1 3rd Quarter Report 2013 30th October 2013
1
3rd Quarter Report 2013 30th October 2013
2
Milestones ………………………………………………………………………………....3
CSR ………………………………………………………………………………….4
Business Development ………………………………………………………………...…..5
Promotions & Events ……… ..……………………………………………………....….6
Sponsors ……… ..………………………………..……………………………....….7
Human Resources ……………………………………………………………………..…...8
STORC Events ………………………………………………………………………...…..…..9
Board Meetings ……………………………………………………………………..…10
Committee Meetings ………………………………………………………………….....13
Corporate Governance Compliance ………………………………………………………..15
Share Information …………………………………………………………………………20
Income Statement ………………………………………………………………………...21
Balance Sheet ………………………………………………………………………...22
Cash flow Statement …………………………………………………………………..23
Declaration ……………………………………………………………………………...24
Contents
3
milestones
Extra-Ordinary General
Meeting
An Extra-ordinary General Meeting (EGM)
was held on 18th July 2013, to revalidate
voting on all motions passed at the Annual
General Meeting (AGM) as there were er-
rors identified in the proxy acceptance and
voting process at AGM.
Staff concern reporting fa-
cility
A staff concern reporting facility was imple-
mented on 29th July 2013, for all staff to
facilitate them raise their concerns and issues
related to work and the work environment.
This facility is directly received by the Manag-
ing Directors Bureau.
Management risk assessment
committee
A Management Risk Assessment Committee of
the Board and Management was formed re-
spectively, with the aim to identify, assess, pri-
oritize, monitor and manage risk management
infrastructure and necessary policies and guide-
lines within the Company. September 2013
Fuvahmulah airport Runway
lighting & Landing aid pro-
ject
The runway lighting & landing aid project was
inaugurated at Gn. Fuvahmulah Airport on 19th
August 2013. The project was inaugurated by
H.E.P Dr. Mohamed Waheed Hassan.
4
Corporate social responsibility
Kuda Kudhinge Hiyaa
STO continued funding of its commitment to the
Kudakudhinge Hiyaa Orphanage by providing salaries and
allowances ‘in kind’ to one of the childcare staff for a period of
one year from June 2013.
Thalassemia Conference
STO showed its support towards creating awareness about
thalassemia by funding a staff, who is a patient himself, to
participate in the 2013 International Thalassemia Patients’
Conference in Abu Dhabi.
Memberships (Maldivian Red Crescent)
STO supported delivering humanitarian services to the most
vulnerable by maintaining its corporate membership with Mal-
divian Red Crescent. By doing so, STO will be indirectly as-
sisting in Health and Social care, Youth, and Organizational
Development activities.
5
Project
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% Current Status Project Start date
E. Project
End date
1 Radisson Blu - Hulhumale'
M&E works mobilization ongoing by Genysys Engineers
Co. Ltd. Architectural works awarded to Genysys Engi-
neers Co. ltd. and Interior fit out works awarded to Kanok
Furniture & Decoration Co. Ltd.
June 2007
(initially started)
October 2011
(structural Works)
Dec-14
2 Proposed 10 storey Building at
Umar Shopping Arcade
Construction works awarded to Amin Construction. Lease
Agreement and Deed of Assignment signed between STO
Plc and Allied Insurance on 03rd October 2013.
2009 NA
3 Construction of Wharfs at Thil-
afushi Tender Evaluation Ongoing. Dec-09 NA
4 Relocation of Rice Godown from
S.Gan to S.Hithadhoo
Project on hold ( Due to unavailability of sand for Backfill-
ing ) Jun-11 NA
5 Home improvement Interior ren-
ovation Project Construction works ongoing. NA Oct-13
6 Relocation of South DC to S.
Hithadhoo
Details design works ongoing by project Consultants
AXEN Pvt Ltd. NA NA
7
Real Estate Project - Develop-
ment of STO Block-393 and
STO Block-345
Tenders Received from interested parties for possible
Real Estate Development at STO Block-393 and STO
Block-345. Tender Evaluation ongoing.
NA NA
Business development
6
Promotions and events
Over 15 different promotional events were held during this
quarter to promote STO brands.
The main objective of these promotions and events was to
promote and provide quality products at affordable prices to
our customers across the nation.
