Zone Authority (CEPZ), Rural Electrification Board(REB), Bangladesh Power Development Board (BPDB), Karnaphuli Export Processing Zone (KEPZ), Oli Knitting Fabrics Limitedunder the conditions of the long term Power Purchase Agreement (PPA).

The Company's Inter-company balances is compose of loan to its parent and sister concern, where majority is avail by its parentcompany;Moreover, the shareholder of all the sister concerns & the parent company are same. Thus management believes that there is nomajor credit risk associated with it.

Interest rate risk is the risk that arises due to changes in interest rates on borrowings. Local loans and borrowings are howevernot affected by fluctuations in interest rates as the rate is below from market rate. The Company has not entered into any type ofderivative instrument in order to hedge interest rate risk as at the reporting date.

41.06 Capital management

41.07 Operational Risk:

41.08 Risk associated with Supply of Raw Material (Natural Gas):

42 Related Party Transactions

42.1 Transactions with Key Management Personnel2012 2011Taka Taka

Employee benefits (Short term) 10,365,000 11,046,881 Employee benefits (Provident fund) 270,468 -

10,635,468 11,046,881

Key management personnel includes Managing Director, Directors, Managers.

Operational risk constitutes the ability of the Company’s power projects to generate and distribute stipulated electricity to its off-takers. Technology used, fuel supply arrangement, operational and maintenance (O&M) arrangement, political or force majeurein the form of natural disaster like floods, cyclone, tsunami and earthquake may hamper normal performance of powergeneration.

The routine & proper maintenance of the distribution networks undertaken by BEPZA reduces the chance of major disruptions.However, severe natural calamities which are unpredictable and unforeseen have the potential to disrupt normal operations ofUPGD. Management believes that prudent rehabilitation schemes and quality maintenance will lessen the damages caused bysuch natural disasters. Most importantly, all the above risks are covered under the insurance agreement with Green DeltaInsurance Company Ltd., to compensate for all the potential damages caused in such situations.

The main raw material used for generating electricity is natural gas. Any interruption of supplies of the gas to the power plantswill hamper the generation of electricity, the only product of the Company.

The Company has a Gas Supply Agreement with Bakhrabad Gas Systems Limited and Titas Gas Transmission & DistributionCompany Limited for 15 years which is renewable every 5 years thereafter. So there is no threat of interruption of supplies of thegas to the power plants that may hamper the generation of electricity, the only product of the company. Furthermore, new gasare being explored and discovered in many areas of the country such as Narayanganj, Narshindi, and Bay of Bengal. TheGovernment of Bangladesh plans to add these discoveries to the national grid. Therefore, management does not expect gassupply interruption in the future.

During the period under review the company carried out a number of transactions with related parties in the normal courses ofbusiness and on an arms' length basis. The name of the related parties and the nature of relationship have been set out inaccordance with the provision of BSA 24:

Capital management refers to implement policies and measures to maintain sufficient capital, assessing Company's internalcapital adequacy to ensure Company's operation as a going concern. Capital consists of share capital and retained earnings. Allmajor investment and operational decisions with exposure to certain amount are evaluated and approved by the board. TheBoard of Directors monitors the level of dividends to ordinary shareholders.

42.2 Other related party transactions

As at and for the year ended 31 December 2012:

1 United Enterprises & Co Ltd.

Parent Company

Loan 1,378,954,791 1,587,000,710 396,576,978 2,569,378,523

2 United Ashuganj Power Ltd.

Sister concern

Loan 29,138,000 50,000,000 30,000,000 49,138,000

3 United Hospital Ltd. Sister concern

Loan 4,493,265 - - 4,493,265

4United Engineering & Power Services Ltd.

Sister concern

Loan 696,963 19,936,183 18,847,971 1,785,175

5Shahjanullah power Company Ltd.

Sister concern

Loan - 71,600,000 - 71,600,000

6 Neptune Properties Sister concern

Loan - 100,000,000 - 100,000,000

7 Neptune Land Development Ltd.

Sister concern

Loan - 50,000,000 30,000,000 20,000,000

8 Neptune Commercial Ltd.

Sister concern

Loan 4,719,107 - - 4,719,107

As at and for the year ended 31 December 2011:

1 United Enterprises & Co Ltd.

Parent Company

Loan 425,880,441 1,574,250,000 621,175,650 1,378,954,791

2 United Ashuganj Power Ltd.

Sister concern

Loan 3,580,000 185,558,000 160,000,000 29,138,000

3 United Hospital Ltd. Sister concern

Loan - 4,493,265 - 4,493,265

4 United Engineering & Power Services

Sister concern

Loan - 696,963 - 696,963

5 Westmont Power Sister concern

Loan 5,013,925 - 5,013,925 -

6 Neptune Properties Sister concern

Loan 119,991,800 - 119,991,800 -

8 Neptune Commercial Ltd.

Sister concern

Loan - 4,719,107 - 4,719,107

43 Capacity and Production

43.01 Own ManufactureInstalled Capacity

KWHLine of business 2012 2011Electricity 328,000,000 276,463,636 267,155,998 DEPZElectricity 352,000,000 321,555,370 312,009,788 CEPZ

680,000,000 598,019,006 579,165,786

Percentage of Capacity utilization (%) 88% 85%

RelationshipNature of

transaction

Opening Balance as on 01 January

2011

Transaction during the year Closing Balance as on 31 December

2011

RelationshipSL No

Name of the related parties

SL No

Name of the related parties Addition Adjustment

Actual Production

KWHProject

Addition

Nature of transaction

Opening Balance as on 01 January

2012

Closing Balance as on 31 December

2012

Transaction during the year

Adjustment

44 Proposed Dividend

45 General

45.01

45.02 Figures appearing in these financial statements have been rounded-off to the nearest Taka.

Previous year's phrases and figures have been re-arranged, wherever necessary to conform to the presentation of financialstatements for the period under audit.

The Board of Directors in its Board meeting dated 02 February 2013 has proposed stock dividend at the rate of 50 % for the year2012.

43.02 Licensed capacity is no more applicable and the regulatory authority does not exercise any direct control over the procurement,production or sale.

United Power Generation and Distribution Company Limited Auditors’ Report under Section-135(1) and Para-24(1) of Part II of Schedule -III of the

Companies Act 1994 for the year ended 31 December 2012

We have examined the financial statements of United Power Generation and Distribution Company Limited for the year ended 31 December 2012, 2011 and 2010 and for the following comparative Balance Sheet (Statements of Assets andLiabilities) and Comparative Income statement (Statement of Profit & Loss) for the years ended 31 December 2009 and 2008 audited by M. Abdus Salam & Co, Chartered Accountants and the figures extracted from the financial statements certified in pursuance of Section 135 (1) under paragraph 24 (1) of part -ii of third schedule of the Companies Act 1994, our report is as under-

A. Statements of Assets and Liabilities:

Amount in Tk. Amount in Tk. Amount in Tk. Amount in Tk. Amount in Tk.as at as at as at as at as at

Particulars 31.12.2012 31.12.2011 31.12.2010 31.12.2009 31.12.2008

PROPERTY AND ASSETSNon-current Assets:Property, plant & equipment, Net 3,507,982,218 3,619,651,795 3,703,492,223 3,668,072,746 1,669,385,515Capital work-in-progress 368,104,364 - 174,262 - 1,335,671,117Pre-operating expenses - 17,380,575 19,553,147 21,725,719 21,668,119Total Non-current Assets 3,876,086,582 3,637,032,370 3,723,219,632 3,689,798,465 3,026,724,751

