Red-Herring Prospectus: STS Holdings Limited Page: i “প জিবািারে বববিরাগ ঝ বিপূ ণ । জিরি ও বরঝ বববিরাগ িি” “Investment in capital market involves certain degree of risks. The investors are required to read the prospectus and risk factors carefully, assess their own financial conditions and risk taking ability before making their investment decisions.” PUBLIC ISSUE OF [*] ORDINARY SHARES ISSUE DATE OF THE PROSPECTUS: _______ OFFER PRICE: TK. [*], TOTAL SIZE OF FUND TO BE RAISED: TK. 750,000,000.00 Opening and closing date of subscription: Opening date of subscription: …………….., 2016 Closing date of subscription (Cut-off date): ………………., 2016 RED-HERRING PROSPECTUS Name of Issuer: STS HOLDINGS LIMITED Name of Issue Managers: AFC CAPITAL LIMITED & ICB CAPITAL MANAGEMENT LIMITED Credit Rating Status Credit Rating Status Long Term Short Term Entity Rating AA3 ST-2 Validity of Rating 31 March 2017 Short Term ratings are valid up to limit expiry date of respective credit facilities or 31 March 2017 whichever is earlier. Date of Rating 16 March 2016 Outlook Stable Rated by Credit Rating Agency of Bangladesh Limited (CRAB)
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RED-HERRING PROSPECTUS STS HOLDINGS LIMITED · Red-Herring Prospectus: STS Holdings Limited Page: iii NBL Capital and Equity Management Limited Printers Building (8th Floor), 5 Rajuk
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“Investment in capital market involves certain degree of risks. The investors are required to read the prospectus and risk factors carefully, assess their own financial conditions and risk taking ability before making their investment decisions.”
PUBLIC ISSUE OF [*] ORDINARY SHARES
ISSUE DATE OF THE PROSPECTUS: _______
OFFER PRICE: TK. [*], TOTAL SIZE OF FUND TO BE RAISED: TK. 750,000,000.00
Opening and closing date of subscription:
Opening date of subscription: …………….., 2016 Closing date of subscription (Cut-off date): ………………., 2016
RED-HERRING PROSPECTUS
Name of Issuer:
STS HOLDINGS LIMITED
Name of Issue Managers:
AFC CAPITAL LIMITED
&
ICB CAPITAL MANAGEMENT LIMITED
Credit Rating Status
Credit Rating Status Long Term Short Term Entity Rating AA3 ST-2
Validity of Rating 31 March 2017 Short Term ratings are valid up to limit expiry date of respective credit facilities or 31 March 2017 whichever is earlier.
Date of Rating 16 March 2016 Outlook Stable Rated by Credit Rating Agency of Bangladesh Limited (CRAB)
Red-Herring Prospectus: STS Holdings Limited
Page: ii
(a) Preliminary Information and Declarations:
(i) Name(s), address(s), telephone number(s), web address(s), e-mail(s), fax number(s) and contact persons of the issuer, issue manager(s), underwriter(s), auditors, credit rating company and valuer, where applicable;
Name & Address Telephone & Fax Number, E-mail, Web Address Contact Person Issuer
(iv) “CONSENT OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE ISSUE/OFFER OF THESE SECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2015. IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS CONSENT THE COMMISSION DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE ISSUER COMPANY, ANY OF ITS PROJECTS OR THE ISSUE PRICE OF ITS SECURITIES OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINION EXPRESSED WITH REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER, ITS DIRECTORS, CHIEF EXECUTIVE OFFICER, MANAGING DIRECTOR, CHIEF FINANCIAL OFFICER, COMPANY SECRETARY, ISSUE MANAGER, ISSUE MANAGER‟S CHIEF EXECUTIVE OFFICER, UNDERWRITERS, AUDITOR(S), VALUER AND/OR CREDIT RATING COMPANY."
(v) „Risks in relation to the First Issue‟ “This being the first issue of the issuer, there has been no formal market for the securities of the issuer. The face value of the securities is Tk. 10.00 (Ten) and the issue price is Tk. [*], i.e. „X-times‟ of the face value. The issue price has been determined and justified by the issuer and the issue managers as stated under the paragraph on “justification of issue price” should not be taken to be indicative of the market price of the securities after listing. No assurance can be given regarding an active or sustained trading of the securities or the price after listing."
(vi) „General Risk' "Investment in securities involves a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offer. For taking an investment decision, investors must rely on their own examination of the issuer and the offer including the risks involved. The securities have not been recommended by the Bangladesh Securities and Exchange Commission (BSEC) nor does BSEC guarantee the accuracy or adequacy of this document. Specific attention of investors is invited to the statement of „risk factors‟ given on page number(s) 173-182”
(vii) „Issuer‟s Absolute Responsibility‟ "The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this red-herring prospectus contains all material information with regard to the issuer and the issue, that the information contained in the red-herring prospectus are true, fair and correct in all material aspects and are not misleading in any respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect."
Red-Herring Prospectus: STS Holdings Limited
Page: v
(b) Availability of Prospectus
(i) Names, addresses, telephone numbers, fax numbers, website addresses and e-mail addresses and names of contact persons of the institutions where the prospectus and abridged version of prospectus are available in hard and soft forms;
The Prospectus and abridged version prospectus in hard and soft forms of the Company shall be obtained from the following addresses:
Name & Address Telephone & Fax Number, E-mail, Web Address Contact Person Issuer
Prospectus would also be available on the web sites of BSEC (www.secbd.org) and at the Public Reference Room of the Bangladesh Securities and Exchange Commission (BSEC) for reading and studying.
(ii) Names and dates of the newspapers where abridged version of prospectus was published.
Names and dates of the newspapers where abridged version of prospectus was published: Sl. No. Name of the Newspaper Date of Publication Page Number of the Newspaper
1 2 3 4
Red-Herring Prospectus: STS Holdings Limited
Page: vii
(iii) Definitions and Acronyms/Elaborations: AGM : Annual General Meeting Allotment : Letter of Allotment of Shares BAS : Bangladesh Accounting Standards BB : Bangladesh Bank BDT : Bangladeshi Taka BO Account : Beneficial Owners Account CDBL : Central Depository Bangladesh Limited CIB : Credit Information Bureau CEO : Chief Executive Officer Commission : Bangladesh Securities and Exchange Commission Company / Issuer : STS Holdings Limited Companies Act : Companies Act, 1994 (Act. No. XVIII of 1994) Corporate Office : Head office of the Company CRAB : Credit Rating Agency of Bangladesh Limited CSE : Chittagong Stock Exchange DSE : Dhaka Stock Exchange DGHS : Directorate General of Health Services DEG : Deutsche Investitions-und Entwicklungsgusellsehaft Maj EPS : Earnings Per Share FC Account : Foreign Currency Account GBP : Great Britain Pound GDP : Gross Domestic Product HIS : Hospital Information System IDCP : Interest During Construction Period IFC : International Finace Corporation IPO : Initial Public Offering IT : Information Technology
Red-Herring Prospectus: STS Holdings Limited
Page: viii
ILFSL : International Leasing and Financial Services Limited MRI : Magnetic Resonance Imaging NAV : Net Asset Value NRB : Non-Resident Bangladeshi OT : Operation Theater P/E : Price-Earnings Ratio RJSC : Registrar of Joint Stock Companies and Firms Rules : Securities and Exchange Commission (Public Issue) Rules, 2015 BSEC : Bangladesh Securities and Exchange Commission Securities : Shares of STS Holdings Limited SND Account : Short Notice Deposit Account Subscription : Application Money Tk. : Taka STSHL : STS Holdings Limited
(a) About the industry: ........................................................................................................................... 1
(b) About the Issuer: ............................................................................................................................... 1
(g) Capital structure and history of capital raising: .............................................................................. 6
(h) Summary of Valuation Report of securities: .................................................................................... 6
CHAPTER (II): CONDITIONS IMPOSED BY COMMISSION UNDER RULE 4(2) OF THE BANGLADESH
SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2015 .......................... 7
CHAPTER (III): DECLARATION AND DUE DILIGENCE CERTIFICATES AS PER ANNEXURE- A, B AND C ............ 9
CHAPTER (IV): ABOUT THE ISSUER ..................................................................................................................... 24
Particulars of the Company: ................................................................................................................... 24
Name of the Sponsors and Directors: ..................................................................................................... 24
Particulars of Auditor and Registrar to the Issue: .................................................................................. 25
Name of the Stock Exchanges where the Securities to be listed: ........................................................... 25
CHAPTER (V): CORPORATE DIRECTORY OF THE ISSUER ................................................................................... 26
CHAPTER (VI): DESCRIPTION OF THE ISSUER .................................................................................................... 27
(a) About the industry: In Bangladesh, healthcare is a sunrise industry with tremendous growth potential. Following the
increase of general awareness in healthcare, the industry is set to boom. Despite improving
healthcare indicators such as decline in mortality rates and increase in average life expectancy,
the health sector of the country is yet to reach its full potential. Reform policies coupled with
innovation and investment by the private sector may translate into rapid rise of this sector. Lack
of adequate healthcare facilities is leading to a greater portion of personal Income to be spent on
health care. Although the percentage of GDP being spent on the health care sector is relatively
higher than it used to be, it is still very low compared to developed countries. In Bangladesh,
total expenditure to health sector is only about 2.8% of GDP as per WHO statistics in the year
2014.
The inadequacy of public health system paved the way of private hospital business in
Bangladesh. Moreover, the public health sector is plagued by uneven demand and perceptions
of poor quality and the quality perception is driving patients to private healthcare sector. This
poor service quality is the pivotal cause responsible for declining utilization rate of public
health care facility in Bangladesh. Overall utilization rate for public health care services is as
low. Dissatisfaction with public health care sector is shifting demand toward private health care
sector in the country. The trend of utilization of public health care services in Bangladesh had
been declining, while the rate of utilization of private health care facilities for the same period
had been increasing. Similar investments have been done by other major corporate groups.
(b) About the Issuer:
STS Holdings Ltd. is the issuer. STS Holdings Limited started its journey in 1997 by the
promoters of three business houses of Bangladesh: The Shanta Group; the Tropica Group and
the Sepal Group; hence the initials S-T-S. STS Holdings Limited has a vision to build institutions
aimed at providing services that would have a positive lasting impact on people‟s quality of life
while continuously raising the standards of the institutions and establishing new benchmarks in
the respective sectors thereby constantly maximizing customer satisfaction and shareholders‟
values.
STS Holdings Limited (STSHL) is a public limited company. STSHL was formed initially as a
private limited company under Companies Act 1994 and incorporated in Bangladesh in the
year 1997 bearing Registration No. C-33709(455)/97 dated 28.08.1997 and subsequently
converted as a public limited company on 22 February, 2006. The registered office as well as
the corporate office of the Company is situated at STS Tower, Plot # 346/A & 347, Road #12,
Block # D, Bashundhara R/A, Dhaka-1229.
STS Holdings Ltd. signed a franchise agreement with Apollo Hospital Enterprises Ltd. (AHEL), a
Franchiser incorporated under the laws of India, and having its registered office at no.19 Bishop
Gardens, R.A. Puram, Madras 600-028 on 25th day of June 1998.
The Franchisee has entered into a project management and operations management agreement
with Indian Hospital Corporation Ltd. (IHC) under the laws of India, and having its registered
office at Ali tower 22 Greams road, Madras 600-006 for establishing and running a medical
Institution consisting of Medical College, Dental College and an attached hospital for which IHC
(Indian Hospital Corporation) will provide technical consultancy services from the concept to
the commissioning stage and thereafter operate the Medical Institution for a period of 15
(fifteen) years.
Red-Herring Prospectus: STS Holdings Limited
Page: 2
The operational management agreement signed on 25th day of June 1998 between STS Holdings
Ltd. and Indian Hospital Corporation (subsequently IHC merged with AHEL vide the order of the
Hon‟ble High Court of Madras, India dated 18th April, 2000) stated that the said agreement
shall come into force on the date of commencement of commercial operation and shall remain
in force for a period of 15 (fifteen) years, or for such extended period (s) as the parties may
decide mutually.
As per the provisions of the said project management and operations management agreement,
IHC on the request of the franchisee sought, on behalf of the franchisee, AHEL‟s permission for
use of name “Apollo” by the franchisee as a part of the name of the Franchisee‟s Medical
Institution. Accordingly STS Holdings Ltd. currently using the name “Apollo Hospitals Dhaka”
Currently the company has operating with 324 bed excluding emergency and day care bed.
Started construction in 2001 and went into commercial operation from 16 April 2005. Since
then Apollo Hospital Enterprises Limited (AHEL), India has been providing technical support by
way of Operations Management agreement.
Red-Herring Prospectus: STS Holdings Limited
Page: 3
(c) Financial Information: Major financial information of STS Holdings Limited (STSHL) is as follows.
Sl. No.
Particulars 31.12.2015
(Consolidated*) 31.12.2015
(The Company)
31.12.2014 (Consolidated*)
(Restated)
31.12.2014 (The Company)
(Restated)
31.12.2013 (The Company)
31.12.2012 (The Company)
31.12.2011 (The Company)
1 Net revenue 3,789,300,061 3,753,919,306 3,565,717,280 3,558,080,623 3,148,834,681 3,070,982,441 2,590,477,890 2 Gross profit 1,816,425,509 1,803,881,835 1,663,608,834 1,660,010,907 1,394,542,964 1,397,982,549 1,216,056,054 3 Net profit before tax 585,974,982 619,797,531 419,189,785 438,370,875 273,494,986 403,006,949 297,653,167 4 Net profit/ (loss) after tax 375,872,621 409,810,801 335,772,317 354,976,500 175,166,245 134,177,696 284,620,603 5 Total assets 8,839,798,079 8,871,522,977 8,166,818,417 8,178,888,105 7,653,502,786 7,360,944,641 7,195,339,429 6 Share capital 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 7 Retained earnings 397,067,700 449,631,858 36,185,008 55,180,244 (332,073,132) (532,221,163) (663,348,337) 8 No. of Shares 150,945,000 150,945,000 150,945,000 150,945,000 150,945,000 150,945,000 150,945,000 9 Face Value 10.00 10.00 10.00 10.00 10.00 10.00 10.00
10 NAV Per Share 48.57 48.92 46.35 46.47 44.06 42.90 42.19 11 Earnings per Share (EPS) 2.49 2.71 2.23 2.35 1.16 0.81 1.65
*Consolidated Information of STS Holdings Ltd and its subsidiaires namly STS Hospital Chittagong Ltd., a private limited company by shares and STS Hospitals Ltd., a private limited company by shares.
(d) Features of the issue and its objects:
Offer Price Tk.10.00 Number of Shares [*] Offer Size Tk. 750,000,000.00
Purpose of Raising Fund
Proceeds from IPO will be used for procuring of medical equipment and construction of 16 storied hospital building in the name of STS Hospital Chittagong Ltd. a subsidiary company of STS Holdings Ltd. using the Brand name of “Apollo” by viture of agreement on 17 September 2015 between STS Hospital Chittagong Ltd., Bangladesh and Apollo Hospital Enterprise Ltd., India. Mentionable here that total project cost is approximately Tk.490.33 crore in which full IPO proceeds Tk.75.00 crore will be used.
Date of Implementation Within 12 months of receiving the IPO proceeds
Red-Herring Prospectus: STS Holdings Limited
Page: 4
(e) Legal and other Information:
Description of License
Registration/NOC/Permission License Issuer/Issuing Authority Certificate/License No. Expiry Date
Certificate of Incorporation Registrar of Joint Stock Companies and Firms C-33709 N/A
Certificate of Commencement of Business RJSC N/A Incorporated as a
private Ltd. company TIN Certificate National Board of Revenue 129266364392 N/A VAT Certificate Customs, Excise and VAT Commissionerate 18141091770 N/A Trade License Vatara Union Parishad 0012 30.06.2017 Import Registration Certificate Office of the Chief Controller of Export & Import 174468 30.06.2017 Fire License Fire Services & Civil Defense 19323/06 30.06.2017 Certificate from Department of Environment Department of Environment Dhaka N/A 01.12.2016 BOI License Board of Investment Bangladesh J-300002014063-H N/A License for Running Private Hospital Director General of Health 1208* 30.06.2016 License for Pathological Lab Director General of Health 2280* 30.06.2016 Drug License Drug Administration DC-6516/A & DC-6516/B 02.11.2018 License for Use of Narcotics Narcotics Control Department, Dhaka 88/2005-2006 30.06.2017 JCI Accreditation for Quality Joint Commission International (JCI) CN 1251.1 24.05.2017
Certificate from Chamber Foreign Investors' Chamber of Commerce & Industry
449 30.06.2017
License for running Blood Bank Director General of Health 02 19.04.2017 License for production & use of Captive Power
Bangladesh Energy Regulatory Commission CPP-0109** 30.05.2016
* We have applied for this renewal on 19/07/2016. But still it is under process.
**We have applied for this renewal on 29/05/2016. But still it is under process.
Red-Herring Prospectus: STS Holdings Limited
Page: 5
(f) Promoters‟ background: When the Company was incorporation time following persons were the subscribers to the memorandum:
Sl. No. Name of Promoter 1 Aneesha Mahial Bhagwan Kundanmal 2 Khondoker Monir Uddin 3 Mohammad A. Moyeen (Nominated by M & M Holdings Limited) 4 Tipu Munshi (Nominated by Sepal Garments Limited)
Their background is stated below:
Aneesha Mahial Bhagwan Kundanmal Aneesha Mahial Bhagwan Kundanmal completed her graduation in Public Administration. She is the sponsor Director of STS Holding Ltd. Having 20 years of experience on business both at home and abroad, she is dynamic person in business world. Now, she is a Srilankan citizen.
Khondoker Monir Uddin A leading entrepreneur of the country, Khondoker Monir Uddin, completed his Bachelors with
Honor’s and Master’s degrees from the Department of Accounting, University of Dhaka in 1982 and started his successful business career in the same year. Over the past three decades he has successfully established the Shanta Group, which previously owned and operated some of export-oriented specialized ready-made garment manufacturing industries of the country. He is the founder promoter and Managing Director of Shanta Properties Limited, the reputed and growing real estate developer of the country. Renowned for its highly aesthetic works of superior and modern structures, redefining the skylines of Dhaka city. In addition, Khondoker Monir Uddin is also a founder Director and former Chairman of the Dhaka Bank Limited.
Mohammad A. Moyeen (Nominated by M & M Holdings Limited) Mr. Mohammad A. Moyeen is a very prominent business personality of Bangladesh. He started his business career in 1982. He is an Architect Engineer by education from the Bangladesh University of Engineering and Technology (BUET). Due to his outstanding contribution to export oriented business in Bangladesh, Mr. Moyeen is recognized by the Government of Bangladesh as a Commercial Important Person (CIP). Mr. Moyeen is the Managing Director of Tropica Garments Limited which employs more than a thousand employees and cater to needs of world renowned ready-made garments brands. Mr. Moyeen is also the Chairman of Lanka Bangla Finance Ltd. and Lanka Bangla Securities Ltd.
Tipu Munshi (Nominated by Sepal Garments Limited) Mr. Tipu Munshi is a very prominent business and political personality of Bangladesh. He started his business career since more than two decades and has alongside successfully served his political constituency with dedication. He is the Managing Director of Sepal Group, a 100% export oriented industry which commenced business in 1986. The group owns several vertically integrated companies in garments manufacturing and washing units under one roof approved by the Board of Investment of Bangladesh. In addition, Mr. Tipu Munshi owns business ventures in cold storages and agro industries. He has served as the President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA). Mr. Munshi is currently a Member of Parliament of Bangladesh.
Red-Herring Prospectus: STS Holdings Limited
Page: 6
(g) Capital structure and history of capital raising: The Company intends to issue [*] ordinary shares of Tk. 10.00 each at an issue price of Tk. [*] through Initial public offering (IPO) totaling to Tk. 750,000,000.00 subject to regulatory approvals.
Particulars No of Shares Face Value (Tk.) Amount in Taka
Authorized Capital 300,000,000 10.00 10.00 3,000,000,000 Before IPO: Paid up capital 150,945,000 10.00 10.00 1,509,450,000 After IPO:
To be issued as IPO [*] 10.00 [*] [*]
Paid up capital (Post IPO) [*] 10.00 10.00 [*] **Form Sixth allotment to ninth allotment the issue price was Tk. 25.00
The Company has raised its paid-up capital in following phases:
Particulars of Allotment Date of
Allotment
Consideration
Amount in Taka In Cash
Other than Cash
First (Subscription to the Memorandum & Articles of Association at the time of incorporation)
**Form Sixth allotment to Ninth allotment the issue price was Tk. 25.00 The Company however has subdivided the face value of its ordinary share from Tk.100.00 to Tk.10.00 by passing a special resolution in its extraordinary general meeting held on 29th
December, 1997 and necessary amendments in the capital clause of the Memorandum and Articles of Association were made accordingly. Hence, the paid-up capital of the Company comes to Tk. 1,509,450,000 divided into 150,945,000 ordinary shares of Tk. 10.00 each.
(h) Summary of Valuation Report of securities:
S.L Method Used Price 1 Net Asset value (NAV) per share 48.56 2 Sector P/E multiple Based Valuation 53.11 3 Average Market price of similar stock Based Valuation 74.04 4 P/BV multiple of similar stock Based Valuation 66.05
5 P/E multiple of similar stock Based Valuation 51.18 6 EV/EBITDA multiple based valuation 64.76
Red-Herring Prospectus: STS Holdings Limited
Page: 7
CHAPTER (II): CONDITIONS IMPOSED BY COMMISSION UNDER RULE 4(2) OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2015 (a) Consent for bidding to determine the cut-off price: After examination of the prospectus and
relevant documents, the Commission, if satisfied, shall issue consent to commence bidding by the eligible investors for determination of the cut-off price.
(b) Determination of the cut-off price:
i) Eligible investors shall participate in the electronic bidding process and submit their
intended quantity and price: ii) provided that any connected person on related party of the issuer shall not be eligible to
participate in the bidding process; iii) No eligible investor shall quote for more than 10% (ten percent) of the total amount
offered to the eligible investors; iv) Eligible investors‟ bidding shall be opened for 72 (seventy-two) hours round the clock; v) The bidding will be conducted through a uniform and integrated automated system of the
exchanges, especially developed for book building process; vi) The value of bid at different prices will be displayed on the screen without identifying the
bidders; vii) The bidders shall deposit at least 20% (twenty percent) of the bid amount in advance in
the designated bank account maintained by the exchange conducting the bidding; viii) The bidders can revise their bids for once, within the bidding period, up to 20% variation
of their first bid price;
ix) After completion of the bidding period, the cut-off price will be determined at nearest integer of the lowest bid price at which the total securities offered to eligible investors would be exhausted;
x) All the eligible investors participating in the bidding shall be offered to subscribe the securities at the cut-off price. It is mandatory for EIs bidding at or above the cut-off price to subscribe up to their intended quantity but optional for EIs bidding below the cut-off price;
xi) The eligible investors shall be allotted securities on pro-rata basis within their category-wise quota at the cut-off price. The category-wise quota shall be determined on the basis of distributing the total securities reserved for other eligible investors equally to each of the category of eligible investors participating in the bidding, except mutual funds. Mutual funds shall be allotted securities reserved for them on pro-rata basis;
xii) The securities shall be offered to general public for subscription at an issue price to be fixed at 10% discount (at nearest integer) from the cut-off price;
xiii) The issuer and the issue manager shall prepare the draft prospectus including the status of bidding, cut-off price, list of eligible investors with number of securities subscribed for, price and number of securities for offering to the general public and submit with relevant documents, simultaneously to the Commission and the exchanges within 5 (five) working days from the closing day of bidding.
Red-Herring Prospectus: STS Holdings Limited
Page: 8
(c) Subscription by the eligible investors:
i) The balance amount of subscription shall be paid by the eligible investors prior to the date of opening of subscription to the general public:
ii) provided that in case of failure to deposit the remaining amount by the eligible investors, advance bid money deposited by them shall be forfeited by the Commission and the unsubscribed securities shall be taken up by the underwriters.
ELIGIBLE INVESTOR OR EI
As per definition of Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015: “Eligible Investor or EI” means the following institution who has business operation/investment in Bangladesh: -
i) Merchant Bankers and Portfolio Managers; ii) Asset Management Companies; iii) Mutual Funds; iv) Stock Dealers; v) Banks; vi) Financial Institutions; vii) Insurance Companies; viii) Alternative Investment Fund Managers; ix) Alternative Investment Funds; x) Foreign Investors who have portfolio investments in capital market of Bangladesh through
any Securities Custodian registered with the Commission; xi) Recognized Pension Funds and Provident Funds; and xii) Other Institutions as approved by the Commission;
Red-Herring Prospectus: STS Holdings Limited
Page: 9
CHAPTER (III): DECLARATION AND DUE DILIGENCE CERTIFICATES AS PER ANNEXURE- A, B AND C
Annexure-A
DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTORS, INCLUDING THE CEO OF THE ISSUER IN RESPECT OF THE RED-HERRING PROSPECTUS
[See rule 4 (1)(d)] This red-herring prospectus has been prepared, seen and approved by us, and we, individually and
collectively, accept full responsibility for the authenticity, accuracy and adequacy of the statements
made, information given in the prospectus, documents, financial statements, exhibits, annexes,
papers submitted to the Commission in support thereof, and confirm, after making all reasonable
inquiries that all conditions concerning this public issue and prospectus have been met and that
there are no other information or documents, the omission of which make any information or
statements therein misleading for which the Commission may take any civil, criminal or
administrative actions against any or all of us as it may deem fit. We also confirm that full and fair disclosures have been made in this red-herring prospectus to enable the investors to make a well informed decision for investment. Sd/- Bhagwan W. Kundanmal (Nominated by STS Capital Limited) Chairman
Sd/- Khondoker Monir Uddin
Managing Director
Sd/- Mohammad A. Moyeen Director
Sd/- Tipu Munshi
(Nominated by Sepal Holdings Limited) Director
Sd/- Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited) Director
Sd/-
Dr. Ratnadeep Chaskar CEO (Current Charge)
Sd/- Chaklader Mansurul Alam Independent Director
Sd/- Dr. Raajiv Singhal
Independent Director
Red-Herring Prospectus: STS Holdings Limited
Page: 10
Annexure-B
DUE DILIGENCE CERTIFICATE BY ISSUE MANAGER (AFC CAPITAL LIMITED)
[See rule 4 (1)(d)]
To The Bangladesh Securities and Exchange Commission Sub: Public Issue of [*] Ordinary Shares of Tk. 750,000,000.00 by STS Holdings Limited. Dear Sir, We, the issue manager to the above-mentioned forthcoming issue, state and confirm as follows: (1) We have examined all the documents submitted with the application for the above mentioned
public issue, visited the premises of the issuer and interviewed the Chairperson, Directors and key management personnel of the issuer in connection with the finalization of the red-herring prospectus pertaining to the said issue;
(2) On the basis of such examination and the discussions with the directors, officers and auditors of
the issuer, other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer.
WE CONFIRM THAT: (a) The red-herring prospectus filed with the Commission is in conformity with the documents,
materials and papers relevant to the issue; (b) All the legal requirements relating to the issue as also in the rules, notification, guidelines,
instructions, etc. framed/issued by the Commission, other competent authorities in this behalf and the Government have been duly complied with;
(c) The disclosures made in red-herring prospectus are true, fair and adequate to enable the
investors to make a well informed decision for investment in the proposed issue and such disclosures are in accordance with the requirements of the Companies Act, 1994, the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 and other applicable laws;
(d) Besides ourselves, all the intermediaries named in the red-herring prospectus are registered
with the Commission and that till date such registrations are valid; (e) We have satisfied ourselves about the capability of the underwriters to fulfill their underwriting
commitments; (f) The proposed activities of the issuer for which the funds are being raised in the present issue fall
within the „main objects‟ listed in the object clause of the Memorandum of Association or other charter of the issuer and that the activities which have been carried out till now are valid in terms of the object clause of its Memorandum of Association;
(g) Necessary arrangements have been made to ensure that the moneys to be received pursuant to the issue shall be kept in a separate bank account and shall be used for the purposes disclosed in the use of proceeds section of the red-herring prospectus;
(h) All the applicable disclosures mandated in the Bangladesh Securities and Exchange Commission
(Public Issue) Rules, 2015 have been made in addition to other disclosures which, in our view, are fair and adequate to enable the investor to make a well informed decision;
(i) We enclose a note explaining how the process of due diligence has been exercised by us in view
of the nature of current business background or the issuer, situation at which the proposed business stands, the risk factors, sponsors experiences etc. We also confirm that the due diligence related process, documents and approval memos shall be kept in record by us for the next 5 (five) years after the IPO for any further inspection by the Commission;
Red-Herring Prospectus: STS Holdings Limited
Page: 11
(j) We enclose a checklist confirming rule-wise compliance with the applicable provisions of the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 containing details such as the rule number, its text, the status of compliance, page numbers of the red-herring prospectus where the rules has been complied with and our comments, if any;
(k) We also declare that we have managed the public issue of following issuers in the last 05 (Five) years:
Serial. No. Name of the Issue Month/Year Issue Price (Tk.) Dividend Payment History
Cash Bonus 1 Global Heavy Chemicals Limited October/2012 20.00 15% 2012, 10% 2013, 10% 2014 -
Sd/- Mahbub H. Mazumdar FCMA Place: Dhaka Chief Executive Date: April 25, 2016 AFC Capital Limited
Red-Herring Prospectus: STS Holdings Limited
Page: 12
Annexure-B
DUE DILIGENCE CERTIFICATE BY ISSUE MANAGER (ICB CAPITAL MANAGEMENT LIMITED)
[See rule 4 (1)(d)]
To The Bangladesh Securities and Exchange Commission Sub: Public Issue of [*********] Ordinary Shares of Tk. 750,000,000.00 by STS Holdings Limited. Dear Sir, We, the issue manager to the above-mentioned forthcoming issue, state and confirm as follows: (1) We have examined all the documents submitted with the application for the above mentioned
public issue, visited the premises of the issuer and interviewed the Chairperson, Directors and key management personnel of the issuer in connection with the finalization of the prospectus pertaining to the said issue;
(2) On the basis of such examination and the discussions with the directors, officers and auditors of
the issuer, other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer.
WE CONFIRM THAT: (a) The prospectus filed with the Commission is in conformity with the documents, materials and
papers relevant to the issue;
(b) All the legal requirements relating to the issue as also in the rules, notification, guidelines, instructions, etc. framed/issued by the Commission, other competent authorities in this behalf and the Government have been duly complied with;
(c) The disclosures made in prospectus are true, fair and adequate to enable the investors to make a well informed decision for investment in the proposed issue and such disclosures are in accordance with the requirements of the Companies Act, 1994 and the relevant provisions of the Bangladesh Securities Exchange Commission (Public Issue) Rules, 2015 and other applicable laws;
(d) Besides ourselves, all the intermediaries named in the prospectus is registered with the Commission and that till date such registrations are valid;
(e) We have satisfied ourselves about the capability of the underwriters to fulfill their underwriting commitments;
(f) The proposed activities of the issuer for which the funds are being raised in the present issue fall within the „main objects‟ listed in the object clause of the Memorandum of Association or other charter of the issuer and that the activities which have been carried out till now are valid in terms of the object clause of its Memorandum of Association;
(g) Necessary arrangements have been made to ensure that the moneys to be received pursuant to the issue shall be kept in a separate bank account and shall be used for the purposes disclosed in the use of proceeds section of the prospectus;
(h) All the applicable disclosures mandated in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 have been made in addition to other disclosures which, in our view, are fair and adequate to enable the investors to make a well informed decision;
Red-Herring Prospectus: STS Holdings Limited
Page: 13
(i) We enclose a note explaining how the process of due diligence has been exercised by us in view of the nature of current business background of the issuer, situation at which the proposed business stands, the risk factors, sponsors experiences etc. We also confirm that the due diligence related process, documents and approval memos shall be kept in record by us for the next 5 (five) years after the IPO for any further inspection by the Commission.
(j) We enclose a checklist confirming rule-wise compliance with the applicable provisions of the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 containing details such as the rule number, its text, the status of compliance, page numbers of the prospectus where the rules has been complied with and our comments, if any;
(k) We also declare that we have managed the public issue of following issuers in the last 05 (five) years:
DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (AFC CAPITAL LIMITED)
[See rule 4 (1)(d)] To The Bangladesh Securities and Exchange Commission
Sub: Public Offer of [*] Ordinary Shares of Tk. 750,000,000.00 by STS Holdings Limited.
Dear Sir, We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows: (1) We, while underwriting the above mentioned issue on a firm commitment basis, have
examined the draft prospectus, other documents and materials as relevant to our underwriting decision; and
(2) On the basis of such examination and the discussions with the issuer company, its directors and officers, and other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.
WE CONFIRM THAT:
(a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 130,000,000.00 (Thirteen Crore only) and we have the capacity to underwrite a total amount of Tk. 650,000,000.00 (Sixty-Five Crore) as per relevant legal requirements. We have committed to underwrite for up to Tk. 60,800,000.00 (Six Crore Eight Lac) for the upcoming issue.
(b) At present, the following underwriting obligations are pending for us: (Name of issue and
amount underwritten) SL Name of the Company Amount Underwritten (TK.) 1 Ananda Shipyard & Slipways Limited 3,599,200 2 GPH Ispat Limited 262,500,000 3 Nurani Dyeing & Sweater Limited 75,250,000 4 Fortune Shoes Limited 35,000,000
Total 376,349,200
(c) All information as are relevant to our underwriting decision have been received by us and the draft prospectus forwarded to the Commission has been approved by us;
(d) We shall subscribe and take up the un-subscribed securities against the above-mentioned
public issue within 15 (fifteen) days of calling up thereof by the issuer; and (e) This underwriting commitment is unequivocal and irrevocable.
For the Underwriter: Sd/- Mahbub H. Mazumdar FCMA Chief Executive AFC Capital Limited Place: Dhaka Date: April 21, 2016
Red-Herring Prospectus: STS Holdings Limited
Page: 15
Annexure C
DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (ICB CAPITAL MANAGEMENT LIMITED) [Rule 4 (1)(d)]
To The Bangladesh Securities and Exchange Commission Sub: Public Offer of [********] Ordinary Shares of Tk. 750,000,000 of STS Holdings Limited. Dear Sir, We, the under-noted Underwriter to the above-mentioned forthcoming issue, state individually and collectively as follows: (1) We, while underwriting the above mentioned issue on a firm commitment basis, have
examined the draft prospectus, other documents and materials as relevant to our underwriting decision; and
(2) On the basis of such examination and the discussions with the issuer company, its directors and officers, and other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.
WE CONFIRM THAT: (a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant
banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 131.86 (One hundred thirty one point eight six) crore and we have the capacity to underwrite a total amount of Tk. 659.30 (Taka six hundred fifty nine point three zero) crore as per relevant legal requirements. We have committed to underwrite for up to Tk. 60,900,000.00 (six crore nine lac) for the upcoming issues.
(b) At present, the following underwriting obligations are pending for us: Sl. No. Name of the Company Amount Underwritten (in Tk.)
1 Energypac Power Generation Limited 7,812,500.00
2 IDLC Finance Limited 150,000,000.00
3 GPH Ispat Limited 210,000,000.00
4 Baraka Patenga Power Limited 21,000,000.00
5 ACME Laboratories Limited 696,320,000.00
Total= 1,085,132,500.00 (c) All information as are relevant to our underwriting decision has been received by us and the
draft prospectus forwarded to the Commission has been approved by us; (d) We shall subscribe and take up the un-subscribed securities against the above-mentioned
public issue within 15 (fifteen) days of calling up thereof by the issuer; and (e) This underwriting commitment is unequivocal and irrevocable.
For the Underwriter:
Sd/-
(Nasrin Sultana)
Chief Executive Officer
ICB Capital Management Limited
Place: Dhaka
Date: April 20, 2016
Red-Herring Prospectus: STS Holdings Limited
Page: 16
Annexure C
DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (LANKABANGLA INVESTMENTS LIMITED) [Rule 4 (1)(d)]
To The Bangladesh Securities and Exchange Commission Sub: PUBLIC OFFER OF [•] ORDINARY SHARES OF TK. 750,000,000/- OF STS HOLDINGS LIMITED Dear Sir, We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows:
1. We, while underwriting the above mentioned issue on a firm commitment basis, have examined
the draft prospectus, other documents and materials as relevant to our underwriting decision; and
2. On the basis of such examination and the discussions with the issuer company, its directors and officers, and other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.
WE CONFIRM THAT: a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant
banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 1,670,000,000.00 (Taka One Hundred Sixty Seven Crore only) and we have the capacity to underwrite a total amount of Tk. 4,348,352,895.00 (Taka Four Hundred Thirty Four Crore Eighty Three Lac Fifty Two Thousand Eight Hundred Ninety Five only) as per relevant legal requirements. We have committed to underwrite for up to Tk. 60,800,000.00 (Taka Six Crore Eight Lac only) for the upcoming issue.
b) At present, the following underwriting obligations are pending for us:
Sl. No. Name of The Company Amount Underwritten (in BDT)
1 Pacific Denims Limited 37,500,000.00
2 Evince Textiles Limited 45,500,000.00
3 Summit Alliance Port Limited 154,586,100.00
4 IDLC Finance Limited 70,000,000.00
5 GPH Ispat Limited 525,000,000.00
6 Bangladesh Thai Aluminium Limited 30,000,000.00
7 VFS Thread Dyeing Limited 20,000,000.00
8 IFCO Garments & Textiles Limited 17,500,000.00
9 aamra networks limited 78,750,000.00
10 Dhaka Regency Hotel and Resort Limited 52,500,000.00
Total 1,031,336,100.00
Red-Herring Prospectus: STS Holdings Limited
Page: 17
c) All information as are relevant to our underwriting decision have been received by us and the draft prospectus forwarded to the Commission has been approved by us;
d) We shall subscribe and take up the un-subscribed securities against the above-mentioned
public issue within 15 (fifteen) days of calling up thereof by the issuer; and
e) This underwriting commitment is unequivocal and irrevocable. For the Underwriter: Sd/- Khandakar Kayes Hasan, CFA Chief Executive Officer LankaBangla Investments Limited Place: Dhaka Date: April 21, 2016
Red-Herring Prospectus: STS Holdings Limited
Page: 18
Annexure: C
DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (EBL INVESTMENTS LIMITED)
[Rule 4 (1)(d)] To The Bangladesh Securities and Exchange Commission Sub: PUBLIC OFFER OF [•] ORDINARY SHARES OF TK. 750,000,000/- OF STS HOLDINGS LIMITED Dear Sir, We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows:
1. We, while underwriting the above mentioned issue on a firm commitment basis, have examined
the draft prospectus, other documents and materials as relevant to our underwriting decision; and
2. On the basis of such examination and the discussions with the issuer company, its directors and officers, and other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.
WE CONFIRM THAT: a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant
banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 300,000,000.00 (Taka Thirty Crore only) and we have the capacity to underwrite a total amount of Tk. 1500,000,000.00 (Taka One Hundred & Fifty Crore only) as per relevant legal requirements. We have committed to underwrite for up to Tk. 20,000,000.00 (Taka Two Crore only) for the upcoming issue.
b) At present, the following underwriting obligations are pending for us:
Sl. No. Name of The Company Amount Underwritten (in Tk.) 1. Fortune Shoes Limited 14,000,000 2. Supreme Seed Company Ltd. 22,000,000 3. Pacific Denims Limited 75,000,000 4. Cutting Edge Industries Ltd. 16,500,000 5. SBS Cables Ltd. 41,922,000 6. ADN Telecom Limited 38,700,000 7. IDLC Finance Ltd 50,000,000 8. Nurani Dyeing & Sweater Limited 107,500,000 9. The ACME Laboratories Ltd. 40,960,000
10. Silco Pharmaceuticals Limited 26,250,000 Total 432,832,000
Red-Herring Prospectus: STS Holdings Limited
Page: 19
c) All information as are relevant to our underwriting decision have been received by us and the draft prospectus forwarded to the Commission has been approved by us;
d) We shall subscribe and take up the un-subscribed securities against the above-mentioned
public issue within 15 (fifteen) days of calling up thereof by the issuer; and e) This underwriting commitment is unequivocal and irrevocable. For the Underwriter: Sd/- Moinul Hossain Asif Managing Director EBL Investments Limited Place: Dhaka Date: April 21, 2016
Red-Herring Prospectus: STS Holdings Limited
Page: 20
Annexure: C
DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (FIRST SECURITIES SERVICES LIMITED)
[Rule 4 (1)(d)]
The Chairman The Bangladesh Securities Exchange Commission Sub: Public Offer under Book-Building Method total amount of BDT 750,000,000.00 against
issuance of Ordinary Shares of STS Holding Limited. Dear Sir, We, the under-noted Underwriter(s) to the abovementioned forthcoming Issue, state individually as follows: 1. We, while underwriting the above mentioned Issue on a firm commitment basis, have examined
the draft Prospectus (Red-Herring Prospectus), other documents and materials as relevant for our underwriting decision; and
2. On the basis of such examination and the discussion with the Issue Company; its directors and other officers and other agencies, independent study & verification of the statements concerning objects of the Issue and the contents of the documents and other materials furnished by the Issuer Company;
We Confirm That: a. We are registered with Bangladesh Securities Exchange Commission as a merchant banker and
eligible to carry out the underwriting activities. Our present paid-up capital stands at BDT- 25,00,00,000.00 (twenty-five crore) only and have capacity to underwrite a total amount of BDT- 125,00,00,000.00 (BDT- one hundred twenty five crore) only as per relevant legal requirements. We have committed to underwrite for up to BDT- 2,00,00,000.00 (BDT- two crore) only for the upcoming issue.
b. At present, the following underwriting obligations are pending for us:
c. All information as are relevant to our underwriting decision has been received by us and the
draft Prospects forwarded to the Commission has been approved by us; d. We shall subscribe and take up the under-subscribed Securities against the above-mentioned
Public Issue within 15 (fifteen) days of calling up thereof by the issuer; and e. This underwriting commitment is unequivocal and irrevocable.
For the underwriter
Sd/- Mustofa Kamal
Chief Executive Officer First Securities Services Limited
Place: Dhaka Dated: April 24, 2016
SL. No. Name of the Company Amount Underwritten (in BDT.) 1. Hemple Rhee Manufacturing Co. (BD) Ltd. 90,000,000.00 2. The Dacca Dyeing & Manufacturing Co. Ltd. 500,000,000.00
Total 590,000,000.00
Red-Herring Prospectus: STS Holdings Limited
Page: 21
Annexure-C
DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (NBL CAPITAL AND EQUITY MANAGEMENT LIMITED)
[Rule 4 (1)(d)] To The Bangladesh Securities and Exchange Commission Sub: PUBLIC OFFER OF [•] ORDINARY SHARES OF TK. 750,000,000/- OF STS HOLDINGS LIMITED Dear Sir, We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows:
1. We, while underwriting the above mentioned issue on a firm commitment basis, have examined
the draft prospectus, other documents and materials as relevant to our underwriting decision; and
2. On the basis of such examination and the discussions with the issuer company, its directors and
officers, and other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.
WE CONFIRM THAT: a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant
banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 25,00,00,000/ (Taka Twenty five crore Only) and we have the capacity to underwrite a total amount of Tk. 125,00,00,000/- (Taka One hundred twenty five crore only) as per relevant legal requirements. We have committed to underwrite for up to Tk. 2,00,00,000/- (Taka Two crore only) for the upcoming issue.
b) At present, the following underwriting obligations are pending for us:
Sl. No. Name of The Company Amount Underwritten (in BDT)
1 Aftab Hatchary Limited 12,60,00,000/-
2 Oimax Electrode Limited 87,50,000/-
Total 13,47,50,000/-
c) All information as are relevant to our underwriting decision have been received by us and the
draft prospectus forwarded to the Commission has been approved by us;
d) We shall subscribe and take up the un-subscribed securities against the above-mentioned public issue within 15 (fifteen) days of calling up thereof by the issuer; and
e) This underwriting commitment is unequivocal and irrevocable. For the Underwriter: Sd/- Kamrun Naher Chief Executive Officer (Current Charge) NBL Capital and Equity Management Limited Place: Dhaka Date: April 21, 2016
Red-Herring Prospectus: STS Holdings Limited
Page: 22
Annexure: C
DUE DILIGENCE CERTIFICATE OF THE UNDERWRITER (ROOTS INVESTMENT LIMITED)
[Rule 4(1)(d)] To The Bangladesh Securities and Exchange Commission Subject: PUBLIC OFFER OF [.] ORDINARY SHARES OF TK. 750,000,000/- OF STS HOLDINGS
LIMITED. Dear Sir, We, the under-noted Underwriter(s) to the above mentioned forthcoming issue, state individually and collectively as follows: 1. We, while underwriting the above mentioned issue on a firm commitment basis, have examined
the draft prospectus, other documents and materials as relevant to our underwriting decision; and
2. On the basis of such examination and the discussions with the issuer company, it‟s directors and officers, and other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.
WE CONFIRM THAT: a) We are registered with The Bangladesh Securities and Exchange Commission as a merchant
banker and eligible to carry out the underwriting activities. Our present paid –up capital stands at Tk. 135 million only (one hundred and thirty five million only) and we have the capacity to underwrite a total amount of Tk. 675 million (Taka Six hundred and seventy five million only) as per relevant legal requirements. We have committed to underwrite for up to Tk. 20,000,000.00 (Taka two crore only) for the upcoming issue.
b) At present. The following underwriting obligation are pending for us: -
6 Mohammed Elias Brothers Poy Manufacturing Co. Limited
10,000,000.00
7 SBS Cables Limited 28,050,000.00 8 Supreme seed Company Limited 11,000,000.00 9 Beach Hatchery Limited 50,000,000.00
10 The ACME Laboratories Limited 35,500,000.00 11 IDLC Finance limited 30,000,000.00 12 Energypac Power Generation Limited. 7,812,500.00
Total 326,802,500.00
Red-Herring Prospectus: STS Holdings Limited
Page: 23
c) All information as are relevant to our underwriting decision have been received by us and the draft prospectus forwarded to the Commission has been approved by us;
d) We shall subscribe and take up the un-subscribe securities against the above-mentioned public issue within 15(fifteen) days of calling up thereof by the issuer; and
e) This underwriting commitment is unequivocal and irrevocable. For Underwriter Sd/- Nomanur Rashid Senior Vice President Roots Investment Limited Place: Dhaka Date: April 21, 2016
Red-Herring Prospectus: STS Holdings Limited
Page: 24
CHAPTER (IV): ABOUT THE ISSUER
(a) Name of the issuer, dates of incorporation and commencement of its commercial operations, its logo, addresses of its registered office, other offices and plants, telephone number, fax number, contact person, website address and e-mail address;
Particulars of the Company:
Particulars Description Name of the Issuer : STS Holdings Limited Dates of Incorporation : 28 August, 1997. Commencement of its Commercial Operations
: 16 April, 2005.
Logo
:
STS HOLDINGS LIMITED (Owner of Apollo Hospitals Dhaka)
Addresses of its registered Office : STS Tower, Plot # 346/A & 347, Road #12, Block #
Telephone number : +88-02-55036601-6 Fax number : +88-02-55036607 Contact person : Mr. B. R. Sikder, FCS, Company Secretary Website address : www.stsgroupbd.com E-mail address : [email protected]
(b) The names of the sponsors and directors of the issuer:
Name of the Sponsors and Directors:
Sponsors: Sl. No Sponsors
1 Aneesha Mahial Bhagwan Kundanmal 2 Khondoker Monir Uddin 3 Mohammad A. Moyeen (Nominated by M & M Holdings Limited) 4 Tipu Munshi (Nominated by Sepal Garments Limited)
Directors:
Sl. No. Name Position 1 Bhagwan W. Kundanmal (Nominated by STS Capital Limited) Chairman 2 Khondoker Monir Uddin Managing Director 3 Mohammad A. Moyeen Director 4 Tipu Munshi (Nominated by Sepal Holdings Limited) Director
5 Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited)
Director
6 Chaklader Mansurul Alam Independent Director 7 Dr. Raajiv Singhal Independent Director
Red-Herring Prospectus: STS Holdings Limited
Page: 25
(c) The name, logo and address of the auditors and registrar to the issue along with their telephone numbers, fax numbers, contact persons, website and e-mail addresses:
Particulars of Auditor and Registrar to the Issue:
Auditor:
Particulars Description Name : S. F. Ahmed & Co., Chartered Accountants
Logo :
Address : House No.53 (2nd and 3rd Floor), Road No. 9, Block-F,
Banani, Dhaka-1213. Telephone Number : +88-02-9894026; 9894346 Fax Number : +88-02-8825135
Contact Person : Mr. Md. Anwar Hossain, ACA
Director Assurance Services Website Address : www.sfahmedco.org E-mail Address : [email protected] Registrar to the Issue:
Particulars Description Name : LankaBangla Investments Limited Logo
Telephone Number : +88-02-7122595, 9561238 Fax Number : +88-02-7113585 Contact Person : Mr. Khandakar Kayes Hasan, CFA
Chief Executive Officer Website Address : www.lankabangla-investments.com E-mail Address : [email protected] (d) The name(s) of the stock exchanges where the specified securities are proposed to be listed.
Name of the Stock Exchanges where the Securities to be listed:
STS Holdings Limited (STSHL) is a public limited company. STSHL was formed initially as a private limited company under Companies Act 1994 and incorporated in Bangladesh in the year 1997 bearing Registration No. C-33709(455)/97 dated 28.08.1997 and subsequently converted as a public limited company in 22 February, 2006.
Date of Incorporation : 28 August, 1997.
Authorized Capital : Tk.3,000,000,000 divided into 240,000,000 Ordinary Share and 60,000,000 Preference Share of Tk.10.00 each
Paid up Capital : Tk. 1509,450,000 divided into 150,945,000 Ordinary Share of Tk. 10.00 each
Auditor : S. F. Ahmed & Co., Chartered Accountants House# 53 (2nd and 3rdFloor), Road# 9, Block-F, Banani, Dhaka-1213.
Lead Banker for IPO : BRAC Bank Limited Managers to the Issue : AFC Capital Limited & ICB Capital Management Limited Registrar to the Issue : LankaBangla Investments Limited Compliance Officer* : Mr. B. R. Sikder FCS, Company Secretary
*All investors are hereby informed that Company Secretary, would be designated as Compliance Officer who will monitor the compliance of the acts, rules, regulations, notification, 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.
Red-Herring Prospectus: STS Holdings Limited
Page: 27
CHAPTER (VI): DESCRIPTION OF THE ISSUER (a) Summary:
(i) The summary of the industry and business environment of the issuer. The summary shall
not be one-sided or biased to highlight the issuer or the issue; Summary of the industry In Bangladesh, healthcare is a sunrise industry with tremendous growth potential.
Following the increase of general awareness in healthcare, the industry is set to boom.
Despite improving healthcare indicators such as decline in mortality rates and increase in
average life expectancy, the health sector of the country is yet to reach its full potential.
Reform policies coupled with innovation and investment by the private sector may translate
into rapid rise of this sector. Lack of adequate healthcare facilities is leading to a greater
portion of personal Income to be spent on health care. Although the percentage of GDP
being spent on the health care sector is relatively higher than it used to be, it is still very low
compared to developed countries. In Bangladesh, total expenditure to health sector is only
about 2.8% of GDP as per WHO statistics in the year 2014.
In Bangladesh, healthcare is a sunrise industry with tremendous growth potential.
Following the increase of general awareness in healthcare, the industry is set to boom.
Despite improving healthcare indicators such as decline in mortality rates and increase in
average life expectancy, the health sector of the country is yet to reach its full potential.
Reform policies coupled with innovation and investment by the private sector may translate
into rapid rise of this sector. Lack of adequate healthcare facilities is leading to a greater
portion of personal Income to be spent on health care. Although the percentage of GDP
being spent on the health care sector is relatively higher than it used to be, it is still very low
compared to developed countries. In Bangladesh, total expenditure to health sector is only
about 2.8% of GDP as per WHO statistics in the year 2014.
Business environment
Dedicated to providing multidisciplinary medical care and backed by state-of-the-art
facilities, Apollo Hospitals Dhaka offers team-based quality patient care that is widely
acknowledged to be amongst the best in Bangladesh. At Apollo Hospitals Dhaka, patients
have ready access to more than 29 specialized departments and services, which are
established as national referral centres. Modern lithotripsy service, i.e. the treatment of
kidney and ureter stones without surgery, is provided by the hospital using extracorporeal
shock wave. The hospital also offers a complete Dialysis Unit for the treatment of patients
with kidney disorders. The hospital has 1.5 Tesla MRI, 64 Slice CT Scan, Color Doppler,
Ultrasound, and Gamma Camera, which have created the most modern Radiology and
Nuclear Medicine service in the country, with equipment that is faster and capable of
conducting a wide range of examinations with a higher degree of detail. This is in addition
to EEG, EMG, neurophysiology, ECG, stress test, pulmonary function test, etc. Our
international standard Lab Medicine Conducts External Quality Control Program with Bio-
Rad, USA and offers a variety of modern tests and diagnostic tools, some of which are not
available anywhere else in Bangladesh, with regular additions.
Red-Herring Prospectus: STS Holdings Limited
Page: 28
The hospital serves its patients with a variety of in-patient bed/room choices, including
standard, semi-private, single private, deluxe, super deluxe, and suite, providing a range of
in-patient facilities. Apollo Hospitals Dhaka provides total Critical Care support with ten
critical care units and over 100 beds; we have High Dependency Unit (HDU), Surgical ICU,
Neuro ICU (NICU), Cardiothoracic ICU (CT ICU), Coronary Care Unit (CCU), Post CCU,
Intensive CCU (ICCU), Kidney Transplant Unit (KTU), Neonatal ICU, and Medical ICU
(MICU). We also have a number Day Care Unit under different Departments, a unique
wing of the hospital to help patients with specific need-based treatment in an out-patient
basis.
Apollo Hospitals Dhaka also boasts a comprehensive range of Allied Health services,
including Physical Medicine & Rehabilitation, Vaccination, Pharmacy, Dietetics & Nutrition,
Hospitality, Counselling, and Nursing
Our highly certified, skilled, experienced, and dedicated Consultants at Apollo Hospitals
Dhaka are performing some very complicated surgeries and procedures. To name a few:
renal transplant, CRRT, cochlear implant, total hip and knee replacement, beating heart
surgery, repair of congenital cardiac defects in adults and children, radial angiogram, RTPA,
endoscopic neurosurgeries, laser surgeries in dermatology and ENT. A total of 35,306
surgeries have been successfully completed in Apollo Hospitals Dhaka by our renowned and
highly skilled surgeons since our beginning. The hospital has nine state-of-the-art operating
rooms with the best infection control system in the country.
Government policy is favorable to this business friendly and service oriented sector.
Red-Herring Prospectus: STS Holdings Limited
Page: 29
(ii) Summary of consolidated financial, operating and other information.
Sl. No. Particulars 31.12.2015 31.12.2014 31.12.2013 31.12.2012 31.12.2011 1 Net revenue 3,789,300,061 3,565,717,280 3,148,834,681 3,070,982,441 2,590,477,890 2 Gross profit 1,816,425,509 1,663,608,834 1,394,542,964 1,397,982,549 1,216,056,054 3 Net profit before tax 585,974,982 419,189,785 273,494,986 403,006,949 297,653,167 4 Net profit/ (loss) after tax 375,872,621 335,772,317 175,166,245 134,177,696 284,620,603 5 Total assets 8,839,798,079 8,166,818,417 7,653,502,786 7,360,944,641 7,195,339,429 6 Share capital 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 7 Retained earnings 397,067,700 36,185,008 (332,073,132) (532,221,163) (663,348,337) 8 No. of Shares 150,945,000 150,945,000 150,945,000 150,945,000 150,945,000 9 Face Value 10.00 10.00 10.00 10.00 10.00
10 NAV Per Share 48.57 46.35 44.06 42.90 42.19 11 Earnings per Share (EPS) 2.49 2.22 1.16 0.81 1.65
* Consolidated Information of STS Holdings Ltd and its subsidiaires namly STS Hospital Chittagong Ltd. and STS Hospitals Ltd.
Red-Herring Prospectus: STS Holdings Limited
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(b) General Information:
(i) Name and address, telephone and fax numbers of the registered office, corporate head
office, other offices, factory, business premises and outlets of the issuer; Particulars Description
Telephone and Fax Numbers of the Registered Office
Telephone: +88-02-55036601-6 Fax: +88-02-55036607
Corporate Head Office Address and Telephone and Fax Numbers
Corporate head office is also the registered office
Factory Nil Address of the Project (Apollo Hospital Dhaka)
Plot No. 81, Block No. E, Bashundhara R/A, Dhaka-1229, Bangladesh.
Telephone and Fax Numbers of the Project (Apollo Hospital Dhaka)
Tel: +88-02-8431661-5
Fax: +88-02-8431679 Outlets of the Issuer The issuer company has no outlets.
(ii) The board of directors of the issuer;
Sl. Name Position
1 Bhagwan W. Kundanmal (Nominated by STS Capital Limited)
Chairman
2 Khondoker Monir Uddin Managing Director
3 Mohammad A. Moyeen Director
4 Tipu Munshi (Nominated by Sepal Holdings Limited)
Director
5 Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited)
Director
6 Chaklader Mansurul Alam Independent Director
7 Dr. Raajiv Singhal Independent Director
Red-Herring Prospectus: STS Holdings Limited
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(iii) Names, addresses, telephone numbers, fax numbers and e-mail addresses of the chairman, managing director, whole time directors, etc. of the issuer;
Name Address Telephone & Fax No. E-mail Address
Bhagwan W. Kundanmal (Nominated by STS Capital Limited) Chairman
10, Dudely Senanayaka Mawatha Colombo-8, Sri Lanka
(iv) Names, addresses, telephone numbers, fax numbers and e-mail addresses of the CFO, company secretary, legal advisor, auditors and compliance officer;
(v) Names, addresses, telephone numbers, fax numbers, contact person, website addresses and e-mail addresses of the issue manager(s), registrar to the issue etc.;
Issue Manager(s): Name & Address Telephone & Fax No. Contact Person Website Address E-mail Address
(vi) The following details of credit rating, where applicable: a) The names of all the credit rating agencies from which credit rating has been obtained;
Name of the Credit Rating Agency: Credit Rating Agency of Bangladesh Limited (CRAB)
b) The details of all the credit ratings obtained for the issue and the issuer;
Credit Rating Report (Surveillance) Summary
Particulars Ratings Date of Rating 16-Mar-16 30-Jun-15 23-Apr-14 31-Mar-13 2-Apr-12 STS Holdings Ltd AA3 AA3 AA3 A1 A1 Long Term Outstanding (LTO) AA3 (Lr) AA3 (Lr) AA3 (Lr) A1 (Lr) A1 (Lr) Short Term Funded limit ST-2 ST-2 ST-3 ST-3 ST-3 Short Term Non Funded limit ST-2 N/A N/A N/A N/A Rating Outlook Stable Positive Stable Positive Positive Rated by CRAB CRAB CRAB CRAB CRAB
c) The rationale or description of the ratings (s) so obtained, as furnished by the credit
rating agency(s); Credit Rating Agency of Bangladesh Limited (CRAB) has reaffirmed AA3 (Pronounced as Double A Three) rating of STS Holdings Limited (hereinafter also referred to as STSHL of the Company) and AA3 (Lr) rating of BDT 129.3 million Long Term Outstanding (LTO) in the Long Term. CRAB has also reaffirmed ST- 2 rating for BDT 700.0 million aggregate Fund based limit BDT 160.0 million aggregate Non fund based limit in the Short Term.
The assigned ratings incorporate the prestigious standing of the Company supported by parent company, long presence in medical service industry, background of the sponsors, long experience of management along with reputed consultants and medical physicians. The ratings are supported by steady revenue trend and sound financial standing of the Company over the years which are the outcome of continuous effort in progression at various operating levels. CRAB also considers the comfortable working capital management, adequate cash flow position along with balanced capital mix of the Company. The ratings are constrained by lower than expected revenue growth triggered by political unrest at the beginning of 2015, delay in implementation of Radiation Oncology Service and failure of appointment of additional Indian Clinical Consultants due to the regulatory constraints. With the constant effort for progression by including new service facilities as well as cost optimization helped the Company to enhance operating performance which reflected through improvement in ALOS coupled with growth in ARPOB. The Company has achieved improvement in most of departments including Consultancy segment and Test Lab segments while significant contribution in revenue came from OT services and room rent. The Company continued steadiness regarding occupancy rate over last four years; meanwhile in spite of adopting new strategies, the occupancy was marked as 61% since 2012 which is still below management expected level. The equity position of the Company stood at BDT 7,330.6 million and the adjusted equity was BDT 2,521.1 million; there has been revaluation surplus regarding fixed assets resulting adjusted equity. The debt ratio was 0.04x while the adjusted debt ratio reached 0.11x in 2015 which was 0.10x in 2014 reflecting balanced leverage position of the Company. Moreover, the TIER reached at 19.1x in 2015 from 9.2x in 2014 indicating improved coverage position in spite of increased borrowed fund of BDT 284.2 million in 2015 which was BDT 221.1 million in 2014. The stability in leverage and coverage position over the years along with flexibility in working capital management apparently helped achieving balanced credit risk profile.
Red-Herring Prospectus: STS Holdings Limited
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The Company has initiated a plan to establish a hospital in Chittagong named STS Hospital Chittagong Limited as a subsidiary company of STS Holdings Limited, having composite facility for full-fledged hospital/ medical care services in around 500,000 square feet area on a 2 (two) basement plus 16 (sixteen) storied building. Among the total estimated project cost of BDT 4,903.4 million, BDT 2,782.5 million would be arranged from IFC and DEG in the form of long term debt and the remaining portion would be supported by IPO which is subject to approval of concerned authority as well as internal generation of fund during the project implementation period. The investment will reflect the capital mix which would eventually affect the leverage, coverage as well as cash flow position of the Company in mid- term. Moreover the Company also has a plan to establish Cancer Care Center as well as Center for Gastroenterology and Nephrology; the on-time inauguration of these centers would positively impact the financial position of the Company.
The strategic planning of management including decentralized reporting channel, more diversified service portfolio and structured MIS system incorporating operational data as well as financial data would keep supporting the further enhancement of business operation in coming days. However, favorable changes in financial matrix along with consistence in operation and business profile regarding the proper utilization of financing may impact the future rating consideration, and vice versa.
d) Observations and risk factors as stated in the credit rating report.
Apollo Hospitals Dhaka (AHD) is an international standard multi-disciplinary super-specialty tertiary care hospital which conducts functionality with five Centres of Excellence and five Strategic Business Units. AHD has been providing health care services through local and international professionals while the work force includes ~200 doctors, ~400 nurses, ~74 consultants and ~300 paramedics and other operational staff for providing health care services. There have been 324 operating beds since 2013 (presently number of licensed beds 360) without any addition although there has been scope of increasing up to 450 numbers of beds subject to the approval of regulatory authority. Although, room occupancy had been increasing, growth rate stood very low over the years. The occupancy rate stood 61.85% in 2015 which was 61.00% in 2014 followed by 60.56% in 2013 indicating sluggishness in growth of occupancy level. The count of visiting in- patient as well as out- patient saw a growth of 4.08% and 4.03% in 2015. However, with the highest number of bed capacity, the occupancy of deluxe was below 54.47%, which contributed as highest revenue earning segment in case of room rent section due to highest count as well as highest pricing. In 2014, the management re-organized room type by reducing ward bed and increasing cabin meanwhile further fine tuning in room type and modified rent could help to grow revenue further.
ALOS dropped to 4.79 days of 2015 from 4.87 days in 2014 which reflects the better capability to serve the patients as well as the progression over last three years. ARPOB had been increasing for last four years due to increasing number of visiting patients following higher revenue generation using same capacity. The volume of patients in both categories; inpatient and outpatient increased in 2015 which would be continued as reflected by the recent two- month data of 2016 showing upward trend in occupancy of 66.93% and other operation ratios indicating the steadiness regarding adjusted occupancy as well as operating efficiency ratios given no significant change in economic and industry scenario. STSHL has diversified service mix minimizing the concentration risk although there has been lower revenue from few major services due to high competition from local and international service providers. The Company saw count-wise growth in case of Consultancy department despite the regulatory constraint reflecting the more efficiency of work force and resource while the cost regarding Consultancy department increased in 2015. The Company earned BDT 397.9 million in 2015 from this department which was BDT 377.2 million in 2014 maintaining the 10.6% of contribution in revenue. The count of AHC as well as Surgery, one of the large profit generating services slowed down in 2015. The contribution to total revenue of surgery had been consistent over last three years which it stood 10.6% in 2015. In order to increase revenue more sturdily, the Company need to attract surgery patient by introducing more specialist. In 2015, the Surgery count 6,253 which was 6,920 in 2014 following 6,685 in 2013 which reflects slight volatility although the contrition of this department in total revenue remained unchanged to 10.6%. Revenue and utilization of other services had been increasing over the years while there is scope to increase revenue from core services (Surgeries, Check-up, and Cardiology) by utilizing maximum capacity which would lead revenue/profit to reach optimum level. Good mix of service focusing on Cardiology, Orthopedic, Nephrology, Neurology, Gastroenterology, OBS & Gyne and Pediatric & Neonatology aids in lowering the concentration risk. Although the Hospital has a plan to capture market of Oncology and nephrology triggered from lack of confidence of patients in local hospitals and international competition Apollo has opportunity to boost revenue by employing renowned specialist of Bangladesh and India.
Figure 01: Revenue Contribution of various departments
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Page: 36
Revenue from major contributing departments was volatile and contribution of few core departments was still low. Highest revenue earned from drug sales was marked as 22.1% of total revenue in 2015; due to healthy number of OP and increasing IP followed by revenues from Test labs and Consultation respectively. Modern lab equipment would help to retain the revenue in coming days as per the management expectation. Mostly, facility covering significant number of procedures earned ~8% of total revenue. Moreover, revenue from Radiology had been increasing steadily by providing better and service dependable result; contributing ~7% of total revenue. The Hospital could see higher growth in the segment by increasing reference by other hospitals.
Table 02: Service-wise performance in count (y-o-y)
Count and income from Apollo Health Check (AHC) decreased in 2015 which can be reasoned by political unrest at first quarter of the year. There had been improving scenario due to promotional steps taken in 2014 helping to increase count and income followed by decreasing trend from 2011 to 2013. STS Holdings Limited has been executing a plan to establish a hospital in Chittagong named STS Hospital Chittagong Limited as a subsidiary company of STS Holdings Limited. In spite of suspension of work for 6 months due to change in infrastructural design, the documentation phase and test pilling were completed in December 2015 while the construction work has been under process at present as per the schedule. STSHL has a plan to infuse equity fund fo finance the expansion project by issuing shares through IPO, which is subject to approval of concerned authority. The Company has a plan to start operation of the expanded facility by December 2018. Previously, to cater to the need of increasing number of Outpatients, the Company had a plan to enhance the availability of 65 OPD Consultation Rooms to 95 Rooms in 2015. However, due to strategic decision of management regarding more focus towards other profitable projects which would generate consistent revenue flow, this plan was dropped in 2015; there has been volatile nature of demand in case of OPD while the other projects are expected to contribute to the earnings in more promptly, the strategic planning was modified accordingly to achieve the long term goal of the Company.
Increased Accessibility and Distributed Presence of AHD‟s services Accessibility to Apollo quality is enhanced through setting up Outpatient Consultation Cum Diagnostic Service Centers under the brand name “STS Life Care Centers” in different strategic locations in Dhaka city. The planned Centers are minimum 3 in the next 2 years and 1st one is already operational in Dhanmondi. These centers act as direct referral feeders to the Main Hospital. These are asset-light models that would be housed in rental premises. STS Pharmacy Chain-Planning to set up at least 20 Pharmacies in the next few years. The first one is operational at Sylhet. In 2016, the Company has a plan to establish 5 Pharmacies in Dhaka, Chittagong and Khulna by investing BDT 2 million.
Red-Herring Prospectus: STS Holdings Limited
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Increased focus on sub specialties and Supra major procedures To limit the prospective patients who intend to going abroad for sub-specialty and super-specialty clinical services, there is a huge opportunity to retain with provision of supra major services. AHD has started adding many super-specialty Consultants such as Interventional Radiologist, Hematology Oncologist specialized in Bone Marrow Transplantation, Transplant Urology Surgeons for kidney transplantation, Hepatologist for Liver disorders, Pediatric Cardiology, Onco Hystopathologist, Pediatric Pulmonology etc. Tapping the potential of the increased disease profile of the Country It is an established fact that the Country suffers a lot from certain specific diseases such as Gastrointestinal disorders, Chronic Kidney Diseases and various forms of Cancers. Hence AHD has decided to triple the infrastructure and Clinical manpower capabilities in Gastroenterology and Nephrology. Accordingly, one of the vacant floors have been earmarked to create a world class Gastro suite involving minimum 4 or 5 clinical Consultants and a Comprehensive Kidney Care Centre with facility for 40 state-of –the –art Dialysis machines. For introducing this facility, the Company has a plan to invest BDT 100 million along with incurring cost of BDT 220 million regarding replacement as well as renovation making the total investment of BDT 320 million which is targeted to be finished by March 2016. Special attention to enhancing Comprehensive Cancer Care Infrastructure and team AHD is shortly coming up with a state of the art Cancer Centre with the most modern Radiation Oncology, Hematology Oncology, Surgical Oncology and Bone Marrow Transplantation facilities within the present hospital building itself. The Radiation facility will contain the latest Image Guided Radio Therapy System, Brachy Therapy System, C.T Simulator and Treatment Planning System. Also getting added are 4 most modern Modular Operation Theatres making the total number of O.Ts in the hospital to 13. This facility is supposed to address the increasing demand for supra major surgical procedures in the hospital. Three positive pressure rooms have been created with the latest machines for conducting both Autologous and Allogeneic bone marrow transplantations of the highest international standards and quality. The Company outlays the plan of investing BDT 150 million for construction work and BDT 400 million for medical equipment in order to establish this facility which has been targeted to be opened June FY16. Import LCs have been in process for the procurement of the medical equipment from USA and UK. The infrastructural portion would be financed by equity investment while the expenditure regarding medical equipments would be financed by bank loan facilities.
Table 03: Cost incurred (Mil. BDT)
Cancer Care Project Expenditure Particulars Cost Incurred Order placed Civil Works 23.7 Consultancy Fee 10.3 PET-CT-Scanner 95.8 Order placed Linier Accelerator 160.0 Order placed Gamma Probe 2.4 Total 292.2
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Adding the specialist Clinical Consultants from different parts of the world and the required infrastructure AHD has the maximum number of expert Consultants in Bangladesh taken from the top Institutes in Asia as well as from U.K. At December 2015, AHD has appointed 74 senior Consultants which were 76 in December 2014 in order to cater to the demand for super specializations. In order to ensure uninterrupted power supply the Company arranged various alternative sources of electricity for its Apollo Hospitals Dhaka with no change in previous year. The Waukesha gas generator of USA with the capacity of 1.5 MW. Hospital had been connected through DESCO line as backup was the main source of power for Apollo Hospitals Dhaka. Moreover, two diesel generators with the capacity of 1.20 MW and 0.64 MW respectively are kept on stand-by to cover emergency period.
