GMG Airlines Limited - Janata Bank Limited Bangladesh

Transcription

Table of Contents
GMG Airlines Ltd. : An Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fleet Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • About the Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Directors’ Involvement in other companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Family Relationships among Director’s and Top Five Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . • CIB Report relating to Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Shareholding Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • About the Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Management at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Involvement of directors and officers in legal proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Related Transactions with directors and/or officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Competitive Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An overview of the Aviation Industry in Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bangladesh Air Travel Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Historical Market growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Interest Rate Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Exchange Rate Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Utility and Input Cost Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Industry Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Market Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Technology Related Risks Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Potential or Existing Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Description of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Location of principal plants and other assets of the company and their condition . . . . . . . . . . . . . • Value of the assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • VAT, income tax and customs duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Funding Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Description of share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Historical Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Highlights of historical financial information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Determination of the offering price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Book Building Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market for Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Description of Securities Outstanding or Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Dividend, Voting and Pre-emption Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Conversion and Liquidation Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Right of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Shareholders Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Availability of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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GMG AIRLINES LIMITED
INFORMATION DOCUMENT FOR ROAD SHOW
FOR
INITIAL PUBLIC OFFERING (IPO)
OF
6,00,00,000 (SIX CRORE) ORDINARY SHARES OF TK 10 (TEN) EACH
AT AN INDICATIVE PRICE
OF TK 150 (TAKA ONE HUNDRED FIFTY)
UNDER BOOK BUILDING METHOD
Credit Rating at A3 by Credit Rating Agency of Bangladesh
Registrar to the Issue:
BANCO FINANCE & INVESTMENT LIMITED
Issue Manager
Janata Capital and Investment Ltd.
General Information
Janata Capital and Investment Ltd, the Issue manager, has prepared this Information Memorandum (IM) based on the information
provided by GMG Airlines Limited (the Issuer Company) and the Managing Director and concerned executives of the Issuer Company.
The Directors, including Managing Director of GMG Airlines Limited and Janata Capital and Investment Limited collectively and
individually, having made all reasonable inquires, confirm that to the best of their knowledge and belief, the information contained
herein is true and correct in all material aspects and that there are no other material facts, the omission of which would make any
statement herein misleading.
No person is authorized to give any information or to make any representation not contained in this IM, and if given or made, any such
information or representation must not be relied upon as having been authorized by the Issuer Company or the Issue Manager.
The Issue contemplated in this document is according to the laws of Bangladesh and is subject to the exclusive jurisdiction of the courts
of Bangladesh. Forwarding this prospectus to any person resident outside Bangladesh in no way implies that the Issue is made in
accordance with the laws of that country or is subject to the jurisdiction of the laws of that country.
1
Issuer : GMG AIRLINES LIMITED
An Overview
CORPORATE OFFICE
Milestones
Rebranding
GMG Airlines is a private airline of
Bangladesh whose corporate office is
based near Dhaka airport. GMG Airlines
is Bangladesh’s largest and oldest
private carrier operating domestic, and
international services, upholding the image
of Bangladesh to the world. Its main bases
are Hazrat Shahjalal International Airport,
Dhaka and Shah Amanat International
Airport, Chittagong.
GMG Airline was established in 1997
and started operations on 6 April
1998. It is owned/managed by the
industrial conglomerates, GMG Group
and Beximco. It began with domestic
operations and launched international
services on 8 September 2004, with a
service from Chittagong to Kolkata. It
was the first private Bangladeshi airline
to launch international services.
In June 2009, the Beximco Group,
Bangladesh’s largest conglomerate
(www.beximco.com), bought a majority stake in GMG Airlines and invested
substantially in the airline to improve financial strength and performance witha
view to make GMG Airlines the major player
in the region.
GMG began regular flights to Bangkok,
Delhi, and Kathmandu on 20 October
2006. It started services to Kuala Lumpur
on 24 January 2007. The airline started
its operation to the Middle East with
daily flights to Dubai on 1 February 2008.
On 1 May 2010, GMG Airlines
initiated their new logo and livery
with their newly acquired Boeing
767-300ER. After the rebranding, the
main body of the planes is white. A
small part of the engine is imprinted
with colorful butterfly wings. The tail
is also partially embedded with the
colorful wings of a butterfly. On the
nose, behind the cockpit the new
logo of GMG airlines appears. In April 2010 GMG acquired its first wide
bodied aircraft B 767-300ER and started
operations to the Kingdom of Saudi
Arabia.
Information Memorandum
2
Issue Manager : Janata Capital and Investment Ltd.
New Philosophy
The new logo epitomizes the new corporate
philosophy of GMG Airlines. The edge of
imagination, backed up by a steely vision,
ardent professionalism, and the relentless
drive for perfection is where it wants
its corporate culture placed today. Its
customers are invited to embark with GMG
and to explore new destinations where their
imagination takes them.
The new Managerial Team, representing
decades of successful international
experience in the aviation industry is
comparable to that of the most successful airlines in the world.
3
Fleet Information
GMG Airlines, the largest private commercial carrier in Bangladesh has been successfully operating since 1998 and
now serving 8 international destinations and 5 domestic routes. It is the largest private airline of Bangladesh. In their
quest to be a major player in the global market, GMG is going through a planned expansion scheme by establishing
new flights to the Middle East, Far East & Europe.
GMG Airlines currently operates a fleet of Boeing 767-300ER, MD 80 (82, 83) and Bombardier Dash 8 aircraft. To
accommodate an increasing demand of air transportation in Bangladesh, GMG is expanding its fleet & routes
rapidly.
Boeing 767-300ER
MD 80 (82, 83)
Bombardier Dash 8
GMG Airlines has acquired its newest
assets, two Boeing 767-300ERs with
a seating capacity of around 260
passengers. While our passengers take
delight on embarking on journeys to
new destinations with these B767300ERs, we are busy inducting more
wide-bodied new aircraft. Two more
B767-300ERs are expected to arrive by
the 2nd half of 2011.
The MD 80 (82, 83) has served GMG’s
foray into the field of international
flights ever since getting permission
to operate globally from Civil Aviation
Authority of Bangladesh (CAAB). The
MD 82 and MD 83 have a seating
capacity of around 150 seats in two
class configuration. These aircraft are
soon due for replacement by brand
new state of the art narrow bodied
aircraft such as the B737-800NG or the
Airbus A320.
The Bombardier Dash 8 turboprop,
has a seating capacity between
37 to 50 passengers depending
on the variant and is a globally
renowned ideal aircraft for
short haul flights. GMG operates
the Dash 8s from Dhaka to
destinations such as Chittagong,
Cox’s Bazar, Jessore, Sylhet &
Kolkata (India). These aircrafts will
also soon be replaced by brand
new state of the art 50 to 70 seat
turboprops.
Aircrafts
Boeing 767 – 300ER
Bombardier Dash 8 100 Bombardier Dash 8 300
Bombardier Dash 8 Q 300
McDonnell Douglas MD-82 McDonnell Douglas MD-83 Total
4
In Fleet
02
01
01
01
02
01
08
Destinations
GMG Airlines currently operates services to the following destinations (December 2010)
Domestic Destinations (Bangladesh)
Hazrat Shahjalal
International Airport
Dhaka
Shah Amanat
Chittagong
Osmani
Sylhet
Jessore
Airport
Jessore
Cox’s Bazar
Airport
Cox’s Bazar
Indira Gandhi
New Delhi
Abu Dhabi
Abu Dhabi
Netaji Subhash Chandra Bose
Kolkata
Dubai
Dubai
Kuala Lumpur
Kuala Lumpur
Suvarnabhumi
Airport
Bangkok
King Abdulaziz
Jeddah
Tribhuvan
Kathmandu
King Khalid
Riyadh
Jinnah
Karachi
International Destinations
Apart from the above GMG plans to launch flights to Doha, Muscat, Kuwait, Bahrain, Damam, Medina, Milan, Frankfurt,
London, Singapore, Hong Kong, Jakarta and Kunming within 2012.
5
Board of Directors
About the Directors
Ahmed Shayan Fazlur Rahman, Chairman
Mr Ahmed Shayan Fazlur Rahman, represents the Beximco Group, Bangladesh’s largest
conglomerate with a market capitilazation of its listed companies valued at USD 2 billion.
Mr Rahman plays an active role in the continuing progress of the Beximco Group. Mr
Rahman completed his BBA with distinction from American University, Washington DC.
Mr Rahman brings his expertise to the GMG Board in transforming GMG Airlines into an
efficient and profitable enterprise. Mr Rahman is the son of Mr Salman F Rahman Vice
Chairman of the Beximco Group.
Shahab Sattar, Managing Director
Mr Shahab Sattar, Managing Director of GMG Airlines Limited, is the Chairman of Samah
Razor Blade Industries Ltd., and GMG Industrial Corporation Limited one of Bangladesh’s
oldest industrial house established in 1952 by his father Mr Aziz Sattar. Mr Shahab Sattar
is a pioneering figure in the Bangladesh aviation industry and has also played a key role in
promoting various social and economic development programs. As founding Managing
Director of GMG Airlines, Mr Sattar brings a wealth of experience and industry knowledge
to the GMG Board.
Ahmed Shahryar Rahman, Director
Mr Ahmed Shahryar Rahman also represents the Beximco Group and plays an active role
in the continuing progress of the Beximco Group. Prior to joining Beximco, he worked as a
financial analyst with Merrill Lynch International Inc and Citigroup Asset Management Ltd
in the UK. Mr Rahman completed BSc and MSc degrees with Honors from Imperial College
of Science, Technology and Medicine in London, UK. Mr Rahman brings his expertise to
the GMG Board in transforming GMG Airlines into an efficient and profitable enterprise. Mr
Rahman is the son of Mr A S F Rahman Chairman of the Beximco Group.
Osman Kaiser Chowdhury FCA, Director
Mr Osman Kaiser Chowdhury is the Group Finance & Corporate Affairs Director of the Beximco
Group and has been with Beximco since 1982. During his long tenure of nearly three decades
he has played a key role and contributed significantly to Beximco’s success and growth. Prior
to joining Beximco he worked in the UK for thirteen years in various management positions.
Mr Chowdhury is an FCA (Member of the Institute of Chartered Accountants of England &
Wales) and Fellow of the Institute of Chartered Accountants of Bangladesh. Mr Chowdhury is
expected to bring decades of experience in financial management, planning & cost control
systems to propel GMG into a diligently managed, highly profitable world class airline.
Mohammad Lutfar Rahman, Director
Mr Rahman is the Chairman, Executive Committee of the Board of Directors, IFIC Bank Limited. He
heads his family’s securities company. He is also Director of NTV a leading Television Broadcasting
Company of Bangladesh. His other interests include major share holdings in various financial
institutions and listed companies. He has played an important role in the development of the
Bangladesh capital market and has financed breakthrough projects in the insurance sector. Mr
Rahman is actively involved in social and sports promotion in Bangladesh. Mr Rahman is expected
to add the wealth of his financial experience in advising the GMG Airlines board.
6
Directors’ Involvement in other companies
Name
Directorship in other Companies
Position
Mr Ahmed Shayan Fazlur Rahman, Chairman
None
None
Mr Shahab Sattar, Managing Director
GMG Industrial Corporation Ltd.
Samah Razor Blades Ltd
Chairman
Chairman
Mr O. K. Chowdhury FCA
Beximco Pharmaceuticals Ltd.
Bangladesh Export Import Co. Ltd.
Beximco Synthetics Ltd.
Shinepukur Ceramics Ltd.
Beximco Media Ltd.
Independent Television Ltd.
Director
Mr Ahmed Shahryar Rahman
None
None
Mr Mohammad Lutfar Rahman
IFIC Bank Ltd.
International Television Ltd. (NTV)
Latif Securities Ltd.
Union Insurance Ltd.
National Television Ltd. (RTV)
Director
Family Relationship among Directors and Top Five Officers
Mr Ahmed Shayan Fazlur Rahman, Chairman and Mr Ahmed Shahryar Rahman, Director are cousins. No other directors and top five officers
have family relationships amongst themselves.
CIB Report of the Directors
Neither the Company nor any of its directors or shareholders who hold 5% or more shares in the paid-up capital of the issuer is loan
defaulter in terms of the CIB Report of the Bangladesh Bank.
Shareholding Structure
Name
Mr Abdus Sattar
Mr Shahab Sattar
Mr A S F Rahman
Mr Salman F Rahman
Beximco & Associates
Foreign Investors
Local Institutions
General Public
Total
Number of Shares
% of Share holding
10,668,031
11,692,623
1000
1000
113,897,367
16,421,000
25,615,679
68,363,300
246,660,000
4.32%
4.74%
0.00%
0.00%
46.18%
6.66%
10.39%
27.71%
100.00%
7
Management
of the Company
About the Management
Mr Shahab Sattar
Managing Director
Michael Moriaty
Chief Financial Officer
John Jack Ekl
Director Flight Operations
Mr Shahab Sattar, Managing
Director of GMG Airlines Limited
completed his MBA from The
Wharton School, University of
Pennsylvania prior to joining his
family business in 1985. His foray
in the aviation industry started in
1997 as the co-founder of GMG
Airlines. Mr Sattar is no stranger
to Bangladesh’s aviation market
and is considered by many as a
pioneering figure responsible for
re-shaping the deregulation of the
airline industry in Bangladesh. Mr
Sattar is also a licensed commercial
pilot since 1981.
