1 

3rd Quarter Report 2013 30th October 2013 

 

 2 

Milestones ………………………………………………………………………………....3

CSR ………………………………………………………………………………….4

Business Development ………………………………………………………………...…..5

Promotions & Events ……… ..……………………………………………………....….6

Sponsors ……… ..………………………………..……………………………....….7

Human Resources ……………………………………………………………………..…...8

STORC Events ………………………………………………………………………...…..…..9

Board Meetings ……………………………………………………………………..…10

Committee Meetings ………………………………………………………………….....13

Corporate Governance Compliance ………………………………………………………..15

Share Information …………………………………………………………………………20

Income Statement ………………………………………………………………………...21

Balance Sheet ………………………………………………………………………...22

Cash flow Statement …………………………………………………………………..23

Declaration ……………………………………………………………………………...24

Contents

 

 3 

milestones

Extra-Ordinary General

Meeting

An Extra-ordinary General Meeting (EGM)

was held on 18th July 2013, to revalidate

voting on all motions passed at the Annual

General Meeting (AGM) as there were er-

rors identified in the proxy acceptance and

voting process at AGM.

Staff concern reporting fa-

cility

A staff concern reporting facility was imple-

mented on 29th July 2013, for all staff to

facilitate them raise their concerns and issues

related to work and the work environment.

This facility is directly received by the Manag-

ing Directors Bureau.

Management risk assessment

committee

A Management Risk Assessment Committee of

the Board and Management was formed re-

spectively, with the aim to identify, assess, pri-

oritize, monitor and manage risk management

infrastructure and necessary policies and guide-

lines within the Company. September 2013

Fuvahmulah airport Runway

lighting & Landing aid pro-

ject

The runway lighting & landing aid project was

inaugurated at Gn. Fuvahmulah Airport on 19th

August 2013. The project was inaugurated by

H.E.P Dr. Mohamed Waheed Hassan.  

 

 4 

Corporate social responsibility

Kuda Kudhinge Hiyaa

STO continued funding of its commitment to the

Kudakudhinge Hiyaa Orphanage by providing salaries and

allowances ‘in kind’ to one of the childcare staff for a period of

one year from June 2013.

Thalassemia Conference

STO showed its support towards creating awareness about

thalassemia by funding a staff, who is a patient himself, to

participate in the 2013 International Thalassemia Patients’

Conference in Abu Dhabi.

 

 

Memberships (Maldivian Red Crescent)

STO supported delivering humanitarian services to the most

vulnerable by maintaining its corporate membership with Mal-

divian Red Crescent. By doing so, STO will be indirectly as-

sisting in Health and Social care, Youth, and Organizational

Development activities.

 

 5 

Project

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Current Status Project Start date

E. Project

End date

1 Radisson Blu - Hulhumale'

M&E works mobilization ongoing by Genysys Engineers

Co. Ltd. Architectural works awarded to Genysys Engi-

neers Co. ltd. and Interior fit out works awarded to Kanok

Furniture & Decoration Co. Ltd.

June 2007

(initially started)

October 2011

(structural Works)

Dec-14

2 Proposed 10 storey Building at

Umar Shopping Arcade

Construction works awarded to Amin Construction. Lease

Agreement and Deed of Assignment signed between STO

Plc and Allied Insurance on 03rd October 2013.

2009 NA

3 Construction of Wharfs at Thil-

afushi Tender Evaluation Ongoing. Dec-09 NA

4 Relocation of Rice Godown from

S.Gan to S.Hithadhoo

Project on hold ( Due to unavailability of sand for Backfill-

ing ) Jun-11 NA

5 Home improvement Interior ren-

ovation Project Construction works ongoing. NA Oct-13

6 Relocation of South DC to S.

Hithadhoo

Details design works ongoing by project Consultants

AXEN Pvt Ltd. NA NA

7

Real Estate Project - Develop-

ment of STO Block-393 and

STO Block-345

Tenders Received from interested parties for possible

Real Estate Development at STO Block-393 and STO

Block-345. Tender Evaluation ongoing.

NA NA

Business development

 

 6 

Promotions and events

Over 15 different promotional events were held during this

quarter to promote STO brands.

The main objective of these promotions and events was to

promote and provide quality products at affordable prices to

our customers across the nation.