Red-Herring Prospectus: STS Holdings Limited
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(vii) Following details of underwriting:
a) The names, addresses, telephone numbers, fax numbers, contact persons and e-mail addresses of the underwriters and the amount underwritten by them;
Names & Address Telephone & Fax No. and E-mail
Address Contact Person
Amount Underwritten
% of Total Underwriting
AFC Capital Limited Saiham Sky View Tower (11th Floor), 45 Bijoy Nagar, Dhaka-1000.
b) Declaration by the underwriters that they have sufficient resources as per the regulatory requirements to discharge their respective obligations; All the underwriters have sufficient resources as per the regulatory requirements to discharge their respective obligations which are disclosed in CHAPTER (III) under Due Diligence Certificate by The Underwriter(S) page number 14-23.
c) Major terms and conditions of the underwriting agreements.
(i) The IPO shall stand cancelled if at least 65% in any category of the IPO is not subscribed.
(ii) In case of under subscription in any category by up to 35% of the IPO the under-subscribed securities shall be taken up by the underwriters.
(iii) Notwithstanding anything contained in the agreement in case of inconsistency between the provision of the agreement and the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the Public Issue Rules shall prevail.
(iv) Prior to publication of the prospectus, the Company shall have obtained consent from the Bangladesh Securities and Exchange Commission permitting the issue as described in Article 2.01 and providing for payment of underwriting commission 0.50% (zero point five zero percent) on the amount underwritten.
(v) The Issuer shall within 10 (Ten) days of the closure of subscription call upon the
underwriter in writing with a copy of said writing to the Bangladesh Securities and Exchange Commission, to subscribe for the shares not subscribed by the closing date and to pay for in cash in full for such unsubscribed shares within 15 (Fifteen) days of the date of said notice and the said amount shall have to be credited into shares subscription account within the said period.
(vi) In any case within 7 (seven) days after the expiry of the aforesaid 15 (fifteen) days,
the Company shall send proof of subscription and payment by the Underwriters to the Commission.
In the case of failure by the underwriter to pay for the shares within the stipulated time, the Company/Issuer will be under no obligation to pay any underwriting commission under this Agreement.
Red-Herring Prospectus: STS Holdings Limited
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(c) Capital Structure:
(i) Authorized, issued, subscribed and paid up capital (number and class of securities, allotment dates, nominal price, issue price and form of consideration);
After IPO: To be issued as IPO [*] Ordinary Share - - [*] 750,000,000 Paid up capital (Post IPO)
[*] Ordinary Share - - [*] - [*]
Notes: 1: The Company however has subdivided the face value of its ordinary share from Tk. 100.00 to Tk. 10.00 by passing a special resolution in its extraordinary general meeting held on 29th December, 1997 and necessary amendments in the capital clause of the Memorandum and Articles of Association were made accordingly. Hence, the paid-up capital of the Company comes to Tk. 1,509,450,000 divided into 150,945,000 ordinary shares of Tk. 10.00 each.
2: Mentionable here that from 6th allotment to 9th allotment issue price was Tk. 25.00.
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(ii) Size of the present issue, with break-up (number of securities, description, nominal value and issue amount);
Particulars Percentage No. of Ordinary Shares Nominal Value Issue price Issue Amount (Taka)
Initial Public Offering
through Fixed Price
Method
Eligible investors
(EIs)
Mutual Funds 10% [*]
10.00 [*]
[*]
Other EIs 50% [*] [*]
General public NRB 10% [*] [*]
Others* 30% [*] [*]
Total 100% [*] 750,000,000
Other*: [*] Ordinary shares will be reserved for General Public and Small Affected Investors.
(iii) Paid up capital before and after the present issue, after conversion of convertible instruments (if any) and share premium account (before and
after the issue);
Paid up Capital (Amount in Tk.) After Conversion of Convertible Instruments
Share Premium Account (Amount in Tk.) Before the Present Issue After the Present Issue Before the Issue After the Issue
1,509,450,000 [*] The Company has no convertible instrument.
614,925,000 [*]
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(iv) Category wise shareholding structure with percentage before and after the present issue and after conversion of convertible instruments (if any);
The paid-up capital of the Company is Tk. 1,509,450,000.00. The Company intends to issue [*] ordinary shares of Tk. 10.00 each at an issue price of Tk. [*] through Initial public offering (IPO) totaling to Tk. 750,000,000.00 under book building method subject to regulatory approvals. The Company has no convertible instrument.
Category wise shareholding structure with percentage before and after the present issue is as follows:
Sl. No.
Category of Shareholders No. of Ordinary Shares Hold Percentage of Holding
Total 150,945,000 [*] 100.00% [*] (v) Where shares have been issued for consideration in other than cash at any point of time,
details in a separate table, indicating the date of issue, persons to whom those are issued, relationship with the issuer, issue price, consideration and valuation thereof, reasons for the issue and whether any benefits have been accrued to the issuer out of the issue; The Company did not issue any of its ordinary shares for consideration in other than cash at any point of time.
(vi) Where shares have been allotted in terms of any merger, amalgamation or acquisition
scheme, details of such scheme and shares allotted;
The Company has not allotted any shares in terms of any merger, amalgamation or acquisition scheme.
(vii) Where the issuer has issued equity shares under one or more employee stock option
schemes, date-wise details of equity shares issued under the schemes, including the price at which such equity shares were issued; The issuer has not issued equity shares under one or more employee stock option schemes.
(viii) If the issuer has made any issue of specified securities at a price lower than the issue price during the preceding two years, specific details of the names of the persons to whom such specified securities have been issued, relation with the issuer, reasons for such issue and the price thereof; The issuer has not made any issue of specified securities at a price lower than the issue price during the preceding two years.
(ix) The decision or intention, negotiation and consideration of the issuer to alter the capital structure by way of issue of specified securities in any manner within a period of one year from the date of listing of the present issue;
The Company has no such decision or intention, negotiation and consideration to alter the capital structure by way of issue of specified securities in any manner within a period of one year from the date of listing of the present issue.
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(x) The total shareholding of the sponsors and directors in a tabular form, clearly stating the names, nature of issue, date of allotment, number of shares, face value, issue price, consideration, date when the shares were made fully paid up, percentage of the total pre and post issue capital, the lock in period and the number and percentage of pledged shares, if any, held by each of them;
Name & Position Nature of
Issue
Date of Allotment and Acquisition & date of shares
fully paid-up No. of shares
Face Value
Issue Price
Consideration Pre IPO
% Post
IPO % Lock in Period*
Number & % of pledge of shares
Name: Bhagwan W. Kundanmal (Nominated by STS Capital Limited) Position: Chairman
Ordinary
04.10.2009 6,275,000 10.00 25.00
Cash 6.64% [*] 3 Yrs No Pledge 05.04.2010 (Transfer)
3,750,000 10.00 25.00
Total 10,025,000
Name: Khondoker Monir Uddin Position: Managing Director
Total 100,000 Name: Chaklader Mansurul Alam Position: Independent Director
- - - - - - - - - -
Name: Dr. Raajiv Singhal Position: Independent Director
- - - - - - - - - -
[*From the issue date of Prospectus]
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(xi) The details of the aggregate shareholding of the sponsors and directors, the aggregate number of specified securities purchased or sold or otherwise transferred by the sponsor and/or by the directors of the issuer and their related parties within six months immediate preceding the date of filing the red-herring prospectus; Aggregate shareholding of the directors and sponsors:
Sl. Name of Sponsor & Director Position Number of Ordinary
Shares Held
Percentage
Pre-IPO Post-IPO
1 Bhagwan W. Kundanmal (Nominated by STS Capital Ltd.)
Chairman 10,025,000 6.64% [*]
2 Khondoker Monir Uddin Managing Director & Director
31,335,750 20.76% [*]
3 Mohammad A. Moyeen Director 8,246,250 5.46% [*]
4 Tipu Munshi (Nominated by Sepal Holdings Ltd.)
Director 10,945,000 7.25% [*]
5 Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Ltd.)
Director 14,970,000 9.92% [*]
6 Sepal Garments Ltd. Sponsor 100,000 0.07% [*]
7 Chaklader Mansurul Alam Independent
Director - - -
8 Dr. Raajiv Singhal Independent
Director - - -
Total 75,622,000 50.10% [*] Aggregate number of specified securities purchased or sold or otherwise transferred by the sponsor and/or by the directors of the issuer and their related parties within six months immediate preceding the date of filing the red-herring prospectus: No share is purchased or sold or otherwise transferred by the sponsor and/or by the directors of the issuer and their related parties within six months immediate preceding the date of filing the red-herring prospectus
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(xii) The name and address of any person who owns, beneficially or of record, 5% or more of the securities of the issuer, indicating the amount of securities owned, whether they are owned beneficially or of record, and the percentage of the securities represented by such ownership including number of equity shares which they would be entitled to upon exercise of warrant, option or right to convert any convertible instrument;
Sl. Name of the Shareholders Address Number of Shares
As far as the existing information is concern, there is no event or intent of exercising warrant, option or right to convert any convertible instrument.
(xiii) The number of securities of the issuer owned by each of the top ten salaried officers, and all other officers or employees as group, indicating the percentage of outstanding shares represented by the securities owned. There is no officer/executive in STS Holdings Limited who holds any shares of the Company individually or as a group.
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(d) Description of Business:
(i) The date on which the issuer company was incorporated and the date on which it
commenced operations and the nature of the business which the company and its subsidiaries are engaged in or propose to engage in; Company Profile: STS Holdings Limited STSHL was formed initially as a private limited company under Companies Act 1994 and
incorporated in Bangladesh in the year 1997 bearing Registration No. C-33709(455)/97
dated 28.08.1997 and subsequently converted as a public limited company in 22
February 2006. On 16 April 2005 the company commences its commercial operation. Nature of Business: STS Holdings Ltd. (As per Audit report) The company has been formed with the object of engaging in healthcare services of
international standard. As a pioneering venture, it has established a super specialty
tertiary care hospital named Apollo Hospitals Dhaka (AHD) with the franchise and
assistance of Apollo Hospitals Enterprises Limited, India. By virtue of separate Operations
Management Agreement and Franchise Agreement AHD uses the expertise, skills, know-
how and technical services of Apollo Hospitals Enterprises Limited, India for
commissioning, managing and operating this international standard super specialty
hospital. Apollo Hospitals Dhaka is located at Plot No. 81, Block No. E, Bashundhara R/A,
Dhaka-1229, Bangladesh.
Nature of Business of two subsidiaries companies as per audit report of STS Holdings Ltd. are given as follows: STS Hospital Chittagong Ltd., (a Private Ltd. company) The Company has been formed with the object of setting up of an international standard
super specialty tertiary care hospital named Apollo Hospitals Chittagong (AHC) with the
franchise and assistance of Apollo Hospitals Enterprises Limited, India. By virtue of
operations and management agreement, Apollo Hospitals Chittagong (AHC) will use
technical services of Apollo Hospitals Enterprises Limited, India for operating this
international standard super specialty hospital. The hospital project is expected to be
completed and come to operation by the year 2018.
Metionabele here that the construction of the said hospital is not yet complted and the
whole IPO proceeds (Tk.75.00 Crore) will be invest to the subsidiary company by the
parent company STS Holdings Ltd.
STS Hospitals Ltd. (a Private Ltd. company) STS Hospitals Ltd. a Private Limited Company is engaged in primary health care facilities
covering outdoor patient services, diagnostic services, retail pharmacy and other health
care related services required for the purpose of human life.
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(ii) Location of the project;
STS HOLDINGS LTD (a Private Ltd. company): Project: Apollo Hospital Dhaka Address: STS Tower, Plot#346/A & 347, Road#12, Block #D, Bashundhara R/A, Dhaka-1229. Project location of two Subsidiary Companies of STS Holdings Ltd. are given as follows: STS HOSPITAL CHITTAGONG LTD (a Private Ltd. company): Project: Apollo Hospital Chittagong Address: Plot No. H-1, Ananya Residential area of CDA, Hathazari , Chittagong. STS HOSPITAL LTD: Project: Life Care Centre Dhanmondi Address: STS Hospital Ltd, House # 3 Sheikh Kamal Sarani, Road-16, Shima Blossom, Level- 3, Dhanmondi, Dhaka-1209 Project: STS Pharmacy Sylhet Address: 28, Modhushahid, New Medical Road, Sylhet
(iii) Plant, machinery, technology, process, etc.
Apollo Hospitals Dhaka has deployed the latest state-of –the- art technology in all areas such as Hospital Information System, Electronic Patient Records, Radiology Information System and Picture Archival Communication System, etc. Among the major clinical equipment deployed, the major ones are 1.5 Tesla, high speed, Superconducting MRI system, 64 Slice CT Scanner, Nuclear Gamma Camera, 2nos of most modern Flat Panel digital Catheterization labs for all types of Cardiac and other interventional procedures. Within 3 months, the hospital will be installing the latest Digital Image Guided Radio Therapy System, Brachy Therapy System, Positron Emission Tomography coupled with 16 Slice C.T Scanner which are all meant for most precise cancer radiation treatment. The comprehensive Cancer Centre will be capable of treating the smallest brain tumor of size less than 2.5 mm diameter after installing these mechneries.
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(iv) Details of the major events in the history of the issuer, including details of capacity/facility creation, launching of plant, products, marketing, change in ownership and/or key management personnel etc.;
History of the Issuer
The Compnay has incorporated as a Private Limitrd Company on August 28, 1997
The Compnay has converted into a Private Limitrd Company to Public Limited Company on February 22, 2006 The Compnay has change of face value of share from Tk.100/- to Tk.10/- on
December 29, 1997 Last Capital raise of Tk. 62,750,000.00 (Cash consideration) on October 04, 2009.
Franchise Agreement
STS Holdings Ltd. signed a franchise agreement with Apollo Hospital Enterprises Ltd. (AHEL), a Franchiser incorporated under the laws of India, and having its registered office at no.19 Bishop Gardens, R.A. Puram, Madras 600-028 on 25th day of June 1998.
Capacity/facility creation and Services
Installed capacity License capacity No. of
Operational % of Capacity
Utilization
450 beds 360 beds 324 beds 60% But there are other major services/facilities provided by the hospitals that are not measurable in unified capacity like the following:
a. Out-patient Services. b. Laboratory Tests/ Diagnostics- c. Surgery d. Procedure e. Specialty wise Tests f. Pharmacy
The capacities of all these diversified services depends on availability to expert qualified doctor in particular specialty, qualified technicians and also various categories of equipment which are variable in nature and cannot exactly be fixed for a certain period.
Launching of plant The Compnay has started its commercial operation on April 16, 2005
Marketing
Arranging the health care awareness program Commercial advertisment (Electronic media and newspaper) Social media advertising Keep patients on track with personalized hospital communication
Change in ownership and/or key management personnel
Annesha Mahial Bagwan Kundamal, sponsor of the issuer company has been sold her entire share. Chaklader Mansurul Alam, on 17.02.2014 and Dr. Raajiv Singhal, on 17.09.2015. The appointment of Dr. Raajiv Singhal will be approved in next AGM. Mr. R. Basil has resigned in the year 2016. His last working day was on 26/06/2016. Dr. Ratnadeep Chaskar, CEO (Current Charge) has joint on 04/07/2016.
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(v) Principal products or services of the issuer and markets for such products or services. Past
trends and future prospects regarding exports (if applicable) and local market, demand and supply forecasts for the sector in which the product is included with source of data;
Medical Services: The issuer provides medical services to its customers. There are more than 30 specialized departments and services in the hospital, which are as follows:
Pathology services:
In the hospital of the Company following diagnostic, laboratory and other services are provided round-the-clock to satisfy the requirements of the patients.
1.5 Tesla MRI Video endoscopy Transplantation Immunology Spiral Whole Body CT Scanner Mammography Transfusion Medicine
(64Slice) with CT Coronary Angiogram
ECG 24-hours Emergency
Gamma Camera Treadmill Physiotherapy Centre X-ray Units Echocardiography Health Check Centre
Cardiac Catheterization Laboratories Histopathology Critical Care Units Biochemistry Real Time PCR Lab Patient Rooms and Wards Hematology Dexa BMD Fibroscan
Holmium Laser Lithotripsy Machine
The Hospital also provides 24 hours‟ pharmacy service to the patients.
APOLLO BONE & JOINTCENTRE
Orthopedics APOLLO
DIAGNOSTIC CENTRE
Diagnostic Modalities Rheumatology Radiology & Imaging Knee Centre Laboratory
Physical Medicine & Rehabilitation
Blood Bank
APOLLO KIDNEY & UROLOGY CENTRE
Nephrology APOLLO PRIMARY
CARECENTRE
Internal Medicine Urology Endocrinology
Renal Transplant Gastroenterology Dialysis
Respiratory Medicine Andrology
APOLLO NEUROSCEINCE
CENTRE
Neurology
APOLLO SURGICAL
CENTRE
General Surgery Neurosurgery Laparoscopic Surgery
Neuro Rehabilitation ENT Neuro ICU Plastic Surgery
Neuro Anesthesia Anesthesia
Surgical ICU
APOLLO HEART CENTRE
Cardiology APOLLO
ACCIDENT & EMERGENCY
CENTRE
Accident & Emergency
Interventional Cardiology Cardiothoracic Surgery
Cardio-Pulmonary Rehabilitation
Coronary Care Unit
APOLLO MOTHER & CHILD CENTRE
Obstetrics/Gynecology
APOLLO THERAPEUTIC
CENTRE
Dermatology Fertility Centre Medical Oncology
Pediatrics Ophthalmology Pediatric Surgery Dentistry
Net Revenue 3,789,300,061 3,565,717,280 3,148,834,681 3,070,982,441 2,590,477,890
Future Prospects:
Apollo Hospitals Dhaka continues to expand its services in primary and secondary care, plus selective tertiary services. AHD is shortly coming up with a state of the art Cancer Centre with the most modern Radiation Oncology, Hematology Oncology, Surgical Oncology and Bone Marrow Transplantation facilities within the present hospital building itself. The Radiation facility will contain the latest Image Guided Radio Therapy System, Brachy Therapy System, C.T Simulator and Treatment Planning System. Also getting added are 4 most modern Modular Operation Theatres making the total number of O.Ts in the hospital to 13. This facility is supposed to address the increasing demand for supra major surgical procedures in the hospital. Three positive pressure rooms have been created with the latest machines for conducting both Autologous and Allogeneic bone marrow transplantations of the highest international standards and quality. Recently STS Holdings Ltd has built 5 new operation theaters in F block area of Apollo Hospitals Dhaka to increase their capacity.
We are going to have our second facility in Chittagong very soon at Plot-H1 of CDA Anannya Residential Area with a total land area of 86.7136 Katha. STS Holdings Limited, the sponsor company of the hospital, has already completed formal registration and acquisition of the land from CDA. With an excellent ultramodern and panoramic view, internationally acclaimed architectural consultants has designed the 346-beds Apollo Hospitals Chittagong having multi-disciplinary super specialty facility poised to deliver advanced care of international standard to the people of Chittagong and adjacent areas. STS has an aggressive plan to start operation of Apollo Hospitals Chittagong within the next 2 years to meet the demand of people of that locality to have an integrated health care service delivery institution. So we are expecting tremendous growth trend in near future.
(vii) If the issuer has more than one product or service, the relative contribution to sales and income of each product or service that accounts for more than 10% of the company‟s total revenues;
Particulars
2015 2014
(Consolidated) (The Company) (Consolidated) (The Company)
(vii) Description of associates, subsidiary and holding company of the issuer and core areas of business thereof;
STSHL has no associates company. It has two subsidiary companies: Name of the Company Core Area of Business
STS Hospitals Ltd. (A Private Limited Company)
Under the banner of STS Hospitals Ltd., the Company has launched two major initiatives viz: STS Life Care Centre and STS Pharmacies. The Life Care Centre has started its operations at Dhanmondi in order to offer increased accessibility to our customers residing in and around that area. The STS Pharmacy was opened at Sylhet offering comprehensive services such as outpatient consultations, home delivery of medicines, etc.
STS Hospital Chittagong Ltd. (A Private Limited Company)
The Company has been formed with the object of setting up of an international standard super specialty tertiary care hospital named Apollo Hospitals Chittagong (AHC) with the franchise and assistance of Apollo Hospitals Enterprises Limited, India. By virtue of operations and management agreement on 17 September 2015 Apollo Hospitals Chittagong (AHC) will use technical services of Apollo Hospitals Enterprises Limited, India for operating this international standard super specialty hospital. Apollo Hospitals Chittagong. The hospital project is expected to be completed and come to operation by the year 2018.
(viii) How the products or services are distributed with details of the distribution channel.
Export possibilities and export obligations; The STS Holding Ltd. has set up a at Dhaka in the name of Apollo Hospitals Dhaka (AHD) by virtue of franchise agreement with Apollo Hospital Enterprises Ltd. (AHEL) on 25th day of June 1998 to provide high standards of health care service and to set up a hospital at Chittagong under a subsidiary Company named STS Hospital Chittagong Ltd. (a private limited company. As a service provided Company, there is no export possibilities and export obligations for the Company.
(ix) Competitive conditions in business with names, percentage and volume of market shares of major competitors;
Competitors
International Hospital chains have started operating in Bangladesh. Mostly they are
serving the upper and middle income group. Various local conglomerates extended their
services in this sector. In this sector the Major Competitors are:
SQUARE Hospital Ltd.
United Hospital Ltd.
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(x) Sources and availability of raw materials, names and addresses of the principal suppliers and contingency plan in case of any disruption; The Company, being a service provider, operates on the basis of professional expertise
relevant to healthcare industry. Its product is a service and its core raw materials are
human resources. The company has been providing the services by experienced
professionals recruited from the existing health industry operators within Bangladesh and
also from outside. The company has also initiated training programs for training fresh
graduates for development of its growing need of human resources. Moreover, for
ensuring quality services, consumables & medicines are being procured through genuine
sources preferring renowned manufacturer within the country and abroad.
The Company classifies its supplier broadly into three groups. Following are the main supplier in different category: Material Suppliers:
Suppliers‟ Name Address Bio Trade International 15/2, Topkhana Road, BMA Bhaban, Dhaka Cardiac Care Limited 476/c Malibagh DIT Road (3rd Fl), Dhaka-1219. Cardiac Solution Road # 4, Plot # 2, Section # 10, Block # A, Mirpur,
Vastech Ltd. Reg: Helena Centre (2nd Floor), New Eskaton Road, Cor: Nurjehan Tower, Suit# G-1,80/22 Mymensingh Road
The Spondon Ltd. BSEC Bhaban, 5th Floor, 102, Kazi Nazrul Islam Avenue, Kawran Bazar,
Unihealth Limited House # 5/8, Block # C, Lalmatia, Dhaka-1207. Ahsan Medical Hall 217 Mitford Road, Ahsan Market, Kawran Bazar,
Orient Export Import Co Ltd. Flat No: D3, Level -3, Plot No: 2/2, Iqbal Road, Block A, Mohammadpur, Kawran Bazar,
Contengency Plan: STS Holdings Ltd selects the vendors based on technical and commercial comparison. There are alternative products and services available locally and globally. In case of non-supply from one supplier, will lead the company to other suppliers of this product or to the alternative products or technics.
M.d. Traders B-400/26, Shopping Center, 3rd Floor, Gulshan-1
(xi) Sources of, and requirement for, power, gas and water; or any other utilities and contingency plan in case of any disruption;
Utilities Requirements Sources and contingency plan in case of any
disruption
Power 2.5 MW
Gas Generator is the main source of power for Apollo Hospitals Dhaka. The Waukesha gas generator of USA has the capacity of 1.5 MW. Hospital has BPDB line as backup. Furthermore, a diesel generator with the capacity of 0.64 MW and is kept on stand-by to cover emergency period.
Water 5-6 lac liters/per day
The hospital has its own water pump which supplies ground water for general purposes, with a general requirement of approximately 5-6 lac liters per day. It also has its own water purification system which purifies ground water for drinking purposes - approximately 3,000 liters per day.
Gas
7,700 CuF/Hr (149,139.02 CuM/Month) @ 10 PSI for Gas Generators
The hospital uses gas line from Titas Gas Transmission and Distribution Company Ltd. Apart from usage by the gas generators; gas is also required to generate steam and is also used in the kitchens.
Bangladesh Power Development Board (BPDB) line. Total power requirement is 2.5 MW.
Main source of power is Gas Generators, Backup power source is BPDB line and for
handling emergency situation diesel Generators are kept as stand by and also un-
interrupted power supply (UPS) Systems are meant to provide un interrupted power
supply to critical areas, namely Operation Theatres, ICUs, Server Rooms, Dialysis Unit,
Major Diagnostic Equipments, etc. in event of any main power failure. In the event that
power from the major supply grid fails, UPS systems enable a continuous supply of power
to all critical areas. Alternate power supply from diesel generators becomes operational
within seconds. So our contingency plan is Backup power source & Emergency situation
handling power source for ensuring un-interrupted power supply.
For water supply, Apollo Hospitals Dhaka has own water pump & own water purification
system which is fulfilled our full requirement properly since inception. So our
contingency plan is ensuring for uninterrupted water supply. For Gas supply, Apollo Hospitals Dhaka has the gas line from Titas Gas Transmission and
distribution Company which is fulfilled our full requirement properly since inception. So our contingency plan is ensuring for uninterrupted Gas supply.
(xii) Names, address(s), telephone number, web address, e-mail and fax number of the
customers who account for 10% or more of the company‟s products/services with amount and percentage thereof; The Company’s products or services are sold to various customers. The Company has no
customer who purchases10% or more of the Company’s products/services.
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(xiii) Names, address(s), telephone number, web address, e-mail and fax number of the suppliers from whom the issuer purchases 10% or more of its raw material/finished goods with amount and percentage thereof; Suppliers from whom the issuer purchases 10% or more of its raw material/finished goods are as follows:
Sl. Name & Address Telephone & Fax Number Web Address E-mail %
(xiv) Description of any contract which the issuer has with its principal suppliers or customers showing the total amount and quantity of transaction
for which the contract is made and the duration of the contract. If there is not any of such contract, a declaration is to be disclosed duly signed by CEO/MD, CFO and Chairman on behalf of Board of Directors;
We, on behalf of the Board of Directors certify that STS Holdings Limited did not enter into any contract with its principal suppliers or
(xv) Description of licenses, registrations, NOC and permissions obtained by the issuer with issue, renewal and expiry dates;
STSHL has several regulatory licenses and certificate in order to continue its operation. The table below lists the Company’s licenses and certification that are material:
Certificate of Incorporation Registrar of Joint Stock Companies and Firms C-33709 N/A
Certificate of Commencement of Business RJSC N/A Incorporated as a
private Ltd. company
TIN Certificate National Board of Revenue 129266364392 N/A
VAT Certificate Customs, Excise and VAT Commissionerate 18141091770 N/A
Trade License Vatara Union Parishad 0012 30.06.2017
Import Registration Certificate Office of the Chief Controller of Export & Import
174468 30.06.2017
Fire License Fire Services & Civil Defense 19323/06 30.06.2017
Certificate from Department of Environment Department of Environment Dhaka N/A 01.12.2016
BOI License Board of Investment Bangladesh J-300002014063-H N/A
License for Running Private Hospital Director General of Health 1208* 30.06.2016
License for Pathological Lab Director General of Health 2280* 30.06.2016
Drug License Drug Administration DC-6516/A & DC-6516/B
02.11.2018
License for Use of Narcotics Narcotics Control Department, Dhaka 88/2005-2006 30.06.2017
JCI Accreditation for Quality Joint Commission International (JCI) CN 1251.1 24.05.2017
Certificate from Chamber Foreign Investors' Chamber of Commerce & Industry
449 30.06.2017
License for running Blood Bank Director General of Health 02 19.04.2017
License for production & use of Captive Power Bangladesh Energy Regulatory Commission CPP-0109** 30.05.2016
* We have applied for this renewal on 19/07/2016. But still it is under process.
**We have applied for this renewal on 29/05/2016. But still it is under process.
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(xvi) Description of any material patents, trademarks, licenses or royalty agreements; The Company neither obtained any Patent, Right/Trademarks nor signed any royalty agreement with any party. However, it has several regulatory licenses, franchise agreement, operations management agreementand certificate in order to continue its operation.
A. FRANCHISE AGREEMENT STS Holdings Limited is in Franchise agreement with Apollo Hospitals Enterprise Limited
(AHEL). Under the agreement STSHL shall use the name „Apollo Hospital‟ as a franchise,
as well as use the „Apollo‟ logo. This represents operation management fees payable to AHEL (Apollo Hospitals Enterprise
Ltd) as per agreement dated 25th day of June 1998 and supplemental agreements of
different dates. According to the 2nd Supplementary Agreement dated 28 January 2002,
every year for the first seven and half years, the fees payable are:
Fixed advance payment: Fixed sum of INR. 4,000,000/-(Four Million only) shall be paid in advance for first 2
years and in 4 equated quarterly installments for the remaining subsequent periods.
Revenue payment rate: 1% of the gross revenue of the hospital business and Quaterly Payment Description in any year: 5% of profit before depreciation and tax (PBDT) shall be paid on quarterly basis based on
provisional accounts drawn at the end of each quarter. However, the cumulative payment
under the above will not exceed BDT 30,000,000 (Thirty million) in any one year. Fixed royalty payment per annum: The royalty payable to AHEL (Apollo Hospital Enterprise Limited) India, @ INR 50,000 per
annum as per agreement dated 25th day of June 1998. The agreement is valid up to April
2020.
B. OPERATIONS MANAGEMENT AGREEMENT
STS Holdings Limited is in agreement with Apollo Hospitals Enterprise Limited (AHEL) to
manage the operations of the hospital for 15 years;
Operation Management fees payable to AHEL (Apollo Hospitals Enterprise Ltd) as per
agreement dated 25 June 1998 and supplemental agreements of different dates.
According to the 2nd Supplementary Agreement dated 28 January 2002, every year for
the first seven and half years, the fees payable are:
Fixed advance payment: Fixed sum of INR. 4,000,000/-(Four Million only) shall be paid in advance for first 2
years and in 4 equated quarterly installments for the remaining subsequent periods.
Revenue payment rate: 1% of the gross revenue of the hospital business and
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Quaterly Payment Description in any year:
5% of profit before depreciation and tax (PBDT) shall be paid on quarterly basis based on
provisional accounts drawn at the end of each quarter. However, the cumulative payment
under the above will not exceed BDT 30,000,000 (Thirty million) in any one year.
Other Terms and Conditions: AHEL fixes tariff for medical services, rooms, commercial space, food and beverage
service, employment policies, credit policies etc.
AHEL provides all the pre-commissioning plans with respect to promotional programs,
recruitment of employees as well as defining their responsibilities and required training to
the employees.
AHEL recruits‟ employee, conducts training programs, makes resource books,
publications, research papers available relating to medical management;
AHEL develops and implements operating policies, MIS and procedures, institute
reporting, control and monitoring systems;
In order to ensure standard of medical care, AHEL acts as a prudent operator of the
medical facility, acts in a manner, which preserves the character, standard, and
reputation of the medical facility;
Helps operation of the Hospitals by appointing some key Personnel (CEO, Director
Medical Services, Director Nursing, Director Operations)
(xvii) Number of total employees and number of full-time employees;
Particulars Full Time Employee Part Time Employee Total Above BDT. 3,000 1,763 Nil 1,763 Below BDT. 3,000 Nil Nil Nil
(xviii) A brief description of business strategy;
Our Business Strategy is focused achieving our vision of becoming a premier International Healthcare destination with comprehensive super specialty excellence touching lives with care and empathy. Towards accomplishing this, we continuously focus on 4 measurable parameters such as 1. Clinical Excellence; 2. Patient friendliness; 3. Transparency and ethical practice and 4. Cost effectiveness.
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(xix) A table containing the existing installed capacities for each product or service, capacity utilization for these products or services in the previous years, projected capacities for existing as well as proposed products or services and the assumptions for future capacity utilization for the next three years in respect of existing as well as proposed products or services. If the projected capacity utilization is higher than the actual average capacity utilization, rationale to achieve the projected levels.
Other major services/facilities provided by the hospitals that are not measurable in unified capacity like the following:
a. Out-patient Services. b. Laboratory Tests/ Diagnostics c. Surgery d. Procedure e. Specialty wise Tests f. Pharmacy
The capacities of all these diversified services depends on availability to expert qualified doctor in particular specialty, qualified technicians and also various categories of equipment which are variable in nature and cannot exactly be fixed for a certain period.
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(e) Description of Property:
Contain the following information in respect of properties of the issuer namely: -
(As per Audited Accounts as of 31December, 2015)
Category of Assets Net book value at
31 Dec 2015 (Consolidated)
Net book value at 31 Dec 2015
(The Compamy)
Land and land development 4,947,292,842 4,947,292,842
Building 1,136,073,814 1,136,073,812
Computer and IT equipment 34,674,244 30,822,579
Furniture and fixture 41,621,994 36,811,273
Library Books 554,654 554,654
Medical and surgical equipment 273,719,867 260,670,883
Office equipment 2,483,106 2,397,856
Housekeeping equipment 911,989 898,025
Air conditioning plant and air conditioners 68,114,321 63,099,117
Electrical installations, generators, boiler, elevator etc. 105,124,594 100,136,980
Office decoration 14,348,076 1,537,693
Vehicles 20,685,982 20,685,982
Total at 31 December 2015 6,645,605,483 6,600,981,696
(i) Location and area of the land, building, principal plants and other property of the
company and the condition thereof; STS Holdings Limited has its Apollo Hospitals Dhaka located in Bashundhara Residential Area measuring land area 400.3 Decimal. Apollo Hospitals Dhaka is glass-wrapped 11-storied building with around 435,000 Sft area that can accommodate 450 beds. Hospital has adequate gas generator and diesel generator. Also the hospital has state-of-the-art diagnosis and investigations equipment. The Company has acquired another land from Chittagong Development Authority (CDA) in Ananya Residential Area measuring 143.11 (86.7316 Katha) Decimal to set up a standard hospital in Chittagong.
(ii) Whether the property is owned by the Company or taken on lease; All the assets of the Company are in its own name except which is disclosed in the section Operating Lease Agreement during last five (5) years and Financial Lease Agreement during last five (5) years.
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(iii) Dates of purchase, last payment date of current rent (LvRbv) and mutation date of lands, deed value and other costs including details of land development cost, if any and current use thereof;
Deed No. Dates of purchase
Last Payment Date of Current
Rent (LvRbv)
Mutation Date R. S Dag No. Deed Value
(Taka)
Other Costs including details of Land Development
Cost
Area of Land (Decimal)
Current Use
6070 29.04.1998 26.04.2015
for 1422 23.02.2012 2301, 2202 1,235,000
204,579,098
203.80
Apollo Hospitals Dhaka
14693 14.10.1998 26.04.2015
for 1422 23.02.2012
2202, 2301, 2303, 2304
600,000 95.25
6455 17.05.2001 26.04.2015
for 1422 23.02.2012
2332, 2333, 2603, 2314, 2310, 2303
370,000 61.25
6456 17.05.2001 26.04.2015
for 1422 23.02.2012 2332, 2333 230,000 40.00
In case of land at Chittagong instead of purchasing the same is taken as lease from CDA. Details of which is as follows:
Deed No. Dates of
Lease
Last Payment Date of
Current Rent
(LvRbv)
Mutation Date R. S Dag No.
Deed Value
(Taka)
Other Costs including details of Land Development
Cost
Area of Land (Decimal)
Current Use
3265 07.07.2010 N/A 29.09.2016
Plot. No. H-1, Ananya Residential Project as per CDA Layout Plan
93,236,470 44,956,012 143.11
Construction of proposed Apollo Hospitals Chittagong in progress
Total 95,671,470 249,535,110 543.66 Grand Total 345,206,580
(iv) The names of the persons from whom the lands has been acquired/proposed to be acquired along with the cost of acquisition and relation, if
any, of such persons to the issuer or any sponsor or director thereof;
Names of the persons from whom the lands have been acquired Cost of acquisition Relation East-West Property Development (Pvt) Limited for Dhaka Hospital Tk. 2,435,000 No relation Chittagong Development Authority (CDA) for Chittagong Hospital Tk. 93,236,470 No relation
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(v) Details of whether the issuer has received all the approvals pertaining to use of the land, if required; The Company has not required receiving any approvals pertaining to use of the land for Apollo Hospitals Dhaka but for STS Hospital Chittagong Limited (a Private Ltd. company), the issuer has received the approvals pertaining to use of the land from Chittagong Development Authority (CDA). However approval from CDA to use the land in the name STS Hospital Chittagong Limited instead of STS Holdings Ltd. is not yet obtained.
(vi) If the property is owned by the issuer, whether there is a mortgage or other type of charge
on the property, with name of the mortgagee; There is no land or plant & machineries are under mortgaged to any banking and non-banking financial institutions.
(vii) If the property is taken on lease, the expiration dates of the lease with name of the lessor, principal terms and conditions of the lease agreements and details of payment; No property was taken on lease during last five years except which is disclosed in the section Operating Lease Agreement during last five (5) years; Financial Lease Agreement during last five (5) years and land from Chittagong Development Authority (CDA).
Lessor Location Plot No. Area of Plot
(Sft) Period of
Agreement Amount Total Monthly Amount
Ch
itta
gon
g D
evel
op
men
t A
uth
ori
ty (
CD
A)
An
an
ya
Res
iden
tial
Are
a,
Ch
itta
gon
g
Plo
t. N
o. H
-1
62,446.75 99 years
Starts from 7th July, 2010
93,236,470
1st 5 years no charge, after that fair service charge have to pay
only. [not yet settled]
Principal Terms and Conditions of the Lease Agreements:
1) The lease is for 99 years from the date of registration i.e. 07.07.2010, which is renewable for further period without payment of any SALAMI
2) LESSEE will pay all Government charges against the land including ground rent 3) LESSEE shall complete construction work for hospital building with the plan only
approved by CDA within stipulated time as set by the CDA. 4) LESSEE will pay the service charges as reasonably fixed by the LESSOR from time to time
after a period of 5 years from the date of registration of the land.
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(viii) Dates of purchase of plant and machineries along with sellers name, address, years of sale, condition when purchased, country of origin, useful economic life at purchase and remaining economic life, purchase price and written down value;
Sl. Name of Equipment Date of
Purchase Seller Name Address
Year of Sale
Condition when
Purchased
Country of Origin
Useful Economic Life
Remaining
Economic life
Purchase Price in BDT
Written Down Value
in BDT
Air conditioning plant & air conditioner
1 Water cooled centrifugal chiller 9/18/2014 Confidence Trade Limited
FLAT NO : D3, LEVEL -3, PLOT NO : 2/2, IQBAL ROAD,BLOCK A, MOHAMMADPUR
N/A Brand New
USA 10 9.9 775,000 767,250
83 IMPEDANCE AUDIOMETER, MODEL - AT235, DENMARK
10/7/2015 Interacoustics AS
DREJERVAENGET 8,DK - 5610, ASSENS
N/A Brand New
Denmark 10 9.9 503,253 498,220
84 JAUNDICE METER, DRAGER, MODEL-JM105
12/29/2015 DRAGER MEDICAL GMBH
MULSLINGER ALLEE 53-55,23558 LUBECK, GERMANY
N/A Brand New
Germany 10 10 503,460 503,460
937,466,189
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(ix) Details of the machineries required to be bought by the issuer, cost of the machineries, name of the suppliers, date of placement of order and the date or expected date of supply, etc. No machineries are required to be bought by the issuer except machineries to be bought from IPO proceeds, the details of which are disclosed under the CHAPTER (XXII) of the prospectus. Probable date of Placement: after receiving of IPO fund. Probable date or expected date of supply: within 12 months after receiving of IPO fund.
(x) In case the machineries are yet to be delivered, the date of quotations relied upon for the
cost estimates given shall also be mentioned; There are no such machineries which are yet to be delivered.
(xi) If plant is purchased in brand new condition then it should be mentioned; All plants and machineries of the Company were purchased in brand new condition.
DECLARTION RELATED TO PLANTS, MEDICAL, SURGICAL AND OTHER MACHINERIES BEING BRAND NEW
We do hereby declare that all the Plants, Medical, Surgical and other Machineries of STS Holdings Limited were purchased in brand new condition. There is no re-conditioned or second hand Plants, Medical, Surgical and other Machineries installed in the Company.
Place: Dhaka Dated: November 14,2016
Sd/- S.F. Ahmed & Co.
Chartered Accountants
(xii) Details of the second hand or reconditioned machineries bought or proposed to be
bought, if any, including the age of the machineries, balance estimated useful life, etc. as per PSI certificates of the said machineries as submitted to the Commission; The Company neither purchased any second hand or reconditioned machineries nor any plan to purchase in future.
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(xiii) A physical verification report by the issue manager(s) regarding the properties as submitted to the Commission;
Accompanied by the officials of STS Holdings Limited
: 1. Md. Giash Uddin FCA Chief Financial Officer
2. B. R. Sikder FCS Company Secretary
Purpose of Visit
: STS Holdings Limited, owning company of Apollo Hospitals Dhaka has signed issue management agreements on 1st March, 2016 with ICB Capital Management Limited (ICML) and AFC Capital Limited (AFCCL) for public issue of shares through Initial Public Offering (IPO) under Book Building Method. In this respect, the management of ICML and AFCCL visited Apollo Hospitals Dhaka on 3rd April, 2016 as a part of due diligence process of issue managers in order to verify the operational status and assets of Apollo Hospitals Dhaka of the Company before public issue of shares.
: At Apollo Hospitals Dhaka, patients have access to 25 departments and services as below:
Cardio Thoracic Surgery
Orthopedics Internal Medicine Oncology
Neuro Surgery ENT IVF Lab Ophthalmology Interventional Cardiology
Gastroenterology Nephrology Plastic Surgery
Neurology General And Lap Surgery
Obs/Gyn Pediatrics
Psychiatry Respiratory Medicine Endocrinology & Dialectology
Urology
Radiation Oncology Emergency Dental Surgery Dermatology Pediatric Surgery
Capacity : 360 beds
Management Team :
Mr.R. Basil Chief Executive Officer Mr. Prasad Muglikar Director, Medical Services Mr. Vinod Kalra Director Finance Mr. Alkona K. Chowdhury Director, HR Mr. Enayet Ullah Khan Director, Business Development Mr. Prashant Vasist Chief Information Officer
Red-Herring Prospectus: STS Holdings Limited
Page: 75
Current status of the project
Apollo Hospitals Dhaka starting operation in 2005 is currently operating with 324-bed to deliver health care services to the people of Bangladesh.
Bed Category
No. of Beds
Bed Category No. of Beds
Bed Category No. of Beds
Bed Category No. of Beds
CCU 12 High Dependency
12 LDR (Labour Deluxe Room)
2 Neuro ICU 12
CT HDU 6 ICCU 2 Medical ICU 12 Post CCU 3 CT ICU 6 KTU/PPU 3 Neonatal ICU 4 Shared Superior 44
Deluxe 62 Labour Room 6 Neonatal Level 2 Care
12 Standard Bed 96
Suite 5 Superior 16 Surgical ICU 9
Physical Existence of following Machineries & Equipment: During the course of visit the following plant, machinery and equipment were physically found: 1. Building and Civil Construction:
The hospital is surrounded by a Boundary wall, on over 4 acres land. It is built up on 11 storied building with one basement having utility facilities.
2. Machineries & Equipment:
Sl. No.
Name of Equipment Supplier Country of Origin
Air conditioning plant & air conditioner 1 Water cooled centrifugal chiller Confidence Trade Limited USA
Electric sub-station 1000kva (supply, installation, testing & commissioning)
1 Gas engine generator waukesha Dana Engineering Ltd USA
2 Electric sub-station 1000kva (supply, installation, testing & commissioning)
Siemens Bangladesh Ltd Germany
3 800 KVA CONTINUOUS FG WILSON DIESEL GENSET MODEL P800P1
4 Ct scan – 64 channel Seimens AG USA 5 Digital radiography lithotripsy Seimens AG Germany 6 Dual head gamma camera for cardiac monitoring Seimens AG China 7 Echo cardiography color doppler with std. Accessories Wipro Norway 8 Laser machine with cooling device G3 LASER P LTD USA 9 Mammography unit (mammomat 3000 nova) Seimens AG Germany
Project Location : Plot # H-1, Anannya Residential Area, Mouza Quaish, P. S. Hathazari, District: Chittagong
Project type : International Standard Hospital
Management Team
:
Mr. Ratnadeep Chaskar : Chief Executive Officer (Current Charge) Mr. Prasad Muglikar : Director, Medical Services Mr. Vinod Kalra: Director Finance Mr. Akhter Uddin Mahmud : Director, HR Mr. Enayet Ullah Khan: Director, Business Development Mr. Prashant Vasist: Chief Information Officer
Visited by the officials of AFC Capital Limited on 11 November, 2016.
STS Holdings Limited 4. B. R. Sikder FCS Company Secretary
Purpose of Visit :
STS Holdings Limited, owning company of Apollo Hospitals Dhaka has signed issue management agreements on 1st March, 2016 with ICB Capital Management Limited (ICML) and AFC Capital Limited (AFCCL) for public issue of shares through Initial Public Offering (IPO) under Book Building Method. The IPO proceeds will be used for construction STS Hospital Chittagong Limited located at Plot # H-1, Anannya Residential Area, Mouza Quaish, P. S. Hathazari, District: Chittagong. In this respect, the management of ICML and AFCCL visited STS Hospital Chittagong Limited on 11 November, 2016 as a part of due diligence process of issue managers in order to verify the construction status of STS Hospital Chittagong Limited before public issue of shares of its Holding Company STS Holdings Limited.
Current status of civil construction of the project:
During the course of visit we found that construction of 10 columns of the Basement Floor, 85% of Earth Excavation, 35% of Sand Filling, 60% of Mat Foundation Brick work (Shutter) and 60% Pile Head Breaking (approximately) of civil construction works of the project has completed. In course of visit we also found that the civil construction works of the project is going on.
(xiv) If the issuer is entitled to any intellectual property right or intangible asset, full description of the property, whether the same are legally held by the issuer and whether all formalities in this regard have been complied with;
The Company has no intellectual property right but it has intangible asset. Amount in BDT.
Name of Intangible Asset Historical Cost at
31/12/2015 (Consolidated)
Historical Cost at 31/12/2015
(The Company) Purchased Date Developed By Maintenance By
HIS software 14,807,246 12,462,482 01.09.2004 & 01.12. 2012
Akhil Sysyemt Ind Pvt Ltd. Akhil Sysyemt Ind Pvt Ltd
Other software: 7,472,086 7,472,086 - - - Application, System Software 1,760,600 1,760,600 15/09/2015 Microsoft Corporate Projukti Ltd. Data Base software 2,250,000 2,250,000 05/09/2012 Microsoft Computer Source Microsoft Operating System 13,650 13,650 25/11/2012 Microsoft Techvalley Solutions Ltd. Server operating system Software 188,476 188,476 25/11/2012 Microsoft Multilink International Co. Ltd. Radiology Image Soft ware 1,213,134 1,213,134 10/05/2014 Medsynaptic Pvt Ltd. Medsynaptic Pvt Ltd. Antivirus 621,918 621,918 04/03/2014 Sysmantec NHQ Distributors Ltd. Data Base High Availability Software 468,000 468,000 16/09/2015 Techvalley Solutions Ltd. Techvalley Solutions Ltd.
Security Camera Monitoring Software 54,000 54,000 31/12/2015 Nextgen Security &
serveillance Nextgen Security &
surveillance Security Camera Video Recording Software
48,600 48,600 31/12/2015 Nextgen Security &
serveillance Nextgen Security &
surveillance Remote Access Software 116,050 116,050 07/07/2014 Adapt Software Ind Pvt Ltd. Adapt Software Ind Pvt Ltd. Software for Call Center 737,658 737,658 06/07/2015 My outsourcing Ltd My outsourcing Ltd.
Total 22,279,332 19,934,568
(xv) Full description of other properties of the issuer. Amount in BDT.
Category of Assets Net book value at 31 Dec 2015 (Consolidated) Net book value at 31 Dec 2015 (The Company)
Land and land development 4,947,292,842 4,947,292,842
Building 1,136,073,814 1,136,073,812
Computer and IT equipment 34,674,244 30,822,579 Furniture and fixture 41,621,994 36,811,273 Library Books 554,654 554,654 Medical and surgical equipment 273,719,867 260,670,883 Office equipment 2,483,106 2,397,856 Housekeeping equipment 911,989 898,025 Air conditioning plant and air conditioners 68,114,321 63,099,117 Electrical installations, generators, boiler, elevator etc. 105,124,594 100,136,980 Office decoration 14,348,076 1,537,693 Vehicles 20,685,982 20,685,982
Total 6,645,605,483 6,600,981,696
Red-Herring Prospectus: STS Holdings Limited
Page: 79
(f) Plan of Operation and Discussion of Financial Condition:
The issuer‟s revenue and results from operation, financial position and changes in financial position and cash flows for the last five years: REVENUE AND RESULTS FROM OPERATION:
Statement of Comprehensive Income For the year ended 31 December 2015, 2014, 2013, 2012 and 2011
Figures in BDT
Particular 31.12.2015
(Consolidated) 31.12.2015
(The Company)
31.12.2014 (Consolidated)
(Restated)
31.12.2014 (The Company)
(Restated)
31.12.2013 (The Company)
31.12.2012 (The Company)
31.12.2011 (The Company)
Net revenue 3,789,300,061 3,753,919,306 3,565,717,280 3,558,080,623 3,148,834,681 3,070,982,441 2,590,477,890
Direct operating expenses (1,972,874,552) (1,950,037,471) (1,902,108,446) (1,898,069,716) (1,754,291,717) (1,672,999,892) (1,374,421,836)
Profit for the year ended 31 December 2015 - - - 376,241,879 376,241,879 (369,258) 375,872,621
Balance at 31 December 2015 1,509,450,000 614,925,000 4,809,560,509 397,067,700 7,331,003,209 (467,206) 7,330,536,004
For the year ended 31 December 2014 (The Company)
Ordinary
share capital Share premium
Revaluation surplus
Retained earnings
Total equity
BDT
BDT
BDT
BDT
BDT
Year 2015
Balance as on 1 January 2015 1,509,450,000
614,925,000
4,835,383,576
55,180,244
7,014,938,820
Realisation of revaluation surplus -
-
(25,823,067)
25,823,067
-
Prior year adjustment -
-
-
(41,182,254)
(41,182,254)
Profit For the year ended 31 December 2015 -
-
-
409,810,801
409,810,801
Balance as on 31 December 2015
1,509,450,000
614,925,000
4,809,560,509
449,631,858
7,383,567,367
Red-Herring Prospectus: STS Holdings Limited
Page: 83
For the year ended 31 December 2014 (Consolidated) Equity attributable to owners of the Company Non-
Controlling interest
Total Equity
Ordinary
share capital Share
premium Revaluation
surplus Retained earnings
Sub-Total
BDT BDT BDT BDT BDT BDT BDT
Year 2014
Balance at 1 January 2014 1,509,450,000 614,925,000 4,860,365,362 (332,073,132) 6,652,667,230 - 6,652,667,230 Share Capital - - - - - - - Realization of revaluation surplus - - (24,981,786) 24,981,786 - - - Prior year adjustment - - - 7,295,089 7,295,089 - 7,295,089 Share Capital - - - - - 111,000.00 111,000 Profit for the year ended 31 December 2014 - - - 335,981,265 335,981,265 (208,948) 335,772,317 Balance at 31 December 2014 1,509,450,000 614,925,000 4,835,383,576 36,185,008 6,995,943,584 (97,948) 6,995,845,636
For the year ended 31 December 2014 (The Company) Ordinary
share capital BDT
Share premium
BDT
Revaluation surplus
BDT
Retained earnings
BDT
Total equity
BDT (Restated)
Year 2014 Balance as on 1 January 2014 1,509,450,000
614,925,000
4,860,365,362
(332,073,131)
6,652,667,231
Realisation of revaluation surplus -
-
(24,981,786)
24,981,786
- Prior year adjustment -
-
-
7,295,089
7,295,089
Profit for the year ended 31 December 2014 (Restated)
-
-
-
354,976,500
354,976,500
Balance as on 31 December 2014
1,509,450,000
614,925,000
4,835,383,576
55,180,244
7,014,938,820
Red-Herring Prospectus: STS Holdings Limited
Page: 84
For the year ended 31 December 2013 (The Company)
Ordinary
share capital Preference
Share Share
premium Revaluation
surplus Retained earnings
Total equity BDT
BDT BDT BDT BDT BDT
Year 2013
Balance as on 1 January 2013 1,509,450,000 - 614,925,000 4,885,347,148 (532,221,163) 6,477,500,985 Realization of revaluation surplus - - - (24,981,786) 24,981,786 - Profit for the year ended 31 December 2013 - - - - 175,166,245 175,166,245 Balance as on 31 December 2013 1,509,450,000 - 614,925,000 4,860,365,362 (332,073,132) 6,652,667,230
For the year ended 31 December 2012 (The Company)
Ordinary
share capital Preference
Share Share
premium Revaluation
surplus Retained earnings
Total equity BDT
BDT BDT BDT BDT BDT
Year 2012
Balance as on 1 January 2012 1,509,450,000 137,047,300 614,925,000 4,910,328,934 (663,348,337) 6,508,402,897 Prior year adjustment - - - - (16,363,043) (16,363,043) Redemption of Preference Share - (137,047,300) - - - (137,047,300) Dividend Paid on Preference Shares - -
- (11,669,265) (11,669,265)
Realization of revaluation surplus - - - (24,981,786) 24,981,786 - Profit for the year ended 31 December 2012 - - - - 134,177,696 134,177,696 Balance as on 31 December 2012 1,509,450,000 - 614,925,000 4,885,347,148 (532,221,163) 6,477,500,985
For the year ended 31 December 2011 (The Company)
Ordinary
share capital Preference
Share Share
premium Revaluation
surplus Retained earnings
Total equity BDT
BDT BDT BDT BDT BDT
Year 2011
Balance as on 1 January 2011 1,509,450,000 319,141,900 614,925,000 2,333,360,720 (951,085,010) 3,825,792,610 Prior Year Adjustment-Capitalization of borrowing cost - - - - 14,311,677 14,311,677 Prior Year Adjustment - - - - (1,291,066) (1,291,066) Redemption of Preference Share - (182,094,600) - - - (182,094,600) Dividend Paid on Preference Shares - - - - (34,886,327) (34,886,327) Revaluation Surplus - - - 2,601,950,000 - 2,601,950,000 Realization of revaluation surplus - - - (24,981,786) 24,981,786 - Profit for the year ended 31 December 2011 - - - - 284,620,603 284,620,603 Balance as on 31 December 2011 1,509,450,000 137,047,300 614,925,000 4,910,328,934 (663,348,337) 6,508,402,897
Red-Herring Prospectus: STS Holdings Limited
Page: 85
CASH FLOWS: Statement of Cash Flows
For the year ended 31 December 2015, 2014, 2013, 2012, and 2011
Figures in BDT
31.12.2015
(Consolidated) 31.12.2015
(The Company)
31.12.2014 (Consolidated)
(Restated)
31.12.2014 (The Company)
(Restated)
31.12.2013 (The Company)
31.12.2012 (The Company)
31.12.2011 (The Company)
Cash flows from operating activities:
Collection from hospital services and others 3,853,729,642 3,814,827,683 3,635,886,470 3,628,702,225 3,208,793,668 3,128,547,048 2,622,741,317 Payment for cost and expenses (3,125,844,869) (3,068,898,491) (2,948,955,354) (2,931,342,571) (2,657,025,640) (2,521,859,470) (2,143,737,434) Cash generated from operations 727,884,773 745,929,192 686,931,116 697,359,654 551,768,029 606,687,578 479,003,883 Income tax paid (180,745,871) (180,745,871) (142,216,321) (142,216,321) (16,388,226) (4,895,808) (19,597,323)
Net cash from operating activities 547,138,902 565,183,321 544,714,795 555,143,333 535,379,803 601,791,770 459,406,560
Cash flows from investing activities:
Payment for acquisition of property, plant & equipment
a) Internal and external sources of cash; The internal sources of the cash of the company are the share capital, revaluation surplus and retained earnings. The external sources of cash are bank loans.
Long term loan 87,588,510 87,588,510 100,027,951 100,027,951 73,805,907 86,559,961 - Long term loan - current portion 32,737,339 32,737,339 59,128,938 59,128,938 36,902,976 32,247,072 - Short term bank loan - - - - - - 201,454,925 Sub-Total 120,325,849 120,325,849 159,156,889 159,156,889 110,708,883 118,807,033 201,454,925 Grand Total 2,641,768,549 2,694,332,707 2,319,716,897 2,338,712,133 1,903,010,751 1,710,960,870 1,662,481,588
b) Any material commitments for capital expenditure and expected sources of funds for such expenditure;
The Company has not yet made any material commitment for capital expenditure except for those that are mentioned at chapter XXII under the head „Use of Proceeds‟ from IPO fund.
Red-Herring Prospectus: STS Holdings Limited
Page: 87
c) Causes for any material changes from period to period in revenues, cost of goods sold, other operating expenses and net income;
Particular 31.12.2015
(Consolidated) 31.12.2015
(The Company)
31.12.2014 (Consolidated)
31.12.2014 (The Company)
31.12.2013 (The Company)
31.12.2012 (The Company)
31.12.2011 (The Company)
Net revenue 3,789,300,061 3,753,919,306 3,565,717,280 3,558,080,623 3,148,834,681 3,070,982,441 2,590,477,890 Change in revenue 6.27% 5.50% 13.24% 12.99% 2.54% 18.55% 16.72% Direct operating expenses (1,972,874,552) 1,950,037,471 (1,902,108,446) 1,898,069,716 1,754,291,717 1,672,999,892 1,374,421,836 Direct operating expenses compared to Sales
52.06% 51.94% 53.34% 53.34% 55.71% 54.48% 53.06%
Gross profit 1,816,425,509 1,803,881,835 1,663,608,834 1,660,010,907 1,394,542,964 1,397,982,549 1,216,056,054 GP compared to Sales 47.94% 48.05% 46.66% 46.65% 44.29% 45.52% 46.94% Other operating expenses 1,337,761,501 1,298,145,771 1,322,374,552 1,299,534,092 1,158,324,796 1,032,015,854 903,379,689 Op. Expenses compared to Sales 35.30% 34.58% 37.09% 36.52% 36.79% 33.61% 34.87% Profit from operation 478,664,008 505,736,064 341,234,281 360,476,815 236,218,168 365,966,695 312,676,365 Op. Profit compared to Sales 12.63% 13.47% 9.57% 10.13% 7.50% 11.92% 12.07% Net profit/ (loss) after tax 375,872,621 409,810,800 335,772,317 354,976,500 175,166,245 134,177,696 284,620,603 Net PAT compared to Sales 9.92% 10.92% 9.42% 9.97% 5.56% 4.37% 10.99%
Causes for Change in revenue STS Holdings Limited manages a continuous growth in revenue as number and price of service was increasing every year. But sales of 2013 had a growth of 2.54% that was comparatively lower than previous years as in2013 country was observing political unrest which caused hindrance for the possible patients from outside Dhaka to come for treatment. In 2012, sales growth was 18.55% as some services was having increasing rate. Revenue from major contributing departments was volatile and contribution of few core departments was still low. Revenue from Pharmacy & Consumables was still highest in 2014 due to healthy number of Outpatient, though Inpatient decreased. Test labs and Consultation revenues were respectively second and third highest for same reason. However, modern lab equipment would help to retain the revenue.
Causes for changes in direct operating expenses: Direct operating expenses shows declining growth that indicates continuous cost control initiatives & better negotiations along optimum utilization
of resources. Causes for Changes in other Operating Expenses Other Operating Expenses shows decreasing growth as depreciation shows negative growth in 2015 as result of a major portion medical equipment &
IT equipment complete their useful life. Causes for Changes in Net income: Net income increase in period to period as sales revenue shows positive growth. Moreover, direct operating expenses and other operating expenses also shows declining growth form year to year.
Red-Herring Prospectus: STS Holdings Limited
Page: 88
d) Any seasonal aspects of the issuer‟s business;
There is no significant seasonal aspect on the Company’s business. However, it has variation in financial results from fiscal period to fiscal period as a result of various factors, including those described under “Risk Factors” and “Causes for Material Changes from period to
period”.
e) Any known trends, events or uncertainties that may have material effect on the issuer‟s future business; There are no known trends, events and/or uncertainties that shall have a material impact on the Company‟s future business except for those which are naturally beyond control of human being. The business operation of the Company may be affected by the following events: i) Political unrest, strike ii) Natural/social disaster
f) Any assets of the company used to pay off any liabilities;
None of the assets of the company has been used to pay off any liabilities of the Company.
g) Any loan taken from or given to any related party or connected person of the issuer with
details of the same;
No loan taken from or given to any related party or connected person of the issuer. h) Any future contractual liabilities the issuer may enter into within next one year, and the
impact, if any, on the financial fundamentals of the issuer; The Company has no plan to enter into any contractual liabilities other than normal course of business within next one year.
i) The estimated amount, where applicable, of future capital expenditure; The Company has no plan for capital expenditure except for those mentioned in the „Use of Proceeds‟ from IPO fund.
j) Any VAT, income tax, customs duty or other tax liability which is yet to be paid, including
any contingent liabilities stating why the same was not paid prior to the issuance of the prospectus. Updated income tax status for the last 5 years or from commercial operation, which is shorter;
VAT: The Company has no outstanding VAT as on 31 December, 2015. The health services are exempted from VAT as per SRO the Company collects VAT from food & beverage services for which monthly Returns are duly submitted. There is no dispute from VAT authority.
Red-Herring Prospectus: STS Holdings Limited
Page: 89
Income Tax: The Company has TIN No.-129266364392. Last five years‟ income tax statues of the company depicted below:
Income year Assessment year Status
2011 2012-2013 Disposed by Taxes Appellate Tribunal by upholding the order of CT(Appeal). Application filed on 30 December 2014 in High Court Division of the Supreme Court of Bangladesh for revenue over estimation and expenditure disallowances.
2012 2013-2014 Disposed by Taxes Appellate Tribunal by upholding the order of CT (Appeal). Application filed on 30 December 2014 in High Court Division of the Supreme Court of Bangladesh for revenue over estimation and expenditure disallowances.
2013 2014-2015 Disposal by Appellate Tribunal by upholding the order passed by CT (A). Application filed on 24 February 2016 in High Court Division of the Supreme Court of Bangladesh expenditure disallowances.
2014 2015-2016 Return duly submitted and assessed by DCT. But, we submitted an appeal on 24 September 2016 to the Commissioner of Taxes (Appeals) against order passed by DCT which is now in under consideration.
2015 2016-2017 Return duly submitted
STS Holdings Ltd has made necessary provisions for tax in the financial Statements for the last five years on the basis of demand from Tax authority/ Income Tax Ordinance 1984. The appeal was made by STS Holdings Ltd for different Assessment years for reducing the assessed tax liability. The tax authority has come up with tax demand after finalization of assessment order at different stages. Since the Company has made necessary provision as per tax demand, there is no contingent liability arises.
Total amount due to tax authority and tax provision in the accounts are as follows:
Income
year Tax year
Tax
provision as
per accounts
Final tax
demand (including
interest, if
applicable)
Interest
charge
Tax paid
AIT/TDS Remarks
2011 2012-2013 13,032,564 13,100,000 - 13,614,834 Turn over Tax @ .50% on 2,620,000,000
2012 2013-2014 151,127,606 135,965,513 5,048,413 113,024,807 Tax finalized by Appellate Tribunal and reference
application to High Court
2013 2014-2015 102,560,620 110,159,470 - 102,600,696 Tax finalized by Appellate Tribunal and reference
application to High Court
2014 2015-2016 98,809,826 168,142,105 2,743,646 104,596,321 Finalized at Deputy Commissioner Tax level. Appeal to
Total 582,459,752 427,367,088 7,792,059 470,689,107
Red-Herring Prospectus: STS Holdings Limited
Page: 90
Customs Duty or other tax liabilities: The Company has no customs and other tax liabilities. Contingent Liability: The Company has a contingent liability for the guarantee issued by Dutch Bangla Bank Ltd., Gulshan Branch and Southeast Bank Ltd., Gulshan Branch in favor of National Board of Revenue for Tk. 52,595,327 as there is a dispute with the customs authority regarding the duty exemption facilities pursuant to the SRO No.133-Aain/2005/2069/Sulko dated 02/06/2005 issued by the National Board of Revenue (NBR).
k) Any financial commitment, including lease commitment, the company had entered into during the past five years or from commercial operation,
which is shorter, giving details as to how the liquidation was or is to be effected; Operating Lease Agreement during last five (5) years
The Company has obtained Doctor House, Expatriate Staff House and Information Centre on non-cancellable operating lease. The operating lease term is for two to six years. There are no restrictions imposed by lease agreement. Some of the leases have escalation and renewal clause. The Company does not have purchase option.
Financial Lease Commitment during last five (5) years Fixed assets include vehicle and Medical Equipment on finance lease arrangements. The finance lease term is for a period of 36 to 60 months. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.
SI. No.
Description Agreement
Number & Date Acquisition
Cost Installment Name of Institutions Duration
Date of Final Settlement
1 Medical Equipment 69011300370
29.08.2013 20,000,000 564,248 United Leasing Com. Ltd. 48 Installments
22.12.2015 2 Medical Equipment 69011300370
29.08.2013 8,349,525 232,162 United Leasing Com. Ltd. 48 Installments
3 Medical Equipment 69011300370
29.08.2013 24,847,085 672,676 United Leasing Com. Ltd. 48 Installments
4 Medical Equipment 892/2012 9,487,445 242,353 Bank Asia 60 Installments
Converted into long term loan on 13.12.2015 and already Settled on 02.11.2016
5 Medical Equipment 892/2012 4,746,970 121,260 Bank Asia 60 Installments
6 Medical Equipment 892/2012 2,870,234 73,319 Bank Asia 60 Installments
7 Medical Equipment 892/2012 1,794,422 45,897 Bank Asia 60 Installments
8 Medical Equipment 892/2012 3,431,323 87,765 Bank Asia 60 Installments
9 Medical Equipment 892/2012 6,527,860 166,967 Bank Asia 60 Installments
10 Medical Equipment 892/2012 845,584 21,628 Bank Asia 60 Installments
11 Medical Equipment 892/2012 2,090,931 53,481 Bank Asia 60 Installments
12 Medical Equipment 892/2012 7,109,111 181,834 Bank Asia 60 Installments
13 Medical Equipment 892/2012 313,438 8,017 Bank Asia 60 Installments
Red-Herring Prospectus: STS Holdings Limited
Page: 93
l) Details of all personnel related schemes for which the company has to make provision for in future years;
STS Holdings Limited has sound human resource policy to ensure the congenial working environment and better career path for its employees. The
Company’s total permanent headcount is 1763 as on December 31, 2015. A. Earn Leave Benefit: Employees are allowed encashment of un-availed earn leave after twelve months‟ services.
B. Bonus: Employees are given festival bonus in two installments during Eids, equivalent to one month’s Basic salary in a year. C. Maternity Benefit: Females Employees are entitled to maternity benefit up to the birth of two children in accordance with applicable Govt. regulation. D. Medical Facilities: The Company provides free medical consultation and other concessional medical facilities to the employees. E. Provident Fund & Gratuity: Schemes of post-employment benefits of eligible employees, payable after completion of employment, include contributory provident fund, unfunded gratuity. F. Group Insurance Policy: The Company has introduced Group Insurance Policy for the permanent employee with Progoti Life Insurance Company limited.
m) Break down of all expenses related to the public issue;
Estimated IPO expenses will be determined after the determination of cut-off price through bidding process.
Red-Herring Prospectus: STS Holdings Limited
Page: 94
n) If the issuer has revalued any of its assets, the name, qualification and experiences of the valuer and the reason for the revaluation, showing the value of the assets prior to the revaluation separately for each asset revalued in a manner which shall facilitate comparison between the historical value and the amount after revaluation and giving a summary of the valuation report along with basis of pricing and certificates required under the revaluation guideline of the Commission;
First revaluation as on 30 September 2006:
Category of assets Book Value
as on 30 Sep 2006
Gross revaluation Surplus
Revalued Book Value
Land and land development 207,013,738 563,563,762 770,577,500
Building 951,036,886 71,327,765 1,022,364,651
Computer & IT equipment 88,232,580 1,682,016 89,914,596
Medical and surgical equipment 538,808,237 107,881,650 646,689,887
Office equipment 849,885 (10,390) 839,495
Air conditioning plant & air Conditioners
90,076,323 18,015,265 108,091,588
Electrical installations, generators, boiler, elevator etc.
156,074,688 31,214,935 187,289,623
Vehicles 14,831,728 - 14,831,728
2,113,702,768 803,625,170 2,917,327,938
Second revaluation 30 April 2010:
Category of assets Book Value
as on 30 Sep 2006
Gross revaluation
Surplus
Revalued Book Value
Land and land development 770,577,505 1,431,072,495 2,201,650,000 Building 1,094,985,609 184,586,695 1,279,572,304 Computer & IT equipment 129,515,106 8,241,684 137,756,790 Furniture & fixture 101,412,211 - 101,412,211 House Keeping Equipment 540,000 - 540,000 Library Books 1,296,384 0 1,296,384 Medical and surgical equipment 799,420,020 40,913,184 840,333,204 Office equipment 2,322,185 0 2,322,185 Air conditioning plant & air Conditioners 109,934,777 31,621,272 141,556,049 Electrical installations, generators, boiler, elevator etc.
Value Land and land development 2,201,650,000 2,601,950,000 4,803,600,000
To confirm fair valuation, company‟s land was revalued as on 12 December 2011 for 3rd time as per decision of the Board of Directors. All other fixed assets under property, plant and equipment were revalued on 30 April 2010 for second time to their fair market value as per decision of the Board of Directors. All the revaluation of fixed assets under property, plant and equipment were performed by an independent valuer. Reserve is created by the
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sum of revaluation surplus and depreciation is charge on the revalued assets except Land and Land Development as per the respective rate of deprecation and transferred the equal amount of deprecation to the equity as per the provision of BAS-16. Particulars of the revaluation of the company are as follows:
Name of the Independent Valuer : Asian Surveyors Ltd
: Location, size of the land, commercial importance and facilities available and likely future appreciation
Notable valuation works done by the valuer
:
Bangladesh Bank
IDLC Finance limited
Pubali Bank Ltd.