Some of the promotions and events held include;
1. Philips Yo! Roadha Promotion
2. Philips beauty billboard at Maldive Gas Pvt Ltd
3. STO VeshiFahi Promotion
4. Advertisement Boards at Football ground
5. Like, Share and Win promotions on facebook
6. Hitachi toaster for Hitachi air purifier purchase
7. Hitachi Hadacrie Cool Promotion
8. Hitachi Eyelash Curler free for Hitachi Hadacrie purchase
9. STO Home Improvement Bashi Tournament, Facebook
like and win Promotion
10. Maxell Promotions
11. Devondale Promotions
12. Tastings
13. Kruger Eid Offer & other promotions
14. Site Visits
The Company appreciates and thanks the customers for their
continuous support towards STO’s products, promotions and
events.
7
Sponsors
Similarly, Our major brands have sponsored various events
across the country. Most sponsors were provided by Hitachi
and Almudhish this quarter. Some of the sponsors given in-
clude;
Hitachi Almudhish Others
1. Teachers Futsal Tournament
2. Raajeyge Emme Aligadha Thari Pro-
gramme on TVM
3. Wathaniyya Mas Reys
4. Sponsor on Medianet
5. Sun Front Miracle Promotion—1st Prize
6. Police Club Men and Women Team
7. Maldives National Mens Volleyball Team
8. Dhivehinge Fannu by Asaree Services
9. 10 Eid Baibala teams
10. STO North DC Warehouse Mas Race
team
11. Ha. Atoll School English Week
12. LJ Associates Cancer book
13. Eid Baibala Competition Co-Sponsor
14. Inter-house Futsal Cup of CHSC
15. Dhivehi Sifainge Club by Nippon
16. BDC Camp by Makita
8
Human resources
Staff
In house trainings / local short train-
ings
Fire training – 3 staff
Finance for Non-finance Managers / Acuity Quest –
4 staff
Business English course / Focus Education Centre –
67 staff
scholarships 2013 (local courses)
Bachelor of Business Administration / Clique College –
3 staffs
Certificate III in Purchasing and Supply Chain Manage-
ment / IIPD – 1 staff
Masters of Business Administration / Villa College –
1 staff
ACCA Profession Level P2 / Villa College – 1 staff
Certificate III in office skills / Focus Education Centre – 3
staffs
Diploma in Office Practice and Management / Focus Educa-tion Centre – 1 staff
Short term overseas courses
Philips Training School Export
Strategic Inventory Management, planning and Control
Basic Course introduction to Insurance
Makita OPE and new tools product hands on training
IIA Malaysia National Conference on Internal Auditing
Successful Planning and Control
Local Foreign Total
No. of staff at the beginning of
July 2013
1,018 206 1,224
No. of staff employed during July
-Sep 2013
47 14 61
No. of staff resigned / terminated
during July-Sep 2013
35 4 39
No. of staff at the end of Sep
2013
1,030 216 1,246
9
Storc events
Philips Fidelio 3on3 Tournament – 5th
July 2013 (1 Day Cup)
Philips Fidelio 3on3 tournament was carried out on 5th July
2013 at STO No.5 Godown where 29 mens & 5 womens
team participated. The main objective of the tournament was
to create togetherness and strengthen friendship within the
staffs of the organization.
Quran Recitation – Ramadan 1434
A Quran recitation event was arranged for the staff of STO,
during the Holy month of Ramadan. This event was held on
9th July 2013.
Nippon Marine Coatings Advance open
water dive (21st June 2013)
STORC Dive club had organized an advance open water dive
course on 21st July 2013 where17 staff participated.
10
Board meetings
Board of directors
The current composition of the Board is still not in constituent
with the Articles of Association (AOA) of the Company or the
Corporate Governance Code (CG Code) of Capital Market
Development Authority (CMDA). As such, since 1st quarter of
2012 only one Executive Director sits in the Board. The Com-
pany has raised several concerns on this issue to the relevant
authorities.