Some of the promotions and events held include;

1. Philips Yo! Roadha Promotion

2. Philips beauty billboard at Maldive Gas Pvt Ltd

3. STO VeshiFahi Promotion

4. Advertisement Boards at Football ground

5. Like, Share and Win promotions on facebook

6. Hitachi toaster for Hitachi air purifier purchase

7. Hitachi Hadacrie Cool Promotion

8. Hitachi Eyelash Curler free for Hitachi Hadacrie purchase

9. STO Home Improvement Bashi Tournament, Facebook

like and win Promotion

10. Maxell Promotions

11. Devondale Promotions

12. Tastings

13. Kruger Eid Offer & other promotions

14. Site Visits

The Company appreciates and thanks the customers for their

continuous support towards STO’s products, promotions and

events.

 

 

 

 7 

Sponsors

Similarly, Our major brands have sponsored various events

across the country. Most sponsors were provided by Hitachi

and Almudhish this quarter. Some of the sponsors given in-

clude;

Hitachi Almudhish Others

1. Teachers Futsal Tournament

2. Raajeyge Emme Aligadha Thari Pro-

gramme on TVM

3. Wathaniyya Mas Reys

4. Sponsor on Medianet

5. Sun Front Miracle Promotion—1st Prize

6. Police Club Men and Women Team

7. Maldives National Mens Volleyball Team

8. Dhivehinge Fannu by Asaree Services

9. 10 Eid Baibala teams

10. STO North DC Warehouse Mas Race

team

11. Ha. Atoll School English Week

12. LJ Associates Cancer book

13. Eid Baibala Competition Co-Sponsor

14. Inter-house Futsal Cup of CHSC

15. Dhivehi Sifainge Club by Nippon

16. BDC Camp by Makita

 

 8 

Human resources

Staff

 

In house trainings / local short train-

ings

Fire training – 3 staff

Finance for Non-finance Managers / Acuity Quest –

4 staff

Business English course / Focus Education Centre –

67 staff

scholarships 2013 (local courses)

Bachelor of Business Administration / Clique College –

3 staffs

Certificate III in Purchasing and Supply Chain Manage-

ment / IIPD – 1 staff

Masters of Business Administration / Villa College –

1 staff

ACCA Profession Level P2 / Villa College – 1 staff

Certificate III in office skills / Focus Education Centre – 3

staffs

Diploma in Office Practice and Management / Focus Educa-tion Centre – 1 staff  

 Short term overseas courses

Philips Training School Export

Strategic Inventory Management, planning and Control

Basic Course introduction to Insurance

Makita OPE and new tools product hands on training

IIA Malaysia National Conference on Internal Auditing

Successful Planning and Control 

Local Foreign Total

No. of staff at the beginning of

July 2013

1,018 206 1,224

No. of staff employed during July

-Sep 2013

47 14 61

No. of staff resigned / terminated

during July-Sep 2013

35 4 39

No. of staff at the end of Sep

2013

1,030 216 1,246

 

 9 

Storc events

Philips Fidelio 3on3 Tournament – 5th

July 2013 (1 Day Cup)

Philips Fidelio 3on3 tournament was carried out on 5th July

2013 at STO No.5 Godown where 29 mens & 5 womens

team participated. The main objective of the tournament was

to create togetherness and strengthen friendship within the

staffs of the organization.

Quran Recitation – Ramadan 1434

A Quran recitation event was arranged for the staff of STO,

during the Holy month of Ramadan. This event was held on

9th July 2013.

Nippon Marine Coatings Advance open

water dive (21st June 2013)

STORC Dive club had organized an advance open water dive

course on 21st July 2013 where17 staff participated.

 

 10 

Board meetings

Board of directors

The current composition of the Board is still not in constituent

with the Articles of Association (AOA) of the Company or the

Corporate Governance Code (CG Code) of Capital Market

Development Authority (CMDA). As such, since 1st quarter of

2012 only one Executive Director sits in the Board. The Com-

pany has raised several concerns on this issue to the relevant

authorities.