Current Assets:Inventories 191,982,411 211,164,353 87,577,173 28,625,829 -Trade receivables & other receivable 840,633,875 396,056,054 312,881,448 149,334,904 6,903,959Inter-company balances 2,821,114,070 1,418,002,126 309,468,641 (141,352,731) -Advances, deposits & pre-payments 48,964,387 38,206,370 47,372,759 98,624,797 168,863,054Cash & cash equivalents 6,085,258 37,294,406 74,335,728 9,146,573 422,691Total Current Assets 3,908,780,000 2,100,723,309 831,635,748 144,379,372 176,189,704

TOTAL ASSETS 7,784,866,582 5,737,755,679 4,554,855,380 3,834,177,837 3,202,914,455

SHAREHOLDERS EQUITY & LIABILITIESShareholders' Equity:Share capital 1,979,664,840 1,979,664,840 1,070,089,100 1,070,089,100 817,668,600Share money deposit - - - - 25,800,000Retained earnings 3,266,713,247 1,246,234,967 1,093,544,217 193,264,743 (1,232,539)Total Shareholders' Equity 5,246,378,087 3,225,899,807 2,163,633,317 1,263,353,843 842,236,061

Non-current Liabilities:Long term loan 1,934,715,782 2,135,832,865 2,174,331,857 1,191,860,000 1,150,000,000Lease finance - - 674,762 - -Total Non-current Liabilities 1,934,715,782 2,135,832,865 2,175,006,619 1,191,860,000 1,150,000,000

Current Liabilities:Trade payable 55,608,568 66,590,189 75,541,436 79,639,555 25,175,308Other payables and accruals 5,411,169 40,142,602 7,590,000 69,309,726 116,898,095Lease finance (Current portion) - 674,762 955,865 2,465,376 1,330,216Long term loan (Current portion) 218,083,337 228,297,389 132,128,143 - -Short term loan 324,585,139 39,546,522 - 1,227,549,337 1,067,274,775Provision for income tax 84,500 771,543 - - -Total Current Liabilities 603,772,713 376,023,007 216,215,444 1,378,963,994 1,210,678,394

TOTAL EQUITY & LIABILITIES 7,784,866,582 5,737,755,679 4,554,855,380 3,834,177,837 3,202,914,455

Dated: Dhaka March 18, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

B. Income Statement:Amount in Tk. Amount in Tk. Amount in Tk. Amount in Tk. Amount in Tk.

as at as at as at as at as at Particulars 31.12.2012 31.12.2011 31.12.2010 31.12.2009 31.12.2008

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599Operating expenses (884,552,090) (895,485,539) (673,310,436) (378,978,719) (2,050,539)Gross profit 2,388,935,967 1,332,147,870 1,105,181,433 459,268,779 2,927,060Administrative expense (57,396,889) (36,371,340) (22,412,566) (20,270,393) (1,332,516)Operating profit 2,331,539,078 1,295,776,530 1,082,768,866 438,998,386 1,594,544Other non-operating income 225,333 2,057,447 (338,384) 521,100 -Financial expenses (311,201,631) (234,795,944) (182,151,008) (245,022,204) (2,827,083)Net profit before tax 2,020,562,780 1,063,038,033 900,279,474 194,497,282 (1,232,539)Provision for income tax (84,500) (771,543) - - -Net profit after tax 2,020,478,280 1,062,266,490 900,279,474 194,497,282 (1,232,539)

Earning per share (EPS) 10.21 5.37 8.41 1.82 (0.02)

C. Statement of Cash FlowsAmount in Tk. Amount in Tk. Amount in Tk. Amount in Tk. Amount in Tk.

as at as at as at as at as at Particulars 31.12.2012 31.12.2011 31.12.2010 31.12.2009 30.12.2008

1 Cash Flows from Operating Activities:Cash received from customers 2,828,910,236 2,139,444,878 1,614,945,323 695,816,552 76,281,571Cash received from other operating Income 225,333 2,057,447 2,141,425 521,100 1,926,361Cash paid to suppliers & contractors (620,621,685) (734,870,628) (460,614,605) (225,389,169) (3,265,545)Cash paid for other operating expenses (193,432,716) (146,211,610) (101,235,900) (38,751,209) 99,629,663Payment of pre operational expenses - - - (57,600) -Payment of financial expenses (329,023,446) (224,564,129) (243,870,735) (284,527,264) 114,071,012Income tax payment (924,038) - - - -Net Cash Flow from Operating Activities 1,685,133,685 1,035,855,957 811,365,508 147,612,410 288,643,063

2 Cash Flows from Investing Activities:Payment for acquisition of property, plant & equipmen (386,263,610) (65,638,629) (182,658,519) (690,329,794) (2,899,671,694)Proceeds from Sale of property, plant & equipment - - 1,087,623 - -Net Cash used in Investing Activities: (386,263,610) (65,638,629) (181,570,896) (690,329,794) (2,899,671,694)

3 Cash Flows from Financing Activities:Ordinary share capital - - - 252,420,500 725,668,600Share money deposit - - - (25,800,000) (268,694,600)Long term loan (211,331,135) 57,670,254 1,114,600,000 41,860,000 1,150,000,000Short term loan 285,038,617 39,546,522 (1,227,549,337) 160,274,562 997,274,775Cash paid for lease finance (674,762) (955,865) (834,749) 1,135,160 (269,784)Cash paid for inter-company loan (1,403,111,944) (1,103,519,560) (450,821,372) 121,551,043 -Net Cash Generated from Financing Activities (1,330,079,224) (1,007,258,649) (564,605,458) 551,441,265 2,603,978,991

Net cash inflow/outflow for the year (1+2+3) (31,209,149) (37,041,321) 65,189,155 8,723,881 (7,049,640)

Opening balance 37,294,406 74,335,728 9,146,573 422,691 7,472,332

Closing balance 6,085,258 37,294,406 74,335,728 9,146,572 422,691

Dated: Dhaka March 18, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

Dated: Dhaka March 18, 2013

Sd/- Hoda Vasi Chowdhury & Co.

Chartered Accountants

Calculation Result Calculation Result Calculation Result Calculation Result Calculation ResultA. Liquidity Ratios

Current Asset 3,908,780,000 2,100,723,309 831,635,748 144,379,372 176,189,704Current Liabilities 603,772,713 376,023,007 216,215,444 1,378,963,994 1,210,678,394

Current Asset - Inventory 3,716,797,589 1,889,558,956 744,058,575 115,753,543 176,189,704Current Liabilities 603,772,713 376,023,007 216,215,444 1,378,963,994 1,210,678,394

Profit before Tax and Interest 2,331,764,411 1,297,833,977 1,082,430,482 439,519,486 1,594,544Interest Expense 311,201,631 234,795,944 182,151,008 245,022,204 2,827,083

Total Debt 2,477,384,258 2,404,351,538 2,308,090,627 2,421,874,713 2,218,604,991Total Shareholders' Equity 5,246,378,087 3,225,899,807 2,163,633,317 1,263,353,843 842,236,061

Total Debt 2,477,384,258 2,404,351,538 2,308,090,627 2,421,874,713 2,218,604,991Total Assets 7,784,866,582 5,737,755,679 4,554,855,380 3,834,177,837 3,202,914,455