Major board decisions
Some of the major decisions taken by the Board of Directors
include;
Decided to hold an Extra-ordinary General Meeting to
correct the vote registration issues faced during the Annu-
al General Meeting
Changes were brought to some of the subsidiary
Boards—new members were appointed
The Charter of Board Directors, Chairman, and Managing
Director was endorsed
New Board Committees were appointed, Chairman of the
Committees appointed and Committee Charters endorsed
Appointed a Managing Director to Allied Insurance Com-
pany of the Maldives Pvt Ltd on resignation of the existing
Managing Director Mr. Abdul Wahid Thaufeeq. Mr. Ah-
med Ameel was appointed as the successor to the post
A Management Risk Assessment Committee was ap-
pointed within the Board and Management
Decided to establish 4 new regional pharmacies
Decided to conduct a Corporate Governance Campaign
within the Company
11
Board meetings
A total of 9 Board meetings were held during this quarter.
Board attendance
*Ms. Vizaad Ali is on maternity leave since August 2013.
Shareholding structure
No changes were brought to the shareholding structure of the
Company. As such the Government holds 81.6% while the
Public holds 18.3%.
1st Jan till 3rd
Q Attendance
% Represents
Abdullah Faiz 25/25 100% Government
Shahid Ali 25/25 100% Government
Ahmed Niyaz 24/25 89% Government
Amir Mansoor 21/25 100% Government
Abdul Hadi Hussain 24/25 100% Government
Vizaad Ali 18/25 22% Government
Mohamed Farshath 25/25 100% Public
3rd Quarter
9/9
9/9
8/9
9/9
9/9
2/9*
9/9
Type of Director
Non-Executive, Independent
Executive, Non-Independent
Non-Executive, Independent
Non-Executive, Independent
Non-Executive, Independent
Non-Executive, Independent
Non-Executive, Independent
%
100%
100%
96%
84%
96%
72%
100%
12
Extra-ordinary general meeting
On 18th July 2013, the Company held an Extra-ordinary
General Meeting at Nasandhura Palace Hotel to rectify and
revalidate the motions passed at the Annual General Meeting
held on 16th May 2013. The Company had identified dis-
crepancies in the shareholder proxy acceptance process and
the voting process at the Annual General Meeting. Hence, the
Company consulted with its Lawyers and other relevant au-
thorities to find means of correcting this issue. As such an
EGM was held and all motions were revalidated.
The items asked for revalidation and its results were;
Item # Item Motion Passed
with % Votes
Item 1 Minutes of 2011 AGM 98.1%
Item 2 2012 Annual Report 98.1%
Item 4 Appoint and Elect Board mem-
bers—Appoint Mr. Mohamed
Farshath as public shareholder
representing Director in the
Board
88.5%
Item 5 Dividend 2012—MVR75.00
per share
98.1%
Item 6 Appoint Auditors—Appoint PWC
for USD30,000.00
98.1%
Item 7 Any other items—Proposal to
increase board sitting fee from
MVR500.00 to MVR2,000.00
was not approved at AGM
96.2%
Item 3 2012 Annual Accounts & Finan-
cials
98.1%
13
Committee meetings
Audit committee meeting
A total of 3 meetings were held during the quarter.
Major decisions of committee
Some of the major issues discussed at the Committee include;
Annual Audit Plan 2013 progress discussions
Attended the Whistleblower notifications received
Appointed a Chairman to the Committee after EGM
Endorsed Committee Charter and the Internal Audit De-
partment Charter for the year
Reviewed the Committee’s Directive Action Plan
Discussed on the Annual Audit Reports and recommend-
ed necessary actions to the management
Committee attendance
*Ms. Vizaad Ali is on maternity leave since August 2013.
**Mr. Amir Mansoor was appointed after Ms. Vizaad Ali took
leave.
Management Risk Assessment Committee
This committee is currently in the process of formulating their
charter and role delegations between the Board and Manage-
ment Committee.
Name Attendance %
Abdul Hadi Hussain 3/3 100%
Ahmed Niyaz 3/3 100%
Vizaad Ali* 1/3 33%
Amir Mansoor** 2/3 66%
14
Nomination & Remuneration Commit-
tee
A total of 1meetings was held during the quarter.
Major decisions of committee
Some of the major issues discussed at the Committee include;
Appointed a Chairman to the Committee after EGM
Endorsed Committee Charter
Reviewed the Committee’s Directive Action Plan
Committee attendance
Corporate Governance and compli-
ance committee
A total of 2 meetings was held during the quarter.