 

Major board decisions

Some of the major decisions taken by the Board of Directors

include;

Decided to hold an Extra-ordinary General Meeting to

correct the vote registration issues faced during the Annu-

al General Meeting

Changes were brought to some of the subsidiary

Boards—new members were appointed

The Charter of Board Directors, Chairman, and Managing

Director was endorsed

New Board Committees were appointed, Chairman of the

Committees appointed and Committee Charters endorsed

Appointed a Managing Director to Allied Insurance Com-

pany of the Maldives Pvt Ltd on resignation of the existing

Managing Director Mr. Abdul Wahid Thaufeeq. Mr. Ah-

med Ameel was appointed as the successor to the post

A Management Risk Assessment Committee was ap-

pointed within the Board and Management

Decided to establish 4 new regional pharmacies

Decided to conduct a Corporate Governance Campaign

within the Company

 

 11 

Board meetings

A total of 9 Board meetings were held during this quarter.

 

Board attendance

*Ms. Vizaad Ali is on maternity leave since August 2013.

Shareholding structure

No changes were brought to the shareholding structure of the

Company. As such the Government holds 81.6% while the

Public holds 18.3%.

 

1st Jan till 3rd

Q Attendance

% Represents

Abdullah Faiz 25/25 100% Government

Shahid Ali 25/25 100% Government

Ahmed Niyaz 24/25 89% Government

Amir Mansoor 21/25 100% Government

Abdul Hadi Hussain 24/25 100% Government

Vizaad Ali 18/25 22% Government

Mohamed Farshath 25/25 100% Public

3rd Quarter

9/9

9/9

8/9

9/9

9/9

2/9*

9/9

Type of Director

Non-Executive, Independent

Executive, Non-Independent

Non-Executive, Independent

Non-Executive, Independent

Non-Executive, Independent

Non-Executive, Independent

Non-Executive, Independent

%

100%

100%

96%

84%

96%

72%

100%

 

 12 

Extra-ordinary general meeting

On 18th July 2013, the Company held an Extra-ordinary

General Meeting at Nasandhura Palace Hotel to rectify and

revalidate the motions passed at the Annual General Meeting

held on 16th May 2013. The Company had identified dis-

crepancies in the shareholder proxy acceptance process and

the voting process at the Annual General Meeting. Hence, the

Company consulted with its Lawyers and other relevant au-

thorities to find means of correcting this issue. As such an

EGM was held and all motions were revalidated.

The items asked for revalidation and its results were; 

Item # Item Motion Passed

with % Votes

Item 1 Minutes of 2011 AGM 98.1%

Item 2 2012 Annual Report 98.1%

Item 4 Appoint and Elect Board mem-

bers—Appoint Mr. Mohamed

Farshath as public shareholder

representing Director in the

Board

88.5%

Item 5 Dividend 2012—MVR75.00

per share

98.1%

Item 6 Appoint Auditors—Appoint PWC

for USD30,000.00

98.1%

Item 7 Any other items—Proposal to

increase board sitting fee from

MVR500.00 to MVR2,000.00

was not approved at AGM

96.2%

Item 3 2012 Annual Accounts & Finan-

cials

98.1%

 

 13 

Committee meetings

Audit committee meeting

A total of 3 meetings were held during the quarter.

Major decisions of committee

Some of the major issues discussed at the Committee include;

Annual Audit Plan 2013 progress discussions

Attended the Whistleblower notifications received

Appointed a Chairman to the Committee after EGM

Endorsed Committee Charter and the Internal Audit De-

partment Charter for the year

Reviewed the Committee’s Directive Action Plan

Discussed on the Annual Audit Reports and recommend-

ed necessary actions to the management

Committee attendance

*Ms. Vizaad Ali is on maternity leave since August 2013.

**Mr. Amir Mansoor was appointed after Ms. Vizaad Ali took

leave.

Management Risk Assessment Committee

This committee is currently in the process of formulating their

charter and role delegations between the Board and Manage-

ment Committee.

Name Attendance %

Abdul Hadi Hussain 3/3 100%

Ahmed Niyaz 3/3 100%

Vizaad Ali* 1/3 33%

Amir Mansoor** 2/3 66%

 

 14 

Nomination & Remuneration Commit-

tee

A total of 1meetings was held during the quarter.

Major decisions of committee

Some of the major issues discussed at the Committee include;

Appointed a Chairman to the Committee after EGM

Endorsed Committee Charter

Reviewed the Committee’s Directive Action Plan

Committee attendance

Corporate Governance and compli-

ance committee

A total of 2 meetings was held during the quarter.