Mr Michael Moriaty is a highly
qualified professional with proven
record of success in managing
financial and project management
in the airlines industry. He has
had wide international exposure
in leading finance departments
of various organizations in USA,
Japan, Thailand, Scandinavia,
Netherlands and Colombia. Prior
to joining GMG, he worked as a
Business and Accounting Service
Management Consultant. Mr
Moriaty is responsible for overall
financial control and overseeing
the implementation of best
accounting practices prevailing in
the aviation industry.
Mr Ekl began flying in 1962 and entered
the US Naval Aviation Officer Candidate
School in 1969. He was a member of
the US Navy’s Flight Demonstration
Squadron, “The Blue Angels”. After
leaving the Navy, Mr Ekl accepted a
position with Southwest Airlines where
he held management positions of
Director of Operations, Chief Pilot and
Manager of Flight Operations. MrEkl
was awarded the President’s award for
developing flight department from
110 to over 4000 pilots. In 1999 Mr Ekl
retired from Southwest Airlines to help
found the new Ozark Air Lines where
he was the Executive Vice President and
Director of Operations. In August 2005,
he became Director of Operations and
Chief Pilot, for Spicejet Airlines in India
where he managed the growth to 20
aircraft and over 450 pilots. MrEkl was
the only foreign Designated Examiner
on the B737NG aircraft in India. In
2008, he was promoted to the position
of Executive Vice President. After
successfully growing SpiceJet for four
years, Mr Ekl joined RwandAir in 2009.
He was the Chief Operating Officer
and Director of Flight Operations in
RwandAir prior to joining GMG Airlines.
8
Capt Raghunandan Lal Kapur
Chief of Flight Safety
Varghese Samuel
Director Engineering
Thomas J Andino
Deputy Director Engineering
Capt Kapur a veteran pilot in
early stages of his life started his
flight safety career in 1981. He
held key positions in Flight Safety
department in many well reputed
airlines in the region. Before
joining GMG, Mr Kapur worked for
four years as Chief of Flight Safety
at Spicejet, India. He is responsible
for the implementation of the
policies concerning over all safety
in the organization and liaising
with the CAAB and other related
agencies. He is also responsible for
compiling the Flight Safety Manual,
Ramp Safety Manual, Emergency
Response Plan, SMS Manual and
other safety related documents
and presentations. Capt. Kapur also heads the team in GMG
responsible for IOSA certification.
Mr Samuel has 24 years of experience
in aviation engineering. As Director of
Engineering, Mr Samuel is responsible
for all aspects of line and heavy
maintenance control and technical
services. He is responsible for ensuring
safe, punctual and economic operations
of all company flights by adhering to
the strictest of international safety
standards. Prior to joining GMG Airlines
he was the CEO of Aero Intelligence. He
served in various senior engineering
management positions in Kingfisher
Airlines, Deccan Airways, Virgin America,
JetBlue Airways, Advance Avionics
Modification Technology, Laker Airways,
Air Europa, Ultra Air and Pan American
Airways.
Mr Andino is a highly skilled
engineer having over 22 years of
maintenance experience on different
types of aircraft. Prior to joining
GMG, he worked as Manager –
Aircraft Maintenance, Florida West
International Airways, Miami, USA. Mr Andino is responsible for bringing
together and motivating talented
individuals and teams to accomplish
organizational objectives, setting
standards of performance, effectively
revitalizing workplace procedures and
repositioning business strategies to
maximize goals. He is also responsible
for assisting the Director Engineering
in establishing adequate maintenance
policies and procedures as related
to the company’s operation in line
and heavy maintenance, planning,
directing, and coordinating the
activities of all maintenance personnel
so as to effectively utilize all resources
to increase production and efficiency.
9
Management of the Company
Lawrence Parris
Manager, Quality Assurance
Asif Ahmed
Head of Marketing
Shoeb Al Ashraf
Director Human Resources
Mr Parris is a licensed aviation
engineer by training and has
been working in the field of
Aviation Quality Assurance since
1987 in key positions in different
organizations and has earned a
good reputation world-wide. He is
responsible for quality assurance
functions governing engineering,
managing the internal audit
program, maintaining an approved
vendor listing and parts QA. He is
also responsible for preparation
and implementation of Quality
Control Manual, ISO Manual and all
other regulatory documentation.
He is also the interface point of all
technical communications with
regulatory agencies, vendors, OEM
and airlines.
Mr Ahmed’s entire professional life has
been dedicated to marketing. He started
his career with Standard Chartered Bank
followed by Unitrend Ltd (the Bangladesh
affiliate of McCann Ericsson World
Group), CityCell and British American
Tobacco Ltd. Before joining GMG he was
working for Warid Telecom which is now
Airtel Limited. Mr Ahmed has proven his
professionalism in all the organizations
he has worked for. Mr Ahmed has been
a significant contributor to the telecom
services marketing from the very
inception of the industry. At GMG he
heads the marketing team and will play
a significant role in promoting the GMG
brand world ide.
Mr Ashraf started his career in
the Bangladesh Army. He has
worked for 12 years in different key
appointments in Army as well as
in United Nations Peace Keeping
Forces. He has worked as Head of
HR in Beximco Pharmaceuticals
for 5 years. His responsibility is to
prepare analysis and evaluation
of existing human resources
policies, practices and procedures
and dissemination of new human
resources policies and guidelines
to meet the evolving needs of the
organization. His responsibility
is to ensure timely delivery of all
sorts of administrative support in
accordance with the organizational
need. His responsibility also
includes safeguarding of the GMG’s
aircraft, GMG’s stores and offices at
airport and the Head office.
10
Ashish R Chowdhury
Head of Corporate Affairs
Mizanur Rahman Siddique
Director, Finance & Accounts
Mr Ashish R Chowdhury has
vast experience in different key
appointments in various Airlines
and travel agents. Responsibilities
include liasing with Civil Aviation’s
Authority, Ministry of Civil Aviation,
and other government offices.
Mr Mizanur Rahman Siddique has spent his entire working life in the area of Finance
and Accounts. Mr Siddique started his career in GMG Industrial Corporation in 1981
and has been working in GMG Airlines since its inception in 1997. Mr Siddique
has served in various key positions in field of accounts & finance for more than
29 years. He was involved in the initial design of company’s chart of accounts,
computerization of the company’s accounting system and in setting up of various
checks and balances in the department. Mr Siddique is also the key liaison person
with respect to GMG’s dealing with all local banks and financial institutions.
Management at Glance
Name
Designation
Last Degree
Experience
with Company
Total
Experience
Mr Shahab Sattar
Mr Michael Moriaty
Mr Mohammad Asad Ullah
Mr Dane Lovell Dobbs
Mr Varghese Samuel
Mr Shoeb-AI-Ashraf
Mr Pran S Dasan
Mr Orlando Nicholas Lobo
Mr Asif Ahmed
Mr Ashish R Chowdhury
Mr Mathew Regala Tamaray
Mr Mujtaba Ali Khan
Mr Rajiv Ghai
Mr Laila Akhtar
12 Years
25 Years
5 months
1 Year
New joined
New joined
2 Years
4 Months
8 Months
6 Months
3 Years
8 Months
1 Year 7 months
3 Years
4 Years
31 Years
20 Years
26 Years
23 years
18 Years
20 years
20 Years
04 Years
21 Years
13 Years
21 years
26 Years
1s Years
Managing Director &CED
Chief Financial Officer
Executive Director & Company Secretary
Director Flight Operations
Director-Engineering
Director-Human Resource
Head of Global Sales
Head of Revenue Optimization
Head of Corporate Communications
Head of Corporate Affairs
General Manager-Corporate Planning
GM-Ground Service
GM- Catering
Manager-Customer & Cabin Service
MBA with Distinction, The Wharton
School, University of Pennsylvania
BSC Hon(Economic)
FCS
Graduation-Aero Engineer
MBA
MBA
MSC-Air Transport Management
Graduation-Commerce
BBA
-
MS-IT, MS-Industrial Economics
Graduation
Bachelor of Commerce
M.A part1
11
Involvement of directors and
officers in legal proceedings
No director or officer of GMG Airlines Limited was involved in any
of the following types of legal proceedings in the last 10 (ten)
years:
a. Any bankruptcy petition filed by or against any company of
which any officer or director of the Issuer Company filing the
prospectus was a director, officer or partner at the time of the
bankruptcy.
b. Any conviction of director, officer in a criminal proceeding or
any criminal proceeding pending against him.
c. Any order, judgment or decree of any court of competent
jurisdiction against any director, officer permanently or
temporarily enjoining, barring, suspending or otherwise
limiting the involvement of any director or officer in any type
of business, securities or banking activities.
d. Any order of the Securities and Exchange Commission, or
other regulatory authority or foreign financial regulatory
authority, suspending or otherwise limiting the involvement
of any director or officer in any type of business, securities or
banking activities.
Related Transactions with
directors and/or officers
The company has neither entered into during the last 2 (two) years
nor has any plan to enter into any transaction with the following
parties:
1. Any executive director or executive officer of the company;
2. Any director or officer;
3. Any person owning 5% or more of the outstanding stock of
the issuer;
4. Any members of the immediate family (including spouse,
parents, brothers, sisters, children and in-laws) of any above
persons;
5. Any transactions or arrangement entered into by the
Company for a person who is currently a director or in any way
connected with a director of either the issuer company or any
of its subsidiaries/associate companies, or who was a director
or connected in any way with director at any time during
the last three years prior to the publication of Information
document; and
6. Any director holding any position, apart from being a
director in the issuer company, in any company, society, trust,
organization or proprietorship or partnership firm.
12
Competitive Condition
Industry Overview
Background of Aviation Industry in Bangladesh
Modern aviation in Bangladesh began when the British Empire
built a military airstrip in Tejgaon during World War II to fly
warplanes towards the battle fields of Kohima and war theaters in
Burma. Other airstrips were built in Comilla, Feni, Chittagong, Cox’s
Bazar, Chakaria, Sylhet, Jessore, Rajshahi and Lalmonirhat.
When the war was over, the colonial government decided to build
the Tejgaon Airport along with a landing strip at Kurmitola to
meet the requirement of Royal Indian Air Force (RIAF) stationed
in Dhaka. In 1946, the Mirza Ahmad Ispahani and his partners
formed an airline - Orient Airways - which soon started using the
airport as a civil airport. Shifting its base from Kolkata to Karachi
when Pakistan was born, Orient Airways started DC-3 flights from
Karachi to Dhaka on 7 June 1954, forming a critical connection
between the capitals of geographically separated East and West
Pakistan. On March 11 1955, Orient Airways merged with the
government’s proposed airline, becoming Pakistan International
Airlines Corporation, later rechristened as Pakistan International
Airlines (PIA).
The first Bangladeshi commercial passenger airline, Biman
Bangladesh Airlines, was born in 1972 soon after the
independence of Bangladesh. As the national flag carrier, Biman
operated as a monopoly for over two decades and is fully owned
by the state. Following deregulation, GMG Airlines pioneered the
way forward for the private sector aviation industry. Bangladesh Air Travel Market
Bangladesh aviation business grosses around US$ 4.5 billion,
nearly 80% of which is earned by foreign airlines. Of this US$ 3
billion accounts for passenger revenue the balance being cargo
revenue.
As can be seen in the graph, the national flag carrier Biman
Bangladesh Airlines Ltd has consistently failed to take advantage
of the market growth allowing foreign airlines to take away the
lion’s share of the market. |In recent years, Biman’s business has
gradually declined to below 25%. This situation represents great
potential for private Bangladeshi carriers to ride the growth curve. !
According to Civil Aviation authority, in 2009 more than 1 million
passengers traveled with Biman Bangladesh Airlines Ltd, which is
6% lower than the previous year. On the other hand foreign airlines’
carried 2.8 million passengers, which is 16% higher than that of
previous year.
United Airways, Regent Air and GMG Airlines are currently
operating in Bangladesh and are in various stages of growth. South
Asian Airlines and SquareAir operate helicopter services.
Historical Market growth
Market growth out of Bangladesh continues to be robust. Following
the economic crisis of 2008-2009 the total numbers of passengers
out of Bangladesh have not significantly reduced when compared
to other countries. This is because the main reduction worldwide
has been due to reduction of leisure traffic and of business travelers
in premium cabins like first class and business class. The profile of the Bangladeshi market is slightly different where the
major share of the market consists of Bangladeshi workers working
abroad with a smaller affluent percentage of leisure and business
travelers. No real downturn in traffic volume is expected in the near
future. Most travelers out of Bangladesh who can afford to travel
on vacation or on business were also not seriously affected by the
financial crisis.
Market information
Passenger
Cargo
Total Market Ex/To Bangladesh in 2000-01
Total Market Ex/To Bangladesh in 2002-03 Total Market Ex/To Bangladesh in 2003-04
Overall growth of Bangladesh Market over 6 yrs
Foreign Carrier’s Growth
2.29 million
2.39 million
2.62 million
2.77 million
3.07 million
3.31 million
3.86 million
3.81 million
66.37%
100%
101,894 ton
105,956 ton
992,295 ton
104706 ton
118,806 ton
102,048 ton
112,956 ton
117,578 ton
15.4%
46.53%
Source : CAAB
13
Risk Factors
Interest Rate Risk
Exchange Rate Risk
Interest rate risk is borne by interest bearing assets of an
organization. Changes in the government’s monetary policy
along with increased demand for loans/investments tend to
raise interest rates. Such rises in interest rates mostly affect
companies having floating rate loans or companies investing
in long-term debt securities. Historically, GMG has succeeded
in improving its gearing from 3.08x in 2008 to 0.39xs as of June
2010. With a healthy capital structure, GMG has moderately
high interest coverage of 5.04x as of June 2010 on majority of
its long-term debt obligations. This could further increase with
the future cash flows of the company. Moreover, leverage of
the company is expected to further increase as Debt/Equity
and Debt/EBITDA is anticipated to increase in the future on
account of Capital Expense and increase in net working capital
requirements. In the event of monetary policy tightening
by the government to combat increased economic growth
and inflation, the company will require a prudent strategy
to take the firm from incurring negative net cash flow from
operations.