James Finlay plc.
Sonargaon Hotel
Square Pharmaceuticals Ltd
Jamuna Multipurpose Bridge Access project
Purpose of valuation: The financial statements of the company have been prepared in accordance with Bangladesh Accounting Standard (BAS) based on historical cost convention previously. However, the value of land has increased due to high inflationary trend and devaluation of local currency. In this circumstance the management has decided to revalue the land to incorporate the fair value of these assets in the financial statements. Basis of revaluation: The Valuer has estimated the value of the land of the company under Estimated Net Realizable Value method (the market approach) depending on the nature of assets and rationale applicable. Summary of revaluation of fixed assets as at 31 December 2011 is given below:
SL No. Class of Fixed
Assets Revalued Amount
(Taka) Carrying Cost
(Taka) Revaluation
Surplus (Taka) 1 Land 4,947,292,482 2,345,342,482 2,601,950,000
Total 4,947,292,482 2,345,342,482 2,601,950,000
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o) Where the issuer is a holding/subsidiary company, full disclosure about the transactions, including its nature and amount, between the issuer and its subsidiary/holding company, including transactions which had taken place within the last five years of the issuance of the prospectus or since the date of incorporation of the issuer, whichever is later, clearly indicating whether the issuer is a debtor or a creditor;
Company Name Nature of Transaction 2015 2014 2013 2012 2011 STS Hospitals Ltd. Share Money Deposit 101,216,627 68,521,735 10,645,920 - - STS Hospitals Ltd. Sale* 681,261 - - - -
*Intercompany transection with STS Hospital Ltd. Includes only investigation (Lab and other test), which is done by the Apollo Hospitals Dhaka (a health care unit of STS Holdings Ltd). But bill and sample collected from STS Hospital Ltd.
p) Financial Information of Group Companies: following information for the last three years based on the audited financial statements, in respect of all the group companies of the issuer, wherever applicable, along with significant notes of auditors:
N/A No No 2014 10,110,000 (19,204,186) 7,636,656 (19,204,186) - 59,527,549
2013 100,000 Not in Operation 10,750,920
3
STS Hospital Chittagong Ltd.
20/04/2011 Hospital Service
2015 98,000,000
Not in Operation
582,112,898
N/A No No 2014 1,000,000 242,996,666
2013 1,000,000 186,364,272
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12)The related business transactions within the group and their significance on the financial performance of the issuer; There were no related business transactions within the group which have significance on the financial performance of the issuer except the following transaction:
As at and for the year ended 31December 2015
Name of related party Nature of
relationship Nature of transaction
Transaction value BDT
Outstanding balance BDT
Terms and conditions
STS Educational Group Ltd. Common
directorship Proportionate corporate
office expenses 27,600,000 -
Mutual understanding
STS Hospitals Ltd. Subsidiary Share money deposit 103,859,026 101,216,627 For subsequent issue of shares
STS Hospital Chittagong Ltd. Subsidiary Share money deposit 349,904,061 484,112,898 For subsequent issue of shares
*Intercompany transection with STS Hospital Ltd. Includes only investigation (Lab and other test), which is done by the Apollo Hospitals Dhaka (a health care unit of STS Holdings Ltd). But bill and sample collected from STS Hospital Ltd.
understanding Other than the above, there was no transaction within the group.
13) Sales or purchase between group companies/ subsidiaries/ associate companies when such sales or purchases exceed in value in the aggregate
ten per cent of the total sales or purchases of the issuer and also material items of income or expenditure arising out of such transactions There were no transactions of STS Holdings between group companies/subsidiaries/associate companies, which exceed in value in the aggregate ten per cent of the total sales or purchases of the Company.
14) Where the issuer is a banking company, insurance company, non‐banking financial institution or any other company which is regulated and licensed by another primary regulator, a declaration by the board of directors shall be included in the prospectus stating that all requirements of the relevant laws and regulatory requirements of its primary regulator have been adhered to by the issuer Not applicable for the STS Holdings Limited.
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15) A report from the auditors regarding any allotment of shares to any person for any consideration otherwise than cash along with relationship
of that person with the issuer and rationale of issue price of the shares;
AUDITOR'S CERTIFICATE REGARDING ALLOTMENT OF SHARES TO PROMOTERS OR SPONSOR SHAREHOLDERS FOR CONSIDERATION IN CASH/OTHER THAN CASH
After due verification, we certify that the paid up capital of STS Holdings Limited as at 31 December, 2015 was BDT 1,509,450,000.00 divided into 150,945,000 ordinary shares of taka 10.00 each made up as follows:
Particulars of Allotment Date of
Allotment
Consideration of Allotment Face
Value of Share
Issue price of Share
Paid up capital amount in BDT
Premium amount in BDT In Cash
Other than Cash
Bonus
First (Subscription to the Memorandum & Articles of Association at the time of incorporation)
150,945,000 - - 1,509,450,000 614,925,000 **Form Sixth allotment to Ninth allotment the issue price was Tk. 25.00
The Company however has subdivided the face value of its ordinary share from Tk. 100.00 to Tk. 10.00 by passing a special resolution in its extraordinary general meeting held on 29th December, 1997 and necessary amendments in the capital clause of the Memorandum and Articles of Association were made accordingly. Hence, the paid-up capital of the Company comes to Tk. 1,509,450,000 divided into 150,945,000 ordinary shares of Tk. 10.00 each.
Sd/- Place: Dhaka
S. F. Ahmed & Co.
Date: 14 November 2016
Chartered Accountants
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16) Any material information, which is likely to have an impact on the offering or change the terms and conditions under which the offer has been made to the public There is no material information, which is likely to have an impact on the offering or change the terms and conditions under which the offer has been made to the public.
17) Business strategies and future plans. Projected statement of financial position, compressive statement of income and earnings per share for the next three accounting years as per the issuers own assessment; Business Strategies Our Business Strategy is focused achieving our vision of becoming a premier International Healthcare destination with comprehensive super specialty excellence touching lives with care and empathy.
Towards accomplishing this, we continuously focus on 4 measurable parameters such as: 1. Clinical Excellence; 2. Patient friendliness; 3. Transparency and ethical practice and 4. Cost effectiveness. Future plans From IPO Proceeds The IPO proceeds of about Tk.75.00 crore will be used as equity contribution to the Chittagong Hospital Project. Balance need of the project cost Tk. 278.25 crore is being arranged from IFC and DEG in the form of long term debt and the rest Tk.137.08 crore is being financed from internal generation of fund during the project implementation period.
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Prospective Financial Information (PFI) for next three years;
The assumptions for these projections are as follows:
The projected financial statements has been prepared on underlying assumption
Assumption indicator
Assumption's Basis
Assumptions Years
Assumptions Years
Assumptions Years
2016 2016 2016
Revenue growth
During the year 2016 five (5) Operation Theaters have newly installed that enhance the company's capacity to provide service to larger number of patients. Moreover, the Full phase Oncology department is expected to be come into operations with effect from the end of 2016 which will create positive impact on the revenue growth.
14.23% 16.51% 17.63%
Tariff Increased
All tariffs are planned to be rationalized from the beginning of the year 2017 which is expected to be enhance the tariff of the company.
0% 5% 0%
Occupancy
Due to increase of 5 Operation theaters and introduction of full phase Oncology department, number of IPD patients will be increased. That result will come in bed occupancy rate.
62.25% 67.07% 78.76%
IPD Number (Admission)
Since the company is planned to rationalized the tariff at the very beginning of the year 2017 and full phase Oncology department is expected to start the operation with effect from end of 2016, Expansion of Gastroenterology & Nephrology department, it is expected that IPD patients admission will be enhanced from year to year.
17,258 18,662 21,916
Growth
Since the company is planned to rationalize the tariff at the very beginning of the year 2017, full phase Oncology department is expected to start the operation with effect from end of 2016 and planned to Expansion of gastroenterology & Nephrology department, it is expected that IPD patient‟s admission will be enhanced from year to year. So IPD revenue growth will be increased.
12.91% 8.14% 17.44%
Average length of stay (ALOS)
The issuer is planned to introduce more and more updated technology in medical sector which
4.27 3.77 3.57
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will help the issuer to achieve operational efficiency and ALOS is expected to be decreased as the patients will receive faster services.
OPD Numbers
Full phase oncology department is expected to start the operation and the company is planned for the expansion of gastroenterology & Nephrology department thus, it is expected that OPD numbers will be enhanced from year to year. Also the issuer companies are running their operation even in holiday. New consultants are joining in Oncology department.
330,255 381,351 427,589
Growth Due to OPD numbers of patients are increasing and OPD revenue growth will be maintained.
9.71% 15.47% 12.13%
Average daily census (OPD)
With the growth of OPD patient‟s number and service, Average daily census (OPD) is expected to be enhanced from year to year.
905 1,045 1,171
Average Revenue Per
Occupied Bed (ARPOB)
With the positive growth in IPD patients‟ number and services, ARPOB is also expected to have the positive growth from year to year. Due to increase of cancer patients and introduce of critical procedures ARPOB will increase.
58,293 63,108 63,278
Bed Days
With the increase of OPD conversion, EM conversion and IPD patients numbers, the bed days is expected to be enhanced from year to year.
73,619 79,313 93,142
Dividend payout
Since the company is expected to have the positive growth in revenue and profit, thus, it is expected that the company will have in a position to declare minimum dividend of 1o%.
10% 10% 10%
Tax Rate Corporate tax rate 35.00% 35.00%
For listed company 0.0% 25.0% Rebate 10% 0.0% 0.0% Effective rate 35.00% 25.00%
Total IPO Proceeds
750,000,000
Share issue expenses
3%
2015 2016 2017 2018 Number of Days in the Period 365 365 365 365 Number of Months in the Period 12 12 12 12
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IN-PATIENT REVENUE DETAILS 2015 2016 2017 2018
Tariff Growth (%) 0% 5% 0%
Standard Bed Number Growth (%) 13% 8% 15% Percentage Utilized 58% 65% 70% 81% Revenue Per Count 2,928 2,928 3,074 3,074 Shared Superior Percentage Utilized 67% 75% 81% 94% Revenue Per Count 4,729 4,729 4,966 4,966 Superior Percentage Utilized 71% 80% 87% 95% Revenue Per Count 8,669 8,669 9,103 9,103 Deluxe Percentage Utilized 55% 62% 67% 84% Revenue Per Count 9,368 9,368 9,836 9,836 Suite Percentage Utilized 57% 65% 70% 80% Revenue Per Count 19,742 19,742 20,729 20,729 ICCU Percentage Utilized 53% 60% 65% 74% Revenue Per Count 8,799 8,799 9,239 9,239 LDR (LABOUR DELUXE ROOM)
Percentage Utilized 19% 21% 23% 66% Revenue Per Count 8,826 8,826 9,267 9,267 NEONATAL LEVEL 2 CARE
Percentage Utilized 61% 69% 75% 86% Revenue Per Count 4,543 4,543 4,770 4,770 MEDICAL ICU Percentage Utilized 83% 94% 94% 94% Revenue Per Count 8,873 8,873 9,316 9,316 SURGICAL ICU Percentage Utilized 38% 43% 46.10% 53% Revenue Per Count 9,008 9,008 9,458 9,458 NEONATAL ICU Percentage Utilized 13% 14% 16% 38% Revenue Per Count 7,900 7,900 8,295 8,295 POST CCU Percentage Utilized 57% 64% 72% 82% Revenue Per Count 5,454 5,454 5,726 5,726 CCU Percentage Utilized 42% 48% 54% 61% Revenue Per Count 8,910 8,910 9,356 9,356 KTU/Positive Pressure Percentage Utilized 7% 8% 9% 10% Revenue Per Count 8,954 8,954 9,401 9,401
Occupancy 26,313 29,734 32,112 36,929 Revenue Per Count 256 256 268 268 Emergency Charges Occupancy 1,583 1,788 1,931 2,221 Revenue Per Count 196 196 206 206 Day care Occupancy 9,048 10,224 11,042 12,698 Revenue Per Count 361 361 379 379 Consultations Fees Ratio to Occupancy 1.40 1.40 1.40 1.40 Revenue Per Count 1,433 1,433 1,504 1,504 Investigations Ratio to Occupancy 0.51 0.51 0.51 0.51 Revenue Per Count 377 377 396 396 BIOCHEMISTRY Ratio to Occupancy 1.08 1.08 1.08 1.08 Revenue Per Count 1,278 1,278 1,342 1,342 CLINICAL PATHOLOGY Ratio to Occupancy 0.09 0.09 0.09 0.09 Revenue Per Count 391 391 410 410 HAEMATOLOGY Ratio to Occupancy 0.33 0.33 0.33 0.33 Revenue Per Count 821 821 862 862 HISTOPATHOLOGY Ratio to Occupancy 0.03 0.03 0.03 0.03 Revenue Per Count 3,366 3,366 3,535 3,535 HOLISTIC MEDICINE Ratio to Occupancy 0.00 0.00 0.00 0.00 Revenue Per Count 910 910 956 956
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MICROBIOLOGY Ratio to Occupancy 0.18 0.19 0.20 0.21 Revenue Per Count 1,407 1,407 1,477 1,477 MOLECULAR DIAGNOSTICS LAB
Ratio to Occupancy 0.0048 0.0050 0.0053 0.0055 Revenue Per Count 8,116 8,116 8,522 8,522 TRANSFUSION MEDICINE
Ratio to Occupancy 0.07 0.07 0.07 0.07 Revenue Per Count 1,067 1,067 1,120 1,120 TRANSPLANT IMMUNOLOGY & MOLECULE GENERATION Ratio to Occupancy 0.04 0.04 0.04 0.04 Revenue Per Count 1,428 1,428 1,500 1,500 Procedures Ratio to Occupancy 0.21 0.21 0.22 0.22 Revenue Per Count 7,225 7,225 7,586 7,586 CT SCAN Ratio to Occupancy 0.03 0.03 0.03 0.04 Revenue Per Count 11,621 11,621 12,202 12,202 MRI Ratio to Occupancy 0.01 0.01 0.01 0.01 Revenue Per Count 13,073 13,073 13,726 13,726 NUCLEAR MEDICINE Ratio to Occupancy 0.0005 0.0005 0.0005 0.0005 Revenue Per Count 5,177 5,177 5,436 5,436 BMD Ratio to Occupancy 0.0020 0.0020 0.0020 0.0020 Revenue Per Count 4,821 4,821 5,062 5,062 ULTRA SOUND Ratio to Occupancy 0.06 0.06 0.07 0.07 Revenue Per Count 2,405 2,405 2,526 2,526 X-RAY CENTER
Ratio to Occupancy 0.25 0.25 0.25 0.25 Revenue Per Count 1,031 1,031 1,083 1,083 Surgery Ratio to Occupancy 0.06 0.06 0.06 0.06 Revenue Per Count 64,272 64,272 67,485 67,485 Others Ratio to Occupancy 2.67 2.67 2.67 2.67 Revenue Per Count 283 283 297 297 Pharmacy & Consumable Revenue Per Bed occupied bed days 5,217 5,322 5,322 5,428 Ambulance Count 15,396 16,166 16,974 17,823
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Revenue Per Count 289 289 303 303 Vaccination Count 0.01 0.02 0.02 0.02 Revenue Per Count 308 308 323 323 Blood Bank Ratio to Occupancy 0.11 0.11 0.11 0.11 Revenue Per Count 1,837 1,837 1,929 1,929 Physical Medicine Ratio to Occupancy 0.23 0.23 0.23 0.23 Revenue Per Count 515 515 540 540 Nursing Service
2,621,815 2,752,906 2,890,551 OTHER REVENUE DETAILS Revenue from Restaurant services
Apollo Food village 0% 8% 8% 8% Cart Sales 0% 8% 8% 8%
EXPENSE DETAILS Food & Beverage
Per Bed Days 1,330.00 1,380.00 1,435.20 1,492.61 House-keeping Per SQM per month 5% 5% 5% 5% Medical Gas Ratio to Occupancy 95.31 97.22 99.17 101.15 Consultants Fees % of Revenue 10.30% 10.30% 10.30% 10.30% Gas expenses for hospitals Unit used 3,055,013 3,196,114 3,355,919 3,523,715 Unit Price 5.66 8.51 8.93 9.38 Hospitals electricity Unit used 2,959,498 3,193,960 3,353,658 3,521,341 Unit Price 7.88 8.42 8.84 9.28 Diesel For Generator Unit used 28,835 35,141 36,898 38,743 Unit Price 65.81 65.81 69.10 72.56 Laundry Expenses Ratio to Occupancy 13% 10% 0% 0% Cleaning Expenses Prisn Bangladesh
25,000 26,250 27,563
A-1 Pest Control 5% 45,000 47,250 49,613 Others 5% 4,000 4,200 4,410 Linen for Hospitals
74,000 77,700 81,585
Ratio to Occupancy 5% 5% 5% 5% Outsourced test expenses
Ratio to IPD & OPD Numbers 16.28 17.09 17.09 17.09 Instrument discard
% of Revenue 0.033% 0.06% 0.04% 0.05% Ambulance running expenses
Cost per KM 5% 5% 5% 5% Consumable Ratio to Revenue 26.33% 26.33% 26.18% 25.98%
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Pharmacy Ratio to Pharmacy Revenue 10.82% 10.60% 10.60% 10.60% Finance Cost Overdraft Interest 10.00% 9.50% 9.50% 9.50% Long-term loan
10.00% 10.00% 10.00%
Bank Charges
5.00% 5.00% 5.00% GENERAL AND ADMINISTRATIVE EXPENSES
OMA Fees (1 % revenue) OMA Fees (5% of PBDT) OMA Fees (Fixed 40 ml INR) Maximum 30 mill BDT each year
Franchise Fees
Marketing Expenses Print Media 10% 52% 10% 10%
Electronic Media 10% 29% 10% 10% Seminar & special events 10% 18% 10% 10% Promotional expenses 10% -9% 10% 10% Info center 10% 8% 10% 10% Other Income Car parking 2% 5% 2% 2% Misc. income 2% -18% 2% 2% BALANCE SHEET DETAILS Inventory (Combined- Single entry)
Number of Days 76 65 60 55 Trade receivable
Sales (Number of Days) 1.84 1.87 1.91 1.95 Trade & other payable
Purchase (Number of Days) 41 41 41 41 Liability for gratuity
(Same Increase as Salary) 12% 12% 17% 12%
Advances, deposits and prepayments Growth (%) 84% -38% 73% 62%
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Statement of Financial Position (Projected)
STS HOLDINGS LIMITED PROJECTED BALANCE SHEET
BDT in Million Actual Projected
2015 2016 2017 2018 Application of Funds:
Non-current assets Property, plant and equipment 6,612 7,444 7,506 7,540 Capital work in progress 141 14 11 15 Investment in Subsidiaries 108 1,203 1,971 2,231 Investment in share money deposit 585 - - - Total non-current assets 7,446 8,661 9,487 9,786 Current assets Financial Assets 652 52 52 252 Inventories and stores & spares 315 307 328 354 Accounts and other receivable 19 22 26 31 Interest Receivable 21 - - - Advances, deposits and prepayments 385 239 412 667
Cash and cash equivalents 32 57 362 475
Total current assets 1,425 677 1,181 1,780 Current liabilities Trade and other payable 383 401 439 487 Liability for current tax 582 435 618 876 Provision for WPPF
32 45 68
Long-term loan Current portion 33 53 61 69 Bank overdraft 164 54 54 54 Total Current Liabilities 1,162 976 1,217 1,554 Net current assets 263 (299) (37) 226 Total Application of Fund 7,709 8,363 9,451 10,012 Sources of Funds:
*Projected EPS for the year 2016, 2017 and 2018 are not calculated due to number of outstanding shares which is not yet determined.
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q) Discussion on the results of operations shall inter-alia contain the following:
1) A summary of the past financial results after adjustments as given in the auditor‟s report containing significant items of income and expenditure;
There was no significant adjustment given by the auditor‟s during the last financial year. Summary of the financial results and operations are presented below:
Sl. No.
Particulars 31.12.2015
(Consolidated) 31.12.2015
(The Company)
31.12.2014 (Consolidated)
(Restated)
31.12.2014 (The Company)
(Restated)
31.12.2013 (The Company)
31.12.2012 (The Company)
31.12.2011 (The Company)
1 Net revenue 3,789,300,061 3,753,919,306 3,565,717,280 3,558,080,623 3,148,834,681 3,070,982,441 2,590,477,890 2 Gross profit 1,816,425,509 1,803,881,835 1,663,608,834 1,660,010,907 1,394,542,964 1,397,982,549 1,216,056,054 3 Net profit before tax 585,974,982 619,797,531 419,189,785 438,370,875 273,494,986 403,006,949 297,653,167 4 Net profit/ (loss) after tax 375,872,621 409,810,801 335,772,317 354,976,500 175,166,245 134,177,696 284,620,603 5 Total assets 8,839,798,079 8,871,522,977 8,166,818,417 8,178,888,105 7,653,502,786 7,360,944,641 7,195,339,429 6 Share capital 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 1,509,450,000 7 Retained earnings 397,067,700 449,631,858 36,185,008 55,180,244 (332,073,132) (532,221,163) (663,348,337) 8 No. of Shares 150,945,000 150,945,000 150,945,000 150,945,000 150,945,000 150,945,000 150,945,000 9 Face Value 10.00 10.00 10.00 10.00 10.00 10.00 10.00
10 NAV Per Share 48.57 48.92 46.35 46.47 44.06 42.90 42.19 11 Earnings per Share (EPS) 2.49 2.71 2.23 2.35 1.16 0.81 1.65
2) A summary of major items of income and expenditure;
Major items of income: Sl. No.
Particulars 31.12.2015
(Consolidated) 31.12.2015
(The Company) 31.12.2014
(Consolidated) 31.12.2014
(The Company) 31.12.2013
(The Company) 31.12.2012
(The Company) 31.12.2011
(The Company)
1 Net revenue 3,789,300,061 3,753,919,306 3,565,717,280 3,558,080,623 3,148,834,681 3,070,982,441 2,590,477,890 2 Other Income 132,202,883 132,119,302 3,565,717,280 105,760,054 3,148,834,681 3,070,982,441 -
3) The income and sales on account of major products or services; The income and sales on account of major products or services are as follows:
Particulars 2015
Amount in Million % Pharmacy & Consumables 828.88 22% Consultation 524.75 14% Laboratory Test 570.00 15% Room Rent 421.37 11%
Procedures 414.67 11% Surgeries 398.84 11%
4) In case, other income constitutes more than 10% of the total income, the breakup of
the same along with the nature of the income, i.e., recurring or non-recurring; The Company‟s other income is not more than 10% of the total income.
5) If a material part of the income is dependent upon a single customer or a few major customers, disclosure of this fact along with relevant data. Similarly, if any foreign customer constitutes a significant portion of the issuer‟s business, disclosure of the fact along with its impact on the business considering exchange rate fluctuations; The Company‟s income is not dependent upon a single customer or a few major customers nor foreign customer.
6) In case the issuer has followed any unorthodox procedure for recording sales and revenues, its impact shall be analyzed and disclosed. The issuer has not followed any unorthodox procedure for recording sales and revenues.
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r) Comparison of recent financial year with the previous financial years on the major heads of the profit and loss statement, including an analysis of reasons for the changes in significant items of income and expenditure, inter-alia, containing the following:
(a) Comparison of consolidated Profit or Loss account for three years from 2013 to 2015
Reason of fluctuation: Revenue: Issuer registered revenue growth for the year 2014 was 13.2% which slowed down to
6.3% during the year 2015 due to political turmoil of two and half months in the year 2015.
Direct operating expenses: During the year 2014 growth in direct operating expenses was 8.4%
which decreased to 3.72% in 2015 that indicates continuous cost control initiatives & better
negotiations along optimum utilization of resources.
Gross profit: Gross profit margin shows declining growth rate due to the facts that revenue growth
for the year 2014 was 13.2% which slowed down to 6.3% during the year 2015.
Other operating expenses: Other Operating Expenses shows decreasing growth as depreciation
expenses decrease significantly in 2015 due to the fact that a major portion of medical equipment &
IT equipment complete their useful life in 2015.
Finance cost: Finance cost shows negative growth due to repayment of long-term loan & efficient
working capital management.
Other income: Other income increases from year to year due to the fact that other income mainly
comprises of interest of FDR which varies every year because issuer investment in FDR increases
every year from 2013. Moreover, compare to year 2014 income from restaurant increased by BDT
8,355,485 during the year 2015.
Income tax expenses: Compare to the year 2014, during the year 2015 provision for current tax
increased by BDT 118,211,846 as net profit before tax was also increased by BDT 166,785,196 in
the year compare to 2014.
Net profit before& after-tax: Issuer experience net profit margin of 10% in 2015 which was 9% in
2014 due to revenue increased and continuous cost control initiatives and better negotiations along
with optimum utilization of resources. Moreover, net profit before & after tax shows increasing
trend due to introduction of deferred tax in the Income Statement.
Particulars 31.12.2015 Consolidated
31.12.2014 Consolidated
Net revenue 3,789,300,061
3,565,717,280
Direct operating expenses (1,972,874,552)
(1,902,108,446)
Gross profit 1,816,425,509
1,663,608,834
Other operating expenses (1,337,761,501)
(1,322,374,552)
Profit from operation 478,664,008
341,234,282
Finance cost (24,891,909)
(27,865,994)
Other income 132,202,883
105,821,498
Net profit before tax 585,974,982
419,189,786
Income tax (expense)/income
Current tax (217,044,766)
(98,832,920)
Deferred tax 6,942,405
15,415,451
(210,102,361)
(83,417,469)
Net profit/(loss) after tax 375,872,621
335,772,317
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(b) Comparison of separate Profit or Loss account for five years from 2011 to 2015
31.12.2015
31.12.2014
31.12.2013
31.12.2012
31.12.2011
Net revenue 3,753,919,306
3,558,080,623
3,148,834,681
3,070,982,441
2,590,477,890 Direct operating expenses (1,950,037,471)
(1,898,069,716)
(1,754,291,717)
(1,672,999,892)
(1,374,421,836)
Gross profit 1,803,881,835
1,660,010,907
1,394,542,964
1,397,982,549
1,216,056,054 Other operating expenses (1,298,145,771)
(1,299,534,092)
(1,158,324,796)
(1,032,015,854)
(903,379,689)
Profit from operation 505,736,064
360,476,815
236,218,168
365,966,695
312,676,365 Finance cost (18,057,835)
(27,865,994)
(32,443,733)
(17,833,375)
(31,058,015)
Other income 132,119,302
105,760,054
69,720,551
54,873,629
16,034,818 Net profit before tax 619,797,531
438,370,875
273,494,986
403,006,949
297,653,168
Income tax (expense)/income
Current tax (216,929,136)
(98,809,826)
(102,560,620)
(151,127,606)
(13,032,564) Deferred tax 6,942,405
15,415,451
4,231,879
(117,701,647)
-
(209,986,731)
(83,394,375)
(98,328,741)
(268,829,253)
(13,032,564)
Net profit/(loss) after tax 409,810,800
354,976,500
175,166,245
134,177,696
284,620,604
Reason of fluctuation:
Revenue: Revenue shows positive growth from year 2012 to 2015. Issuer registered revenue growth for the year 2014 was 13% which slowed down to 6% during the year 2015 due to political turmoil of two and half months in the year 2015.
Direct operating expenses: During the year 2014 growth in direct operating expenses was 8.2% which decreased to 3.0% that indicates continuous cost control initiatives & better negotiations along optimum utilization of resources.
Gross profit: Gross profit margin shows declining growth rate due to the facts that revenue growth for the year 2014 was 13% which slowed down to 6% during the year 2015.
Other operating expenses: Other Operating Expenses shows decreasing growth as depreciation shows negative growth in 2015 as result of a major portion medical equipment & IT equipment complete their useful life.
Finance Cost: Finance cost shows negative growth due to repayment of long-term loan & efficient working capital management.
Other income: Other income increases from year to year due to the fact that other income mainly comprises of interest of FDR which varies every year because issuer investment in FDR increases every year from 2013.
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Income tax expenses: Compare to the year 2014, during the year 2015 provision for current tax expenses increased by BDT 118,119,310 as net profit before tax was also increased by BDT 181,426,656 in the year compare to 2014.
Net profit before& after-tax: Issuer experience net profit margin of 11% in 2015 which was 10% in 2014 due to revenue increased and continuous cost control initiatives and better negotiations along with optimum utilization of resources. Moreover, net profit before & after tax shows increasing trend due to introduction of deferred tax in the Income Statement during the year 2012.
1) Unusual or infrequent events or transactions including unusual trends on
account of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses etc.
The is no unusual or infrequent events or transactions including unusual trends on account of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses etc.
2) Significant economic changes that materially affect or are likely to affect income from continuing operations;
There are no significant economic changes that materially affect or are likely to affect income from continuing operations.
3) Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations;
There are no known trends, events and/or uncertainties that shall have a material impact on the Company‟s future business except for those which are naturally beyond control of human being.
The business operation of the Company may be affected by the following events: i) Political unrest, strike ii) Natural/social disaster
4) Future changes in relationship between costs and revenues, in case of events such as future increase in labor or material costs or prices that will cause a material change are known;
Any event such as increase in labor or material costs or prices will not affect the operational result of the Company, because of, with the passages of time volume and prices of net sales or revenue are also expected to increase in normal course of operation and for introduction of new products or services.
5) The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices;
The Company is expecting a positive growth in net sales or revenue are due to increased sales volume by expansion of its 5 number operation theaters, New initiative for oncology project, OPD expansion and by conducting tariff rationalization. Positive results in this regard have been reflected in projected financial statements.
6) Total turnover of each major industry segment in which the issuer operated;
Considering the business nature of STSHL the Company is assumed to operate in
Services & Real Estate Sector.
Year Industry Segment- Service & Real Estate 2014-15 345.54 Mill 2013-14 335.14 Mill
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Note: The turnovers mentioned above are consisting of the turnover of Samorita Hospital Ltd. At present samorita hospital is listed in service sector.
7) Status of any publicly announced new products or business segment;
The Company did not announce new products or business segment.
8) The extent to which the business is seasonal.
There is no significant seasonal aspect on the Company’s business. However, it has variation in financial results from fiscal period to fiscal period as a result of various factors, including those described under “Risk Factors” and “Causes for
Material Changes from period to period”.
s) Defaults or rescheduling of borrowings with financial institutions/banks, loans into equity along with reasons thereof, lock out, strikes and reasons for the same etc.
The Company neither defaulted or rescheduled of its borrowings with financial institutions/banks nor converted any of its loans into equity till to date.
t) Details regarding the changes in the activities of the issuer during the last five years
which may had a material effect on the profits/loss, including discontinuance of lines of business, loss of agencies or markets and similar factors;
There were no changes in the activities of the Company during the last five years and had not any material effect on the profits/loss, including discontinuance of lines of business, loss of agencies or markets and similar factors.
u) Injunction or restraining order, if any, with possible implications;
There was no injunction or restraining order from any Court of Law or competent authority during the entire life of the Company‟s business.
v) Technology, market, managerial competence and capacity built-up;
Technology
Apollo Hospitals Dhaka has deployed the latest state-of –the- art technology in all areas such as Hospital Information System, Electronic Patient Records, Radiology Information System and Picture Archival Communication System, etc. Among the major clinical equipment deployed, the major ones are 1.5 Tesla, high speed, Superconducting MRI system, 64 Slice CT Scanner, Nuclear Gamma Camera, 2nos of most modern Flat Panel Digital Catheterization labs for all types of Cardiac and other interventional procedures. Within 3 months the hospital will be installing the latest Digital Image Guided Radio Therapy System, Brachy Therapy System, Positron Emission Tomography coupled with 16 Slice C.T Scanner which are all meant for most precise cancer radiation treatment after installing these mechneries. The comprehensive Cancer Centre will be capable of treating the smallest brain tumor of size less than 2.5 mm diameter. The whole infrastructure of the hospital is state-of the –art, comparable to the best in the world. The Modular Operation Theatres and ICUs are designed to ensure almost close to zero percent infection.
Market
Healthcare Market in Bangladesh has always been facing huge gap between Demand and Supply. It is estimated that close 150,000 patients go abroad every year for major clinical treatments. Hence the future opportunity is going to be multi folds of present market, if good super specialty hospitals are able to offer the best clinical services in this country itself.
Capacity Build Up
Capacity enhancement is planned through creation of new sub specialties and by adding new Clinical Consultants in areas such as Surgical Oncology, Medical Oncology, Hematology Oncology, Bone Marrow Transplant programs, Radiation
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Oncology, Bariatric Surgery, Organ Transplantations, etc. In addition, we will also be establishing Life Care Centers and chain of Pharmacies in different potential geographical locations in the country.
w) Changes in accounting policies in the last three years;
The management of the Company has not change any accounting policies in the last three years.
x) Significant developments subsequent to the last financial year: A statement by the
directors whether in their opinion there have arisen any circumstances since the date of the last financial statements as disclosed in the red-herring prospectus and which materially and adversely affect or is likely to affect the trading or profitability of the issuer, or the value of its assets, or its ability to pay its liabilities within the next twelve months;
A statement by the directors:
In our opinion, there have no such circumstances arisen since the date of the last financial statements as disclosed in the red-herring prospectus which materially and adversely affect or is likely to affect the trading or profitability of the STS Holdings Limited or the value of its assets, or its ability to pay its liabilities within the next twelve months.
Sd/- Bhagwan W. Kundanmal
(Nominated by STS Capital Ltd.) Chairman
Sd/- Khondokar Monir Uddin
Managing Director
Sd/- Mohammad A. Moyen Director
Sd/- Tipu Munshi
(Nominated by Sepal Holdings Ltd.)
Director
Sd/- Nissanka B. Weerasekera
(Nominated by Aureos South Asia Holdings SPV 1 Ltd.)
Director Sd/-
Chaklader Mansurul Alam Independent Direct
Sd/- Khondokar Monir Uddin
Independent Director
y) If any quarter of the financial year of the issuer ends after the period ended in the audited financial statements as disclosed in the prospectus, unaudited financial statements for each of the said quarters duly authenticated by the CEO and CFO of the issuer;
As of now the compnay don‟t have any unaudited quarterly accounts. However, half-yearly audited accounts as on 30th June 2016 of STS Holdings Limited and its two subsidiaries company i.e. STS Hospitals Ltd. & STS Hospital Chittagong Ltd. has been incorporated in the red-herring prospectus. (Page No.450-537)
z) Factors that may affect the results of operations.
There are no such factors that may affect the results of operations.
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CHAPTER (VII): MANAGEMENT‟S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
a) Overview of business and strategies:
Our Business Strategy is focused achieving our vision of becoming a premier International Healthcare destination with comprehensive super specialty excellence touching lives with care and empathy. Towards accomplishing this, we continuously focus on 4 measurable parameters such as 1. Clinical Excellence; 2. Patient friendliness; 3. Transparency and ethical practice and 4. Cost effectiveness.
b) SWOT ANALYSIS:
A SWOT analysis is a structured planning method that helps to evaluate the strengths, weaknesses, opportunities and threats involved in a business venture. It identifies the internal and external factors that affect business venture. Strength and Weakness are evaluated with internal factors whereas Opportunity and Threat are evaluated by external factors. The SWOT analysis of the company is as follows:
Strengths Weaknesses
1. Quality Services 1. Dependence on Expat Professionals 2. Highly dependence on Brand name
2. State-of the –art Technology 3. World Class Doctors 4. Market Share 5. Professional Management
Opportunities Threats
1. Government Support 2. High Demand of Service 3. Evolution of medical insurance
1. Competition
Strengths 1. Quality Service: We provide world class healthcare service in Bangladesh. We are the only
hospital in the entire country with an International Accreditation like JICIA.
2. State of the art Technology: We have been using most modern state of the art and latest digital technology.
3. World Class Doctor: We try to provide service through local and International expert doctors.
4. Market Share: Our market share has been increasing rapidly. Our brand is looked upon as the last resort by most of the patients.
5. Professional Management: We have professional management and they have more than two decades of hands-on experience in healthcare management and in different industries.
Weaknesses 1. Dependence on Expat Professionals: Dependence on Expat Professionals, especially in clinical areas. We will overcome this by training and coaching local professionals in due course of time. 2. Highly dependence on Brand name: STS Holings Limited is using brand name “Apollo” its
Hospital at Dhaka which is based on a franchise agreement that will expair on April 15, 2020.
Opportunity 1. Government Support: There is government support to smoothen our business.
2. High Demand of Service: Bangladesh Economic condition is going to better and better.
There is high demand of taking healthcare treatment from abroad. So we are trying to provide world class healthcare in our hospital so that these potential patients can be treated in our Country itself.
3. Evolution of Medical Insurance: Medical Insurance will throw open a major opportunity that can grow the overall market to exponential terms.
Threat 1. Competition: There is competition from many existing and upcoming private hospitals.
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c) Analysis of the financial statements of last five years with reason(s) of fluctuating revenue/sales, other income, total income, cost of material, finance
cost, depreciation and amortization expense, other expense; changes of inventories, net profit before & after tax, EPS etc.
Reason of fluctuation: Revenue: Issuer experienced revenue growth of 6.3% in 2015 which slowed down from 13.2% in 2014 reasoned by political turmoil of two and half months. Moreover, growth of revenue in 2013 was very low compared to 2012 due to countrywide strike and political unrest. Other income: Other income mainly comprises of interest on FDR which shows increasing trend from period to period because issuer investment in FDR increases by every year from 2012. Moreover, income from restaurant also shows increasing trend (compare to year 2014 income from restaurant increased by BDT 8,355,485 during the year 2015)
Total Income: Issuer registered total income growth of 7% in 2015 which slowed down from 14% in 2014 reasoned by political turmoil of two and half months. Growth of total income in 2013 was very low in comparison to 2012 due countrywide strike and political unrest. Cost of materials: Cost of materials shows declining growth that indicates continuous cost control initiatives & better negotiations along optimum
utilization of resources. Moreover, declining growth in cost of materials resulted in positive growth in gross profit margin.
Finance Cost: Finance cost is reduced year on year due to repayment of long-term loan & efficient management of working capital.
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Depreciation: Depreciation shows negative growth in 2015 as result of a major portion of medical equipment & IT equipment complete their useful life. Moreover, during the period 2011to 2014 depreciation expenses shows increasing trend due to addition in property, plant & equipment. Changes of inventory: With the positive growth in revenue inventory also increases from year to year. Net profit before& after-tax and Earning Per Share (EPS): Issuer experience net profit margin of 10% in 2015 which was 9% in 2014 as a result of revenue increased and continuous cost control initiatives and better negotiations along with optimum utilization of resources. In 2012 net profit and EPS shows negative growth in compared to 2011 which is the result of first time introduce deferred tax implication in the Income Statement.
d) Known trends, demands, commitments, events or uncertainties that are likely to have an effect on the company‟s business:
There are no known trends, events and/or uncertainties that shall have a material impact on the Company‟s future business except for those which are naturally beyond control of human being.
The business operation of the Company may be affected by the following events: i) Political unrest, strike ii) Natural/social disaster
e) Trends or expected fluctuations in liquidity:
There are no trends or expected fluctuations in liquidity.
f) Off-balance sheet arrangements those have or likely to have a current or future effect on financial condition:
There are no off-balance sheet arrangements those have or likely to have a current or future effect on financial condition.
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CHAPTER (VIII): DIRECTORS AND OFFICERS
a) Name, Father‟s Name, age, Residential address, Educational qualification, experience and position of each director and nominated director with
nomination period, organization name:
SL Name of Director, Father‟s Name, Age & Experience Residential Address Educational Qualification
1
Name: Bhagwan W. Kundanmal (Nominated by STS Capital Limited) Position: Chairman Father‟s Name: Wassiamal Kundanmal Age: 54 Years Experience: 30 Years
10, Dudely Senanayaka Mawatha, Colombo-8, Sri Lanka
Graduate
2
Name: Khondoker Monir Uddin Position: Managing Director Father‟s Name: K. M. Momtaz Uddin Age: 54 Years
Name: Mohammad A. Moyeen Position: Director Father‟s Name: Mohammad A. Huq Age: 57 Years
Experience: 33 Years
2/9, Block-D, Lalmatia Dhaka-1207, Bangladesh.
B. Sc Engineer (Architect)
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4
Name: Tipu Munshi (Nominated by Sepal Holdings Limited)
Position: Director
Father‟s Name: Ramjan Ali Munshi
Age: 64 Years
Experience: 34 Years
House No. 10, Road No. 4, Sector-5Uttara Model Town, Dhaka-1230
Graduate
5
Name: Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited) Position: Director Father‟s Name: Heen Banda Weerasekera Age: 55 Years
Experience: 30 Years
146/8C, Dutugemunu Street, Dehiwala Colombo, Sri Lanka
M. A in Economics, CIMA (UK)
6
Name: Chaklader Mansurul Alam Position: Independent Director Father‟s Name: Chaklader Mofajjal Ali Age: 65 Years
Experience: 36 Years
Flat No. 4, House No. 30, UN Road Baridhara, Dhaka-1212
Chartered Accountant
7
Name: Dr. Raajiv Singhal Position: Independent Director Father‟s Name: Tara Chand Singhal Age: 48 Years
Experience: 20 Years
B-171, Belvedere Towers, DLF Phase 2, Gurgaon-122002, Haryana, India
Postgraduate from Armed Forces
Medical College (AFMC)
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b) Date of first Directorship and Expiry of Current Tenure of the directors:
SL. Name of the Director Position Date of first Directorship
Date of Expiration of Current term
1 Bhagwan W. Kundanmal (Nominated by STS Capital Limited
Chairman 31.08.2000 19th AGM in 2016
2 Khondoker Monir Uddin Managing Director
28.08.1997 20th AGM in 2017
3 Mohammad A. Moyeen Director 28.08.1997 20th AGM in 2017
4 Tipu Munshi (Nominated by Sepal Holdings Limited)
Director 28.08.1997 20th AGM in 2017
5 Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited)
Director 21.11.2007 19th AGM in 2016
6 Chaklader Mansurul Alam Independent
Director 17.02.2014 19th AGM in 2016
7 Dr. Raajiv Singhal Independent
Director 17.09.2015 -
**Dr. Raajiv Singhal, Date of Expiration of Current term will be set after approval of his appointment in next AGM.
c) Name of Interest and Involvement in other business/organization of directors:
SL Name & Designation in STSHL Directorship/Ownership with Other
Companies Position
1
Bhagwan W. Kundanmal (Nominated by STS Capital Limited) Chairman
i. STS Hospitals Limited Chairman
ii. Royal Park Residence Ltd. Director
iii. STS Capital Ltd. Chairman
iv. STS Hospital Chittgong Ltd. Chairman
2 Khondoker Monir Uddin Managing Director
i. Shanta Securities L Ltd. Managing Director ii. Shanta Washing Plant Ltd. Managing Director
iii. GDS Chemical Bangladesh Ltd. Managing Director iv. Universal Business Machines
Ltd. Managing Director
v. Shanta Capital Management Ltd. Managing Director
vi. Shanta Medical Centre Ltd. Managing Director
vii. Shanta Holdings Limited Managing Director
viii. STS Capital Ltd. Managing Director
ix. STS Hospitals Limited Managing Director
x. STS Hospital Chittagong Limited Managing Director
xi. Dhaka Bank Limited Director
3 Mohammad A. Moyeen Director
i. Lanka Bangla Finance Ltd. Chairman ii. Global Aviation Services Ltd. Director
iii. Standard Paper Products Ltd. Director iv. Wings Tours & Travels Ltd. Director v. Wings Ocean Freight Ltd. Director
vi. Swift Logistics Services Ltd. Director vii. SG Logistics (Pvt) Ltd. Director
viii. The M & M Ltd. Director ix. Freight Care Aviation Services
Ltd. Director
x. Expo Express Services Ltd. Director xi. Lanka Bangla Securities Ltd. Director
xii. Wings Logistic Ltd. Director xiii. Wings Express Ltd. Director xiv. Orchid Air Ltd. Director
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xv. UCL Logistic Ltd. Director xvi. Cross Freight Lines Ltd. Director
xvii. Air Line Cargo Resources Ltd. Director xviii. Pulser Shipping Agencies Ltd. Director
xix. Lanka Bangla Investments Ltd. Director xx. Colloid Enterprises Ltd. Director
xxi. Voytech Limited Director xxii. Wings Aviation Limited Director
xxiii. Biz Bangla Media Limited Director xxiv. Datafort Limited Director xxv. Information Technology
Consultants Ltd. Director
xxvi. Inno Web Limited Director xxvii. WAC Logistics Ltd. Director
xxviii. Wings Classic Tours & Travels Ltd. Director
xxix. STS Hospitals Ltd. Director xxx. STS Capital Ltd. Director
xxxi. STS Hospital Chittagong Limited Director xxxii. Anyeshan Limited Director
xxxiii. Bengal Meet Processing Limited Director xxxiv. First Forwarding Limited Director xxxv. Cross Freight Limited Director
xxxvi. APS Logistics International Ltd. Director
4
Tipu Munshi (Nominated by Sepal Holdings Limited) Director
i. Sepal Garments Ltd. Managing Director
ii. Glory Fashion Wear Ltd. Managing Director
iii. Eternal Holdings Ltd. Managing Director
iv. Sepal Washing Plant Ltd. Managing Director
v. Sepal Holdings Ltd. Managing Director
vi. Apu Munshi Himager Ltd. Managing Director
vii. Aqua Marine Dredging Ltd. Chairman viii. STS Hospitals Limited Director ix. Orchid Garments Ltd. Director x. STS Capital Ltd. Director
xi. STS Hospital Chittagong Limited Director
5
Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited) Director
i. STS Hospitals Limited Director
ii. STS Hospital Chittagong Limited Director
6 Chaklader Mansurul Alam, Independent Director
i. Kapita Auto Bricks Ltd Director ii. AutoKap Bricks Ltd Director
7 Dr. Raajiv Singhal, Independent Director
- -
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d) Statement of if any Directors of the issuer are associated with the securities market in any manner and any director of the issuer company is also director of any issuer of other listed securities during last three years with dividend payment history and market performance:
1. Khondoker Monir Uddin, Managing Director
Associated in Listed Company Associated in Non-Listed Company
Dhaka Bank Limited Shanta Securities L Ltd.
Last three years with dividend payment history and market performance of Dhaka Bank Ltd. under as follows:
Last three years Dividend payment history:
Sl. No. Name of the
Issue Publication Date
of Prospectus Listing Year
Issue Price
Dividend Payment History
2013 2014 2015
1 Dhaka Bank Ltd. 25-Nov-1999 2000 100.00 17% C, 5% B
14% C 10% B
6% C 10% B
Last three years Market performance of Dhaka Bank Limited:
Sl. No. Particulars 31.12.2013 31.12.2014 31.12.2015 1 Turnover 15,179,221,577 13,735,943,604 12,146,219,663 2 Gross Profit 3,356,339,852 2,863,806,337 2,022,059,457 3 Net Profit after Tax 1,981,495,178 2,098,646,823 1,512,728,701
4 NAV per share 22.25 22.82 21.89 5 Earnings per Share 3.66 3.69 2.42
Source: Dhaka Stock Exchanges 2. Mohammad A. Moyeen, Director
Associated in Listed Company Associated in Non-Listed Company
Information Technology Consultants Ltd. Lanka Bangla Investments Ltd.
Last three years with dividend payment history and market performance of Lanka Bangla Finance Ltd. under as follows: Last three years Dividend payment history:
Sl. No. Name of the
Issue Publication Date
of Prospectus Listing Year
Issue Price
Dividend Payment History
2013 2014 2015
1 LankaBangla
Finance Limited 10-July-2006 2006 10.00
15% C 5% B
10% C 10% B
15% C 15% B
Last three years Market performance of LankaBangla Finance Limited:
Sl. No. Particulars 31.12.2013 31.12.2014 31.12.2015
3 Net Profit after Tax 954,552,560 453,986,871 420,928,515
4 NAV per share 32.83 31.75 26.02
5 Earnings per Share 4.58 2.08 1.75
Source: Dhaka Stock Exchanges
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Last three years with dividend payment history and market performance of Information Technology Consultants Ltd.under as follows: Last three years Dividend payment history:
Sl. No.
Name of the Issue Publication Date
of Prospectus Listing Year
Issue Price
Dividend Payment History
2013 2014 2015
1 Information Technology
Consultants Limited October 8, 2015 2016 10.00 - - 15% B
Last three years Market performance of Information Technology Consultants Ltd.:
3 Net Profit after Tax 77,720,893 31,556,565 75,806,840
4 NAV per share 18.28 18.58 19.37
5 Earnings per Share 1.04 0.42 0.93
Source: Dhaka Stock Exchanges
e) Family relationship (father, mother, spouse, brother, sister, son, daughter, spouse‟s father, spouse‟s mother, spouse‟s brother, spouse‟s sister) among the directors and top five officers:
No family relationship exists between the members of the board of directors and top five officers of the STS Holdings Limited.
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f) Brief description of other businesses of the directors: Bhagwan W. Kundanmal (Chairman):
Sl. No. Name of Companies Date of Incorporation Nature of Business Legal Status 1 STS Hospitals Limited 17.12.2006 Medical Services Private Limited Company 2 Royal Park Residence Ltd., 23.07.1996 Hospitality Services Private Limited Company 3 STS Hospital Chittagong Limited 20.04.2011 Medical Services Private Limited Company
4 STS Capital Ltd. 28.08.1997 Education Public Limited Company
Sl. No. Name of Companies Date of Incorporation Nature of Business Legal Status 1 Shanta Securities L Ltd. 18.11.2014 Share Brokerage House Private Limited Company 2 Shanta Washing Plant Ltd. 20.05.1995 Washing Plant Private Limited Company 3 GDS Chemical Bangladesh Ltd. 26.11.1996 Exporter & Importer Private Limited Company
4 Universal Business Machines Ltd. 01.01.1979 Supplier of Office Machines &
Indenting Private Limited Company
5 Shanta Capital Management Ltd. 26.12.2004 Share Transaction Co. Private Limited Company 6 Shanta Medical Centre Ltd. 28.04.2004 Clinic Private Limited Company 7 Shanta Holdings Limited. 11.08.2014 Real Estate Private Limited Company
8 STS Capital Ltd. 28.08.1997 Education Public Limited Company
(not publicly traded) 9 STS Hospitals Limited 17.12.2006 Medical Services Private Limited Company
10 STS Hospital Chittagong Limited 20.04.2011 Medical Services Private Limited Company 11 Dhaka Bank Limited 06.04.1995 Commercial Banking Public Limited Company
Mohammad A. Moyeen (Director):
Sl. No. Name of Companies Date of Incorporation Nature of Business Legal Status
2 Global Aviation Services Ltd. 14.06.04 GSA Private Limited Company 3 Standard Paper Products Ltd. 09-04-1995 Packaging Private Limited Company 4 Wings Tours & Travels Ltd. 09.04.1995 GSA Private Limited Company 5 Wings Ocean Freight Ltd. 15.02.1992 Shipping Agency Private Limited Company
6 Swift Logistics Services Ltd. 10.04.1994 C&F and Transport Private Limited Company
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7 SG Logistics (Pvt.) Ltd. 11.06.2001 Freight Forwarders Private Limited Company 8 The M & M Ltd. 29.06.2002 Developer Private Limited Company 9 Freight Care Aviation Services Ltd. 18.02.2002 GSA Private Limited Company
10 Expo Express Services Ltd. 30.04.2002 GSA Private Limited Company
11 Lanka Bangla Securities Ltd. 03.07.1997 Brokerage Service Public Limited Company
12 Wings Logistic Ltd. 07.01.2002 Freight Forwarders Private Limited Company 13 Wings Express Ltd. 04.12.2008 GSA Private Limited Company 14 Orchid Air Ltd. 03.09.03 GSA Private Limited Company 15 UCL Logistic Ltd. 24.10.2002 Freight Forwarders Private Limited Company 16 Cross Freight Lines Ltd. 28.02.2004 Freight Forwarders Private Limited Company 17 Air Line Cargo Resources Ltd. 11.10.2004 GSA Private Limited Company 18 Pulser Shipping Agencies Ltd. 10.09.1995 Freight Forwarders Private Limited Company
19 Lanka Bangla Investments Ltd. 29.03.2010 Merchant Banking Service Public Limited Company
21 Voytech Limited 29.06.2010 General contractor service &
Commission agent Private Limited Company
22 Wings Aviation Limited 07.09.2009 GSA Private Limited Company
23 Biz Bangla Media Limited 18.01.2011 Print Media Services Private Limited Company
24 Datafort Limited 08.06.2014 File Archiving Private Limited Company
25 Information Technology Consultants Ltd. 23.08.2000 IT Business Public Limited Company
(Publicly traded)
26 Inno Web Limited 18.09.2014 Information Technology
Enabled services Private Limited Company
27 WAC Logistics Ltd. 06.07.1989 Freight Forwarders Private Limited Company
28 Wings Classic Tours & Travels Ltd. 28.08.1997 Travel Agency Private Limited Company 29 STS Hospitals Ltd. 17.12.2006 Medical Services Private Limited Company
30 STS Capital Ltd. 28.08.1997 Education Public Limited Company
(Not publicly traded) 31 STS Hospital Chittagong Limited 20.04.2011 Medical Services Private Limited Company 32 Anyeshan Limited 13.09.15 R & D Private Limited Company 33 Bengal Meat Processing Limited 04.05.2003 Meat Processing Private Limited Company 34 First Forwarding Ltd 02.11.15 GSA Private Limited Company 35 Cross Freight Ltd. 18.09.14 Freight Forwarders Private Limited Company 36 APS Logistics International Limited 29.09.2016 Freight Forwarders Private Limited Company
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Tipu Munshi (Director): Sl. No. Name of Companies Date of Incorporation Nature of Business Legal Status
1 Sepal Garments Ltd., 19-07-1990 Readymade Garments Private Limited Company 2 Glory Fashion Wear Ltd., 06-10-1997 Readymade Garments Private Limited Company 3 Eternal Holdings Ltd. 26-07-2004 Developer Private Limited Company 4 Sepal Washing Plant Ltd., 24-12-2009 Garments Washing Private Limited Company 5 Sepal Holdings Ltd. 04-05-2010 Developer Private Limited Company 6 Apu Munshi Himager Ltd. 08-05-2008 Agriculture Private Limited Company 7 Aqua Marine Dredging Ltd. 24-06-2010 Dredging Private Limited Company 8 STS Hospitals Limited 17.12.2006 Medical Services Private Limited Company 9 Orchid Garments Ltd., 01-11-1984 Readymade Garments Private Limited Company
10 STS Capital Ltd. 28.08.1997 Education Public Limited Company
(not publicly traded) 11 STS Hospital Chittagong Limited 20.04.2011 Medical Services Private Limited Company
Nissanka B. Weerasekera (Director):
Sl. No. Name of Companies Date of Incorporation Nature of Business Legal Status 1 STS Hospitals Limited 17.12.2006 Medical Services Private Limited Company 2 STS Hospital Chittagong Limited 20.04.2011 Medical Services Private Limited Company
Chaklader Mansurul Alam, Independent Director
Sl. No. Name of Companies Date of Incorporation Nature of Business Legal Status 1 Kapita Auto Bricks Ltd 10.03.2008 Bricks Manufacturing Private Limited Company 2 AutoKap Bricks Ltd 24.11.2010 Bricks Manufacturing Private Limited Company
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g) Short bio-data of each director: Mr. Bhagwan W. Kundanmal, Chairman Mr. Bhagwan W. Kundanmal started his business career in the early seventies and built up very successful ventures in Sri Lanka, Bangladesh, Thailand, Hong Kong and Maldives ranging from hotels, resorts and motels in Thailand, Bangladesh and Maldives to garments buying and apparel industries in Bangladesh and Sri Lanka, and, property development in Sri Lanka. Apart from Apollo Hospitals Dhaka, Mr. Kundanmal is also associated with Sino Lanka (Private) Limited, Srilanka. He is also the Chairman of Royal Park Residence Limited, a hotel situated in Banani, Dhaka, Bangladesh.
Mr. Khondoker Monir Uddin, Managing Director A leading entrepreneur of the country, Khondoker Monir Uddin,
completed his Bachelors with Honor’s and Master’s degrees from the Department of Accounting, University of Dhaka in 1982 and started his successful business career in the same year. Over the past three decades he has successfully established the Shanta Group, In addition, Khondoker Monir Uddin is also a founder Director and former Chairman of the Dhaka Bank Limited.Presently he is also director of the Dhaka bank Limited.
Mr. M. A. Moyeen, Director Mr. Mohammad A. Moyeen is a very prominent business personality of Bangladesh. He started his business career in 1982. He is an Architect Engineer by education from the Bangladesh University of Engineering and Technology (BUET). Due to his outstanding contribution to export oriented business in Bangladesh, Mr. Moyeen is recognized by the Government of Bangladesh as a Commercial Important Person (CIP). Mr. Moyeen is the Managing Director of Tropica Garments Limited which employs more than a thousand employees Mr. Moyeen is also the Chairman of Lanka Bangla Finance Ltd. and Lanka Bangla Securities Ltd.
Mr. Tipu Munshi, Director Mr. Tipu Munshi is a very prominent business and political personality of Bangladesh. He started his business career since more than two decades and has alongside successfully served his political constituency with dedication. He is the Managing Director of Sepal Group, a 100% export oriented industry which commenced business in 1986. The group owns several vertically integrated companies in garments manufacturing and washing units under one roof approved by the Board of Investment of Bangladesh. In addition, Mr. Tipu Munshi owns business ventures in cold storages and agro industries. He has served as the President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA). Mr. Munshi is currently a Member of Parliament of Bangladesh.
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Mr. Nissanka B. Weerasekera, Director Mr. Nissanka B. Weerasekera is representing Aureos South Asia Holdings SPV 1 Limited, one of the institutional shareholders of STS Holdings Limited as a nominated Director of the Board. Mr. Nissanka B. Weerasekera is the Managing Director, responsible for Sri Lanka and Bangladesh of the Abraaj Group, a leading investor in growth markets managing US$ 7.5 billion in assets, operating through 31 offices in Asia, Africa, Latin America and the Middle East. He is a Fellow Member of the Chartered Institute of Management Accountants, UK. He graduated from the University of Peradeniya in Physics and holds a
Master’s Degree in Economics from the University of Colombo.
Mr. Chaklader Mansurul Alam, Independent Director Mr. Chaklader Mansurul Alam is a UK qualified Chartered Accountant by profession. He returned to Bangladesh at the age of 36 after 17 years in professional service and joined the Industrial Promotion and Development Company of Bangladesh Ltd (IPDC) as its Financial Controller in March 1986. He accepted the post of Managing Director of IPDC in June 1994 and resigned from the post in August 2005. Under his professional leadership IPDC gained prominence as a premier investment bank in Bangladesh. After qualifying as a Chartered Accountant, completing a Post Graduate in Social Planning for Developing Countries from LSE, he gained invaluable experience before deciding to return to Bangladesh. He advocates the employment of sound flexible financial instruments and effective management through which the economic backbone of the country can grow significantly which in turn would lead to sustainable development.
Dr. Raajiv Singhal, Independent Director A Graduate and Postgraduate of the prestigious Armed Forces Medical College (AFMC), Pune and an alumnus of IIM, Ahmedabad with a rich and varied experience of over 20 years in the healthcare industry. Finance and business development and known for successful outcomes in challenging situations. Visiting faculty for management programs at prestigious institutes like AIIMS, AFMC, Institute of Chartered Accountants and Symbiosis University of Health Sciences.
Actively associated with various Healthcare Committees such as FICCI as Co-Chair of the FICCI Committee on Health Insurance and member of FICCI Health Services National Committee. Invited speaker at various management forums to deliver talks related to healthcare management.
Played an instrumental role in setting-up the first e-ICU concept in India. Based on this concept, Fortis Escorts Heart Institute is running more than 150 such beds from cities like Raipur, Raighar, Dehradun, Amritsar and Agra. Established Hub & Spoke model of several successful Heart Command Centers in India and abroad including Dubai, Nepal, Bangladesh & Afghanistan.
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h) Loan status of the issuer, its directors and shareholders who hold 5% or more shares in the paid-up capital of the issuer in terms of the CIB Report of Bangladesh Bank: Neither STS Holdings Limited nor any of its Sponsors or Directors or shareholders who hold 5% or more shares in paid-up capital of the issuer is loan defaulter in terms of the CIB Report of the Bangladesh Bank.
i) Name, position, educational qualification, age, date of joining in the company, overall experience (in year), previous employment, salary paid for the
financial year of the CEO, MD, CFO, CS, Advisers, Consultants and all Departmental Heads. If the Chairman, any director or any shareholder received any monthly salary than this information should also be included:
Name & Designation Educational
Qualification Age
Date of Joining
Overall experience
Previous Employment Salary/remuneration paid for the financial
year
Khondoker Monir Uddin* Managing Director
B. Com (Hons), M. Com from the Department of
Accounting, University of Dhaka.
54Yrs N/A 34yrs
Over the past three decades he has successfully established the Shanta Group, Founder promoter and Managing Director of Shanta Holdings Ltd., reputed and growing real estate business of the country. He is also associated with the Banking Companies as well as non-banking financial Institutions. He was the founder Director and former Chairman of Dhaka Bank Limited.
-
Dr. Ratnadeep Chaskar** CEO (Current Charge)
MBBS, MBA (Hospital Administration)
45Yrs 7/4/2016 19Yrs Fortis Healthcare Ltd. Int. Zonal Director-Mumbai as CEO S L Raheja Hospital, Mahim. India
-
Md. Giash Uddin Chief Financial Officer
Chartered Accountant
56 Yrs. 26.072005 28 Yrs Social Marketing Company BDT 2,430,000
Mr. Md. Enayet Ullah Khan Director, Business Development
Masters of Business Administration
Bachelor of Science
50 Yrs. 31.12.2015 24 Yrs.
General Manager General Electronic (Health Care)
Head Commercial Novartis Bangladesh Ltd.
BDT 21,613
Dr. Simeen Majid Akhtar General Manager, Quality Assurance
Masters of Public Health (Bangkok)
Masters of Science in Nutrition
MBBS
60 Yrs. 01.01.2009 35 Yrs. CEO Consultant & Director
Bangkok Hospital BDT 2,760,000
Mr. Kishwar Imdad Masters of 51 Yrs. 20.08.2009 26 Yrs. General Manager BDT 3,711,000
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General Manager, Operations
Business Administration
Masters of Commerce (Management)
Rahimafrooz Superstores Ltd. Head of Customer Care
Banglalink
Mr. Md. Shafiqul Islam General Manager, Supply Chain
Masters of Business Administration
Masters of Commerce (Accounting)
52 Yrs. 01.12.2011 27 Yrs.
Group Head of Supply Chain Metal Group
Deputy General Manager & Head of Supply Chain Process & Efficiency Grameen Phone
BDT 3,087,000
Mr. Prashant Vashisht Chief Information Officer
PGD in Information & Web Technology
Bachelor of Commerce
36 Yrs. 06.01.2011 15 Yrs.
Project Manager Akhil Systems Pvt. Ltd.
Senior Programmer Newage Data Links Pvt. Ltd.
BDT 2,867,420
Mr. Mahadurage Ajit Ivers De Silva General Manager, Hospitality Services
Diploma in F&B Operations
Diploma in Hotel Management
62 Yrs. 16.09.2013 28 Yrs.
General Manager Vaby‟s Mediterranean Grill, Sydney
General Manager Panarotti‟s, Sydney
BDT 2,467,067
*Khondoker Monir Uddin is managing director and also director of the company. He is not getting Salary/remuneration from the company. ** Dr. Ratnadeep Chaskar (CEO, Current Charge) of the company. Dr. Ratnadeep Chaskar, CEO (Current Charge) has newly joint on 04/07/2016.
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j) Changes in the key management persons during the last three years: Changes in the key management persons during the last three years are as given below: Last three years joining status of key management persons:
Sl. No. Name Position Date of Appointment Date of Joining
01 Mr. R Basil CEO 2014 06/01/2014
02 Mr. Vinod Kalra Director Finance 2014 04/02/2014
03 Mr. Mahadurga Ajit Ivers De Silva GM Hospitality Service 2014 16/09/2013
04 Ms. Alkona K. Choudhuri Director HR 2015 15/11/2014
05 Mr. Enayet Ullah Khan Director Business
Developemnt 2015 31/12/2015
06 Capt. Shubha Ravindranath (Retd.) Director Nursing 2015 07/07/2015
07 Dr. Ratnadeep Chaskar CEO (Current Charge) 2016 04/07/2016
Last three years resigned status of key management persons:
Sl. No. Name Position Date of resigned Date of Last working day
01 Mr. Ranjan D Silva Director Stretic
Execution 2013 05/01/2014
02 Mukesh Chandra Rai Director Finance 2013 14/01/2014
03 Mr. Sarath Nandana Jayasinghe Director HR 2014 30/09/2014
04 Dr. Shagufa Anwar GM BD 2014 28/02/2015
05 Major Ranjana Rajendra Williams Chief Nursing Officer 2014 11/06/2015
06 Mr. Keerthi Deshapriya Weragoda Vidanelage GM Hospitality Service 2013 18/09/2013
07 Mr. R Basil CEO 2016 26/06/2016
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k) A profile of the sponsors including their names, father‟s names, age, personal addresses, educational qualifications, and experiences in the business, positions/posts held in the past, directorship held, other ventures of each sponsor and present position:
Name, Father‟s Name, Age & Personal Address Educational
Qualification Experience
(Years) Position/Post
Holding in other Venture Past Present
Name: Aneesha Mahial Bhagwan Kundanmal Father‟s Name: Abdur Rahman Age: 49 Years Personal Address: 10, Dudley Senanayake Mawatha, Colombo-8, Sri lanka
Bachelor in Public
Administration 20 Chairman -
Sino-Lanka (Pvt) Limited Royal Park Residence Limited
Name: Khondoker Monir Uddin Father‟s Name: K. M. Momtaz Uddin Age: 54 Years Personal Address: Safura Tower (3rd Floor), 20, Kemal Ataturk Avenue Banani C/A, Dhaka-1213.
Masters in
Accounting 30 MD MD
Shanta Securities L Ltd.
Shanta Washing Plant Ltd.
GDS Chemical Bangladesh Ltd.
Universal Business Machines Ltd.
Shanta Capital Management Ltd.
Shanta Medical Centre Ltd.
Shanta Holdings Limited
STS Capital Ltd.
STS Hospitals Limited
STS Hospital Chittagong Limited
Dhaka Bank Limited
Name: M & M Holdings Limited Father‟s Name: N/A Age: N/A Personal Address: 20, Kemal Ataturk Avenue, Banani C/A, Dhaka
N/A N/A Sponsor - There is no holding in other venture.
Name: Sepal Garments Limited Father‟s Name: N/A Age: N/A Personal Address:247-248, West Tejgaon Industrial Area, Dhaka-1208.
N/A N/A Sponsor Sponsor Aqua Marine Dredging Ltd.
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l) If the present directors are not the sponsors and control of the issuer was acquired within five years immediately preceding the date of filing prospectus details regarding the acquisition of control, date of acquisition, terms of acquisition, consideration paid for such acquisition etc.
Name Acquisition of Control Date of Acquisition Terms of
Acquisition Consideration paid for
such Acquisition Bhagwan W. Kundanmal (Nominated by STS Capital Limited)
17.02.2014 4th October, 2009 & 5th April, 2010
N/A Cash
Mohammad A. Moyeen 31.08.2000
31st August, 2000, 17th August, 2003, 10th
March, 2004, 15th March, 2005 & 19th March, 2007
N/A Cash
Tipu Munshi (Nominated by Sepal Holdings Limited) 17.02.2014 2nd November, 2010 N/A Cash
Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited)
02.11.2007 2nd October, 2007 & 5th April, 2010
N/A Cash
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m) If the sponsors/directors do not have experience in the proposed line of business, the fact explaining how the proposed activities would be carried out/managed: Since all Sponsors/directors are experience in line of business hence, the fact is not arise problem of the company‟s operation.
n) Interest of the key management persons: There is no other interest with the key management except board meeting fees received by all directors except Bhagwan W. Kundanmal, Chairman; Nissanka B. Weerasekera, Director and Dr. Raajiv Singhal, Independent Director.
o) All interests and facilities enjoyed by a director, whether pecuniary or non-pecuniary:
Facilities whether pecuniary or non-pecuniary enjoyed by the Directors will remain unchanged
during the publication period of the Prospectus.
p) Number of shares held and percentage of shareholding (pre issue):
Sl. Name of Director Number of Shares Held %
Pre-IPO
1 Bhagwan W. Kundanmal (Nominated by STS Capital Ltd.)
10,025,000 6.64%
2 Khondoker Monir Uddin 31,335,750 20.76% 3 Mohammad A. Moyeen 8,246,250 5.46%
4 Tipu Munshi (Nominated by Sepal Holdings Ltd.)
10,945,000 7.25%
5 Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Ltd.)
14,970,000 9.92%
q) Change in board of directors during last three years:
There had been no change in Board of Directors of STS Holdings Limited during last three years, except inclusion of following two Independent Directors:
Name Date of inclusion/appointment Remarks
Mr. Chaklader Mansurul Alam 28.05.2014 Independent Director
Dr. Raajiv Singhal 17.09.2015 Independent Director
r) Director‟s engagement with similar business:
None of the Directors are involve with similar business except two subsidiary companies.
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CHAPTER (IX): CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) TO WHOM IT MAY CONCERN
This is to certify that, The Company does not have any transaction during the last five years, or any proposed transaction, between the issuer and any of the following persons:
i. Any director or sponsor or executive officer of the issuer;
ii. Any person holding 5% or more of the outstanding shares of the issuer;
iii. Any related party or connected person of any of the above persons;
Except the transactions describe in the following table:
I. Director Remuneration
Name Designation/ Relationship
Amount in BDT
31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11
- - - - - - -
II. Board Meeting Fees
Name Designation/ Relationship
Amount in BDT
31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11
Mr. Khondoker Monir Uddin Managing Director 115,000 69,000 - - -
Mr. Mohammad A. Moyeen Director 138,000 92,000 - - -
Mr. Chaklader Mansurul Alam Independent Director 138,000 69,000 - - -
Mr. Tipu Munshi Director 138,000 69,000 - - -
Total 529,000 299,000 - - -
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III. Other Transaction
Name Designation/ Relationship
Amount in BDT
31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11
- - - - - - -
Note: No other transaction made with the Directors.
(b) There is no transaction or arrangement entered into by the issuer or its subsidiary or associate or entity owned or significantly influenced by 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 prospectus except the transaction mentioned in CHAPTER (IX) (a).
(c) No loan was taken or given from or to any Directors or any person connected with the Directors of STS Holdings Limited.