Major decisions of committee

Some of the major issues discussed at the Committee include;

Appointed a Chairman to the Committee after EGM

Endorsed Committee Charter

Reviewed the Committee’s Directive Action Plan

Decided to present information to the Board on Corporate

Governance Campaign “I WILL NOT”

Committee attendance Name Attendance %

Amir Mansoor 1/1 100%

Mohamed Farshath 1/1 100%

Abdul Hadi Hussain 1/1 100%

Name Attendance %

Mohamed Farshath 2/2 100%

Amir Mansoor 2/2 100%

Ahmed Niyaz 2/2 100%

 

 15 

Corporate governance compliance

 

 16 

Provisions

Effective Board 1.1 Non -Complied Although there are seven Directors sitting in the Board, the composition of the Board does not conform to

the Company Articles of Association and CG Code, since there is still only one Executive Director. Composition of Board 1.2 Non -Complied

Nomination/re-election of Directors 1.3 Complied

A 21 day notice period was given to the shareholders to submit names for Directorship. The major share-

holder was informed through letter. The NR Committee interviewed the Directorship interested candidates

2013/2014 from public and made recommendations to the Board. The information on qualifying candi-

dates were announced for the perusal of Shareholders.

A vote was taken to elect the Public Share representative Director to the Board. Mr. Mohamed Farshath /

H.Two Hearts succeeded the election at AGM. However, since the Company had observed discrepancies

in proxy entries at AGM, an EGM was held to verify the motions passed at AGM. Mr. Farshath’s appoint-

ment at AGM was reaffirmed at the EGM.

Separation of Chairman and MD 1.4 Complied The Chairman and MD are separate persons in the Company. The Chairman is considered an independent

Director.

Roles of Chairman and MD 1.5 Complied The roles of Chairman and MD are stated separately in their charter. The Charter was reviewed this quarter.

Duties of the Board 1.6 Complied Board Directors roles are separately stated in their charter. The Charter was reviewed this quarter.

Training 1.7 Complied

1st Quarter—The Audit Committee members attended a 3 Day Seminar in Beginning Auditor Tools and

Techniques organized by the Institute of Internal Auditors in Singapore. The Board also went through a

refresher course on the most relevant laws and regulations by the lawyers of the Company. 2nd Quarter—

The Managing Director attended the “job of a Chief Executive” training programme in Singapore. 3rd Quar-

ter—Directors participated in Financial Management for Non-Finance Managers, CG for Directors & Institu-

tional Investors, Project monitoring & evaluation and Developing Effective Managerial Skills programme.

Committees 1.8 Complied

In compliance with the CG Code, STO Board has an Audit Committee and a Nomination and Remuneration

Committee in place. In addition to this, the Company also has a Corporate Governance and Compliance

Committee. The Nomination and Remuneration Committee act as one, since almost the same Directors sit

in all Committees of the Board. Further to this a Risk Assessment Committee was formed this quarter.

 

 17 

Provisions

Evaluation of Board performance 2.2 Complied Board evaluation for the year 2012 was carried out in the 1st quarter. The results were reviewed and dis-

cussed in the Board.

Board remuneration disclosure 2.3 Complied A lump sum figure of Board and top management remuneration was disclosed in the Annual report.

Individual Board Member Remuneration Disclo-

sure 2.4 Partially Complied

The individual remuneration of Board Members are disclosed in the 2012 Annual Report. However, due to

discrepancies of remuneration in the current job market, the Board has decided not to disclose the individ-

ual remuneration of top management.

Management constitution 3.1 Complied The management team constitutes of MD, Executive Directors, and the key managers of the company.

Roles and responsibilities of

management 3.2 Complied

Job descriptions are placed at HR for every employee. The management team is given constant guidance

by the Board on promoting high standards of CG. All executives and managers are required to submit their

conflict of interest and disclosure statements to the MD.

Access to information 3.3 Complied

Board and its committees have authority to request information from the management that are deemed

necessary for decisions made at meetings. They also have the authority to obtain at the company’s ex-

pense, outside legal or any other professional advice on any matter deemed necessary for effective perfor-

mance of their duties.

Internal Audit 4.1 Complied The company’s internal audit department reports directly to the Audit Committee and administratively to

MD.