B. Operating RatiosRevenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599

Average Receivables 618,344,964 354,468,751 231,108,176 78,119,432 3,451,980Operating Expenses 884,552,090 895,485,539 673,310,436 378,978,719 2,050,539Average Inventory 201,573,382 149,370,763 58,101,501 14,312,914 -

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599Average Total Assets 6,761,311,131 5,146,305,529 4,194,516,608 3,518,546,146 1,830,796,413

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599Average Fixed Assets 3,756,559,476 3,680,126,001 3,706,509,048 3,358,261,608 1,521,567,835

C. Profitability Ratios:Gross Profit 2,388,935,967 1,332,147,870 1,105,181,433 459,268,779 2,927,060

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599Operating Profit 2,331,539,078 1,295,776,530 1,082,768,866 438,998,386 1,594,544

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599Profit After Tax 2,020,478,280 1,062,266,490 900,279,474 194,497,282 (1,232,539)

Revenue 3,273,488,057 2,227,633,409 1,778,491,868 838,247,498 4,977,599Profit After Tax 2,020,478,280 1,062,266,490 900,279,474 194,497,282 (1,232,539)

Average Total Assets 6,761,311,131 5,146,305,529 4,194,516,608 3,518,546,146 1,830,796,413Profit After Tax 2,020,478,280 1,062,266,490 900,279,474 194,497,282 -1,232,539

Shareholders' Equity 5,246,378,087 3,225,899,807 2,163,633,317 1,263,353,843 842,236,061Profit After Tax 2,020,478,280 1,062,266,490 900,279,474 194,497,282 -1,232,539

Waighted Average No. of Shares 197,966,484 197,966,484 107,008,910 107,008,910 81,766,860

20092010Amount in Taka

38.51

10.21

72.98

71.22

61.72

29.88

6.16

7.49

0.10

11.59

5.59

5.03

4.39

21.46

62.14

1.79

0.08

52.37

0.250.48

3.44

1.07

5.94

58.80

-

1.44

0.15

0.15

2.63

0.69

0.56

0.63

(0.02)

6.28

5.53

23.20

58.17

7.70

0.0033

(0.15)

0.42

41.61

0.61

0.48

0.874 Fixed Asset Turnover Ratio (Times)

Asset Turnover Ratio (Times)

32.03

(24.76)

10.73

26.48

3

6.00

0.43

Net Income Ratio (%)

3

2

1

Earnings Per Share (EPS)

Operating Income Ratio (%)

Return on Assets Ratio (%)

Gross Margin Ratio (%)

6

Return on Equity Ratio (%)5

4

1

2

5

3

4

Formula

Quick Ratio (Times)

Current Ratio (Times)

Name of Ratio

1

2

2011

Times Interest Earned Ratio(Times)

5.53

Debt to Equity Ratio (Times)

2008

3.85

2012

6.47

Inventory Turnover Ratio (Times)

Account Receivable Turnover Ratio ( Times)

0.42Debt to Assets Ratio (Times)

0.47

0.32

5.29

32.93

59.80

47.69

1.825.37 8.41

15.40

54.79

60.88

50.62

(0.07)

0.0027

20.64

0.24

0.75 1.92

0.51

United Power Generation and Distribution Company Limited Statement of Ratio Analysis

We have Examined the following earnings per share (EPS) and other ratios of United Power Generation and Distribution Company Limited for the year ended on 31 December 2012, 2011 and 2010 and for the following comparative ratios for the year ended 31 December 2009 and 2008 audited by M. Abdus Salam & Co., Chartered Accountants which have been produced by the management of the company to us.The preparation of the EPS and other ratios is the responsibility of the company's management. Our responsibility is to review them and certify as to whether they have been properly prepared using acceptable principles on the basis of audited financial statements for the year ended 31 December 2012, 2011 and 2010 and for the following comparative ratios for the year ended 31 December 2009 and 2008 audited by M. Abdus Salam & Co., Chartered Accountants.

Based on our review, we certify that the company has properly prepared the following EPS and other ratios using acceptable principles on the basis of audited financial statements for the year ended 31 December 2012, 2011, 2010, 2009 and 2008.

Credit Rating Report Section: XII

Address:CRISL Nakshi Homes(4th & 5th Floor) 6/1A, Segunbagicha,Dhaka-1000Tel: 9515807-8 9514767-8 Fax: 88-02-9565783Email: crisldhk@crislbd.com

Analysts: Khandakar Aminul Islam amin@crislbd.com

Habibur Rahman Khanhabibur@crislbd.com

Long Term: AA

Short Term: ST-2

UNITED POWER GENERATION AND

DISTRIBUTION COMPANY LIMITED

ACTIVITYPower Generation

DATE OF INCORPORATION 15th January, 2007

CHAIRMAN Mr. Hasan Mahmood Raja

MANAGING DIRECTORMr. Moinuddin Hasan Rashid

EQUITY Tk. 3,225.90 mil.

TOTAL ASSETSTk. 5,738.56 mil.

Date of Rating May 29, 2012Long Term Short Term

Entity Rating: Surveillance AA ST-2Entity Rating: 2011 AA ST-2Outlook Stable

1.0 RATIONALE

CRISL has reaffirmed the Long Term rating ‘AA’ (pronounced as double A) and the Short Term rating ‘ST-2’ to United Power Generation and Distribution Company Limited (UPGD) on the basis of its financials and other relevant quantitative and qualitative information up to the date of rating. The above ratings have been assigned after due consideration to its fundamentals such as good business performance, good financial performance, equity based capital structure, good liquidity, strong Group support, regular debt repayment history, sound infrastructural facilities, experienced management team, etc. However, the above factors are moderated, to some extent, by high finance cost burden, exposure to gas price escalation risk, etc.

The Long Term rating indicates that entities rated in this category are adjudged to offer higher safety and have high credit quality. This level of rating indicates a corporate entity with a sound credit profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions. The Short Term rating indicates high certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors.

CRISL placed the company with “Stable Outlook” with an expectation of no extreme changes in economic or company situation within the rating validity period.

2.0 CORPORATE PROFILE

2.1 The GenesisUnited Power Generation and Distribution Company Limited (UPGD), an Independent Power Producer (IPP), has been operating as a subsidiary of United Enterprises & Co. Ltd. (UECL) and is a sister concern of United Group. The main activity of the company is to generate and supply electricity to Dhaka Export Processing Zone (DEPZ) and Chittagong Export Processing Zone (CEPZ) whereas the company supplies its surplus electricity to Rural Electrification Board (REB), Bangladesh Power Development Board (BPDB) and Oli Knitting Fabrics Ltd. (OKFL). It was incorporated on 15th January, 2007 as a private limited company under the Companies Act 1994 with an authorized and paid up capital of Tk. 30.00 mil. and Tk. 2.00 mil. respectively. The company further increased its paid up capital to Tk. 1,979.66 mil. in FY 2011 by issuance of bonus share of Tk. 909.57 mil. Previously, the company was known as Malancha Holdings Limited (MHL) and on October 1, 2009 it changed its name into United Power Generation and Distribution Company Limited. The management of the company has decided to go for Initial Public Offering (IPO) within FY 2012. With the above intention, the company converted as a public limited company under Companies Act 1994 on December 30, 2010. The present Chairman of UPGD, Mr. Hasan Mahmood Raja is a renowned and pioneering business personality in the power sector of Bangladesh. The power plants of UPGD are located at DEPZ (41MW) and at CEPZ (44 MW). The commercial operation of DEPZ plant started on 26th December 2008 and CEPZ plant started on 12 August 2009. Being a subsidiary of United Enterprises & Co. Ltd., major ownership stake is owned by United Enterprises & Co. Ltd, which is about 52% (102,942,566 shares) of the total outstanding share (197,966,484 shares). The rest 48% share are owned by 08 (Eight) individual

CREDIT RATING REPORTOn

UNITED POWER GENERATION AND DISTRIBUTION COMPANY LIMITED

REPORT: RR/1504/12entity rating is

valid one year for long-term for long term facilities and up-to 365 days (according to tenure of short term facilities) for short term facilities. After the above periods, these ratings will not carry any validity unless the entity goes for surveillance.