Sd/- Place: Dhaka
S. F. Ahmed & Co.
Date: 14 November 2016
Charterred Accountants
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CHAPTER (X): EXECUTIVE COMPENSATION
a) The total amount of remuneration/salary/perquisites paid to the top five salaried officers of the issuer in the last accounting year and the name and designation of each such officer:
SL Name Designation Remuneration/salaries (Tk.) for year
ended 31 December, 2015 (Taka) 1 R. Basil CEO & ED 28,260,000 2 Ms. Alkona Kobir Director HR 6,900,000 3 Mr. Vinod Kalra Director Finance 4,700,000
4 Mr. Prasad R. Muglikar Director –Medical
Services 3,000,000
5 Kishwar Imdad GM, Operations 3,711,000 b) Aggregate amount of remuneration paid to all directors and officers as a group during the last
accounting year:
Particular Nature of Payments Amount Paidfor year ended 31 December, 2015 (Tk.)
Directors Board Meeting Fees 529,000
Remuneration Nil Executives & Employees Salary and Allowance 772,156,178
c) If any shareholder director received any monthly salary/perquisite/benefit it must be
mentioned along with date of approval in AGM/EGM, terms thereof and payments made during the last accounting year:
None of the shareholder directors received any monthly salary/perquisite/benefit.
d) The board meeting attendance fees received by the director including the managing director along with date of approval in AGM/EGM:
The board meeting attendance fees received by all the directors including the managing director except Bhagwan W. Kundanmal, Chairman, Nissanka B. Weerasekera, Director and Dr. Raajiv Singhal, Independent Director are as follows:
Name & Designation Attendance Board Meeting Fee (Amount in Tk.)
Date of Approval
Khondoker Monir Uddin 5 115,000 First Approved in
Board meeting dated 28th May,
2014 and subsequently
confirmed in the AGM of 2014 on 9th April, 2015
Director & Managing Director Mohammad A. Moyeen
6 138,000 Director Tipu Munshi (Nominated by Sepal Holdings Ltd.) 6 138,000 Director Chaklader Mansurul Alam
6 138,000 Independent Director e) Any contract with any director or officer providing for the payment of future compensation:
There is no such contract between the Company and any of directors or officers regarding any future compensation to be made to them.
f) If the issuer intends to substantially increase the remuneration paid to its directors and officers
in the current year, appropriate information regarding thereto:
The Directors of STS Holdings Limited did not receive any remuneration and the Company has no plan for substantially increasing salaries to officers except for those that are paid as annual increment to their salaries.
g) Any other benefit/facility provided to the above persons during the last accounting year:
No other benefit/facility provided to the above persons during the last accounting year.
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CHAPTER (XI): OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES The STS Holdings Limited did not grant any options to its directors, officers and/or any other employees for the purpose of issuing shares.
CHAPTER (XII): TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM
(a) The names of the directors and subscribers to the memorandum, the nature and amount of anything of value received or to be received by the issuer from the above persons, or by the said persons, directly or indirectly, from the issuer during the last five years along with the description of assets, services or other consideration received or to be received; Benefits from the Company during last five years: The Directors and subscribers to the Memorandum of Association have not received any benefits except board meeting fee (The board meeting attendance fees received by all the Directors including the Managing Director except Bhagwan W. Kundanmal, Chairman, Nissanka B. Weerasekera, Director and Dr. Raajiv Singhal, Independent Director) directly or indirectly during the last five years.
Name Designation/ Relationship Amount in BDT
31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11 Mr. Khondoker Monir Uddin Managing Director 115,000 69,000 - - - Mr. Mohammad A. Moyeen Director 138,000 92,000 - - - Mr. Chaklader Mansurul Alam Independent Director 138,000 69,000 - - - Mr. Tipu Munshi Director 138,000 69,000 - - - Total 529,000 299,000 - - -
(b) If any assets were acquired or to be acquired from the aforesaid persons, the amount paid for such assets and the method used to determine the price
shall be mentioned in the prospectus, and if the assets were acquired by the said persons within five years prior to transfer those to the issuer, the acquisition cost thereof paid by them. Directors and Subscribers‟ Assets to the Company: Directors and subscribers to the memorandum have not transferred any asset to the Company. Besides, the issuer has not received any assets or other considerations from its Directors and subscribers to the memorandum except fund against allotment of shares.
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CHAPTER (XIII): OWNERSHIP OF THE COMPANY‟S SECURITIES
a) The names, addresses, BO ID Number of all shareholders of the company before IPO, indicating the amount of securities owned and the percentage of the securities represented by such ownership:
Sl. Name of the Shareholders Address BO IDs Number of Shares Held
Total 150,945,000 100.00% *List of Investors under LankaBangla Finance Limited-IP A/C: SL Name of the Shareholders Address BO ID Number of Shares %
1 Mohammed Atiq Haider Flat no: C1, House No: 19, Sanmar 5th Avenue, Road no: 5, North Khulshi, Chittagong.
1605280046968546 1,000,000 0.66%
2 Mass Insight Corporation 37 Islampur Road, 2nd Floor, Dhaka. 1605280046969144 1,000,000 0.66% 3 Md. Shamsul Alam 40/A, Dilu Road (1st floor), New Eskaton, Dhaka. 1605280046931379 1,720,000 1.14% 4 Mohammed Musa 86, Panchalaish, Chowkbazar, Chittagong. 1605280046932159 780,000 0.52%
5 Abul Bashar Chowdhury Mashud & Brothers, 34, Chand Miah Lane, Dhaka Building (1st Floor), Kharungong, Chittagong.
1605280046944725 300,000 0.20%
TOTAL 4,800,000 3.18%
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b) There shall also be a table showing the name and address, age, experience, BO ID Number, TIN number, numbers of shares held including percentage, position held in other companies of all the directors before the public issue:
Sl. No. Name of Director, Address, Age &
Experience No. of Share %
Pre-IPO
Position held in Other Organization
Other Organization Position
1
Name: Bhagwan W. Kundanmal
(Nominated by STS Capital Limited),
Chairman
Address:10, Dudely Senanayaka Mawatha
Colombo-8, Sri Lanka
Age: 54 Years
Experience: 30 Years
BO ID No.: 1204030061453393
TIN No.: N/A (Foreigner)
10,025,000 6.64%
STS Hospitals Limited Chairman
STS Capital Ltd. Chairman
STS Hospital Chittgong Ltd. Chairman
Royal Park Residence Ltd. Director
Name: Khondoker Monir Uddin,
Managing Director
Address: Safura Tower (3rd Floor), 20,
Kemal Ataturk Avenue Banani C/A,
Dhaka-1213.
Age: 54 Years
Experience: 30 Years
BO ID No.: 1201830000021762
TIN No.: 776184619099
31,335,750 20.76%
Shanta Securities L Ltd. Managing Director
Shanta Washing Plant Ltd. Managing Director
GDS Chemical Bangladesh Ltd. Managing Director
Universal Business Machines Ltd. Managing Director
Shanta Capital Management Ltd. Managing Director
Shanta Medical Centre Ltd. Managing Director
Shanta Holdings Ltd. Managing Director
STS Capital Ltd. Managing Director
STS Hospitals Limited Managing Director
STS Hospital Chittagong Ltd. Managing Director
Dhaka Bank Limited Director
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Name: Mohammad A. Moyeen, Director Address: 2/9, Block-D, Lalmatia Dhaka-1207, Bangladesh. Age: 57 Years Experience: 33 Years BO ID No.: 1201830000011575 TIN No.: 349173699375
8,246,250 5.46%
Lanka Bangla Finance Ltd. Chairman Global Aviation Services Ltd. Director Standard Paper Products Ltd. Director Wings Tours & Travels Ltd. Director Wings Ocean Freight Ltd. Director Swift Logistics Services Ltd. Director SG Logistics (Pvt) Ltd. Director The M & M Ltd. Director Freight Care Aviation Services Ltd. Director Expo Express Services Ltd. Director Lanka Bangla Securities Ltd. Director Wings Logistic Ltd. Director Wings Express Ltd. Director Orchid Air Ltd. Director UCL Logistic Ltd. Director Cross Freight Lines Ltd. Director Air Line Cargo Resources Ltd. Director Pulser Shipping Agencies Ltd. Director Lanka Bangla Investments Ltd. Director Colloid Enterprises Ltd. Director Voytech Limited Director Wings Aviation Limited Director Biz Bangla Media Limited Director Datafort Limited Director Information Technology Consultants Ltd. Director Inno Web Limited Director WAC Logistics Ltd. Director Wings Classic Tours & Travels Ltd. Director STS Hospitals Ltd. Director STS Capital Ltd. Director STS Hospital Chittagong Limited Director Anyeshan Limited Director Bengal Meet Processing Limited Director First Forwarding Limited Director Cross Freight Limited Director APS Logistics International Limited Director
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Name: Tipu Munshi (Nominated by Sepal Holdings Limited), Director Address: House No. 10, Road No. 4, Sector-5Uttara Model Town, Dhaka-1230 Age: 64 Years Experience: 34 Years BO ID No.: 1204030061454031 TIN No.: 384173126291
10,945,000 7.25%
Sepal Garments Ltd. Managing Director Glory Fashion Wear Ltd. Managing Director Eternal Holdings Ltd. Managing Director Sepal Washing Plant Ltd. Managing Director Sepal Holdings Ltd. Managing Director Apu Munshi Himager Ltd. Managing Director Aqua Marine Dredging Ltd. Chairman STS Hospitals Limited Director Orchid Garments Ltd. Director STS Capital Ltd. Director STS Hospital Chittagong Limited Director
Name: Nissanka B. Weerasekera (Nominated by Aureos South Asia Holdings SPV 1 Limited), Director Address:146/8C, Dutugemunu Street, Dehiwala Colombo, Sri Lanka Age: 55 Years Experience: 30 Years BO ID No.: 1204030061483154 TIN No.: N/A (Foreigner)
14,970,000 9.92%
STS Hospitals Limited Director
STS Hospital Chittagong Limited Director
Name: Chaklader Mansurul Alam, Independent Director Address: Flat No. 4, House No. 30, UN Road Baridhara, Dhaka-1212 Age: 65 Years Experience: 36 Years BO ID No.: - TIN No.:630892500595
- -
Kapita Auto Bricks Ltd Director
AutoKap Bricks Ltd Director
Name: Dr. Raajiv Singhal, Independent Director Address: B-171, Belvedere Towers, DLF Phase 2, Gurgaon-122002, Haryana, India Age: 48 Years Experience: 20 Years BO ID No.: - TIN No.: N/A (Foreigner)
- - - -
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c) The average cost of acquisition of equity shares by the directors certified by the auditors:
STS Holdings Limited has been allotted in face value & in cash and the average cost of acquisition of equity by the directors is Tk. 10.00 each. Necessary
particulars of shareholdings, allotment date and consideration are given below:
**From Sixth allotment to Ninth allotment the issue price was Tk. 25.00 according to consent letter of SEC dated on 27.02.2007 and 15.09.2009, Bhagwan W. Kundanmal nominated by STS Capital Limited and Nissanka B. Weerasekera Aureos nominated by South Asia Holdings SPV 1 Limited has purchased their share from Sixth allotment to Ninth allotment. so their issue price is Tk. 25.00.
Sd/- Place: Dhaka Date: 14 November 2016
S. F. Ahmed & Co. Chartered Accountants
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d) A detail description of capital built up in respect of shareholding (name-wise) of the issuer‟s sponsors/directors. In this connection, a statement to be included: -
Aneesha Mahial Bhagwan Kundanmal, Sponsor
M & M Holdings Limited (Represented by Mohammad A. Moyeen), Sponsor
Sepal Garments Limited (Represented by Tipu Munshi), Sponsor
Date of Allotment/
Transfer of fully paid- up shares
Consideration Nature of issue No. of Equity shares
Total 31,335,750 8,246,250 8,246,250 33,340,250 14,970,000 10,945,000 10,945,000 10,025,000
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CHAPTER (XIV): CORPORATE GOVERNANCE
a) Management disclosure regarding compliance with the requirements of Corporate Governance Guidelines of the Bangladesh Securities and Exchange Commission (BSEC);
The Company declares that it has been complied with the requirements of the applicable regulations of Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC) and accordingly constitutes several committees under the board for good governance. A certificate of compliance from competent authority has been incorporated accordingly. Sd/- R. Basil Chief Executive Officer STS Holdings Limited
b) A compliance report of Corporate Governance requirements certified by competent authority;
CERTIFICATE OF COMPLIANCE ON CORPORATE GOVERNANCE OF STS HOLDINGS LIMITED
[As required under the Bangladesh Securities and Exchange Commission (BSEC) Guideline] We have examined compliance to the Bangladesh Securities and Exchange Commission (BSEC) guidelines on Corporate Governance by STS Holdings Limited (the Company) for the year ended 31 December 2015. These guidelines related to the Notification No. SEC/ CMRRCD/2006-158/134/ Admin/44 dated 7th August 2012, as amended vide notification dated 21 July 2013 and 18 August 2013 of Bangladesh Securities and Exchange Commission (BSEC) on Corporate Governance. The compliance with the said conditions of Corporate Governance and reporting the status thereof is the responsibility of the management of the STS Holdings Limited. Our responsibility is to provide a certificate about whether the STS Holdings Limited is in compliance with the said conditions of Corporate Governance based on our examination. Our examination for the purpose of issuing this certificate was limited to the procedures including implementation thereof as adopted by the Company for ensuring the compliance on the attached statement on the basis of evidence gathered and representation received. It is neither an audit nor an expression of opinion on the financial statements of the STS Holdings Limited. Based on the audited financial statement issued by S.F. Ahmed & Co., Chartered Accountants dated on 09 March 2016 and our examination condition of compliance status of corporate guidelines issued by the Bangladesh Securities and Exchange Commission (BSEC) Notification No. SEC/CMRRCD/2006-158/134/ Admin/44 dated 7th August 2012, as amended vide notification dated 21 July 2013 and 18 August 2013, in our opinion and to the best of our information and according to the explanations provided by the management to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned guidelines issued by Bangladesh Securities and Exchange Commission (BSEC). We also state that such compliance is neither an assurance as to the future viability of the Company nor a certification on the efficiency or effectiveness with which the Management has conducted the affairs of the Company.
Sd/- Dated: 16 March 2016 Dhaka
AHMAD & AKHTAR Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 156
Status of compliance with the conditions imposed by the Commission‟s Notification No BSEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969:
STS HOLDINGS LIMITED CORPORATE GOVERNANCE COMPLIANCE STATUS REPORT
UNDER CONDITION NO. 7.00
Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange
Commission's Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012
issued under section 2CC of the Securities and Exchange Ordinance, 1969 (XVII of 1969):
Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
1 Boards of Directors
1.1 Board's Size: Boards members should not be less than 5 (five) and more than 20 (twenty).
1.2 Independent Director:
1.2(i) At least 1/5th of the total number of directors in the company‟s board shall be independent directors.
1.2(ii) For the purpose of this clause “Independent Director” means a Director:
1.2(ii)a) Independent Directors do not hold any share or holds less than one Percent (1%) shares of the total paid- up capital.
1.2(ii)b) Independent Directors are not connected with the company‟s Sponsor or Director or shareholder who holds one percent (1%) or more shares.
1.2(ii) c) Independent Directors do not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies.
1.2(ii) d) Independent Directors are not members, directors or officers of any stock exchange.
1.2(ii) e) Independent Directors are not Shareholder, Directors or officers of any member of stock exchange or an intermediary of the capital market.
1.2(ii) f) Independent Directors are not the partners or executives during the preceding 3 (three) years of the concerned company‟s statutory audit firm.
1.2(ii) g) They are not the Independent Directors in more than 3 (three) listed companies.
1.2(ii) h) They have not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a bank or a Non-Bank Financial Institution (NBFI).
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Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
1.2(ii) i) They have not been convicted for a criminal offence involving moral turpitude.
1.2(iii) The independent directors shall be appointed by the board of Directors and approved by the shareholders in the Annual General Meeting (AGM).
1.2(iv) The post of independent Directors cannot remain vacant of more than 90 (ninety) days.
1.2(v) The Board shall lay down a code of conduct of all Board members and annual compliance of the code to be recorded.
1.2(vi) The tenure of office of an independent Directors shall be for 3 (three) Years, which may be extended for 1 (one) term only.
1.3 Qualification of Independent Director (ID)
1.3 (i) Independent Director shall be knowledge individual with integrity who is able to ensure compliance with financial, regulatory and corporate laws and can make meaningful contribution to business.
1.3 (ii) The Independent Director must have at least 12 (twelve) years of corporate management/ professional experience.
1.3 (iii) In special cases the above qualifications may be relaxed subject to approval of the Commission.
N/A
1.4 Chairman and Chief Executive Officer shall be filled by different individuals. Chairman shall be elected from among the directors. The Board of Directors shall clearly define respective roles and responsibilities of the Chairman and the CEO.
1.5 The Directors‟ Report to Shareholders: The Board of Directors of Sts Holdings Limited would like to include the following additional statements in its Report prepared under section 184 of the Companies Act, 1994.
1.5(i) Industry outlook and possible future developments in the industry.
1.5(ii) Segment-wise or product-wise performance.
1.5(iii) Risks and Concerns.
1.5(iv) A Discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin.
1.5(v) Discussion on continuity of any Extra-Ordinary gain or loss.
N/A
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Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
1.5(vi) Basis for related party transactions- a statement of all related party transactions should be disclosed in the annual report.
1.5(vii) Utilization of proceeds from public issues, rights issues and/ or through any others instruments.
N/A
1.5(viii) An explanation if the financial results deteriorate after the company goes for IPO, RPO, Rights Offer and Direct Listing, etc.
N/A
1.5(ix) If significant variance occurs between Quarterly Financial performance and Annual Financial Statements, the management shall explain about the variance on their Annual Report.
1.5(x) Remuneration to directors including independent directors.
No remuneration is being paid to directors other
than Board Meeting
attendance fee
1.5(xi) The financial statements prepared by the management of the issuer company present fairly its state of affairs, the result of its operations, cash flows and changes in equity.
1.5(xii) Proper books of account of the issuer company have been maintained.
1.5(xiii) Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment.
1.5(xiv) International Accounting Standards (IAS)/ Bangladesh Accounting Standards (BAS) / International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there-from has been adequately disclosed.
1.5(xv) The system of internal control is sound in design and has been effectively implemented and monitored.
1.5(xvi) There are no significant doubts upon the issuer company's ability to continue as a
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Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
going concern. If the issuer company is not considered to be a going concern, the fact along with reasons thereof should be disclosed.
1.5(xvii) Significant deviations from the last year‟s operating results of the issuer company shall be highlighted and the reasons thereof should be explained.
N/A
1.5(xviii) Key operating and financial data of at least preceding 5(five) years shall be summarized.
1.5(xix) If the issuer company has not declared dividend (cash or stock) for the year, the reasons thereof shall be given.
The Board decided not to declare any dividend for the year due to expansion of operation through investment in STS Hospital Chittagong Ltd.
1.5(xx) The number of Board meetings held during the year and attendance by each director shall be disclosed.
1.5(xxi) The pattern of shareholding shall be reported to disclose the aggregate number of shares.
1.5(xxi)a) Parent / Subsidiary / Associated Companies and other related parties (name wise details).
STS Hospitals Ltd and STS Hospital Chittagong Ltd
have been incorporated as
Subsidiary of STS Holdings Limited
1.5(xxi)b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and their spouses and minor children (name wise details).
1.5(xxi)c) Executives
1.5(xxi)d) Shareholders holding ten percent (10%) or more was voting interest in the company (name wise details).
1.5(xxii) In case of the appointment/re-appointment of a director the company shall disclose the following information to the shareholders: -
1.5(xxii)a) A brief resume of the director.
1.5(xxii)b) Nature of his/ her expertise in specific functional areas.
1.5(xxii)c) Names of companies in which the person
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Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
also holds the directorship and the membership of committees of the board.
2 Chief Financial Officer (CFO) Head of Internal Audit and Company Secretary (CS)
2.1 The company shall appoint a Chief Financial Officer (CFO), a Head of Internal Audit (Internal Control and Compliance) and a Company Secretary (CS). The Board of Directors should clearly define respective roles, responsibilities and duties of the CFO, the Head of Internal Audit and the CS.
2.2 The CFO and the Company Secretary of the companies shall attend the meetings of the Board of Directors, provided that the CFO and/or the Company Secretary shall not attend such part of a meeting of the Board of Directors which involves consideration of an agenda item relating to their personal matters.
3 Audit Committee
3 (i) The company shall have an Audit Committee as a sub-committee of the Board of Directors.
3 (ii) The Audit Committee shall assist the Board of Directors in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business.
3 (iii) The Audit Committee shall be responsible to the Board of Directors. The duties of the Audit Committee shall be clearly set forth in writing.
3.1 Constitution of the Audit Committee:
3.1(i) The Audit Committee shall be composed of at least 3 (three) members.
3.1(ii) Constitution of Audit Committee with Board Members including one independent director.
3.1(iii) All members of the audit committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management experience: The term “financially literate” means the ability to read and understand the financial statements like Balance Sheet, Income Statement and Cash Flow Statement and a person will be considered to have accounting or related financial management expertise if (s)he possesses
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Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
professional qualification or Accounting/ Finance graduate with at least 12 (twelve) years of corporate management/ professional experiences.
3.1(iv) Filling of Casual Vacancy in Committee. N/A
3.1(v) The company secretary shall act as the secretary of the Committee.
3.1(vi) The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) independent director.
3.2 Chairman of the Audit Committee
3.2 (i) Chairman of the Audit Committee shall be an independent director.
3.2 (ii) Chairman of the audit committee shall remain present in the Annual General Meeting (AGM).
3.3 Role of Audit Committee:
3.3 (i) Oversee the financial reporting process.
3.3 (ii) Monitor choice of accounting policies and principles.
3.3 (iii) Monitor Internal Control Risk management process.
3.3 (iv) Oversee hiring and performance of external auditors.
3.3 (v) Review the annual financial statements before submission to the board for approval.
3.3 (vi) Review the quarterly and half yearly financial statements before submission to the board for approval.
3.3 (vii) Review the adequacy of internal audit function.
3.3 (viii) Review statement of significant related party transactions submitted by the management.
3.3 (ix) Review Management Letters/ Letter of Internal control weakness issued by statutory auditors.
3.3 (x) When money is raised through Initial Public Offering (IPO)/ Repeat Public Offering (RPO)/ Rights Issue the company shall disclose to the Audit Committee about the uses / applications of funds by major category (capital expenditure, sales and marketing expenses, working capital etc.), on a quarterly basis, as a part of their quarterly declaration of financial results.
N/A
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Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
3.4 Reporting of the Audit Committee
3.4.1 The Audit Committee shall report on its activities to the Board of Directors.
3.4.1(i) The Audit Committee shall immediately report to the Board of Directors on the following findings, if any:
3.4.1(ii)a) Report on conflicts of interests. N/A
3.4.1(ii)b) Suspected or presumed fraud or irregularity or material defect in the internal control system.
N/A
3.4.1(ii)c) Suspected infringement of laws, including securities related laws, rules and regulations.
N/A
3.4.1(ii)d) Any other matter which shall be disclosed to the Board of Directors immediately.
N/A
3.4.2 Reporting to the Authorities: If the Audit Committee has reported to the Board of directors about anything which has material impact on the financial condition and results of operation and has discussed with the Board of Directors and the management that any rectification is necessary and if the Audit Committee finds that such rectification has been unreasonably ignored, the Audit Committee shall report such finding to the Commission, upon reporting of such matters to the Board of Directors for three times or completion of a period of 6(six) months from the date of first reporting to the Board of Directors, whichever is earlier.
N/A
3.5 Reporting to the Shareholders and General Investors.
N/A
4 External/Statutory Auditors: The issuer company should not engage its external/statutory auditors to perform the following services of the company; namely: -
4 (i) Appraisal or valuation services or fairness opinions.
4(ii) Financial information systems design and implementation.
4(iii) Book-keeping or other services related to the accounting records or financial statements.
4 (iv) Broker-dealer services.
4 (v) Actuarial services.
4 (vi) Internal audit services.
4 (vii) Any other services that the Audit Committee
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Page: 163
Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
Determines.
4 (viii) No partner or employee of the external audit firms shall possess any share of the company they audit at least during the tenure of their audit assignment of that company.
4 (ix) Statutory Auditors are not appointed as CG compliance Auditors.
5 SUBSIDIARY COMPANY:
5 (i) Provisions relating to the Composition of the Board of Directors of the holding company shall be made applicable to the composition of the Board of Directors of the subsidiary company.
5 (ii) At least 1 (one) independent director on the Board of Directors of the holding company shall be a director on the Board of Directors of the subsidiary company.
5 (iii) The minutes of the Board meeting of the subsidiary company shall be placed of review at the following Board meeting of the holding company.
5 (iv) The minutes of the respective Board meeting of the holding company shall state they have reviewed the affairs of the subsidiary company.
5 (v) The Audit Committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company.
6 DUTIES OF CEO AND CFO:
6 (i) They have reviewed financial statements for the year and that to the best of their knowledge and behalf.
6 (i) a) These statements do not contain any materially untrue statement or do not omit any material fact or contain statements that might be misleading.
6.(i)b These statements together present a true and fair view of the company affairs and are in compliance with existing accounting standards and application laws.
6 (ii) There are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violation of the company‟s Code of conduct.
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Condition No.
Title
Compliance Status (Put in the
Appropriate Column) Remarks
Complied Not
Complied
7 REPORTING AND COMPLIANCE OF CORPORATE GOVERNANCE:
7 (i) The company shall obtain a certificate from a practicing Professional Accountant/ Secretary (Chartered Accountant/ Cost and Management Accountant / Chartered Secretary) regarding compliance of conditions of Corporate Governance Guidelines of the Commission and shall send the same to the shareholders along with the Annual Report on a yearly basis.
7 (ii) The directors of the company shall state, in accordance with the Annexure attached, in the directors' report whether the company has complied with these conditions.
c) Details relating to the issuer's audit committee and remuneration committee, including the
names of committee members and a summary of the terms of reference under which the committees operate.
STS Holdings Limited‟s Audit Committee: In accordance with the currently accepted Best Practice and Corporate Governance Guidelines adopted by Bangladesh Securities and Exchange Commission (BSEC), the Board appointed Audit
Committee comprises of the following Non‐Executive and Independent Directors of the Company:
Name of Audit Committee Member Designation Effective Date Mr. Chaklader Mansurul Alam FCA Independent Director
Chairman 17.02.2014
Mr. Khondoker Monir Uddin Managing Director
Member 17.02.2014
Mr. Mohammad A. Moyeen Director
Member 17.02.2014
Mr. B. R. Sikder CFS, Company Secretary is acting as the Secretary to the Board‟s Audit Committee.
Red-Herring Prospectus: STS Holdings Limited
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The terms of reference of the Audit Committee has been agreed upon as follows: To review all internal and external audit report. To recommend the statutory annual audited financial statements to the Board of Directors
for approval. To review the finding of the internal and external auditors. To review and approve the Annual “Audit Plan” of the Internal Audit Department. To monitor the implementation of the recommendations of the Internal and External
auditors. To review the performance of the external auditors and make recommendations to the
Board regarding their appointment and fees. To review the quarterly, half yearly and annual financial statements before submission to
the Board. To review the company‟s statement on internal control systems prior to endorsement by the
Board. The Company secretary shall be the secretary of the audit committee. STS Holdings Limited‟s Remuneration Committee:
The Company does not have any remuneration committee.
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CHAPTER (XV): VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGERS
Qualitative Factor
a) Apollo Hospitals Dhaka, the international standard hospital first of its kind in Bangladesh, is the pioneering and flagship venture of STS Holdings Ltd.
b) Only hospital in Bangladesh having JCI (Joint Commission Accreditation) Gold Seal Approval; first time ever in Bangladesh In order to maintain international standard quality.
c) Apollo Hospitals Dhaka has deployed the latest state-of –the- art technology in all areas such as Hospital Information System, Electronic Patient Records, Radiology Information System and Picture Archival Communication System, etc.
d) The whole infrastructure of the hospital is state-of the –art, comparable to the best in the world. The Modular Operation Theatres and ICUs are designed to ensure almost close to zero percent infection.
e) Capacity enhancement is planned through creation of new sub specialties and by adding new Clinical Consultants in areas such as Surgical Oncology, Medical Oncology,
Hematology Oncology, Bone Marrow Transplant programs, Radiation Oncology, Bariatric Surgery, Organ Transplantations, etc.
f) STS Holdings Ltd. has two subsidiaries company:
STS Hospitals Ltd. (a Private Ltd. company)
STS Hospital Chittagong Ltd., (a Private Ltd. company) g) The company‟s has minimum Debt burden.
Valuation Methodology: STS Holdings Ltd.
S.L Method Used Price 1 Net Asset value (NAV) per share 48.56 2 Sector P/E multiple Based Valuation 53.11 3 Average Market price of similar stock Based Valuation 74.04 4 P/BV multiple of similar stock Based Valuation 66.05
5 P/E multiple of similar stock Based Valuation 51.18 6 EV/EBITDA multiple based valuation 64.76
Method 1: Net Asset value (NAV) per share
Net Asset value (NAV) per share Based Valuation Share capital 1,509,450,000 Share premium 614,925,000 Revaluation surplus 4,809,560,509 Retained earnings 397,067,700 Total Shareholders‟ Equity 7,330,436,003 Non-controlling interest (467,206) Share money deposit 100,000 Total equity 7,330,636,003 Number of Share Outstanding 150,945,000
Net Asset value (NAV) per share (a/b) 48.56
Net Asset value (NAV) per share (Assumptions)
1. Total Shareholders‟ Equity & Number of Share Outstanding of STS Holdings limited is considering as of FY 2015.
Sector P/E multiple Based Fair Price (Assumptions)
1. Average Sector P/E of the period October, 2015 to September, 2016 has been considered; 2. Weighted average EPS of STS Holdings limited for the FY 2011-15 has been considered.
Method 3: Average Market price of similar stock Based Valuation
1. Samorita Hospital considered as per of STS Holdings Limited is listed in the Stock Exchanges of Bangladesh, which are Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited.
2. We have considered the company listed under Service & Real Estate Sector only to make the comparison more relevant.
3. Data used here is taken from Dhaka Stock Exchange Limited and last published annual Financial Statements, available on September 2016.
Explanation of similarities of Average Market price of similar stock Based Valuation:
1. The nature of business of STS Holdings Ltd. Dhaka falls into the category of Service & Real Estate Sector under the exchanges:
2. Currently (as of September, 2016) there are four companies listed under this sector. Since, the nature of business of STS Holdings Limited directly matches only with the nature of business of Samorita Hospital Limited, we have considered Samorita Hospital Limited as its comparable.
Method 4: P/BV multiple of similar stock Based Valuation
S.L Company Average Price of Last Year NAV P/BV 1 Samorita Hospital 74.04 55.69 1.36
P/BV multiple of similar stock Based Valuation a. Net Asset Value (NAV) per share of STS Holdings limited 48.56 b. Average P/BV of peer company 1.36
Fair Price (BDT) (a*b) 66.05
P/BV multiple of similar stock Based Valuation (Assumptions)
1. The average month end close price of Samorita hospital from October, 2015 to September, 2016 is considered and NAVs has been considered based on Annual Report of 2015;
2. The NAV of STS Holdings limited is as of FY 2015.
Method 5: P/E multiple of similar stock Based Valuation
S.L Company Average Price of Last Year EPS P/E 1 Samorita Hospital 75.74 2.56 29.59
P/E multiple of similar stock Based Valuation c. EPS of STS Holdings limited 1.73 d. P/E of Samorita Hospital 29.59
Fair Price (BDT) (a*b) 51.18
P/E multiple of similar stock Based Valuation (Assumptions)
3. The average month end close price of Samorita hospital from October, 2015 to September,
2016 is considered and EPS has been considered based on Annual Report of 2015. 4. Weighted average EPS of STS Holdings limited for the FY 2011-15 has been considered.
Red-Herring Prospectus: STS Holdings Limited
Page: 169
Method 6: EV/EBITDA multiple based valuation
Company EV/EBITDA Multiple a) Enterprise Value of Samorita Hospital 1,101,141,039 b) EBITDA of Samorita Hospital 78,107,066 c) EV Multiple of Samorita Hospital (a/b) 14.10 d) EBITDA of STS Holdings Limited 693,337,555 e) Enterprise Value of STS Holdings Limited (d*c) 9,774,562,975 f) Number of Shares 150,945,000
Value per Share (e/f) 64.76
EV/EBITDA multiple of similar stock Based Valuation (Assumptions)
1. The relevant information in calculating EV/EBITDA multiple of the peer has been considered based on Annual Report of 2015 while the Market price of the security has been considered as of 29 September, 2016;
2. The EBITDA of STS Holdings limited is as of FY 2015.
CHAPTER (XVI): DEBT SECURITIES The Company has not issued or is planning to issue any debt security within six months.
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Page: 170
CHAPTER (XVII): PARTIES INVOLVED AND THEIR RESPONSIBILITIES
Parties involve with YPL Responsibilities
(a) Issue Managers (1) AFC Capital Limited; (2) ICB Capital Management Limited.
The Issue Managers will act as the managers to the issue for the public issue as described in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015.
(b) Underwriters
(1) AFC Capital Limited; (2) ICB Capital Management Limited; (3) LankaBangla Investments Limited; (4) EBL Investments Limited & (5) NBL Capital and Equity Management Limited; (6) Roots Investment Limited; (7) First Securities Services Limited.
The Underwriters will act as the underwriters to the public issue as described in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015.
(c) Auditor S. F. Ahmed & Co. Chartered Accountants
To express an opinion on these financial statements based on their audit. Auditor will conduct the audit in accordance with Bangladesh Standards on Auditing (BSA).
(d) Cost and Management Accountants Not applicable for the Company -
(e) Valuer Asian Surveyors Ltd.
The valuer‟s responsibility is to conduct and prepare an appraisal of valuation of assets owned by the company. Valuer‟s have to perform the necessary inspection, made relevant enquires and obtained such further information available for the purpose of providing the opinion on the value of assets. The valuer should cite the fundamental measurement assumptions of valuation. The valuer shall be straightforward and honest in all professional and business relationships. The valuer shall comply with relevant laws and regulations.
Credit Rating Company is responsible for conducting the long term and short term rating of the company based on its financial statements and other relevant qualitative and quantitative information. Credit Rating Company shall publish the rating in its public website when it issues or updates a final rating.
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CHAPTER (XVIII): MATERIAL CONTRACTS (a) Major agreements entered into by the Issuer (b) Material parts of the agreements (c) Fees payable to different parties
Issu
e M
an
ager
s Issue Management Agreement between the Company, STS Holdings Limited and the Managers to the issue, AFC Capital Limited & ICB Capital Management Limited.
To do the entire task as mentioned in the Bangladesh Securities of Exchange Commission (Public Issue) Rules, 2015.
To AFC Capital Limited Tk. 75.00 Lac & To ICB Capital Management Limited Tk. 75.00 Lac.
Un
der
wri
ters
Underwriting Agreement between the Company and the following underwriters:
(1) AFC Capital Limited; (2) ICB Capital Management Limited; (3) LankaBangla Investments Limited; (4) EBL Investments Limited & (5) NBL Capital and Equity Management
Limited; (6) Roots Investment Limited; (7) First Securities Services Limited.
Total Underwritten amount Tk. 262,500,000
The issuer, in the event of under subscription, shall notice to the underwriters within ten days of closer of subscription calling upon them to subscribe the securities and pay for this in cash in full within 15 days of the date of said notice and said amount shall be credited in to securities subscription account within the said period.
The issuer shall within 7 days of the expiry of the period mentioned above, sent to the commission proof of subscription and deposit of the money by the underwriters.
underwriting commission at the rate of 0.50% on 35% of the Total IPO amount (i.e. Tk. 1,312,500.00)
Reg
istr
ar
to t
he
Issu
e Registrar to the Issue Agreement between the Company, STS Holdings Limited and LankaBangla Investments Limited.
To carry out the activities in relation to an issue including processing applications from investors, keeping record of applications and money received from investors or paid to the seller of securities, assisting in determining the basis of allotment of securities, finalizing the list of persons entitled to allotment of securities and processing and distributing allotments, refunds or certificates and other related documents.
To LankaBangla Investments Limited Tk. Tk. 75.00 Lac.
Cre
dit
Rati
ng
A
gen
cy
Agreement between the Company, STS Holdings Limited and Credit Rating Agency of Bangladesh Limited (CRAB).
To conduct the long term and short term rating of the Company based on its financial statements and other relevant qualitative and quantitative information. CRAB will publish the rating in its public website when it issues or updates a final rating.
To Credit Rating Agency of Bangladesh Limited (CRAB) Tk. 230,000.00
Copies of the above mentioned contracts and documents and the Consent Order from the Bangladesh Securities and Exchange Commission may be
inspected on any working day during office hours at the Company‟s Registered Office.
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CHAPTER (XIX): OUTSTANDING LITIGATIONS, FINE OR PENALTY
(a) The following outstanding litigations against the issuer or any of its directors and fine or penalty imposed by any authority: The issuer or any of its directors was not involved in any of the following type of legal
proceedings mentioned below;
(i) Litigation involving Civil Laws
(ii) Litigation involving Criminal Laws
(iii) Litigation involving Securities, Finance and Economic Laws
(iv) Litigation involving Labor Laws
(v) Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes/duties)
(vi) Litigation involving any other Law
(b) Outstanding cases filed by the Company or any of its directors: There is no outstanding case filed by the issuer or any of its directors except Litigation involving
Taxation of the following types of legal proceedings mentioned below;
(i) Litigation involving Civil Laws: No cases filed by the company or any of its directors.
(ii) Litigation involving Criminal Laws: No cases filed by the company or any of its directors.
(iii) Litigation involving Securities, Finance and Economic Laws: No cases filed by the company or any of its directors.
(iv) Litigation involving Labor Laws: No cases filed by the company or any of its directors.
(v) Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes/duties); Cases filed by the company.**
(vi) Litigation involving any other Laws: No cases filed by the company or any of its directors.
**There has been outstanding litigation with High Court Division against various unjust decision
of tax authority. The status of tax demand, payment and the litigation issues are as follows:
Income Year
Tax Year Final Tax Demand
Tax Paid AIT/TDS
Grounds of Litigation (Reference Application)
2006 2007-2008 2,882,000 2,519,977
Disallowance of legitimate expenditure and overestimation of revenue.
2007 2008-2009 - -
2008 2009-2010 - -
2009 2010-2011 - -
2010 2011-2012 11,270,163 8,871,090
2011 2012-2013 13,100,000 13,032,564
2012 2013-2014 133,551,609 113,024,807
2013 2014-2015 110,159,470 102,287,243 Disallowance of legitimate expenditure.
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CHAPTER (XX): RISK FACTORS AND MANAGEMENT‟S PERCEPTIONS ABOUT THE RISKS (i) INTERNAL RISK FACTORS MAY INCLUDE, AMONG OTHERS:
a) Credit Risk: This is the risk of default on a debt that may arise because of default by the borrower to pay the loan. In operating any business there is always credit risk lies in the business. As there is always lending and borrowing between parties in the form of money and goods. Management Perception: Credit Risk mainly lies with Financial Institutions. Since STS Holdings Ltd. is concentrating in Healthcare Business, there is no such credit risk.
b) Liquidity Risk: The risk that a company may be unable to meet short term financial
demands. This usually occurs due to the inability to convert its current assets to cash without a loss of capital or income. Liquidity is a common phenomenon of the business. Management Perception: STS Holdings Ltd. has been dealing with its working capital in efficient way. As per Credit Rating Report by crab the company requires low working capital due to nature of business.
c) Risk associated with the issuer‟s interest in subsidiaries, joint ventures and associates:
Management Perception: STS Holdings Ltd. has two subsidiaries, that is, STS Hospitals Ltd., STS Hospital Chittagong Ltd.(a Private Ltd. company), but it has no joint venture and associate. STS Hospitals ltd. is loss incurring but within 2/3 years it will recover from loss. Another subsidiary is not in operation.
d) Significant revenue generated from limited number of customers, losing any one or more of
which would have a material adverse effect on the issuer. Management Perception: Our business is in healthcare sector. Apollo Hospital is renowned hospital in Bangladesh. It is service oriented. We are trying to provide world class healthcare in Bangladesh through local and International expert doctor or Bangladeshi expert doctor working in abroad.
e) Dependency on a single or few suppliers of raw materials, failure of which may affect
production adversely.
Management Perception: The Company, being a service provider, operates on the basis of professional expertise relevant to healthcare industry. Its product is a service and its core raw materials are human resources. The company has also initiated training programs for training fresh graduates for development of its growing need of human resources. Moreover, for ensuring quality services, consumables & medicines are being procured through genuine sources preferring renowned manufacturer within the country and abroad. The company classifies its supplier broadly into three groups as a) Material suppliers, b) Medicine suppliers and c) Hospitality suppliers.
f) More than 20% revenue of the issuer comes from sister concern or associate or subsidiary
Management Perception: We have two subsidiaries of which only one of them is in operation. There is no revenue generating from subsidiary.
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g) Negative earnings, negative cash flows from operating activities, declining turnover or profitability, during last five years, if any.
Management Perception: We are profitable entity and we have not experienced with negative earning and negative cash flow from operating for last five years.
h) Loss making associate/subsidiary/group companies of the issuer.
Management Perception: STS Hospitals Ltd. (a private limited company) subsidiary of STS Holdings ltd. is loss making subsidiary but we believe that within 2/3 year it will be profitable entity.
i) Financial weakness and poor performance of the issuer or any of its subsidiary or associates
Management Perception: STS Holding Ltd. is reputed company and it is financially sound. Debt to Equity ratio is 0.03. Its profitability is stable over the years. As per credit rating report the company outlook has been improved from stable to positive. Of the two subsidiaries, one is not in operation and another is loss incurring which will be recovered within 2/3 years.
j) Decline in value of any investment
Management Perception: STS Holdings Ltd. does not have any investment in any ordinary shares both listed and non-listed company except in STS Hospitals Ltd. (a private ltd. company) and STS Hospital Chittgong Limited (a private ltd. company) which are not listed with any stock exchanges. So, value of investment of STS Holdings Ltd. is remaining unchanged.
k) Risk associated with useful economic life of plant and machinery, if purchased in second
hand or reconditioned.
Management Perception: We are in service industry. Our machineries are always of the latest technology and no second hand machineries are used.
l) Adverse effect on future cash flow if interest free loan given to related party or such loans
taken from directors may recall. Management Perception: STS holdings Ltd did not provide any loan to its related party. As such, this risk is not applicable of the company.
m) Potential conflict of interest, if the sponsors or directors of the issuer are involved with one or more ventures which are in the same line of activity or business as that of the issuer and if any supplier of raw materials or major customer is related to the same sponsors or directors.
Management Perception: There is no potential conflict of Interest as we do not have any venture which is in the same line of activity.
n) Related party transactions entered into by the company those may adversely affect
competitive edge.
Management Perception: There is no as such transaction which may adversely affect competitive edge.
o) Any restrictive covenants in any shareholders' agreement, sponsors' agreement or any agreement for debt or preference shares or any restrictive covenants of banks in respect of the loan/ credit limit and other banking facilities.
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Management Perception: There are no restrictive covenants in any shareholders‟ agreement, sponsors‟ agreement or any agreement relating to debt or preference shares or any restrictive covenants of Banks in respect of loan or credit limit and other banking facilities.
p) Business operations may be adversely affected by strikes, work stoppages or increase in wage demands by employees. Management Perception: There is no such incident like strikes, work stoppages or increase in wage demands by employees occurred in the history of the company since its inception. So, there are little scope for arisen any risk related this issue in future.
q) Seasonality of the business of the issuer Management Perception: We have to provide healthcare service round the clock since providing the healthcare service in Bangladesh.
r) Expiry of any revenue generating contract that may adversely affect the business
Management Perception: The above point is not applicable to our case since we are providing world class health service in Bangladesh.
s) Excessive dependence on debt financing which may adversely affect the cash flow.
Management Perception: We are not depending on debt financing and the debt to equity ratio is 0.03 for the year 2015 and it was 0.02 in 2014 and 0.02 in 2013.
t) Excessive dependence on any key management personnel absence of whom may have adverse effect on the issuer‟s business performance.
Management Perception: Corporate Governance is well practiced in our company. We have also well placed organogram in our company. So any change in the key management will be followed by others. In addition, we are always international contact with any update regarding medicine, treatment and technology to provide best healthcare service.
u) Enforcement of contingent liabilities which may adversely affect financial condition.
Management Perception: Although STS Holdings Ltd has contingent liabilities; they have assessed by the advocate regarding those contingent liabilities and found that outcome will come in favor of the company.
v) Insurance coverage not adequately protect against certain risks of damages.
Management Perception:
We have General insurance and Group insurance to protect certain risks of damages.
w) Absence of assurance that directors will continue its engagement with Company after expiry of lock in period. Management Perception: Apollo has professional management with more than three decade of experience in different industries. They will continue its engagement with company after expiry of lock in period.
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x) Ability to pay any dividends in future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditure.
Management Perception: We have been earning profit and we are in belief that we will be able to pay dividend from our earning profit.
y) History of non-operation, if any and short operational history of the issuer and lack of adequate background and experience of the sponsors. Risk associated with non-function of hospital due to absence of any group of employees like doctors or nurses or graded employees for any of their grievances.
Management Perception: STS Holdings Ltd is owner of Apollo Hospitals Dhaka is run by professional management team. Company abides by all the applicable rules and regulations. Employees are provided with competitive facilities and working environment is of international standard. Therefore, there is little chance of hospital or for that matter, the Company to become non-operative in future. The past operations history of more than ten years support this confident view of the management.
z) Risks related to engagement in new type of business, if any.
Management Perception: There is no as such risk relating to engagement in new type of business. We are solely involved in healthcare business.
aa) Risk in investing the securities being offered with comparison to other available investment options.
Management Perception: We are profitable entity and our business growth will continue in longer period. It is not risky in investing securities in comparison with other available investment option.
bb) Any penalty or action taken by any regulatory authorities for non-compliance with provisions of any law.
Apollo Hospitals Dhaka had stored few absolutely essential and lifesaving drugs which were not available in the country but not approved by the local authority, Directorate General of Drug Administration (DGDA).
Management Perception:
STS Holdings Ltd owner of Apollo Hospitals Dhaka has one penalty regarding this penalty management response are given below: In last 10 years, Apollo Hospitals Dhaka has been maintaining highest standard through robust processes and systems ensuring world class healthcare where patient safety being the top most priority. These drugs are manufactured by reputed international companies and used globally. These were imported and stocked for the patient‟s sake. This includes Lifesaving drugs such as Sodium Valproate, Vasopressin, Metolazine, IVF drug; Lucrin, multiple crash cart items; Naloxone and Antibiotics Polymyxin. These were purchased, transported and stocked maintaining proper environmental condition including monitoring of expiry dates. The exact substitutes are not available in the country. Applications for approval of these drugs were sent to DGDA in 2014. This was also explained to the JCI surveyors in 2014.
On 8th September legal authorities raided and seized these drugs but we had acted and resolved the matter to their satisfaction. None of the drugs were contraband or expired. Media had covered the issue and press release has been drafted from our end.
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Apollo purchased the said products from the importer. On 8th August 2016 the Importer
have got permission from the DGDA for importing these products.
cc) Litigations against the issuer for Tax and VAT related matters and other government claims, along with the disclosures of amount, period for which such demands or claims are outstanding, financial implications and the status of the case.
Management Perception: We did not have any litigation relating to Tax, VAT or other government claims against of STS Holdings Ltd.
dd) Registered office or factory building or place of operation is not owned by the issuer.
Management Perception: STS Holdings Limited has its Apollo Hospitals Dhaka located in Bashundhara Residential Area measuring land area 400.3 Decimal. Apollo Hospitals Dhaka is glass-wrapped 11-storied building with around 435,000 Sft area that can accommodate 450 beds. Hospital has adequate gas generator and diesel generator. Also the hospital has state-of-the-art diagnosis and investigations equipment.
ee) Lack of renewal of existing regulatory permissions/ licenses.
Management Perception: There is no such issue relating to lack of existing regulatory permissions/ licenses.
ff) Failure in holding AGM or declaring dividend or payment of interest by any listed securities of the issuer or any of its subsidiaries or associates
Management Perception: Neither we nor our subsidiaries have any listed securities. However, we along with our subsidiaries hold AGM regularly.
gg) Issuances of securities at lower than the IPO offer price within one year
Management Perception: STS Holdings Ltd. has been profitable entity. It has potentiality to grow in future. We believe that our IPO offer price will not be lower within one year.
hh) Refusal of application for public issue of any securities of the issuer or any of its subsidiaries or associates at any time by the Commission.
STS Holding Ltd. has been refused for Initial Public Offering application under the public Issue rules 2006 on April 10, 2010. Apart from that another application of STS Hospital Chittagong Ltd. (a Private Ltd. company), a subsidiary of STS Holdings Ltd., has been refused for capital raising application under the Issue of Captital Rules 2001 on September 26, 2016.
Management Perception: In 2010, the Company applied for raising share capital through Initial Public Offering based on fixed price method. The estimated offer price of the company in 2010 was higher due to the higher index of the market. The regulatory authority thought that the offer price was not justified rather higher and thus refused the IPO proposal. Now the company has applied newly for IPO by maintaining all the rules and regulations under the Public Issue Rules, 2015 and the management of the company believes that the valuation of securities is justified.
Capital raise of STS Hospital Chittagong Ltd. a subsidiary of STS Holdings Ltd. has been refused due to inadequate supporting documents. The Company will submit application to Bangladesh Securities Exchange Commission (BSEC) for raising paid up capital of STS Hospital Chittagong Limited complying with BSEC requirements.
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(ii) EXTERNAL RISK FACTORS MAY INCLUDE AMONG OTHERS: a) Interest Rate Risks;
STS Holdings Ltd is exposed to movement of interest rate for its short term working capital loan and the existing long term loan debt. Any upward movement of interest rate in future will have adverse effect on the profitability of the Company.
Management Perception: Company management always keeps eye on market interest rate to make it as competitive as possible. Also company is very debt-averse and maintains debt utilization level to a bare minimum so as to keep the impact of finance cost at a lower level even if the rate moves upwards. Therefore, management perceives that the fluctuation of interest rate on the outstanding borrowing would have little impact on the performance of the company.
b) Exchange Rate Risks;
STS Holdings Ltd has to import medical equipment, accessories and chemicals from time to time. Fluctuations of currency exchange rate may negatively impact on the import cost thereby hitting the profit of the Company.
Management Perception:
As per Operation Management Agreement with AHEL, STS Holdings requires to pay the AHEL as operation management fees by following manner.
1% of the gross revenue of the hospital business and
5% of Profit before Depreciation and Tax (PBDT)
However cumulative payment will not exceed BDT 30,000,000 in any one year. Bangladeshi currency (BDT) is the functional currency of STS Holdings Limited and BDT is considered as contract value. STS holdings limited convert the BDT into USD at the date of payment. Therefore, there is no foreign currency risk. As per franchise Agreement with AHEL, STS Holdings requires to pay INR50,000 in every year as franchise fees. This amount is very minimum and management don‟t perceive any foreign currency risk related to payment of franchise fees.
c) Industry Risks; Although pioneer in the international standard healthcare services in the country, STS Holdings Ltd has competitors in the market. Increased competition from both foreign and domestic players may lead to lower pricing of service, reducing profit margins and depletion of market share etc. which can adversely affect the business. Due to untapped market opportunity, more providers both in upper and mid segment including unorganized sector are likely to grow. The entry to the industry is not restricted in Bangladesh as the healthcare services market is much underserved and Government medical services cannot cope up with the need. Therefore, it is inevitable for the sector to grow with investments from both local and foreign players.
Management Perception: Management always emphasizes on maintaining highest quality of clinical and personalized service. In order to maintain international standard quality, STS Holdings Ltd has got their hospital accredited under the Joint Commission International (JCI) Gold Certification. In the last seven years, AHD was reaccredited twice by JCI and the last reaccreditation in May 2014 was for the latest fifth edition of JCI global standards. STSHL believes that by way of maintaining high level of premium service, they can ensure leadership position in this industry. Moreover, STSHL is also targeting and increasing their service to corporate sector. In general, the corporate culture in Bangladesh is changing. Employers take more responsibilities for their employees, and most of the multinationals and financial institutions provide health care benefits for their employees. STSHL management perceives that the total market will simultaneously grow along with the competition and company will always take its expansion plans forward with adequate resources in order to meet the growing demand.
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d) Economic and political risks; Management perception: Bangladesh‟s real GDP growth will likely remain stable at 6.5% in FY2015/16 (July-June) before picking up slightly to 6.7% in FY2016/17, aided by an accommodative monetary policy, expansionary fiscal policy, and the return of a stable political climate. The recent Central Bank hacking of USD 951 M may have an economic effect if not the Government can bring the money back to country. Bangladesh healthcare expenditure is growing: BDT 494.0 Bn (USD 6.3 Bn) in 2015 to BDT 554.9 Bn (USD 7.0 Bn) in 2016; +12.3% in local currency terms and +10.3% in US dollar terms, which shows positive trend in spending terms. The number of domestic terror attacks in Bangladesh could increase over the coming months, posing further downside risk to political and social stability as the present government continues to dismiss the presence of IS in the country and downplay the scale of the threat. Accordingly, BMI research downgraded Bangladesh‟s Short-Term Political Risk score to 62.4, from 64.2 previously. This could have an adverse impact on the country‟s economic growth prospects as investors, expatriates, and tourists may be deterred. Otherwise political situation is much stable in the country as the opposition is not much active in the field.
e) Market and Technology-related Risks; The Company is already in the competitive market and adverse market conditions may affect the revenue and in turn, profitability of the company. Medical science is advancing very fast bringing out newer and newer technologies. Failure to compete with the other market players in terms of technology would result in adverse effect on the Company‟s as well as profitability performance. STSHL is capital-intensive entity that requires technological edge over its competitors in order to build and maintain its position in the market.
Management perception: STSHL has a strong brand image and its brand equity is even stronger. Superior services in many areas compared to competitors have created significant value amongst the patients in particular and the community in general. The company always uses state-of-the-art technology in ensuring most advanced clinical services. With all these the company management is confident of addressing the Market and Technology Related Risks.
f) Potential or existing government regulations;
The Company operates under various statutes like Companies Act, 1994, Income Tax Ordinance 1984 and Finance Acts with the changes, Income Tax Rules, Value Added Tax (VAT) Act, 1991 and Rules thereon etc. Any abrupt changes of the policies made by the regulatory authorities through these regulations may adversely affect the business of the Company. In addition, company has to operate under various rules and regulations of Health Ministry, Directorate of Health, Board of Investment and various other government bodies. Any change in the policies and rules of all these bodies may impact on the operation and profitability of the company. Management perception: Unless there are major changes in the policies that may lead to adverse effects in the overall industry concerned, the business of the company will not be affected significantly. “Health for all by 2021”is the goal of the government and hence emphasis is given to take healthcare services to the doorsteps of the common people. Therefore, it is very unlikely that Government will take any policy measure that will hamper the growth of healthcare services in the country.
g) Potential or existing changes in global or national policies; Global and national policies have huge impact on the performance of business in any sector. Hospitality sector is heavily dependent on the political situation, both nationally and globally. Any change in these policies as well as political unrest may have adverse effect on the profitability of the Company.
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Management perception: The healthcare services are hardly affected by global policy changes. However, national policies particularly political instability in Bangladesh may impact the business. Our past experience proves that the impact is not much during political disturbances, as healthcare is the basic need of people.
h) Statutory clearances and approvals those are yet to be received by the issuer; Management Perception: We have been in the business over 11 years. We have collected all the statutory clearance to operate our business. Hence, there are no as such risk for our company.
i) Competitive condition of the business;
Management Perception: Being a tertiary care and only JCI accredited hospital in Bangladesh, Apollo Hospital Dhaka is enjoying patients‟ faith in terms of service and quality healthcare. Apollo Hospitals Dhaka is the first and only Joint Commission International (JCI) accredited hospital in Bangladesh. Accreditation is awarded after meeting certain performance standards. Among 30 Private hospitals with more than 200 bed capacity we are the first and only one to achieve a Global Healthcare Accreditation. United, Square are the two major hospitals that compete with Apollo. This hospital is staffed with a team of world–class physicians, trained nurses and technicians in most disciplines of medical sciences. As a premier healthcare provider in the country Apollo Hospital is employing maximum number of expat doctors and nurses having experience from world renowned hospitals which is actually making a difference. Comprehensive Cancer care to be opened in this year by Apollo, which will be unique from other hospitals‟ cancer facilities. A historical landmark was achieved by Apollo Hospitals Dhaka by successful bone marrow transplant which was carried out on 12th March 2016. This is the first time in any private hospital a bone marrow transplant occurred. Foreseeing people turnover in near future as some new hospitals are starting operations.
j) Complementary and supplementary products/services which may have an impact on business of the issuer.
Management Perception: We don‟t have any complimentary or supplementary services.
(iii) OTHER RISK FACTORS: a) Risk relating to hiring Nurses, Consultants and Doctors.
Management Perception: Consultants and Nurses will be sourced from Bangladesh, India and a few expats from Thailand. In addition, Non Resident Bangladeshi Doctors from UK, Middle East and other countries will be appointed. It is mention worthy that STS Holdings has prior experience to appoint Nurses, Consultants and Doctors from home and abroad.
b) Local Loan instead of foreign loan and exchange rate risk relating to foreign loan. Management Perception: At present, cost of foreign currency loan is much lower than that of local loan. Moreover, Bangladesh economy is going strong over the years and as far as balance of payment of Bangladesh is concerned, Bangladesh is in favorable position. Hence, there is less likely to depreciate taka against dollar. However, if the situation arises, local currency loan will be considered.
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c) Franchise Risk and perception of Management. Management Perception: The relationship with Apollo Hospitals Enterprises Ltd, India (AHEL) has been more than 11 years and this long continuity is primarily based on pleasant experience on both sides. Hence, STS Holdings Ltd. can easily enter into a Management and Operational Contract with AHEL for the Chittagong project.
d) Risk factor relating to dividend because of internal funding for Chittagong project. Management Perception: The fund that will be invested to STS Hospital Chittagong Ltd. (a Private Ltd. company) is the portion of accumulated earnings (currently in FDR form) plus IPO proceeds. Hence, internal funding will not impact on STS Holdings to declare dividend. STS holdings Ltd. will be able to pay dividend out of its operational earnings.
e) Loss incurring two subsidiary companies: Management Perception: Management of STS Holdings Ltd and its subsidiaries always emphasizes on maintaining highest quality of clinical and personalized service. In order to maintain international standard quality, STS Holdings Ltd has got their hospital accredited under the Joint Commission International (JCI) Gold Certification. STSHL believes that by way of maintaining high level of premium service, they can ensure leadership position in this industry. Employers take more responsibilities for their employees and vice versa. STSHL management perceives that the total market will simultaneously grow along with the competition and company will always take its expansion plans forward with adequate resources in order to meet the growing demand. They are aware about changing world wide technology and updated simultaneously. Hopefully the subsidiaries companies of STS holdings ltd will come in Break even within 3-4 years
f) Risk relating to delay in getting work permit from BMDC for foreign doctors. Management Perception: STS Holdings Ltd. has had extensive dialogues with BMDC Authorities and subsequently the delay has been reduced. The company has plan for recruitment in advance and unexpected delay could be 2 to 3 months.
g) Termination of franchise agreement and management & operational agreement:
STS Holdings Ltd., the owner of Apollo Hospital Limited, Dhaka, has signed a franchise
agreement with Apollo Hospital Enterprises Ltd. (AHEL) on 25th day of June 1998.
The operational management agreement was signed on 25th day of June 1998 between STS
Holdings Ltd. and Indian Hospital Corporation (subsequently IHC merged with AHEL vide the
order of the Hon‟ble High Court of Madras, India dated 18th April, 2000).
In the agreement it was said that the agreement will be effective from the commencement of
commercial operation of Apollo Hospital Dhaka and it will remain in force for the period of 15
(fifteen) years. The company started its commercial operation from 16th April 2005.
Management Perception: STS Holdings Ltd. has been enjoying cordial relationship with Apollo Hospitals Enterprises Ltd, India (AHEL) for more than 11 years and this long continuity is primarily based on pleasant experience on both sides. Hence, STS Holdings Ltd. can easily enter into a Management and Operational Contract with AHEL for the STS Hospital Chittagong Ltd (a Private Ltd. company). The company has already experienced with high quality services for more than 11 years and has positive perception to the general people. Hence, we think termination of this franchise
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agreement and operational management will not create any risk. However, STS holdings ltd can easily enter into any further agreement with AHEL for the foreseeable future if required after termination of existing agreement.
h) Risk associated with reputation arisen from using STS brand name by some other business firm
which is not controlled by the issuer company
Management Perception:
STS brand name is now established and this name has duly been registered with Registrar of Trade Marks and Patents. There has been another name of STS (Scholastica Transport Service), which is and will not at all make any dent in the reputation of STS.
i) Risk associated with outstanding Tax and Custom litigation
The litigation associated with outstanding tax is a normal issue for all corporate. This arises due
mainly to disputes with tax authority and company on allowance/ disallowance of legitimate
expenses, non-acceptance of revenue, charging penalty etc. There is a risk of unfavorable
judgment for the company and in such cases company‟s profitability will be impacted. There
has not been any custom litigation other the one disclosed as contingent liability.
Management Perception STS Holdings Limited closely observes the current status of the subject matter and management is well aware about prospective outcomes from it. However, management is optimistic regarding the issue and most likely it will go in favor of the company.
j) Office Building Situated at Bashundhara Residential Area: Management Perception STS Holdings Limited have obtained trade license from the local authority. The Company started its operation on 16 April 2005. Since 2015, the Company didn‟t receive any complain from Bashundhara Authority regarding its operation. Moreover, Bashundhara Authority extend their cooperation to continue its operations. Hence there is no risk.
k) Risk associated with investing IPO proceeds in privately owned subsidiary company
The investment of IPO proceeds in subsidiary company named “STS Hospital Chittagong
Limited” entails a risk for holding company as any negative profitability of the subsidiary
company will ultimately impact the operating results of the issuer /parent company STS
Holdings Limited.
Management Perception Although it is subsidiary company, its shares are held mostly by the parent company. Having
control over the subsidiary, the parent company will exert all its efforts to make operational
success of the subsidiary so as to not negatively impact the operational result of the holding
company.
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CHAPTER (XXI): DESCRIPTION OF THE ISSUE
a) Issue Size:
(i) Number of securities to be issued;
The Company will offer [*] Ordinary Shares, of this [*] ordinary shares 10% (i.e. [*]
Ordinary Shares) are reserved for Mutual Fund and 50% (i.e. [*] Ordinary Shares) are
reserved for Other Eligible Investors (EIs) at a cut off price of Tk. [*] and 10% (i.e. [*]
Ordinary Shares) are reserved for NRB and remaining 30% (i.e. [*] Ordinary Shares) to
Other General Public and ¶wZMÖ ’̄ ¶z ª̀ wewb‡qvMKvix at a discounted price of Tk. [*] per share.
(ii) Authorized capital and paid-up capital; Particular Amount in Tk. Authorized Capital 240,000,000 Ordinary Share and 60,000,000 Preference Share of Tk.10.00 each
3,000,000,000.00
Issued, Subscribed and Paid up Capital Before IPO 150,945,000 Ordinary Shares of Taka 10 each
1,509,450,000.00
Initial Public Offering through Book Building Method [*] Ordinary Shares @ Tk. 10 each
[*]
Post IPO Paid up Capital [*]
(iii) Face value, premium and offer price per unit of securities; Face value per share Tk. 10.00 each
Offer Price per share to Eligible Investors (EIs) Tk. [*] with a premium of Tk. [*]
Offer Price per share to General Public Tk. [*] with a premium of Tk. [*]
(iv) Number of securities to be entitled for each category of applicants;
Category Particular Number of
Shares Issue Price per Share
Amount in Tk.
Eligible Investors
(EIs)
10% of IPO i.e. [*] Ordinary Shares shall be reserved for Mutual Funds
[*]
[*]
[*]
50% of IPO i.e. [*] Ordinary Shares shall be reserved for Other Eligible Investors (EIs)
[*] [*]
General Public
10% of IPO i.e. [*] Ordinary Shares shall be reserved for Non-Resident Bangladeshis (NRBs)
[*]
[*]
[*]
30% of IPO i.e. [*] Ordinary Shares shall be reserved for ¶wZMÖ ’̄ ¶z`ª wewb‡qvMKvix and General Public
[*] [*]
Total 750,000,000
In case of over‐subscription under Eligible Investors (EIs) categories mentioned
above shall be allotted security on pro‐rata basis at the cut‐off price.
In case of over subscription in the general public category, the issuer and the issue manager shall jointly conduct an open lottery.
In case of under‐subscription in any category by up to 35% in an initial public offer, the unsubscribed portion of securities shall be taken up by the underwriter(s).
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(v) Holding structure of different classes of securities before and after the issue;
Sl. No.
Category of Shareholders No. of Ordinary Shares Hold Percentage of Holding
(vi) Objective of the issue including financing requirements and feasibility in respect of
enhanced paid-up capital. Net proceeds from Initial Public Offering (IPO) will be used to finance its subsidiary company-STS Hospital Chittagong Limited for its Hospital Complex in Chittagong. This composite facility for full-fledged hospital/medical care services is planned to be constructed over 48,418.75 square meter built up area with 1 (one) basement plus 16 (sixteen) storied building and an helipad on the roof top of the building. Total project costs of this upcoming Hospital at Chittagong have been estimated at Tk. 4,903.38 million. The IPO proceeds of about Tk. 750 million will be used as equity contribution to the Chittagong Hospital Project. Out of the balance need of the project cost Tk. 2,782.50 million is being arranged from IFC and DEG in the form of long term debt and the rest Tk. 1,370.88 million is being financed from internal generation of fund during the project implementation period.
Mode of Financing Already Financed To be Financed Total Financing
Loans including Interest During Contruction period (IDCP)
TOTAL 812.78 4090.60 4,903.38 The feasibility report in respect STS Hospital Chittagong Limited as prepared Mohammad Naser, MBA, LLB, CPA is enclosed below:
Summary of the Project
Under The Entity STS Hospital Chittagong Limited (a Private Ltd. company) Type of the Industry Healthcare Service
Location of the Project Plot No.H-1, Anannya Residential Area (CDA), Mouza-Quaish, Ha th az a ry , Chittagong Development Authority (CDA), Chittagong
Cost of the Project (in Million) Tk. 4,903.04 Total Equity of the Project (in Million)
Tk. 2,108.32
Capacity of the Project:
The Hospital has been built with a capacity of 346 beds.
Cost of the Project:
Total project cost is estimated at Tk. 4903 Mns; 346 beds will be established in 2 phases.
Project cost Total
In Tk. Million 4,903.38 In USD Million 61.44
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Means of Finance
Funding – In Tk. Million Total
Debt 2,794.72 Million (57%)
Equity 2,108.32 Million (43%)
Total Tk. 4,903.04 Million
* Payback Period: About 6.41 Years
* Debt-Service Coverage Ratio (DSCR): Average 1.35
* Employment Generation: About 500 in 1st year
Assumptions for Financial Projections:
Capacity Utilization levels
Revision of tariffs by 7.0 from the third year onwards – every alternate year;
Direct overheads
G & A variable % of revenue
Oxygen (Direct expenses) 0.50%
Sterilization (Direct expenses) 0.20%
Housekeeping (Direct expenses) 1.00%
Electricity / Fuel (Direct expenses) 2.20%
Food & Beverages (Direct expenses) 2.00%
Consultants‟ fees (Direct expenses)* 10.00%
*Over & above the minimum guarantee AND share in OPD, Diagnostics & surgeries
Year No. Capacity Utilization I 22%
II 40%
III 60%
IV 70%
V 75%
VI Years onwards 85%
Red-Herring Prospectus: STS Holdings Limited
Page: 186
General & Admin overheads
G & A variable % of revenue Advertising & Publicity 4.00%
Taka in Million PARTICULARS I II III DESCRIPTION OF ASSETS Land & Land development 262 Building incl'g support services 1299 60 Contingency 71 4 Interest 44 0 Pre.op.exp 60 2 1474 67 Value of New Asset 1474 Value Of Asset 1474 1474 1445 1482 Depreciated value 1474 1445 1415 1451
RATE @ 2.00% 29 29 31 PLANT & MACHINERY Electrical 195.00 A/C Equipment 170 Contingency 17 Interest 10 Pre.op.exp 14 Value Of New Asset 406 Value Of Asset 406 406 345 284 Depreciated Value 406 345 284 223
RATE @ 15.00% 61 61 61
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Page: 189
PARTICULARS I II III DESCRIPTION OF ASSETS MEDICAL EQUIPMENT 917.7 393.4 Contingency 42 26 Interest 26 0 Pre.op.exp 35 16 - ------------ Value Of New Asset 1021 436 Value Of Asset 1021 1021 919 1253 Depreciated Value 1021 919 817 1107
RATE @ 10.00% 102 102 146 SUPPORT SERVICES 192.00 63.05 Contingency 9 4 Interest 5 0 Pre.op.exp 7 3 - --------------- Value Of New Asset 214 70 Value Of Asset 214 214 182 219 Depreciated Value 214 182 150 177
RATE @ 15.00% 32 32 43 Furniture & Fixtures 20 10 Communication services 60.00 0 Contingency 4 1 Interest 2 0 Pre. op. exp. 3 0 ---- -------------- Value Of Asset 89 11 Value Of Asset 89 89 80 82 Depreciated Value 89 80 71 72
RATE @ 10.00% 9 9 10 TOTAL DEPRECIATION 233 233 290 TOTAL VALUE OF ASSETS (DEP) 3204 2970 2737 3031
Taka in Million PARTICULARS 1 2 3 LIABILITIES Equity 2121 2121 2121 Reserves & Surplus -952 -963 -767 Term Loan 2782 2653 2283 Bank Borrowings 65 75 87 Current Liabilities 29 32 37 Total Liabilities 4045 3698 3540 ASSETS Fixed assets 3614 3244 2875 Current Assets 111 126 145 Cash & Bank balance 321 328 520 Total Asset 4045 3698 3540
Red-Herring Prospectus: STS Holdings Limited
Page: 191
STS Hopital Chittagong Limited Income & Expenditure Statement:
Taka in Million PARTICULARS I II III Daily Income (w/o tariff revision) 9.14 Annual, at 100% Occupancy 3337 3337 3337 PARTICULARS I II III Occupancy Rate 45% 60% 75% Total Income 1502 2002 2503 62 62 62 DIRECT OPERATING EXPENSES 4.64 14.49 26.97 0.044 0.038 0.036 Food & beverages 30 40 50 Housekeeping 15 20 25 Sterilization 3 4 5 Oxygen 8 10 13 Consultants' fee 150 200 250 Power & Energy - Gas expenses 30 40 50 - Electricity 3 4 5 Salary 388 416 504 G & A 236 328 328 AMC for Medical equipment - Based on book value 45 45 41 Materials 451 581 701 Total expenses 1359 1688 1972 PBIDT 143 314 531 Interest [loan] 251 251 270 [W Cap] 5 8 10 PBDT -114 54 251 Depreciation 330 330 369 PBT -443 -275 -119 Operations Management Fee 23 37 54 Tax / MAT 0 0 0 PAT -467 -313 -172
Red-Herring Prospectus: STS Holdings Limited
Page: 192
STS Hopital Chittagong Limited Key Performance Indicators KEY RESULTS YEARS ----> I II III RETURN ON ASSETS (%) -11% -8% -4% RETURN ON EQUITY (%) -26% -18% -9% RETURN ON NETWORTH (%) -36% -32% -18% RETURN ON CAPITAL EMPLOYED -5% 0% 4% FIXED ASSETS TURNOVER RATIO 36% 52% 62% DSCR BEP (%) 76.52% BEP (CASH) (%) 56.72% INTERNAL RATE OF RETURN (%) 16.5%
Red-Herring Prospectus: STS Holdings Limited
Page: 193
CHAPTER (XXII): USE OF PROCEEDS (a) Use of net proceeds of the offer indicating the amount to be used for each purpose with head-
wise break-up;
STS Holdings Limited will raise the capital through Initial Public Offering (IPO) in order to make investment in its subsidiary company namely STS Hospital Chittagong Limited (a private limited company) to build up international standard Hospital Complex in Chittagong. To be named as Apollo Hospitals Chittagong this composite facility for full-fledged hospital/ medical care services is planned to be constructed over 48,418.75 square meter built up area with 1 (one) basement plus 16 (sixteen) storied building and one helipad on the roof top. Total project costs of this upcoming hospital at Chittagong have been estimated at Tk.490.33 crore. The IPO proceeds of about Tk.75.00 crore will be used as equity contribution to the Chittagong Hospital Project. Balance need of the project cost Tk. 278.25 crore is being arranged from IFC and DEG in the form of long term debt and the rest Tk.137.08 crore is being financed from internal generation of fund during the project implementation period. A detail of the estimated project cost financing has been planned as under:
Amount in Crore (BDT) Mode of Financing Already Financed To be Financed Total Financing
IFC DEG Loans including Interest During Contruction period (IDCP)
A detail of the estimated project cost break up has been planned as under:
STS HOSPITAL CHITTAGONG LIMITED PROJECT COST BREAK UP
Amount in BDT Sl. No Particulars Amount IPO proceeds Other Then IPO 1 Land 262,360,000 - 262,360,000 Deed Value 93,236,470 - 93,236,470 Registration Cost 24,707,864 - 24,707,864 Transfer Cost 43,309,176 - 43,309,176 Road Development 9,567,890 - 9,567,890 Registration cost & other cost for
transfering to STS Hospital Chittagong Ltd.