External Audit 4.2 Complied

Audit Committee made recommendations to the Board, on the appointment, re-appointment and removal

of external auditors for 2013. The Committee also negotiated their remuneration for the year. The appoint-

ment of External Auditors was affirmed at the EGM. PriceWaterHouseCoopers were appointed the External

Auditors for 2013, for a remuneration of USD30,000.00.

Internal Controls 4.3 Complied

The Board ensures that the management maintains a sound system of internal controls to safeguard the

shareholders investments and company assets. Audit committee annually reviews several of these internal

control measures enforced in the company. Information on Internal Controls are disclosed in the Annual

Report.

Remuneration policy 2.1 Complied The Company has approved and acts upon a board approved remuneration policy for Directors and em-

ployees.

 

 18 

Provisions

Company Secretary 5 Complied

The Company Secretary keeps an annual record of the company’s compliance and liability to the CG code

and other legal requirements. CS also maintains adequate registers of the Board, shareholders, minutes

and Directors interests in the company.

Shareholders 6.1 Complied The rights of the shareholders are periodically reminded through notices, annual reports, website and AGM.

Shareholder Communication 6.2 Complied Pertinent information is disclosed on company matters, through company website, interviews, press releas-

es, press conferences, quarterly reports, annual report and AGM’s.

General Meetings 6.3 Complied AGM’s are held annually, to brief shareholders on company performance of previous year. AGM 2012

was held on 16th May 2013 and an EGM held on 18th July 2013.

Voting Rights 6.4 Complied Shareholders are briefed on their voting rights from time to time. Shareholders are allowed to vote in their

absentia through proxy voting.

Disclosure 7.1 Complied The Board ensures that the Annual Report of the Company is in compliance with the Articles of Association,

Companies Act, Listing Rules, CG code and other regulations that the Company has to abide to.

Financial Statements 7.2 Complied

Financial Statements are prepared in accordance with the IFRS reporting standards. The balance sheet and

P&L statements are reviewed and signed by the Chairman, MD, CFO and the public representative Director

to certify true and fair accounts of the Company.

Non-financial Statements 7.3 Complied Each year, remuneration, conflict of interest, HR, Share, Business Development and other activities of the

Company is disclosed in the Annual Report and interim updates are disclosed through Quarterly Report.

Systems to raise concerns 8 Complied

The Board and Management ensures that an appropriate process is put in place to enable employees and

management to raise their concerns. These means are regularly informed to the employees and disclosed

in the annual report. As such, the Company has a Fraud Response and a Whistleblower Policy in effect.

Quarterly report 9.4 Complied STO publishes the Quarterly Report on website, since 2011.

Voluntary Provision: Investors and media rela-

tions 9 Complied The company encourages media and investor relations by promoting good CG.

 

 19 

Share

performance &

financials

 

 20 

Share information

2nd Quarter

2013

1st Quarter

2013

Highest Trade Price 510 500

Lowest Trade Price 360 400

Last Trade Price 500 500

WATP 478.3 414.5

Market Capitalization 563.5 563.5

EPS 56.9 28.4

Dividend Yield 15% 15%

Price Earning Ratio 8.8 17.6

3rd Quarter

2013

500

405

405

445.7

456.4

(17.52)

19%

(23.1)

Year to date

510

360

405

418.3

456.4

67.8

19%

5.9

 

 21 

Year to Date 3rd Quarter 2013 2nd Quarter 2013 1st Quarter 2013

Turnover 8,645,553,724 2,876,099,657 2,956,778,766 2,812,675,301

Cost of Sales (7,749,937,785) (2,601,802,557) (2,626,344,718) (2,521,800,510)

Gross Profit 895,615,940 274,297,101 330,444,048 290,874,791

Other Income 42,297,650 15,430,668 13,821,444 13,045,537

Operating Expenses (498,902,035) (162,123,927) (192,440,445) (144,337,664)

Operating Profit 439,011,554 127,603,842 151,825,047 159,582,664

Financial Income / (Expenses) (347,714,007) (132,516,072) (87,662,578) (127,535,357)

(14,829,777) (14,829,027) (750) 0

Net Profit before Tax 76,467,770 (19,741,256) 64,161,719 32,047,307

Figures in MVR

INCOME STATEMENT (UNAUDITED)

 