Major decisions of committee
Some of the major issues discussed at the Committee include;
Appointed a Chairman to the Committee after EGM
Endorsed Committee Charter
Reviewed the Committee’s Directive Action Plan
Decided to present information to the Board on Corporate
Governance Campaign “I WILL NOT”
Committee attendance Name Attendance %
Amir Mansoor 1/1 100%
Mohamed Farshath 1/1 100%
Abdul Hadi Hussain 1/1 100%
Name Attendance %
Mohamed Farshath 2/2 100%
Amir Mansoor 2/2 100%
Ahmed Niyaz 2/2 100%
15
Corporate governance compliance
16
Provisions
Effective Board 1.1 Non -Complied Although there are seven Directors sitting in the Board, the composition of the Board does not conform to
the Company Articles of Association and CG Code, since there is still only one Executive Director. Composition of Board 1.2 Non -Complied
Nomination/re-election of Directors 1.3 Complied
A 21 day notice period was given to the shareholders to submit names for Directorship. The major share-
holder was informed through letter. The NR Committee interviewed the Directorship interested candidates
2013/2014 from public and made recommendations to the Board. The information on qualifying candi-
dates were announced for the perusal of Shareholders.
A vote was taken to elect the Public Share representative Director to the Board. Mr. Mohamed Farshath /
H.Two Hearts succeeded the election at AGM. However, since the Company had observed discrepancies
in proxy entries at AGM, an EGM was held to verify the motions passed at AGM. Mr. Farshath’s appoint-
ment at AGM was reaffirmed at the EGM.
Separation of Chairman and MD 1.4 Complied The Chairman and MD are separate persons in the Company. The Chairman is considered an independent
Director.
Roles of Chairman and MD 1.5 Complied The roles of Chairman and MD are stated separately in their charter. The Charter was reviewed this quarter.
Duties of the Board 1.6 Complied Board Directors roles are separately stated in their charter. The Charter was reviewed this quarter.
Training 1.7 Complied
1st Quarter—The Audit Committee members attended a 3 Day Seminar in Beginning Auditor Tools and
Techniques organized by the Institute of Internal Auditors in Singapore. The Board also went through a
refresher course on the most relevant laws and regulations by the lawyers of the Company. 2nd Quarter—
The Managing Director attended the “job of a Chief Executive” training programme in Singapore. 3rd Quar-
ter—Directors participated in Financial Management for Non-Finance Managers, CG for Directors & Institu-
tional Investors, Project monitoring & evaluation and Developing Effective Managerial Skills programme.
Committees 1.8 Complied
In compliance with the CG Code, STO Board has an Audit Committee and a Nomination and Remuneration
Committee in place. In addition to this, the Company also has a Corporate Governance and Compliance
Committee. The Nomination and Remuneration Committee act as one, since almost the same Directors sit
in all Committees of the Board. Further to this a Risk Assessment Committee was formed this quarter.
17
Provisions
Evaluation of Board performance 2.2 Complied Board evaluation for the year 2012 was carried out in the 1st quarter. The results were reviewed and dis-
cussed in the Board.
Board remuneration disclosure 2.3 Complied A lump sum figure of Board and top management remuneration was disclosed in the Annual report.
Individual Board Member Remuneration Disclo-
sure 2.4 Partially Complied
The individual remuneration of Board Members are disclosed in the 2012 Annual Report. However, due to
discrepancies of remuneration in the current job market, the Board has decided not to disclose the individ-
ual remuneration of top management.
Management constitution 3.1 Complied The management team constitutes of MD, Executive Directors, and the key managers of the company.
Roles and responsibilities of
management 3.2 Complied
Job descriptions are placed at HR for every employee. The management team is given constant guidance
by the Board on promoting high standards of CG. All executives and managers are required to submit their
conflict of interest and disclosure statements to the MD.
Access to information 3.3 Complied
Board and its committees have authority to request information from the management that are deemed
necessary for decisions made at meetings. They also have the authority to obtain at the company’s ex-
pense, outside legal or any other professional advice on any matter deemed necessary for effective perfor-
mance of their duties.
Internal Audit 4.1 Complied The company’s internal audit department reports directly to the Audit Committee and administratively to
MD.