Management Perception:
The management of GMG is very aware of the interest rates
at which the debts of the company are being financed.
Management intends to finances long-term funds using fixed
interest rate debt and finances short-term funds at reasonable
competitive rates. The company has been
repaying borrowed funds on a continuous
basis to reduce such interest risk. Overall
liquidity position of GMG has improved
in 2010 and a net cash accruals/debt
of 25.07% in June 2010 indicates the
financial flexibility of the firm to tackle
unfavorable interest rate fluctuations in
the markets.
14
Exchange rate risk occurs when business operations of a
company are affected by fluctuations in exchange rates.
Since GMG Airlines has international operations, it does have
exposure in exchange rates such as the Taka/USD. Currently,
Bangladesh Bank follows a managed floating exchange rate
policy and therefore, the Taka/USD rates have remained within
a tight band. However, as demand for the dollar grows with
increased economic wellbeing and global competitiveness
of the nation’s assets, exchange rate volatility is expected.
Globally, dollar has been depreciating against other currencies
due to unfavorable outlook growth of the American economy.
Central Banks across the globe are losing confidence in
the weakened dollar and fleeing to safety by increasing
gold reserves for their treasuries. Therefore, predicting the
anticipated movements of the dollar in a highly speculative
market and the risks in hedging against exposure is quite
crucial for the firm.
GMG Airlines earns its revenues both in dollar & taka
denominations. Recent depreciating trend of the Taka/USD has
worked in GMG’s favor as it fetches more value when converted
in to Taka. More importantly, the dollar denominated income
has aided the company to offset their requirements for foreign
purchases in USD denominations.
Utility and Input Cost Risks
Input cost risk is the risk of businesses when procuring materials
or commodities in high global demand. Increasing demand and
supply shortages create volatility in these commodity values
therefore the timing, quantity and price of purchase
must be closely planned. Input costs such as fuel,
represent 34% of an airline’s operating costs in the
industry. Similarly, fuel is the major operating utility
for GMG Airlines. Direct costs peaked in 2008 due
to increases in fuel prices. The global energy market
witnessed price hikes in 2007 and 2008 which
inflated cost structures and suppressed profitability
of airlines across the globe.
Jet fuel prices (charted above) are correlated with spot
Light Crude prices. The volatility of oil prices in the
recent months – moving from highs of US $145/
bbl in 2008 down to $60/bbl in 2009 and currently
trading near $90/bbl – could make a significant
difference to the company’s financials and
our estimates. Currently, hedging
strategies are being planned to
cushion against oil price
fluctuations.
15
Risk Factors
specifically targeting the migrant worker group. These include
higher baggage allowances, personalized customer care both
on ground and in the air keeping in view the special needs of
migrant workers with respect to language and food habits.
Management of GMG Airlines would hedge their exposure
to fuel price volatility; however government regulators
of Bangladesh make such an approval difficult to obtain.
Therefore, GMG has channeled their losses (if incurred by fuel
price hikes) to fuel surcharges portion of a passenger’s ticket
price.
Industry Risks
The airline industry has witnessed challenges such as terrorist
attacks, a historic fuel price peak, job cuts, bankruptcy, M&A,
and impacts of drastic climate changes across the globe. It
stands as one of the most challenging industries to operate
in to date. Fortunately, the local industry does not have such
a troubled backdrop and has immense opportunities for
growth. The risks Bangladesh airlines share with its global
players is vulnerability to economic cycles, seasonality,
competition from regional LCCs, high profile brand value, and
cost effectiveness of servicing the same routes. These may
follow dampening air traffic, sales, and ultimately profitability
and cash flow.
Technology Related Risks
Potential
Management is optimistic about growth opportunities in
Bangladesh. They believe they can target an untapped market
of customers who are seeking global standards of quality
service, reliability and punctuality and state of the art aircrafts.
The largest market opportunity consists of business travelers
and professionals who are expected to generate repeat sales
once they have developed brand loyalty with GMG Airlines.
Market Risks
Market risk refers to the risk of adverse market conditions
affecting the sales and profitability of the company. Mostly, the
risk arises from falling demand for the service, which would harm
the performance of the company. On the other hand, strong
marketing and brand management would help the company
increase their customer base. GMG has recently completed
re-branding strategies to exemplify their image as the industry
defining premium quality airline in Bangladesh. This quality also
comes with a premium added to ticket prices, which may not be
preferred by the emerging customer base in Bangladesh. One
of Bangladesh’s largest airlines traveling customer base is the
migrant worker group from regional countries such as Malaysia,
Singapore, and the Gulf regions. Premium prices may not attract
this customer base. This could prevent GMG from gaining market
share from low cost carriers such as Biman.
Management is fully aware of this market risk and has planned
to act accordingly by offering special services and prices
16
Technology always plays a vital role for each and every type
of business. Better technology can increase productivity and
reduce costs of production. Firms are exposed to technology
risks when there are better technologies available in the
market than the one used by the company, which may cause
operational inefficiency. In the case of the airline industry and
GMG, technology is crucial to monitor safety and conduct
strict quality control of its fleet and equipments. Accidents due
to equipment or aircraft failure are detrimental for an airliner’s
reputation and business. GMG must also invest in state of the
art worldwide reservation systems in order to increase sales
and reach out to new customers.
GMG administration is aware of technological changes and has
adopted new technology according to its needs. Furthermore,
routine and proper maintenance of equipments carried out
by the company ensures longer service life for the existing
equipment and facilities. GMG is committed to maintaining
quality and brand image. Training of staff and officers and
continuous technical evaluation of the aircrafts is routine
protocol. GMG Airlines is connected to all major GDS system
named Amadeus, Worldspan, Galileo, Sabre etc to fully market
its destinations and capture sales. On the operations and
engineering side GMG has implemented ARMS a state of the
art system used by major airlines in the region. This includes
modules for computerized flight planning, engineering
planning, engineering quality control, stores and materials
management and fuel management among others. GMG
intends to persue a policy of upgrading its fleet with new aircraft
periodically as and when new generation aircraft become
available. In line with this policy GMG has initiated negotiations
with both Boeing and Airbus for acquiring brand new, new
generation narrow body and wide body aircraft with a view to
finalize an agreement within 2011.
Potential or Existing Government
Regulations
The Company operates under the Companies Act; 1994,
Civil Aviation Authority of Bangladesh (CAAB) regulations
and other related regulations, Income Tax Ordinance, 1984;
Income Tax Rules, 1984; Customs Act, 1969; Value Added
Tax (VAT) Act, 1991; and Value Added Tax (VAT) Rules, 1991.
Any abrupt changes of the policies made by the regulatory
authorities may adversely affect the business of the Company. Issue Manager : Janata Capital and Investment Ltd.
GMG operates in a highly regulated market with registration
of licenses, operational reviews and aircraft inspections
required by CAAB and International Air Transport Association
(IATA) periodically. Any negative reviews could cause fleets
to be grounded for a prolonged period of time or require
unexpected fleet renewal. Moreover, regulatory bodies control
routes and approval for new routes is difficult to obtain.
Therefore, to compensate for these abnormalities, airliner
must maintain a healthy cash reserve.
GMG has now planned to keep such reserve so that it can
combat unforeseen uncertainties. Increased cash flow coming
in from increased routes operation with the new aircraft being
purchased will enable GMG to keep this reserve in the coming
years.
GMG is the first private airline in the country and the company
follows all the rules and regulations. Change in regulations
will bring changed strategies of doing business by the dynamic
management of the company.
Risk & Sensitivity to Events of
Uncertainty
The airline industry is highly sensitive to external shocks such
as terrorist attacks, natural disasters, climate changes, etc.
These unpredictable events can shut airports, cancel flights,
and terminate services for airliners for a prolonged period of
time and cause significant amount of losses for the company.
17
Description of Assets
Location of Aircrafts and other assets of the company and their
condition
The head office of the company is located at Nikunja, Dhaka and the main hub is located in Hazrat Shah Jalal International Airport,
Dhaka. All the Aircrafts of the company are stationed in the main hub when not flying.
Value of the Assets
GMG Airlines owns the following assets and the table below represents the classifications of operating assets along with the written
down value of the same as at 30 September 2010 and 1 January 2010.
SI. Particulars
Cost
Depreciation
Cost as on
Addition
Cost as on Depreciation Rate
Charged
Total
Written down
01.01.10
30.09.10 as on 01.01.10
% during the year Depreciation Value on 30.09.10
As on 30.09.10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Building & Construction
Aircraft Tools& equipment
Electrical Equipment
Renovation & Decoration
Technical Manual
Computer Reservation System
Office Equipment
Vehicle
Furniture& Fixtures
Crockeries & Cutleries
Ground Support Equipment
Aircraft-AAA
Aircraft-ADX
Aircraft-ADO
Hi-Lift& Engine
Total: 30.09.2010
Total: 31.12.2009
6,525,81 7
682,179,546
6,239,683
36,284,199
14,736,019
31,273,344
33,393,550
22,749,091
16,326,236
3,703,917
655,317,672
288,476,642
738,000,000
40,600,000
88,552,482
2,664,358,197
1,803,195,098
102,744
6,628,561
400,147,921 1,082,327,467
69,780
6,309,463
5,807,959
42,092,158
6,277,344
21,013,363
52,075,269
83,348,613
11,982,190
45,375,740
3,509,600
26,258,691
496,293
16,822,529
685,661
4,389,578
267,775,421 923,093,093
- 288,476,642
- 738,000,000
45,370,500
85,970,500
-
88,552,482
794,300,681 3,458,658,879
861,163,099 2,664,358,197
Operating Lease
The Company has taken the following aircraft on operating lease:
1. 2 x B767-300ER
2. 2 x MD-82
3. 1 x Dash8-300
18
5,616,270
20
54,402,150
15
4,599,584
15
15,876,869
15
5,395,746
10
12,315,104
10
15,958,074
15
9,189,293
20
7,985,621
10
717,369
10
38,635,398
15
36,764,642
4
29,520,000
4
-
4
38,950,419
15
275,926,539
136,610,590
136,432
70,624,957
184,511
2,295,825
700,520
1,421,868
1,961,491
2,033,970
625,546
223,991
69,376,756
7,551,360
21,254,400
1,218,000
5,580,232
185,189,859
139,315,949
5,752,702
125,027,107
4,784,095
18,172,694
6,096,266
13,736,972
17,919,565
11,223,263
8,611,167
941,360
108,012,154
44,316,002
50,774,400
1,218,000
44,530,651
461,116,398
275,926,539
875,859
957,300,360
1,525,368
23,919,464
14,917,097
69,611,641
27,456,175
15,035,428
8,211,362
3,448,218
815,080,939
244,160,640
687,225,600
84,752,500
44,021,831
2,997,542,481
2,388,431,659
VAT, Income Tax and Customs Duty
1.
There are no VAT and/or Customs duties outstanding of the company.
2.
Details of Income Tax Assessment
Financial Year
31-12-2005
As per Income-Tax (IT) Return
Income /(Loss)
Cumulative
for the year Income /(Loss)
As per IT Assessment
Income /(Loss)
for the year
Cumulative Assessed
Income/(Loss)
Status
-54,154,410
-214,096,881
Finalised.
-54,154,410
-54,154,410
31-12-2006
4,415,434
-49,738,976
4,415,434
-209,681,447
Finalised.
31-12-2007
58,251,018
8,512,042
199,377,506
-10,303,941
Under Appeal with Income-tax Tribunal
31-12-2008
-38,275,223
-29,763,181
- - Under Assessement.
31-12-2009
375,061,148
345,297,967
- - IT Return submited.
19
Funding Requirement
Description of share capital
Types of share capital
Number of Shares
Amount (in Tk.)
Authorized Share Capital*
500,000,000
5,000,000,000
Paid up share capital**
246,660,000
2,466,600,000
To be issued though IPO
60,000,000
600,000,000
Paid up capital (Post IPO)
306,660,000
3,066,600,000
*
The Authorized share capital has been increased from Tk. 1,500,000,000 to Tk. 5,000,000,000 on April 11, 2010. In addition, the share
denomination has been reduced from Tk. 100 to Tk. 10 on the same date.
**
The paid up share capital has been increased from Tk. 2,266,600,000 to Tk. 2,466,600,000 on December 14, 2010.
Capital Structure
Particulars
Shareholders’ Equity
Share Capital
Share Premium Account*
Revaluation Surplus
Retained Earnings
Share money deposits
Total
as at 30 Sep 2010
as at 31 Dec 2009
2,266,600,000
2,400,000,000
330,195,439
788,725,982
-
600,000,000
330,195,439
23,385,362
380,000,000
5,785,521,421
1,333,580,801
*Share Premium Account has increased by Tk. 800,000,000 to Tk. 3,200,000,000 on December 14, 2010.