 22 

Figures in MVR

Year to Date 3rd Quarter 2013 2nd Quarter 2013 1st Quarter 2013

ASSETS

Non Current Assets 1,579,294,994 2,562,117 6,402,108 33,000,567.29

Current Assets 2,556,648,128 (433,693,838) (714,122,964) 97,836,628.64

Total Assets 4,135,943,122 (431,131,721) (707,720,856) 130,837,196

EQUITY & LIABILITIES

Equity 1,026,122,905 (79,740,506) (20,357,281) 32,047,306.89

Non Current Liabilities 597,305,407 (60,037,140) (47,542,217) (624,051,197.86)

Current Liabilities 2,512,514,811 (291,354,075) (639,821,359) 722,841,086.90

TOTAL EQUITY & LIABILITIES 4,135,943,122 (431,131,721) (707,720,856) 130,837,196

BALANCE SHEET (UNAUDITED)

Cash Flow Statement (Unaudited) Figures in MVR Q3 Q2 Q1

Profit before tax 91,297,546.89 96,209,026 32,047,307

Adjustments for:

Depreciation 47,914,151.01 31,190,554 15,110,620

Interest Income (11,118,653.92) (7,485,902) (4,023,460)

Interest on Fixed Deposits (4,180,898.96) (1,577,189) -

Interest Expense 159,396,586.92 111,693,548 55,897,785

Dividend Income (60,429,146.46) (45,825,946) (1,529,900)

Provision for Bad Debts 120,489,964.00 87,000,000 30,000,000

Provision for Inventories 9,573,359.18 6,570,102 1,553,897

Changes in Working capital

Inventories - (Increase) / decrease 152,887,559.27 44,207,629 98,681,280

Trade & Other receivables - (Increase) / Decrease 127,578,487.97 358,127,544 (72,813,370)

Trade & Other Payables - (Decrease) / Increase (204,520,451.95) 86,833,623 709,685,382

Cash generated from Operations 428,888,503.95 766,942,988 864,609,540

Cash flow from operating activities

Cash generated from Operations 428,888,503.95 766,942,988 864,609,540

Interest paid (159,396,586.92) (111,693,548) (55,897,785)

Tax Paid (18,643,672.00) (3,814,645) (12,922,079)

Net cash generated from/(Used in) operating activities 250,848,245.03 651,434,794 795,789,676

Cash flow from Investing activities

Purchases of PPE (88,310,142.79) (69,024,429) (105,974,737)

Investment in Shares (1,568,800.00) (1,568,800) -

Interest Received 11,118,653.92 7,485,902 4,023,460

Interest on Fixed Deposits 4,180,898.96 1,577,189 -

Dividends received 60,429,146.46 45,825,946 1,529,900

Net Cash used in Investing activities (14,150,243.45) (15,704,191) (100,421,377)

Cash flow from Financing activities

Net Borrowings (584,074,950.66) (541,721,657) (474,680,459)

Dividends paid to company share holders (84,518,250.00) (84,518,250) -

Net cash (used in) / Generated from financing activities (668,593,200.66) (626,239,907) (474,680,459)

Net Increase/(Decrease) in cash, cash equivalents and Bank overdrafts

(431,895,199.08) 9,490,696 220,687,840

Cash & Cash equivalents at beginning of the year 350,887,182.00 350,887,182 350,887,182

Cash & Cash equivalents at the end of the period. (81,008,017.08) 360,377,878 571,575,022

 

 

 23 

Compliance to the Maldives company’s act 10/96

The Company has abided compliance

to the Company’s Act and its regulations

throughout the quarter.

Compliance to listing rules

The Company has abided compliance

to listing rules and its requirements

within the quarter.

Compliance to cdoi regula-tions

The Company has abided compliance

to CDOI regulations and its requirements

within the quarter.

Compliance to corporate governance code

Details of compliance to code is stated

in page 15-18.

Fines

The Company was neither fined nor

under any other penalty, in reference

to the above mentioned regulations,

during the past quarter.

Tax

The Company had paid required tax to MIRA

within the allocated time.

MQRR Compliance

This report has been prepared in compli-

ance with the Minimum Quarterly Report-

ing Requirements of CMDA.

DECLARATION

State Trading Organization PLC

Male’, Republic of Maldives Tel: (960) 3344333 Fax: (960) 3344334 www.stomaldives.com