NAVANA REAL ESTATE LIMITED - Dhaka Stock Exchange · Issuer: Navana Real Estate Limited Issue...

NAVANA REAL ESTATE LIMITED

INFORMATION MEMORANDUM FOR ROAD SHOW

FOR

INITIAL PUBLIC OFFERING (IPO)

OF

3,00,00,000 (THREE CRORE) ORDINARY SHARES OF TK 10 (TEN) EACH AT AN

INDICATIVE PRICE OF TK [*]/- INCLUDING A PREMIUM OF TK. [*]/- TOTALLING

TK. [*] UNDER BOOK BUILDING METHOD

Credit Rating at AA3 by Credit Rating Agency of Bangladesh

ISSUER COMPANY

NAVANA REAL ESTATE LIMITED

125/A, Motijheel C/A, Dhaka-1000.

Phone: 9552212, Fax: 02-9566324

Website: www. navana-realestate.com

MANAGER TO THE ISSUE

ICB CAPITAL MANAGEMENT LIMITED

( A S U B S I D I A R Y O F I C B )

BDBL Bhaban (Level-16), 8, DIT Avenue, Dhaka - 1000.

Phone: 7160326-7, Fax: 02-9555707

Website: www. icbcml.com.bd

REGISTRAR TO THE ISSUE

LANKABANGLA FINANCE LIMITED

Safura Tower (Level-11), 20 Kemal Ataturk Avenue,

Banani, Dhaka-1213.

Phone: 9883701–10, Fax: 8810998

Website: www.lankabangla.com

Issuer: Navana Real Estate Limited Issue Manager: ICB Capital Management Limited

Page- 2

General Information

� ICB Capital Management Limited, the Issue Manager, has prepared this

Information Memorandum (“IM”) based on the information provided by Navana Real

Estate Limited (the Company/the Issuer) and also upon several discussions with the

Chief Executive Officer and concerned executives of the issuer company. The

Directors, including Chief Executive Officer of Navana Real Estate Limited and ICB

Capital Management 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 prospectus, and if given or made, any such information or

representation must not be relied upon as having been authorized by the Issuer or

Issue Manager.

� The Issue as contemplated in this document is made in 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.


Page- 3

Risk Factors

Interest 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. 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 NREL is aware of the interest rates at which the debts of the company

are being financed. Management intends to finance 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. The recent trend

shows that, NREL funded ongoing projects by advance against sales. Besides that,

management also utilizes retained earnings and bank loan to finance projects.

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 MS rod and cement, represent material direct costs in the industry.


Management of NREL would hedge their exposure to input price volatility by purchases of

such inputs at right price at the right time; and by charging for contingency against such

inputs in selling prices.

Industry Risks

Real Estate business, especially apartment projects started to flourish and showed robust

growth in the Dhaka City from the early 1980s. At present, more than 250 real estate and

land development companies are operating their business. Demands of flats and land are

high and thereof most of the developers of housing estate are concentrating in this segment

of business and make a competitive market.


Based on the number and size of projects besides Brand strength in marketplace and

upcoming project portfolio, NREL has a strong position that is the key for success in real

estate sector. The Company has established brand name in real estate market with its asset

quality and customer services. Diversification in terms of location within Dhaka and

Chittagong will assist them to capture different income groups. Therefore, the Company

targets prime locations as well as locations that will be affordable by middle class income group people.

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 which would affect the

performance of the company.


Page- 4


Management is fully aware of this market risk; and has planned to act accordingly. On the

other hand, strong marketing and brand management would help the company increase their customer base.

Potential or Existing Government Regulations

The Company operates under the Companies Act, 1994, Real Estate Development and

Management Act, 2010; Dhaka Metropolitan Construction Rules, 2006; Income Tax Ordinance 1984, Customs Act, 1969, Value Added Tax (VAT) Act 1991 and rules, regulations

and notifications made under these laws. Any abrupt changes of the policies made by the

regulatory authorities may adversely affect the business of the Company. NREL operates in a

highly regulated market with registration, plan approvals and inspections required by RAJUK

periodically.