91,538,600 -
91,538,600
2
Cost of Civil & Structural works 1,446,828,701 158,737,448 1,288,091,253 a Piling Works 336,105,495 - 336,105,495
b Civil-structure (Basement, super structure)
629,485,477 - 629,485,477
c Civil Works with finishing 474,760,230 158,737,448 316,022,781 d Materials Test 6,477,500 - 6,477,500
- Structural Design-Inter Space 2,420,000 - 2,420,000
- C & S consultant; Meinhardt 25,630,000 - 25,630,000
- M & Econsultant; Meinhardt 38,950,000 - 38,950,000
- QS; WT Partner 1,800,000 - 1,800,000
Local structural, Mechanical Electronic Plumbing, ID, Kitchen-laundry etc.
30,000,000 - 30,000,000
4
Costs of Mechanical Electronic Plumbing, Electrical and Finishing
1,433,493,723 471,852,553 961,641,170
a Plumbing Works 177,546,565 58,956,000 118,590,565 b Electrical Works 401,169,978 128,010,380 273,159,598
c HVAC (Hitting Ventilation and Air Conditioning)
159,412,032 53,140,000 106,272,032
d Kitchen-Laundry, TV & Telecom 101,000,000 33,670,000 67,330,000 e Fire Fighting System 72,540,933 24,180,000 48,360,933 f Elevator (Lifts) 85,500,000 28,500,000 57,000,000 g Medical Gas 68,850,000 22,950,000 45,900,000 h Building Management System 91,389,744 30,460,000 60,929,744 i Interior 158,584,471 52,846,173 105,738,298 j Furniture & Fixture 117,500,000 39,140,000 78,360,000
5
Medical Equipment 1,263,598,786 119,410,000 1,144,188,786
a. 150mm dia , Ajay India ISO Rft 1,500 5,616 8,424,000 1,404 2,106,000 10,530,000 3,510,000 7,020,000
b. 100mm dia, Ajay India ISO Rft 2,500 2,592 6,480,000 648 1,620,000 8,100,000 2,698,920 5,401,080
c. 80mm dia Ajay India ISO Rft 8,500 1,800 15,300,00
0 450 3,825,000 19,125,000 6,374,250 12,750,750
d. 65mm dia, Ajay India ISO Rft 5,000 1,368 6,840,000 342 1,710,000 8,550,000 2,850,570 5,699,430
e. 50mm dia, Ajay India ISO Rft 7,500 580 4,347,000 145 1,086,750 5,433,750 1,811,250 3,622,500
f. 40mm dia, Ajay India ISO Rft 6,500 364 2,363,400 91 590,850 2,954,250 984,902 1,969,349
g. 35mm dia, Ajay India ISO Rft 7,500 230 1,728,000 58 432,000 2,160,000 720,000 1,440,000
h. 25mm dia, Ajay India ISO Rft 9,500 137 1,299,600 34 324,900 1,624,500 541,557 1,082,943
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S/N Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total IPO Proceeds
Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
i. 20mm dia, Ajay India ISO Rft 12,500 115 1,440,000 29 360,000 1,800,000 600,048 1,199,952
j. 12 mm dia, Ajay India ISO Rft 25,000 90 2,250,000 23 562,500 2,812,500 939,375 1,873,125
k. Adhesive Solution Ajay India ISO Nos 150 3,193 478,980 798 119,745 598,725 199,575 399,150
3 FIXTING OF TOILET FITTINGS:
Fixing of toilet fittings in Toilets with all hardwares and consumables (SS Bush, SS Screw, SS fancy Bush, Nut bolt, Teflon, Solvent Cement, white Cement, Gasket etc) required for complete installation and function of the fitting.
3.1 Stop Cock: TOTO Thailand JIS No 25 2,002 50,040 500 12,510 62,550 62,550 -
3.2 Angle Stop Cock: TOTO Thailand JIS No. 1,576 769 1,211,881 192 302,970 1,514,851 812,214 702,637
3.3 WC Shower Rose (push shower):
TOTO Thailand JIS No 298 1,083 322,698 271 80,675 403,373 403,373 -
3.4 Open Tap / Bib Cock : TOTO Thailand JIS No 200 2,009 401,760 502 100,440 502,200 502,200 -
3.5 Pillar Cock : TOTO Thailand JIS No 35 4,841 169,445 1,210 42,361 211,806 211,806 -
3.6 Basin Mixture: TOTO Thailand JIS No 450 6,945 3,125,304 1,736 781,326 3,906,630 1,597,378 2,309,252
3.7 Sink Mixture: TOTO Thailand JIS No 165 5,689 938,758 1,422 234,689 1,173,447 - 1,173,447
3.8 Sink waste TOTO Thailand JIS No 165 1,693 279,299 423 69,825 349,124 - 349,124
3.9 Basin Waste TOTO Thailand JIS No 450 1,693 761,724 423 190,431 952,155 - 952,155
3.1 Bottle Trap TOTO Thailand JIS No 615 2,222 1,366,481 555 341,620 1,708,101 - 1,708,101
4 FITTING & FIXING OF TOILET FIXTURES:
4.1 Washing Hand Basin: TOTO Thailand JIS No 450 5,023 2,260,224 1,256 565,056 2,825,280 - 2,825,280
4.2 Stainless Steel Sink TOTO Thailand JIS No 165 6,120 1,009,800 1,530 252,450 1,262,250 - 1,262,250
4.3 Commodes TOTO Thailand JIS No 298 27,076 8,068,529 6,769 2,017,132 10,085,661 4,873,608 5,212,053
4.4 Long Pan With Low down TOTO Thailand JIS No 20 3,240 64,800 810 16,200 81,000 - 81,000
4.5 Urinal TOTO Thailand JIS No 25 10,944 273,600 2,736 68,400 342,000 - 342,000
5 Towel Bar, Towel Rack & Other Toilet Accessories
Thailand
i Towel Rail. TOTO Thailand JIS No. 748 4,591 3,434,397 1,148 858,599 4,292,996 3,409,144 883,852
ii Toilet Paper Holder TOTO Thailand JIS No. 298 2,707 806,746 677 201,686 1,008,432 1,008,432 -
iii Soap tray TOTO Thailand JIS No. 750 2,197 1,648,080 549 412,020 2,060,100 2,060,100 -
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Page: 212
S/N Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total IPO Proceeds
Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
iv Dryer TOTO Thailand JIS No. 30 8,280 248,400 2,070 62,100 310,500 111,870 198,630
v Mirror TOTO Thailand JIS No. 615 2,520 1,549,800 630 387,450 1,937,250 - 1,937,250
vi Glass Shelf TOTO Thailand JIS No 615 4,630 2,847,647 1,158 711,912 3,559,559 - 3,559,559
vii Robe Hook TOTO Thailand JIS No 298 4,032 1,201,536 1,008 300,384 1,501,920 - 1,501,920
viii Shower TOTO Thailand JIS No 165 3,964 653,994 991 163,499 817,493 - 817,493
ix Shower mixture TOTO Thailand JIS No 165 7,220 1,191,326 1,805 297,832 1,489,158 - 1,489,158
x Connetion pipe TOTO Thailand JIS No 1,541 360 554,760 90 138,690 693,450 - 693,450
xi Floor grating TOTO Thailand JIS No 933 1,800 1,679,400 450 419,850 2,099,250 - 2,099,250
6 CATCH PIT:
a. 450 mm x 450 mm x 600 mm
Brick Work
No 50 3,240 162,000 810 40,500 202,500 70,000 132,500
7 INSPECTION PIT:
a. Construction of masonry Inspection
(600 mm x 600 mm x 550 mm)
Brick Work
NA
No 40 4,680 187,200 1,170 46,800 234,000 80,000 154,000
8 C.I. COVER: 24" Local Bangladesh
No 50 2,520 126,000 630 31,500 157,500 50,000 107,500
9 PRESSURED HOT WATER DISTRIUTION SYSTEM:
Supply, fitting, fixing of Pressurized Water distribution
KSB Holland DIN-2548
/IEC Set 1 4,680,000 4,680,000 1,170,000 1,170,000 5,850,000 1,950,000 3,900,000
10 SUMP PUMP KSB Holland DIN-2548
/IEC No 12 39,600 475,200 9,900 118,800 594,000 200,000 394,000
11 GATE VALVE
i 19 mm dia Ajay India ISO No 2,500 612 1,530,000 153 382,500 1,912,500 612,000 1,300,500
ii 25mm dia Ajay India ISO No 1,054 900 948,600 225 237,150 1,185,750 337,500 848,250
iii 32 mm dia Ajay India ISO No 160 1,800 288,000 450 72,000 360,000 112,500 247,500
iv 62 mm dia Ajay India ISO No 90 2,520 226,800 630 56,700 283,500 94,500 189,000
v 50 mm dia Ajay India ISO No 80 2,880 230,400 720 57,600 288,000 190,800 97,200
vi 38 mm dia Ajay India ISO No 130 2,160 280,800 540 70,200 351,000 113,400 237,600
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S/N Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total IPO Proceeds
Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
vii 100 mm dia Ajay India ISO No 35 32,400 1,134,000 8,100 283,500 1,417,500 486,000 931,500
viii 150 mm dia Ajay India ISO No 25 32,400 810,000 8,100 202,500 1,012,500 323,200 689,300
12 PRESSURE REDUCING VALVE (PRV):
a. 50mm dia Itop Italy BS/ZIK No 10 9,000 90,000 2,250 22,500 112,500 33,750 78,750
b. 38 mm dia Itop Italy BS/ZIK No 14 6,120 85,680 1,530 21,420 107,100 30,600 76,500
c. 25 mm dia Itop Italy BS/ZIK No 8 4,680 37,440 1,170 9,360 46,800 23,400 23,400
d.80 mm dia Itop Italy BS/ZIK No 6 18,000 108,000 4,500 27,000 135,000 42,250 92,750
13 PUMP PANEL: NA
Set 3 54,000 162,000 13,500 40,500 202,500 67,000 135,500
Nos 620 324 200,880 81 50,220 251,100 238,000 13,100
vii water pipe presure test Local
Nos 450 180 81,000 45 20,250 101,250 - 101,250
16.1 Non Return Valve
i 65 mm Tozan Japan BS Nos 4 3,240 12,960 810 3,240 16,200 - 16,200
ii 50 mm Tozan Japan BS Nos 4 2,520 10,080 630 2,520 12,600 - 12,600
iii 32 Tozan Japan BS Nos 2 1,800 3,600 450 900 4,500 - 4,500
16.2 Foot Valve Tozan Japan BS Nos 4 6,120 24,480 1,530 6,120 30,600 - 30,600
16.3 WATER LEVEL CONTROLLER
Tozan Japan BS Nos 4 10,800 43,200 2,700 10,800 54,000 - 54,000
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Page: 214
S/N Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total IPO Proceeds
Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
17 Construction of septic tank
1. For 1000 users
RCC Work
each 1 324,000 324,000 81,000 81,000 405,000 138,000 267,000
18 Construction of soak well
1. 1000 users
Brick Work
each 1 180,000 180,000 45,000 45,000 225,000 78,000 147,000
19 Providing following capacity 2800- 2900 RPM single stage Centrifugal water pump manufactured according to DIN/NEMA/IEC/BS/VDE/JIS & ISO 9001 standard complete
20 Deep Well Pump [DWP] KSB Holland DIN-2548
/IEC Set 1 2,880,000 2,880,000 720,000 720,000 3,600,000 1,200,000 2,400,000
21
Raw Water Transfer Pump [RWTP] With Panel Total capacity 10m³/hr, TDH 15m , 1duty + 1standby
KSB Holland DIN-2548
/IEC Set 2 50,400 100,800 12,600 25,200 126,000 38,000 88,000
22
Filter Water Transfer Pump [FWTP] With Panel Total capacity 15m³/hr, 1duty + 1standby
KSB Holland DIN-2548
/IEC Set 2 54,000 108,000 13,500 27,000 135,000 48,000 87,000
23
RO Water Transfer Pump [ROTP] With Panel Total capacity 80m³/hr, TDH 90m, 1duty + 1standby
KSB Holland DIN-2548
/IEC Set 2 277,200 554,400 69,300 138,600 693,000 - 693,000
24
Cold Water Booster Pump [CWBP] Total capacity 56m³/hr, TDH 15m
KSB Holland DIN-2548
/IEC Set 1 684,000 684,000 171,000 171,000 855,000 290,000 565,000
Set 1 200,000 200,000 1,500 1,500 201,500 - 201,500
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S/N Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total
IPO Proceeds
Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
23 Cables
Supply and installation Cables complete with lugs, termination, fittings, support, all necessary accessories and other associated works required to complete the said installation.
IEC Meter 1,485 1,962 2,912,976 490 728,244 3,641,220 - 3,641,220
19 1CX240rm XLPE cable for BBT t0 Chiller(Green)
BRB Bangladesh VDE / BS /
IEC Meter 180 1,962 353,088 490 88,272 441,360 - 441,360
20 1CX270rm XLPE cable for BBT t0 DB
BRB Bangladesh VDE / BS /
IEC Meter 135 2,419 326,592 605 81,648 408,240 - 408,240
24.0 Raceway
Supply and installation raceway complete with fittings, support, all necessary accessories and other associated works required to complete the said installation.
1 Cable ladders Local
Company Bangladesh BNBC Meter 2,000 280 560,000 70 140,000 700,000 350,000 350,000
2 Cable trays Local
Company Bangladesh BNBC Meter 16,000 344 5,504,000 86 1,376,000 6,880,000 3,440,000 3,440,000
Switches / Receptacles
Supply and install Switches / Receptacles complete with cables & containment, fittings, support, all necessary accessories and other associated works required to complete the said installation.
Supply and install Luminaries complete with cables & containment, fittings, support, all necessary accessories and other associated works required to complete the said installation.
1 Indoor Luminaries Imported China BNBC lot 18 960,000 17,280,000 210,000 3,780,000 21,060,000 9,149,994 11,910,006
2 Outdoor Luminaries Imported China BNBC lot 1 1,011,20
0 1,011,200 221,200 221,200 1,232,400 - 1,232,400
Emergency Luminaries Imported China BNBC lot 1
1,011,200
1,011,200 221,200 221,200 1,232,400 - 1,232,400
3 Central Battery Unit 450W with Simplex Outlet @ B1
Local Bangladesh BNBC nos 1 3,792 3,792 830 830 4,622 - 4,622
4 Central Battery Unit 550W with Simplex Outlet @ L14
Local Bangladesh BNBC nos 1 8,342 8,342 1,825 1,825 10,167 - 10,167
5 Central Battery Unit 700W with Simplex Outlet @ B2
Local Bangladesh BNBC nos 1 10,618 10,618 2,323 2,323 12,940 - 12,940
6 Central Battery Unit 830W with Simplex Outlet @ L7 to L13
Local Bangladesh BNBC nos 7 12,589 88,126 2,754 19,278 107,404 - 107,404
7 Central Battery Unit 920W with Simplex Outlet @ L1
Local Bangladesh BNBC nos 1 13,955 13,955 3,053 3,053 17,007 - 17,007
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Page: 235
S/N
Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total
IPO Proceeds
Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
8 Central Battery Unit 1040W with Simplex Outlet @ L2 to L6
Local Bangladesh BNBC nos 5 15,775 78,874 3,451 17,254 96,127 - 96,127
9 Emergency Down Light 50W Halogen with 2hours Battery Backup
Imported China BNBC nos 170 7,584 1,289,280 1,659 282,030 1,571,310 - 1,571,310
10 2*10W FL Lamp Fire Exit Sign, Single Side/Front Exit
Imported China BNBC nos 60 2,528 151,680 553 33,180 184,860 - 184,860
11 2*10W FL Lamp Fire Exit Sign, Single Side/Side Exit
Imported China BNBC nos 34 2,528 85,952 553 18,802 104,754 - 104,754
12 2*10W FL Lamp Fire Exit Sign, Double Side/Side Exit
Imported China BNBC nos 42 2,528 106,176 553 23,226 129,402 - 129,402
13
2*55W Halogen Lamp, Self-Contained Battery Emergency Lighting Unit, Sealed Lead Acid, 2hours duration with Simplex Outlet
Imported China BNBC nos 130 7,584 985,920 1,659 215,670 1,201,590 - 1,201,590
14
2*55W Halogen Lamp, Self-Contained Battery Emergency Lighting Unit, Sealed Lead Acid, 2hours duration with Duplex Outlet
Imported China BNBC Nos 50 7,584 379,200 1,659 82,950 462,150 - 462,150
15 Remote Lamp (1 Lamp) Imported China BNBC lot 1 7,584 7,584 1,659 1,659 9,243 - 9,243
16 Remote Lamp (2 Lamps) Imported China BNBC lot 1 8,848 8,848 1,936 1,936 10,784 - 10,784
26 Main Incoming & High Voltage Routing (HM Cable)
BRB Bangladesh BS, IEC,
VDE lot 1 4,419,328 4,419,328 966,728 966,728 5,386,056 1,800,000 3,586,056
27 Sub-Station Imported UK BS, IEC,
VDE lot 1 78,710,737 78,710,737 17,217,974 17,217,974 95,928,710 31,972,000 63,956,710
28 Generator Set Imported UK BS, IEC,
VDE lot 1 55,770,880 55,770,880 12,199,880 12,199,880 67,970,760 22,660,000 45,310,760
29 250 KVA UPS Imported UK BS, IEC,
VDE lot 1 10,240,000 10,240,000 2,240,000 2,240,000 12,480,000 4,155,000 8,325,000
30 Lightning Protection and Earthing Imported UK BS, IEC,
VDE lot 1 5,143,318 5,143,318 1,213,257 1,213,257 6,356,575 2,245,000 4,111,575
TOTAL ELECTRICAL WORKS
401,169,978 128,010,380 273,159,598
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Page: 236
c. Hitting Ventilation and Air Conditioning (HVAC)
S/N
Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total IPO Proceeds Other Then IPO
Unit Qty Materials Cost Labor Cost Total IPO Proceeds Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
Supply and installation of Elevator complete with finishes, handicapped provision, traction machine, lift car, hoistway equipment, landing doors, hall fixtures, Automatic Rescue Device (ARD), variable voltage variable frequency (VVVF) drives, regenerate drive, control panels, instrumentation, control wiring, cables & containment, fittings, support, all necessary accessories and other associated works required to complete the said installation.
1 O.P. Public Elevator,7 stop ,1600kg,1.75m/s
OTIS USA EN 81 Nos 2 9,000,000 18,000,000
- 18,000,000 14,250,000 3,750,000
2 I.P. Public Elevator 17 stop ,1600kg,1.75m/s
OTIS USA EN 81 Nos 2 9,000,000 18,000,000
- 18,000,000 14,250,000 3,750,000
3 Staff/ Patient/ Service Elevator,17 stop ,1600kg,1.75m/s
OTIS USA EN 81 Nos 4 9,000,000 36,000,000
- 36,000,000 - 36,000,000
4 Service Elevator,9 stop ,1600kg,1.75m/s
OTIS USA EN 81 Nos 1 9,000,000 9,000,000
- 9,000,000 - 9,000,000
5 Durm Lift 3 Stop, 1000Kg OTIS USA EN 81 Nos 2 2,250,000 4,500,000
- 4,500,000 - 4,500,000
Sub total
85,500,000 28,500,000 57,000,000
g. Medical Gas
S/N
Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total IPO Proceeds Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
1 Air Compressor Linde
Nos 2 9,000,000 18,000,000
- 18,000,000 18,000,000 -
2 Vacuum Compressor Linde
Nos 2 4,500,000 9,000,000
- 9,000,000 4,950,000 4,050,000
3 N2O Bank Linde
Nos 2 900,000 1,800,000
- 1,800,000 - 1,800,000
5 CO2 Bank Linde
Nos 2 450,000 900,000
- 900,000 - 900,000
6 Vassal Tank Linde
Nos 4 450,000 1,800,000
- 1,800,000 - 1,800,000
7 Piping Work with outlets Linde
Lot 1 28,350,000 28,350,000
- 28,350,000 - 28,350,000
8 Alarm panel Linde
Lot 1 9,000,000 9,000,000
- 9,000,000 - 9,000,000
Sub Total
68,850,000 22,950,000 45,900,000
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Page: 245
h. Building Management System
S/N Line Items Brand Origin Standard/ Approval
Unit Qty Materials Cost Labor Cost Total IPO Proceeds Other Then IPO
Rate Amount Rate Amount Amount Amount Amount
1 Master Antenna Television System (MATV)
Clipsal Europe BS lot 1 22,530,960 22,530,960 5,632,740 5,632,740 28,163,700 20,728,656 7,435,044
2 CCTV Services Sony Germany BS lot 1 11,785,075 11,785,075 2,946,269 2,946,269 14,731,344 9,731,344 5,000,000
3 Access Control System Honeywell Europo BS lot 1 17,462,160 17,462,160 4,365,540 4,365,540 21,827,700 - 21,827,700
4 Public Address System Bosch Germany BS lot 1 4,608,000 4,608,000 1,152,000 1,152,000 5,760,000 - 5,760,000
5 Intercom Nurse Call system
Panasonic Japan BS lot 1 16,725,600 16,725,600 4,181,400 4,181,400 20,907,000 - 20,907,000
Sub total
91,389,744 30,460,000 60,929,744
i. Interior & Other Works
S/N Line Items Unit Qty Materials Cost Labor Cost Total IPO Proceeds Other Then IPO
1 1000 long joinery bench with laminated top and cutout for handbasin (measured separately) including cupboards under.
No 111 11,200 1,243,200 4,800 532,800 1,776,000 - 1,776,000
2 Ditto built-in to wall of patient ward. No 97 11,200 1,086,400 4,800 465,600 1,552,000 - 1,552,000
3 Ditto but 4000 long No 89 44,800 3,987,200 19,200 1,708,800 5,696,000 - 5,696,000
Red-Herring Prospectus: STS Holdings Limited
Page: 246
4 Ditto but 7000 long. No 2 77,000 154,000 33,000 66,000 220,000 - 220,000
5 Nominally 1500 long vanity bench with cutouts for handbasin (measured separately) to amenities.
No 18 16,800 302,400 7,200 129,600 432,000 - 432,000
6 Nominally 2000 long 'charting' bench built between nib walls.
No 16 20,160 322,560 8,640 138,240 460,800 - 460,800
7
2500 long reception desk to waiting area on Level 1, 2 and 3 comprising stone (marbel or granite) front face, side panels and quartz solid surface counter top.
No 4 56,000 224,000 24,000 96,000 320,000 - 320,000
8 2500 long reception desk to waiting area comprising laminated top, front and side panels.
No 11 56,000 616,000 24,000 264,000 880,000 - 880,000
9 Ditto but 5000 long overall and 'L' shaped. No 3 112,000 336,000 48,000 144,000 480,000 - 480,000
10 2500 long x 1000 wide nurse station comprising laminated bench with cupboards under.
No 7 28,000 196,000 12,000 84,000 280,000 - 280,000
11 Ditto but 7000 long overall and 'L' shaped. No 10 78,400 784,000 33,600 336,000 1,120,000 - 1,120,000
12 Ditto but 9000 long overall and 'U' shaped. No 1 100,800 100,800 43,200 43,200 144,000 - 144,000
13 9000 long overall 'L' shaped bench to multi-disciplinry area comprising laminated bench with cupboards under.
No 5 100,800 504,000 43,200 216,000 720,000 - 720,000
14 General allowance for built-in shelving and joinery to storage rooms (not shown on the drawings).
No 76 14,000 1,064,000 6,000 456,000 1,520,000 - 1,520,000
15 Ditto to offices. No 79 15,400 1,216,600 6,600 521,400 1,738,000 - 1,738,000
16 Ditto to consulting and examination rooms. No 118 15,400 1,817,200 6,600 778,800 2,596,000 - 2,596,000
17 Ditto to patient wards. No 257 15,400 3,957,800 6,600 1,696,200 5,654,000 - 5,654,000
18 Ditto to lockers rooms. No 6 16,800 100,800 7,200 43,200 144,000 - 144,000
19 Ditto to basement workshop and storage rooms. Item 1 140,000 140,000 60,000 60,000 200,000 - 200,000
SL. NO. EQUIPMENT DETAILS MODEL BRAND ORIGIN QTY UNIT COST TOTAL COST IPO PROCEED OTHER THAN IPO
Radiology & Imaging'
1
Clinical MRI scanner 1.5 - Tesla, state of the art, top of the line and latest model, complete with magnetic and RF shielding, all RF coils and application packages for whole body imaging including fMRI, spectroscopy, injector, dry-view film printer, MRI compatible anaesthetic ventilator with suitable gas cylinders and patient vital signs monitoring system to come with PACS (9018.12.00) -GE
Avanto 1.5T, Siemens GE USA 1 52,895,867 52,895,867 - 52,895,867
2
Clinical CT scanner, state-of-the-art, top-of-the-line, latest model Multi detector, Multi slice 256 slice spiral/non spiral or both mode with all application packages including synchronised injector and dry- view film printer-Philips
Brillance 64, Philips GE Japan 1 118,242,487 118,242,487 - 118,242,487
3 1000mA HF Digital X-ray system; with Fluroscopy (9022.14.00)--Philips
Iconos R200, Siemens Philips China 1 16,098,742 16,098,742 16,098,742 -
4 550mA X-ray machine - Analog (9022.14.00)--Philips
Multix Ease, Siemens Philips China 1 9,199,281 9,199,281 9,199,281 -
5 Mobile x-ray equipment with digital cassettes (250mA)(9022.14.00)--Philips
Poly Mobile Plus, Siemens
Philips India 4 3,449,730 13,798,922 13,798,922 -
6 Ultrasound scanner (High end -4D) (9018.12.00)--Philips
Voluson E8 Expert, GE Philips Austria 1 8,049,371 8,049,371 8,049,371 -
7 Digital Mammography system having stereotactic system & biopsy attachment (9022.12.00)-Siemens
Nova3000, Siemens Siemens USA 1 16,098,742 16,098,742 16,098,742 -
8 Digital film printer/Film processor (9018.19.00)-Fuji Flim
Dry pix 7000, Fuji Fuji Film Japan 1 3,219,748 3,219,748 3,219,748 -
9 Full body bone densitometer-GE Discovery Wi, Hologic GE USA 1 6,148,609 6,148,609 6,148,609 -
Subtotal 243,751,771 72,613,416 171,138,354
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SL. NO. EQUIPMENT DETAILS MODEL BRAND ORIGIN QTY UNIT COST TOTAL COST IPO PROCEED OTHER THAN IPO
Cardiology
1 12 lead interpretive ECG ( Resting computered interpretation )
8 Patient monitor (ECG, NIBP, SPO2, HR) NA Philips Japan 1 607,153 607,153 - 607,153
9 Suction apparatus NA Philips Japan 2 165,587 331,174 - 331,174
10 Pulse oximeter NA Philips China 1 72,036 72,036 - 72,036
11 Defibrillating cum monitor NA Soering Germany 1 377,171 377,171 - 377,171
subtotal 12,479,695 - 12,479,695
Red-Herring Prospectus: STS Holdings Limited
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SL. NO. EQUIPMENT DETAILS MODEL BRAND ORIGIN QTY UNIT COST TOTAL COST IPO PROCEED OTHER THAN IPO
Operation theater- General purpose (Urology, ENT/Ophthal. & Gen surgical, Plastic/cosmetic)- 2nos
-
1
OT table (Urology and eklectrically operated ) to come with attachement for urology procedures, general surgery, cosmetic/plastic, ENT & Opthal, Surgeries
system, GE GE USA 1 16,098,742 16,098,742 - 16,098,742
Sub Total 234,383,413 - 234,383,413
Grand Total 1,263,598,786 119,410,000 1,144,188,786
Red-Herring Prospectus: STS Holdings Limited
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SITE DEVELOPMENT, SITE OFFICE-LABOR SHED & FENCING:
SL. NO
LINE ITEMS UNIT QTY MATERIALS COST LABOR COST TOTAL IPO PROCEEDS OTHER THEN IPO
RATE AMOUNT RATE AMOUNT AMOUNT AMOUNT AMOUNT
1 Land development (Clearing, grabing, levelling, dressing etc.)
L/S 1
1,000,000 1,000,000 1,000,000 - 1,000,000
2 Site office & labor shed LS 1
2,000,000 2,000,000 2,000,000 - 2,000,000
3 Construction fencing sft 9,850
150 1,477,500 1,477,500 - 1,477,500
Total for site development 4,477,500 - 4,477,500
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(b) Where the sponsors‟ contribution or privately placed fund has been brought prior to the public issue and has already been deployed by the issuer, indication of use of such funds in the cash flow statement; Tk. 156,875,000 has been raised, including share premium, through private placement prior to the public issue on dated 04.10.2009.
Indication of use of privately placed fund in the statement of cash flows:
Accounting Year
Items Amount in
BDT Reflected in cash Flows
31-Dec-06 Acquisition of property, plant and equipment
4,285,984
In the statement of Cash flows, the figure is included in total amount of Acquisition of property, plant and equipment (Medical Equipment) under the head of Investing activities.
31-Dec-07 Acquisition of property, plant and equipment
113,133,185
In the statement of Cash flows, the figure is included in total amount of Acquisition of property, plant and equipment (Medical Equipment) under the head of Investing activities
31-Dec-08 Acquisition of property, plant and equipment
22,637,166
In the statement of Cash flows, the figure is included in total amount of Acquisition of property, plant and equipment (Medical Equipment and electrical Installation) under the head of Investing activities
31-Dec-09 Acquisition of property, plant and equipment
16,818,665
In the statement of Cash flows, the figure is included in total amount of Acquisition of property, plant and equipment (Medical Equipment and electrical Installation) under the head of Investing activities
Total 156,875,000 Mentionable here that, we received share money deposit in the year 2006, 2007, 2008 and 2009 before obtaining consent from Bangladesh Securities and Exchange Commission on 04.10. 2009. As such we used this fund earlier from consent date.
(c) If one of the objects is an investment in a joint venture, a subsidiary, an associate or any
acquisition, details of the form of investment, nature of benefit expected to accrue to the issuer as a result of the investment, brief description of business and financials of such venture; STS Holdings Limited is owner of Apollo Hospitals Dhaka, the first international standard corporate hospital in Bangladesh in order to attain the coveted goal of sponsors to standardize healthcare services in Bangladesh. During its journey of over 10 years Apollo Hospitals Dhaka
hospital has been progressing towards its destined goal and it has been able to set a milestone in the healthcare facility for this country. As a pioneer, it can proudly be told that more hospitals with modern health care services are gradually coming in.
The sponsors are now confident to spread its services to untapped market and Chittagong being the second largest city of the country along with its surrounding locality needs standard healthcare services. After a detailed study the sponsors have come up with the conclusion that if the second hospital is set up in Chittagong with international standard facility it will benefit the patients of the area on the one hand by way of not avoiding hassle to abroad for treatment. The sponsors will benefit through a sizeable return on equity that will in the long run enhance the value of shareholders wealth.
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(d) If IPO proceeds are not sufficient to complete the project, then source of additional fund must be mentioned. In this connection, copies of contract to meet the additional funds are required to be submitted to the Commission. The means and source of financing, including details of bridge loan or other financial arrangement, which may be repaid from the proceeds of the issue along with utilization of such funds; STS Holdings Limited will raise the capital through Initial Public Offering (IPO) in order to make investment in its 99.99% owned subsidiary company- STS Hospital Chittagong Limited (a private limited company) to build up international standard Hospital Complex in Chittagong. Total project costs of this upcoming hospital at Chittagong have been estimated at Tk.490.33 crore. The IPO proceeds of about Tk.75.00 crore will be used as equity contribution to the Chittagong Hospital Project. Balance need of the project cost Tk. 278.25 crore is being arranged from IFC and DEG in the form of long term debt and the rest Tk.137.08 crore is being financed from internal generation of fund during the project implementation period.
(e) A schedule mentioning the stages of implementation and utilization of funds received through
public offer in a tabular form, progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, the approximate date of completion of the project and the projected date of full commercial operation etc. The schedule shall be signed by the Chief Executive Officer or Managing Director, Chief Financial Officer and Chairman on behalf of Board of Directors of the issuer;
Sl. No.
Projects Progress
made so Far Approximate date of
Completion of the projects
Projected date of full
commercial operation
1 Land Acquisition No land is required to acquired
- -
2 Civil Construction Is going on Within 03 months of receiving
the IPO proceeds
Within 12 months of
receiving the IPO proceeds
3 Medical Equipment Will be
started after receiving of
IPO fund
Within 12 months of receiving the IPO proceeds
4 Mechanical, Electrical & Finishing
Within 06 months of receiving the IPO proceeds
5 HVAC, Fire Fighting, Lifts, Medical Gas, BMS, Interior etc.
Within 09 months of receiving the IPO proceeds
Sd/- Dr. Ratnadeep Chaskar,
CEO (Current Charge)
Sd/-
Md. Giash Uddin FCA
Chief Financial Officer
Sd/- Mr. Bhagwan W. Kundanmal
Chairman on behalf of Board of Directors
(f) If there are contracts covering any of the activities of the issuer for which the proceeds of sale of
securities are to be used, such as contracts for the purchase of land or contracts for the construction of buildings, the issuer shall disclose the terms of such contracts, and copies of the contracts shall be enclosed as annexure to the prospectus; There is no such contract yet to be engaged by the Company.
(g) If one of the objects of the issue is utilization of the issue proceeds for working capital, basis of estimation of working capital requirement along with the relevant assumptions, reasons for raising additional working capital substantiating the same with relevant facts and figures and also the reasons for financing short with long term investments and an item wise break-up of last three years working capital and next two years projection; Not applicable for the Company.
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(h) Where the issuer proposes to undertake one or more activities like diversification, modernization, expansion, etc., the total project cost activity-wise or project wise, as the case may be; The Company has a plan to implement project by using IPO proceeds, which have been mentioned in use of IPO Proceeds, Loan, internal fund and project implementation schedule.
(i) Where the issuer is implementing the project in a phased manner, the cost of each phase,
including the phases, if any, which have already been implemented; The Company has a plan to implement expansion by using IPO proceeds after receiving the funds, Loan, internal fund which have been mentioned in use of IPO Proceeds and project implementation schedule.
(j) The details of all existing or anticipated material transactions in relation to utilization of the
issue proceeds or project cost with sponsors, directors, key management personnel, associates and group companies; There is no existing or anticipated material transaction in relation to utilization of the issue proceeds or project cost with sponsors, directors, key management personnel, associates and group companies.
(k) Summary of the project appraisal/feasibility report by the relevant professional people with cost
of the project and means of finance, weaknesses and threats, if any, as given in the appraisal/ feasibility report.
Summary:
Under The Entity STS Hospital Chittagong Limited Type of the Industry Healthcare Service
Location of the Project Plot No.H-1, Anannya Residential Area (CDA), Mouza-Quaish, Ha th az a ry , Chittagong Development Authority (CDA), Chittagong
Cost of the Project (in Million) Tk. 4,903.04 Total Equity of the Project (in Million)
Tk. 2,108.32
Capacity of the Project:
The Hospital has been built with a capacity of 346 beds.
Cost of the Project:
Total project cost is estimated at Tk. 4903 Mns; 346 beds will be established in 2 phases.
Project cost Total
In Tk. Million 4,903.38 In USD Million 61.44
Means of Finance
Funding – In Tk. Million Total
Debt 2,794.72 Million (57%)
Equity 2,108.32 Million (43%)
Total Tk. 4,903.04 Million
* Payback Period: About 6.41 Years * Debt-Service Coverage Ratio (DSCR): Average 1.35 * Employment Generation: About 500 in 1st year
Red-Herring Prospectus: STS Holdings Limited
Page: 295
Key Performance Indicators of STS Hopital Chittagong Limited
KEY RESULTS YEARS ----> I II III RETURN ON ASSETS (%) -11% -8% -4% RETURN ON EQUITY (%) -26% -18% -9% RETURN ON NETWORTH (%) -36% -32% -18% RETURN ON CAPITAL EMPLOYED -5% 0% 4% FIXED ASSETS TURNOVER RATIO 36% 52% 62% DSCR BEP (%) 76.52% BEP (CASH) (%) 56.72% INTERNAL RATE OF RETURN (%) 16.5%
Sd/-
Mohammad Naser, MBA, LLB, CPA
Red-Herring Prospectus: STS Holdings Limited
Page: 296
CHAPTER (XXIII): LOCK-IN Ordinary shares of the issuer shall be subject to lock-in, from the date of issuance of prospectus or commercial operation, whichever comes later, in the following manner:
(1) All shares held, at the time of according consent to the public offer, by sponsors, directors and shareholders holding 5% or more shares, other than alternative investment funds, for 03 (Three) years;
(2) All shares allotted, before 02 (Two) years of according consent to the public offer, to any person, other than alternative investment funds, for 03
(Three) years;
(3) In case any existing sponsor or director of the issuer transfers any share to any person, other than existing shareholders, within preceding 12 (twelve) months of submitting an application for raising of capital or initial public offer (IPO), all shares held by those transferee shareholders, for 03 (Three) years;
(4) 25% of the shares allotted to eligible investors, for 03 (Three) months and other 25% of the shares allotted to them, for 06 (Six) months;
(5) All shares held by alternative investment funds, for 01 (One) year; and
(6) Shares allotted, within two years of according consent to the public offer, to any person other than the shares mentioned in sub-rules (1), (2),
(3), (4), and (5) above, for 01 (One) year. The following table indicates the Lock-In status of the shareholders of STS Holdings Limited:
Sl. Name of the Shareholders Position BO ID Number of Shares Held
% Date of
Acquisition Lock-in Period*
1 Khondoker Monir Uddin Managing Director
1201830000021762 31,335,750 20.76% 28.08.1997 3 years
2 Mohammad A. Moyeen Director 1201830000011575 8,246,250 5.46% 31.08.2000 3 years 3 Mahabubul Anam Shareholder 1201830017217506 8,246,250 5.46% 31.08.2000 3 years 4 Khondoker Jamil Uddin Shareholder 1201830000081814 2,000,000 1.33% 14.03.2010 3 years 5 Ramon Investments Ltd Shareholder 1201830061483138 33,340,250 22.09% 17.08.2003 3 years 6 Aureos South Asia Holdings SPV 1 Ltd Director 1204030061483154 14,970,000 9.92% 02.10.2007 3 years 7 Sepal Holdings Ltd Director 1204030061454031 10,945,000 7.25% 02.11.2010 3 years 8 Diamond Investment Ltd Shareholder 1204030061454041 10,945,000 7.25% 02.11.2010 3 years 9 STS Capital Ltd Director 1204030061453393 10,025,000 6.64% 04.10.2009 3 years
10 LankaBangla Finance Limited-IP A/C Shareholder (Details are given below) 4,800,000 3.18% 04.06.2009 3 years 11 United Commercial Bank Ltd Shareholder 1205590015459615 4,000,000 2.65% 02.10.2007 3 years 12 Sino Lanka (Pvt.) Ltd Shareholder 1201830061483081 2,393,500 1.59% 31.08.2000 3 years 13 Anwer Khan Modern Hospital Ltd Shareholder 1204690058167828 2,000,000 1.32% 09.03.2008 3 years 14 Modern Hatchery Ltd Shareholder 1201840000051847 1,000,000 0.66% 09.03.2008 3 years
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15 National Accessories Ltd Shareholder 1201840061452554 1,000,000 0.66% 09.03.2008 3 years 16 Shanta Holdings Ltd Shareholder 1201830007707441 1,000,000 0.66% 2012.2014 3 years 17 Robintex(Bangladesh) Ltd Shareholder 1203510056416816 898,000 0.59% 16.11.2014 3 years 18 IIDFC Capital Ltd Shareholder 1604790028773041 800,000 0.53% 04.06.2009 3 years 19 AIMS First Guaranteed Mutual Fund Shareholder 1604620000025075 500,000 0.33% 09.03.2008 3 years 20 Grameen One Shareholder 1604620000025067 500,000 0.33% 09.03.2008 3 years 21 Grameen One-Scheme Two Shareholder 1604620016329737 400,000 0.26% 04.06.2009 3 years 22 Sepal Garments Ltd Shareholder 1201630000125764 100,000 0.07% 28.08.1997 3 years 23 Fahima Ahmed Shareholder 1204030061460536 800,000 0.53% 02.04.2015 3 years 24 Farjuma Khan Shareholder 1202550000095900 200,000 0.13% 02.04.2015 3 years 25 Md. Mehedi Hasan Shareholder 1203180040004278 500,000 0.33% 08.07.2015 3 years [From the issue date of Prospectus] List of Investors under LankaBangla Finance Limited-IP A/C:
SL Name of the Shareholders Position BO ID Number of
Shares %
Date of Acquisition
Lock-in Period*
1 Mohammed Atiq Haider Shareholder 1605280046968546 1,000,000 0.66% 04.06.2009 3 years 2 Mass Insight Corporation Shareholder 1605280046969144 1,000,000 0.66% 04.06.2009 3 years 3 Md. Shamsul Alam Shareholder 1605280046931379 1,720,000 1.14% 04.06.2009 3 years 4 Mohammed Musa Shareholder 1605280046932159 780,000 0.52% 04.06.2009 3 years 5 Abul Bashar Chowdhury Shareholder 1605280046944725 300,000 0.20% 04.06.2009 3 years
TOTAL 4,800,000 3.18%
Red-Herring Prospectus: STS Holdings Limited
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CHAPTER (XXIV): MARKETS FOR THE SECURITIES BEING OFFERED Stock Exchanges: The Issuer shall apply to the following bourses for listing shares within 7 (seven) working days from the date of consent accorded by the Commission to issue the prospectus:
Declaration about Listing of Shares with Stock Exchanges: None of the Stock Exchanges, if for any reason, grant listing within 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 exchange, or from the date of expiry of the said 75 (seventy-five) days, as the case may be.
In case of non‐refund of the subscription money within the aforesaid fifteen days, the Company 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 managers, in addition to the issuer Company, shall ensure due compliance of the above mentioned conditions and shall submit compliance report thereon to the Commission within seven days of expiry of the aforesaid fifteen days‟ time period allowed for refund of the subscription money. Trading and Settlement; Trading and Settlement Regulation of the stock exchanges will apply in respect of trading and settlement of the shares of the Company. THE ISSUE SHALL BE PLACED IN “N” CATEGORY
Red-Herring Prospectus: STS Holdings Limited
Page: 299
CHAPTER (XXV): DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED
(a) Dividend, voting and preemption rights;
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 rights 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 presents 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 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 Right Issue of shares in terms of the guidelines issued by the Bangladesh Securities and Exchange Commission (BSEC) from time to time.
(b) Conversion and liquidation rights;
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 freely transferable. The Company shall not charge any fee for registering transfer of shares. No transfer shall be made to a firm, an infant or person of unsound mind.
(c) Dividend policy;
i. The profit of the Company, subject to any special right relating thereto created or
authorized to be created by the Memorandum and subject to the provisions of the Articles of
Association, shall be divisible among the members in proportion to the amount of capital
paid-up on the shares held by them respectively.
ii. No large 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.
iii. No dividend shall be payable except out of the profits of the Company or any other
undistributed profits. Dividend shall not carry interest as against the Company.
iv. 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.
v. A transfer of shares shall not pass the right to any dividend declared thereon before the
registration of transfer.
vi. No limitation in payment of dividend is stipulated in any debt instrument or otherwise.
(d) Other rights of the securities holders;
In terms of the 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 objective of providing maximum disclosure as par 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 un audited, 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 for the section 84 of the Companies Act 1994.
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CHAPTER (XXVI): FINANCIAL STATEMENTS (a) The latest financial statements prepared and audited by the Commission‟s panel auditors in
adherence to the provisions of the Securities and Exchange Rules, 1987, the Companies Act, 1994, International financial Reporting and Auditing Standards as adopted in Bangladesh from time to time and Financial Reporting Act;
Independent Auditors‟ Report to the Shareholders of STS Holdings Limited We have audited the accompanying consolidated financial statements of STS Holdings Limited (the Group) as well as the separate financial statements of STS Holdings Limited (the Company) which comprise the consolidated and separate statements of financial position as at 31 December 2015, profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements of the group and separate financial statements of the company in accordance with Bangladesh Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements of the group and the separate financial statements of the company that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements of the group and separate financial statements of the company based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statement of the group and separate financial statements of the company are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements of the group and separate financial statements of the company. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements of the group and separate financial statements of the company, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements of the group and separate financial statements of the company 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 consolidated financial statements of the group and separate financial statements of the company. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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Opinion In our opinion, the consolidated financial statements of the group and separate financial statements of the company, give a true and fair view of the consolidated and separate financial position of the Group and the Company as at 31 December 2015 and of the results of their operations and cash flows for the period then ended in accordance with Bangladesh Financial Reporting Standards (BFRS), Companies Act 1994 (as amended in 2013), Bangladesh Securities and Exchange Rules 1987 and other applicable laws and regulations. Report on Other Legal and Regulatory Requirement In accordance with the Companies Act 1994 (as amended 2013) and Bangladesh Securities and Exchange Rules 1987, we also report the following:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 Group
and the Company so far as it appeared from our examination of those books; and
(c) the consolidated and separate statements of financial position and statements of profit or loss and other comprehensive income dealt with by this report are in agreement with the books of account and returns and
(d) the expenditure incurred was for the purpose of the company‟s business.
Sd/- Dated; Dhaka 09 March 2016
S. F. Ahmed & Co. Chartered Accountants
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Page: 302
STS Holdings Limited
Consolidated Statement of Financial Position (Balance Sheet)
As at 31 December 2015
Notes
Amount in BDT
2015 2014 Assets
Non-current assets Property, plant and equipment
4(a)
6,645,605,483
6,763,546,858
Intangible assets
5(a)
12,930,367
13,741,903 Capital work-in-progress
6(a)
660,942,718
252,102,649 Total non-current assets
7,319,478,568
7,029,391,410 Current assets
Investments in short term deposits
9(a)
731,489,387
505,537,462 Inventories
10(a)
325,701,940
294,094,270 Accounts receivable
11(a)
18,374,897
13,660,355 Interest and other receivable
12
20,928,840
18,214,847 Advances, deposits and prepayments
13(a)
389,122,080
218,180,588
Cash and cash equivalents
14(a)
34,702,367
87,739,485
Total current assets
1,520,319,511
1,137,427,007
Total assets
8,839,798,079
8,166,818,417
Equity and liabilities Equity Share capital
15
1,509,450,000
1,509,450,000
Share premium
16
614,925,000
614,925,000
Revaluation surplus
17
4,809,560,509
4,835,383,576
Retained earnings
18(a)
397,067,700
36,185,008
Equity attributable to owners of the Company
7,331,003,209
6,995,943,584 Non-controlling interest
(467,206)
(97,948) Share money deposit
100,000
100,000 Total equity
7,330,636,003
6,995,945,636 Liabilities
Non-current liabilities Long term loan
20(a)
87,588,510
100,027,951 Deferred tax liability
21
116,702,326
123,644,731
Retirement benefits obligations (gratuity) 22
121,276,720
93,788,210 Total non-current liabilities
325,567,556
317,460,892
Current liabilities Accounts payable
23(a)
404,379,432
366,173,892 Income tax provision
24(a)
582,598,476
365,553,710
Bank overdraft
25
163,879,273
61,913,551 Long term loan - current portion
20(a)
32,737,339
59,128,938
Donation fund
19
-
641,800 Total current liabilities
1,183,594,520
853,411,889
Total liabilities
1,509,162,076
1,170,872,781
Total equity and liabilities
8,839,798,079
8,166,818,417
Net assets value per share
41(a)
48.57
46.35
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited
Sd/- Sd/- Sd/- Company Secretary Director Managing Director
See annexed report of the date
Sd/- Dated; Dhaka
S. F. Ahmed & Co
09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 303
STS Holdings Limited
Statement of Financial Position (Balance Sheet)
As at 31 December 2015
Notes
Amount in BDT
2015 2014 Assets
Non current assets
Property, plant and equipment
4
6,600,981,696
6,714,970,425 Intangible assets
5
11,117,368
11,459,952
Capital work-in-progress
6
140,890,562
11,389,298 Investment in subsidiaries
7
107,999,000
10,999,000
Investment in share money deposit
8
585,329,525
310,518,402 Total non current assets
7,446,318,151
7,059,337,077
Current assets
Investments in short term deposits
9
652,489,387
505,537,462 Inventories
10
315,327,087
287,402,380
Accounts receivable
11
18,900,759
13,146,500 Interest and other receivable
12
20,928,840
18,214,847
Advances, deposits and prepayments
13
385,473,880
209,172,267 Cash and cash equivalents
14
32,084,874
86,077,572
Total current assets
1,425,204,826
1,119,551,028 Total assets
8,871,522,977
8,178,888,105
Equity and liabilities
Owners' equity
Ordinary share capital
15
1,509,450,000
1,509,450,000 Share premium
16
614,925,000
614,925,000
Revaluation surplus
17
4,809,560,509
4,835,383,576 Retained earnings
18
449,631,858
55,180,244
Total equity
7,383,567,367
7,014,938,820
Liabilities
Non current liabilities
Long term loan
20
87,588,510
100,027,951 Deferred tax liability
21
116,702,326
123,644,732
Retirement benefits obligations (gratuity)
22
121,276,720
93,788,210 Total non current liabilities
325,567,556
317,460,893
Current liabilities
Accounts payable
23
383,311,691
359,273,489 Income tax provision
24
582,459,751
365,530,615
Bank overdraft
25
163,879,273
61,913,551 Long term loan - current portion
20
32,737,339
59,128,938
Donation fund
19
-
641,800 Total current liabilities
1,162,388,054
846,488,392
Total liabilities
1,487,955,611
1,163,949,285 Total equity and liabilities
8,871,522,977
8,178,888,105
Net assets value per share
41
48.92
46.47
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited
Sd/- Sd/- Sd/- Company Secretary Director Managing Director
See annexed report of the date
Sd/- Dated; Dhaka
S. F. Ahmed & Co
09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 304
STS Holdings Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2015 Notes Amount in BDT 2015 2014 (Restated) Net revenue 26(a) 3,789,300,061 3,565,717,280 Direct operating expenses 27(a) (1,972,874,552) (1,902,108,446) Gross profit 1,816,425,509 1,663,608,834 Other operating expenses 28(a) (1,337,761,501) (1,322,374,552) Profit from operations 478,664,008 341,234,281 Finance cost 29(a) (24,891,909) (27,865,994) Other income 30(a) 132,202,883 105,821,498 Net profit before tax 585,974,982 419,189,785 Income tax (expenses)/income
Current tax 24(a) (217,044,766) (98,832,920) Deferred tax 21.1 6,942,405 15,415,451
(210,102,361) (83,417,469) Net profit after tax 375,872,621 335,772,317 Other comprehensive income - - Total comprehensive income 375,872,621 335,772,317
Profit attributable to: Owners of the Company 376,241,879 335,981,265 Non-controlling interest 43 (369,258) (208,948)
Profit for the year 375,872,621 335,772,317
Total comprehensive income attributable to: Owners of the Company 376,241,879 335,981,265 Non-controlling interest (369,258) (208,948)
375,872,621 335,772,317
Earnings per share Basic earnings per share 40.1(a) 2.49 2.23 Diluted earnings per share 40.2(b) 2.49 2.23
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited
Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/- Dated; Dhaka
S. F. Ahmed & Co
09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 305
STS Holdings Limited
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2015
Notes
Amount in BDT
2015 2014
(Restated)
Net revenue
26
3,753,919,306
3,558,080,623
Direct operating expenses
27
(1,950,037,471)
(1,898,069,716)
Gross profit
1,803,881,835
1,660,010,907
Other operating expenses
28
(1,298,145,771)
(1,299,534,092)
Profit from operations
505,736,064
360,476,815
Finance cost
29
(18,057,835)
(27,865,994)
Other income
30
132,119,302
105,760,054
Profit before tax
619,797,531
438,370,875
Income tax (expenses)/income
Current tax
24
(216,929,136)
(98,809,826)
Deferred tax
21.1
6,942,405
15,415,451
(209,986,731)
(83,394,375)
Net profit after tax
409,810,801
354,976,500
Other comprehensive income
-
-
Total comprehensive income
409,810,801
354,976,500
Earning per share
Basic earning per share
40.1
2.71
2.35
Diluted earnings per share
40.2
2.71
2.35
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited
Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/- Dated; Dhaka
S. F. Ahmed & Co
09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 306
STS Holdings Limited
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Equity attributable to owners of the Company
Non- Controlling
interest
Total Equity
BDT
BDT
Ordinary
share capital Share
premium Revaluation
surplus Retained earnings
Sub-Total
BDT
BDT
BDT
BDT
BDT
Year 2014
Balance at 1 January 2014
1,509,450,000
614,925,000
4,860,365,362
(332,073,131)
6,652,667,231
-
6,652,667,231
Realization of revaluation surplus
-
-
(24,981,786)
24,981,786
-
-
-
Prior year adjustment
-
-
-
7,295,089
7,295,089
-
7,295,089
Share capital
-
-
-
-
-
111,000
111,000
Profit for the year ended 31 December 2014 (Restated)
-
-
-
335,981,265
335,981,265
(208,948)
335,772,317
Balance at 31 December 2014
1,509,450,000
614,925,000
4,835,383,576
36,185,008
6,995,943,584
(97,948)
6,995,845,636
Red-Herring Prospectus: STS Holdings Limited
Page: 307
Equity attributable to owners of the Company
Non- Controlling
interest
Total Equity
BDT
BDT
Ordinary share capital
Share premium
Revaluation surplus
Retained earnings
Sub-Total
BDT
BDT
BDT
BDT
BDT
Year 2015
Balance at 1 January 2015
1,509,450,000
614,925,000
4,835,383,576
36,185,008
6,995,943,584
(97,948)
6,995,845,636
Realization of revaluation surplus
-
-
(25,823,067)
25,823,067
-
-
-
Prior year adjustment
(41,182,254)
(41,182,254)
-
(41,182,254)
Profit For the year ended 31 December 2015
-
-
-
376,241,879
376,241,879
(369,258)
375,872,621
Balance at 31 December 2015
1,509,450,000
614,925,000
4,809,560,509
397,067,700
7,331,003,209
(467,206)
7,330,536,004
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited
Sd/- Sd/- Sd/- Company Secretary Director Managing Director
See annexed report of the date
Sd/-
Dated; Dhaka
S. F. Ahmed & Co 09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 308
STS Holdings Limited
Statement of Changes in Equity
For the year ended 31 December 2015
Ordinary
share capital Share premium
Revaluation surplus
Retained earnings
Total equity
BDT
BDT
BDT
BDT
BDT
Year 2014
Balance as on 1 January 2014
1,509,450,000
614,925,000
4,860,365,362
(332,073,131)
6,652,667,231 Realization of revaluation surplus
-
-
(24,981,786)
24,981,786
-
Prior year adjustment
-
-
-
7,295,089
7,295,089 Profit for the year ended 31 December 2014 (Restated)
-
-
-
354,976,500
354,976,500
Balance as on 31 December 2014
1,509,450,000
614,925,000
4,835,383,576
55,180,244
7,014,938,820
Ordinary
share capital Share premium
Revaluation surplus
Retained earnings
Total equity
BDT
BDT
BDT
BDT
BDT
Year 2015
Balance as on 1 January 2015
1,509,450,000
614,925,000
4,835,383,576
55,180,244
7,014,938,820 Realization of revaluation surplus
-
-
(25,823,067)
25,823,067
-
Prior year adjustment
-
-
-
(41,182,254)
(41,182,254) Profit For the year ended 31 December 2015
-
-
-
409,810,801
409,810,801
Balance as on 31 December 2015
1,509,450,000
614,925,000
4,809,560,509
449,631,858
7,383,567,367
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited
Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/-
Dated; Dhaka
S. F. Ahmed & Co 09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 309
STS Holdings Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2015
Notes
Amount in BDT
2015 2014 Cash flows from operating activities
Collection from hospitals services and others 31(a)
3,853,729,642
3,635,886,470
Payment for cost and expenses 32(a)
(3,125,844,869)
(2,948,955,354) Cash generated from operation
727,884,773
686,931,116
Income taxes paid
34
(180,745,871)
(142,216,321) Net cash from operating activities (a) 547,138,902
544,714,795
Cash flows from investing activities
Payment for acquisition of property, plant and equipment
(73,140,090)
(154,156,908) Payment for acquisition of intangible asset
(3,539,210)
(6,206,431)
Payment for capital work-in-progress
(392,653,460)
(134,281,428) Proceed from sales of non-current asset
2,030,770
2,425,200
Investments in short term deposit
(225,951,925)
(280,468,587) Interest received from short term deposit
55,492,078
32,533,118
Net cash used in investing activities (b) (637,761,837)
(540,155,035) Cash flows from financing activities
Net cash used in financing activities (c) (64,379,904)
31,954,078
Net increase/(decrease) in cash and cash equivalent (a+b+c)
(155,002,840)
36,513,837 Opening cash and cash equivalents
25,825,934
(10,687,903)
Closing cash and cash equivalents (129,176,906)
25,825,934
Closing cash and cash equivalents represents:
Cash and bank balances
34,702,367
87,739,485 Bank overdraft
(163,879,273)
(61,913,551)
(129,176,906)
25,825,934
Net operating cash flow per share
3.62
3.61
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited
Sd/- Sd/- Sd/- Company Secretary Director Managing Director
See annexed report of the date
Sd/-
Dated; Dhaka
S. F. Ahmed & Co 09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 310
STS Holdings Limited Statement of Cash Flows
For the year ended 31 December 2015
Notes
Amount in BDT
2015 2014
Cash flows from operating activities
Collection from hospitals services and others 31
3,814,827,683
3,628,702,225 Payment for cost and expenses 32
(3,068,898,491)
(2,931,342,571)
Cash generated from operation
745,929,192
697,359,654 Income taxes paid
34
(180,745,871)
(142,216,321)
Net cash flows from operating activities (a)
565,183,321
555,143,333 Cash flows from investing activities
Payment for acquisition of property, plant and equipment 35
(69,315,237)
(99,440,716)
Payment for acquisition of intangible assets
(3,539,210)
(6,206,431) Payment for capital work-in-progress 36
(129,501,265)
(17,814,423)
Proceed from sale of non-current assets
2,030,770
2,425,200 Investment in subsidiaries
(97,000,000)
(10,000,000)
Investment in share money deposit
(274,811,123)
(115,507,211) Investments in short term deposit 37
(146,951,925)
(280,468,587)
Interest received from short term deposit 38
55,492,078
32,533,118 Net cash used in investing activities (b)
(663,595,912)
(494,479,049)
Cash flows from financing activities
Interest paid
33
(17,214,790)
(28,325,956) Cash received /(paid) for long term loan 39
(38,831,040)
3,603,165
Cash received/(paid) from/to inter-company
(1,500,000)
(65,525) Net cash used in financing activities (c)
(57,545,830)
(24,788,316)
Net increase/(decrease) in cash and cash equivalent (a+b+c)
(155,958,421)
35,875,967 Opening cash and cash equivalents
24,164,021
(11,711,946)
Closing cash and cash equivalents
(131,794,400)
24,164,021
Closing cash and cash equivalents represents:
Cash and bank balances
32,084,873
86,077,572 Bank overdraft
(163,879,273)
(61,913,551)
(131,794,400)
24,164,021
Net operating cash flow per share
3.74
3.68
These financial statements should be read in conjunction with annexed notes.
For STS Holdings Limited Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/- Dated; Dhaka
S. F. Ahmed & Co.
09 March 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 311
STS Holdings Limited Notes to the financial statements
For the year ended 31 December 2015 1. Reporting entity
1.1 Company profile STS Holdings Limited (STSHL) is a public limited company, formed initially as a private
limited company under Companies Act 1994 and incorporated in Bangladesh in the year 1997 bearing registration no. C-33709(455)/97 dated 28.08.1997 and subsequently converted as a public limited company in February 2006. The registered office as well as the corporate office of STSHL is situated at House 8A, Road 143, Gulshan, Dhaka-1212.
1.2 Nature of business The company has been formed with the objective of engaging in healthcare services
with international standard. As a pioneering venture, it has established super specialty tertiary care hospital named Apollo Hospitals Dhaka (AHD) with the franchise and assistance of Apollo Hospitals Enterprises Limited, India. By virtue of separate Project Management Agreement, Operations Management Agreement and Franchise Agreement, AHD uses the expertise, skills, know-how and technical services of Apollo Hospitals Enterprises Limited, India for commissioning, managing and operating this hospital. Apollo Hospitals Dhaka is located at Plot 81, Block E, Bashundhara R/A, Dhaka-1229, Bangladesh.
1.3 Subsidiaries of the STS Holdings Limited STS Hospitals Limited
STS Hospitals Limited is a private company limited by shares having its registered office in Bangladesh. The company was incorporated under the Company Act XVIII of 1994 on 17 December 2006 vide incorporation No # C- 64969(2461)/2006. The registered office of the Company is located at House No #8/A, Road No #143, Gulshan-1, Dhaka-1212, Bangladesh. The company is engaged in sophisticated hospitals, diagnostic centers, retail pharmacy and other health care related business items required for the purpose of human life benefited to mankind in various sector. STS Hospital Chittagong Limited STS Hospital Chittagong Limited is a private company limited by share having its registered office in Bangladesh. The Company was incorporated under the Company Act XVIII of 1994 on 20 April 2011 vide incorporation No # C-92166/2011. The registered office of the company is located at House No # 8/A, Road No # 143, Gulshan-1, Dhaka-121, Bangladesh. The objective of the company is to engage in sophisticated hospitals, diagnostic centers, retail pharmacy and other chemical and pharmaceutical industries, produce and manufacturer lifesaving drugs and medicine chemical and other health care related business items required for the purpose of human life benefited to mankind in various sector.
2. Basis of Preparation of Financial statements
2.1 Reporting Framework and Compliance thereof The financial statements have been prepared in compliance with the requirements of
the Companies Act 1994 and other relevant local laws and regulations, and in accordance with the Bangladesh Financial Reporting Standards (BFRSs) and Bangladesh Accounting Standards (BASs) adopted by the Institute of Chartered Accountants of Bangladesh (ICAB).
2.2 Measurement of the elements of financial statements Measurement is the process of determining the monetary amounts at which the
elements of the financial statements are to be recognized and carried in the statement of financial position and profit or loss and other comprehensive income. The measurement basis adopted by STS Holding Limited is historical cost except for few of the property,
Red-Herring Prospectus: STS Holdings Limited
Page: 312
plant and equipment which are stated at their revalued amount. Under the historical cost, assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances (for example, income taxes), at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business.
2.3 Functional and presentational currency and level of precision These financial statements are presented in Bangladesh Taka (BDT) except where
indicated otherwise, which is both functional currency and presentation currency of the Company. The figures of financial statements have been rounded off to the nearest BDT.
2.4 Use of estimates and judgments The preparation of financial statements in conformity with Bangladesh Financial
Reporting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and disclosure requirements for contingent assets and liabilities during and at the date of the financial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected as required by BAS 8: Accounting Policies, Changes in Accounting Estimates and Errors. In particular, significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements include depreciation, inventory valuation, accrued expenses and tax provision.
2.5 Reporting period The financial statements of the company have been prepared for the year ended 31
December 2015. 2.6 Comparative Information and Rearrangement thereof Comparative figures have been re-arranged wherever considered necessary to ensure
better comparability with the current period without causing any impact on the profit and value of assets and liabilities as reported in the financial statements.
2.7 Going Concern When preparing financial statements, management shall make an assessment of an
entity‟s ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so.
2.8 Accrual Basis of Accounting An entity shall prepare its financial statements, except for cash flow information, using
the accrual basis of accounting. When the accrual basis of accounting is used, an entity recognizes items as assets, liabilities, equity, income and expenses (the elements of financial statements) when they satisfy the definitions and recognition criteria for those elements in the Framework.
2.9 Materiality and Aggregation An entity shall present separately each material class of similar items. An entity shall
present separately items of a dissimilar nature or function unless they are immaterial. Financial statements result from processing large numbers of transactions or other events that are aggregated into classes according to their nature or function.
Red-Herring Prospectus: STS Holdings Limited
Page: 313
2.10 Off setting An entity shall not offset assets and liabilities or income and expenses, unless required
or permitted by an BFRS. 2.11 Events after the Reporting Period Events after the reporting period are those events, favorable and unfavorable, that occur
between the end of the reporting period and the date when the financial statements are authorized for issue. Two types of events can be identified: Adjusting Events: - those that provide evidence of conditions that existed at the end of the reporting period. Non adjusting Events: - those that are indicative of conditions that arose after the reporting period
2.12 Date of Authorization for Issue of the Financial Statements On March 09, 2016 the Board of Directors reviewed the financial statements and
authorized them for issue. 3. Summary of Significant Accounting Policies The accounting policies and methods of computation used in preparation of financial
statements for the year ended 31 December 2015 are consistent with the policies and methods adopted in preparing the financial statements for the year ended 31 December 2014.
3.1 Basis of Consolidation Subsidiaries are entities controlled by the Group. An investor controls an investee if and
only if it has all of the following: -Power over the investee, -exposure, or rights, to variable returns from its involvement with the investee, and -the ability to use its power over the investee to affect the amount of the investor's returns. The consolidated financial statements incorporate the financial statements of STS Holdings Limited and the financial statements of subsidiary companies from the date that control commences until the date that control ceases. The financial statements of such subsidiary companies are incorporated on a line by line basis and the investments held by the Group are eliminated against the corresponding share capital of Subsidiaries in the consolidated financial statements. Figures used in the consolidated financial statements are based on the audited financial statements which are audited by other auditors. Intra-Group balances and transactions, and any unrealized income and expenses arising from Intra-Group transactions are eliminated in preparing the consolidated financial statements. unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
3.2 Property, plant and equipment Recognition
The cost of an item of property, plant and equipment shall be recognized as an asset if, and only if: - it is probable that future economic benefits will flow to the entity; and - the cost of the item can be measured reliably. Measurement at Recognition An item of property, plant & equipment that qualifies for recognition as an asset shall be measured at its cost.
Red-Herring Prospectus: STS Holdings Limited
Page: 314
Elements of Costs - Purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates. - Costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management. - The initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located. Subsequent Costs Comprises - Repairs and maintenance expenditure is recognized as expenditure as incurred. - Replacement parts are capitalized, provided the original cost of the items they replace is derecognized.
Revaluation of property, plant and equipment The revaluation model requires an asset, after initial recognition, to be measured at a
revalued amount, which is its fair value less subsequent depreciation and impairment losses. When an asset is revalued, any increase in carrying amount is credited to a revaluation reserve in equity. The revaluation reserve released to retain earnings by the difference between the depreciation charged on the revalued amount and that based on cost transferred from the revaluation reserve to retain earnings. Lands were revalued as on 12 December 2011 for third time as per decisions of the Board of Directors. All other property, plant and equipment were revalued on 30 April 2010 for second time to their fair market value as per decisions of the Board of Directors. All the revaluation of property, plant and equipment were performed by an independent valuer.
Date of valuation Name of Valuer September 2006 Asian Surveyors Ltd April 2010 Asian Surveyors Ltd December 2011 Asian Surveyors Ltd
(Certified by Ahmed & Akther, Chartered Accountants)
Depreciation Depreciation is commenced when the asset is in the location and condition necessary
for it to be capable of operating in the manner intended. Property plant and equipment of STS Holding Limited are depreciated using straight line method whereby there is a constant charge each year, on the assumption that equal amounts of economic benefit are consumed in each year of the assets life. Each significant part of an item of Property, plant & equipment is depreciated separately, using their useful lives. Land is held on a freehold basis and is not depreciated considering its unlimited useful life. If any residual value is considered for an asset on its expiry of expected life, the value is deducted from the cost to arrive at the depreciable amount. The residual value and useful life of an asset are reviewed in each year end. Depreciation is expressed in terms of percentage of cost of the related assets. The annual depreciation rates applicable to different category of assets are:
2015 2014 Land and land development Nil Nil Building 2% 2% Computer and IT equipment 20% 20% Furniture and fixture 10% 10% Library books 25% 25% Medical and surgical equipment 10% 10% Office equipment 15% 15% Housekeeping equipment 20% 20% Air conditioning plant and air conditioners 10% 10%
An item of Property, Plant and Equipment is removed from the statement of financial position when it is disposed of or when no future economic benefits are expected from its use or disposal. The gain or loss on the disposal of an item of Property, Plant and Equipment is included in the statement of income of the period in which the de-recognition occurs.