Debts
Long term loan
Short term loan
Total
422,457,253
110,964,704 533,421,957
716,026,704
1,257,896,577
1,973,923,281
Use of proceeds
The Company is planning to raise about Tk. 9 billion from the capital market through IPO. The IPO proceeds will be utilized in the following
manner:
Usage of Proceeds
Pre-Delivery Payment to Aircraft Suppliers
Construction of Hanger and Related Equipment
(Maintenance & Repair Facility for own & third party aircraft)
Repayment of Loans
Balance as Working Capital
Total
20
Amount in BDT
5,500,000,000
1,300,000,000
550,000,000
1,650,000,000
9,000,000,000
1) Signing Fee and Down Payment to Aircraft Suppliers: IPO
proceeds will be used for Signing Fee and Down Payment (15%)
to the aircraft suppliers.
GMG intends to purchase brand new aircraft and related spares
and tooling as follows:
a) Four Turbo Props, two each of 50 seats and another two
of 70 seats; probable models being ATR 42-600/72-600 or
Bombardier Dash8-400; list price USD 18 million and USD 21
million each respectively. These will replace its existing three
Dash8 aircraft.
b) Four new generation narrow body aircraft with options for
three additional aircraft; probable models being Boeing
737-800 or Airbus A 320 with a capacity of around 180 seats;
list price USD 70 million each. These will replace its existing
three MD 80 aircraft.
c) Four wide body aircraft with options for three additional
aircraft; probable models being Boeing 777-200ER or Airbus
A330-300 with a capacity of above 300 seats; list price USD
230 million and USD 180 million respectively. These will
replace its existing and proposed B767-300ER aircraft.
Balance 85% of the aircraft price is financed by US EXIM Bank in
the case of Boeing and European Credit Agency (ECA) in the case
of Airbus as along term soft loan.
GMG management intends to negotiate vigorously with both
Boeing and Airbus in order to finalize the purchase substantially
below the list prices quoted above and intends to place the order
to the most competitive bidder.
Based on expected outcome of negotiations with Boeing and
Airbus an estimated amount of Tk. 8,500,000,000 is required to be
paid as signing fee and down payment prior to Aircraft delivery.
An amount of Tk. 5,500,000,000 will be utilized out of the IPO
proceeds and balance payment will be generated from own cash
flow. 2) Construction of Hanger and Maintenance Facility: A portion of the
IPO proceeds will be used for construction of a Hanger with full
Maintenance and Repair facilities at Hazrat Shahjalal International
Airport. This hanger will be able to give service to extend C check
(which is a vital routine check for every aircrafts). After completion
of this hanger, GMG’s own aircraft as well as third party aircrafts
will be able get serviced from this facility. Considering the huge
number of aircrafts coming in and going out from this airport
GMG expects a good amount of revenue from this operation.
GMG’s new hanger will be certified as a JAR 145 / EASA 145
(European Regulatory Approved) & FAA (USA Regulatory
Approved) MRO (Maintenance & Repair Organization) ensuring
highest level of safety standards.
3) Repayment of Long Term Loan: IPO proceeds will be used for
repayment of entire long term loans which is currently in the
form of finance lease. This includes payment for the outstanding
balance from Dhaka Bank (Tk. 90.39 million) led consortium
finance lease for one Dash-8 100 series aircraft and payment for
IIDFC led consortium finance lease (Tk. 459.61 million) for one
Dash-8 Q300 series aircraft. Lease finance outstanding against
ground service equipment from Premier leasing will also be fully
paid off.
4) GSE Equipment with Hanger: An amount of BDT 530 Million
from the IPO proceeds will be to procure GSE Equipment with
Hanger. Ground handling equipment is required to turn around
aircraft during operations and includes tow trucks, air-starter
carts, air-conditioning carts, catering trucks, ground power units,
water and toilet servicing carts, stairs and a host of cargo loading
/ unloading equipment. This included tow bars and fly-away
kits for both narrow body and wide body aircraft. In the future
there may be a possibility of using this equipment for third party
ground handling also.
5) Balance as Working Capital: A portion of the IPO amount will be
utilized to cover the flotation cost for the IPO. The balance amount
shall be used as working capital to meet costs of opening new
routes and offices; and working assets. According to the worldwide aviation industry norms, airlines are required to keep at
three to six months expenditures’ worth of free cash flows to meet
cyclical trends and unforeseen calamities. Appropriate amount
of working capital will be maintained to meet international
operational standards of liquidity.
21
Financial Performance
Historical Financial Performance
GMG’s revenue mainly comes from passenger flights
and handling cargos and mails. GMG improved its
financial performance in the first nine months of 2010
after experiencing a fall in revenues in 2009 from 2008
by 21.77%. The increase was propelled mainly by an
increase in the number of business and leisure flights
and the migration of labor to the Middle East and
Malaysia. GMG is projected to end the year with the
profit margins demonstrated in the graph above. After
the fall in sales in 2009, sales have shown an upward
trend and are expected to continue that trend for the
foreseeable future. Growth in EBITDA was substantially
higher in 2009 than in 2008 due to relatively lower
operating costs in 2009.
GMG also experienced a fall in COGS in the first nine
months of 2010 and is expected to end the year with
COGS being 57.02% of sales down from 77.80% from
2009. Although GMG did not face pressure from the
global financial crisis like other global airlines that faced
huge losses in 2008, GMG did make a loss of BDT 38
million in 2008 because of a spike in jet fuel prices and
high aircraft lease expenses during that year. However
in 2009 the company earned a net income of 326.47
million, the highest amount of net profit GMG ever
made since its inception in 1998. GMG has projected
to generate a much higher net income of BDT 1,185.93
million by the end of 2010.
Overall Liquidity position of the company improved
during the first nine months of 2010 as current maturity
of long-term debt decreased in current liabilities.
Its current assets, which include stocks and spares,
receivables and cash all, increased substantially in the
first nine months of 2010 from 2009 and 2008. Though
negative, the net working capital to total assets has
been gradually decreasing from -125.21% in 2005 to
28.04% in 2010. The inventory of the company which
consists of spare parts, unsold tickets and catering
stock showed an increasing trend over the last five
years and in 2009 inventory balance almost doubled
from 2008 mainly due to an increase in spare parts.
50.00%
30.00%
20.00%
10.00%
0.00%
22
2006
2007
2008
2009
2010 (P)
10
8
Sales Growth(%)
EBITDA Growth (%)
6
4
2
0
2007
-2
2008
2009
2010 (P)
120 %
100%
COGS as % of Sales
80 %
60 %
40 %
20 %
0%
2006
2007
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2008
2009
2010 (P)
Sales
EBITDA
Net Profit net of Tax
2006
2007
-1,000
figure in million taka
2008
2009
2010 (P)
2.5
2
Current Ratios
Quick Ratios
Net Working Cap.
To Total Assets
1.5
1
0.5
0
-0.5
-1
Gross Profit margin
Operating Profit margin
Net profit margin
40.00%
2006
2007
2008
2009
2010 (P)
Highlights of historical financial information
a) Balance Sheet and Income Statement Caption
Particulars
2006
2007
2008
Balance Sheet Caption
Non Current Asset
238,177 293,663 1,947,667 Current Asset
195,664 538,677 738,607 Total Asset
433,841 832,340 2,686,274 Current Liabilities
629,215 960,707 1,889,906 Non Current Liabilities
36,372 45,955 469,258 Shareholder’s Equity
(231,746)
(174,322)
327,109 Share Premium account
- - - Share Money Deposit
- - 77,200 Revaluation Surplus
- - 330,195 Proposed Stock Dividend
- - - Liabilities & Shareholder’s Equity
433,841 832,340 2,686,273 Income Statement Caption
Revenue
709,626 2,467,485 3,717,470 Gross Operating Profit
52,031 138,493 79,747 Net Profit Before Tax
7,964 63,592 94,037 Net Profit/(Loss) After Tax
4,415 57,423 94,037 (Amount in Tk. ‘000)
2009
2,705,500 1,533,123 4,238,623 2,188,360 716,682 1,333,581 - 380,000 330,195 - 4,238,623 2,908,066 647,041 375,061 326,472 30th Sep, 10
4,873,150
2,618,270
7,491,420
1,282,492
423,407
5,785,521
2,400,000
- 330,195
- 7,491,420
3,896,640
1,428,368
1,224,545
765,341
b) Growth
Particular’s
Revenue
Gross Operating Profit
Net Profit Before Tax
Net Profit/(Loss) After Tax
Non Current Asset
Non Current Liabilities
Shareholder’s Equity
in %
2007
2008
2009
30th Sep, 10 Averages
247.72 166.17 698.49 1,200.63 23.30 26.35 (24.78)
50.66 (42.42)
47.88 63.76 563.23 921.13 (287.65)
(21.77)
711.37 298.84 247.17 38.91 52.73 307.69 33.99 120.75 226.49 134.43 80.12 (40.92)
333.83 82.83
254.90
339.12
438.93
188.15
255.81
87.76
c) Selected Ratios
in %
Ratio
2006
2007
2008
2009
30th Sep, 10
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Current Ratio (Times)
Quick Ratio (Times)
Total Asset Turnover
Return on Assets (ROA-Ungeared)
Return on Equity (ROE)
47.82 21.45 0.62 0.31 0.11 1.64 1.02 (1.51)
40.11 18.35 2.33 0.56 0.19 2.96 6.90 26.09 47.35 29.61 2.53
0.39 0.16 1.38 3.50
28.75
56.13 30.25 11.23 0.70 0.26 0.69 7.70 24.48 65.28
42.74
19.64
2.04
0.86
0.52
10.22
13.23
23
Determination of the offering price
GMG Airlines Limited is one of the leading market participants having about BDT 3.9 billion of operating revenue
within 9 months of 2010 in the airline industry of Bangladesh. The leading private airline of the country is enjoying a
high growth in revenue and net profit in the past couple of years. As shown in the previous part that revenue has an
average growth rate of 77.65%. Gross profit and operating profit has grown by at an average rate of more than 50%
& 25% per year respectively. Net profit after tax has a compounded annual growth rate of 81% (from 2006 to 2010).
Moreover, company’s non current asset base has a high growth rate. The ungeared ROA in 2009 was 20.75% and in
2010 was 22.23%; average during the last 5 years was 34.70%. ROE was 24.48% in 2009 and 13.23% in 2010; this was
negative in previous years. Overall ROA and ROE are compare favorably with other companies in this industry.
GMG Airlines’s degree of leverage line is downward sloping starting from 7.21 in 2008 to only 0.29 in 2010. The
interest coverage ratio remains above 3 for the last couple of years and reached as high as 11.09 in 2008, while the
debt service coverage ratio remained in the single digit around unity. The derived indications of financial analysis
show the financial stability of the company as well as proof of its earning consistency of past years.
Based on the past trend of business growth and future earning generation capacity, four valuation methods were
used by GMG in setting the Indicative Price of its shares. Earning-based Value that reflects earnings on the price of
shares is the most important valuation method. Net Asset Value gives asset-backing to the shares of a Company
is another important valuation method. Earnings-based Value and Book Value-based Value of similar stock have
been taken to estimate a theoretical fair price that gives us good indication of market demand for the shares of
a company. The weighted average price derived from the four valuation methods, giving equal weight, is the
indicative offer price for the shares of GMG Airlines Limited to be issued through the IPO under Book Building
Method.
Share Price based on Net Asset Value (NAVPS)
PARTICULARS
TAKA
Share Capital as at 30.09.2010
Share Premium
Reserve and Surplus
Total Shareholders Equity
Number of Ordinary Shares as at 30.09.2010
226,66,00,000
240,00,00,000
111,89,21,421
578,55,21,421
22,66,60,000
Net Asset Value Per Share
25.53
Earning Based Value Per Share (EBVPS)
Financial Year
2006
2007
2008
2009
Annualized 2010
Average EPS
Net Profit After Tax
No. Of Share
Earning Per Share
4,415,434 17,138,500 0.26
6,007,723 94,036,520 326,471,623 765,340,619 17,138,500 22,280,500 42,454,584 99,072,912 0.35
4.22
7.69
10.31
4.56
The restated average EPS stands at Tk. 4.56. If we consider the share price of the company on the basis of Price Earning multiple of 10
the earning based value of shares of the Company stands at Tk. 45.60.
24
Share Price Based on PE Ratio of Similar Stocks (Service Sector)
Name of the Company
Face Value
EPS
One Year Average Market Price*
PE (X)
Samorita Hospitals Ltd.
100
27.77
1205.94
43.43
Eastern Housing Ltd.
100
18.28
1038.59
Summit Alliance Port Ltd.
10
3.66
220.67
Ocean Container Ltd.
10
3.39
177.19
United Air Ltd.
100
7.80
545.55
Total Average PE (X)
56.82
60.29
52.27
69.94
282.74
56.55
* December 2009- November 2010, Source : DSE Database
Annualized EPS 10.31
Representative PE Multiple (X) 56.55
Fair Value = 10.31 X 56.55 = 583.03
Share Price Based on P/BV Ratio of Similar Stocks (Service Sector)
Name of the Company
Face Value
EPS
NAV
One Year Average Market Price*
P/BV Ratio
Samorita Hospitals Ltd.
100
27.77
138.48
1205.94
8.71
Eastern Housing Ltd.
100
18.28
153.96
1038.59
6.75
Summit Alliance Port Ltd.
10
3.66
30.81
220.67
7.16
Ocean Container Ltd.
10
3.39
49.62
177.19
3.57
United Air Ltd.