CRISL followed Corporate Rating Methodology published in CRISL website www.crislbd.com

Emerging conglomerate

Operating two power plants with production capacity of 85 MW

shareholders. CRISL views that although present share holding pattern is confined to the sister concern of United Group, after IPO the above will be diversified to some extent. The Corporate Head Office of the company is located at United Center, House# 6, Road #51, Gulshan-2, and Dhaka-1212.

3.0 GROUP PROFILE

The United Group is one of the leading conglomerates in Bangladesh. The Group started its business in 1978 with its Flagship company United Enterprises and Co. Limited. During the last three decades of operation, the Group has expanded its business in various sectors of the national economy such as Power Generation, Civil and Hydro Engineering, Real Estate Development, Land port Services, Hospital and healthcare, Textiles, Polymer industries, Education etc. Over the years, the Group has completed several large and unique projects that testify its strength and capability in project management. Currently, the Group has 17 sister concerns and notable concerns are United Hospital Ltd., United Power Generation & Distribution Co. Ltd., Comilla Spinning Mills Ltd., United International University, Neptune Land Development Ltd. , United Property Solutions Ltd., United Polymers Ltd., United Land Port Teknaf Ltd., Khulna Power Company Limited United Group Brokerage House, United Ashuganj Power Ltd., United Rotospin Ltd., United Enterprise & Co. Ltd., Novo Healthcare & Pharma Ltd., United Maritime Academy etc.

4.0 PROJECT DETAILS

The company has developed two power plants; one of them is 41 MW at Dhaka Export Processing Zone (DEPZ) and another is 44 MW at Chittagong Export Processing Zone (CEPZ) premises under two agreements with Bangladesh Export Processing Zones Authority (BEPZA) signed on May 6, 2007 and May 16, 2007 respectively for a term of 30 years from Commercial Operation Date. UPGD also signed power supply contract with REB, BPDB and OKFL. The power plants have made a Gas Supply Agreement with Gas Distribution Company in the respective zone for ensured gas supply. A summary of the power plants are outlined below:

4.1 DEPZ PlantThe DEPZ power plant is set up on 5,920.13 sq. meter of leased land having core engine facilities from Wartsila, Finland of 41 MW capacities. The company uses gas as fuel for the generators. This gas-powered generating set consists of Auxiliaries, Exhaust Gas Silencer, and Electrical, Mechanical & Civil Construction and Erection. The power plant has 14 (fourteen) integrated systems named fuel, lubrication oil, compressed air, cooling, charge air, exhaust, water treatment, fire protection, emission control, automation, electrical, station service, DC and high voltage systems. The plant has 04 (four) gas fired engines with the capacity of 8.73 MW each and three (3) gas fired engines with the capacity of 2 MW each for the generation of electricity. In addition, as the company has no formal written agreement with machine supplier for maintenance of the power plants, therefore the company themselves carryout the maintenance work by using their own technical team. The plant gets gas supply from Titas Gas Transmission and Distribution Company Limited. The plant started to generate electricity from 26th December 2008.

4.2 CEPZ Plant The CEPZ power plant is set up on 6,033.80 sq. meter of leased land having core engine facilities from Wartsila, Finland of 44 MW capacities. The plant uses gas as fuel for the generators. This gas-powered generating set consists of Auxiliaries, Exhaust Gas Silencer, and Electrical, Mechanical & Civil Construction and Erection. The power plant has 14 (fourteen) integrated systems named fuel, lubrication oil, compressed air, cooling, charge air, exhaust, water treatment, fire protection, emission control, automation, electrical, station service, DC and high voltage systems. The plant has 05 (five) gas fired engines with the capacity of 8.73 MW each. In addition, as the company has no formal written agreement with machine supplier for maintenance of the power plant, therefore the company themselves carryout the maintenance work by using their own technical team. The plant gets gas supply from Bakhrabadh Gas Systems Limited. The plant started to generate electricity from 12 August 2009.

4.3 Tariff Structure

Project (plant) Buyer Reference Tariff Charge (Tk. /KWH)

Demand Charge (TK./Monthly)

DEPZREB 4.80

Tk. 45.00BEPZA 5.90 flat

CEPZ PDB 4.41 Tk. 40.00BEPZA 5.61 flatDEPZ OKFL 6.11 Tk. 40.00

Significant demand supply gap in the market

Seven Members Board

Experienced management team

5.0 INDUSTRY OVERVIEW

Electricity is the major source of power for the country's most of the economic activities. Bangladesh's energy infrastructure is quite small, insufficient and poorly managed. Its installed electricity generation capacity was 8,233 MW in the year of 2011. That is only 45% of the population has access to electricity with a per capita availability of 149 kWh per annum only. The current peak demand for electricity in summer is more than 7,518 MW while the supply varies between some 4,300 MW to 5,900 MW. In the rural areas the demand stands at some 2,400 MW but the Rural Electrification Board (REB) can supply barely half of that. In the capital city, the demand stands at 1,800 MW but there is supply shortage of about 500 MW every day in summer. And the gap between power demand and supply would be wider in the coming years if proper step is not taken. Public and private sector produces 63% and 37% of electricity respectively. Public sector produces electricity through Bangladesh Power Development Board (BPDB), Ashuganj Power Station Company Ltd. (APSCL) and Electricity Generation Company of Bangladesh (EGCB). On the other hand, private sector produces power through small independent power producers and rental that government buys at a constant price. BPDB individually produces 46% of the total electricity generation. Problems in the Bangladesh's electric power sector include corruption in administration, high system losses, delays in completion of new plants, low plant efficiencies, erratic power supply, electricity theft, poor governance, politically blessed bureaucracy dominated energy sector, management lacking in competency and efficiency and shortages of funds for power plant maintenance. At present 75 percent of electricity is produced by the natural gas and thecountry’s gas reserve is depleting over the years. The proven reserve now is 7.3 trillion cubic feet (tcf) while the probable reserve is 5.5 tcf or more as disclosed by competent authority. For this, it is important to take up on-shore and offshore exploration for new reserves.

The government has invited bids from global players to build six more coal-fired power plants to generate up to 2,775 megawatts (mw) of electricity by 2015 to ensure future electricity generation at affordable costs. The Government has an arrangement with Tripura to buy 100 megawatts (MW) of electricity from its proposed Palatana Power Plant by 2012. Government is operating a feasibility study for setting up coal-based power plants in Chittagong, Khulna, Shariatpur and Meghnaghat by 2014 with a capacity of generating 2,000-2,600MW. The government has taken up plans to set up wind power units and solar power plants to generate 280MW of power by 2013. For nuclear waste disposal, Bangladesh stands in a position for pursuing ‘take back option’ meaning that the reactor suppliers will take the high level radioactive wastes back.