3.3 Impairment The carrying amounts of assets are reviewed at each balance sheet date to determine
whether there is any indication of impairment loss. If any such indication exists, recoverable amount is estimated in order to determine the extent of the impairment loss, if any. Impairment loss is recorded on judgmental basis, for which provision may differ in the future years based on the actual experience. An impairment loss is recognized whenever the carrying amount of the asset exceeds its recoverable amount. Impairment losses, if any, are recognized in the statement of profit and loss and other comprehensive income.
3.4 Intangibles Recognition
An intangible asset is recognized if it is probable that future economic benefits from the asset will flow to the entity and the cost of the asset can be measured reliably. Cost comprises: -Purchase prices (including duties & non-refundable taxes). -Directly attributable cost of preparing the assets for its intended use. Amortization An intangible asset with a finite useful life is amortized over the period.
3.5 Capital Work-in-progress Property, plant & equipment under construction/acquisition have been accounted for as
capital work-in-progress until construction/acquisition is completed and measured at cost.
3.6 Financial Instruments Financial instruments are recognized in the balance sheet when STSHL has become a
party to the contractual provisions of the instrument. Cash & Cash Equivalents Cash and cash equivalents for the purposes of the statement of cash flows comprise cash and bank balances and fixed deposits. Interest-Bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of plant and equipment are capitalized as part of the cost of those assets, until such time as the assets are ready for their intended use. All other borrowing costs are charged to the statement of profit or loss and other comprehensive income as an expense in the period in which they are incurred. Receivables Trade receivables are recognized and stated at original invoiced amounts and carried at anticipated realizable values. Bad debts are written off when it is established that they are irrecoverable. Specific allowance is made for known doubtful debts. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.
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Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.
3.7 Provision, Contingent Liabilities and Contingent Assets Provisions
Provisions are recognized when STS Holding Limited has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If a transfer of economic benefit is no longer probable the provision should be reversed. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure required to settle the obligation.
Accruals Accruals are liabilities to pay for goods or services that have been received or supplied but have not been paid, invoiced or formally agreed with the supplier, including amount due to employees.
Contingent Liabilities A contingent liability arises where a past event may lead to an entity having a liability in the future but the financial impact of the event will only be confirmed by the outcome of some future event not wholly within the entity's control. A contingent liability should be disclosed in the financial statements unless the possible outflow of resources is thought to be remote. (Ref. note-45)
Contingent Asset A contingent asset is a potential asset that arises from past events but whose existence can only be confirmed by the outcome of future events not wholly within an entity's control. A contingent asset should be disclosed in the financial statements only when the expected inflow of economic benefits is probable.
etc. Inventories are stated at the lower of cost and net realizable value in accordance with BAS 2 "Inventories" after making due allowances for any obsolete or slow moving items.
The cost is determined using the first-in, first-out (FIFO) method consistently. The cost of inventories comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition. Net realizable value is based on estimated selling price less VAT in the ordinary course of business less any further costs expected to be incurred to make the sale (applicable variable selling expenses).
3.9 Foreign currency Foreign currencies are translated into BDT at the rates ruling on the transaction dates.
Monetary assets and liabilities are reconverted at the rates prevailing at the balance sheet date. Non-monetary assets and liabilities are reported using the exchange rate at the date of respective transactions. Difference arising on conversion are charged to Statement of Profit or Loss and Other Comprehensive Income.
3.10 Borrowing costs Interest and other costs incurred by the company in connection with the borrowing of
funds are recognized as expense in the period in which they have incurred, unless such borrowing cost relates to acquisition / construction of assets in progress that are capitalized as per alternative treatment of BAS 23: "Borrowing Costs".
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3.11 Taxation The expense comprises current and deferred tax. Current tax and deferred tax is
recognized in profit or loss except to the extent that it relates to a business combination or items recognized directly in equity. Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date and any adjustment to the tax payable in respect of previous years. Provision for current income tax has been made on taxable income of the STS Holding Limited @ 35% as prescribed in the Income Tax Ordinance 1984.
Deferred tax A deferred tax liability or asset should be recognized for all taxable and deductible
temporary difference unless they arise from: -The initial recognition of goodwill, or -The initial recognition of an asset or liability in a transaction which is not a business combination, and at the time of transaction, affects neither accounting nor taxable profit. The tax rates that should be used to calculate deferred tax are the ones that are expected to apply in the period when the asset is realized or the liability settled. The best estimate of this tax rate is the rate which have been enacted or substantively enacted by the reporting date.
A Deferred tax asset should only be recognized to the extent that it is probable that future taxable profit will be available against which it can be utilized.
3.12 Revenue recognition Revenue in the hospital is recognized as follows: -In case of IPD services, as and when final bill for different services are raised. -In case of OPD services, as and when invoices are issued. -In case of pharmacy, when medicines are delivered from the pharmacy counter.
3.13 Post-employment benefit schemes Schemes of post-employment benefits of eligible employees, payable after completion of
employment, include contributory provident fund, unfunded gratuity and group insurance scheme as envisaged in "BAS 19: Employee Benefits". The management of recognized provident fund, within the framework of the rules approved by the National Board of Revenue, is vested in a Board of Trustees which is independent of Company's management. All permanent employees contribute @ 8.33% of their basic pay to the said provident fund and the Company makes equal contributions. Furthermore, the Company operates an unfunded gratuity scheme for its permanent employees under which an employee is entitled, upon completion of minimum five years' of continuous service, gratuity of one month's basic pay, last drawn, for each completed years of his/her service. The Company calculates the provisions for maximum exposure as at the balance sheet date for all eligible employees. While no actuarial valuation has ever been done, the management does not anticipate significant difference in the amount payable on the basis of such actuarial valuation vis-à-vis provisions made.
3.14 Finance expenses Finance expenses comprise interest expenses on term loan, overdraft, and bank charges.
All finance expenses are recognized in the statement of profit or loss and other comprehensive income.
3.15 Earnings per share The Company presents basic and diluted (when dilution is applicable) earnings per
share (EPS) data for its ordinary shares according to BAS/IAS 33. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares during the period, adjusted for the
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effect of change in number of shares for bonus issue, share split and reverse split. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the relevant periods.
3.16 Statement of cash flow Statement of Cash Flows (Cash Flow Statement) is prepared under direct method in
accordance with BAS 7: "Statement of Cash Flows". 3.17 Restatement Prior period error has been corrected retrospectively by restating the opening balance
of assets, liabilities and equity following the provision of BAS 8: Accounting Policies, Changes in Accounting Estimates and Errors.
Red-Herring Prospectus: STS Holdings Limited
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STS Holdings Limited
Notes to the financial statements
For the period ended 31 December 2015
4. Property, plant and equipment
(i) Cost
Category of Assets
Cost
Rate of
depreciation
Depreciation Net book
value at
31 Dec 2015
BDT
Balance at
1 Jan 2015
BDT
Addition
BDT
Disposal/
adjustment
BDT
Balance at
31 Dec
2015
BDT
Balance at
1 Jan 2015
BDT
(Restated)
Charge for the
period
BDT
Disposal/
Derecognise
BDT
Balance at
31 Dec
2015
BDT
Land and land development 138,192,842 - - 138,192,842 - - -
Encashed during the year (473,607,437) (438,572,000)
652,489,387 505,537,462
Investment in short term deposit includes fixed deposits (FDR) at various financial institutions.
Details of FDR For the year ended 31 December 2015 are as follows:
Name of Company
FDR No
Interest
Rate Maturity
Date Principal Amount
United Leasing Co Ltd
667528259 9.50% 29-Jan-16
27,500,000
United Leasing Co Ltd
667528374 9.50% 9-Feb-16
25,000,000
United Leasing Co Ltd
667520071 9.50% 22-Feb-16
17,146,563
United Leasing Co Ltd
667521228 10.25% 3-May-16
14,247,813
IDLC Finance Limited
10552206068107 10.00% 31-Mar-16
5,750,000
IDLC Finance Limited
10552206068106 10.00% 31-Mar-16
5,750,000
LankaBangla Finance Ltd
001020200000062 10.00% 10-Jul-16
6,566,000
LankaBangla Finance Ltd
001021200000067 10.00% 23-Jul-16
16,991,217
LankaBangla Finance Ltd
001021200000068 10.00% 23-Jul-16
16,991,217
LankaBangla Finance Ltd
001021200000069 10.00% 23-Jul-16
16,991,217
LankaBangla Finance Ltd
001021200000070 10.00% 23-Jul-16
16,991,217
IDLC Finance Limited
10552206068108 9.50% 6-Jan-16
18,000,000
United Leasing Co Ltd
667526889 9.00% 23-Dec-16
12,411,329
United Leasing Co Ltd
667526923 9.00% 25-Dec-16
11,176,250
United Leasing Co Ltd
667526924 9.00% 25-Dec-16
11,176,250
United Leasing Co Ltd
667526925 9.00% 25-Dec-16
11,176,250
United Leasing Co Ltd
667526926 9.00% 25-Dec-16
12,294,375
LankaBangla Finance Ltd
0009 22800000402 9.25% 5-Apr-16
110,000,000
LankaBangla Finance Ltd
0009 22800000436 8.75% 20-Apr-16
25,000,000
IDLC Finance Limited
10252206068114 8.75% 31-Jan-16
15,000,000
LankaBangla Finance Ltd
1122800000110 8.75% 4-May-16
31,323,178
IDLC Finance Limited
10252206068112 8.50% 7-Feb-16
31,330,678
IDLC Finance Limited
10252206068113 8.50% 7-Feb-16
20,887,119
LankaBangla Finance Ltd
001122800000062 8.25% 23-Feb-16
30,641,250
LankaBangla Finance Ltd
001122800000064 8.25% 23-Feb-16
20,427,500
LankaBangla Finance Ltd
1022800000031 8.75% 4-May-16
23,027,883
LankaBangla Finance Ltd
1022800000032 8.75% 4-May-16
23,027,883
LankaBangla Finance Ltd
1022800000033 8.75% 4-May-16
17,268,302
LankaBangla Finance Ltd
1020200000095 9.00% 9-Nov-16
27,245,000
LankaBangla Finance Ltd
001020200000049 8.25% 21-May-16
11,505,397
LankaBangla Finance Ltd
920200000714 8.75% 18-Dec-16
12,548,375
LankaBangla Finance Ltd
920200000730 8.75% 18-Dec-16
7,097,125
652,489,387
9.(a) Consolidated investments in short term deposits
STS Holdings Ltd.
652,489,387
505,537,462
STS Chittagong Hospital Ltd.
79,000,000
-
731,489,387
505,537,462
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10. Inventories
Instruments
115,318,912
101,313,316
Consumable
94,345,531
90,588,349
Maintenance spares
38,421,309
35,383,695
Pharmacy
27,129,703
26,516,069
Linen
17,159,406
14,878,537
Stationery
5,800,667
8,771,206
Hospitality services
8,751,905
7,194,642
Goods-in-transit
8,015,881
2,372,794
Medical gas
383,772
383,772
315,327,087
287,402,380
*
In view of innumerable items of inventory and diverse units of measurement, it is not feasible to disclose quantities against each item.
*
Inventory includes Instruments for various surgeries, Lab Reagents, various type of Medicine, Hospitals consumable, Linen, Uniform, cleaning chemical & items, Food & Beverage items.
10(a) Consolidated inventories
Instruments
116,083,527
102,028,586
Consumable
97,463,580
92,740,448
Maintenance spares
38,521,828
35,438,420
Pharmacy
32,427,962
29,164,443
Linen
17,486,066
15,177,109
Stationery
6,567,419
9,594,056
Hospitality services
8,751,905
7,194,643
Goods-in-transit
8,015,881
2,372,793
Medical gas
383,772
383,772
325,701,940
294,094,270
11. Accounts receivable
Corporate patients
17,140,862
11,606,211
Other than corporate patients
1,759,897
1,540,289
18,900,759
13,146,500
Accounts receivable includes amounting to BDT 681,261 against related party (Note - 44)
Disclosure as per Schedule -XI, Part-I, of the Companies Act,1994.
Receivables -exceeding 6 months
1,605,961
1,275,092
Other receivables- not exceeding six months
17,294,798
11,871,408
18,900,759
13,146,500
Receivables considered good and secured
18,900,759
13,146,500
Receivables considered good without security
-
-
Receivables considered doubtful or bad
-
-
Receivables due from companies same management
-
-
Maximum receivables due by director or officers at any time -
-
18,900,759
13,146,500
11(a) Consolidated accounts receivable
Corporate patients
16,615,000
12,101,066
Other than corporate patients
1,759,897
1,559,289
18,374,897
13,660,355
12. Interest and other receivable
Interest receivable on FDR (Note 12.1)
20,928,840
17,649,199
Insurance claim receivable
-
565,648
20,928,840
18,214,847
12.1 Opening balance
17,649,199
8,329,853
Addition during the year
57,218,628
56,996,486
74,867,827
65,326,339
Encashed during the year
(53,938,987)
(47,677,140)
20,928,840
17,649,199
Red-Herring Prospectus: STS Holdings Limited
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Details of interest receivable as on 31 December 2015 are as follows: Name of Company FDR No Interest Rate Maturity Date Amount United Leasing Co Ltd 667528259
Anwer Khan Modern Hospital Ltd 1.32% 1.32% 20,000,000
20,000,000
Modern Hatchery Ltd
0.66% 0.66% 10,000,000
10,000,000
National Accessories Ltd
0.66% 0.66% 10,000,000
10,000,000
Shanta Holdings Ltd
0.66% 0.66% 10,000,000
10,000,000
Robintex (Bangladesh) Ltd
0.59% 0.59% 8,980,000
8,980,000
IIDFC Capital Ltd
0.53% 0.53% 8,000,000
8,000,000
AIMS First Guaranteed Mutual Fund 0.33% 0.33% 5,000,000
5,000,000
Grameen One
0.33% 0.33% 5,000,000
5,000,000
Grameen One-Scheme Two
0.26% 0.26% 4,000,000
4,000,000
Sepal Garments Ltd
0.07% 0.07% 1,000,000
1,000,000
66.00% 66.00% 996,167,500
996,167,500
100.00% 100.00% 1,509,450,000
1,509,450,000
15.1.2 Composition of shareholdings as on 31 December 2015:
No. of
shareholders No. of shares % of shareholdings
Sponsors (Institution)
3
35,833,750
23.74 Sponsors (Individual)
3
47,828,250
31.69
General shareholders
19
67,283,000
44.57 Total
25
150,945,000
100.00
15.1.3 Classification of shareholders:
Holdings
Number of holders Total holding (%)
2015 2014 2015 2014
Less than 500 shares - - - - 500 to 5,000 shares - - - - 5,001 to 10,000 shares - - - - 10,001 to 20,000 shares - - - - 20,001 to 30,000 shares - - - - 30,001 to 40,000 shares - - - - 40,001 to 50,000 shares - - - - 50,001 to 100,000 shares 1 1 0.07% 0.07% 100,001 to 1,000,000 shares 11 8 5.03% 4.04% Over 1,000,000 shares 13 13 94.90% 95.89%
25 22 100% 100%
16. Share premium
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Page: 333
Share premium
614,925,000
614,925,000
This amount represents issue of 40,995,000 ordinary shares at a premium of BDT 15 per share.
17. Revaluation surplus
Opening balance
4,835,383,576
4,860,365,362
Realization of revaluation surplus
17.1
(25,823,067)
(24,981,786)
Closing balance of revaluation surplus
4,809,560,509
4,835,383,576
17.1 Realization of revaluation surplus
Depreciation charged
on Revalued amount
Depreciation charged
on Historical Cost
Difference ( Realization of Surplus)
Building
25,591,446
20,473,157
5,118,289
Computer
267,522
248,391
19,131
Furniture
5,391,461
5,018,184
373,277
Electrical
24,121,284
16,868,031
7,253,253
Medical Equipment
41,604,346
33,529,004
8,075,342
Air Com
14,155,605
9,191,951
4,963,654
Office equipment
81,403
61,282
20,121
111,213,068
85,390,001
25,823,067
18. Retained earnings
Opening balance
55,180,244
(332,073,131)
VAT payment -related with prior year
(41,025,232)
-
Excess depreciation charged
-
7,294,727
Rectification of error
(157,022)
362
13,997,990
(324,778,042)
Revaluation surplus realized during the year
25,823,067
24,981,786
Profit earned during the year 2015
409,810,801
-
Profit earned during the year 2014 (Restated)
-
354,976,500
449,631,858
55,180,244
Amount in BDT
2015 2014
18(a) Consolidated retained earnings
Opening balance
36,185,008
(332,073,131)
Revaluation surplus realized during the year
25,823,067
24,981,786
VAT payment -related with prior year
(41,025,232)
362
Excess depreciation charged
-
7,294,727
Rectification of error
(157,022)
-
Profit earned during the year 2015
376,241,879
-
Profit earned during the year 2014 (Restated)
-
335,981,265
397,067,700
36,185,008
19. Donation fund
Opening balance
641,800
1,283,600
Transfer to income statement
(641,800)
(641,800)
Closing balance
-
641,800
Donation fund fully charged in this year.
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20. Long term loan
Opening balance
159,156,889
155,553,724
Addition during the year
95,455,000
56,479,493
Payment during the year
(134,286,040)
(52,876,328)
120,325,849
159,156,889
Current portion of long term loan
(32,737,339)
(59,128,938)
87,588,510
100,027,951
Details of the above term loans are given below:
Bank
: Commercial Bank of Ceylon PLC Limit amount : BDT 200 Million Purpose : Acquisition of medical equipment Sanction date : 29 March 2015 Interest rate : 10.5%(floating) Security : First charge with RJSC on Pari Passu basis Tenure : 4 years
20 (a) Long term loan
Opening balance
159,156,889
155,553,724
Addition during the year
95,455,000
56,479,493
Payment during the year
(134,286,040)
(52,876,328)
120,325,849
159,156,889
Current portion of long term loan
(32,737,339)
(59,128,938)
87,588,510
100,027,951
21. Deferred tax liability
Opening balance
123,644,732
139,060,183
Deferred tax income during the year 2015 (Note 21.1)
(6,942,405)
-
Deferred tax income during the year 2014 (Restated)
-
(15,415,451)
116,702,326
123,644,732
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21.1 Deferred tax expenses/(income)
Carrying
(Taxable)
Amount
Tax
Deductible
on the Balance
Base
Temporary
Sheet Date
Amount
Difference
Year 2015
Property, plant and equipment
6,612,099,064
1,347,826,617
(5,264,272,447)
Provision for gratuity
(121,276,720)
-
121,276,720
Revaluation surplus
(4,809,560,509)
-
4,809,560,509
1,681,261,835
1,347,826,617
(333,435,218)
Net taxable temporary difference
Applicable tax rate
35.00%
Deferred tax liabilities at the end of the period
(116,702,326)
Deferred tax liabilities at the beginning of the period
(123,644,732)
Deferred tax expenses/(income) for the period
6,942,405
Year 2014
Property, plant and equipment (Restated)
6,726,430,378
1,443,987,930
(5,282,442,448)
Provision for gratuity (Restated)
(93,788,210)
-
93,788,210
Revaluation surplus
(4,835,383,576)
-
4,835,383,576
1,797,258,592
1,443,987,930
(353,270,662)
Net taxable temporary difference
Applicable tax rate
35.00%
Deferred tax liabilities at the end of the year
(123,644,732)
Deferred tax liabilities at the beginning of the year
(139,060,183)
Deferred tax income (expenses) for the year (Restated)
15,415,451
22. Retirement benefits obligations (gratuity)
Opening balance
93,788,210
71,281,537
Provision made during the year
41,800,000
36,154,355
135,588,210
107,435,892
Payment made during the year
(14,311,490)
(13,647,682)
Closing balance
121,276,720
93,788,210
Liability for gratuity is payable to the permanent employees at the time of separation from the company. The balance represents provision till 31 December 2015.
a. This represents operation management fees payable to AHEL (Apollo Hospitals Enterprise Ltd) as per
agreement dated 25 June 1998 and supplemental agreements of different dates. According to the 2nd Supplementary Agreement dated 28 January 2002, every year for the first seven and half years, the fees payable are: a) fixed sum of INR. 4,000,000/-(Four Million only) shall be paid in advance for first 2 years and in 4 equated quarterly installments for the remaining subsequent periods. b) 1% of the gross revenue of the hospital business and c) 5% of profit before depreciation and tax (PBDT) shall be paid on quarterly basis based on provisional accounts drawn at the end of each quarter. However, the cumulative payment under the above will not exceed BDT 30,000,000 (Thirty million) in any one year.
b. This represents royalty payable to AHEL (Apollo Hospital Enterprise Limited) India, @ INR 50,000 per
annum as per agreement dated 25 June 1998. 23.2 Sundry creditors Advance collection from patients 38,989,358 43,643,535
Sundry creditors - others 2,535,823 4,081,103 Retention money payable 1,005,695 624,950 Security deposit received 350,000 350,000 Collection from Apollo Health Club 41,350 41,350
23.2.a Consolidated sundry creditors Advance collection from patients 38,989,358 43,643,535
Retention money payable 1,005,695 2,748,482 Sundry creditors - others 2,535,823 4,083,518 Security deposit received 350,000 350,000 Collection from Apollo Health Club 41,350 41,350
42,922,226 50,866,885
24. Income tax provision
Opening balance
365,530,615 266,720,789
Provision for the year
216,929,136 98,809,826
582,459,751 365,530,615
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24(a) Consolidated income tax provision
Opening balance
365,553,710 266,720,790
For STS Holdings Ltd
216,929,136 98,809,826 For STS Hospitals Ltd.
115,631 23,094
Provision for the year
217,044,766 98,832,920
582,598,476 365,553,710
25. Bank overdraft
Bank Asia Ltd
- (42,223)
Commercial Bank of Ceylon Plc 26,464,904 58,796,969 Pubali Bank Ltd 87,357,308 3,158,805 Standard Chartered Bank 50,057,061 - 163,879,273 61,913,551
These overdrafts are secured by first charge on Pari Passu basis over all fixed assets (excluding land
and building) and current assets. Details are given below Bank
Sanctioned Limit
Bank Asia Ltd
100,000,000
100,000,000 Commercial Bank of Ceylon Plc
100,000,000
100,000,000
Pubali Bank Ltd 150,000,000 150,000,000 Standard Chartered Bank 50,000,000 - 400,000,000 350,000,000
26. Net revenue
Revenue from healthcare services
In Patients Department 2,227,320,823
2,126,301,659
Out Patient Department 1,272,824,188
1,229,137,388
Out Patient Pharmacy 295,969,514
236,057,093
3,796,114,525
3,591,496,140
Free bed and discounts (Note 26.1) (42,195,219)
(33,415,517)
3,753,919,306
3,558,080,623
26.1 Represents discounts allowed to corporate clients, company staffs and free bed to
poor patients.
26(a) Consolidated net revenue
Revenue from healthcare services 3,832,678,583
3,599,255,319
Free bed and discounts (43,378,522)
(33,538,040)
3,789,300,061
3,565,717,280
27. Direct operating expenses Hospital supplies 988,382,397 1,040,831,748 Medicine 406,179,359 363,863,628 Consultants' fees 386,824,230 313,038,140 F & B and housekeeping and sterilization expenses 108,626,415 99,188,639 Power and energy 42,488,074 62,632,811 Outsource test expenses 6,562,373 5,033,324 Medical gas 9,735,628 8,834,177 Instruments 1,238,995 4,647,249
1,950,037,471 1,898,069,716
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27(a) Consolidated direct operating expenses
Hospital supplies 993,236,514
1,026,504,993
Medicine
415,382,622
364,576,938
Consultants' fees 393,382,861
330,498,753
F & B and housekeeping and sterilization expenses 108,626,415
99,188,639
Power and energy 42,488,074
62,632,811
Outsource test expenses 6,843,501
5,033,324
Medical gas 9,735,628
8,834,177
Other direct expenses 1,939,942
191,562
Instruments expenses 1,238,995
4,647,249
1,972,874,552
1,902,108,446
28. Other operating expenses
General and administrative expenses (Note 28.1) 1,040,434,406
999,577,344
Management fees (Note 28.2) 30,060,440
30,086,208
Marketing expenses (Note 28.3) 40,049,434
48,313,770
Depreciation (Note 28.4) 187,601,491
221,556,771
1,298,145,771
1,299,534,092
28(a) Consolidated other operating expenses
General and administrative expenses (Note 28.1(a)) 1,069,453,095
28.1 General and administrative expenses Salary and allowances (Note 28.1.1) 772,156,178
721,341,690
Repair and maintenance (Note 28.1.2) 80,754,302
88,342,135 Printing and stationery (Note 28.1.3) 26,550,294
25,992,439
Premises (Note 28.1.4) 36,944,558
35,129,714 Car maintenance (Note 28.1.5) 8,789,093
8,146,762
Other administration expenses (Note 28.1.6) 28,597,311
30,783,134 Communication (Note 28.1.7) 7,441,145
7,544,156
Recruitment (Note 28.1.8) 7,394,317
12,297,677 Traveling (Note28.1.9) 17,758,411
19,630,720
Legal, registration and other professional fees (Note 28.1.10)
16,504,306
24,933,142
Employee welfare (Note 28.1.11) 9,097,895
5,821,272 Insurance (Note 28.1.12) 8,169,139
5,884,199
Training (Note 28.1.13) 7,191,712
3,360,757 Bank charges 13,085,745
10,369,546
1,040,434,406
999,577,344
28.1.1 Salary and allowances Salary and allowances 659,068,140 620,302,650 Festival bonus 26,519,044 23,953,020 Gratuity 41,800,000 36,154,355 Overtime 19,643,068 17,597,494 Employer contribution to PF 13,079,461 11,150,730 Leave encashment 4,587,769 6,060,726 Part time and casual staff 7,458,696 6,122,715 Bank charges 772,156,178 721,341,690
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28.1.2 Repair and maintenance
Bio-medical equipment 44,719,830
45,963,253
Plant and machinery 9,406,850
15,487,840
Electrical
10,223,127
12,004,834
Building
8,393,805
7,886,466
General
5,312,298
3,632,156
Office furniture 1,244,105
2,113,585
Water test and other fees 1,030,115
1,172,535
Office equipment 424,172
81,466 80,754,302
88,342,135
28.1.3 Printing and stationery
Printing, stationery and computer accessories 22,471,602
22,159,439
Office supplies
3,116,213
2,957,959
Newspaper and periodicals 962,479
875,041 26,550,294
25,992,439
28.1.4 Premises
House rent expenses
15,583,073
13,553,173
Security services
10,253,692
7,830,394
Service charge and utilities 7,937,186
7,510,881
Repair and soft furnishing cost 3,170,607
6,235,266
36,944,558
35,129,714
28.1.5 Car maintenance Lease rental 263,430 526,860 Car hire 999,961 470,000 Fuel and oil 2,038,134 1,670,142 Repairs and maintenance 1,684,273 1,716,629 Insurance, registration and others 632,688 745,184 Ambulance running expenses 3,170,607 3,017,947 8,789,093 8,146,762
28.1.6 Other administration expenses Corporate office expenses 27,600,000 27,600,000 Office expenses 507,635 2,310,376 Entertainment 410,989 594,212 Loading and unloading expenses 78,687 278,546 28,597,311 30,783,134
28.1.7 Communication Mobile phone costs 4,893,504 4,832,977 Internet usage subscription 849,140 656,304 Telephone expenses 696,358 747,809 Cable network 792,475 736,886 SMS services 73,025 289,425 Courier services 136,643 280,755 7,441,145 7,544,156
28.1.8 Recruitment Visa and work permit and others 6,354,009 10,586,377 Traveling 838,121 1,364,820 Advertisement 71,240 79,020 Recruitment costs-primary source verification 130,947 267,460 7,394,317 12,297,677
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28.1.9 Traveling Overseas 3,077,858 6,033,067 Local 14,680,553 13,597,653 17,758,411 19,630,720
28.1.10 Legal, registration and other professional fees Legal and other fees 11,024,131 13,085,688 License and registration 3,167,771 1,005,730 Audit fees 615,250 287,500 Board meeting expenses 529,000 299,000 Share issue expenses 1,042,415 235,308 JCI accreditation 125,739 10,019,916 16,504,306 24,933,142
28.1.11 Employee welfare Dress and uniform 2,884,182 2,384,513 Sports, social club and welfare cost 3,895,584 2,693,919 Professional subscriptions 1,925,550 342,000 Refreshment allowance 392,579 400,840 9,097,895 5,821,272
28.1.12 Insurance General insurance 5,254,654 3,326,416 Group life insurance 2,914,485 2,557,783 8,169,139 5,884,199
28.1.13 Training Local training 2,080,695 923,482 Overseas training 5,111,017 2,437,275 7,191,712 3,360,757
28.1(a) Consolidated general and administrative expenses Salary and allowances
Repair and maintenance 786,060,754 727,962,450
81,027,031 88,347,135 Printing and stationery 27,230,108 26,383,153 Premises
49,770,819 43,088,322
Car maintenance 8,789,093 8,146,762 Other administration expenses 29,007,721 31,098,472 Communication 7,750,380 7,732,777 Recruitment 7,394,317 12,297,677 Traveling
17,958,189 19,672,919
Legal, registration and other professional fees 16,778,069 25,588,249 Employee welfare 9,097,895 5,821,272 Insurance
8,311,262 5,920,031
Training
7,191,712 3,364,757 Bank charges 13,085,745 10,369,546 1,069,453,095 1,015,793,523
The above fees, up to a maximum of BDT. 30 million excluding fixed franchise fee, are payable to Apollo Hospitals Enterprises Ltd., India by virtue of Operations Management and Franchise Agreement signed on 25 June 1998.
29. Finance cost Interest on long-term loan 17,186,518 24,982,003 Interest on working capital loan 871,317 2,883,991 18,057,835 27,865,994
29(a) Consolidated finance cost Interest on long-term loan 24,020,592 24,982,003 Interest on working capital loan 871,317 2,883,991 24,891,909 27,865,994
30. Other income Bank interest received (Note 30.1) 58,771,719 41,852,464 Income from restaurant (Note 30.2) 55,760,043 47,404,558 Income from scrap sale and others 5,833,288 7,548,499 Car parking 4,025,952 4,126,986 Rent income 5,697,530 2,402,347 Proceeds from sale non-current assets 2,030,770 2,425,200 132,119,302 105,760,054
30.1 Bank interest received Interest received from FDR 56,529,023 39,315,045 Interest received from STD account 2,242,696 2,537,419 58,771,719 41,852,464
30.2 Income from restaurant Gross sales 63,102,778 53,718,256 VAT 7,342,735 6,313,698 55,760,043 47,404,558
30(a) Consolidated other income Bank interest receipts 58,771,719 41,852,464 Income from restaurant 55,760,043 47,404,558 Income from scrap sale, health clinic and others 5,916,869 7,609,943 Car parking fees 4,025,952 4,126,986 Rent income 5,697,530 2,402,347 Proceeds from sale non-current assets 2,030,770 2,425,200 132,202,883 105,821,498
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31. Collection from hospital services and others Collection from hospitals services 3,743,510,870 3,567,216,985 Collection from restaurant 55,760,043 47,404,558 Collection from others 5,833,288 7,551,349 Collection from rental 5,697,530 2,402,347 Collection from car parking 4,025,952 4,126,986 3,814,827,683 3,628,702,225
31(a) Consolidated Collection from hospital services and others Collection from hospitals services 3,782,329,248 3,574,339,786 Collection from restaurant 55,760,043 47,404,558 Collection from others 5,916,869 7,612,793 Collection from rental 5,697,530 2,402,347 Collection from car parking 4,025,952 4,126,986 3,853,729,642 3,635,886,470
32. Payment for cost and expenses Cash paid to supplier and employee 3,008,725,294 2,931,342,571 Cash paid for management fees 60,173,197 - 3,068,898,491 2,931,342,571
32(a) Payment for cost and expenses Cash paid to supplier and employee 3,065,671,672 2,948,955,354 Cash paid for management fees 60,173,197 - 3,125,844,869 2,948,955,354
33. Interest paid Opening balance of interest payable 19,896 479,858 Financial charges during the period 18,057,835 27,865,994 Closing balance of interest payable (862,941) (19,896) 17,214,790 28,325,956
34. Income taxes paid Opening balance of income tax provision 365,530,615 266,720,790 Opening balance of advance income tax (176,926,014) (34,709,693) Provision made during the period 216,929,136 98,809,826 Closing balance of income tax provision (582,459,751) (365,530,616) Closing balance of advance income tax 357,671,885 176,926,014 180,745,871 142,216,321
35. Payment for acquisition of property, plant and equipment Opening liability for property, plant and equipment 4,275,851 3,386,682 Addition during the period 71,760,232 262,363,174 Transferred from capital work in progress - (162,032,929) Closing liability for property, plant and equipment (6,720,846) (4,276,210) 69,315,237 99,440,716
36. Payment for capital work-in-progress Opening balance for capital work-in-progress (11,389,298) (155,607,803) Transferred to property, plant and equipment - 162,032,929 Closing balance for capital work-in-progress 140,890,562 11,389,298 129,501,265 17,814,423
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37. Investments in short term deposit Opening balance (505,537,462) (225,068,875) Closing balance 652,489,387 505,537,462 Investments in short term deposit 146,951,925 280,468,587
38. Interest received from short term deposit Opening balance of interest receivable 17,649,199 8,329,853 Interest income during the period 58,771,719 41,852,464 Closing balance of interest receivable (20,928,840) (17,649,200) 55,492,078 32,533,118
39. Cash paid for long term loan Opening balance - long term loan (159,156,889) (155,553,724) Closing balance - long term loan 120,325,849 159,156,889 (38,831,040) 3,603,165
40. Earnings per share The calculation of basic earnings per share on the profit attributable to ordinary
shareholders and weighted average number of share ordinary shares outstanding is as flows.
40.1 Basic Earnings per share Net profit after tax 409,810,801
354,976,500
Earnings attributable to the ordinary shareholders 409,810,801
354,976,500 Weighted no. of outstanding share during the period/year 150,945,000
150,945,000
2.71
2.35 40.1(a) Basic Earnings per share Earnings from core business 333,367,961
296,559,560
Earnings attributable to the ordinary shareholders 333,367,961
296,559,560 Weighted no. of ordinary shares outstanding
during the year
150,945,000
150,945,000
Earnings per share (from core business) 2.21
1.96 Earnings from extraordinary income 76,442,840
58,416,940
Weighted no. of ordinary share outstanding during the year
150,945,000
150,945,000
Earnings per share (from extra ordinary income) 0.51
0.39 Basic Earnings per share 2.71
2.35
Weighted average number of shares outstanding 150,945,000
150,945,000 40.2 Diluted earnings per share Net profit after tax 409,810,801 354,976,500 Earnings attributable to the ordinary shareholders 409,810,801 354,976,500 Total existing number of share outstanding 150,945,000 150,945,000 Diluted earnings per share 2.71 2.35 40.1(a) Consolidated basic earnings per share Net profit after tax 375,872,621 354,976,500 Earnings attributable to the ordinary shareholders 376,241,879 335,981,265 Weighted no. of outstanding share during the year 150,945,000 150,945,000 2.49 2.23
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40.2(b) Consolidated diluted earnings per share Net profit after tax 375,872,621 335,772,317 Earnings attributable to the ordinary shareholders 376,241,879 335,981,265 Total existing number of share outstanding 150,945,000 150,945,000 Diluted earnings per share 2.49 2.23 41. Net asset value per share Total assets 8,871,522,977 8,178,888,105 Total liabilities (1,487,955,611) (1,163,949,285) Net assets value (NAV) 7,383,567,367 7,014,938,820 Number of ordinary shares outstanding 150,945,000 150,945,000 Net assets value per share 48.92 46.47
41(a) Consolidated net asset value per share Total assets 8,839,798,079 8,166,818,417 Intangible assets Total liabilities (1,509,162,076) (1,170,872,781) Share Money Deposit (100,000) (100,000) Non-controlling interest 467,206 97,948 (1,508,794,870) (1,170,874,833) Net assets value (NAV) 7,331,003,209 6,995,943,584 Number of ordinary shares outstanding 150,945,000 150,945,000 Net assets per share 48.57 46.35
42. Capacity utilization The company has 358 operational beds, excluding emergency and day-care beds. Since the company offers diverse healthcare services, it is not realistic to disclose utilization
of capacity against each category of service.
43. Non-controlling interest
The following table summarizes the information relating to each of the group's subsidiaries that has material non-controlling interest.
For the year ended 31 December 2015
STS Hospitals
Ltd.
STS Chittagong Hospital
Ltd.
Total BDT
Non-controlling percentage
1.09%
0.00102%
Share capital
10,110,000
98,000,000
108,110,000
Retained earnings
(53,142,366)
-
(53,142,366)
Net assets
(43,032,366)
98,000,000
54,967,634
Carrying amount of non- controlling interest
(468,206)
1,000
(467,206)
Revenue
38,459,922
-
38,459,922
Total operating expenditure
(65,531,978)
-
(65,531,978)
Profit from operation
(27,072,056)
-
(27,072,056)
Finance cost
(6,834,074)
-
(6,834,074)
Non-operating income
83,581
-
83,581
Net profit before tax
(33,822,549)
-
(33,822,549)
Income tax
(115,631)
-
(115,631)
Net profit after tax
(33,938,180)
-
(33,938,180)
Loss attributable to NCI
(369,258)
-
(369,258)
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For the year ended 31 December 2014
STS Hospitals
Ltd.
STS Chittagong Hospital
Ltd.
Total BDT
(Restated)
Non-controlling percentage
1.09%
0.10000%
Share capital
10,110,000
1,000,000
11,110,000
Retained earnings
(19,204,186)
-
(19,204,186)
Net assets
(9,094,186)
1,000,000
(8,094,186)
Carrying amount of non- controlling interest
(98,948)
1,000
(97,948)
Revenue
7,636,656
-
7,636,656
Total operating expenditure
(26,879,192)
-
(26,879,192)
Profit from operation
(19,242,536)
-
(19,242,536)
Non-operating income
61,444
-
61,444
Net profit before tax
(19,181,092)
-
(19,181,092)
Income tax
(23,094)
-
(23,094)
Net profit after tax
(19,204,186)
-
(19,204,186)
Loss attributable to NCI
(208,948)
-
(208,948)
44. Related party disclosure
During the year the Company carried out a number of transactions with related parties in the normal course of business on arms' length basis. Names of those related parties, nature of those transactions and their total value have been set out in accordance with the provisions of BAS-24: Related Party Disclosure.
` As at and for the year ended 31December 2015
Name of related party
Nature of relationship
Nature of transaction
Transaction value BDT
Outstanding balance BDT
Terms and conditions
STS Educational
Group Ltd. Common
directorship
Proportionate corporate
office expenses
27,600,000
-
Mutual understanding
STS Hospitals
Ltd. Subsidiary
Share money deposit
103,859,026
101,216,627 For subsequent issue of shares
STS Hospitals
Ltd. Subsidiary Sales
3,079,167
681,261
Mutual
understanding
STS Medical Education &
Research
Common directorship
Advances
1,500,000
1,565,525 Mutual
understanding
STS Hospital
Chittagong Ltd. Subsidiary
Share money deposit
349,904,061
484,112,898
For subsequent
issue of shares
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Page: 347
As at and for the year ended 31 December 2014
Name of related party
Nature of relationship
Nature of transaction
Transaction value BDT
Outstanding balance BDT
Terms and conditions
STS Educational
Group Ltd. Common
directorship
Proportionate corporate
office expenses
27,600,000
-
Mutual understanding
STS Hospitals Ltd. Subsidiary
Share money deposit
57,875,815
68,521,735
For subsequent
issue of shares
STS Medical Education &
Research
Common directorship
Advances
-
65,525 Mutual
understanding
STS Hospital
Chittagong Ltd. Subsidiary
Share money deposit
56,632,394
241,996,666
For subsequent
issue of shares
45. Contingent liabilities and commitments
45.1 The Company bears a contingent liability for the bank guarantee issued by Dutch Bangla Bank Ltd, Gulshan Branch and Southeast Bank Ltd, Gulshan Branch in favor of National Board of Revenue for BDT. 53,365,184. As the bank guarantee was taken out in response to the dispute with the Customs Authority regarding duty exemption facilities pursuant to the SRO No.133-Aain/2005/2069/Sulko dated 02/06/2005 issued by the National Board of Revenue (NBR).
46. Remittances in foreign currency
2015
2014
USD
BDT
USD
BDT
Apollo Hospitals Enterprises Ltd. 528,608
42,088,146
50,000
3,904,500
Smith Group
62,182
4,865,089
25,000
1,943,750
Meinhard (Thailand) Ltd.
-
-
9,375
732,094
Joint Commission International
-
-
53,456
4,174,379
Instrutech Engineers
-
-
7,392
578,643
590,789
46,953,235
145,223
11,333,366
47. Disclosure as per requirement of Schedule XI, Part II of The Companies Act 1994
47.1 Number of employees engaged
Employee Position as per requirement of Schedule XI, Part II, Para 3
Salary range (monthly)
Below BDT. 3,000
-
-
Above BDT. 3,000
1,763
1,712
1,763
1,712
47.2 Directors' remuneration for attending board meeting
Board meeting attendance fees are being received by the local directors including one Independent Director, while the foreign directors are not receiving the board meeting attendance fees.
47.3 Directors' remuneration for special service rendered.
No remuneration has been paid to the directors for special service rendered.
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47.4 Aggregate amount of remuneration paid to all directors and employees
Particulars Payment type
Amount in BDT
2015 2014
Directors Board meeting fees
529,000
299,000
Directors Remuneration
-
-
Officers and others Salary and allowances
772,156,178
721,341,690
772,685,178
721,640,690
48. Restatement
The 2014 comparative figures have been restated to correct certain errors in the presentation of the
financial position. The detail is given below:
Overstatement of deferred tax liability:
Deferred tax liability was inadvertently overstated by BDT 4,669,165 due to carrying amount of
property, plant and equipment was understated by BDT 7,295,089 and retirement benefits obligations (gratuity) was understated by BDT 20,635,560. The error has been rectified now and previous year's related figures have been restated.
Effect in the financial position:
Amount
in BDT
Deferred tax liability
Balance as at December 31, 2014
128,313,897
Restatement
(4,669,165)
Restated balance as at December 31, 2014
123,644,732
The restatement affects positively in the statement of profit or loss and other comprehensive
income for the year ended December 31, 2014 by BDT 4,669,165.
For STS Holdings Limited
Sd/- Sd/- Sd/- Company Secretary Director Managing Director
Dated; Dhaka
09 March 2016
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Page: 349
(b) Information as is required under section 186 of the †Kv¤úvwb AvBb, 1994 relating to holding company;
Auditors‟ Report To the Shareholders of
STS HOSPITALS LIMITED
We have audited the accompanying financial statements of STS HOSPITALS LIMITED (“the Company”) which comprise the statement of financial position as at 31st December 2015 and related statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes thereon. Management‟s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud and error. Auditors‟ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 and error. In making those risk assessments, we consider 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 our audit evidence we have obtained is sufficient & appropriate to provide a basis for our opinion. Opinion In our opinion, the financial statements, prepared in accordance with Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards, give a true and fair view of the state of the company‟s affairs as at 31st December 2015 and of the results of its operations and cash flows for the year then ended and comply with the Companies Act.1994, 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 purposes of our audit and made due verification thereof.
b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of these books.
c) The statement of the financial position and statement of comprehensive income dealt with by the report are in agreement with the books of accounts.
d) The expenditure incurred was for the purpose of the Company‟s business.
Sd/- Dated: 28.02.2016 Azad Abul Kalam & Co. Chartered Accountants
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Page: 350
STS HOSPITALS LIMITED Statement of Financial Position
As at 31 December 2015
Particulars Notes Amount (Taka)
Amount (Taka)
31.12.2015
31.12.2014
Assets
Non-current assets
51,268,146
53,058,382.00
Property, plant and equipment
4
44,623,785
48,576,431
Intangible asset
5
1,812,999
2,281,951
Capital work-in-progress
6
4,831,363
2,200,000
Current assets
12,690,232
13,365,664
Inventories
7
10,374,854
6,691,890
Accounts receivable
8
155,399
513,855
Advances, deposits and prepayments
9
134,670
5,494,791
Cash and cash equivalents
10
2,025,309
665,128
Total assets
63,958,378
66,424,046
Equity and liabilities
Owners' equity
(43,032,366)
(9,094,186)
Ordinary share capital
11
10,110,000
10,110,000
Retained earnings
(53,142,366)
(19,204,186)
Share money deposit
12
101,316,627
68,621,735
Total equity
58,284,261
59,527,549
Current liabilities
5,674,117
6,896,497
Account payable
13
5,535,393
6,873,403
Current tax liabilities
14
138,725
23,094
Total liabilities
5,674,117
6,896,497
Total equity and liabilities
63,958,378
66,424,046
The accompanying notes from 1 to 20 form an integral part of this financial statements
Sd/-
Sd/-
Sd/- B. R. Sikder
Mohammad A. Moyeen
Khondoker Monir Uddin
Company Secretary
Director
Managing Director
Signed in terms of our report of even date
Sd/- Azad Abul Kalam & Co. Chartered Accountants
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Page: 351
STS HOSPITALS LIMITED Statement of Comprehensive Income
for the year ended 31 December 2015
Particulars Notes Amount (Taka)
Amount (Taka)
31.12.2015
31.12.2014
Net Revenue
15 38,459,922
7,636,656
Direct operating expenses
16 (25,916,248)
(4,038,730)
Gross Profit 12,543,674
3,597,926
Other operating expenses
17 (39,615,730)
(22,840,462)
Profit from operations
(27,072,056)
(19,242,536)
Finance cost
18 (6,834,074)
-
Other income
19 83,581
61,444
Net profit before tax (33,822,549)
(19,181,092)
Income tax expenses
(115,631)
(23,094)
Net profit after tax (33,938,180)
(19,204,186)
Other comprehensive income
-
-
Total comprehensive income
(33,938,180)
(19,204,186)
The accompanying notes from 1 to 20 form an integral part of this financial statements
Sd/-
Sd/-
Sd/- B. R. Sikder
Mohammad A. Moyeen
Khondoker Monir Uddin
Company Secretary
Director
Managing Director
Signed in terms of our report of even date
Sd/- Azad Abul Kalam & Co. Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 352
STS HOSPITALS LIMITED Statement of Changes in Equity
For the period ended 31 December 2015
Particulars Ordinary
share capital
Share Money
Retained earnings
(Restated)
Total equity Deposit
Taka Taka Taka
Balance as on 1 January 2014 100,000
-
-
100,000
Ordinary share issue
10,010,000
-
-
10,010,000
Share money deposit
-
68,621,735
-
68,621,735
Profit for the year ended 31 December 2014 -
(19,204,186)
(19,204,186)
Balance as on 31 December 2014 10,110,000
68,621,735
(19,204,186)
59,527,549
Profit for the year ended 31 Dec 2015 -
(33,938,180)
(33,938,180)
Share money deposit
32,694,892
Balance as on 31 December 2015 10,110,000
101,316,627
(53,142,366)
25,589,369
The accompanying notes from 1 to 20 form an integral part of this financial statements
Sd/-
Sd/-
Sd/- B. R. Sikder
Mohammad A. Moyeen
Khondoker Monir Uddin
Company Secretary
Director
Managing Director
Signed in terms of our report of even date
Sd/- Azad Abul Kalam & Co. Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 353
STS HOSPITALS LIMITED Statement of Cash Flows
For the year ended 31 December 2015
2015 2014
Cash flows from operating activities:
Amount (Taka)
Amount (Taka)
Cash receipts from customer & others
38,901,959
7,184,245 Payment for cost and expenses
(56,946,378)
(17,612,783)
(18,044,419)
(10,428,538)
(18,044,419)
(10,428,538)
Cash flows from investing activities:
Payment for acquisition of property, plant & equipment
(3,824,855)
(54,716,192)
Payment for capital work-in-progress
(2,631,363)
(2,200,000) Net cash used in investing activities (6,456,218)
(56,916,192)
Cash flows from financing activities:
Issue ordinary shares
-
10,010,000
Share money deposit
32,694,892
57,975,815 Cash paid for interest
(6,834,074)
-
25,860,818
67,985,815
Net increase/(decrease) in cash and cash equivalent:
1,360,181
641,085
Opening cash and cash equivalents
665,128
24,043 Closing cash and cash equivalents 2,025,309
665,128
The accompanying notes from 1 to 20 form an integral part of this financial statements
Sd/-
Sd/-
Sd/- B. R. Sikder
Mohammad A. Moyeen
Khondoker Monir Uddin
Company Secretary
Director
Managing Director
Signed in terms of our report of even date
Sd/-
Azad Abul Kalam & Co. Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 354
STS HOSPITALS LIMITED Notes to the Financial Statements
As at and for the year ended 31 December 2015 1. Reporting entity:
1.1 Company profile: STS HOSPITALS LIMITED is a private Company limited by shares having its registered office
in Bangladesh. The Company was incorporated under the Companies Act 1994 on 17th December 2006 vide incorporation No. C - 64969(2461)/2006. The registered office of the company is located at Plot-346/A, 347, Block-D, Road-12, Bashundhara R/A, Dhaka-1229, Bangladesh.
1.2 Nature of business: The Company is engaged in primary health care facilities covering outdoor patient services,
diagnostic services, retail pharmacy and other health care related services required for the purpose of human life.
2. Basis of preparation 2.1 Statement of Compliance These financial statements have been prepared on going concern basis in accordance with
the applicable Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standard (BFRS), the Companies Act 1994, and other applicable laws and regulations.
2.2 Basis of measurement
These financial statements have been prepared on going concern basis under historical cost convention.
2.3 Functional and presentational currency & level of precision: These financial statements are presented in Bangladesh Taka (Taka/Tk.) except where
indicated otherwise, which is both functional currency and presentation currency of the Company. The figures of financial statements have been rounded off to the nearest taka.
In particular, information about significant areas of estimation and judgments in applying accounting policies that have most significant effect on the amount recognized in the financial statements are described in the following notes:
Note 6: Inventory valuation
Note 17: Expenses, creditors and accruals
2.5 Reporting period: The financial statements of the Company have been prepared for the period from 01
January 2015 to 31 December 2015.
2.6 Comparative amount: Wherever necessary, figures of the prior year has been rearranged and restated to conform
to current year's presentation. The comparative period covers for the period from 01 January 2014 to 31 December 2014.
3 Significant accounting policies The accounting policies and methods of computation used in preparation of financial
statements for the year ended 31 December 2015 are consistent with the policies and methods adopted in preparing the financial statements for the year ended 31 December 2014.
3.1 Foreign currency
Foreign currencies are translated into Taka at the rates ruling on the transaction dates. Monetary assets and liabilities are reconverted at the rates prevailing at the balance sheet date. Non-monetary assets and liabilities are reported using the exchange rate at the date of respective transactions. Difference arising on conversion are charged or credited to income
Red-Herring Prospectus: STS Holdings Limited
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statement.
3.2 Property, plant and equipment:
The fixed asset of the company shown under "Property, Plant and Equipment" as per BAS 16 is recorded at historical cost. Historical cost includes its purchase price and any directly attributed cost of bringing the asset to its working condition for its intended use inclusive of inward freight, duties, non-refundable taxes and (a) the cost of site preparation; (b) initial delivery and handling costs; (c) installation costs; (d) professional fees such as for architects and engineers; and (e) the estimated cost of dismantling and removing the asset and restoring the site, to the extent applicable in line with the provisions under 'BAS 37: Provisions, Contingent Liabilities and Contingent Assets'.
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 entity and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.
3.3 Depreciation: Land is held on a freehold basis and is not depreciated considering its useful unlimited life.
In respect of all other fixed assets, depreciation is provided on straight line method to amortize the cost of the assets after commissioning, over their expected useful life. Depreciation is charged on additions to fixed assets from the month of capitalization and no depreciation is provided from the month of retirement. The annual depreciation rates applicable to different category of assets are:
Computer & IT equipment : 20%
Furniture & fixture : 10%
Medical and surgical equipment : 10%
Office equipment : 15%
Housekeeping equipment : 20%
Air conditioning plant & air conditioners : 10%
Electrical installations, generators, boiler, elevator etc. : 10%
Inventories are stated at the lower of cost and net realizable value in accordance with BAS 2 "Inventories" after making due allowances for any obsolete or slow moving items.
The cost is determined using the first-in, first-out (FIFO) method consistently. The cost of inventories comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition. Net realizable value is based on estimated selling price less VAT in the ordinary course of business less any further costs expected to be incurred to make the sale (applicable variable selling expenses).
3.5 Cash and cash equivalents: This comprises cash in hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown in current liabilities on the statement of financial position.
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3.6 Revenue recognition: Revenue in the hospital is recognized as follows: (ii) In case of OPD services, as and when invoices are issued. (iii) In case of Pharmacy, when medicines are delivered from the pharmacy counter.
3.7 Provisions, contingent liabilities and contingent assets: 3.7.1 Contingent liabilities and contingent assets: Contingent liabilities are not provided for unless a reliable estimate of probable amount as
at the statement of financial position date can be made. Contingent assets are not recognized.
3.7.2 Provision: A provision is recognized in the statement of financial position when the company has a
legal or constructive obligation as a result of past event, future outflow will require to meet the past obligation and a reliable estimate can be made of the amount of the obligation.
3.8 Cash flow statement: Cash flow statement is prepared principally in accordance with BAS-7 and the cash flow
from the operating activities has been presented under the direct method.
3.9 Events after the reporting date: Events after the reporting date that provide additional information about the company's
position at the date of statement of financial position are reflected in the financial statements. Events after the reporting period date that are non-adjusting events are disclosed in the notes when material.
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Page: 357
STS HOSPITALS LIMITED Notes to the Financial Statements
As at year ended 31 December 2015 4. Property, plant and equipment:
STS HOSPITALS LIMITED Notes to the Financial Statements
As at and for the year ended 31 December 2015
Amount (Tk.)
Amount (Tk.)
31.12.2015
31.12.2014
6. Capital work-in-progress:
Local procurement
205,000
2,200,000
Goods in Transit-LC
4,626,363
-
4,831,363
2,200,000
7. Inventories:
Consumable
2,630,914
1,744,626
Pharmacy
5,298,259
2,648,374
Instruments
764,615
715,270
Maintenance spares
100,519
54,725
Others
487,135
407,473
Stationery
766,752
822,850
Linen
326,660
298,572
10,374,854
6,691,890
7.1 In view of innumerable items of inventory and diverse units of measurement, it is not feasible to disclose quantities against each item.
8. Accounts receivable
Corporate patients
141,460
494,855
Other than corporate patients
13,939
19,000
155,399
513,855
There are no related party transaction
Disclosure as per Schedule -XI, Part-I, of the Companies Act,1994.
Debts exceeding 6 months
24,646
-
Other debts less provision
130,753
513,855
155,399
513,855
Debts considered good & secured
155,399
513,855
Debt considered good without security
-
-
Debts considered doubtful or bad
-
-
Debt due from companies same management
-
-
Maximum debt due by Director or Officers at any time.
-
-
155,399
513,855
There is no related party transaction
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Page: 359
9. Advances, deposits & prepayments:
Advances:
Advance to contractor
37,913
104,326
Advance income tax
3,609
3,608
Advance rent
-
5,322,960
Other advance
-
6,600
41,522
5,437,494
Prepayments:
Pre-paid insurance
93,148
57,297
134,670
5,494,791
9.1 Disclosures as per Schedule -XI, Part-I, of the Companies Act,1994
Advance, deposit and pre-payments exceeding 6 months
28,980
5,494,791
Other advance, deposit & prepayments less provision 105,690
-
134,670
5,494,791
Advance, deposit and pre-payments considered good & secured
134,670
5,494,791
Advance, deposit and pre-payments considered good without security
Advance, deposit and pre-payments considered doubtful & bad
Advance, deposit and pre-payments due by Directors or other officers
Advance, deposit and pre-payments due from companies from same management
Maximum advance, deposits and pre-payments due by Directors or other officers at any time
134,670
5,494,791
10. Cash and cash equivalents:
Cash at bank
10.1 1,809,894
349,383
Cash and cheques on hand
215,415
315,745
2,025,309
665,128
10.1 Cash at bank
Eastern Bank Ltd.
1,083,185
233,488
Bank Asia Ltd.
726,709
115,895
1,809,894
349,383
11. Share Capital:
Authorized:
3,000,000 ordinary shares of Taka 10 each. 30,000,000
30,000,000
30,000,000
30,000,000
Issued, subscribed and paid up:
11.1 Ordinary share capital :
1,011,000 ordinary shares of Taka 10 each issued and fully paid-up in cash
11.1.1 10,110,000
10,110,000
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Page: 360
STS HOSPITALS LIMITED Notes to the Financial Statements As at year ended December 2015
Amount (Tk.)
Amount (Tk.)
31.12.2015
31.12.2014
11.1.1 Position of ordinary shareholding:
The composition of shareholders at balance sheet date was as follows:
Name of shareholders
Percentage of shareholdings
Value
2015 2014
2015
2014
Individual:
Mr. Khondoker Monir Uddin 0.64% 0.64%
65,000
65,000
Mr. Mohammad A. Moyeen 0.15% 0.15%
15,000
15,000 Mr. Tipu Munshi
0.20% 0.20%
20,000
20,000
0.99% 0.99%
100,000
100,000
Corporate:
STS Holdings Ltd.
98.91% 98.91%
10,000,000
10,000,000 STS Educational Group Ltd. 0.10% 0.10%
10,000
10,000
99.01% 99.01%
10,010,000
10,010,000
100.00% 100.00%
10,110,000
10,110,000
11.1.2 Composition of shareholdings as on 31 December 2015 was under:
No. of
Shareholders No. Of Shares Percentage
Sponsors (Individual) 3
10,000
0.99%
General shareholders 2
1,001,000
99.01%
Total 5
1,011,000
100%
11.1.3 Classification of shareholders by holding:
Holdings
Number of holders
Total holding (%)
2015 2014
2015
2014
Less than 500 shares - -
-
- 500 to 5000 shares
3 2
0.45%
0.35%
5001 to 10000 shares 1 1
0.64%
0.64% 10001 to 20000 shares - -
-
-
20001 to 30000 shares - -
-
- 30001 to 40000 shares - -
-
-
40001 to 50000 shares - -
-
- 50001 to 100000 shares - -
-
-
100001 to 1000000 shares 1 -
98.91%
98.91% Over 1000000 shares - -
-
-
5 3
100%
100%
12 Share money deposit
STS Holdings Ltd.
101,216,627
68,521,735
Mr. Khondoker Monir Uddin
65,000
65,000
Mr. Mohammad A. Moyeen
15,000
15,000
Mr. Tipu Munshi
20,000
20,000
101,316,627
68,621,735
In terms of management decision, the investment made so far by STS Holdings Ltd. towards STS Hospitals Limited kept in Current Account with STS Holdings Ltd. has been transferred to share Money Deposit Account for issue of shares in due course subject to prior permission of the proper authority(s) if any.
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STS HOSPITALS LIMITED Notes to the Financial Statements
As at year ended 31 December 2015
Notes Amount (Tk.)
Amount (Tk.)
31.12.2015
31.12.2014
13. Accounts payable
Trade payable
2,132,741
1,256,637
Expenses creditors and accrual
13.01 3,402,652
3,490,819
Sundry creditors
13.02 -
2,125,947
5,535,393
6,873,403
13.01 Expenses creditors and accrual
Contractors
898,299
2,474,526
Withheld tax payable
505,392
292,407
VAT payable
194,961
108,590
Audit fee payable
34,500
30,000
Accrual for consultants‟ fees
760,157
263,931
Accrued expenses
1,009,343
321,365
3,402,652
3,490,819
13.02 Sundry creditors
Retention money payable
-
2,123,532
Sundry creditors-others
-
2,415
-
2,125,947
14. Current tax liabilities
Opening balance
23,094
-
Provision for the year
115,631
23,094
138,725
23,094
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Page: 362
STS HOSPITALS LIMITED
Notes to the Financial Statements
for the year ended 31 December 2015
Amount (Tk.)
Amount (Tk.)
Notes
31.12.2015
31.12.2014
15. Net revenue:
Revenue from health care services
39,643,225
7,759,179
Less: Discounts 15.1
1,183,303
122,523
38,459,922
7,636,656
15.1 Represents discounts allowed to corporate clients, company staffs and to poor patients.
16. Direct operating expenses:
Hospital supplies
4,854,117
1,673,245
Medicine
9,203,263
713,310
Consultants fees
6,558,631
1,460,613
Out sourced Test Expenses
3,360,295
61,114
Other Direct expenses
1,939,942
130,448
25,916,248
4,038,730
17. Other operating expenses
General and administrative
expenses 17.1
29,018,689
16,216,179
Marketing expenses 17.2
2,350,588
2,766,473
Depreciation 17.3
8,246,453
3,857,810
39,615,730
22,840,462
17.1 General and administrative expenses:
Salary & allowances 17.1.1
13,904,576
6,620,760
Repair & maintenance 17.1.2
272,729
5,000
Printing & stationery 17.1.3
679,814
390,714
Rent and other expenses 17.1.4
12,826,261
7,958,608
Other administration expenses 17.1.5
410,410
315,338
Communication 17.1.6
309,235
188,621
Traveling 17.1.7
199,778
42,199
Legal & other professional fees 17.1.8
118,000
127,000
License & registration fees
155,763
528,107
Insurance 17.1.9
142,123
35,832
Training 17.1.10
-
4,000
29,018,689
16,216,179
17.1.1 Salary & allowances:
Salary & allowances
12,820,275
5,890,587
Festival bonus
571,059
392,751
Overtime
104,291
32,877
Part time & casual staff
408,951
304,545
13,904,576
6,620,760
17.1.2 Repair & maintenance:
General
272,729
5,000
272,729
5,000
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Page: 363
17.1.3 Printing & stationery:
Printing, stationery & computer accessories
638,438
375,580
Office supplies
31,056
4,704
Newspaper & periodicals
10,320
10,430
679,814
390,714
17.1.4 Rent and other expenses:
House rent expenses
12,224,364
6,721,091
Security services
512,294
322,899
Service charge & utilities
89,603
807,133
Repair & Furnishing expenses
-
107,485
12,826,261
7,958,608
17.1.5 Other administration expenses:
Entertainment
86,946
75,294
Cleaning expenses
75,000
26,500
Office expenses
128,873
129,355
Bank charges
119,591
84,189
410,410
315,338
17.1.6 Communication:
Mobile phone costs
60,926
20,393
Internet usage subscription
166,706
56,475
Telephone expenses
66,797
106,469
Cable Network
4,140
4,900
Courier services
10,666
384
309,235
188,621
17.1.7 Traveling:
Overseas
-
-
Local
199,778
42,199
199,778
42,199
17.1.8 Legal & other professional fees:
Legal & other fees
80,500
97,000
Audit fee
37,500
30,000
118,000
127,000
17.1.9 Insurance:
General insurance
94,955
35832
Group Life insurance
47,168
-
142,123
35,832
17.1.10 Training:
Local Training
-
4,000
-
4,000
17.2 Marketing expenses:
Promotional expenses
1,231,426
895,021
A & P - newspaper & periodicals
612,760
364,500
A & P - bill board, neon sign
451,202
62,552
A & P - Radio & TV
55,200
1,444,400
2,350,588
2,766,473
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Page: 364
17.3 Depreciation:
Depreciation 4
7,777,501
3,794,997
Amortization 5
468,952
62,813
8,246,453
3,857,810
18. Finance cost:
Interest-long term loan
6,834,074
-
6,834,074
-
19. Other income:
Miscellaneous income
83,581
61,444
83,581
61,444
20. Related party disclosure:
During the year the Company carried out a number of transactions with related parties in the
normal course of business at arms' length basis. Names of those related parties, nature of those transactions and their total value have been set out in accordance with the provisions of BAS-24: Related Party Disclosure.
Name of Related Party
Nature of relationship
Nature of transaction
Transaction Value Taka
Outstanding Balance
Taka
Terms and conditions
As at year ended 31 December 2015
STS Holdings Ltd.
Parent Company
Share money deposit
98,532,173 101,316,627 For
subsequent issue of shares
STS Holdings Ltd.
Parent Company
Outsource Service
3,079,167 681,261 Mutual
understanding As at year ended 31 December 2014
STS Holdings Ltd.
Parent Company
Share money deposit
78,262,674 68,621,735 For
subsequent issue of shares
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Page: 365
AUDITORS‟ REPORT We have audited the accompanying financial statements of STS HOSPITAL CHITTAGONG LIMITED (“the Company”) which comprises the statement of financial position as at 31st December, 2015 and related statement of changes in equity, statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes thereon. Management‟s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud and error. Auditors‟ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 and error. In making those risk assessments, we consider 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 our audit evidence we have obtained is sufficient & appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements, prepared in accordance with Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards, give a true and fair view of the state of the company‟s affairs as at 31st December, 2015 and cash flows for the year then ended and comply with the Companies Act.1994, 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 purposes of our audit and made due verification thereof.
b) In our opinion, proper books of accounts as required by law have been kept by the company
so far as it appeared from our examination of these books.
c) The statement of the financial position and other financial statements dealt with by the report are in agreement with the books of accounts.
Sd/-
Azad Abul Kalam & Co. Dated: 01.03.2016 Chartered Accountants
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STS HOSPITAL CHITTAGONG LIMITED Statement of Financial Position
As at 31 December 2015
Figures in Taka
Notes
31.12.2015 31.12.2014
Assets
Non-current assets Capital work-in-progress
4
515,220,793
238,513,351
Current assets
83,105,714
4,510,315
Investments in short term deposits
79,000,000
- Advances, deposits and prepayments
5
3,513,530
3,513,530
Cash and cash equivalents
6
592,184
996,785
Total assets
598,326,507
243,023,666
Equity and liabilities
Owners' equity
98,000,000
1,000,000 Ordinary share capital
7
98,000,000
1,000,000 Share money Deposit
8
484,112,898
241,996,666
Total equity
582‟,112,898
242,996,666
Current liabilities
16,213,609
27,000 Accounts payable
9
16,213,609
27,000
Total liabilities
16,213,609
27,000
Total equity and liabilities
598,326,507
243,023,666
The accompanying notes from 1 to 10 form an integral part of this financial statements
Sd/-
Sd/-
Sd/- Company Secretary
Director
Managing Director
Signed in terms of our report of even date
Sd/-
Azad Abul Kalam & Co. Chartered Accountants
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Page: 367
STS HOSPITAL CHITTAGONG LIMITED
Statement of Changes in Equity
For the year ended 31 December 2015
Ordinary share capital
Share Money Deposit
Total equity
Taka Taka Taka Balance as on 1 January 2014 1,000,000 1,000,000
Balance as on 31 December 2014 1,000,000 1,000,000 Prior year adjustment - Issue of Share Capital 97,000,000 97,000,000 Share Money Deposit 484,112,898 484,112,898 Balance as on 31 December 2015 98,000,000 484,112,898 582,112,898
The accompanying notes from 1 to 10 form an integral part of this financial statements
Sd/-
Sd/-
Sd/- Company Secretary
Director
Managing Director
Signed in terms of our report of even date
Sd/-
Azad Abul Kalam & Co. Chartered Accountants
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Page: 368
STS HOSPITAL CHITTAGONG LIMITED
Statement of Cash Flows
For the year ended 31 December 2015
Figures in Taka
2,015
2,014
Cash flows from operating activities:
-
-
Cash flows from investing activities:
Investments in short term deposit
(79,000,000)
Payment for capital work-in-progress
(260,520,833)
(56,635,609) Net cash used in investing activities (339,520,833)
(56,635,609)
Cash flows from financing activities:
Share Money Deposit
242,116,232
56,632,394
Proceeds from share issue
97,000,000
-
339,116,232
56,632,394
Net increase/(decrease) in cash and cash equivalent:
(404,601)
(3,215)
Opening cash and cash equivalents
996,785
1,000,000 Closing cash & cash equivalent 592,184
996,785
The accompanying notes from 1 to 10 form an integral part of this financial statements
Sd/-
Sd/-
Sd/- Company Secretary
Director
Managing Director
Signed in terms of our report of even date
Sd/-
Azad Abul Kalam & Co. Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 369
STS HOSPITAL CHITTAGONG LIMITED Notes to the Financial Statements
As at and for the year ended 31 December 2015
1. Reporting entity: 1.1 Company profile: STS HOSPITAL CHITTAGONG LIMITED is a private Company limited by shares having
its registered office in Bangladesh. The Company was incorporated under the Companies Act of 1994 on 20th April 2011 vide incarnation No. C - 92166/2011. The registered office of the Company is located at Plot-346/A, 347, Block-D, Road-12, Bashundhara R/A, Dhaka-1229, Bangladesh.
1.2 Nature of business: The Company has been formed with the object of setting up of an international
standard super specialty tertiary care hospital named Apollo Hospitals Chittagong (AHC) with the franchise and assistance of Apollo Hospitals Enterprises Limited, India. By virtue of operations and management agreement, Apollo Hospitals Chittagong (AHC) will use technical services of Apollo Hospitals Enterprises Limited, India for operating this international standard super specialty hospital. Apollo Hospitals Chittagong is located at Plot No.H-1, Ananya Residential Area of Chittagong Development Authority (CDA), Chittagong. The hospital project is expected to be completed and come to operation by the year 2018.
2. Basis of preparation 2.1 Statement of compliance These financial statements have been prepared on going concern basis in accordance
with the applicable Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standard (BFRS), the Companies Act 1994, and other applicable laws and regulations.
2.2 Basis of measurement These financial statements have been prepared on going concern basis under historical
cost convention. 2.3 Functional and presentational currency & level of precision: These financial statements are presented in Bangladesh Taka (Taka/Tk.) except where
indicated otherwise, which is both functional currency and presentation currency of the Company. The figures of financial statements have been rounded off to the nearest taka.
2.4 Reporting period: The financial statements of the Company have been prepared for the period from 01
January 2015 to 31 December 2015. 2.5 Comparative amount: The Company has not yet commercial operation in the previous year i.e. the
incorporation date from 20th April 2011, so the comparative amounts were not shown in the accounts.
3 Significant accounting policies The accounting policies and methods of computation used in preparation of financial
statements for the year ended 31 December 2015 are consistent with the policies and methods adopted in preparing the financial statements for the year ended 31 December 2015.