100
7.80
102.59
545.55
5.32
Total
31.51
Average P/BV Ratio
6.30
* December 2009- November 2010, Source : DSE Database
Net Asset Value Per Share
Representative P/BV Multiple
Fair Value
= 25.53
= 6.30
= 160.84
Pricing under Book Building Method:
Specific Value
Weightage
Weighted Value
Net Asset Value Per Share (NAVPS) 25.53
25%
6.38
Earning Based Value Per Share (EBVPS)
45.60
25%
11.40
Share Price Based on PE Ratio of Similar Stocks (Service Sector)
583.03
25%
145.76
Share Price Based on P/BV Ratio of Similar Stocks (Service Sector)
160.84
25%
40.21
203.75
Therefore, from a conservative viewpoint, an Indicative Price of Tk 150 is recommended.
Disclaimer: Estimates and projections herein are our own and are based on assumptions that we believe to be reasonable. Information
presented herein, while obtained from sources we believe to be reliable, is not guaranteed either as to accuracy or completeness.
Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any security. As it acts for
public companies from time to time, JCIL may have a relationship with the above-mentioned company(s). This report is intended for
distribution in only those jurisdictions in which JCIL is registered. Redistribution of this report in any format, to any recipient other than
initially intended by the Firm, is strictly prohibited.
25
Book Building Method
Book Building is a process through which an issuer attempts
to determine the price to offer its security based on demand
from institutional investors. Under the process, the price of an
IPO share will be determined through an automated bidding to
be participated by different financial institutions and then the
share will be opened for the IPO participant at the cut-off price
determined during the book building process. The bidding
will be handled through a uniform and integrated automated
system of the stock exchanges, or any other organization as
decided by the Commission, especially developed for book
building method. The entire procedure of price discovery under
book building method is delineated below:
a) The issuer/issue manager shall issue invitation to the
eligible institutional investors, both in writing and through
publication in at least 5 (five) widely circulated national dailies,
giving at least 10 (ten) working days time, to the road show/
presentation/seminar indicating time and venue of such event.
b) The invitation letter shall accompany an information
document containing all relevant information covering
the proposed issue of the issuer. The eligible institutional
investors shall submit indicative price to the issuer/issue
manager, signed jointly by the Chief Executive Officer
(CEO) and the Financial Analyst, highlighting the factors
taken into consideration in support of the indicative price,
within the next 3(three) working days of the said road show/
presentation/seminar;
c) The indicative price band will be fixed based on the past
performance, expected future earnings of the issuer and
the P/E ratio of other peer companies in the industry and
the determination of indicative price involves the following
institutional investors registered with or approved by SEC in
this regard
•
•
•
•
•
•
•
•
Merchant Bankers except the issue manager of the
proposed issue
Foreign institutional investors
Recognized pension funds and provident funds
Banks and NBFIs under regulatory control of Bangladesh
Bank
Insurance Companies regulated under Insurance Act,
1938
Institutional venture capital and institutional investors
Stock Dealers
Any other artificial juridical person permitted by the SEC
for this purpose
d) Issuer in association with issue manger and eligible
institutional investors quote an indicative price in the
prospectus with the rationale for such price and submit
the prospectus to the Commission with copy to the stock
exchanges.
e) The indicative price range shall be determined as per price
indications obtained from at least 15 (fifteen) eligible institutional
investors covering at least 3 (three) different categories including
at least 5 (five) merchant banks of such investors.
26
f) Eligible institutional investors bidding shall commence after
getting consent from the Commission for this purpose.
Institutional bidding period will be 3 to 5 (Three to Five) working
days which may be changed with the approval of the Commission.
g) Eligible institutional investors (EIIs) shall not be allowed to
participate in the bidding unless they participate and quote
in the Road Show for setting the indicative price. The EII
participating in the Road Show and quote price must also
participate in the bidding. The issuer and issue manager will
jointly submit the attendance sheet and the quoted price by
the EII along with the draft prospectus to SEC.
h) Prospectus will be posted on the Websites of the
Commission, stock exchanges, issue manager and issuer
at least 2 (two) weeks prior to the start of the bidding to
facilitate investors to know about the company and all
aspect of offering.
i) The indicative price shall be the basis for formal price building
with an upward and downward band of 20% (Twenty Percent)
of indicative price within which eligible institutional investors
shall bid for the allocated amount of security.
j) If institutional quota is not cleared at 20% (Twenty Percent)
below indicative price, the issue will be considered cancelled
unless the floor price is further lowered within the face value
of security. Provided that the issuer’s chance to lower the
price shall not be more than once.
k) No institutional investor shall be allowed to quote for more
than 10% (Ten Percent) of the total security offered for sale,
subject to maximum of 5 (Five) bids.
l) The volume and value of bid at different prices will be
displayed on the monitor of the said system without
identifying the bidder.
m) The institutional bidders will be allotted security on pro-rata
basis at the weighted average price of the bids that would
clear the total number of securities being issued to them.
n) Institutional bidders shall deposit their bid with 20% (Twenty
Percent) of the amount of bid in advance to the designated
bank account and the rest amount to settle the dues against
security to be issued to them shall be deposited within 5
(Five) working days prior to the date of opening subscription
for general investors.
o) In case of failure to deposit remaining amount that
is required to be paid by institutional bidders for full
settlement of the security to be issued in their favor, 50%
(Fifty Percent) of bid money deposited by them shall be
forfeited by the Commission. The securities earmarked
for the bidder who defaulted in making payment shall be
added to the general investor quota.
p) The time gap between closure of bidding by Eligible Institutional
Investors and subscription opening for general investors is 25
working days or as may be determined by the Commission.
q) The securities will be offered to the general investors, NRBs
and Mutual Funds at the cut-off price determined during the
book building process.
Market for Securities Being Offered
The issuer shall apply to all the stock exchanges in Bangladesh within seven working days from the date of
consent accorded by the Commission to issue prospectus.
DECLARATION ABOUT THE LISTING OF SHARES WITH THE STOCK EXCHANGE(S)
None of the stock exchange(s), if for any reason, grants 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(s), or from the date of expiry of
the said 75 days, as the case may be.
In case of non-refund of the subscription money within the aforesaid fifteen days, the Company’s Directors, in
addition to the issuer company, shall be collectively and severally liable for refund of the subscription money,
with interest at the rate of 2% (two percent) per month above the bank rate, to the subscribers concerned.
The issue manager, in addition to the issuer company, shall ensure due compliance of the above mentioned
conditions and shall submit compliance report thereon to the Securities and Exchange Commission within
seven days of expiry of the aforesaid fifteen days time period allowed for refund of the subscription money.
27
Description of Securities
Outstanding or Being Offered
Dividend, Voting and Preemption
Right
In case of any declaration of cash/stock dividend by
the Company or distribution of any property of the
Company, all the shareholders shall be entitled to it
in proportion to their shareholdings on the date of
the book closure or record date for the purpose. The
Company will follow a dividend policy, which will
allow it to provide a fair return on its shareholders’
investment and simultaneously allow for building
up of the retained earnings and reserves as a
rule that would sustain growth of the Company.
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
28
Association of the Company. All shareholders shall
have the usual voting right in person or by proxy
in connection with, among others, election of
Directors and Auditor(s) and other usual agenda
of General Meeting – Ordinary or Extra ordinary.
On a show of hand, every shareholder present in
person and every duly authorized representative
of a shareholder present at a General Meeting shall
have one vote and on a poll every shareholder
present in person or by proxy shall have one vote
for every share heldby him or her. In case of any
additional issue of shares for raising further capital
the existing shareholders shall be entitled to Rights
Issue of shares in terms of the guidelines issued by
the Securities and Exchange Commission from time
to time.
Conversion and Liquidation Right
The Company in its General Meeting may convert
paid-up shares to any denomination. No special
preferences or privileges shall be attached to this
conversion. If the company at any time issues
Preference Shares or Debentures or Bonds with
the consent of SEC, such holders of securities shall
be entitled to convert such securities into ordinary
shares if it is so determined by the company. In
case of winding- up or liquidation of the Company,
all shareholders have the same privileges and
advantages as ordinary shareholder as regards
participation in profits and voting at meetings of
the Company.
Right for Transfer
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 shares shall be
transferred to an infant or a person of unsound
mind.
Dividend Policy
I. The profits of the Company, subject to any
special right relating thereto created or
authorized to be created by the Memorandum
of Association and subject to the provision 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 larger dividend shall be declared than
is recommended by the directors, but the
Company in its General meeting may declare a
smaller dividend. If preference share dividend is
not paid in one year, such unpaid dividend shall
be carried forward to the next year or years; and
become cumulative.
III. The declaration of directors as to the amount of
net profit of the company shall be conclusive.
profits and general reserves. Dividend shall not
carry interest as against the Company.
V. The Directors may from time to time pay off the
members such interim dividend as appear to
the Directors to be justified by the profits of the
Company.
VI. A transfer of shares shall not pass the right
to any dividend declared thereon after such
transfer and before the registration of the
transfer.
VII.There is no limitation on the payment of
dividends to the common stockholders.
Other Rights of Shareholders
The shareholders shall have the right to receive
all periodic reports and statements, audited as
well as unaudited, published by the company
from time to time. The directors shall present
the financial statements as required under the
law and International Accounting Standards and
International Financial Reporting Standards as
adopted by the Institute of Chartered Accountants
of Bangladesh. Financial statements will be
prepared in accordance with International Financial
Reporting/Accounting Standards, consistently
applied throughout the subsequent periods and
present with the objective of providing maximum
disclosure as per law and international Financial
Reporting/Accounting Standard to the shareholders
regarding the Financial and operational position of
the company.
In case of any declaration of stock dividend through
issue of Bonus Shares, all shareholders shall be
entitled to it in proportion to their shareholdings
on the date of book closure or record date for the
purpose.
The shareholders holding not less than 10% of the
issued/fully paid up capital of the Company shall
have the right to requisition Extra-Ordinary General
Meeting (EGM) of the Company as provided under
Section 84 of the Companies Act, 1994.
IV. No dividends shall be paid otherwise than out of
the profits of the year or any other undistributed
29
Availability of Securities
Particulars
Number of Shares
30% of IPO of Ordinary Shares is reserved for
Eligible Institutional Investors through Book Building Method
18,000,000
10% of IPO of Ordinary Shares is reserved for Mutual Funds
6,000,000
10% of IPO of Ordinary Shares is reserved for Non-Resident Bangladeshis (NRB)
Remaining 50% of IPO of Ordinary Shares is reserved for General Public
Total
60,000,000
1)
20% of the total public o?ering shall be reserved for the Eligible Institutional Investors (EII), 10% shall be reserved
for mutual funds, 10% for non-resident Bangladeshi (NRB) and the remaining 60% shall be open for subscription by
the general public.
2)
The Institutional Investors will be allotted security on a pro-rata basis at the weighted average price of the bids that
would clear the total number of securities being o?ered to the Institutional investors.
3)
The securities o?ered to the Mutual Funds, NRBs and General Public would be at the cut-o? price determined
during the Book Building Process.
4)
In case of over-subscription under any of the categories mentioned in the above table, the Issue Manger shall
conduct an open lottery of all the applications received under each category separately in accordance with the
letter of consent issued by the Securities and Exchange Commission.
5)
In case of under-subscription under any of Mutual Funds or NRB category as mentioned in the above table, the
unsubscribed portion shall be added to the general public category, and, if after such addition there is oversubscription in the general public category the issuer and the issue manager shall jointly conduct an open lottery
of all the applicants added together.
6)
In case of under-subscription of the public o?ering, the unsubscribed portion of shares shall be taken up by the
underwriter(s).
7)
The lottery as stated in clause (5) and (6) should be conducted in the presence of the representatives of Issuer, stock
exchange(s) and the applicants, if there be any.
30
6,000,000
30,000,000
Corporate Directory
GMG Airlines Limited
Registered Office:
ABC House (9th Floor)
8 Kamal Ataturk Avenue
Banani C/A, Dhaka - 1213
Plot no. 1 & 3,, Road 21, Nikunja - 2, Dhaka - 1229
Tel: +88-02-8922248, 8924274, Fax: +88-02-8924390
Email: ipo@gmgairlines.com,
Website: www.gmgairlines.com
Auditor:
S. F. Ahmed & Co
Chartered Accountants
House 25, Road 13A, Block D, Banani, Dhaka 1213
Legal Advisor:
The Legal Minds
Barristers, Advocates & Associates
House No. 44, Road 3/A, Dhanmondi R/A, Dhaka - 1209
Manager to the Issue:
Janata Capital & Investment Limited
57 Purana Paltan, Dhaka-1000
Phone: 88 (02) 7176421, 7176720
Fax: 88 (02) 7110496
E-mail: Info@jcil.com.bd
Registrar to the Issue:
BANCO FINANCE & INVESTMENT LIMITED
ISPAHANI BUILDING (3RD FLOOR)
14-15 MOTIJHEEL C/A, DHAKA-1000
Shahab Sattar
Managing Director
31
Financials
32
Issue Manager
: Janata Capital and Investment Ltd.