External Audit 4.2 Complied
Audit Committee made recommendations to the Board, on the appointment, re-appointment and removal
of external auditors for 2013. The Committee also negotiated their remuneration for the year. The appoint-
ment of External Auditors was affirmed at the EGM. PriceWaterHouseCoopers were appointed the External
Auditors for 2013, for a remuneration of USD30,000.00.
Internal Controls 4.3 Complied
The Board ensures that the management maintains a sound system of internal controls to safeguard the
shareholders investments and company assets. Audit committee annually reviews several of these internal
control measures enforced in the company. Information on Internal Controls are disclosed in the Annual
Report.
Remuneration policy 2.1 Complied The Company has approved and acts upon a board approved remuneration policy for Directors and em-
ployees.
18
Provisions
Company Secretary 5 Complied
The Company Secretary keeps an annual record of the company’s compliance and liability to the CG code
and other legal requirements. CS also maintains adequate registers of the Board, shareholders, minutes
and Directors interests in the company.
Shareholders 6.1 Complied The rights of the shareholders are periodically reminded through notices, annual reports, website and AGM.
Shareholder Communication 6.2 Complied Pertinent information is disclosed on company matters, through company website, interviews, press releas-
es, press conferences, quarterly reports, annual report and AGM’s.
General Meetings 6.3 Complied AGM’s are held annually, to brief shareholders on company performance of previous year. AGM 2012
was held on 16th May 2013 and an EGM held on 18th July 2013.
Voting Rights 6.4 Complied Shareholders are briefed on their voting rights from time to time. Shareholders are allowed to vote in their
absentia through proxy voting.
Disclosure 7.1 Complied The Board ensures that the Annual Report of the Company is in compliance with the Articles of Association,
Companies Act, Listing Rules, CG code and other regulations that the Company has to abide to.
Financial Statements 7.2 Complied
Financial Statements are prepared in accordance with the IFRS reporting standards. The balance sheet and
P&L statements are reviewed and signed by the Chairman, MD, CFO and the public representative Director
to certify true and fair accounts of the Company.
Non-financial Statements 7.3 Complied Each year, remuneration, conflict of interest, HR, Share, Business Development and other activities of the
Company is disclosed in the Annual Report and interim updates are disclosed through Quarterly Report.
Systems to raise concerns 8 Complied
The Board and Management ensures that an appropriate process is put in place to enable employees and
management to raise their concerns. These means are regularly informed to the employees and disclosed
in the annual report. As such, the Company has a Fraud Response and a Whistleblower Policy in effect.
Quarterly report 9.4 Complied STO publishes the Quarterly Report on website, since 2011.
Voluntary Provision: Investors and media rela-
tions 9 Complied The company encourages media and investor relations by promoting good CG.
19
Share
performance &
financials
20
Share information
2nd Quarter
2013
1st Quarter
2013
Highest Trade Price 510 500
Lowest Trade Price 360 400
Last Trade Price 500 500
WATP 478.3 414.5
Market Capitalization 563.5 563.5
EPS 56.9 28.4
Dividend Yield 15% 15%
Price Earning Ratio 8.8 17.6
3rd Quarter
2013
500
405
405
445.7
456.4
(17.52)
19%
(23.1)
Year to date
510
360
405
418.3
456.4
67.8
19%
5.9
21
Year to Date 3rd Quarter 2013 2nd Quarter 2013 1st Quarter 2013
Turnover 8,645,553,724 2,876,099,657 2,956,778,766 2,812,675,301
Cost of Sales (7,749,937,785) (2,601,802,557) (2,626,344,718) (2,521,800,510)
Gross Profit 895,615,940 274,297,101 330,444,048 290,874,791
Other Income 42,297,650 15,430,668 13,821,444 13,045,537
Operating Expenses (498,902,035) (162,123,927) (192,440,445) (144,337,664)