3.1 Foreign currency Foreign currencies are translated into Taka at the rates ruling on the transaction dates.
Monetary assets and liabilities are reconverted at the rates prevailing at the balance
Red-Herring Prospectus: STS Holdings Limited
Page: 370
sheet date. Non-monetary assets and liabilities are reported using the exchange rate at the date of respective transactions. Difference arising on conversion are charged or credited to income statement.
3.2 Cash and cash equivalents: This comprises cash in hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown in current liabilities on the statement of financial position.
3.3 Provisions, contingent liabilities and contingent assets: 3.3.1 Contingent liabilities and contingent assets: Contingent liabilities are not provided for unless a reliable estimate of probable amount
as at the statement of financial position date can be made. Contingent assets are not recognized.
3.3.2 Provision: A provision is recognized in the statement of financial position when the Company has
a legal or constructive obligation as a result of past event, future outflow will require to meet the past obligation and a reliable estimate can be made of the amount of the obligation.
3.4 Cash flow statement: Cash flow statement is prepared principally in accordance with BAS-7 and the cash
flow from the operating activities has been presented under the direct method.
Red-Herring Prospectus: STS Holdings Limited
Page: 371
STS HOSPITAL CHITTAGONG LIMITED Notes to the Financial Statements
As at and for the year ended 31 December 2015
Figures in Taka
31.12.2015
31.12.2014
4.00 Capital work-in-progress:
Civil Work
Rebar
43,757,618
7,454,316
Ready Mix & cement
135,231,412
75,667,108
Piling & Labour
127,731,709
2,837,946
306,720,739
85,959,370
Architectural & Technical Fees
79,729,705
63,525,842
Pre-operating expenses
128,770,349
89,028,139
Total
515,220,793
238,513,351
5.00 Advances, deposits & prepayments:
Advances:
Advance to Chittagong Development Authority (CDA) 3,513,530
3,513,530
Total
3,513,530
3,513,530
6.00 Cash and cash equivalents:
Cash at bank
Pubali Bank-3677901025374 592,184
996,785
Total
592,184
996,785
7.00 Share Capital:
Authorized:
100,000,000 ordinary shares of Taka 10 each.
1,000,000,000
1,000,000,000
Total
1,000,000,000
1,000,000,000
Issued, subscribed and paid up:
7.01 Ordinary share capital:
9,800,000 ordinary shares of Taka 10 each
issued and fully paid-up in cash (2014: 100,000 ordinary shares of Taka 10 each issued and fully paid-up in cash)
98,000,000
1,000,000
Red-Herring Prospectus: STS Holdings Limited
Page: 372
STS HOSPITAL CHITTAGONG LIMITED Notes to the Financial Statements
As at and for the year ended 31 December 2015
Figures in Taka
31.12.2015
31.12.2014
7.1.1 Position of ordinary shareholding:
The composition of shareholders at balance sheet date was as follows:
Name of shareholders
Percentage of shareholdings
Value
2015 2014
2015
2014
Corporate:
STS Holdings Ltd. 99.999% 99.90%
97,999,000
999,000
STS Educational Group Ltd. 0.0010% 0.10%
1,000
1,000
Total
100.00% 100.00%
98,000,000
1,000,000
7.1.2 Composition of shareholdings as on 31 December 2014 was under:
No. of Shareholders
No. of Shares
Percentage
Sponsors
2
9,800,000
100.00%
Total
2
9,800,000
100%
7.1.3 Classification of shareholders by holding:
Holdings
Number of holders
Total holding (%)
2015 2014
2015
2014
Less than 500 shares 1 1
0.00%
0.10%
500 to 5000 shares - -
-
-
5001 to 10000 shares - -
-
-
10001 to 20000 shares - -
-
-
20001 to 30000 shares - -
-
-
30001 to 40000 shares - -
-
-
40001 to 50000 shares - -
-
-
50001 to 100000 shares - -
-
-
100001 to 1000000 shares 1 1
100.00%
99.90%
Over 1000000 shares - -
-
-
Total
2 2
100%
100%
8.00 Share Money Deposit:
484,112,898
241,996,666
484,112,898
241,996,666
In terms of management decision, the investment made so far by STS Holdings Ltd. towards
STS Hospital Chittagong Limited kept in Current Account with STS Holdings Ltd. has been transferred to share Money Deposit Account for issue of shares in due course subject to prior permission of the proper authority(s) if any.
9.00 Accounts payable:
Audit fees
57,000
27,000
VAT Payable
5,339,647
AIT Payable
10,816,962
Total
16,213,609
27,000
Red-Herring Prospectus: STS Holdings Limited
Page: 373
STS HOSPITAL CHITTAGONG LIMITED Notes to the Financial Statements
As at and for the year ended 31 December 2015
10.00 Related party disclosure:
During the year the Company carried out a number of transactions with related parties in the normal course of business at arms' length basis. Names of those related parties, nature of those transactions and their total value have been set out in accordance with the provisions of BAS-24: Related Party Disclosure.
Name of Related Party
Nature of relationship
Nature of transaction
Transaction Value
(During reporting period)
Taka
Outstanding Balance
Taka
Terms and conditions
As at 31 December 2015
STS Holdings
Ltd.
Parent Company
Share Money Deposit
23,119,266 484,112,898
For subsequent
issue of shares
As at 31 December 2014
STS Holdings
Ltd.
Parent Company
Share Money Deposit
242,116,232 241,996,666
For subsequent
issue of shares
Red-Herring Prospectus: STS Holdings Limited
Page: 374
(c) Selected ratios as specified in Annexure-D;
AUDITOR'S CERTIFICATE REGARDING CALCULATION OF EPS AND RATIOS
STS Holdings Limited Statement of Ratio Analysis
For the year ended 31 December 2015, 2014, 2013, 2012 and 2011.
Auditors' Certificate regarding the calculation of EPS & other ratio(s): (Selected Ratio as specified in Rule 4 (1) (d) - Annexure-D of the Bangladesh Securities and Exchange Commission (Public Issues) Rules, 2015
Particulars Measured
by
For the Year Ended 31/12/2015 (consolidated)
31/12/2015 (The (The Company)
31/12/2014 (Consolidated)
31/12/2014 (The Company)
31/12/2013 (The Company)
31/12/2012 (The Company)
31/12/2011 (The Company)
I. Liquidity Ratios: (i) Current Ratio Times 1.28 1.23 1.33 1.32 0.94 0.66 0.48
(ii) Quick Ratio Times 1.01 0.95 0.99 0.98 0.56 0.26 0.16 (iii) Times Interest Earned Ratio Times 24.54 35.32 16.04 16.73 13.79 54.94 14.48 (iv) Debt to Equity Ratio Times 0.04 0.04 0.03 0.03 0.03 0.03 0.06
II. Operating Ratios:
(i) Accounts Receivable Turnover Ratio Times 19.29 19.14 17.94 18.23 16.52 10.49 6.86 (ii) Inventory Turnover Ratio Times 6.37 6.47 6.88 6.95 7.14 7.73 7.27 (iii) Asset Turnover Ratio Times 0.45 0.44 0.45 0.45 0.42 0.42 0.44
III. Profitability Ratios:
(i) Gross Margin Ratio Percentage 47.94% 48.05% 46.66% 46.65% 44.29% 45.52% 46.94% (ii) Operating Income Ratio Percentage 12.63% 13.47% 9.57% 10.13% 7.50% 11.92% 12.07% (iii) Net Income Ratio Percentage 9.92% 10.92% 9.42% 9.98% 5.56% 4.37% 10.99% (iv) Return on Assets Ratio Percentage 4.42% 4.81% 4.24% 4.48% 2.33% 1.84% 4.83% (v) Return on Equity Ratio Percentage 5.13% 5.55% 4.80% 5.06% 2.63% 2.07% 4.47% (vi) Basic Earnings Per Share (EPS) BDT 2.49 2.71 2.22 2.35 1.16 0.81 1.65 (vii) EBITDA Margin Percentage 21.29% 21.99% 18.86% 19.33% 16.12% 19.50% 19.41%
IV. Coverage Ratios:
(i) Debt to total Assets Ratio Times 0.03 0.03 0.03 0.03 0.03 0.03 0.05 (ii) Debt Service Coverage Ratio Times 1.68 1.78 1.54 1.63 1.14 1.72 0.79
V. Cash Flow:
(iii) Net Operating Cash Flow per Share Times 3.62 3.74 3.61 3.68 3.54 3.99 3.04 (iv) Net Operating Cash Flow per Share/EPS Times 1.46 1.38 1.62 1.56 3.05 4.91 1.84
We have examined the calculation of the above ratios prepared from the audited financial statements of STS Holdings Limited as at and for the year ended 31 December 2015, 2014, 2013, 2012, 2011, and 2010 respectively and found correct. The detail calculation is presented in 'Annexure-D'.
Sd/- Dhaka, Bangladesh
S. F. Ahmed & Co.
Dated: 14 November 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 375
Ratio Calculation:
Annexure - D STS Holdings Limited Calculation of Ratio
For the year ended 31 December 2015, 2014, 2013, 2012 and 2011
Name of ratio Formula
Figures in BDT 31/12/2015
(Consolidated) 31/12/2015 (The
company) 31/12/2014
(Consolidated) 31/12/2014 (The
company) 31/12/2013 (The
company) 31/12/2012 (The
company) 31/12/2011 (The
company) Calculation Result Calculation Result Calculation Result Calculation Result Calculation Result Calculation Result Calculation Result
Comparison ratios with the industry average ratios of the same periods:
STS Holdings Limited Industry Average
***
Particulars 31.12.2015 30.06.2015
Remark/ Explanation Ratio Ratio
I. Liquidity Ratios: (i) Current Ratio 1.28 1.64 STSHL's Current Ratio is satisfactory with the industry average current ratio. (ii) Quick Ratio 0.68 0.94 STSHL's Ratio is satisfactory with the industry average ratio. (iii) Times Interest Earned Ratio
19.23 19.62 STSHL's Ratio is satisfactory with the industry average ratio as operating profit is sufficient to pay financial expense.
(iv) Debt to Equity Ratio 0.04 0.01 STSHL's Ratio is satisfactory with the industry average ratio. II. Operating Ratios: (i) Accounts Receivable Turnover Ratio
236.57 40.04 STSHL's Ratio is satisfactory as collection period is shorter than the average industry.
(ii) Inventory Turnover Ratio
6.37 5.83 STSHL's Ratio is satisfactory as inventory is sold in shorter time.
(iii) Asset Turnover Ratio 0.45 0.35 STSHL's Ratio is satisfactory with the average industry. III. Profitability Ratios: (i) Gross Margin Ratio 47.94% 61.61% STSHL's Ratio is satisfactory with the industry average ratio. (ii) Operating Income Ratio
12.63% 15.77% STSHL's Ratio is satisfactory with the industry average ratio.
(iii) Net Income Ratio 9.92% 11.11% STSHL's Ratio is satisfactory with the industry average ratio. (iv) Return on Assets 4.42% 3.88% STSHL's Ratio is satisfactory with the industry average ratio.
Red-Herring Prospectus: STS Holdings Limited
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Ratio (v) Return on Equity Ratio
5.25% 4.64% STSHL's Ratio is satisfactory with the industry average ratio.
(vi) Basic Earnings Per Share (EPS)
2.49 2.56 STSHL's Ratio is satisfactory with the industry average ratio.
(vii) EBITDA Margin 17.58% 23.49% STSHL's Ratio is satisfactory with the industry average ratio. IV. Coverage Ratios: (i) Debt to total Assets Ratio
0.03 0.01 STSHL's Ratio is better as debt burden is lower than assets.
(ii) Debt Service Coverage Ratio
1.68 Not Available -
V. Cash Flow: (iii) Net Operating Cash Flow per Share
3.62 4.22 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
(iv) Net Operating Cash Flow per Share/EPS
1.46 1.65 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
N.B: For wider range of data, we communicated with Bangladesh Bureau of Statistics, Bangladesh Medical Association (BMA) and Bangladesh Bank. But, we were informed that none of them maintains such ratios with regard to industry concern. *** The Industry average ratio is calculated through using the ratio of only one listed similar company namely Samorita Hospital Limited for the year ended June 30, 2015. (Source: Annual Report)
Red-Herring Prospectus: STS Holdings Limited
Page: 379
STS Holdings Limited
Industry Average ***
Particulars 31.12.2014 30.06.2014
Remark/ Explanation Ratio Ratio
I. Liquidity Ratios: (i) Current Ratio 1.30 1.57 STSHL's Current Ratio is satisfactory with the industry average current ratio. (ii) Quick Ratio 0.71 0.97 STSHL's Ratio is satisfactory with the industry average ratio. (iii) Times Interest Earned Ratio
9.20 10.30 STSHL's Ratio is satisfactory with the industry average ratio as operating profit is sufficient to pay financial expense.
(iv) Debt to Equity Ratio 0.03 0.03 STSHL's Ratio is satisfactory with the industry average ratio. II. Operating Ratios: (i) Accounts Receivable Turnover Ratio
277.62 52.73 STSHL's Ratio is satisfactory as collection period is shorter than the average industry.
(ii) Inventory Turnover Ratio
6.96 7.09 STSHL's Ratio is satisfactory as inventory is sold in shorter time.
(iii) Asset Turnover Ratio 0.45 0.34 STSHL's Ratio is better than the average industry. III. Profitability Ratios: (i) Gross Margin Ratio 46.08% 63.25% STSHL's Ratio is satisfactory with the industry average ratio. (ii) Operating Income Ratio
9.86% 18.08% STSHL's Ratio is satisfactory with the industry average ratio.
(iii) Net Income Ratio 9.29% 12.23% STSHL's Ratio is satisfactory with the industry average ratio.
(iv) Return on Assets Ratio
4.19% 4.19% STSHL's Ratio is satisfactory with the industry average ratio.
Red-Herring Prospectus: STS Holdings Limited
Page: 380
(v) Return on Equity Ratio
4.86% 5.11% STSHL's Ratio is satisfactory with the industry average ratio.
(vi) Basic Earnings Per Share (EPS)
2.19 3.01 STSHL's Ratio is satisfactory with the industry average ratio.
(vii) EBITDA Margin 16.18% 25.55% STSHL's Ratio is satisfactory with the industry average ratio. IV. Coverage Ratios: (i) Debt to total Assets Ratio
0.03 0.02 STSHL's Ratio is better as debt burden is lower than assets.
(ii) Debt Service Coverage Ratio
1.54 Not Available -
V. Cash Flow: (iii) Net Operating Cash Flow per Share
3.35 4.74 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
(iv) Net Operating Cash Flow per Share/EPS
1.53 1.58 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
N.B: For wider range of data, we communicated with Bangladesh Bureau of Statistics, Bangladesh Medical Association (BMA) and Bangladesh Bank. But, we were informed that none of them maintains such ratios with regard to industry concern. *** The Industry average ratio is calculated through using the ratio of only one listed similar company namely Samorita Hospital Limited for the year ended June 30, 2014. (Source: Annual Report)
Red-Herring Prospectus: STS Holdings Limited
Page: 381
STS Holdings Limited
Industry Average ***
Particulars 31.12.2013 30.06.2013
Remark/ Explanation Ratio Ratio
I. Liquidity Ratios:
(i) Current Ratio 0.94 0.80 STSHL's Current Ratio is better than the industry average current ratio because of relatively lower current liabilities.
(ii) Quick Ratio 0.42 0.36 STSHL's Ratio is better than the industry average ratio as quick assets are relatively higher.
(iii) Times Interest Earned Ratio
7.28 6.25 STSHL's Ratio is better than the industry average ratio as operating profit is relatively more sufficient to pay financial expense.
(iv) Debt to Equity Ratio 0.03 0.05 STSHL's Ratio is better as debt burden is lower than equity. II. Operating Ratios: (i) Accounts Receivable Turnover Ratio
321.84 52.32 STSHL's Ratio is satisfactory as collection period is shorter than the average industry.
(ii) Inventory Turnover Ratio
7.14 10.03 STSHL's Ratio is satisfactory as inventory is sold in shorter time.
(iii) Asset Turnover Ratio 0.42 0.52 STSHL's Ratio is satisfactory with the average industry. III. Profitability Ratios: (i) Gross Margin Ratio 44.29% 62.14% STSHL's Ratio is satisfactory with the industry average ratio. (ii) Operating Income Ratio
7.50% 16.66% STSHL's Ratio is satisfactory with the industry average ratio.
(iii) Net Income Ratio 5.56% 10.47% STSHL's Ratio is satisfactory with the industry average ratio. (iv) Return on Assets 2.33% 5.42% STSHL's Ratio is satisfactory with the industry average ratio.
Red-Herring Prospectus: STS Holdings Limited
Page: 382
Ratio (v) Return on Equity Ratio
2.67% 7.06% STSHL's Ratio is satisfactory with the industry average ratio.
(vi) Basic Earnings Per Share (EPS)
1.16 3.24 STSHL's Ratio is satisfactory with the industry average ratio.
(vii) EBITDA Margin 14.26% 26.57% STSHL's Ratio is satisfactory with the industry average ratio. IV. Coverage Ratios: (i) Debt to total Assets Ratio
0.03 0.04 STSHL's Ratio is better as debt burden is lower than assets.
(ii) Debt Service Coverage Ratio
1.14 Not Available -
V. Cash Flow: (iii) Net Operating Cash Flow per Share
3.33 5.63 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
(iv) Net Operating Cash Flow per Share/EPS
2.87 1.74 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
N.B: For wider range of data, we communicated with Bangladesh Bureau of Statistics, Bangladesh Medical Association (BMA) and Bangladesh Bank. But, we were informed that none of them maintains such ratios with regard to industry concern. *** The Industry average ratio is calculated through using the ratio of only one listed similar company namely Samorita Hospital Limited for the year ended June 30, 2013. (Source: Annual Report)
Red-Herring Prospectus: STS Holdings Limited
Page: 383
STS Holdings Limited
Industry Average ***
Particulars 31.12.2012 30.06.2012
Remark/ Explanation Ratio Ratio
I. Liquidity Ratios:
(i) Current Ratio 0.66 0.50 STSHL's Current Ratio is better than the industry average current ratio because of relatively lower current liabilities.
(ii) Quick Ratio 0.08 0.20 STSHL's Ratio is satisfactory with the industry average ratio. (iii) Times Interest Earned Ratio
20.52 6.96 STSHL's Ratio is better than the industry average ratio as operating profit is relatively more sufficient to pay financial expense.
(iv) Debt to Equity Ratio 0.03 0.34 STSHL's Ratio is better as debt burden is lower than equity. II. Operating Ratios: (i) Accounts Receivable Turnover Ratio
331.10 42.26 STSHL's Ratio is satisfactory as collection period is shorter than the average industry.
(ii) Inventory Turnover Ratio
7.73 9.67 STSHL's Ratio is satisfactory as inventory is sold in shorter time.
(iii) Asset Turnover Ratio 0.42 0.95 STSHL's Ratio is satisfactory with the average industry. III. Profitability Ratios: (i) Gross Margin Ratio 45.52% 62.60% STSHL's Ratio is satisfactory with the industry average ratio. (ii) Operating Income Ratio
11.92% 15.72% STSHL's Ratio is satisfactory with the industry average ratio.
(iii) Net Income Ratio 4.37% 9.76% STSHL's Ratio is satisfactory with the industry average ratio. (iv) Return on Assets Ratio
1.84% 9.30% STSHL's Ratio is satisfactory with the industry average ratio.
Red-Herring Prospectus: STS Holdings Limited
Page: 384
(v) Return on Equity Ratio
2.07% 14.26% STSHL's Ratio is satisfactory with the industry average ratio.
(vi) Basic Earnings Per Share (EPS)
0.81 2.72 STSHL's Ratio is satisfactory with the industry average ratio.
(vii) EBITDA Margin 18.05% 24.03% STSHL's Ratio is satisfactory with the industry average ratio. IV. Coverage Ratios: (i) Debt to total Assets Ratio
0.03 0.21 STSHL's Ratio is better as debt burden is lower than assets.
(ii) Debt Service Coverage Ratio
1.72 Not Available -
V. Cash Flow: (iii) Net Operating Cash Flow per Share
3.87 6.20 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
(iv) Net Operating Cash Flow per Share/EPS
4.77 2.28 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
N.B: For wider range of data, we communicated with Bangladesh Bureau of Statistics, Bangladesh Medical Association (BMA) and Bangladesh Bank. But, we were informed that none of them maintains such ratios with regard to industry concern. *** The Industry average ratio is calculated through using the ratio of only one listed similar company namely Samorita Hospital Limited for the year ended June 30, 2012. (Source: Annual Report)
Red-Herring Prospectus: STS Holdings Limited
Page: 385
STS Holdings Limited
Industry Average ***
Particulars 31.12.2011 30.06.2011
Remark/ Explanation Ratio Ratio
I. Liquidity Ratios: (i) Current Ratio 0.48 1.42 STSHL's Current Ratio is satisfactory with the industry average current ratio. (ii) Quick Ratio 0.06 0.56 STSHL's Ratio is satisfactory with the industry average ratio. (iii) Times Interest Earned Ratio
10.07 13.98 STSHL's Ratio is satisfactory with the industry average ratio as operating profit is sufficient to pay financial expense.
(iv) Debt to Equity Ratio 0.06 0.28 STSHL's Ratio is satisfactory with the industry average ratio. II. Operating Ratios: (i) Accounts Receivable Turnover Ratio
238.67 44.81 STSHL's Ratio is satisfactory as collection period is shorter than the average industry.
(ii) Inventory Turnover Ratio
7.27 9.99 STSHL's Ratio is satisfactory as inventory is sold in shorter time.
(iii) Asset Turnover Ratio 0.44 1.01 STSHL's Ratio is better than the average industry. III. Profitability Ratios: (i) Gross Margin Ratio 46.94% 62.91% STSHL's Ratio is satisfactory with the industry average ratio. (ii) Operating Income Ratio
12.07% 20.66% STSHL's Ratio is satisfactory with the industry average ratio.
(iii) Net Income Ratio 10.99% 13.78% STSHL's Ratio is satisfactory with the industry average ratio.
(iv) Return on Assets Ratio
4.83% 13.93% STSHL's Ratio is satisfactory with the industry average ratio.
Red-Herring Prospectus: STS Holdings Limited
Page: 386
(v) Return on Equity Ratio
5.51% 19.38% STSHL's Ratio is satisfactory with the industry average ratio.
(vi) Basic Earnings Per Share (EPS)
1.65 3.79 STSHL's Ratio is satisfactory with the industry average ratio.
(vii) EBITDA Margin 19.14% 27.58% STSHL's Ratio is satisfactory with the industry average ratio. IV. Coverage Ratios: (i) Debt to total Assets Ratio
0.05 0.19 STSHL's Ratio is better as debt burden is lower than assets.
(ii) Debt Service Coverage Ratio
0.79 Not Available -
V. Cash Flow: (iii) Net Operating Cash Flow per Share
2.83 5.29 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
(iv) Net Operating Cash Flow per Share/EPS
1.71 1.39 STSHL's Ratio is satisfactory as Net Operating Cash Flow is positive.
N.B: For wider range of data, we communicated with Bangladesh Bureau of Statistics, Bangladesh Medical Association (BMA) and Bangladesh Bank. But, we were informed that none of them maintains such ratios with regard to industry concern. *** The Industry average ratio is calculated through using the ratio of only one listed similar company namely Samorita Hospital Limited for the year ended June 30, 2011. (Source: Annual Report)
Red-Herring Prospectus: STS Holdings Limited
Page: 387
(d) Auditors report under Section 135(1), Para 24(1) of Part II of Schedule III of the †Kv¤úvwb AvBb, 1994. The report shall include comparative income statements and balance sheet and aforementioned ratios for immediate preceding five accounting years of the issuer. If the issuer has been in commercial operation for less than five years, the above mentioned inclusion and submission will have to be made for the period since commercial operation;
Auditors‟ report Under Section-135 (1) and Para-24(1) of Part-II of Schedule-III of the Companies Act 1994
Annexure - A
STS Holdings Limited Consolidated Statement of Financial Position
2 STS Holdings Limited (STSHL) is a public limited company. STSHL was formed initially as a
private limited company under Companies Act 1994 and incorporated in Bangladesh in the year 1997 bearing Registration No. C-33709(455)/97 dated 28.08.1997 and subsequently converted as a public limited company in 22 February, 2006.
3 The Company started its commercial operation in 16 April, 2005.
4 The company had two subsidiaries namely STS Hospitals Limited and STS Hospital Chittagong Limited as on the balance sheet date.
5 No proceeds or part of the proceeds of the issue of shares would be applied directly by the company in the purchase of any business.
6 The Company has prepared any statement of accounts for the period 01 January 2016 to 30 June 2016 as per Section 9 of Finance Act 2015 and modification of selection 2(35) of Income tax Ordinance 1984.
Sd/- Dhaka, Bangladesh S. F. Ahmed & Co. Dated: 14 November 2016 Chartered Accountants Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 391
(e) Financial spread sheet analysis for the latest audited financial statements;
Worksheet Analysis For the year ended December 31, 2015
(f) Earnings Per Share (EPS) on fully diluted basis (with the total existing number of shares) in addition to the weighted average number of shares basis. Future projected Net Income should not be considered while calculating the weighted average EPS;
Amount in Taka
Particulars 31.12.2015
(Consolidated) 31.12.2015
(The Company)
Net profit after Tax 375,872,621 409,810,801 No. of shares before IPO 150,945,000 150,945,000 Earnings per Share (EPS) 2.49 2.71
(g) All extra-ordinary income or non-recurring income coming from other than core operations
should be shown separately while showing the Net Profit as well as the Earnings per Share; Amount in Taka
Particulars 31.12.2015
(Consolidated) 31.12.2015
(The Company)
Net profit after tax 375,872,621 409,810,801
Earnings attributable to the ordinary shareholders 375,872,621 409,810,801
Less: Extra-ordinary income net of tax (418,148) (418,148)
Net profit after tax before extra -ordinary income 375,454,473 409,392,653
Weighted no. of outstanding share during the period/year 150,945,000 150,945,000
EPS before Extra-ordinary income 2.49 2.71
(h) Quarterly or half-yearly EPS should not be annualized while calculating the EPS;
This information is not applicable for us.
(i) Net asset value (with and without considering revaluation surplus/reserve) per unit of the
securities being offered at the date of the latest audited statement of financial position. Amount in Taka
Particulars 31.12.2015
(Consolidated) 31.12.2015
(The Company)
Share Capital 1,509,450,000 1,509,450,000
Share premium 614,925,000 614,925,000
Revaluation surplus 4,809,560,509 4,809,560,509
Retained earnings 397,067,700 449,631,858
Non-controlling interest 467,206 0
Total Shareholders' Equity (without Revaluation Reserve)
2,520,975,494 2,574,006,858
Total Shareholders' Equity (with Revaluation Reserve)
7,330,536,003 7,383,567,367
Total Number of Ordinary Share 150,945,000 150,945,000
a) Net Assets Value (NAV) at BDT 10.00 per share (without Rev. Reserve)
16.70 17.05
b) Net Assets Value (NAV) at BDT 10.00 per share (with Rev. Reserve)
48.56 48.92
(j) The Commission may require the issuer to re-audit the audited financial statements, if any
deficiency/anomaly is found in the financial statements. In such a case, cost of audit should be borne by the concerned issuer. This information is not applicable for the company.
Red-Herring Prospectus: STS Holdings Limited
Page: 393
(k) Following statements for the last five years or any shorter period of commercial operation certified by the auditors: -
(i) Statement of long term and short term borrowings including borrowing from related party or connected persons with rate of interest and interest paid/accrued;
Certification on Statement of Long Term and Short Term Borrowings including Borrowing
from Related Party or Connected Persons
After due verification, we certify that the Long Term and Short Term Borrowings including Borrowing from Related Party or Connected Persons of STS Holdings Ltd. for the last five years made up as follows: For the Year ended December 31, 2015:
Name Of the Parties
Nature of Relationship
Nature of Borrowings
Balance as on 31 Dec. 2015
Interest Rate (%)
Interest Paid (BDT)
Interest Accrued (BDT)
Commercial Bank of Ceylon PLC Ltd. Lender Long Term 91,901,200 10.50 7,003,908 - Bank Asia Ltd. Lender Long Term 28,424,649 10.50 3,902,370 862,941 United Leasing Company Ltd. Lender Long Term - 10.50 5,437,195 -
Sub Total
120,325,849
16,343,473 862,941 STS Hospitals Ltd:
Eastern Bank Ltd. Lender Long Term -
6,834,074 -
Grand Total
120,325,849
23,177,547 862,941
For the Year ended December 31, 2014:
Name Of the Parties
Nature of Relationship
Nature of Borrowings
Balance as on 31 Dec. 2014
Interest Rate (%)
Interest Paid (BDT)
Interest Accrued (BDT)
Commercial Bank of Ceylon PLC Ltd. Lender Long Term 73,805,907 15.00 14,177,251 - Bank Asia Ltd. Lender Long Term 36,781,367 14.50 4,858,310 19,896 United Leasing Company Ltd. Lender Long Term 48,569,615 14.50 6,406,404
Total
159,156,889
25,441,965 19,896
For the Year ended December 31, 2013:
Name Of the Parties
Nature of Relationship
Nature of Borrowings
Balance as on 31 Dec. 2013
Interest Rate (%)
Interest Paid (BDT)
Interest Accrued (BDT)
Commercial Bank of Ceylon PLC Ltd. Lender Long Term 110,708,883 15.00 19,833,764 - Bank Asia Ltd. Lender Long Term 15,890,514 15.00 - 479,858 United Leasing Company Ltd. Lender Long Term 28,954,327 15.00 2,175,892 - IDLC Lender Long Term - 15.00 134,921 -
Total 155,553,724 22,144,577 479,858
Red-Herring Prospectus: STS Holdings Limited
Page: 394
For the Year ended December 31, 2012:
Name Of the Parties Nature of
Relationship Nature of
Borrowings Balance as on 31
Dec. 2012 Interest Rate (%)
Interest Paid (BDT)
Interest Accrued (BDT)
Commercial Bank of Ceylon PLC Ltd. Lender Long Term 118,807,033 15.00 - 1,239,094 United Leasing Company Ltd. Lender Long Term 14,401,647 15.00 3,817,895 IDLC Lender Long Term 2,499,135 15.00 1,276,316 International Leasing Company Ltd. Lender Long Term - 15.00 1,138,532 -
Grand Total 135,707,815 6,232,743 1,239,094
For the Year ended December 31, 2011:
Name Of the Parties
Nature of Relationship
Nature of Borrowings
Balance as on 31 Dec. 2011
Interest Rate (%)
Interest Paid (BDT)
Interest Accrued (BDT)
United Leasing Company Ltd. Lender Long Term 442,952 16.50 112,540 IDLC Lender Long Term 7,614,829 16.50 1,333,872 International Leasing Company Ltd. Lender Long Term 4,686,950 16.50 1,559,301 IDLC - 2 Lender Long Term 11,807,083 16.50 5,050,684 United Leasing Co. Ltd. - 2 Lender Long Term 4,893,653 16.50 5,600,401
Sub Total 29,445,467
13,656,798 Nil Eastern Bank Ltd. Lender Short Term 145,000,000 14.00 15,633,619 572,293 Eastern Bank Ltd. Lender Short Term 56,454,925 14.00 2,114,531 21,774
Sub Total 201,454,925
17,748,150 594,067 Grand Total 230,900,392
31,404,948 594,067
However, there are no borrowings from related party or connected persons with rate of interest and interest paid/accrued.
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 14 November 2016 Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 395
(ii) Statement of principal terms of secured loans and assets on which charge have been created against those loans with names of lenders, purpose, sanctioned amount, rate of interest, primary security, collateral/other security, re-payment schedule and status;
Certification on Statement of Principal Terms of Secured Loans and Assets on which Charge have been Created against those Loans
After due verification, we certify that the Principal Terms of Secured Loans as per Loan Agreement and Assets on which Charge have been Created against those Loans of STS Holdings Ltd. for the last five years were as follows:
Collateral Asset N/A N/A N/A N/A Sanctioned Amount 200 million 150 million 150 million 150 million Rate of Interest 10.50% 15.00% 15.00% 15.00% Primary/Collateral/Other Security
0 0 0 0
Re-payment schedule 48 Equal Monthly Installment
48 Equal Monthly Installment
48 Equal Monthly Installment
48 Equal Monthly Installment
Status (Outstanding balance Tk.)
91,901,200 73,805,907 110,708,883 118,807,033 -
For STS Hospitals Ltd:
Particulars 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11 Names of lenders Eastern Bank Ltd Purpose Acquisition of Medical Equipment Collateral Asset Corporate Guarantee Sanctioned Amount 70 million Rate of Interest 12.00% Primary/Collateral/Other Security 0 Re-payment schedule 18 Equal Quarterly Installment Status (Outstanding balance Tk.) -
Red-Herring Prospectus: STS Holdings Limited
Page: 396
Particulars 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11 Names of lenders
Names of lenders IDLC IDLC IDLC IDLC IDLC Purpose Acquisition of Medical
Equipment Acquisition of Medical Equipment
Collateral Asset N/A N/A Sanctioned Amount
16,000,000 66,000,000
Rate of Interest 15.5% & 15% 16.50% Primary/Collateral/Other Security
Re-payment schedule 60 Equal Monthly Installment
60 Equal Monthly Installment
Status (Outstanding balance Tk.)
-
-
2,499,135
19,421,912
Particulars 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11 Names of lenders ILFSL ILFSL Purpose Acquisition of Medical Equipment Acquisition of Medical Equipment Collateral Asset(Third party) N/A N/A Sanctioned Amount 35,000,000 35,000,000 Rate of Interest 13.50% 13.50% Primary/Collateral/Other Security Re-payment schedule 60 Equal Monthly Installment 60 Equal Monthly Installment Status (Outstanding balance Tk.) - 4,686,950
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 24 April, 2016 Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 398
(iii) Statement of unsecured loans with terms & conditions;
Certification on unsecured loan with terms and conditions of STS Holdings Ltd.
This is to certify that STS Holdings Limited did not take any unsecured loan from any person/body/related party from 01 January 2011 to 31 December 2015. Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 24 April, 2016 Chartered Accountants
(iv) Statement of inventories showing amount of raw material, packing material, stock-in-process and finished goods, consumable items, store &
spares parts, inventory of trading goods etc.;
Certification on Statement of Inventories
After due verification, we certify that the statement of inventories showing amount of Consumable, Instrument, Pharmacy, Store and spares, Goods in Transit of STS Holdings Ltd. for the last five years were as follows:
Total 315,327,086 325,701,940 287,402,380 294,094,270 258,646,627 232,658,078 200,005,039
Sd/-
Place: Dhaka
S. F. Ahmed & Co. Date: 24 April, 2016
Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 399
(v) Statement of trade receivables showing receivable from related party and connected persons;
Certification on Statement of Trade Receivables of STS Holdings Ltd
After due verification, we certify that the statement of trade receivables showing receivable from related party and concerned persons of STS Holdings Ltd for the last five years were as follows:
Other Than Corporate Patients 1,759,897 1,759,897 1,540,289 1,540,289 3,106,086 2,565,143 3,259,386
Sub Total 18,900,759 18,374,897 13,146,500 13,660,355 12,027,672 7,540,332 10,681,551
Receivable from related party and concerned persons of STS Holdings Ltd
STS Hospitals Ltd. 681,261 - - - - - -
Sub Total 681,261 - - - - - -
Grand Total 19,582,020 18,374,897 13,146,500 13,660,355 12,027,672 7,540,332 10,681,551
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 14 November 2016 Chartered accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 402
(vi) Statement of any loan given by the issuer including loans to related party or connected persons with rate of interest and interest realized/accrued;
Certificate on statement of any loan given by the issuer including loans to related
party or connected persons with rate of interest and interest realized/accrued
This is to certify that STS Holdings Limited did not give any loan including loans to related party
or connected persons with rate of interest and interest realized/accrued from 01 January 2011 to 31
December 2015.
However, there is an advances (Tk. 1,565,525) given to STS Medical Education and research for
medical research work purposes which already has adjusted subsequently.
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 14 November 2016 Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 403
(vii) Statement of other income showing interest income, dividend income, discount received, other non-operating income;
Certification on Statement of Other Income of STS Holdings Ltd.
After due verification, we certify that the other income showing interest income, dividend income, discount received and other non-operating income of STS Holdings Ltd. for the last five years were as follows:
Particulars
Amount in BDT 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11
Parent Consolidated Parent Consolidated Parent Parent Parent Bank Interest Income 58,771,719 58,771,719 41,852,464 41,852,464 11,575,351 187,673 155,372 Income from Restaurant 55,760,043 55,760,043 47,404,558 47,404,558 45,797,809 46,569,672 11,000,741 Income from Scrap Sale & Others
Car Parking 4,025,952 4,025,952 4,126,986 4,126,986 2,484,406 2,596,353 2,532,877 Rent Income 5,697,530 5,697,530 2,402,347 2,402,347 1,835,614 - - Proceed from Sale of Non-Current Asset
2,030,770 2,030,770 2,425,200 2,425,200 - - -
Total 132,119,302 132,202,883 105,760,054 105,821,498 69,720,551 54,873,629 16,034,818
Note: 1.) Income from restaurant represents net of VAT
2.) Income from restaurant represent after deducting directly attributable expenses for the year 2011.
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 24 April, 2016 Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 404
(viii) Statement of turnover showing separately in cash and through banking channel;
Certification on Statement of Turnover of STS Holdings Ltd.
After due verification, we certify that the turnover showing separately in cash and through banking channel of STS Holdings Ltd for the last five years were as follows;
Particulars Amount in BDT 2015 2014 2013 2012 2011
In Cash 2,623,246,201 2,612,780,743 2,343,636,796 2,347,819,455 2,050,719,667 Through Banking Channel 1,120,264,669 954,436,241 809,114,055 726,014,349 542,225,508 Total 3,743,510,870 3,567,216,984 3,152,750,851 3,073,833,804 2,592,945,175
Reconciliation of Sale with Collection:
Particulars 2015 2014 2013 2012 2011 Opening Receivable 13,146,500 12,027,672 7,540,332 10,681,551 10,369,553 Sale 3,753,919,306 3,558,080,623 3,148,834,681 3,070,982,441 2,590,477,890 Closing Receivable (18,900,759) (13,146,500) (12,027,672) (7,540,332) (10,681,551) Opening Advance Collection from Patient (43,643,535) (32,667,417) (24,263,907) (24,553,763) (21,774,480) Closing Advance Collection from Patient 38,989,358 43,643,535 32,667,417 24,263,907 24,553,763 Opening Advance Collection from HC - (720,929) (720,929) (720,929) (720,929) Closing Advance Collection from HC - - 720,929 720,929 720,929 Collection Total 3,743,510,870 3,567,216,984 3,152,750,851 3,073,833,804 2,592,945,175
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 24 April, 2016 Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 405
(ix) Statement of related party transaction;
Certification on Loan given to Related Party or connected persons by STS Holdings Ltd.
This is to certify that STS Holdings Ltd has transactions with Related Party from January 2011 to 31 December 2015 which are stated below: As at and for the year ended 31December 2015
Certification on Statement of Related Party Transaction (Director‟s board meeting Attendance fee) of STS Holdings Ltd.
After due verification, we certify that the status of related party transactions (Director's board meeting Attendance fee) of STS Holdings Ltd. for the last five years were as follows:
Name Designation/ Relationship
Amount in BDT 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11
Mr. Khondoker Monir Uddin Managing Director 115,000 69,000 - - - Mr. Mohammad A. Moyeen Director 138,000 92,000 - - - Mr. Chaklader Mansurul Alam Independent Director 138,000 69,000 - - - Mr. Tipu Munshi Director 138,000 69,000 - - - Total 529,000 299,000 - - -
Sd/- lace: Dhaka
S. F. Ahmed & Co.
Date: 24 April, 2016
Chartered Accountants
(x) Reconciliation of business income shown in tax return with net income shown in audited financial statements;
Certification regarding Reconciliation of Business Income Shown in Tax Return with Net Income Shown in Audited Financial Statements of STS Holdings Ltd for the last five years.
This is to certify that the income of STS Holdings Ltd as per Audited financial statements and Income shown in Tax Return are similar during last five years
ended on December 31 and as such there was no matters of reconciliation which are shown below:
Income as per Tax return 619,797,531 585,974,982 438,370,875 419,189,785 273,494,986 403,006,950 274,968,980
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 14 November 2016 Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 408
(xi) Confirmation that all receipts and payments of the issuer above Tk.5,00,000/- (five lac) were made through banking channel;
Certification on receipts and payments above Tk. 5,00,000 (five lac)
were made through banking channel of STS Holdings Ltd.
We have conducted such test of accounting transactions of STS Holdings Ltd as were considered necessary and do hereby confirm that the company made all receipts and payments except petty cash & Patients' collection over tk. 500,000 (five lac) from January 1, 2011 to December 31, 2015 through banking channel so far as it appeared from our test of those accounting transactions.
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 24 April, 2016 Chartered Accountants
(xii) Confirmation that Bank Statements of the issuer are in conformity with its books of
accounts;
Certification on books of accounts of STS Holdings Ltd. are in conformity with bank statements
This is to certify that the books of accounts of STS Holding Limited from January 01, 2011 to December 31 2015 are in conformity with bank statements.
Sd/- Place: Dhaka S. F. Ahmed & Co. Date: 24 April, 2016 Chartered Accountants
Red-Herring Prospectus: STS Holdings Limited
Page: 409
(xiii) Statement of payment status of TAX, VAT and other taxes/duties; and
Certification on status of payment of TAX, VAT and other Taxes/Duties of STS Holdings Limited
After due verification, we certify that the status of TAX, VAT and other Taxes/Duties payment of STS Holdings Limited for the last five years were as follows:
2014 98,809,826 168,142,105 Yet to finalize The Company has filed
appeal to the Commissioner
Taxes (Appeal) on the ground
of disallowance of expenses.
However, the Company has
excess provision in the
income year‟12 Tk.1.5 crore.
2015 216,929,136 Yet to finalize Yet to finalize
Red-Herring Prospectus: STS Holdings Limited
Page: 412
7. It appears that land and land development were revalued 3rd times in 2011 except other
fixed assets which were revalued 2nd times in 2010. It appears that there is impairment
indication in other fixed assets. As such, clarification regarding impairment test having not
been made as per BAS -36 is required;
Auditor‟s renponse as above: We have reviewed the impairment test performed by management in every statutory audit
of STS Holdings Limited including 2011. In 2011, the Company has revalued land and land
development for 3rd time to reflect fair value of assets as last couple of years‟ value of land
changed radically.
As the value of other fixed assets did not change significantly, the management of the
Company didn‟t revalue the other fixed assets to reflect the fair value. We have reviewed
the impairment test performed by management of those assets in every statutory audit as a
part of audit responsibility. We did not find any indication of impairment of assets.
Moreover, we (auditors) did not find any significant change in value of other fixed assets in
subsequent statutory audit.
8. List of transferees other than existing shareholders to whom shares were transferred by
sponsor or director of the issuer within preceding 12 (twelve) months of submitting this
application dated 28th April 2016 for raising of capital or initial public offer (IPO) is
required;
Auditor‟s renponse as above: No shares were transferred by sponsor director from 29 April 2015 to 28 April 2016. Only
STS Educational Group Limited renamed its name as STS Capital Limited effective from 20
January 2016.
9. It appears that out of total project cost amounting Tk. 490.34 Crore for STS Hospital
Chittagong Ltd., Tk. 68.86 Crore had already been financed. The reflection of the said
financed amount was not found in audited financial statements of STS Hospital Chittagong
Ltd. for the year ended on 31st December 2015. As such, the matter is required to be
clarified;
Auditor‟s renponse as above: STS Holdings Limited incurred cost Tk. 51.52 crore as capital work in progress up to 31
December 2015 for Chittagong Hospitals Project which was presented in the financial
statements of STS Hospital Chittagong Ltd for the year ended on 31st December 2015. After
the year end 2015, STS Holdings Limited incurred further Tk. 17.34 Crore for Chittagong
Hospitals Project. The details are as follows:
Particulars As at 31 Dec '15 1 Jan'16 to 15
April'16 As at 15 April'16
Rebar and bricks 43,757,618 9,440,750 53,198,368
Ready mix and cement 135,231,412 14,320,333 149,551,745
Piling and labor 127,731,709 11,440,601 139,172,310
Civil works 306,720,739 35,201,684 341,922,423
Land & Land Development
138,190,000 138,190,000
Architectural and technical fees 79,729,705 - 79,729,705
Other cost associate with construction 128,770,349 - 128,770,349
Professional fees and other costs 208,500,054 - 208,500,054
Capital work-in-progress 515,220,793 173,391,684 688,612,477
Red-Herring Prospectus: STS Holdings Limited
Page: 413
10. It is required to confirm whether financial statement for the year- 2015 has been prepared
in accordance with Securities and Exchange Rules, 1987;
Auditor‟s renponse as above: The consolidated financial statements of STS holdings Limited have been prepared in
accordance with Securities and Exchange Rules, 1987 which is also mentioned in auditors‟
report.
11. Management fees payable (Note No. 23.1.1) does not match with percentage of revenue
and PBDT. It is required to explain (a) why the quarterly payment is kept in payable, (b)
how that fees were calculated and (c) on what ground Tk. 6.02 Crore was paid to AHEL for
year 2014;
Auditor‟s renponse as above: a & b. Payable to AHEL as at 31 December‟15 is BDT 30,060,440. It arose as follows:
- 1% of the gross revenue of the hospital business and
- 5% of Profit before Depreciation and Tax (PBDT)
However cumulative payment will not exceed BDT30,000,000 in any one year.
In year 2015 revenue from hospital business stood BDT3,753,919,306. Management fees
were BDT 37,539,193 based on revenue but maximum limit is BDT 30,000,000. STS
Holdings Limited did not pay this amount during the year 2015. Hence, it is shown as
payable to AHEL. On 27 July 2016 STS Holdings limited applied for remitting the
Operational management fees to Board of Investment (BOI). As of 15 November‟16 the
Company did not receive the approval from BOI.
c. BOI provides approval for remitting the operational management fees and franchise fees on
the basis of annual audited accounts. Though in the agreement, it is required to pay
quarterly but AHEL accepted the annual payment.
Payable to AHEL as at 31 December‟14 is BDT 60,173,197. The Company did not pay the
Operational management fees and franchise fees for the year 2013 and 2014. The
Company got permission/approval from BOI on 12 January 2015 and 1 November 2015
for the year 2013 and 2014 respectively.
As per franchise agreement dated 25 June 1998, STS Holdings Limited requires to pay INR
50,000 per annum as franchise fees.
12. Disclosures regarding the recognition/disposal of other software is required;
Auditor‟s renponse as above: The Company disposed off other software amounting to Tk. 0.38 crore in 2015 as the
service lives of those intangibles assets expired as well as the written down value of those
assets were zero. This disposal was presented under the note # 5 “Intangible Assets”. The
items of disposal were operating system software, application software, and networking
software. The above items were purchased in year 2006 and 2010 from Flora Limited and
Chermor Networks Limited.
Red-Herring Prospectus: STS Holdings Limited
Page: 414
13. It appears from note No. 4(iii) to the audited F/S for the year ended on 31st December 2015
that assets amounting Tk. 89.16 Crore had been disposed off/derecognized. But capital
gain/loss resulted from such dispose-off/de-recognition was not found in Statement of
Comprehensive Income. As such, detailed disclosures regarding such dispose-off/de-
recognition are required;
Auditor‟s renponse as above: In 2015, the Company disposed off assets amounting to BDT 89.16 crore whose written down value is zero/BDT 1 except few assets. In note no 4 of the financial statements of STS Holdings Limited as at and for the year ended 2015: Cost: Disposal/adjustment Tk. 89.16 crore Accumulated depreciation: Disposal/derecognize Tk. 89.30 crore Difference 0.14 Cores
These differences (loss) were adjusted from income from scrap sales in note # 30.
Moreover, the Company sold its few vehicles amounting Tk. 0.20 core whose values were
zero and made gain through sales amounting Tk. 0.20 core, shown in note # 30.
14. It appears from note No. 4(ii) to the audited F/S for the year ended on 31st December 2015
that revalued amount of assets for Tk. 87.93 Crore had been disposed off/adjusted. Effect of
such dispose-off/adjustment was not found in revaluation surplus. As such, the matter is
required to be clarified;
Auditor‟s renponse as above: In year 2015 STS Holdings Limited disposed off assets, whose cost/revalued values were Tk.
89.16 crore. The Company incurred loss of Tk.0.14 crore for disposal of assets and it is
presented in note # 4 (a) (iii). This loss was adjusted from income from scrap sales in note
# 30.
15. Summation of „transferred/adjustment‟ under the head of „Capital goods and works under
construction‟ (note No. 6.1) and „transferred/adjustment‟ under the head of „Capital goods
in transit‟ (note No. 6.2) does not match with addition of assets (note No. 4(i). The matter is
required to be clarified;
Auditor‟s renponse as above: Capital work in progress account contains all expenses incurred on the asset until it is
converted into working condition. When an asset is completed and it is ready to use, cost
related to the assets are transferred after adjusting source tax (advance income tax) and
others to the relevant asset account.
In the addition column of the property, plant and equipment schedule (note #4) includes
followings
Transferred from CWIP (recognized through CWIP) and
Direct purchase (Directly recognized as assets)
Red-Herring Prospectus: STS Holdings Limited
Page: 415
16. It appears from note No. 9(a) that STS Hospital Chittagong Limited (a subsidiary company
of the issuer) had a short-term deposit amounting Tk. 7.90 Crore for the year ended on 31st
December 2015. But the subsidiary company did not prepare the Statement of
Comprehensive Income for that period. As such, it is required to be clarified how such
income was accounted for with reference to BAS/BFRS;
Auditor‟s renponse as above: STS Hospitals have two short-term deposits with United Finance Limited and Lanka Bangla
Finance Limited. It was opened on 13 October‟15 and 23 September‟15 for the period of
one year. The accrued interest on short-term deposit for the year ended 31 December ‟15
was Tk. 0.18 crore was not accounted for in both STS Hospital Chittagong Limited and STS
Holdings Limited.
Subsequently, in financial statements for the period ended 30 June 2016 of STS Hospital
Chittagong Limited has recognized that amount and it is shown as prior year adjustment in
STS Holdings Limited in its financial statements for the period ended 30 June 2016.
17. It is required to be clarified note No. 13 stating „advance, deposits and prepayment include
amounting to BDT 586,895,050 against related party. (Note-46)‟;
Auditor‟s renponse as above: It would be BDT 1,565,525. It is related party transactions and disclosures are given in the
financial statements of STS Holdings Limited under note # 44.
18. Disclosure regarding MD‟s salary as Schedule XI part –II, Para 4 of the Companies Act 1994
is required;
Auditor‟s renponse as above: Being a non-executive MD, he does not receive any salary or allowance from STS Holdings
Limited except Board meeting attendance fees.
19. In addition to Finance Cost (note 29), Bank charges amounting Tk. 1.31 Crore (note 28.1 at
page 231) was accounted for as „general and administrative expense‟. As such, the matter is
required to be clarified;
Auditor‟s renponse as above: Interest on long term loan, overdraft and lease loan are shown under the finance cost (note
29).
Patients can settle their bills or make an advance through using debit/credit card.
Subsequently STS Holdings Limited claims to bank for the settlement of debit/credit card
collection. Bank charged 1%-1.9% to gross claimed amount as a service charge for settling
the claim. STS Holdings Limited booked this service charge as bank charge under the head
of general and administrative expense.
20. Disclosures regarding prior years‟ adjustments are required;
Auditor‟s renponse as above: Adjustment for Tk. 41,182,254 is related to VAT demand made by VAT Authority for non-
deduction of VAT from suppliers & contractors bill, VAT on sale for the year 2009 -2014
and VAT associated expenses. AHD management settled the demand by depositing money to
Govt. treasury. For the said claim amount AHD management has adjusted the opening
balance of retained earnings of the year 2015 (Note no. 18).
Red-Herring Prospectus: STS Holdings Limited
Page: 416
21. Clarifications regarding negative closing cash and cash equivalents for the year ended 31st
December 2015 as shown in Statement of Cash Flow are required to be disclosed;
Auditor‟s renponse as above: As per Paragraph 8 of IAS 7 Statement of Cash Flows, Bank borrowings are generally
considered to be financing activities. However, bank overdrafts which are repayable on
demand form an integral part of entity‟s cash management. In these circumstances, bank
overdrafts are included as a component of cash and cash equivalents.
As at 31 December 2015, cash and cash equivalents represent Cash and bank balances Tk. 34,702,367 Bank Overdraft Tk. (163,879,273) (129,176,906)
22. Disclosures regarding pre-operation expenses (Note No. 4.00) are required;
Auditor‟s renponse as above: It is related to STS Hospital Chittagong Limited and response of concerned auditors attached
separately.
23. It is required to confirm whether section 103 of the Companies Act 1994 is compiled while
providing loan/advance to STS Medical Education Research Ltd.;
Auditor‟s renponse as above: STS Holdings Limited paid BDT 1,565,525 as advance to STS Medical Education Research
Limited. It is related party transactions and disclosures are given in the financial statements
of STS Holdings Limited under note # 44. Subsequently, the transaction was settled by STS
Medical Research Limited in 2016.
24. It is required to confirm with reference to the clause # 12 of 99 years lease deed between
CDA and the issuer company dated 07/07/2010 whether depreciation charge as para # 59
of BAS – 16 is applicable for land development amounting Tk. 4.50 Crore incurred for land
at Chittagong acquired under 99 years‟ lease;
Auditor‟s renponse as above: According to para 55 of BAS-16, depreciation of an asset begins when it is available for use
i.e. when it is in the location and condition necessary for it to be capable of operating
manner intended by the management.
The hospital project is expected to be completed and come to operation by end of year 2018.
The assets of Chittagong hospitals projects are not in readily usable condition. Hence we are
unable to depreciate the assets. We shall recommend for charging depreciation of land after
completion of projects as per International Accounting Standards.
25. Auditors‟ certification regarding reconciliation of business income shown in tax return with
net income shown in audited F/S is required to be revised as per tax return;
Auditor‟s renponse as above: Auditors‟ certification regarding reconciliation of business income shown in tax return with
net income shown in audited F/S is attached herewith.
Red-Herring Prospectus: STS Holdings Limited
Page: 417
26. Auditors‟ certifications as per Annexure –G (25) (a), (f), (j) under rule 4(1)(d) of the
„Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 are required to
be revised as per facts;
Auditor‟s renponse as above: Auditors‟ certification regarding reconciliation of business income shown in tax return with
net income shown in audited F/S is attached herewith.
27. Average cost are required to be included in auditors‟ certification regarding average cost for
acquisition of securities by the directors;
Auditor‟s renponse as above:
Auditors‟ certificate is attached herewith.
28. Financial Statements for the year ended on 31st December 2014 of STS Hospitals Ltd. and
STS Hospital Chittagong Ltd. (two subsidiaries of the issuer) were not authenticated as per
section 189 of the Companies Act, 1994;
Auditor‟s renponse as above: It is related to STS Hospital Chittagong Limited and response of concerned auditors attached
separately.
29. Date & place of the audited F/S for 2014 of the issuer company and place of audited F/S for
2015 of the two subsidiaries could not found;
Auditor‟s renponse as above: It is related to STS Hospital Chittagong Limited and response of concerned auditors attached
separately.
30. It is required to confirm whether land development was accounted for. If so, it is also required
to explain why that (land development) was not depreciated as per para 59 of BAS -16;
Auditor‟s renponse as above: According to para 15, 16 &17 of BAS 16 “Property, Plant and Equipment” an item of
property, plant and equipment should initially be recorded at cost. Cost includes all costs
necessary to bring the asset to working condition for its intended use. This would include
not only its original purchase price but also costs of site preparation, delivery and handling,
installation, related professional fees for architects and engineers, and the estimated cost of
dismantling and removing the asset and restoring the site.
As per para # 59 of BAS – 16, if the cost of land includes the costs of site dismantlement,
removal and restoration, that portion of the land asset is depreciated over the period of
benefits obtained by incurring those costs. In some cases, the land itself may have a limited
useful life, in which case it is depreciated in a manner that reflects the benefits to be derived
from it.
The lands have been acquired from East-West Property Development (Pvt) Limited. STS
Holdings Limited holds titles of these lands and it is not lease hold property. The land has an
unlimited useful life and sites dismantle & restorations are not required.
These costs were incurred for earth filling (as it was low land while taken possession of
land), stamp duty, registration charge, VAT on registration, Local Government tax, source
tax, professional fees and others etc. There are no costs of site dismantlement, removal and
restoration etc. Hence it is not required to charge depreciation.
Red-Herring Prospectus: STS Holdings Limited
Page: 418
31. Worker‟s Profit Participation and Welfare Fund (WPPF) in accordance with Section 234 of
Bangladesh Labour Act, 2006 were not recognized. As such, explanation regarding such
non-recognition of WPPF is required;
Auditor‟s renponse as above: Subsequently the Company management has given representation to us that they have
planned to implement the WPPF from next year and provision made in the financial
statements for the period ended 31 June 2016.
32. It is required to confirm whether such assets and liabilities arisen from financial lease of the
red-herring prospectus) were recognized as per Para 20 of BAS – 17. If not, it is required to
ascertain its consequences. Disclosures as Para 31 of BAS – 17 are required;
Auditor‟s renponse as above: STS Holdings Limited entered an agreement with United Leasing Co. Ltd. and Bank Asia
Limited for finance lease. In 2014, STS Holdings Limited disclosed the financial lease
obligations as Para 31 of BAS 17 Leases. On 22 December 2015, the Company settled the
finance lease with United Leasing Co Ltd.
On 13 December‟15 the Company applied to Bank Asia Limited for converting the financial
lease into long term loan. Hence there is no finance lease as at 31 December 2015 and no
disclosure is required.
33. It is required to disclose detailed information regarding perquisite, benefit in cash or kind as
per Schedule XI, Part – II, para 4 including sub-para (f) of the Companies Act, 1994;
Auditor‟s renponse as above: It is disclosed in the note # 28.1.1 of financial statements of STS Holdings Limited for the
year ended 31 December 2015.
34. Mention date of commencement of commercial operation of STS Holdings Ltd. As
mentioned in „Operations Management Agreement‟ dated 23-06-1998 between STS
Holdings Limited and Indian Hospitals Corporation Ltd.;
Auditor‟s renponse as above: As per 4th supplemental operation management agreement dated 28 December 2004 with
Apollo Hospitals Enterprise Limited (AHEL), upon request of the STS Holdings Limited, AHEL
has extended time for setting up and commissioning of the Medical Institution till 31 March
2005.The Company started its commercial operations on 16 April 2005.
35. Provide detailed information regarding use of „Apollo Hospital‟ name by the STS Holdings
Ltd.;
Auditor‟s renponse as above: As per franchise agreement dated 25 June 1998, Apollo Hospitals Enterprise Limited (AHEL)
permits the STS Holdings Limited to use the name “Apollo” as prefix or suffix or in any
other conjunction for use as part of the name of the STS Holdings Limited‟s Medical
Institution in the City Dhaka, Bangladesh solely during the subsistence of the Project
Management Agreement and Operations Management Agreement.
Red-Herring Prospectus: STS Holdings Limited
Page: 419
36. It appears that auditor of STS Hospital Chittagong Ltd. have mentioned in note 1.2 of the
audit report of 2015 that the hospital is located at plot No. H#1, Anananya Residential Area
Chittagong. But as per lease agreement the said land is leased to the STS Holdings Ltd.
Explain it.
Auditor‟s renponse as above: Related to STS Hospital Chittagong Limited, however management has provided the
following clarification.
“We have already submitted application to CDA for transfer of the land in favour of STS
Hospital Chittagong Ltd. and which is under process. A copy of the application including
payment of CDA transfer fees are attached at Annex-14”.
37. Details of land development costs (in both Dhaka and Chittagong office).
Auditor‟s renponse as above:
For Dhaka Office
The Company acquired lands from East-West Property Development (Pvt) Limited in 1998
and 2001. As it was low land (400.30 decimal land) while taken possession, the Company
incurred huge amount for earth filling. Besides the deed value the company incurred costs
for earth filling, stamp duty, registration charge, VAT on registration, Local Government
tax, source tax, professional fees etc.
The Company provides the below break up for land developments
Land in Decimal Deed value Govt. Tax
others Land Development (sands, labour, fencing and others)
Borrowed Fund to Equity (x) 0.04 0.03 0.03 0.0 0.06
Borrowed Fund to Adjusted Equity (x) 0.11 0.10 0.12 0.1 0.25
Borrowed Fund to EBITDA (x) 0.42 0.38 0.40 0.4 0.77
Borrowed Fund to Total Asset (x) 0.03 0.03 0.03 0.0 0.05
Total Liabilities to Total Asset 0.17 0.1 0.1 0.1 0.1
FFO/Debt (%) 201.2 251.8 187.4 151.2 118.9
CFO/Debt (%) 209.8 253.8 231.0 225.3 106.4
RCF/Debt (%) 209.8 253.8 231.0 225.3 106.4
FCF/Debt (%) 272.4 109.1 169.6 143.8 (575.7)
Page: 438
ANNEXER:1 Milestone
Year Event
August 1997 Incorporated
December ,2002 Authorized capital Increased to tk.1,500 mil from BDT 400 mil
June,2004 Increased paid up capital to BDT 600 mil from BDT 400 mil
March, 2005 Increased paid up capital to BDT 950 mil
April,2005 Out Patients Activity Started (Date of Operation)
February 2006 Authorized capital Increased to BDT 3000 mil
February 2006 Converted to Public Company
March 2007 Increased paid up capital by BDT149.50 Mil
June ,2007 Private placement of Preference Share for BDT 455.23 mil
September, 2007 Private placement of Ordinary Share (foreign) BDT 343 Mil including premium BDT 205 mil
October ,2007 Private placement of Ordinary Share (Local) for BDT 225 mill (+premium BDT 135 mil)
January, 2008 Syndication Loan Repayment
December 2008 Private placement of Ordinary Share (Local) for BDT 125 mill (+premium BDT 75 mil)
January 2011 Private placement of Ordinary Share (Local) for BDT 331mil (+premium BDT 199 mil)
April ,2011 Joint Commission International Accreditation
Source: Company & CRAB analysis
Page: 439
CRAB RATING SCALES AND DEFINITIONS –Long Term (Corporate)
Long Term Rating Definition
AAA
Triple A
Companies rated in this category have extremely strong capacity to meet financial
commitments. These companies are judged to be of the highest quality, with minimal
credit risk.
AA1, AA2, AA3*
Double A
Companies rated in this category have very strong capacity to meet financial
commitments. These companies are judged to be of very high quality, subject to very low
credit risk.
A1, A2, A3
Single A
Companies rated in this category have strong capacity to meet financial commitments,
but are susceptible to the adverse effects of changes in circumstances and economic
conditions. These companies are judged to be of high quality, subject to low credit risk.
BBB1, BBB2, BBB3
Triple B
Companies rated in this category have adequate capacity to meet financial commitments
but more susceptible to adverse economic conditions or changing circumstances. These
companies are subject to moderate credit risk. Such companies possess certain
speculative characteristics.
BB1, BB2, BB3
Double B
Companies rated in this category have inadequate capacity to meet financial
commitments. Have major ongoing uncertainties and exposure to adverse business,
financial, or economic conditions. These companies have speculative elements, subject to
substantial credit risk.
B1, B2, B3
Single B
Companies rated in this category have weak capacity to meet financial commitments.
These companies have speculative elements, subject to high credit risk.
CCC1, CCC2, CCC3
Triple C
Companies rated in this category have very weak capacity to meet financial obligations.
These companies have very weak standing and are subject to very high credit risk.
CC
Double C
Companies rated in this category have extremely weak capacity to meet financial
obligations. These companies are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.
C
Single C
Companies rated in this category are highly vulnerable to non-payment, have payment
arrearages allowed by the terms of the documents, or subject of bankruptcy petition, but
have not experienced a payment default. Payments may have been suspended in
accordance with the instrument's terms. These companies are typically in default, with
little prospect for recovery of principal or interest.
D
(Default)
D rating will also be used upon the filing of a bankruptcy petition or similar action if
payments on an obligation are jeopardized.
*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1
indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates a ranking in the lower end of that generic rating category.
Page: 440
LONG-TERM RATING: LOANS/FACILITIES FROM BANKS/FIS
(All loans/facilities with original maturity exceeding one year)
RATINGS DEFINITION
AAA (Lr)
(Triple A)
Highest Safety
Loans/facilities rated AAA (Lr) are judged to offer the highest degree of safety, with regard to timely payment of
financial obligations. Any adverse changes in circumstances are unlikely to affect the payments on the loan facility.
AA (Lr)*
(Double A)
High Safety
Loans/facilities rated AA (Lr) are judged to offer a high degree of safety, with regard to timely payment of financial
obligations. They differ only marginally in safety from AAA (Lr) rated facilities.
A (Lr)
Adequate Safety
Loan/facilities rated A (Lr) are judged to offer an adequate degree of safety, with regard to timely payment of financial
obligations. However, changes in circumstances can adversely affect such issues more than those in the higher rating
categories.
BBB (Lr)
(Triple B)
Moderate Safety
Loans/facilities rated BBB (Lr) are judged to offer moderate safety, with regard to timely payment of financial
obligations for the present; however, changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal than for issues in higher rating categories.
BB (Lr)
(Double B) Inadequate
Safety
Loans/facilities rated BB (Lr) are judged to carry inadequate safety, with regard to timely payment of financial
obligations; they are less likely to default in the immediate future than instruments in lower rating categories, but an
adverse change in circumstances could lead to inadequate capacity to make payment on financial obligations.
B (Lr)
High Risk
Loans/facilities rated B (Lr) are judged to have high risk of default; while currently financial obligations are met,
adverse business or economic conditions would lead to lack of ability or willingness to pay interest or principal.
CCC (Lr)
Very High Risk
Loans/facilities rated CCC (Lr) are judged to have factors present that make them very highly vulnerable to default;
timely payment of financial obligations is possible only if favorable circumstances continue.
CC (Lr)
Extremely High Risk
Loans/facilities rated CC (Lr) are judged to be extremely vulnerable to default; timely payment of financial obligations
is possible only through external support.
C (Lr)
Near to Default
Loans/facilities rated C (Lr) are currently highly vulnerable to non-payment, having obligations with payment
arrearages allowed by the terms of the documents, or obligations that are subject of a bankruptcy petition or similar
action but have not experienced a payment default. C is typically in default, with little prospect for recovery of
principal or interest. C (Lr) are typically in default, with little prospect for recovery of principal or interest.
D (Lr)
Default Loans/facilities rated D (Lr) are in default or are expected to default on scheduled payment dates.
*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in
the lower end of that generic rating category.
SHORT-TERM CREDIT RATING: LOANS/FACILITIES OF BANKS/FIS
(All loans/facilities with original maturity within one year)
DEFINITION
ST-1
Highest Grade This rating indicates that the degree of safety regarding timely payment on the loans/facilities is very strong.
ST-2
High Grade
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is strong; however, the
relative degree of safety is lower than that for issues rated higher.
ST-3
Adequate Grade
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is adequate; however, the
issues are more vulnerable to the adverse effects of changing circumstances than issues rated in the two higher
categories.
ST-4
Marginal
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is marginal; and the
issues are quite vulnerable to the adverse effects of changing circumstances.
ST-5
Inadequate Grade
This rating indicates that the degree of safety regarding timely payment on the loans/facilities is minimal, and it is likely
to be adversely affected by short-term adversity or less favorable conditions.
ST-6
Lowest Grade This rating indicates that the loans/facilities are expected to be in default on maturity or is in default.
SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR
SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT CRAB’S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by CRAB from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors,
however, such information is provided “as is” without warranty of any kind and CRAB, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness,
completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall CRAB have any liability to any person or entity for (a) any loss or
damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of CRAB or any of
its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such
information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if CRAB is advised in advance
of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting
part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER
OPINION OR INFORMATION IS GIVEN OR MADE BY CRAB IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment
decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer
and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling.
Page: 441
CHAPTER (XXVIII): PUBLIC ISSUE APPLICATION PROCEDURE
Application for Subscription:
1. Application for shares may be made for a minimum lot for [*] ordinary shares to the value of Tk.
[*]. Red-Herring Prospectus may be obtained from the Registered Office of the Company, members of Dhaka Stock Exchange Limited, Chittagong Stock Exchange Limited. Applications/buy Instruction must not be for less than [*] shares. Any application/buy Instruction not meeting this criterion will not be considered for allotment purpose.
2. Joint application form for more than two (2) persons will not be accepted. In the case of joint
application, each party must sign the application form. 3. An applicant for public issue of securities shall submit application/buy instruction to the
Stockbroker/Merchant Banker where the applicant maintains customer account, within the
cut‐off date (i.e. subscription closing date). 4. The application/buy instruction may be submitted in prescribed paper or electronic form,
which shall contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total Amount and Category of the Applicant.
5. Application/buy instruction must be in full name of individuals or limited companies or trusts
or societies and not in the name of firms, minors or persons of unsound mind. Application/buy instruction from insurance, financial and market intermediary companies and limited companies must be accompanied by Memorandum and Articles of Association.
6. An applicant cannot submit more than two applications, one in his/her own name and the
other jointly with another person. In case, an applicant submits more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, 15% (fifteen) of the application money will be forfeited by the Commission and the balance amount will be refunded to the applicant.
7. The applicants who have applied for more than two applications using same bank account,
their application will not be considered for lottery and the Commission will forfeit 15% of the subscription money.
8. Making of any false statement in the application or supplying of incorrect information therein
or suppressing any relevant information in the application shall make the application liable to rejection and subject to forfeiture of 25% of the application money and/or forfeiture of share (unit) before or after issuance of the same by the issuer. The said forfeited application money or share (unit) will be deposited in account of the Bangladesh Securities and Exchange Commission (BSEC). This is in addition to any other penalties as may be provided for by the law.
9. An IPO applicant shall ensure his/her BO account remains operational till the process of IPO
(including securities allotment or refund of IPO application/buy instruction) is completed. If any BO account mentioned in the application/buy instruction is found closed, the allotted security may be forfeited by BSEC.
10. Bangladeshi Nationals (including non-resident Bangladeshi Nationals working abroad) and
foreign nationals shall be entitled to apply for the share. 11. Non-resident Bangladeshi (NRB) and Foreign applicants shall submit bank drafts (FDD), issued
in favor of the Issuer for an amount equivalent to the application money, with their application to the concerned Stockbroker/Merchant Banker. A Non-resident Bangladeshi (NRB) and Foreign applicant may also submit a single draft against 02(two) applications made by him/her, i.e. one in his/her own name and the other jointly with another person. The draft (FDD) shall be issued by the Bank where the applicant maintains NITA/Foreign Currency account debiting the same account. No banker shall issue more than two drafts from any NITA/Foreign Currency
Page: 442
account for any public issue. At the same time, the applicant shall make the service charge available in respective customer account maintained with the Stockbroker/Merchant Banker.