Auditors’ Report
To the Shareholders of GMG AIRLINES LIMITED
We have audited the accompanying Balance Sheet of GMG Airlines Limited as at 30 September 2010 and the related Income Statement,
Cash Flow Statement and Statement of Changes in Equity for the year then ended along with Notes thereto. The preparation of these
Financial Statements is the responsibility of the company’s management. 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 plan and perform
the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by the management as well as evaluating the overall presentation of
the Financial Statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the Financial Statements, prepared in accordance with Bangladesh Accounting Standard (BAS), give a true and fair view of
the state of the company’s affairs as of 30 September 2010 and of the results of its operations and its Cash Flow 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 account as required by law have been kept by the company so far as it appeared from our examination of those books; and
(c)
the company’s Balance Sheet, Income Statement and Cash Flow Statement dealt with by the report are in agreement with the
books of account.
(d)
the expenditure incurred was for the purpose of the company’s business.
Dated, Dhaka;
01 November, 2010
S. F. Ahmed & Co.
Chartered Accountants
35
Balance Sheet
as at 30 September 2010
Amount in Taka
Notes
9 month’s ended 30 Sept’ 2010
Year ended
31 Dec’ 2009
SOURCES OF FUND
Shareholders’ fund:
5,785,521,421
1,333,580,801
Share capital
Share premium account
Share money deposit
Reserve & surplus
3
4
5
6
2,266,600,000
2,400,000,000
-
1,118,921,421
600,000,000
380,000,000
353,580,801
Long Term fund:
423,407,401
716,681,850
Secured
Long-term loans net off current maturity
7
422,457,253
716,026,704
Unsecured
Security deposit from travel agencies
8
950,148
655,146
Total:
6,208,928,822
2,050,262,651
9
10
2,997,542,481
1,875,607,729 2,388,431,659
317,068,639
APPLICATIONS OF FUND
Long -term Assets:
Fixed assets at cost less accumulated depreciation
Intangible assets
4,873,150,210
2,705,500,297
11
12
13
14
713,076,606
896,590,252
796,820,173
211,783,413
462,063,132
547,212,336
493,400,763
30,446,273
Current liabilities & provisions:
1,282,491,832
2,188,360,150
Short term loans
15
Accounts & other payables
16
Provision for taxation
110,964,704
663,733,859
507,793,270
1,257,896,577
881,874,048
48,589,525
Net current Assets
1,335,778,612
(655,237,647)
Total:
6,208,928,822
2,050,262,651
25.53 15.89
Stores and spares
Accounts & other receivables
Advances, deposits & prepayments
Cash in hand & bank balances
Net Asset Value Per Share (NAVPS)
17
The accompanying notes form an integral part of this financial statement and are to be read in conjunction therewith. Chairman
Director (F&A)
GMG Airlines Limited Managing Director
Signed in terms of our report of even date.
Dated, Dhaka;
01 November, 2010
36
S. F. Ahmed & Co.
Chartered Accountantsants
Issue Manager
Income Statement
for the nine month’s from 01 January 2010 to 30 September, 2010
Notes
Amount in Taka
Year ended
31 Dec’ 2009
3,896,639,971
2,908,066,425
Operating revenue
18
Less: Operating expenses
19
2,468,272,098
2,261,025,238
Gross operating profit/(loss)
1,428,367,873
647,041,187
20
189,748,363
253,214,016
Preliminary expenses written off
5,723,365
7,631,160
Amortization of deferred revenue expenses
8,351,154
11,134,863
Less:
Financial expenses
203,822,882
271,980,039
Net operating profit /(loss) before tax
1,224,544,991
375,061,148
Less: Provision for tax
459,204,372
48,589,525
Net operating profit after tax
765,340,619
326,471,623
Accumulated profit brought forward
23,385,362
(303,086,261)
Profit carried forward to Balance Sheet
788,725,981
23,385,362
7.73
7.69
Earning Per Share (EPS) for the period
21
The accompanying notes form an integral part of this financial statement and are to be read in conjunction therewith. Chairman
Director (F&A)
Dated, Dhaka;
01 November, 2010
S. F. Ahmed & Co.
37
Statement of Changes in Equity
Amount in Taka
Particulars
Share
Capital
Share Premium Share Money
Account
Deposit
Revaluation
Surplus
Retained
Earnings
Total
Equity
600,000,000
-
380,000,000
330,195,439
23,385,362
1,333,580,801
-
-
-
-
765,340,619
765,340,620
1,286,600,000
-
-
-
-
1,286,600,000
Balance as on 01 January 2010
Net profit/ (loss) for the year
Issue of shares
Share money deposit transfer
380,000,000
-
-
-
-
2,400,000,000
-
-
-
2,400,000,000
Balance as at 30 September2010
2,266,600,000
2,400,000,000
-
330,195,439
788,725,981
5,785,521,421
Share premium
Chairman
- (380,000,000)
Director (F&A)
Dated, Dhaka;
01 November, 2010
38
S. F. Ahmed & Co.
Issue Manager
Cash Flow Statement
Amount in Taka
9 month’s ended Year ended
30 Sept’ 2010
31 Dec’ 2009
A.
Cash from Operating Activities :
Operating revenues
Operating expenses
Net cash inflow from operation
Financial expenses
Net Cash used by Operating Activities (A):
3,896,639,971
(3,403,940,355)
492,699,616 (189,748,363)
302,951,253
2,908,066,425
(2,645,270,536)
262,795,889
(268,964,016)
(6,168,127)
B.
Cash from Investing Activities :
Acquisition of fixed assets
Deferred expenses for C-Check
Net Cash used by Investing Activities (B):
(794,300,681)
(1,573,707,109)
(2,368,007,790)
(861,163,099)
(39,002,509)
(900,165,608)
C.
Cash from Financing Activities:
Issue of shares including premium
Long term loan ( repaid)/ received
Security deposit from /( refunded to) travel agency
Short term loan (repaid)/ received
3,686,600,000
(293,569,451)
295,002
(1,146,931,874)
680,000,000
284,443,839
(37,020,197)
(25,861,558)
2,246,393,678
901,562,084
Net Cash used by Financing Activities (C):
Net Increase/ (Decrease )in Cash & Cash Equivalents (A+B+C):
181,337,140
(4,771,651)
Opening Cash & Cash Equivalents
30,446,273
35,217,924
Closing Cash & Cash Equivalents
211,783,413
30,446,273
4.97
6.19
Operating Cash Flow Per Share ( OCFPS)
Chairman
Director (F&A)
Dated, Dhaka;
01 November, 2010
S. F. Ahmed & Co.
39
Notes to the Financial Statements
for the nine month’s from 01 January 2010 to 30 September 2010
1
Background, Legal Status and Nature of the Company:
1.1 Background and legal status
GMG Airlines Ltd., was established as a private company, limited by shares, under the Companies Act, 1994 (Act XVIII of 1994) to carry on the
business of Air Transport Services including Passenger, Cargo, Mail, Air Ambulance, Charter, Ferrying, Rescue Evacuation and Training of Pilots,
Technicians, Engineers, Ground Handling (own & third party) handling of Ground Support Equipment etc. and started operation initially under the
Air Transport Operating License No. 8 issued by the Civil Aviation Authority, Bangladesh, on 6th May 1998 for a period of one year subsequently
renewable every year. Afterwards on 10th January 2004, the Civil Aviation Authority, Bangladesh, issued License No. 24 to start operation on
international routes. The company has been converted into a Public Limited Company effective on 11 April 2010.
On 6`h of April 1998, GMG Airlines first took to the skies with a slogan “First Class All the Way” and since then has been providing committed
services. The GMG-fleet is equipped now with 3 (three) modern state of the art DASH 8 series aircrafts manufactured by Bombardier of Canada;
3 (three) MD82/83 aircrafts manufactured by McDonnell Douglas, a subsidiary of the Boeing Company of USA; and 01 (one) B-767-300 3Q8ER
aircraft manufactured by the Boeing Company.
The Company has presently 04 (four) domestic and 08 (eight) international destinations.
1.2 Nature of Business
The principal activities of the company are to provide all kinds of airlines services to customers at home and abroad.
2
Basis of preparation
2.1
Basis of Accounting
The financial statements have been prepared on a going concern basis under historical cost convention on accrual basis and in accordance
with Generally Accepted Accounting Principles (GAAP). The accounting polices have been consistently followed.
2.2
Basis of Preparation and Presentation of the Financial Statements:
The financial statements have been prepared and the disclosures of information therein have been made in accordance with the
requirements of Bangladesh Accounting Standard (BAS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) and
the Companies Act, 1994 (as amended) and other the applicable laws, rules and regulations.
2.3
Significant Accounting Policies
2.3.1 Principle Accounting Policies
Specific accounting policies were selected and applied by the company’s management for significant transactions and events that
have material effect within the framework of BAS-1: ‘Preparation of Financial Statements’ in preparation and presentation of financial
statements. The previous period’s figure was presented according to the same accounting principles.
2.3.2 Basis of Measurement
The financial statements have been prepared using the Historical Cost basis.
2.3.3 Statement of Compliance
The financial statements of the company under reporting have been prepared under historical cost convention in a going concern
concept and on accrual basis in accordance with generally accepted accounting principles and practice in Bangladesh in compliance
with the Companies Act 1994, The Securities and Exchange Rules 1987, The Listing Regulations of Dhaka Stock Exchange Ltd. (DSE)
and Chittagong Stock Exchange (CSE), International Accounting Standards (IAS), as adopted by the Institute of Chartered Accountants
of Bangladesh (ICAB), as Bangladesh Accounting Standards (BAS) and other applicable laws and regulations.
2.3.4 Responsibility for Preparation and Presentation of Financial Statements
The Board of Directors is responsible for preparation and presentation of Financial Statements under the section 183 of the Companies
Act 1994 and as per the provision of ‘The Framework for the Preparation and Presentation of Financial Statements’ issued by the
International Accounting Standards Board (IASB).
2.3.5 Date of Authorization
The Board of Director of GMG Airlines Ltd. has approved these financial statements on 18th October, 2010 for preparation of the
prospectus and include in the said prospectus in order to submit the prospectus and Audited Financial Statements to The Securities
and Exchange Commission (SEC) for public issue of shares of the Company.
2.3.6 Reporting currency and level of precision
40
Issue Manager
The figures in the financial statements represent Bangladeshi Taka, which have been rounded off to the nearest taka except where
indicated otherwise & Figures of the year 2009 have been rearranged whenever considered necessary to ensure comparability with
the current period.
2.3.7 Reporting Period
The financial period of the company covers the period from 01 January to 30 September 2010 (nine month’s).
2.4 Fixed Assets and Depreciation
a) Fixed assets are stated at cost or valuation less accumulated depreciation. Depreciation has been charged on acquisition following “reducing
balance method” at the applicable rates and no depreciation has been charged on the addition during the financial year irrespective of the
date of purchase.
b) The applicable rates of depreciation for each type/category of assets are as follows:
i)
ii)
iii)
iv)
Building & Constructions, Vehicles
Aircraft Tools, Electrical Equipment, Renovations & Decoration,
Office Equipment, Ground Support Equipment, Hi-Lift & Engine
Technical Manual, Computer Reservation System, Furniture &
Fixture, Crockeries & Cutleries
Aircraft
20%
15%
10%
4%
c) The air crafts, engines, lifts and handling equipment acquired on “finance lease” basis, have been capitalized rather than, charging depreciation
and interest, instead of “lease rental”.
d) Re- valuation performed by M/s. Cabot Aviation Service Ltd., an International Firm specializes in aircraft remarketing, at current cost of the two
aircrafts of GMG at 31 December 2008 valued at USD 14,663,952 (Taka 1,000,200,000), resulted in a revaluation surplus of Tk. 330,195,439 and
transferred to the equity as per provision of BAS-16.
2.5 Intangible Assets
Preliminary expenses, deferred revenue expenses and deferred lease rent, deferred expenses for C-Check are written off @ 10% based on actual
hours flown after C- Check incurred for long-term benefit on each year.
2.6 Inventory
In compliance with the requirement of BAS–2 “Inventories”, inventories are stated at the lower of cost and net realizable value. Cost is determined
on a normal average basis for consumable stores, Aircraft spares (Rotable Items) and Catering items. Cost comprises the aggregate of purchase
price plus other related expenses incurred to bring the inventories to their present condition and locations.
2.7 Disposal of Fixed Assets
An asset is recognized on disposal when no future economic benefits are expected from its use and subsequent disposal. Gain or loss arising from
the retirement or disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the assets
and is recognized as gain or loss from disposal of assets under other income in the profit & loss account.
2.8 Cash and Cash Equivalents:
Cash and Cash equivalents include cash in hand and cash at bank, which are held and available for use by the company without any restriction.
There is insignificant risk of changes in value of these current assets.
41
2.9 Impairment
In accordance with the provision of “BAS-36” Impairment of assets, the carrying amount of non financial assets other than Inventories are
reviewed to determine whether there is any indication of impairment. No such indication of impairment has been raised till the date of
our audit.
2.10 Revenue Recognition
Sales of passenger tickets are recognized based on operating revenue after these are availed off/ flown away by the passengers within the
period of their validity or on the average basis where validity of such tickets has expired. Tickets sold but remaining unused represents a
liability and are shown as provision for unavailed tickets or unearned revenue. Other operating revenues represent the invoice value of the
services rendered net of rebate, if any.
2.11 Cash Flow Statement:
The Statement of Cash Flow is prepared principally in accordance with the requirements of BAS- 7 “Cash Flow Statement” under direct
method as required by the Securities and Exchange Rules, 1987 and considering the provisions that “Enterprises are encourage to report
cash flow from operating activities using the direct method.”