Operating Profit 439,011,554 127,603,842 151,825,047 159,582,664
Financial Income / (Expenses) (347,714,007) (132,516,072) (87,662,578) (127,535,357)
(14,829,777) (14,829,027) (750) 0
Net Profit before Tax 76,467,770 (19,741,256) 64,161,719 32,047,307
Figures in MVR
INCOME STATEMENT (UNAUDITED)
22
Figures in MVR
Year to Date 3rd Quarter 2013 2nd Quarter 2013 1st Quarter 2013
ASSETS
Non Current Assets 1,579,294,994 2,562,117 6,402,108 33,000,567.29
Current Assets 2,556,648,128 (433,693,838) (714,122,964) 97,836,628.64
Total Assets 4,135,943,122 (431,131,721) (707,720,856) 130,837,196
EQUITY & LIABILITIES
Equity 1,026,122,905 (79,740,506) (20,357,281) 32,047,306.89
Non Current Liabilities 597,305,407 (60,037,140) (47,542,217) (624,051,197.86)
Current Liabilities 2,512,514,811 (291,354,075) (639,821,359) 722,841,086.90
TOTAL EQUITY & LIABILITIES 4,135,943,122 (431,131,721) (707,720,856) 130,837,196
BALANCE SHEET (UNAUDITED)
Cash Flow Statement (Unaudited) Figures in MVR Q3 Q2 Q1
Profit before tax 91,297,546.89 96,209,026 32,047,307
Adjustments for:
Depreciation 47,914,151.01 31,190,554 15,110,620
Interest Income (11,118,653.92) (7,485,902) (4,023,460)
Interest on Fixed Deposits (4,180,898.96) (1,577,189) -
Interest Expense 159,396,586.92 111,693,548 55,897,785
Dividend Income (60,429,146.46) (45,825,946) (1,529,900)
Provision for Bad Debts 120,489,964.00 87,000,000 30,000,000
Provision for Inventories 9,573,359.18 6,570,102 1,553,897
Changes in Working capital
Inventories - (Increase) / decrease 152,887,559.27 44,207,629 98,681,280
Trade & Other receivables - (Increase) / Decrease 127,578,487.97 358,127,544 (72,813,370)
Trade & Other Payables - (Decrease) / Increase (204,520,451.95) 86,833,623 709,685,382
Cash generated from Operations 428,888,503.95 766,942,988 864,609,540
Cash flow from operating activities
Cash generated from Operations 428,888,503.95 766,942,988 864,609,540
Interest paid (159,396,586.92) (111,693,548) (55,897,785)
Tax Paid (18,643,672.00) (3,814,645) (12,922,079)
Net cash generated from/(Used in) operating activities 250,848,245.03 651,434,794 795,789,676
Cash flow from Investing activities
Purchases of PPE (88,310,142.79) (69,024,429) (105,974,737)
Investment in Shares (1,568,800.00) (1,568,800) -
Interest Received 11,118,653.92 7,485,902 4,023,460
Interest on Fixed Deposits 4,180,898.96 1,577,189 -
Dividends received 60,429,146.46 45,825,946 1,529,900
Net Cash used in Investing activities (14,150,243.45) (15,704,191) (100,421,377)
Cash flow from Financing activities
Net Borrowings (584,074,950.66) (541,721,657) (474,680,459)
Dividends paid to company share holders (84,518,250.00) (84,518,250) -
Net cash (used in) / Generated from financing activities (668,593,200.66) (626,239,907) (474,680,459)
Net Increase/(Decrease) in cash, cash equivalents and Bank overdrafts
(431,895,199.08) 9,490,696 220,687,840
Cash & Cash equivalents at beginning of the year 350,887,182.00 350,887,182 350,887,182
Cash & Cash equivalents at the end of the period. (81,008,017.08) 360,377,878 571,575,022
23
Compliance to the Maldives company’s act 10/96
The Company has abided compliance
to the Company’s Act and its regulations
throughout the quarter.
Compliance to listing rules
The Company has abided compliance
to listing rules and its requirements
within the quarter.
Compliance to cdoi regula-tions
The Company has abided compliance
to CDOI regulations and its requirements
within the quarter.
Compliance to corporate governance code
Details of compliance to code is stated
in page 15-18.
Fines
The Company was neither fined nor
under any other penalty, in reference
to the above mentioned regulations,
during the past quarter.
Tax
The Company had paid required tax to MIRA
within the allocated time.
MQRR Compliance
This report has been prepared in compli-
ance with the Minimum Quarterly Report-
ing Requirements of CMDA.
DECLARATION
State Trading Organization PLC
Male’, Republic of Maldives Tel: (960) 3344333 Fax: (960) 3344334 www.stomaldives.com