12. The bank draft (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Ltd. on
the date of publication of abridged version of prospectus.
13. The IPO subscription money collected from investors (other than non‐resident Bangladeshis in US Dollar or UK Pound sterling or EURO) by the Stock Borkers/Merchant Bankers will be remitted to the „STS Holdings Limited‟ (IPO) A/C No. 1501203054418001, BRAC Bank Limited, 1, Gulshan Avenue, Gulshan-1, Dhaka-1212, Bangladesh for this purpose.
14. The Application money collected from Eligible Investors (EIs) by the lead banker to the issue will
be remitted to the „STS Holdings Limited‟ (IPO) interest bearing escrow Account No. [*] for this purpose.
15. The subscription money collected from Non-Resident Bangladeshis in US Dollar or UK Pound
sterling or EURO shall be deposited to three FC accounts opened by the Company for IPO purpose as follows:
Sl. Name of the
A/C Account No. Type of A/C Currency Bank & Branch
1 STS Holdings
Limited
1501203054418002
FC A/C
USD BRAC Bank Limited, 1, Gulshan Avenue, Gulshan-1, Dhaka-
APPLICATIONS NOT IN CONFORMITY WITH THE ABOVE REQUIREMENTS ARE LIABLE TO BE
REJECTED.
Page: 443
Public Issue Application Procedure:
Step-1 (Applicant) 1. An applicant for public issue of securities shall submit application/buy instruction to the
Stockbroker/ Merchant Banker where the applicant maintains customer account, within the cut-off date (i.e. The subscription closing date), which shall be the 25th (twenty fifth) working day from the date of publication of abridged version of prospectus.
2. The application/buy instruction may be submitted in prescribed paper or electronic form, which shall contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total Amount and Category of the Applicant. At the same time:
a. Other than non-resident Bangladeshi (NRB) and Foreign applicants shall make the application money and service charge available in respective customer account maintained with the Stockbroker/Merchant Banker. No margin facility, advance or deferred payment is permissible for this purpose. In case the application is made through a margin account, the application money shall be deposited separately and the Stockbroker/Merchant Banker shall keep the amount segregated from the margin account, which shall be refundable to the applicant, if become unsuccessful.
b. Non-resident Bangladeshi (NRB) and Foreign applicants shall submit bank drafts (FDD), issued in favor of the Issuer for an amount equivalent to the application money, with their application to concerned Stockbroker/Merchant Banker. The draft (FDD) shall be issued by the Bank where the applicant maintains NITA/Foreign Currency account debiting the same account. No banker shall issue more than two drafts from any NITA/Foreign Currency account for any public issue. At the same time, the applicant shall make the service charge available in respective customer account maintained with the Stockbroker/Merchant Banker.
Step-2 (Intermediary) 3. The Stockbroker/Merchant Banker shall maintain a separate bank account only for this purpose
namely “Public Issue Application Account”. The Stockbroker/Merchant Banker shall:
a. post the amount separately in the customer account (other than NRB and Foreign applicants), and upon availability of fund, block the amount equivalent to the application money;
b. accumulate all the application/buy instructions received up to the cut-off date, deposit the amount in the “Public Issue Application Account” maintained with its bank within the first banking hour of next working day of the cut-off date. In case of application submitted by the Stock-dealer or the Merchant Banker‟s own portfolio, the application amount should also be transferred to the “Public Issue Application Account”;
c. instruct the banker to block the account for an amount equivalent to the aggregate application money and to issue a certificate in this regard.
4. Banker of the Stockbroker/Merchant Banker shall block the account as requested for, issue a
certificate confirming the same and handover it to the respective Stockbroker/Merchant Banker.
5. For Non-resident Bangladeshi (NRB) and Foreign applicants, the Stockbroker/Merchant Banker shall hold the bank drafts (FDD) submitted by the applicants in their custody with a list containing the draft information against the respective applicant‟s particulars.
6. The Stockbroker/Merchant Banker shall prepare category wise lists of the applicants containing Customer ID, Name, BO Account Number and Number of Securities applied for, and within 03 (three) working days from the cut-off date, send it to the respective Stock Exchange in electronic (text format with tilde „~‟ separator ) format and the certificate(s) issued by its banker.
7. On the next working day, the stock exchanges shall provide the Issuer with the information received from the Stockbroker/Merchant Bankers. Stock Exchanges shall verify and preserve the bankers‟ certificates in their custody.
Page: 444
8. The application/buy instructions shall be preserved by the Stockbroker/Merchant Bankers up
to 6 months from listing of the securities with exchange. Step-3 (Issuer) 9. The Issuer shall prepare consolidated list of the applications and send the applicants‟ BOIDs in
electronic (text) format in a CDROM to CDBL for verification. The Issuer shall post the consolidated list of applicants on its website. CDBL shall verify the BOIDs as to whether the BO accounts of the applicants are active or not.
10. On the next working day, CDBL shall provide the Issuer with an updated database of the applicants containing BO Account Number, Name, Addresses, Parents‟ Name, Joint Account and Bank Account Information along with the verification report.
11. After receiving verification report and information from CDBL, the Issuer shall scrutinize the applications, prepare category wise consolidated lists of valid and invalid applications and submit report of final status of subscription to the Commission and the stock exchanges within 10 (ten) working days from the date of receiving information from the stock exchanges.
12. The Issuer and the issue manager shall conduct category wise lottery with the valid applications within 03 (three) working days from the date of reporting to the Commission and the Stock Exchanges, if do not receive any observation from the Commission or the Stock Exchanges.
13. The Issuer and issue manager shall arrange posting the lottery result on their websites within 06 (six) hours and on the websites of the Commission and Stock Exchanges within 12 (twelve) hours of lottery.
14. Within 02 (two) working days of conducting lottery, the Issuer shall:
a. Send category wise lists of the successful and unsuccessful applicants in electronic (text format with tilde „~‟ separator) format to the respective Stock Exchange.
b. send category wise lists of unsuccessful applicants who are subject to penal provisions as per conditions of the Consent Letter issued by the Commission in electronic (text format with tilde „~‟ separator) format to the respective Stock Exchange mentioning the penalty amount against each applicant.
c. issue allotment letters in the names of successful applicants in electronic format with digital signatures and send those to respective Stock Exchange in electronic form.
d. send consolidated allotment data (BOID and number of securities) in electronic text format in a CDROM to CDBL to credit the allotted shares to the respective BO accounts.
Step-4 (Intermediary) 15. On the next working day, Exchanges shall distribute the information and allotment letters to the
Stockbroker/Merchant Bankers concerned in electronic format and instruct them to:
a) remit the amount of successful (other than NRB and Foreign) applicants to the Issuer‟s respective Escrow Account opened for subscription purpose, and unblock the amount of unsuccessful applicants;
b) send the penalty amount of other than NRB and Foreign applicants who are subject to penal provisions to the Issuer‟s respective Escrow Accounts along with a list and unblock the balance application money;
16. On the next working day of receiving the documents from the Stock Exchanges, the
Stockbrokers/Merchant Bankers shall request its banker to:
a. release the amount blocked for unsuccessful (other than NRB and Foreign) applicants;
b. remit the aggregate amount of successful applicants and the penalty amount of unsuccessful (other than NRB and foreign) applicants who are subject to penal provisions to the respective „Escrow‟ account of the Issuer opened for subscription purpose.
Page: 445
17. On the next working day of receiving request from the Stockbrokers/Merchant Bankers, their
bankers shall unblock the amount blocked in the account(s) and remit the amount as requested for to the Issuer‟s „Escrow‟ account.
18. Simultaneously, the Stockbrokers/Merchant Bankers shall release the application money in the customer accounts; inform the successful applicants about allotment of securities and the unsuccessful applicants about releasing their blocked amounts. The unblocked amounts of unsuccessful applicants shall be placed as per their instructions. The Stockbroker/Merchant Banker shall be entitled to recover the withdrawal charges, if any, from the applicant who wants to withdraw the application money, up to an amount of Tk. 5.00 (five) per withdrawal.
19. On the same day, Stock Exchanges shall send the drafts submitted by successful NRB and Foreign applicants and also by unsuccessful NRB and Foreign applicants who are subject to penal provisions, to the Issuer.
20. In case of drafts (FDD) submitted by successful NRB or Foreign applicant for any amount excess to the value of securities to be allotted or by unsuccessful NRB and Foreign applicants who are subject to penal provisions, refund of the balance amount shall be made by the Issuer to the applicant through bank drafts issued in the same currency within 7 (seven) working days of receiving the drafts from Stock Exchange.
Miscellaneous: 21. The Issuer and Issue Manager(s) shall jointly ensure compliance of the above.
22. The bank draft (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Limited
on the date of publication of abridged version of prospectus.
23. Amount deposited and blocked in the “Public Issue Application Account” shall not be withdrawn or transferred during the blocking period. Amount deposited by the applicants shall not be used by the Stockbrokers/Merchant Bankers for any purpose other than public issue application.
24. The Issuer shall pay the costs related to data transmission, if claimed by the Stock Exchange concerned.
25. The Stockbrokers/Merchant Bankers shall be entitled to a service charge of 5.00 (taka five) only per application irrespective of the amount or category. The service charge shall be paid by the applicant at the time of submitting application.
26. The Stockbroker/Merchant Banker shall provide the Issuer with a statement of the remittance and drafts sent.
27. The Issuer shall accumulate the penalty amount recovered and send it to the Commission through a bank draft/payment order issued in favor of the Bangladesh Securities and Exchange Commission.
All eligible Stock Brokers and Merchant Bankers shall receive the IPO subscription.
Page: 446
Application Form Interested persons are entitled to a prospectus, if they desire, and that copies of prospectus may be obtained from the issuer and the issue manager
STS HOLDINGS LIMITED
APPLICATION FOR PUBLIC ISSUE
Date:
Name of applicant :
Client Code :
BO ID No. :
Category of applicant :
Name of the Company/Fund :
Number of Shares/Units : …………………………. Shares of Tk. …………………… each
This is to certify that, as per provision of the Companies Act 1994, Cost Audit by Professional Accountant is not applicable for “STS Holdings Limited”.
Sd/-
Dr. Ratnadeep Chaskar
Chief Executive Officer (Current Charge)
STS Holdings Limited
Sd/-
Md. Giash Uddin FCA
Chief Financial Officer
STS Holdings Limited
Sd/-
Mahbub H. Mazumdar FCMA
Chief Executive
AFC Capital Limited
Sd/-
Mrs. Nasrin Sultana
Chief Executive Officer
ICB Capital Management Limited
2. It appears that Mr. R. Basil whose name was not in RJSC certified Particulars of Directors (Form
XII) signed in Declaration (Annexure –A) and also each page of the prospectus as CEO. As such,
it is required to explain how Mr. R. Basil as CEO signed the same;
Our Responses:
Since Mr. R. Basil is not a Director of the issuer company, his name cannot be appeared in
Form-XII. He has signed the Declaration (Annexure-A) of the draft red-herring prospectus as a
requirement to sign the Declaration as CEO. Also since the Board of Directors has authorized
Mr. R. Basil, CEO, he has signed each page of the draft red-herring prospectus.
3. It appears that the issuer company entered into franchise agreement and management &
operational agreement with Apollo Hospital Enterprises Limited, India. But the signatories of
those agreements are from Indian Hospitals Corporation Limited. Clarification in this regard is
required;
Our Responses:
Initially, both the agreements were signed with Indian Hospitals Corporation Ltd. (IHC) but
subsequently IHC was merged with Apollo Hospitals Enterprises Ltd. (AHEL) and hence the
further amendments to the agreements including the one for merged with new name were
signed by AHEL.
4. WPPF was not found. Comments on this issue is required;
Our Responses:
WPPF has already been introduced and provision has also been made in the accounts of the
Company for the period January to June, 2016.
5. Explain how will you built a 16 storied building in the name of STS Hospital Chittagong Limited,
whereas lease agreement dated 07-7-2010 shows the name of lessee as STS Holdings Limited
and also construction approval letter dated 28-01-2014 issued by CDA shows the name of the
company as STS Holdings Ltd;
Our Responses:
We have already submitted application to CDA for transfer of the land in favor of STS Hospital
Chittagong Ltd. and which is under process.
Page: 448
6. Explain how STS Hospital Chittagong Ltd. proposed to construct a hospital to the Apollo
Hospitals Enterprise Ltd. at plot No. H#1, Anananya Residential Area of CDA (mentioned in
clause D of agreement dated 17-09-2015 between AHEL and STS Hospital Chittagong Limited),
whereas it appears that the CDA has leased the said land to the STS Holdings Ltd.;
Our Responses:
We have already submitted application to CDA for transfer of the land in favour of STS Hospital
Chittagong Ltd. and which is under process.
7. Qualification of Dr. Raajiv Singhal, Independent Director, does not match with that mentioned in
the corporate governance guideline of the Commission;
Our Responses:
Considering the nature of business of STS Holdings Limited, the Company appointed two
Independent Director, one is professional Accountant and another one is the expert of medical
business.
Dr. Raajiv Singhal have completed his graduation and post-graduation from Armed Forces
Medical College, Pune and he is an alumnus of Indian Institute of Management. He is dynamic
and innovative leader with board based expertise in operations, finance and business
development. He is also a visiting faculty for management programs of AIIMS, AFMC, and
Institute of Chartered Accountants of India etc. He has more than 20 experiences in health care
business.
Considering the above qualification of Dr. Raajiv Singhal and interest of the shareholder the
Company appointed Dr. Raajiv Singhal as Independent Director.
8. It appears of the draft red-herring prospectus under summary of credit rating that accessibility
to Apollo quality in enhanced through setting up Outpatient Consultation Cum Diagnostic
Service Centres under the brand name “STS Life Care Centres” in different strategic locations in
Dhaka city. 1st one is already in operation at Dhanmondi. The company is planning to set up 20
chain-pharmacies. 1st one is already in operation in Sylhet. It is required to explain the matter;
Our Responses:
In order broaden the service base of the company all over the country, these are the strategic
decisions to take the healthcare services to the doorstep of the community, these projects have
been undertaken. Both the services--Life Care Center and Pharmacy services will gradually be
expanded to strategic locations of the country depending on the success of 1st Outpatient and
Consultation center at Dhanmondi and the 1st chain Pharmacy at Sylhet. The Outpatient
Consultation Cum Diagnostic Service Centers provide referral services to Apollo Hospitals
Dhaka.
9. Management perceptions about enforcement of contingency liability and tax, VAT related
litigation do not match with the disclosures made under VAT, Tax, Customs duty or other
liability.
Our Responses:
Necessary correction has been made in the draft red-herring prospectus.
Page: 449
10. Management perceptions about any penalty imposed by any regulators for non-compliance of
any provision of laws does not reflect the matters published in the daily newspaper- “Prothom
Alo” dated 9th September 2015;
Our Responses:
Apollo Hospitals Dhaka had stored few absolutely essential and lifesaving drugs which were not
available in the country but not approved by the local authority, Directorate General of Drug
Administration (DGDA). These were imported and stocked for the patient‟s sake. These includes
Lifesaving drugs such as Sodium Valproate, Vasopressin, Metolazine, IVF drug; Lucrin, multiple
crash cart items; Naloxone and Antibiotics Polymyxin.
In last 10 years, Apollo Hospitals Dhaka has been maintaining highest standard through robust
processes and systems ensuring world class healthcare where patient safety being the top most
priority. These drugs are manufactured by reputed international companies and used globally.
These were purchased, transported and stocked maintaining proper environmental condition
including monitoring of expiry dates. The exact substitutes are not available in the country. An
application for approval of these drugs was sent to DGDA in 2014. This was also explained to
the JCI surveyors in 2014.
On 8th September legal authorities raided and seized these drugs but we had acted and resolved
the matter to their satisfaction. None of the drugs were contraband or expired. Media had
covered the issue and press release has been drafted from our end.
Apollo purchased the said products from the importer. On 8th August 2016 the Importer have
got permission from the DGDA for importing these products.
11. Reasons for non-adjustment of advance tax for the year ended on 31st December 2015 and
2014 is required to be disclosed;
Our Responses:
Income year Status
2010-2013 Application filed in High Court Division of the Supreme Court of Bangladesh for disallowance of expenditures.
2014 Assessment completed by DCT and application filed in Taxes Appellate Tribunal for reassessment.
2015 Return duly submitted and assessment yet to be completed at DCT level. Due to non-finalization of income tax assessment, STS Holdings Limited neither adjusts the advance income tax nor advance tax provision.
12. Disclose NPAT, EPS considering charging of WPPF from the beginning;
Our Responses:
Basic Earnings per share considering Tax effect on WPPF Particulars 2013 2014 2015
as at and for the six months period ended 30 June 2016
Independent Auditors‟ Report to the Shareholders of STS Holdings Limited
We have audited the accompanying consolidated financial statements of STS Holdings Limited (the
Group) as well as the separate financial statements of STS Holdings Limited (the Company) which
comprise the consolidated and separate statements of financial position as at 30 June 2016, profit or
loss and other comprehensive income, changes in equity and cash flows for the six month period
then ended and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements of the group and separate financial statements of the company in accordance with
Bangladesh Financial Reporting Standards, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements of the group and the
separate financial statements of the company that are free from material misstatement, whether due
to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial statements of the group
and separate financial statements of the company based on our audit. We conducted our audit in
accordance with Bangladesh Standards on Auditing. Those standards require that we comply with
relevant ethical requirements and plan and perform the audit to obtain reasonable assurance
whether the consolidated financial statement of the group and separate financial statements of the
company are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements of the group and separate financial statements
of the company. The procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements of the
group and separate financial statements of the company, whether due to fraud or error. In making
those risk assessments, we consider internal control relevant to the entity's preparation and fair
presentation of the consolidated financial statements of the group and separate financial statements
of the company 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 consolidated financial statements of the group and separate financial statements
of the company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Page: 451
Opinion
In our opinion, the consolidated financial statements of the group and separate financial statements
of the company, give a true and fair view of the consolidated and separate financial position of the
Group and the Company as at 30 June 2016 and of the results of their operations and cash flows for
the six month period then ended in accordance with Bangladesh Financial Reporting Standards
(BFRS), Companies Act 1994 (as amended in 2013), Bangladesh Securities and Exchange Rules
1987 and other applicable laws and regulations.
Report on Other Legal and Regulatory Requirement
In accordance with the Companies Act 1994 (as amended 2013) and Bangladesh Securities and Exchange Rules 1987, we also report the following:
(a) we have obtained all the information and explanations which to the best of our knowledge
and belief were necessary for the purposes 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 Group
and the Company so far as it appeared from our examination of those books; and (c) the consolidated and separate statements of financial position and statements of profit or
loss and other comprehensive income dealt with by this report are in agreement with the books of account and returns and
(d) the expenditure incurred was for the purpose of the company‟s business.
Sd/- Dated; Dhaka 20 October 2016
S. F. Ahmed & Co. Chartered Accountants
Page: 452
STS Holdings Limited Consolidated Statement of Financial Position
As at 30 June 2016
Notes
Amount in BDT
30-Jun-16 31-Dec-15
ASSETS
Non-current assets
Property, plant and equipment
4(a)
6,799,651,246
6,645,605,483
Intangible assets
5(a)
10,702,434
12,930,367
Capital work-in-progress
6(a)
1,052,361,568
660,942,718
Total non-current assets
7,862,715,248
7,319,478,567
Current assets
Investments in short-term deposits
9(a)
635,026,724
731,489,387
Inventories
10(a)
252,903,204
325,701,940
Trade receivables
11(a)
22,361,665
18,374,897
Interest receivable
12(a)
25,660,225
22,641,463
Advances, deposits and prepayments
13(a)
592,948,152
389,122,080
Cash and cash equivalents
14(a)
45,647,750
34,702,367
Total current assets
1,574,547,721
1,522,032,134
Total assets
9,437,262,969
8,841,510,701
EQUITY AND LIABILITIES
Equity
Share capital
15.1
1,509,450,000
1,509,450,000
Share premium
16
614,925,000
614,925,000
Revaluation Reserve
17
4,798,417,674
4,809,560,509
Retained earnings
18(a)
565,553,211
398,180,893
Equity attributable to owners of the Company
7,488,345,885
7,332,116,402
Non-controlling interests
(625,040)
(467,194)
Share money deposit
100,000
100,000
Total equity
7,487,820,845
7,331,749,208
Non-current liabilities
Long term loan
20(a)
226,677,897
87,588,510
Deferred tax liability
21
125,242,493
116,702,326
Employees retirement benefits (gratuity) 22
138,027,054
121,276,720
Total non-current liabilities
489,947,444
325,567,556
Current liabilities
Trade and other payables
23(a)
463,418,100
404,379,432
Income tax provision
24(a)
688,477,083
583,197,893
Bank overdraft
25
223,266,232
163,879,273
Long-term loan - current portion
20(a)
54,333,265
32,737,339
Short-term loan
19
30,000,000
-
Total current liabilities
1,459,494,680
1,184,193,937
Total liabilities
1,949,442,124
1,509,761,493
Total equity and liabilities
9,437,262,969
8,841,510,701
Net assets value per share
41(a)
49.61
48.57
The annex notes 1-48 form an integral part of these financial statements
For STS Holdings Limited
Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/-
Dated; Dhaka
S. F. Ahmed & Co. 20 October 2016
Chartered Accountants
Page: 453
STS Holdings Limited
Statement of Financial Position
As at 30 June 2016
Notes
Amount in BDT
30-Jun-16 31-Dec-15
ASSETS
Non current assets
Property, plant and equipment
4
6,753,492,365
6,600,981,696
Intangible assets
5
9,123,911
11,117,368
Capital work-in-progress
6
346,973,257
140,890,562
Investment in subsidiaries
7
107,999,000
107,999,000
Deposited for subsidiaries share capital
8
914,021,551
585,329,525
Total non current assets
8,131,610,085
7,446,318,151
Current assets
Investments in short-term deposits
9
556,026,724
652,489,387
Inventories
10
244,170,533
315,327,087
Trade receivables
11
22,738,091
18,900,759
Interest receivable
12
20,186,684
20,928,840
Advances, deposits and prepayments
13
589,316,491
385,473,880
Cash and cash equivalents
14
29,434,739
32,084,874
Total current assets
1,461,873,263
1,425,204,826
Total assets
9,593,483,348
8,871,522,977
EQUITY AND LIABILITIES
Owners' equity
Ordinary share capital
15.1
1,509,450,000
1,509,450,000
Share premium
16
614,925,000
614,925,000
Revaluation reserve
17
4,798,417,674
4,809,560,509
Retained earnings
18
630,479,142
449,631,858
Total equity
7,553,271,817
7,383,567,367
Non current liabilities
Long-term loan
20
226,677,897
87,588,510
Deferred tax liability
21
125,242,493
116,702,326
Employees retirement benefits (gratuity)
22
138,027,054
121,276,720
Total non current liabilities
489,947,444
325,567,556
Current liabilities
Trade and other payables
23
555,573,608
383,311,691
Income tax provision
24
687,090,982
582,459,751
Bank overdraft
25
223,266,232
163,879,273
Long-term loan - current portion
20
54,333,265
32,737,339
Short-term loan
19
30,000,000
-
Total current liabilities
1,550,264,087
1,162,388,054
Total liabilities
2,040,211,531
1,487,955,610
Total equity and liabilities
9,593,483,348
8,871,522,977
Net assets value per share
41
50.04
48.92
The annex notes 1-48 form an integral part of these financial statements
For STS Holdings Limited
Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/-
Dated; Dhaka
S. F. Ahmed & Co. 20 October 2016
Chartered Accountants
Page: 454
STS Holdings Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months period ended 30 June 2016
Notes
Amount in BDT
Jan to June
2016
Jan to Dec
2015
Revenue 26(a)
2,037,021,829
3,789,300,061
Direct operating expenses 27(a)
(1,066,913,434)
(1,972,874,552)
Gross profit
970,108,396
1,816,425,509
Other operating expenses 28(a)
(748,778,891)
(1,337,761,501)
Profit from operations
221,329,504
478,664,008
Finance cost 29(a)
(10,276,825)
(24,891,909)
Other income 30(a)
72,982,105
133,915,506
284,034,785
587,687,605
Contribution to WPPF
(14,143,792)
-
Profit before tax
269,890,993
587,687,605
Income tax (expenses)/income
Current tax 24(a)
(105,279,189)
(217,644,184)
Deferred tax 21.1
(8,540,167)
6,942,405
(113,819,356)
(210,701,779)
Profit after tax
156,071,637
376,985,826
Other comprehensive income
-
-
Total comprehensive income
156,071,637
376,985,826
Profit attributable to:
Owners of the Company
156,229,483
377,355,073
Non-controlling interests 43
(157,846)
(369,247)
156,071,637
376,985,826
Total comprehensive income attributable to:
Owners of the Company
156,229,483
377,355,073
Non-controlling interests
(157,846)
(369,247)
156,071,637
376,985,826
Earnings per share
Basic earnings per share 40.1(a)
1.03
2.50
The annex notes 1-48 form an integral part of these financial statements
For STS Holdings Limited
Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/-
Dated; Dhaka
S. F. Ahmed & Co. 20 October 2016
Chartered Accountants
Page: 455
STS Holdings Limited Statement of Profit or Loss and Other Comprehensive Income
For the six months period ended 30 June 2016
Notes
Amount in BDT
Jan to June
2016
Jan to Dec
2015
Revenue 26
2,012,948,319
3,753,919,306
Direct operating expenses 27
(1,051,536,500)
(1,950,037,471)
Gross profit
961,411,820
1,803,881,835
Other operating expenses 28
(723,317,135)
(1,298,145,771)
Profit from operations
238,094,684
505,736,064
Finance cost 29
(10,276,825)
(18,057,835)
Other income 30
69,201,781
132,119,302
297,019,641
619,797,531
Contribution to WPPF
(14,143,792)
-
Profit before tax
282,875,849
619,797,531
Income tax (expenses)/income
Current tax 24
(104,631,231)
(216,929,136)
Deferred tax 21.1
(8,540,167)
6,942,405
(113,171,398)
(209,986,731)
Profit after tax
169,704,451
409,810,800
Other comprehensive income
-
-
Total comprehensive income
169,704,451
409,810,800
Earnings per share
Basic earning per share 40.1
1.12
2.71
The annex notes 1-48 form an integral part of these financial statements
For STS Holdings Limited
Sd/- Sd/- Sd/-
Company Secretary Director Managing Director
See annexed report of the date
Sd/-
Dated; Dhaka
S. F. Ahmed & Co. 20 October 2016
Chartered Accountants
Page: 456
STS Holdings Limited Consolidated Statement of Changes in Equity
For the six months period ended 30 June 2016
Amount in BDT
Equity attributable to owners of the Company Non-
Controlling
interest
Total equity
Ordinary
share capital
Share
premium
Revaluation
Reserve
Retained
earnings Total
Year 2015
Balance at 1 January 2015 1,509,450,000 614,925,000 4,835,383,576 36,185,008 6,995,943,584 (97,948) 6,995,845,636
Profit For the period ended 30 June 2016 - - - 156,229,483 156,229,483 (157,846) 156,071,637
Balance at 30 June 2016 1,509,450,000 614,925,000 4,798,417,674 565,553,211 7,488,345,885 (625,040) 7,487,720,845
The annex notes 1-48 form an integral part of these financial statements
STS Holdings Limited
Statement of Changes in Equity For the six months period ended 30 June 2016
Amount in BDT
Year 2015 Ordinary
share capital Share premium Revaluation Reserve Retained earnings Total equity
Balance as on 1 January 2015 1,509,450,000 614,925,000 4,835,383,576 55,180,244 7,014,938,820 Realization of revaluation surplus - - (25,823,067) 25,823,067 - Prior year adjustment - - - (41,182,254) (41,182,254) Profit for the year ended 31 December 2015 - - - 409,810,801 409,810,801 Balance as on 31 December 2015 1,509,450,000 614,925,000 4,809,560,509 449,631,858 7,383,567,367
For the six months period ended 30 June 2016
Balance as on 1 January 2016 1,509,450,000 614,925,000 4,809,560,509 449,631,858 7,383,567,367 Realization of revaluation surplus - - (11,142,835) 11,142,835 - Profit For the period ended 30 June 2016 - - - 169,704,451 169,704,451 Balance as on 30 June 2016 1,509,450,000 614,925,000 4,798,417,674 630,479,143 7,553,271,817
The annex notes 1-48 form an integral part of these financial statements
Page: 457
STS Holdings Limited
Consolidated Statement of Cash Flows
For the six months period ended 30 June 2016
Notes
Amount in BDT
Jan to June
2016 Jan to Dec
2015
Cash flows from operating activities
Collection from hospitals services and others 31(a)
2,071,768,165
3,853,729,642
Payment for cost and expenses 32(a)
(1,690,101,159)
(3,125,844,869)
Cash generated from operation
381,667,006
727,884,773
Income taxes paid 34
(187,390,126)
(180,745,871)
Net cash from operating activities (a)
194,276,880
547,138,902
Cash flows from investing activities
Payment for acquisition of property, plant and equipment
(135,329,531)
(73,140,090)
Payment for acquisition of intangible asset
-
(3,539,210)
Payment for capital work-in-progress
(411,271,026)
(392,653,460)
Proceed from sales of non current asset
-
2,030,770
Proceeds from/(investment in) short term deposit
96,462,663
(225,951,925)
Interest received from short term deposit
27,255,333
55,492,078
Net cash used in investing activities (b)
(422,882,561)
(637,761,837)
Cash flows from financing activities
Interest paid
(10,521,208)
(24,048,864)
Cash received /(paid) for long term loan
160,685,313
(38,831,040)
Cash paid to inter-company
-
(1,500,000)
Received from short term loan
30,000,000
-
Net cash used in financing activities (c)
180,164,105
(64,379,904)
Net increase/(decrease) in cash and cash equivalent (a+b+c)
(48,441,576)
(155,002,839)
Opening cash and cash equivalents
(129,176,906)
25,825,934
Closing cash and cash equivalents
(177,618,482)
(129,176,906)
Closing cash and cash equivalents represents:
Cash and bank balances 14(a)
45,647,750
34,702,367
Bank overdraft 25
(223,266,232)
(163,879,273)
(177,618,482)
(129,176,906)
Net operating cash flow per share
1.29
3.62
Page: 458
STS Holdings Limited
Statement of Cash Flows
For the six months period ended 30 June 2016
Notes
Amount in BDT
Jan to June
2016
Jan to Dec
2015
Cash flows from operating activities
Collection from hospitals services and others 31
2,042,600,290
3,814,827,683
Payment for cost and expenses 32
(1,648,910,398)
(3,068,898,491)
Cash generated from operation
393,689,892
745,929,192
Income taxes paid
34
(187,390,126)
(180,745,871)
Net cash flows from operating activities (a)
206,299,766
565,183,321
Cash flows from investing activities
Payment for acquisition of property, plant and equipment 35
(134,444,239)
(69,315,237)
Payment for acquisition of intangible assets
-
(3,539,210)
Payment for capital work-in-progress 36
(206,082,695)
(129,501,265)
Proceed from sale of non current assets
-
2,030,770
Received against Chittagong land
97,000,000
-
Investment in subsidiaries
-
(97,000,000)
Investment in share money deposit
(328,692,026)
(274,811,123)
Proceeds from/(investment in) short term deposit 37
96,462,663
(146,951,925)
Interest received from short term deposit 38
27,255,333
55,492,078
Net cash used in investing activities (b)
(448,500,964)
(663,595,912)
Cash flows from financing activities
Interest paid
33
(10,521,208)
(17,214,790)
Cash received /(paid) for long term loan 39
160,685,313
(38,831,040)
Cash paid to inter-company
-
(1,500,000)
Received from short term loan
30,000,000
-
Net cash from in financing activities (c)
180,164,105
(57,545,830)
Net increase/(decrease) in cash and cash equivalent (a+b+c)
(62,037,093)
(155,958,421)
Opening cash and cash equivalents
(131,794,399)
24,164,021
Closing cash and cash equivalents
(193,831,492)
(131,794,400)
Closing cash and cash equivalents represents:
Cash and bank balances
14
29,434,739
32,084,873
Bank overdraft
25
(223,266,232)
(163,879,273)
(193,831,493)
(131,794,400)
Net operating cash flow per share
1.37
3.74
Page: 459
1. Reporting enti ty
1.1 Company profi l e
1.2 Nature of business
1.3 Subsidiaries of the STS Holdings Limi ted
2 Basi s of preparation
2.1 Reporting framework and compl iance thereof
STS Hospi tal s Limi ted
STS Hospitals Limited is a private company limited by shares having its registered office in
Bangladesh. The company was incorporated under the Company Act XVIII of 1994 on 17
December 2006 vide incorporation No. # C- 64969(2461)/2006. The registered office of the
Company is located at STS Tower, Plot # 346/A & 347, Road 12, Block # D, Bashundhara R/A,
Dhaka-1229. The company is engaged in sophisticated hospitals, diagnostic centers, retail
pharmacy and other health care related business items required for the purpose of human life
benefited to mankind in various sectors.
STS Hospi tal Chi ttagong Limi ted
STS Hospital Chittagong Limited is a private company limited by share having its registered
office in Bangladesh. The Company was incorporated under the Company Act XVIII of 1994 on
20 April 2011 vide incorporation No. # C-92166/2011. The registered office of the company
is located at STS Tower, Plot # 346/A & 347, Road 12, Block # D, Bashundhara R/A, Dhaka-
1229. The objective of the company is to engage in sophisticated hospitals, diagnostic centers,
retail pharmacy and other chemical and pharmaceutical industries, produce and manufacturer
life saving drugs and medicine chemical and other health care related business items required
for the purpose of human life benefited to mankind in various sectors.
These consolidated financial statements have been prepared in accordance with Bangladesh
Financial Reporting Standards (BFRSs) as adopted by the Institute of Chartered Accountants of
Bangladesh (ICAB), the Companies Act, 1994 and other relevant local laws and regulations.
STS Holdings Limi ted
Notes to the consol idated financial s tatements
As at and for the s ix months period ended 30 June 2016
STS Holdings Limited (hereinafter referred to as the “Company” or "STSHL") is a public limited
company, formed initially as a private limited company under Companies Act, 1994 and
incorporated in Bangladesh in the year 1997 bearing registration no. C-33709(455)/97 dated
28 August 1997 and subsequently converted as a public limited company in February 2006.
The registered office as well as the corporate office of STSHL is situated at STS Tower, Plot #
Total as at 30 June 2016 ( i i ) 5,031,167,137 - - 91,553 5,031,075,583 221,606,627 11,142,835 91,553 232,657,909 4,798,417,675
Total as at 30 June 2016 ( i+i i ) 7,615,901,412 146,966,614 98,664,350 843,360 7,860,689,016 1,014,919,716 93,015,941 739,007 1,107,196,651 6,753,492,365
Total as at 31 December 2015 8,435,824,498 47,638,187 24,122,045 891,683,318 7,615,901,412 1,720,854,071 184,361,496 890,295,851 1,014,919,716 6,600,981,696
Net book value at
30 June 2016 Balance at
1 Jan 2016 Addi tion
Disposal/
adjustment
Balance at
30 June 2016
Balance at
1 Jan 2016
Charge for the
period
Disposal/
derecognize
Balance at
30 June 2016
RevaluationRate of
depreciation
Depreciation
Transfer from
CWIP
Category of Assets
Page: 472
4. Property, plant and equipment - 2015
(i) Cost
Amount in BDT.
(ii) Revaluation-2015
Amount in BDT.
Land and land development 345,206,580 - - - 345,206,580 - - - - - 345,206,580
Total as at 31 December 2015 3,293,783,858 47,638,187 24,122,045 780,809,815 2,584,734,275 1,414,197,007 158,538,429 779,422,348 793,313,089 1,791,421,187
Category of Assets
Cost Rate of
depreciation
Depreciation Net book value at
31 Dec 2015 Balance at
1 Jan 2015 Addi tion
Disposal/
adjustment
Balance at
31 Dec 2015
Balance at
1 Jan 2015
Charge for the
period
Disposal/
derecognize
Balance at
31 Dec 2015
Transfer from
CWIP
Land and land development 4,602,086,262 - - - 4,602,086,262 - - - - - 4,602,086,262
Total as at 31 December 2015 5,142,040,640 - - 110,873,503 5,031,167,137 306,657,064 25,823,067 110,873,503 221,606,627 4,809,560,509
Total as at 31 December 2015 ( i+i i ) 8,435,824,498 47,638,187 24,122,045 891,683,318 7,615,901,412 1,720,854,071 184,361,496 890,295,851 1,014,919,716 6,600,981,696
Net book value at
31 Dec 2015 Balance at
1 Jan 2015 Addi tion
Disposal/
adjustment
Balance at
31 Dec 2015
Balance at
1 Jan 2015
Charge for the
period
Disposal/
derecognize
Balance at
31 Dec 2015
Category of Assets
Revaluation Rate of
depreciation
Depreciation
Transfer from
CWIP
Page: 473
4 (a). Consolidated property, plant and equipment
(i) Cost Amount in BDT
Land and land development 345,206,580 - - - 345,206,580 - - - - - 345,206,580
Total as at 30 June 2016 (ii) 5,031,167,137 - - 91,553 5,031,075,583 221,606,627 11,142,835 91,553 232,657,909 4,798,417,675
Total as at 30 June 2016 (i+ii) 7,672,097,695 152,683,270 98,664,350 843,360 7,922,601,955 1,026,492,212 97,197,503 739,007 1,122,950,709 6,799,651,246
Total at 31 December 2015 8,488,195,927 51,463,042 24,122,045 891,683,319 7,672,097,695 1,724,649,068 192,138,997 890,295,852 1,026,492,212 6,645,605,483
Net book value
at
30 June 2016
Balance at
1 Jan 2016 Addition
Disposal/
adjustment
Balance at
30 June 2016
Balance at
1 Jan 2016
Charge for
the period
Disposal/
derecognize
Balance at
30 June 2016
Category of assets
RevaluationRate of
depreciation
Depreciation
Category of assets
Cost Rate of
depreciation
Depreciation
Net book value
at
30 June 2016
Balance at
1 Jan 2016 Addition
Disposal/
adjustment
Balance at
30 June 2016
Balance at
1 Jan 2016
Charge for
the period
Disposal/
derecognize
Balance at
30 June 2016
Transfer from
CWIP
Transfer from
CWIP
Page: 474
4 (a). Consolidated property, plant and equipment-2015
(i) Cost Amount in BDT
Land and land development 345,206,580 - - - 345,206,580 - - - - - 345,206,580
Total as at 31 December 2015 3,346,155,287 51,463,042 24,122,045 780,809,816 2,640,930,558 1,417,992,004 166,315,930 779,422,349 804,885,585 1,836,044,973
(ii) Revaluation
Land and land development 4,602,086,262 - - - 4,602,086,262 - - - - - 4,602,086,262
Total as at 31 December 2015 5,142,040,640 - - 110,873,503 5,031,167,137 306,657,064 25,823,067 110,873,503 221,606,627 4,809,560,509
Total as at 31 December 2015 (i+ii) 8,488,195,927 51,463,042 24,122,045 891,683,319 7,672,097,695 1,724,649,068 192,138,997 890,295,852 1,026,492,212 6,645,605,483
Net book value
at
31 Dec 2015
Balance at
1 Jan 2015 Addition
Disposal/
adjustment
Balance at
31 Dec 2015
Balance at
1 Jan 2015
Charge for
the period
Disposal/
derecognize
Balance at
31 Dec 2015
Revaluation Rate of
depreciation
Depreciation
Category of assets
Cost Rate of
depreciation
Depreciation
Transfer from
CWIP
Transfer from
CWIP
Net book value
at
31 Dec 2015
Balance at
1 Jan 2015 Addition
Disposal/
adjustment
Balance at
31 Dec 2015
Balance at
1 Jan 2015
Charge for
the period
Disposal/
derecognize
Balance at
31 Dec 2015
Category of assets
Page: 475
5 Intangible assets Amount in BDT
Category of assets Balance at
1 Jan 2016
Addition
during the
period
Disposal/
Adjustment
Balance at
30 June 2016
Rate of
amortization
Balance at
1 Jan 2016
Charge
during
the period
Disposal/
Derecognition
Balance at
30 June 2016
Net book value
at
30 June 2016
HIS software 12,462,481 12,462,481 20% 5,691,525 1,246,248 6,937,773 5,524,708
Other software 7,472,087 7,472,087 20% 3,125,675 747,209 3,872,884 3,599,203
Total as at 30 June 2016 19,934,568 - - 19,934,568 8,817,200 1,993,457 - 10,810,657 9,123,911
Total as at 31 December 2015 20,205,222 3,539,210 3,809,865 19,934,568 8,745,270 3,881,795 3,809,865 8,817,200 11,117,368
STS HOSPITALS LIMITED We have audited the accompanying financial statements of STS HOSPITALS LIMITED (“ the Company”) which comprise the statement of financial position as at 30 June 2016 and related statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended and a summery of significant accounting policies and other explanatory notes thereon. Management‟s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud and error. Auditors‟ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 and error. In making those risk assessments, we consider 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 our audit evidence we have obtained is sufficient & appropriate to provide a basis for our opinion. Opinion In our opinion, the financial statements, prepared in accordance with Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards, give a true and fair view of the state of the company‟s affairs as at 30 June 2016 and of the results of its operations and cash flows for the year then ended and comply with the Companies Act.1994, and other applicable laws and regulations. We also report that: We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof. In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of these books. The statement of the financial position and statement of comprehensive income dealt with by the report are in agreement with the books of accounts. The expenditure incurred was for the purpose of the Company‟s business. Sd/- Place: Dhaka Azad Abul Kalam & Co. Dated: 25.09.2016 Chartered Accountants
Page: 501
The accompanying notes from 1 to 20 form an integral part of these financial statements Sd/- Sd/- Sd/- B. R. Sikder Mohammad A. Moyeen Khondokar Monir Uddin Company Secretary Director Managing Director
Signed in terms of our report of even date Sd/- Azad Abul Kalam & Co. Chartered Accountants
31-Dec-15
ASSETS
Non-current assets 47,737,403 51,268,146
Property, plant and equipment 4 46,158,880 44,623,785
Capital work-in-progress 6 - 4,831,363
Intangible asset 5 1,578,523 1,812,999
Current assets 11,453,748 12,690,232
Inventories 7 8,732,666 10,374,854
Trade receivables 8 410,293 155,399
Advances, deposits and prepayments 9 118,130 134,670
Cash and cash equivalents 10 2,192,659 2,025,309
Total assets 59,191,151 63,958,378
EQUITY AND LIABILITIES
Owners' equity (57,540,675) (43,032,366)
Ordinary share capital 11.1 10,110,000 10,110,000
Retained earnings (67,650,675) (53,142,366)
Share money deposit 13 112,008,652 101,316,627
Total equity 54,467,977 58,284,261
Current liabilities 4,723,174 5,674,117
Trade payables 12 4,407,913 5,535,393
Current tax liabilities 14 315,261 138,725
Total liabilities 4,723,174 5,674,117
Total equity and liabilities 59,191,151 63,958,378
Statement of Financial Position
ParticularsAmount in BDT
30-Jun-16
STS Hospitals Limited
As at 30 June 2016
Note
Page: 502
The accompanying notes from 1 to 20 form an integral part of these financial statements Sd/- Sd/- Sd/- B. R. Sikder Mohammad A. Moyeen Khondokar Monir Uddin Company Secretary Director Managing Director
Signed in terms of our report of even date Sd/- Azad Abul Kalam & Co. Chartered Accountants
Jan to June
2016
Jan to Dec
2015
Revenue 15 29,403,366 38,459,922
Direct operating expenses 16 (20,706,790) (25,916,248)
8,696,576 12,543,674
Other operating expenses 17 (23,047,754) (39,615,730)
Profit from operations (14,351,178) (27,072,056)
Finance cost 18 - (6,834,074)
Other income 19 19,406 83,581
(14,331,773) (33,822,549)
Income tax expenses (176,537) (115,631)
(14,508,309) (33,938,180)
Other comprehensive income - -
Total comprehensive income (14,508,309) (33,938,180)
Gross profit
Net profit before tax
STS Hospitals Limited
Amount in BDT
Particulars
For the six months period ended 30 June 2016
Net profit after tax
Note
Statement of Profit or Loss and Other Comprehensive Income
Page: 503
Share money
deposit
Balance as on 1 January 2015 10,110,000 68,621,735 (19,204,186) 59,527,549
Ordinary share issue - - -
Share money deposit - 32,694,892 - 32,694,892
Profit for the year ended 31 December 2015 - (33,938,180) (33,938,180)
Balance as on 31 December 2015 10,110,000 101,316,627 (53,142,366) 58,284,261
Ordinary share issue - - - -
Profit for the period Jan to Jun 2016 - - (14,508,309) (14,508,309)
Share money deposit - 10,692,025 - 10,692,025
Balance as on 30 June 2016 10,110,000 112,008,652 (67,650,675) 54,467,977
The accompanying notes from 1 to 20 form an integral part of these financial statements
STS Hospitals Limited
Statement of Changes in Equity
For the six months period ended 30 June 2016
Ordinary
share capital
Retained
earnings Total equityParticulars
Page: 504
1. Reporting entity
1.1 Company profile
1.2 Nature of business
2. Basis of preparation
2.1 Statement of compliance
2.2 Basis of measurement
2.3 Functional and presentational currency and level of precision
2.4 Use of estimates and judgements
Note 7: Inventory valuation
Note 12: Expenses, creditors and accruals
The preparation of financial statements requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. The estimates and the associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the
circumstances the result of which form the basis of making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.
These financial statements have been prepared on going concern basis in accordance with the
applicable Bangladesh Financial Reporting Standard (BFRS), the Companies Act 1994, and other
applicable laws and regulations.
STS Hospitals Limited
Notes to the Financial Statements
As at and for the six months period ended 30 June 2016
STS HOSPITALS LIMITED is a private Company limited by shares having its registered
office in Bangladesh. The Company was incorporated under the Companies Act, 1994 on 17th
December 2006 vide incorporation no. C - 64969(2461)/2006. The registered office of the
Company is located at Plot-346/A, 347, Block-D, Road-12, Bashundhara R/A, Dhaka-1229,
Bangladesh.
The Company is engaged in primary health care facilities covering outdoor patient services,
diagnostic services, retail pharmacy and other health care related services required for the
purpose of human life.
These financial statements are presented in Bangladesh Taka (Taka/Tk.) except where indicated
otherwise, which is both functional currency and presentation currency of the Company. The
figures of financial statements have been rounded off to the nearest taka.
These financial statements have been prepared on going concern basis under historical cost
convention.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only
that period or in the period of revision and future periods if the revision affects both current and
future periods.
In particular, information about significant areas of estimation and judgments in applying
accounting policies that have most significant effect on the amount recognized in the financial
statements are described in the following notes:
Page: 505
2.5 Going concern
2.6 Accrual basis of accounting
2.7 Reporting period
2.8 Comparative information and rearrangement thereof
2.9 Date of authorization for issue
3 Significant accounting policies
3.1 Foreign currency
3.2 Property, plant and equipment
These financial statements were authorized for issue by the Board of Directors on 25 September
Foreign currencies are translated into Taka at the rates ruling on the transaction dates. Monetary
assets and liabilities are reconverted at the rates prevailing at the balance sheet date. Non-
monetary assets and liabilities are reported using the exchange rate at the date of respective
transactions. Difference arising on conversion are charged or credited to income statement.
The fixed asset of the company shown under "Property, Plant and Equipment" as per BAS 16:
Property, plant and equipment is recorded at historical cost. Historical cost includes its
purchase price and any directly attributed cost of bringing the asset to its working condition for its
intended use inclusive of inward freight, duties, non-refundable taxes and (a) the cost of site
preparation; (b) initial delivery and handling costs; (c) installation costs; (d) professional fees such
as for architects and engineers; and (e) the estimated cost of dismantling and removing the asset
and restoring the site, to the extent applicable in line with the provisions under BAS 37:
Provisions, Contingent Liabilities and Contingent Assets .
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 entity and the cost of the item can be measured reliably. All other repairs and
maintenance costs are charged to the income statement during the financial period in which they
are incurred.
The accounting policies and methods of computation used in preparation of these financial
statements have been applied consistently to all periods presented in these financial statements.
Comparative figures have been re-arranged wherever considered necessary to ensure better
comparability with the current period without causing any impact on the profit and value of assets
and liabilities as reported in the financial statements.
The financial period of the Company covers six months from 1 January 2016 to 30 June 2016.
The accompanying financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in the normal course of
business. The accompanying financial statements do not include any adjustments, should the
company be unable to continue as a going concern.
These financial statements have been prepared on an accrual basis of accounting, except for
cash flow information. The items of assets, liabilities, equity, income and expenses (the elements
of financial statements) have been recognized when they satisfy the definitions and recognition
criteria applicable for these elements as mentioned in the Framework.
Page: 506
3.2.1 Depreciation
Computer & IT equipment 20%
Furniture and fixture 10%
Medical and surgical equipment 10%
Office equipment 15%
Housekeeping equipment 20%
Air conditioning plant and air conditioners 10%
Electrical installations, generators, boiler, elevator etc. 10%
3.3 Intangibles
3.3.1 Amortization
3.4 Inventories
3.5 Cash and cash equivalents
Rate of dep.
Intangible assets that are acquired by the Company and have finite useful lives are measured at
cost less accumulated amortization and accumulated impairment loss, if any. Intangible assets are
recognized when all the conditions for recognition as per IAS/BAS 38: Intangible Assets are
met. The cost of an intangible assets comprises its purchase price, import duties and non-
refundable taxes and any directly attributable cost of preparing the asset for its intended use.
Amortization is calculated to write off the cost of intangible assets less their estimated residual
values using the straight-line method over their estimated lives, and is generally recognized in
profit or loss.
The annual rate of amortization is 20%.
Inventories comprise consumables, medicine, materials, linens, printing & stationery etc.
Inventories are stated at the lower of cost and net realizable value in accordance with BAS 2:
Inventories after making due allowances for any obsolete or slow moving items.
The cost is determined using the first-in, first-out (FIFO) method consistently. The cost of
inventories comprises expenditure incurred in the normal course of business in bringing such
inventories to their present location and condition. Net realizable value is based on estimated
selling price less VAT in the ordinary course of business less any further costs expected to be
incurred to make the sale (applicable variable selling expenses).
These comprises cash in hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts, if any.
Depreciation is commenced when the asset is in the location and condition necessary for it to be
capable of operating in the manner intended. Property plant and equipment of the Company are
depreciated using straight line method whereby there is a constant charge each year, on the
assumption that equal amounts of economic benefits are consumed in each year of the assets
lives. Each significant part of an item of property, plant & equipment is depreciated separately,
using its useful life. Depreciation is charged on additions to fixed assets from the month of
capitalization and no depreciation is provided from the month of retirement. Depreciation method,
useful lives and residual values are reviewed at each year-end and adjusted if appropriate. The
annual depreciation rates applicable to different category of assets are:
Category of assets
Page: 507
3.6 Revenue recognition
Revenue in the hospital is recognized as follows
3.7 Provision, accruals, and contingencies
a. Provisions
Provisions are recognized when the Company has a present obligation as a result of a past event
and it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, and a reliable estimate can be made of the amount of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best
estimate. If a transfer of economic benefit is no longer probable the provision should be reversed.
Where the effect of the time value of money is material, the amount of a provision is the present
value of the expenditure required to settle the obligation.
(ii) In case of pharmacy, when medicines are delivered from the pharmacy counter.
(i) In case of OPD services, as and when invoices are issued.
b.
c.
3.8 Taxation
3.8.1 Current tax
3.9 Cash flow statement
3.10 Events after the reporting date
Income tax expense comprises current tax. Income tax expense is recognized in the income
statement except to the extent that it relates to items recognized directly in equity, in which case
it is recognized in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantially enacted at the reporting date and any adjustment to the tax payable in
respect of previous years. Provision for current income tax has been made on the taxable
income/gross receipts of the company as prescribed in the Income Tax Ordinance, 1984 and
Finance Act, 2016.
A contingent asset is a possible asset that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company.
Accruals
Accruals are liabilities to pay for goods or services that have been received or supplied but have
not been paid, invoiced or formally agreed with the supplier, including amount due to employees.
Contingent liabilities and assets are not recognized in the statement of financial position of the
Company.
Contingencies
Cash flow statement is prepared principally in accordance with BAS 7: Statement of Cash
Flows and the cash flow from the operating activities has been presented under the direct
method.
Events after the reporting date that provide additional information about the company's position at
the date of statement of financial position are reflected in the financial statements. Events after
the reporting period date that are non adjusting events are disclosed in the notes when material.
A contingent liability is a possible obligation that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Company; or a present obligation that arises from past events
but is not recognized because it is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or the amount of the obligation cannot be
measured with sufficient reliability.
Page: 508
4. Property, plant and equipment Amount in BDT
Balance Balance Balance Balance
as on as on as on as on as on
01 Jan. '16 30 June '16 01 Jan. '16 30 June '16 30 June '16
Computer and IT equipment 5,711,145 - 5,711,145 20% 1,859,480 572,541 2,432,021 3,279,124
11.1.2 Composition of shareholdings as on 30 June 2016 was under
No. of
Shareholders
In
percentage
Sponsors (Individual) 3 10,000 0.99%
Sponsors (Institution) 2 1,001,000 99.01%
5 1,011,000 100%
11.1.3 Classification of shareholders by holding
30-Jun-16 31-Dec-15 30-Jun-16 31-Dec-15
Less than 500 shares - - - -
500 to 5000 shares 3 3 0.45% 0.45%
5001 to 10000 shares 1 1 0.64% 0.64%
10001 to 20000 shares - - - -
20001 to 30000 shares - - - -
30001 to 40000 shares - - - -
40001 to 50000 shares - - - -
50001 to 100000 shares - - - -
100001 to 1000000 shares 1 1 98.91% 98.91%
Over 1000000 shares - - - -
5 5 100% 100%
Amount in BDT
30-Jun-16
Total shareholding (%)Number of shareholders
No. of
Shares
Name of shareholders% of shareholdings Share Value
*STS Educational Group Ltd was renamed as STS Capital Limited (effective from 20
January 2016).
Page: 512
31-Dec-15
12. Trade payables
Payable to suppliers 1,356,710 2,132,741
Liabilities for expenses (Note 12.1) 3,038,082 3,402,652
Sundry creditors 13,121 -
4,407,913 5,535,393
12.1 Liabilities for expenses
Contractors 1,213,745 898,299
Withheld tax payable 856,791 505,392
VAT payable 217,778 194,961
Audit fees payable 23,000 34,500
Accrual for consultants' fees 642,865 760,157
Accrued expenses 83,903 1,009,343
3,038,082 3,402,652
13. Share money deposit
STS Holdings Limited 111,908,652 101,216,627
Others 100,000 100,000
112,008,652 101,316,627
14. Current tax liabilities
Opening balance 138,725 23,094
Provision for the period/year 176,537 115,631
315,261 138,725
In terms of management decision, the investment made so far by STS Holdings Limited
towards STS Hospitals Limited kept in Current Account with STS Holdings Limited has
been transferred to share Money Deposit Account for issue of shares in due course
subject to prior permission of the proper authority(s) if any.
Amount in BDT
30-Jun-16
Page: 513
Note
6 Months
period ended
30 June '16
Year ended
2015
15. Revenue
Revenue from health care services 30,799,576 39,643,225
Less: Discounts 15.1 1,396,210 1,183,303
29,403,366 38,459,922
15.1
16. Direct operating expenses
Hospital supplies 4,393,032 4,854,117
Medicine 5,909,055 9,203,263
Consultants fees 3,722,884 6,558,631
Out sourced test expenses* 5,605,326 3,360,295
Other direct expenses 1,076,493 1,939,942
20,706,790 25,916,248
17. Other operating expenses
General and administrative expenses 17.1 17,139,736 29,018,689
Marketing expenses 17.2 1,491,981 2,350,588
Depreciation 17.3 4,416,037 8,246,453
23,047,754 39,615,730
17.1 General and administrative expenses
Salary and allowances 17.1.1 8,005,938 13,904,576
Repair and maintenance 41,820 272,729
Printing and stationery 17.1.2 453,364 679,814
Rent and other expenses 17.1.3 7,665,237 12,826,261
Other administration expenses 17.1.4 381,005 410,410
Communication 17.1.5 103,830 309,235
Traveling 17.1.6 161,385 199,778
Legal and other professional fees 17.1.7 156,335 118,000
License and registration fees 92,904 155,763
Insurance 17.1.8 77,918 142,123
17,139,736 29,018,689
17.1.1 Salary and allowances
Salary and allowances 7,252,591 12,820,275
Festival bonus 375,000 571,059
Overtime 165,965 104,291
Part time and casual staff 212,382 408,951
8,005,938 13,904,576
Discounts are allowed to corporate clients, company staffs and to poor patients.
Amount in BDT
Out sourced test expenses includes amounting to Taka 5,329,856 related with inter-
company transactions.
Page: 514
6 Months
period ended
30 June '16
Year ended
2015
17.1.2 Printing and stationery
Printing, stationery and computer accessories 429,595 638,438
Office supplies 18,459 31,056
Newspaper and periodicals 5,310 10,320
453,364 679,814
17.1.3 Rent and other expenses
House rent expenses 7,277,212 12,224,364
Security services 255,990 512,294
Service charge and utilities 20,968 89,603
Repair and Furnishing expenses 111,067 -
7,665,237 12,826,261
17.1.4 Other administration expenses
Entertainment 223,850 86,946
Cleaning expenses 42,960 75,000
Office expenses 50,410 128,873
Bank charges 63,784 119,591
381,005 410,410
17.1.5 Communication
Mobile phone costs 33,523 60,926
Internet usage subscription 53,910 166,706
Telephone expenses 12,237 66,797
Cable network 2,070 4,140
Courier services 2,090 10,666
103,830 309,235
17.1.6 Traveling
Local 161,385 199,778
161,385 199,778
17.1.7 Legal and other professional fees
Legal and other fees 133,335 80,500
Audit fee 23,000 37,500
156,335 118,000
17.1.8 Insurance
General insurance 52,226 94,955
Group life insurance 25,692 47,168
77,918 142,123
Amount in BDT
Page: 515
20. Related party disclosure
Name of related partyNature of
relationship
Nature of
transaction
Transactions
value in
Taka
Outstanding
balance in
Taka
Terms and
conditions
STS Holdings LimitedParent
company
Share money
deposit10,692,026 111,908,653
Mutual
understanding
STS Holdings LimitedParent
companyPurchase 5,329,856 786,719
Mutual
understanding
STS Holdings LimitedParent
company
Share money
deposit98,532,173 101,216,627
Mutual
understanding
STS Holdings LimitedParent
companyPurchase 3,079,167 681,261
Mutual
understanding
During the year the Company carried out a number of transactions with related parties in the normal
course of business at arms' length basis. Names of those related parties, nature of those transactions
and their total value have been set out in accordance with the provisions of BAS 24: Related Party
Disclosures .
As at year ended 31 December 2015
As at period Jan to June 2016
Page: 516
AUDITORS‟ REPORT To the Shareholders of
STS HOSPITAL CHITTAGONG LIMITED
We have audited the accompanying financial statements of STS HOSPITAL CHITTAGONG LIMITED (“the Company”) which comprises the statement of financial position as at 30th June, 2016 and related statement of changes in equity, statement of cash flows for the Period then ended and a summary of significant accounting policies and other explanatory notes thereon. Management‟s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud and error.
Auditors‟ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 and error. In making those risk assessments, we consider 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 our audit evidence we have obtained is sufficient & appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements, prepared in accordance with Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards, give a true and fair view of the state of the company‟s affairs as at 30th June, 2016 and cash flows for the period then ended and comply with the Companies Act.1994, and other applicable laws and regulations. We also report that:
We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof. In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of these books. The statement of the financial position and other financial statements dealt with by the report are in agreement with the books of accounts. The Hospital Project is under construction and yet to start commercial operation. Sd/- Place: Dhaka Azad Abul Kalam & Co. Dated: 25.09.2016 Chartered Accountants
Page: 517
The accompanying notes from 1 to 16 form an integral part of these financial statements Sd/- Sd/- Sd/- B. R. Sikder Mohammad A. Moyeen Khondokar Monir Uddin Company Secretary Director Managing Director
Signed in terms of our report of even date Sd/- Azad Abul Kalam & Co. Chartered Accountants
30-Jun-16 31-Dec-15
ASSETS
Non current assets
Capital work-in-progress 4 705,388,311 515,220,793
Current assets 199,007,422 84,818,337
Investments in short-term deposits 5 79,000,000 79,000,000
Interest receivable 6 5,473,541 1,712,623
Advances, deposits and prepayments 7 100,513,530 3,513,530
Cash and cash equivalents 8 14,020,351 592,184
904,395,733 600,039,130
EQUITY AND LIABILITIES
Owners' equity 98,000,000 98,000,000
Ordinary share capital 9.1 98,000,000 98,000,000
Share money deposit 10 802,112,898 484,112,898
Retained earnings 11 1,988,700 1,113,205
Total equity 902,101,598 583,226,103
Current liabilities 2,294,135 16,813,027
Trade payables 12 1,223,296 16,213,609
Income tax provision 13 1,070,839 599,418
2,294,135 16,813,027
904,395,733 600,039,130
Total liabilities
Total equity and liabilities
Total assets
Amount in BDT
STS Hospital Chittagong Limited
Statement of Financial Position
As at 30 June 2016
Note
Page: 518
The accompanying notes from 1 to 16 form an integral part of these financial statements Sd/- Sd/- Sd/- B. R. Sikder Mohammad A. Moyeen Khondokar Monir Uddin Company Secretary Director Managing Director
Signed in terms of our report of even date Sd/- Azad Abul Kalam & Co. Chartered Accountants
Jan to June 2016 Jan to Dec
2015
Revenue - -
Operating expenses - -
Profit from operations - -
Pre-operating general & administrative expenses14 (2,414,002) -
(2,414,002) -
Non operating income 15 3,760,918 1,712,623
1,346,916 1,712,623
Income tax (471,421) (599,418)
875,495 1,113,205
Other comprehensive income - -
Net non operating income 875,495 1,113,205
STS Hospital Chittagong Limited
Amount in BDT
Particulars Note
For the six months period ended 30 June 2016
Statement of Profit or Loss and Other Comprehensive Income
Profit/(loss) after tax
Profit before tax
Page: 519
Amount in BDT
Balance as on 1 January 2015 1,000,000 241,996,666 - 242,996,666
Issue of share capital 97,000,000 - - 97,000,000
Share money deposit - 242,116,232 - 242,116,232
Non operating profit for the year - - 1,113,205 1,113,205
Balance as on 31 December 2015 98,000,000 484,112,898 1,113,205 583,226,103
Issue of share capital - - - -
Share money deposit - 318,000,000 - 318,000,000
Non operating profit for the period Jan to Jun'16 - - 875,495 875,495
98,000,000 802,112,898 1,988,700 902,101,598
The annex notes 1-16 form an integral part of these financial statements
STS Hospital Chittagong Limited
Statement of Changes in Equity
Ordinary
share capitalTotal equity
Share money
deposit
Retained
earnings
For the six months period ended 30 June 2016
Particulars
Page: 520
Jan to June
2016
Jan to Dec
2015
Cash flows from operating activities
Payment for pre-operating general & administrative exp. (2,383,502) -
Net cash used in pre-operating activities (2,383,502) -
Cash flows from investing activities
Investments in short-term deposit - (79,000,000)
Payment for acquisition of land (97,000,000) -
Payment for capital work-in-progress (205,188,331) (260,520,833)
Net cash used in investing activities (302,188,331) (339,520,833)
Cash flows from financing activities
Share money deposit 318,000,000 242,116,232
Issue of share capital - 97,000,000
Net cash from financing activities 318,000,000 339,116,232
Net increase/(decrease) in cash and cash equivalents 13,428,167 (404,601)
Opening cash and cash equivalents 592,184 996,785
Closing cash and cash equivalents 14,020,351 592,184
The annex notes 1-16 form an integral part of these financial statements
For the six months period ended 30 June 2016
STS Hospital Chittagong Limited
Statement of Cash Flows
Amount in BDT
Page: 521
1. Reporting entity
1.1 Company profile
1.2 Nature of business
2. Basis of preparation
2.1 Statement of compliance
2.2 Basis of measurement
2.3 Functional and presentational currency and level of precision
2.4 Reporting period
2.5 Comparative information and rearrangement thereof
2.6 Going concern
STS Hospital Chittagong Limited
Notes to the Financial Statements
As at and for the six months period ended 30 June 2016
STS Hospital Chittagong Limited is a private Company limited by shares having its
registered office in Bangladesh. The Company was incorporated under the Companies
Act of 1994 on 20th April 2011 vide incorporation no. C - 92166/2011. The
registered office of the Company is located at Plot-346/A, 347, Block-D, Road-12,
Bashundhara R/A, Dhaka-1229, Bangladesh.
These financial statements have been prepared on going concern basis in accordance
with the applicable Bangladesh Financial Reporting Standard (BFRS), the Companies
Act 1994, and other applicable laws and regulations.
The Company has been formed with the object of setting up of an international
standard super specialty tertiary care hospital named Apollo Hospitals Chittagong
(AHC) with the franchise and assistance of Apollo Hospitals Enterprises Limited, India.
By virtue of operations and management agreement, Apollo Hospitals Chittagong
(AHC) will use technical services of Apollo Hospitals Enterprises Limited, India for
operating this international standard super specialty hospital. Apollo Hospitals
Chittagong is located at plot no. H-1, Ananya Residential Area of Chittagong
Development Authority (CDA), Chittagong. The hospital project is expected to be
completed and come to operation by the end of the year 2018.
These financial statements have been prepared on going concern basis under historical
cost convention.
The accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. The accompanying financial statements do not include any
adjustments, should the company be unable to continue as a going concern.
These financial statements are presented in Bangladesh Taka (Taka/Tk.) except where
indicated otherwise, which is both functional currency and presentation currency of
the Company. The figures of financial statements have been rounded off to the nearest
taka.
The financial statements of the Company have been prepared for the period from 01
January 2016 to 30 June 2016.
Comparative figures have been re-arranged and restated wherever considered
necessary to ensure better comparability with the current period. Comparative
information of non operating income (Note #15) has been changed owing to
recognition of prior year non operating interest income.
Page: 522
2.7 Accrual basis of accounting
2.8 Date of authorization for issue
3 Significant accounting policies
3.1 Capital work-in-progress
3.2 Cash and cash equivalents
3.3 Foreign currency
3.4 Provisions, contingent liabilities and contingent assets
3.4.1 Contingent liabilities and contingent assets
3.4.2 Provision
3.5 Taxation
3.6 Cash flow statement
These comprise cash in hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown in current liabilities on the statement of
financial position.
These financial statements have been prepared on an accrual basis of accounting,
except for cash flow information. The items of assets, liabilities, equity, income and
expenses (the elements of financial statements) have been recognized when they
satisfy the definitions and recognition criteria applicable for these elements as
mentioned in the Framework.
Capital work-in-progress represents the cost incurred for acquisition and / or
construction of items of property, plant and equipment that were not ready for use at
the end of 30 June 2016 and these are stated at cost.
Income tax expense comprises current tax. Income tax expense is recognized in the
income statement.
Foreign currencies are translated into Taka at the rates ruling on the transaction dates.
Monetary assets and liabilities are reconverted at the rates prevailing at the balance
sheet date. Non-monetary assets and liabilities are reported using the exchange rate at
the date of respective transactions. Difference arising on conversion are charged or
credited to income statement.
The accounting policies and methods of computation used in preparation of these
financial statements have been applied consistently to all periods presented in these
financial statements.
These financial statements were authorized for issue by the Board of Directors on 25
September 2016.
Contingent liabilities are not provided for unless a reliable estimate of probable
amount payable as at the statement of financial position date can be made. There are
no existing contingent assets as at the date of statement of financial position of the
Company.
Cash flow statement is prepared principally in accordance with BAS 7: Statement of
Cash Flows, under direct method.
Provisions are recognized when the Company has a present obligation as a result of a
past event and it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.
Page: 523
30-Jun-16 31-Dec-15
4 Capital work-in-progress
Civil work
Rebar and bricks 81,822,754 43,757,618
Ready mix and cement 143,385,259 135,231,412
Piling and labor 174,681,594 127,731,709
Electric works and tiles 1,588,620 -
401,478,227 306,720,739
Architectural and technical fees 92,263,033 79,729,705
Other cost associate with construction 211,647,051 128,770,349
705,388,311 515,220,793
5 Investments in short-term deposits
Opening balance 79,000,000 -
Addition during the period - 79,000,000
79,000,000 79,000,000
Name of Company FDR no.Interest
rate
Maturity
date
Principal
amount
United Finance Limited 6760132786 9.50% 13 October '16 64,000,000
Lanka Bangla Finance 000921200000189 9.75% 23 December '16 15,000,000
79,000,000
6 Interest receivable
Opening balance 1,712,623 -
Interest receivable on short-term deposits 3,760,918 1,712,623
5,473,541 1,712,623
Details of interest receivable as on 30 June 2016 are as follows:
Name of Company FDR no.Interest
rate
Maturity
date
Interest
receivable
amount
United Finance Limited 6760132786 9.50% 13 October '16 4,347,616
Lanka Bangla Finance 000921200000189 9.75% 23 December '16 1,125,925
5,473,541
7 Advances, deposits and prepayments
Advances
Advance to STS Holdings Limited for land acquisition 97,000,000 -
Advance to Chittagong Development Authority (CDA) 3,513,530 3,513,530
100,513,530 3,513,530
Amount in BDT
Details of short-term deposits as on 30 June 2016 are as follows:
Page: 524
7.1 Disclosures as per Schedule -XI, Part-I, of the Companies Act, 1994
Advance, deposit and pre-payments exceeding 6 months 3,513,530 3,513,530
Advance, deposit and pre-payments less than 6 months 97,000,000 -
100,513,530 3,513,530
- -
3,513,530 3,513,530
- -
- -
97,000,000 -
- -
100,513,530 3,513,530
Advance, deposit and pre-payments considered good and
secured
Advance, deposit and pre-payments considered good without
security
Advance, deposit and pre-payments considered doubtful and
bad
Advance, deposit and pre-payments due by Directors or other
officers
Advance, deposit and pre-payments due from companies from
same management
Maximum advance, deposits and pre-payments due by Directors
or other officers at any time
8 Cash and cash equivalents
Cash at Bank Pubali Bank-3677901025374 14,000,351 592,184
Cash in hand 20,000 -
14,020,351 592,184
9 Share capital Authorized:
Authorized
100,000,000 ordinary shares of Tk. 10 each 1,000,000,000 1,000,000,000