6.0 CORPORATE GOVERNANCE

6.1 Board of DirectorsThe Board of Directors of the company comprises of 07 (Seven) Directors and is chaired by Mr. Hasan Mahmood Raja, a renowned business personality in the power sector of Bangladesh. He is the Chairman of United Group. Due to his keen business farsightedness, United Group has already created a franchise value in the country. The other members of the Board are also eminent personalities having diversified business track record. The Board formulates strategic objectives and policies for the company, provides leadership and supervises management actions in implementing objectives of the company. The Board conducted 12 meetings during 2011.

Serial Name Designation1 Mr. Hasan Mahmood Raja Chairman 2 Mr. Moinuddin Hasan Rashid Managing Director3 Mr. Ahmed Ismail Hossain Director4 Mr. Akter Mahmud Rana Director 5 Mr. Khandaker Moinul Ahsan Shamim Director6 Mr. Faridur Rahman Khan Director7 Mr. Abul Kalam Azad Director

6.2 Corporate Management The corporate management team of UPGD is very experienced and efficient, led by Managing Director Mr. Moinuddin Hasan Rashid, who is aided by Mr. Syed Abdul Mayeed advisor, Mr. Md. Amir Khasru Project Director, Mr. Seikh Ashraf Hossain Senior General Managers, Mr. Md. Ebadat Hossain Bhuyian Finance Controller & Company Secretary and Mr. Chandra Shekhar Barua, General Manager. The above management team of the company has qualified and technical professionals to run the operation smoothly. To run the total operations of the company efficiently and effectively as well as to bring dynamism in overall management, total management functions have been segregated into various Departments like Engineering Department, Finance and Accounts Department and Human Resource and Administrative Department, etc.

Good business performance

High finance cost

Serial Name Designation1 Mr. Moinuddin Hasan Rashid Managing Director2 Mr. Sayed Abdul Mayeed Advisor3 Mr. M Shafiqul Islam CEO3 Mr. Md. Amir Khasru Project Director4 Mr. Seikh Ashraf Hossain Senior General Manager5 Mr. Md. Ebadat Hossain Bhuiyan Finance Controller and Company Secretary6 Mr. Chandra Shekhar Barua GM (Operation and Maintenance)7 Mr. Zainal Abedin Plant Manager

6.3 Human Resource ManagementUPGD recognizes human resource as the most important resource and for this it tries to create a congenial working environment within the company. The company has a structuredHR policy about employee selection, recruitment, compensation, training, promotion, termination code of conduct, etc. The employees of the company are enjoying long term benefit schemes like Provident Fund, Gratuity, personal income tax, performance bonusfacility, etc. The company has been sending its employees on numerous training programs. The above benefits and overall working environment has built confidence and satisfaction among the employee base which has been reflected on its negligible human resources turnover. Total human resource strength of the company stood 118 as on December 31, 2011.

6.4 Management Information SystemThe Management Information System of the company is moderate. The company has own web based data communication system among the power plants and Head Office. Each work stations of head office are connected through LAN. Without having any automated software, the company uses different packages to generate management report. The company uses an advanced ERP system for keeping the record of accounting system.

7.0 BUSINESS PERFORMANCE

Indicators

FY 2011 FY 2010

DEPZ Plant CEPZ Plant Total DEPZ Plant CEPZ Plant Total

Installed Capacity (KWH) 328,000,000 352,000,000 680,000,000 328,000,000 352,000,000 680,000,000

Production (KWH) 267,155,998 312,009,788 579,165,786 238,798,776 230,328,960 469,127,736

Plant Factor (%) 81.45% 88.64% 85.17% 72.81% 65.43% 68.99%

Economic Efficiency (TK/KW) 1.78 1.35 1.56 - - -

The business performance of the company has been found to be good. The company generated 579,165,786 KWH of energy during FY 2011 against the gross profit of Tk. 1,332.15 mil. The electricity generation was increased by almost 23.45% in FY 2011 due to increasing the capacity utilization of the power plants. The company has two 02 (Two) power plants located in Dhaka Export Processing Zone (Capacity of 41 MW) and Chittagong Export Processing Zone (Capacity of 44 MW). UPGD has dispatched 579,165,786 KWH of energy to Dhaka Export Processing Zone (DEPZ), Chittagong Export Processing Zone (CEPZ), RuralElectrification Board (REB) and Bangladesh Power Development Board (BPDB) through National Power Gridline against installed capacity of 85 MW of energy during 2011. Currently, the company is running with the plant factor rate of 85.17%. In terms of economic efficiency (production cost to energy output), average cost per KW reached to Tk. 1.78 for DEPZ Plant and also Tk. 1.35 for CEPZ Plant.

8.0 FINANCIAL PERFORMANCE

Although the company has been operating for only three and half years; financial performance of this company appears to be good. In view of the above, the company maintained a reasonable growth in its financial performance over the last three years. The revenue stood at Tk. 2,227.63 mil. in the FY 2011 and Tk. 1,778.49 mil. in the FY 2010. The revenue was increased by 25.25% in FY 2011 due to the increasing capacity utilization and increasing electricity tariff rate per unit. After deducting all administrative and finance expenses the net profit after tax of the company stood at Tk. 1,062.27 mil. in FY 2011 and Tk. 900.28 mil. in FY 2010. The company has received exemption from all related taxes from the Government of Bangladesh under the Private Sector Power Generation Policy for a period of 15 years from start of its commercial operation. Such exemption will be expired on February, 2024.

Good financial performance

Equity based capital structure

Sound liquidity

Indicators FY 2011 FY2010 FY2009Gross Profit Margin% 59.80 62.14 54.79Operating Profit Margin% 58.17 60.88 52.37Net Profit Margin% 47.69 50.62 23.20Return on Average Assets After Tax (ROAA)% 20.64 21.11 5.42Return on Average Equity After Tax (ROAE)% 39.42 52.54 18.47Return on Average Capital Employed (ROACE) % 21.90 25.96 8.44Cost to Revenue Ratio (%) 40.20 37.86 45.21Administrative Exp to Revenue Ratio (%) 1.63 1.26 2.42Finance Cost to Revenue Ratio (%) 10.54 10.24 29.23Earnings Per Share (Tk.10) 5.37 8.41 1.82

The profitability indicators of UPGD were found to be good within its short period of operation. In analyzing the profitability indicators of the company, the gross profit margin stood at 59.80% in FY 2011 and 62.14% in FY 2010. The cost efficiency indicators of UPGD were increased in FY 2011. The cost to revenue ratio increased to 40.20% in FY 2011 from 37.86% in FY 2010. The above increase was due to spare parts consumption as well as incurring significant amount for repair and maintenance for the plant. After adjusting all expenditure its net profit margin of the company stood at 47.69% in FY 2011 and 50.62% in FY 2010.

The profitability of a company can also be measured in terms of Return on Average Assets (ROAA), Return on Average Equity (ROAE) and Return on Average Capital Employed (ROACE). These indicators were also found to be good. As on 31st December, 2011 the Earning per share (EPS) of Tk. 10 stood at Tk. 5.37 and Tk. 8.41 in FY 2010.