NREL is the one of the leading real estate developers of the country. This company is doing

business following all laws, rules and regulations. Changes in regulatory framework will bring

changed strategies of doing business by the dynamic management of the Company.

Potential changes in global or national policies

Political instability and the associated deterioration of law and order stand in the way of timely implementation of the projects.

Management Perception

Management is optimistic about growth opportunities in Bangladesh. They believe they target

an untapped market of customers who are seeking quality service, reliability and timeliness

with their management team.

Operational risk

The real estate industry has witnessed challenges such as earthquakes and floods. It stands

as one of the most challenging industries to operate in to date.

Management Perception

Fortunately, the local industry does not have such a troubled backdrop and has immense

opportunities for growth.

FINANCIAL STRUCTURE OF THE COMPANY

� The Financial Structure of the Company is as follows:

Particulars No of

Shares

Face Value

(Taka)

Amount in

Taka

Before IPO:

Authorized Capital 1,000,000 1,000 1,000,000,000

Paid up capital as on 31 August, 2010 300,000 1,000 300,000,000

Paid up capital as on 30 September, 2010 30,000,000 10 300,000,000

Total paid up capital before IPO 30,000,000 10 300,000,000

After IPO:

To be issued as IPO 30,000,000 10 300,000,000

Paid up capital (Post IPO) 60,000,000 10 600,000,000


Page- 5

* Board of Directors had decided to denominate the share price from Tk.1000.00 to Tk. 10.00

on 12th August 2010 which has been approved by the shareholder of the Company in their Extra

Ordinary General Meeting dated 8th September 2010.

� Capital Structure

Particulars as at 31 August 2010 as at 31 August 2009

Shareholders’ Equity:

Share Capital 300,000,000 51,000,000

Retained Earnings 881,924,935 408,218,519

Total 1,181,924,935 459,218,519

Debts:

Long-term loan 457,557,539 490,771,249

Short-term loan 1,483,279,899 996,801,968

Total 1,940,837,438 1,487,573,217

� Use of proceeds

The Company is planning to raise about Tk. 420.00 crore from the capital market through

IPO. The IPO proceeds will be utilized in the following manner:

Sl. No. Usage of Proceeds Amount (Taka)

1 Repayment of Loans 2,000,000,000

2 Acquisition of Investment Properties 750,000,000

3 Balance as Working Capital 1,450,000,000

Total 4,200,000,000

1. Repayment of Loans of Tk. 200.00 crore

NREL will repay the entire loans from banks and financial institutions aggregating around Tk

200 crore out of its IPO proceeds immediately upon completion of IPO formalities subject to

the approval of Securities & Exchange Commission. This will improve NREL’s profitability,

making it debt-free. The details of Loan taken from Financial Institution are stated below (as

per Audited Accounts):

Sl. No. Financial Institution Loan amount

(In Taka)

1.00 Long-term borrowings:

1.01 City Bank Ltd. 83,912,923

1.02 Delta Brac Housing Ltd. 30,638,971

1.03 Dhaka Bank Ltd. 50,000,000

1.04 Pubali Bank Ltd. 5,838,515

1.05 Southeast Bank Ltd. 175,900,049

1.06 United Commercial Bank Ltd. 136,571,845

2.00 Lease finance:

2.01 Dhaka Bank Ltd. 13,557,126

2.02 Dutch Bangla Bank Ltd. 1,604,565

2.03 EXIM Bank Ltd. 91,070,843

2.04 Standard Bank Ltd. 9,165,483

3.00 Short-term loan:

3.01 Al-Arafah Islami Bank Ltd. 53,807,500

3.02 Bank Alfalah Ltd. 49,600,000

3.03 Bank Asia, Pr. 215,000,000

3.04 EXIM Bank Ltd. 71,971,667


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3.05 IFIC Bank Ltd. 140,626,648