2.12 Basic Earning Per Share (EPS):
Earning per Share (EPS) is calculated in accordance with Bangladesh Accounting Standard BAS-33 “ Earning per share” by dividing the basic
earning by weighted average number of ordinary shares that remained outstanding during the year. Since there was no factor & scope to
determine the diluted EPS, only basic EPS has been disclosed in the Income Statement.
Basic of Earning Per Share
Earning Per Share (EPS) has been calculated by dividing the earning attributable to the number of ordinary shares held by the members
during the year period under audit.
2.13 Commission
The company management charged commission as revenue expenditure against the sale of tickets from different agents as per formal
agreement with them varying from 4% to 9% based on the relationship which is renewable in each year.
2.14 Employee Benefits
The company has not introduced any employees benefit plan as per BAS-19 “Employee’s benefits”.
2.15 Borrowing Cost
Financial expenses (Borrowing Costs) incurred during the year was recognized as revenue expenses in accordance with BAS -33 “Borrowing
Cost”.
2.16 Provision for taxation
Current taxation
Provision for current income tax has been made @ 37.5% as prescribed in the Finance Act, 2010 on the accounting profit made as per
income tax law incompliance with BAS-12 “Income Taxes”.
Deferred taxation
The Company is not required to recognize any deferred tax assets and liabilities as per BAS-12 “Income Taxes”.
2.17 Components of the Financial Statements
42
According to the Bangladesh Accounting Standard BAS-1 ‘Presentation of Financial Statements’ the complete set of Financial Statements
includes the following components:
a)
b)
c)
d)
e)
Balance Sheet as at 30th September 2010.
Profit and Loss Account for the nine month’s from 1st January 2010 to 30th September 2010.
Statement of Changes in Equity for the same period.
Cash Flow Statement for the same period.
Accounting policies and explanatory notes.
Issue Manager
2.18 Risk and uncertainties for use of estimates in preparation of financial statement
The preparation of financial statements in conformity with the International Accounting Standards require management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
affecting financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.
Estimates are used for accounting of certain items such as long term contracts, depreciation and employees benefit plans, taxes, reserves
and contingencies.
2.19 Provision
The preparation of financial statements in conformity with the Bangladesh Accounting Standards BAS-37 ‘Provisions, Contingent Liabilities
and Contingent Assets’ require management to make estimates and assumption that affect the reported amounts of revenues and
expenses, assets and liabilities, and the disclosures requirements for contingent assets and liabilities during and at the date of the financial
statements.
In accordance with the guidelines prescribed by BAS-37 provisions were recognised in the following situations:
• When the company has a present obligation as a result of past event
• When it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
• Reliable estimates can be made of the amount of the obligation.
We have shown the provision in the balance sheet at an appropriate level with regard to an adequate provision for risk and uncertainties.
An amount recorded as a provision represents the best estimate of the probable expenditure required to fulfil the current obligation on the
balance sheet date.
2.20 Creditors and Accruals
Liabilities are recognised for amounts to be paid in the future for aviation services received, whether or not billed by the supplier.
2.21 Foreign Currency Translation
Translations in foreign currencies are translated into Bangladeshi taka at the exchange rate prevailing on the date of transactions in
accordance with BAS-21 ‘The effect of changes in foreign currencies rate’. Bank deposit in foreign currency has been translated into taka at
the period end at the rate of exchange ruling on the date.
2.22 Compliance with local laws
The financial statements have been prepared in compliance with the requirements of the Companies Act, 1994, Securities and Exchange
Rules, 1987 and other relevant local laws and rules.
2.23 Related Party Disclosure
Related party is considered if the party is related to the company and exert significant influence over the day to day transactions of the
subject gain as per BAS-24.
2.24 Comparative Information
Financial statements are presented as per BAS-1 “Presentation of Financial Statements” and previous year’s figures have been rounded of
due to changes in some accounting policies as per BAS-8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
43
2.25 Compliance of Bangladesh Accounting Standards (BAS) transformed into Bangladesh Financial Reporting Standards (BFRS):
Title of BAS
Presentation of Financial Statements Inventories
Statement of Cash Flows
Accounting Policies, Changes in Accounting Estimates and Errors
Events after the Reporting Period
Construction Contracts Income Taxes
Segment Reporting Property, Plant and Equipments
Leases Revenue
Employee Benefits
Accounting for Govt. Grants and disclosures of Govt. Assistances The Effects of Changes in Foreign Exchange Rates Borrowing Costs
Related Party Disclosures
Consolidated and Separate Financial Statements
Investments in Associates Disclosures in Financial Statements of Banks and Similar Financial Institutions
Interests in Joint Ventures
Earnings Per Share
Interim Financial Reporting
Impairment of Assets
Provisions, Contingent Liabilities and Contingent Assets
Intangible Assets
Investment Property BAS No.
Status
1
2
7
8
10
11
12
14
16
17
18
19
20
21
23
24
27
28
30
31
33
34
36
37
38
40
Applied
Applied
Applied
Applied
Applied
N/A
Applied
N/A
Applied
Applied
Applied
Applied
N/A
Applied
Applied
Applied
N/A
N/A
N/A
N/A
Applied
Applied
Applied
Applied
Applied
N/A
2.26 Brand Value
44
The Company did not incorporate in the accounts the potential value of its brand “GMG Airlines” (i.e., Strategic Brand Value) estimated at Tk.
10,454,674,938 by Brand Finance (India) Pvt. Ltd., a subsidiary of Brand Finance PLC, United Kingdom.
Issue Manager
3
Amount in Taka
Year ended
31 Dec’ 2009
2,266,600,000
600,000,000
5,000,000,000
1,500,000,000
2,266,600,000
600,000,000
Percentage
Amount in Taka
Amount in Taka
5.15 5.16
0.00
0.00
13.23
76.46
-
-
116,680,310 116,926,230
10,000
10,000
299,980,000
1,732,993,460
-
-
100
2,266,600,000
600,000,000
Share premium account:
2,400,000,000
-
-
380,000,000
Share Capital: 3.1 Authorised
The authorised share capital of the company is Taka
5,000,000,000 (2009: Taka 1,500,000,000) divided into
500,000,000 (2009:150,000,000) shares of Tk. 10 each
3.2 Issued, subscribed & paid-up capital
4
226,660,000(2009:60,000,000) Ordinary shares of
Taka 10 each (Restated)
Details of Shares Holding position are as under:
Name of Shareholders
Mr. Abdus Sattar
Mr. Shahab Sattar
Mr. A S F Rahman
Mr. Salman F Rahman
Bangladesh Export Import Co. Ltd.
General Public & Institutions
Mr. Saleem Sattar
Mrs. V.A. Sattar
Total:
135,297,100
135,295,400
- 300,000,000
29,057,400
350,100
This represents share premium on 60,000,000 shares at Tk. 40 each.
5
Share money deposit:
6
Reserve & surplus:
1,118,921,421
353,580,801
Revaluation surplus (Note-6.1)
Retained earnings (Note- 6.2)
330,195,439
788,725,982
330,195,439
23,385,362
1,118,921,421
353,580,801
6.1 Revaluation surplus:
330,195,439
330,195,439
The detail break up is as follows:
Aircraft-ADX
Aircraft-AAA
216,136,601
114,058,838
216,136,601
114,058,838
330,195,439
330,195,439
Share money deposit has been transfered to share
capital during this period.
Re-valuation by M/s. Cabot Aviation Service Ltd., an International Firm who specializes in aircraft remarketing, at current cost of the two aircrafts
of GMG at 31 December 2008 at USD 14,663,952 (Taka 1,000,200,000), resulted in a revaluation surplus of Tk. 330,195,439.
45
9 month’s ended
30 Sept’ 2010
Year ended
31 Dec’ 2009
6.2 Retained earnings:
788,725,982
23,385,362
(45,923,034)
(18,504,355)
(31,165,130)
(51,838,903)
(75,264,401)
(71,702,143)
(58,144,749)
(55,003,223)
4,415,434
6,007,723
94,036,520
326,471,623
765,340,619
(45,923,034)
(18,504,355)
(31,165,130)
(51,838,903)
(75,264,401)
(71,702,143)
(58,144,749)
(55,003,223)
4,415,434
6,007,723
94,036,520
326,471,623
-
788,725,982
23,385,362
422,457,253
716,026,704
-
433,659,140
74,122,978
16,269,609
352,103,515
489,180,649
94,990,236
24,996,001
524,051,727
961,270,401
-
62,328,865
32,937,084
6,328,525 114,228,000
75,490,118
47,820,876
7,704,703
101,594,474
245,243,697
422,457,253
716,026,704
950,148
655,146
The movement of the above balance is given below:
Opening balance as on 01.01.10
Add: Additions during the period
Less: Adjustment made during the period
655,146
339,918
995,064
44,916
37,675,343
11,700,001
49,375,344
48,720,198
950,148
655,146
The above balance is made-up as follows:
Particulars
Loss- 1998
Loss- 1999
Loss- 2000
Loss- 2001
Loss- 2002
Loss- 2003
Loss- 2004
Loss- 2005
Profit-2006
Profit-2007
Profit-2008
Profit-2009
Profit Sept-2010
7
Long-term loan:
The above balance is made-up as follows :
Sonali Bank Ltd. Term Loan A/C
Payable for Lease Finance-ADX
Payable for Lease Finance-AAA
Payable for Lease Finance-Hi-lift & Engine
Less: Current maturity
Payable for Sonali Bank Term Loan (Note-15)
Payable for Lease Finance-ADX (Note-15)
Payable for Lease Finance-AAA (Note-15)
Payable for Lease Finance-Hi-lift & Engine (Note-15)
8
46
Amount in Taka
Security deposit from travel agencies:
Closing balance as on 30.09.10
Issue Manager
9
Fixed Assets: Taka: 2,997,542,481
SI. Particulars
CostDepreciation
Cost as on
Addition
Cost as on
Depreciation Rate
Charged
Total
01.01.10
30.09.10
as on 01.01.10
% during the year Depreciation
As on 30.09.10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Building & Construction
Aircraft Tools& equipment
Electrical Equipment
Renovation & Decoration
Technical Manual
Computer Reservation System
Office Equipment
Vehicle
Furniture& Fixtures
Crockeries & Cutleries
Ground Support Equipment
Aircraft-AAA
Aircraft-ADX
Aircraft-ADO
Hi-Lift& Engine
Total: 30.09.2010
Total: 31.12.2009
6,525,81 7
682,179,546
6,239,683
36,284,199
14,736,019
31,273,344
33,393,550
22,749,091
16,326,236
3,703,917
655,317,672
288,476,642
738,000,000
40,600,000
88,552,482
2,664,358,197
1,803,195,098
102,744
6,628,561
400,147,921 1,082,327,467
69,780
6,309,463
5,807,959
42,092,158
6,277,344
21,013,363
52,075,269
83,348,613
11,982,190
45,375,740
3,509,600
26,258,691
496,293
16,822,529
685,661
4,389,578
267,775,421 923,093,093
- 288,476,642
- 738,000,000
45,370,500
85,970,500
-
88,552,482
794,300,681 3,458,658,879
861,163,099 2,664,358,197
5,616,270
20
54,402,150
15
4,599,584
15
15,876,869
15
5,395,746
10
12,315,104
10
15,958,074
15
9,189,293
20
7,985,621
10
717,369
10
38,635,398
15
36,764,642
4
29,520,000
4
-
4
38,950,419
15
275,926,539
136,610,590
136,432
70,624,957
184,511
2,295,825
700,520
1,421,868
1,961,491
2,033,970
625,546
223,991
69,376,756
7,551,360
21,254,400
1,218,000
5,580,232
185,189,859
139,315,949
Written down
Value on
30.09.10
5,752,702
875,859
125,027,107
957,300,360
4,784,095
1,525,368
18,172,694
23,919,464
6,096,266
14,917,097
13,736,972
69,611,641
17,919,565
27,456,175
11,223,263
15,035,428
8,611,167
8,211,362
941,360
3,448,218
108,012,154
815,080,939
44,316,002
244,160,640
50,774,400
687,225,600
1,218,000
84,752,500
44,530,651
44,021,831
461,116,398 2,997,542,481
275,926,539 2,388,431,659
Note: Aircraft-ADO converted from operating lease to Finance lease during last year and no depreciation was charged on addition as per our
accounting policy. Depreciation charged for 9 months during the period of Jan-Sep’10 on written down value of last year.
47
10
Year ended
31 Dec’ 2009
1,875,607,729
317,068,639
90,407,670
1,669,184,779
75,951,750
40,063,530
93,694,074
95,477,670
82,110,000
45,786,895
1,875,607,729
317,068,639
10.1 Deferred revenue expenses:
90,407,670
93,694,074
93,694,074
6,246,000
89,078,936
15,750,000
99,940,074
104,828,936
9,532,404
90,407,670
11,134,862
93,694,074
10.2 Deferred expenses for C-check:
1,669,184,779
95,477,670
95,477,670
1,596,164,185
56,475,161
49,720,502
1,691,641,855
106,195,663
Less: Charged during the period
22,457,076
1,669,184,779
10,717,993
95,477,670
10.3 Deferred expenses for lease rent
75,951,750
82110000
82,110,000
6,158,250
75,951,750
82,110,000
82,110,000
10.4 Preliminary expenses
40,063,530
45,786,895
less : Written off during the period
45,786,895
5,723,365
53,418,055
7,631,160
40,063,530
45,786,895
713,076,606
462,063,132
708,540,086
4,064,940
471,580
456,992,579
4,064,939
1,005,614
713,076,606
462,063,132
Intangible assets:
Deferred revenue expenses (Note-10.1)
Deferred expenses for C-Check (Note-10.2)
Deferred expenses for Lease Rent (Note-10.3)
Preliminary expenses (Note-10.4)
Add: Addition during the period
11
48
Less : Written off during the period
Less : Written off during the period
Stores and spares: The above balance is made-up as follows:
i) Spare Parts Inventory
iii) Stock of Air Tickets
iii) Catering Stock
Amount in Taka
The Company has carried out detail verification & inventory of stores and spares as at 30 September 2010 in order to determine the physical
existence of those consumable assets.