9.0 CAPITAL STRUCTURE AND LEVERAGE

Indicators FY 2011 FY2010 FY2009Leverage Ratio (X) 0.78 1.11 2.15Bank Borrowing to Equity(X) 0.75 1.07 2.03Net Asset Value Per Share (Tk.10) 16.30 20.22 11.81

UPGD has been operating with a leverage ratio of 0.78 times as on December 31, 2011 against 1.11 times as on 31st December, 2010. Due to issuance of bonus share, its leverage ratio improved in FY 2011 compared to FY 2010 and FY 2009. The capital employed as on December 31, 2011 stood at Tk. 5,361.73 mil. consisting of non-current assets of Tk. 3,637.03 mil. and net current assets of Tk. 1,724.70 mil. The above capital employed was financed by shareholders’ equity of Tk. 3,225.90 mil. and non-current liabilities of Tk. 2,135.83 mil. However, considering all outside liabilities, total debt to equity ratio of the company reached to 44:56 as on December 31, 2011 against 52:48 respectively as on December 31, 2010.

Particulars FY 2011 FY 2010 FY 2009Current assets 2,101.53 831.64 285.73Less Current liabilities 376.83 216.22 1378.96Net Current Asset 1,724.70 615.42 -1,093.23Add Non-current assets 3,637.03 3,723.22 3,689.80CAPITAL EMPLOYED 5,361.73 4,338.64 2,596.57FINANCED BYEquity:Paid up capital 1,979.66 1,070.09 1,070.09Retained earnings 1,246.23 1,093.54 193.26Total Equity 3,225.90 2,163.63 1,263.35Non-Current Liabilities:Long term Liabilities 2,135.83 2,175.01 1,333.21TOTAL EQUITY & NON-CURRENT LIABILITIES 5,361.73 4,338.64 2,596.57

The components of shareholders equity as on December 31, 2011 included paid-up capital of Tk. 1,979.66 mil. (61.37 % of total shareholders’ equity) and Retained earnings of Tk. 1,246.23 mil. (38.63 % of total shareholders’ equity).The Net asset value per share (NAV) of Tk. 10 each stood at Tk. 16.30 as on December 31, 2011 against Tk. 20.22 in FY 2010.

10.0 LIQUIDITY AND FUNDING

Indicators FY 2011 FY2010 FY2009Current Ratio (X) 5.58 3.85 0.21Quick Ratio (X) 5.02 3.44 0.19Cash Conversion Cycle 142.81 68.62 6.86Being a power generation company, not alike other inventory based manufacturing company, UPGD depends highly on its early realization of receivables to support its liquidity. Albeit its

O O O | 9

Regular debt repayment history

revenue flow has been structured through PPA, it has to delay average 15 days to cash its receivable from DEPZ and CEPZ. Moreover, it has to delay average 30 days for REB and BPDB. Accordingly, it also staggers its payment obligation to gas distributing company by almost 15 days that counterbalances the impact. However, CRISL perceived that, if receivable to REB and BPDB becomes higher, liquidity of the company may be affected in future, which will also hamper the repayment of financial obligation duly.

While analyzing the cash flow of the company it has been revealed that the company generated sufficient cash flow to meet its fixed financial obligation and other liabilities also.UPGD, being a power generation company will generate almost static revenue due to its structured tariff agreement. As on December 31, 2011, the operating cash flow of the company stood at Tk. 958.41 mil. and after adjusting the capital expenditure of Tk. 65.64 mil. the free operating cash flow stood at Tk. 892.77 mil. resulting in a operating cash flow to Debt coverage ratio of 7.20 times.

11.0 CREDIBILITY & BANKING RELATIONSHIP

11.1 Liability Position As on May 25, 2012 total outstanding bank loan was Tk. 2,325.42 mil. comprising of term loan of Tk. 2,281.20 mil. and working capital loan of Tk. 44.22 mil. respectively. The company availed a syndicated term loan of Tk. 1,150.00 mil. in 2009-2010 with a tenure of 10 years arranged by Dhaka Bank Ltd, out of which Tk. 920.00 mil. was financed by Investment Promotion and Financing Facility (IPFF) fund repayable with 34 equal quarterly installment and rest of the amount of Tk. 230.00 mil. was as local syndicated term loan repayable with 21 equal installments. Moreover, the interest rate for IPFF loan will be 360 days Bangladesh Bank Treasury Bill rate plus 0.50% (IPFF margin) plus 2.50% (PFI’s margin) and 15.00% p.a. for non-IPFF syndicated loan.

The company also availed another syndicated term loan of Tk. 1,350.00 mil. in 2009-2010 with a tenure of 10 years arranged by Dutch-Bangla Bank Ltd, out of which Tk. 1,080.00 mil. was financed by Investment Promotion and Financing Facility (IPFF) fund repayable with 28 equal quarterly installments and rest of the amount of Tk. 270.00 mil. was as term loan. Moreover, the interest rate for IPFF loan will be 360 days Bangladesh Bank Treasury Bill rate plus 0.50% (IPFF margin) plus 2.10% (PFI’s margin) and 15.00% p.a. for non-IPFF syndicated loan.

Figure in Tk. Mil.Type of loan Bank Limit

SanctionedOutstanding

Amount as on 25.05.12

RepaymentStatus

TLO Dhaka Bank Ltd. 1,058.56 Regular TLO Dutch-Bangla Bank Ltd. 1,222.64 Regular WCL Dhaka Bank Ltd. 100 .00 43.98 Regular LFO United Leasing Company 0.05 RegularLFO National Bank Ltd. 0.18 RegularTotal 2,325.42

TLO- Term Loan Outstanding, WCL- Working Capital Limit, LFO- Loan Finance Outstanding

11.2 Payment Efficiency and Creditworthiness

Indicators FY 2011 FY2010 FY2009Debt Service Coverage Ratio (X) 3.88 6.62 1.83Interest Coverage Ratio (X) 5.53 5.94 1.79

The loan payment history of the company has been found to be regular. The creditworthiness of the company is also supported by its debt servicing capacity as well as interest coverage capability. The Debt service coverage ratio stood at 3.88 times in FY 2011 against 6.52 times in FY 2010. Interest coverage ratio was quite good and it stood at 5.53 times in FY 2011 against 5.94 times at the end of FY 2010.

No O&M contract with vendors

Exposed to gas price escalation risk

11.3 Security Arrangement against ExposureSecurity packages offered against various loan facilities are summarized below:

Sl. No

Name of the

Bank/FIS

Security Package Details

1 DBL

Hypothecation of all fixed and floating asset including but not limited to machinery, book debts, furniture, fixture and equipment.Establishment of Escrow Account and debt service account with appropriate cash waterfall arrangement to the satisfaction of JMLA.Personal guarantee of the sponsors.Corporate guarantee of the business concerns of the sponsors of MHL . Negative pledge over bank mortgage, assignment, charge or any other encumbrance.Personal guarantee of the Directors of UPGD.Corporate Gurantee of United Enterprise & Co Ltd and Neptune Land development Limited.One undated cheque for BDT.346.70 Million.

2 DBBL

Hypothecation of all fixed and floating asset including but not limited to machinery, book debts, furniture, fixture and equipment.Personal guarantee of the sponsors.Corporate guarantee of the business concerns of the sponsors of MHL .Personal guarantee of the directors of UPGD.Corporate Gurantee of United Enterprise & Co Ltd and Neptune Land development Limited.

3 ULCL

Ownership of the Lease Asset.Personal guarantee of all the Directors and their spouse.Corporate guarantee of the business concerns of the sponsors of UECL..36 Nos. of post dated cheque.

4 NBL

Ownership of the Lease Asset.Personal guarantee of all the Directors and their spouse.Corporate guarantee of the business concerns of the sponsors of UECL.36 Nos. of post dated cheque.

12.0 RISK MANAGEMENT

12.1 Operational Risk Management The operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Some of the examples of operational Risks are internal and external frauds, legal risks, damages to clients, diversity, damage to physical assets, business interruptions etc. The global best practice suggests that any corporate irrespective of size and business must identify and assess all operational risk against all of its products and services and monitor the same by an operationally independent professional. The operational risk management of UPGD is reviewed as follows:

12.2 Plant Protection System & Risk Mitigations Strong protection system is a must for power plant and it has no alternative. UPGD has established fire protection devices, different type of extinguishers at various key points, for any fire hazard. Security of the plant is maintained by the Security team headed by a Security- in Charge. The Control room has CCTV cameras and access-control to bar unauthorized access. So far UPGD has not faced any fire causality. The company has insurance coverage of all risks of physical loss or damages, e.g. Industrial materials, machinery, equipment, operations & maintenance from Green Delta Insurance Company Ltd.

12.3 Operating & Maintenance Risk UPGD has the operating and maintenance risk exposure. The company does not employ any specific O & M agent to transfer and mitigate such type of risk. UPGD has own competent team for running plant with less interruption. Moreover, the company does not have spare parts agreement with any vendors. However, the company has spent of Tk. 27.07 mil. for top overhauling recently and upcoming overhauling schedule of Engine is expected to be started in December 2012 with a estimated cost of Tk. 30.00 mil.

12.4 Gas Supply RiskAs per the agreement with BEPZA, UPGD is ensured to get required gas supply for power generation. In this regard UPGD has entered into gas supply agreement with Titas Gas Transmission and Distribution Company Ltd. for DEPZ and Bakhrabad Gas Systems Limited for CEPZ on account of UPGD for supplying required gas for a period of 15 years. The company is yet to face any shortage of gas supply or required gas pressure from the inception. Again,

availability of gas, being a natural resource is not fully dependent on supplier’s commitment. Therefore, project has dependency risk for availability of natural gas.

12.5 Revenue Collection Risk UPGD supplies power to DEPZ, CEPZ, REB, BPDB and OKFL from two of its plant. So, the company’s ability to service its both existing and future debt obligations rest on buyer’s ability to meet the tariff payments under the PPA. However, failure of one party to consume specific capacity of the plants, the cash flow might not be affected seriously due to not having single party risk exposure. In this case the company can supply electricity to another party.

12.6 Gas Price Escalation RiskAs per PPA, gas price is borne by UPGD. Any change of gas price (as limited natural resources) will expose the company to price escalation risk because of high material cost.

13.0 OBSERVATION SUMMARY

Rating Comforts:Good business performanceGood financial performanceEquity based capital structureGood liquidly Strong Group supportRegular debt repayment history Sound Infrastructural facilities Experienced Management teamGuaranteed gas supply

Rating Concerns: High finance cost burdenNo O&M contract with vendorsNo spare parts agreement Exposed to operating and maintenance riskExposed to Gas price escalation risk

Business Opportunities:Bright scope of private sector power generationSignificant deficit of electricity generation

Business Challenges:Unstable Government policyLimited Gas supplyDevelopment of efficient technical team

END OF THE REPORT

(Information used herein is obtained from sources believed to be accurate and reliable. However, CRISL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Rating is an opinion on credit quality only and is not a recommendation to buy or sell any securities. All rights of this report are reserved by CRISL. Contents may be used by news media and researchers with due acknowledgement)

[We have examined, prepared, finalized and issued this report without compromising with the matters of any conflict of interest. We have also complied with all the requirements, policy procedures of the SEC rules as prescribed by the Securities and Exchange Commission.]

14.0 CORPORATE INFORMATION

Date of Incorporation : 15th January, 2007

Commencement of Business : 2007

Board of Directors Mr. Hasan Mahmood Raja Chairman Mr. Moinuddin Hasan Rashid Managing DirectorMr. Ahmed Ismail Hossain Director Mr. Akter Mahmud Rana Director Mr. Khandaker Moinul Ahsan Shamim

Director

Mr. Faridur Rahman Khan Director Mr. Abul Kalam Azad Director

Auditor Hoda Vasi Chowdhury & CoChartered Accountants

Key ManagementMr. Moinuddin Hasan Rashid Managing DirectorMr. Sayed Abdul Mayeed AdvisorMr. M Shafiqul Islam CEOMr. Md. Amir Khasru Project DirectorMr. Seikh Ashraf Hossain Senior General ManagerMr. Md. Ebadat Hossain Bhuiyan Finance Controller and Company

SecretaryMr. Chandra Shekhar Barua GM (Operation and Maintenance)Mr. Zainal Abedin Plant Manager

15.0 FINANCIALS

A. Balance Sheet as at: Figure In Tk.Balance Sheet Dec 31, 2011 Dec 31, 2010

ASSETSNon-current assetsProperty, plant and equipment, net 3,619,651,795 3,703,492,223Capital work-in-progress - 174,262Pre-operational expenses 17,380,575 19,553,147

3,637,032,370 3,723,219,632Current assets Inventories 211,164,353 87,577,173 Trade and other receivables 788,785,880 622,350,089 Advance, deposits and prepayments 1,064,280,720 47,372,759Cash and bank balances 37,294,406 74,335,728

2,101,525,359 831,635,748Total assets 5,738,557,729 4,554,855,380EQUITYShareholders' equityShare capital 1,979,664,840 1,070,089,100 Retained earnings 1,246,234,967 1,093,544,217

3,225,899,807 2,163,633,317LIABILITIESNon-current liabilitiesLong term loan 2,135,832,865 2,174,331,857 Finance lease obligation - 674,762

2,135,832,865 2,175,006,619Current liabilities Trade and other payables 89,713,026 75,541,436 Finance lease obligation (Current portion) 674,762 955,865Long term loan (Current portion) 228,297,389 132,128,143Short term loan 39,546,522 -Provision for Taxation 771,543 - Provisions for other liabilities and charges 17,821,815 7,590,000 Total liabilities 376,825,057 216,215,444Total Equity & Liabilities 5,738,557,729 4,554,855,380

B. Income Statement (For the period/year ended)

Figure in Tk.Income Statement Dec 31, 2011 Dec 31, 2010

Revenue 2,227,633,409 1,778,491,868Operating expenses (895,485,539) (673,310,436)Gross profit 1,332,147,870 1,105,181,432Administrative expenses (36,371,340) (22,412,566) Operating profit 1,295,776,530 1,082,768,866Other operating income 2,057,447 (338,384) Financial expenses (234,795,944) (182,151,008) Net profit before Tax 1,063,038,033 900,279,475Provision for Taxation (771,543) -Net Profit after Tax for the year 1,062,266,490 900,279,475

CRISL RATING SCALES AND DEFINITIONS LONG-TERM RATINGS OF CORPORATE

RATING DEFINITIONAAA

Triple A(Highest Safety)

Investment GradeEntities rated in this category are adjudged to be of best quality, offer highest safety and have highest credit quality. Risk factors are negligible and risk free, nearest to risk free Government bonds and securities. Changing economic circumstances are unlikely to have any serious impact on this category of companies.

AA+, AA, AA-(Double A)

(High Safety)

Entities rated in this category are adjudged to be of high quality, offer higher safety and have high credit quality. This level of rating indicates a corporate entity with a sound credit profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions.

A+, A, A-Single A

(Adequate Safety)

Entities rated in this category are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories.