Issue Manager
12
Accounts & other receivables:
Accounts receivable
Other receivable
Amount in Taka
Year ended
31 Dec’ 2009
896,590,252
794,762,700
101,827,552
547,212,336
547,212,336
-
896,590,252
547,212,336
These are considered good and appear fully realizable. No amount was written off as bad debts and no debt was considered doubtful of
recovery as explained by the management.
13
Advances, deposits & pre-payments:
The movement of the above balance is given below:
796,820,173
493,400,763
493,400,763
303,419,410
203,760,380
775,890,920
796,820,173
982,355,923
Less: Adjustment made during the period
-
796,820,173
486,250,537
493,400,763
211,783,413
30,446,273
55,937,617
155,845,796
8,222,263
22,224,010
211,783,413
30,446,273
14
Cash in hand & bank balances:
The above balance is made up as follows:
Cash in hand
Cash at banks
Detailed break-up of cash in hand and bank balances are given in Annexure-A/1 & Annexure-A/2 attached herewith the report.
15
Short-term loans:
Sonali Bank Ltd. O/D A/C
Sonali Bank Ltd. CC-Hypo
Dhaka Bank Ltd. loan O/D A/C
Habib Bank Ltd. O/D A/C
Standard Bank Ltd.
Dhaka Bank Ltd. Term loan A/C
Long-term loan (current portion) :
Sonali Bank Term Loan (Note-7)
Payable for Lease Finance-ADX-Current Maturity (Note-7)
Payable for Lease Finance-AAA-Current Maturity (Note-7)
Payable for Lease Finance-Hi-lift & Engine (Note-7)
110,964,704
1,257,896,577
-
-
-
-
9,370,230
-
664,383,683
31,107,012
185,563,019
23,070,232
18,715,425
89,813,509
-
62,328,865
32,937,084
6,328,525
114,228,000
75,490,118
47,820,876
7,704,703
110,964,704
1,257,896,577
Secured overdraft availed by the Company from Sonali Bank Ltd. , Local Office, Dhaka for a period of one year ended on 31 December 2009
which was subsequently renewed for next one year to 31 December 2010.
49
16
Year ended
31 Dec’ 2009
663,733,859
881,874,048
94,120,106
12,141,655
26,216,375
12,670,119
37,633,914
(14,608,764)
108,187,818
188,546,633
79,376,186
24,088,034
34,568,793
23,070,138
3,435,812
1,024,993
33,262,047
65,296,926
12,874,235
121,293,510
14,142,936
26,501,923
102,490,284
174,841,800
80,128,216
10,166,357
11,695,282
6,905,907
3,306,715
252,229,956
663,733,859
881,874,048
25.53
15.89
5,785,521,421
226,660,000
953,580,801
60,000,000
25.53
15.89
Operating revenue: 3,896,639,971
2,908,066,425
Passenger
Mail, EBT & Cargo Handling
3,774,713,613
121,926,358
2,791,546,871
116,519,554
3,896,639,971
2,908,066,425
2,468,272,098
2,261,025,238
1,353,042,608
614,548,472
191,250,057
309,430,961
1,275,771,969
468,363,590
291,905,380
224,984,299
2,468,272,098
2,261,025,238
Accounts & other payables
The above balance is made up as follows:
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)
xi)
xii)
xiii)
xiiii)
xv)
For Local services
For Local goods
For Foreign services
For Foreign goods
For Oil Companies
Insurance & fuel surcharges
Embarkation fee, WO/PSF tax
Departure travel tax
Insurance premium
Tax payable- employees & others
IATA Clearing House
Unearned revenue
VISA charges
BSP commission ORC
Others
17
Net assets value per share (NAVPS)
The computation of NAVPS is given below:
Total Equity
Total no. of Shares
18
19
Operating expenses :
Direct expenses
19.1
Fixed expenses
19.2
Marketing expenses
19.3
Administrative & financial expenses
19.4
50
Amount in Taka
Issue Manager
19.1
Direct expenses:
Aircraft fuel
GSE fuel
In-flight services
Landing, parking & security
Consumption & maintenance
Supplementary rent
Aircraft engine rent
“C” Check expenses
Pax carrying cost
Hotac & training
Engineering & procurement department expenses
Operation department expenses
Ground service, cargo & security department expenses
Ground & cargo handling charges Amount in Taka
Year ended
31 Dec’ 2009
1,353,042,608
1,275,771,969
804,319,274
2,480,722
56,776,767
102,551,825
102,835,451
89,440,043
34,313,659
38,647,685
18,413,776
30,046,534
9,098,082
20,191,416
7,770,924
36,156,450
707,861,717
67,679,293
161,843,444
46,824,608
129,023,321
27,161,399
10,244,471
30,058,615
16,862,399
6,596,263
5,945,885
11,137,716
54,532,840
1,353,042,608
1,275,771,969
19.2
Fixed expenses: 614,548,472
468,363,590
Aircraft lease rent
Foreign expatriate salary
Salary for ops, engg., procurement and GS & S. service
Insurance for aircraft
Airport office rent
214,873,386
145,609,630
94,066,437
153,272,542
6,726,477
189,239,960
47,556,602
88,341,160
132,778,288
10,447,580
614,548,472
468,363,590
191,250,057
291,905,380
11,247,746
179,256
26,700,197
64,650,930
58,492,476
17,766,885
-
10,628
12,201,939
1,387,663
2,611,086
22,397,407
103,172,426
145,096,967
8,135,355
13,620
1,511,973
7,578,883
191,250,057
291,905,380
19.3
Marketing expenses: Advertisement, publicity & promotional expenses
Phone, fax & communication expenses
Salary - sales, marketing & reservation
GDS reservation
Travel agency commission, sales tax and VAT
Sales office rent
Training expenses
Air ticket used
Sales office & reservation dept. expenses
51
19.4
Year ended
31 Dec’ 2009
Administrative & financial expenses:
309,430,961
224,984,299
Salary-accounts, finance & administration
Directors’ remuneration
Depreciation
IATA expenses
General fees & taxes
Uniform and protective clothing
Audit fees
Utility & other charges
Staff canteen expenses
Staff compensation
Bonus paid
Relief, charity & donation
Travelling, conveyance & car maintenance
General advertisement
Finance & administration department expenses
12,957,024
17,052,780
185,189,859
25,072,739
15,564,722
2,278,638
529,686
2,401,052
681,966
415,650
8,503,746
368,734
1,936,695
4,071,303
32,406,367
20,934,820
4,800,000
139,315,949
11,687,083
21,693,288
2,160,364
721,486
2,210,558
6,061,407
471,990
14,927,354
309,430,961
224,984,299
189,748,363
253,214,016
73,358,472
14,128,716
21,714,635
65,778,770
14,767,770
140,933,578
4,214,517
13,538,230
82,153,030
12,374,661
189,748,363
253,214,016
7.73
7.69
765,340,619
99,072,912
326,471,623
42,454,584
7.73
7.69
20
Financial expenses:
This is made up as follows
Bank Interest on OD loan
Bank interest on CC Hypo. loan
Bank interest on demand loan
Lease finance interest on aircrafts
Bank charges & commission
21
Basic earning per share:
The computation of EPS is given below:
a) Net profit (loss) during the period
b) Weighted average number of shares (21.b (1) & 21.b(2)
Basic Earning Per Share (a/b)
21.b (1).
Calculation of Weighted Average number of shares: (30 September 2010)
No. of shares alloted 20 May 2010
XOutstanding period 365
75,996,800 X
132
3 65
No. of shares alloted 30 May 2010 XOutstanding period 365
30,663,200 X
122
365
No. of shares alloted 17 August 2010 XOutstanding period 365
11,375,000 X
43
365
Opening no. of shares
Total Weighted average no. of shares
52
Amount in Taka
= 27,483,774
=1,0249,070
=1,340,068
=60,000,000
=99,072,912
Issue Manager
21.b (2). Calculation of Weighted Average number of shares: (31 December 2009).
No. of shares alloted 05 March 2009
XOutstanding period 365
7,719,950 X
301
365
= 6,366,315
No. of shares alloted 16 July 2009 XOutstanding period 365
30,000,000
X
168
365
Opening no. of shares
Total Weighted average no. of shares=42,454,584
22
= 13,808,219
=22,280,050
Contingent liabilities
The above head represent claims raised by Civil Aviation Authority of Bangladesh (CAAB) for Landing, Parking and Space Rent aggregating to
Tk. 127,198,041 at 31 December 2008. which was not settled up to 30 September 2010.
53
Annexure-A/1
Detailed break up of Cash in Hand as on 30.09.10
SL. No. Name of offices
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Head Office, Dhaka
Benapole
Chittagong- Agrabad
Rajshahi Cox’s Bazar
Chittagong Airport
Banani Counter
Senakalyan
Sonargaon Counter
Dhaka Airport Counter
Nikunja Counter
Chittagong City Counter
Sylhet City Counter
Jessore Airport
Khulna Counter
Delhi
Kolkata Airport
Kolkata City
Kualalampur
Katmandu- Airport
Katmandu- City Office
Jeddah-City office
Bangkok
Dubai
9 month’s ended
30 Sept’ 2010
38,329
12,160
672,181
80
30,353
2,232,194
291,100
2,180,348
184,191
1,520,090
456,602
55,674
152,195
267,015
122,739
145,603
1,892,117
4,048,499
1,954,965
79,347
2,978,974
10,399,642
788,327
16,280,005
Total:
46,782,731
54
Issue Manager
Annexure-A/2
Detailed break up of Cash at Bank as on 30.09.10
SL. Bank Name Branch Name A/c No.
No. 01 Sonali Bank
Banani Branch.Dhaka
825/7
02 Sonali Bank
Sonargoan Br.Dhaka
33002948
03 Sonali Bank
Shahjalal International Airport
12833002357
04 Sonali Bank
Patenga Br. Chittagong
109
05 Sonali Bank
Panchlaish Br.Chittagong
986
06 Sonali Bank
Agrabad Branch
488
07 Sonali Bank
Zindabazar
562733008829
08 Sonali Bank
Khatungonj
12411100002874
09 Sonali Bank
Osmani Apt 93
10 Sonali Bank
Garib Shah
G-1113
11 Sonali Bank
Banapole Br
230633005608
12 Sonali Bank
CXB Br
3511100000633
13 Sonali Bank
BZL Br
200000337
14 Sonali Bank
RJH
461733004435
15 Sandard Chartered Bank
CCU
324-0-503392-7
16 Standard Chartered Bank
DMST
01-1153692-01
17 IFIC Bank
JSR Br
6133022702
18 Dhaka Bank DMST
2061006590
19 AB Bank CGP
4110-382841-430
20 Hongkong Br
DMST
001-007665-011
21 Islami Bank DMST
1073601
22 Sonali Bank( Current A/c)
DMST
33187266
23 Prime Bank
DMST
11007390
24 Sonali Bank
CCU
CI1002CA1352
25 HDFC Bank CCU
3828640000316
26 Nabil Bank- FC A/C
KTM
103217500066
27 Nabil Bank- NPR A/C
KTM
101017500607
28 Global Bank-NPR A/C
KTM
201010000446
29 Bangkok (Current A/c)
BKK
1013394141
30 Bangkok Bank -FCD A/c
BKK
8401010018009260000
31 IndusInd Bank Ltd
CCU
515614797060
32 Vijaya Bank
CCU
722700301000143
33 Standard Chartered Bank
KHI
1498026301
34 May Bank Current A/c Old
KUL
514039011482
35 May Bank Current A/c New
KUL
514356725023
36 Standard Bank Principal Br, Dhaka
33010988
37 Janata Bank Current A/C DXB
4968
38 Bank Asia
MCB Br. Dhaka
833007595
39 IFIC Bank
Banani Branch.Dhaka
1096297288001
40 Trust Bank
Gulshan Br. Dhaka
41 Janata Bank Current A/C Local office, Dhaka
010233061684
42 Sonali Bank Ltd. Local Office
Total :
9 month’s ended
30 Sept’ 2010
299,146
38,892
79,838
486,749
9,649
2,089
3,377
111,219
8,012
13,751
25,161
36,915
23
21
13,537,353
10,877,116
150
379,228
5,246
19,758
9,950
45,842
582,454
4,527,176
195,775
604,535
4,988,752
56,203,652
2,000
191,990
297,240
655,978
542,853
17,789
130,503
699,288
31,285,638
10,000
100,000
100,100
20,135,281
17,740,196
165,000,683
55
Notes
56
printed by : McCoy Multi Media Ltd. Phone : +880 2 9671014
www.gmgairlines.com
Corporate Office
Plot no. 1 & 3,, Road 21, Nikunja - 2, Dhaka - 1229
Tel: +88-02-8922248, 8924274, Fax: +88-02-8924390
Email: ipo@gmgairlines.com, Website: www.gmgairlines.com

GMG Airlines Limited - Janata Bank Limited Bangladesh

Transcription

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