BBB+, BBB, BBB-

Triple B(Moderate

Safety)

Entities rated in this category are adjudged to offer moderate degree of safety for timely repayment of financial obligations. This level of rating indicates that a company is under-performing in some areas. Risk factors are more variable in periods of economic stress than those rated in the higher categories. These entities are however considered to have the capability to overcome the above-mentioned limitations.

BB+, BB, BB- Double B

(Inadequate Safety)

Speculative Grade Entities rated in this category are adjudged to lack key protection factors, which results in an inadequate safety. This level of rating indicates a company as below investment grade but deemed likely to meet obligations when due. Overall quality may move up or down frequently within this category.

B+, B, B-Single B(Risky)

Entities rated in this category are adjudged to be with high risk. Timely repayment of financial obligations is impaired by serious problems which the entity is faced with. Whilst an entity rated in this category might be currently meeting obligations in time through creating external liabilities.

CCC+,CCC,CCC-

Triple C(Vulnerable)

Entities rated in this category are adjudged to be vulnerable and might fail to meet its repayments frequently or it may currently meeting obligations in time through creating external liabilities. Continuance of this would depend upon favorable economic conditions or on some degree of external support.

CC+,CC, CC-Double C

(High Vulnerable)

Entities rated in this category are adjudged to be very highly vulnerable. Entities might not have required financial flexibility to continue meeting obligations; however, continuance of timely repayment is subject to external support.

C+,C,C- Single C

(Extremely Speculative)

Entities rated in this category are adjudged to be with extremely speculative in timely repayment of financial obligations. This level of rating indicates entities with very serious problems and unless external support is provided, they would be unable to meet financial obligations.

D(Default)

Default GradeEntities rated in this category are adjudged to be either already in default or expected to be in default.

Note: For long-term ratings, CRISL assigns + (Positive) sign to indicate that the issue is ranked at the upper-end of its generic rating category and - (Minus) sign to indicate that the issue is ranked at the bottom end of its generic rating category. Long-term ratings without any sign denote mid-levels of each group.

SHORT-TERM RATINGS OF CORPORATE

ST-1

Highest Grade Highest certainty of timely payment. Short-term liquidity including internal fund generation is very strong and access to alternative sources of funds is outstanding. Safety is almost like risk free Government short-term obligations.

ST-2 High GradeHigh certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small.

ST-3

Good Grade Good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small.

ST-4

Moderate Grade Moderate liquidity and other protection factors qualify an entity to be in investment grade. Risk factors are larger and subject to more variation.

ST-5 Non-Investment/Speculative Grade Speculative investment characteristics. Liquidity is not sufficient to ensure discharging debt obligations. Operating factors and market access may be subject to a high degree of variation.

ST-6 DefaultEntity is in default or is likely to default in discharging its short-term obligations. Market access for liquidity and external support is uncertain.

CRISL RATING SCALES AND DEFINITIONS BANK LOAN/ FACILITY RATING SCALES AND DEFINITIONS- LONG-TERM

RATING DEFINITIONblr AAA

(blr Triple A)(Highest Safety)

Investment GradeBank Loan/ Facilities enjoyed by banking clients rated in this category are adjudged to have highest credit quality, offer highest safety and carry almost no risk. Risk factors are negligible and almost nearest to risk free Government bonds and securities. Changing economic circumstances are unlikely to have any serious impact on this category of loans/ facilities.

blr AA+, blr AA, blrAA-

(Double A)(High Safety)

Bank Loan/ Facilities enjoyed by banking clients rated in this category are adjudged to have high credit quality, offer higher safety and have high credit quality. This level of rating indicates that the loan / facilities enjoyed by an entity has sound credit profile and without any significant problem. Risks are modest and may vary slightly from time to time because of economic conditions.

blr A+, blr A,blr A-

Single A(Adequate Safety)

Bank Loan/ Facilities rated in this category are adjudged to carry adequate safety for timely repayment/ settlement. This level of rating indicates that the loan / facilities enjoyed by an entity have adequate and reliable credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories.

blr BBB+, blr BBB,blr BBB-Triple B

(Moderate Safety)

Bank Loan/ Facilities rated in this category are adjudged to offer moderate degree of safety for timely repayment /fulfilling commitments. This level of rating indicates that the client enjoying loans/ facilities under-performing in some areas. However, these clients are considered to have the capability to overcome the above-mentioned limitations. Cash flows are irregular but the same is sufficient to service the loan/ fulfill commitments. Risk factors are more variable in periods of economic stress than those rated in the higher categories.

blr BB+, blr BB, blr BB-Duble B

(Inadequate Safety)

Speculative/ Non investment Grade Bank Loan/ Facilities rated in this category are adjudged to lack key protection factors, which results in an inadequate safety. This level of rating indicates loans/ facilities enjoyed by a client are below investment grade. However, clients may discharge the obligation irregularly within reasonable time although they are in financial/ cash problem. These loans / facilities need strong monitoring from bankers side. There is possibility of overcoming the business situation with the support from group concerns/ owners. Overall quality may move up or down frequently within this category.

blr B+, blr B,blr B-

Single B(Somewhat Risk)

Bank Loan/ Facilities rated in this category are adjudged to have weak protection factors. Timely repayment of financial obligations may be impaired by problems. Whilst a Bank loan rated in this category might be currently meeting obligations in time, continuance of this would depend upon favorable economic conditions or on some degree of external support. Special monitoring is needed from the financial institutions to recover the installments.

blr CCC+, blr CCC, blr CCC- Triple C(Risky )

Risky Grade Bank Loan/ Facilities rated in this category are adjudged to be in vulnerable status and the clients enjoying these loans/ facilities might fail to meet its repayments frequently or it may currently meeting obligations through creating external support/liabilities. Continuance of this would depend upon favorable economic conditions or on some degree of external support. These loans / facilities need strong monitoring from bankers side for recovery.

blr CC+, blr CC,blr CC-Double C

(High Risky)

Bank Loan/ Facilities rated in this category are adjudged to carry high risk. Client enjoying the loan/ facility might not have required financial flexibility to continue meeting obligations; however, continuance of timely repayment is subject to external support. These loans / facilities need strong monitoring from bankers side for recovery.

blr C+, blr C,blr C-

(ExtremelySpeculative)

Bank Loan/ Facilities rated in this category are adjudged to be extremely risky in timely repayment/ fulfilling commitments. This level of rating indicates that the clients enjoying these loan/ facilities are with very serious problems and unless external support is provided, they would be unable to meet financial obligations.

blr D(Default)

Default GradeEntities rated in this category are adjudged to be either already in default or expected to be in default.

SHORT-TERM RATINGS

blr ST-1

Highest GradeHighest certainty of timely payment. Short-term liquidity including internal fund generation is very strong and access to alternative sources of funds is outstanding, Safety is almost like risk free Government short-term obligations.

blr ST-2 High Grade High certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small.

blr ST-3

Good GradeGood certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small.

blr ST-4 Satisfactory Grade Satisfactory liquidity and other protection factors qualify issues as to invest grade. Risk factors are larger and subject to more variation.

blr ST-5 Non-Investment GradeSpeculative investment characteristics. Liquidity is not sufficient to insure against disruption in debt service. Operating factors and market access may be subject to a high degree of variation.

blr ST-6 Default Institution failed to meet financial obligations

United Power Generation & Distribution Co. Ltd.

House NW (J)-6, Road 51, Gulshan 2,Dhaka-1212, Bangladesh

Phone : 986 1000 (10 lines), 985 0161(5 lines) Fax : 989 3445-6

E-mail : info@united.com.bd www.united.com.bd