3.06 NCC Bank Ltd. 154,490,723

3.07 National Bank Ltd. 77,439,941

3.08 One Bank Ltd. 150,000,000

3.09 Pubali Bank Ltd. 133,827,899

3.10 Social Islami Bank Ltd. 100,610,216

3.11 Southeast Bank Ltd. 20,000,000

3.12 Standard Bank Ltd. Pr. Br. 175,202,524

Total 1,940,837,437

The Loan amount would be paid which incurred after August 31, 2010:

1. Dhaka Bank Ltd. 50,000,000

2. Pubali Bank Ltd. 9,162,563

Total 59,162,563

2. Acquisition of investment properties

A part of the IPO proceeds at Tk. 75.00 crore shall be utilized by NREL to acquire land and

construct it’s Head Office in Road no. 9/A (new), Dhanmondi, Dhaka. This will improve its

capacity, reduce its expenses and improve its profitability. For this purpose a land measuring

19.80 decimal (12 katha) at Plot no. 231/A (Old), 35 (New), Road no. 18 (old), 9/A (new),

Dhanmondi R/A, Dhaka has been acquired on 31.10.2010 to construct the NREL Head Office.

Implementation Schedule

Date of Baina Nama: 04/01/2010

Date of Registration: 31/10/2010

Expected date of plan pass from RAJUK: 30/04/2011

Expected date of construction to be started: 01/05/2011

Duration of the construction period: 36 months

Expected date of completion: 30/09/2014

3. Balance as Working Capital of Tk. 145.00 crore

The balance IPO proceeds of Tk. 145.00 crore shall be used for meeting the costs of IPO and

NREL’s day to day operations as working capital.

Navana Real Estate Limited: An Overview

Company Profile

Navana Real Estate Ltd (NREL), a part of Navana Group, started its operation in 1996 as a

private limited company & converted as a Public Limited on 8th September, 2010. Since its

inception, NREL has completed and handed over a good number of projects in diversified

areas in Dhaka where it is capturing the market for high and middle-income people. Of late,

NREL has also started its operation in different areas of Chittagong.

Considering the future expansion of Dhaka City and related demand hike for housing, NREL

has extended its area of operation into land development projects, handing over one land

project in Kallyanpur and two projects at Ashulia. Ongoing land projects include two projects

at Narayangonj and Ashulia.


Page- 7

NREL within a short span of time turned out as one of the most trusted company in Real

Estate sector and has been working in various numbers of apartments, commercial and land

projects. The motto of NREL is not only to deliver apartment or land ahead of schedule but

also to maintain the highest-grade construction quality that has gained trust and respect in

customers. Further NREL is pursuing the motto of becoming “different, dependable and

definitive”.

Nature of Business

The Company is engaged in purchasing land & developing the same for urban housing and

selling to the people of different income group. The company also purchases high land for

construction of multi-storied Apartment building, Shopping and Office spaces.

Principal Products/Services

Principal products are Apartment and Commercial spaces approximately cover more than

90% of total revenue. We have also Housing project which will flourish significantly in near

future.

Name of products/Services

The company produces different type of Apartment and commercial spaces in different

location of Dhaka and Chittagong city categorized like as Diamond, Gold, Silver and pearl.

Projects Overview:

NREL’s Apartment Portfolio status

Project Status Number of projects in 2009-10

Total No. of

Projects

Square feet of built-up

area

Square feet of saleable

area

Handed Over Projects 17 59 21,12,791 14,10,704

Ongoing Projects - 67 31,43,020 20,37,902

Upcoming Projects - 75 8256383 51,54,524

Handed Over Projects: During the accounting year 2009-10, NREL handed over total 17

projects to their client located at different areas like Gulshan, Banani, Dhanmondi, New

DOHS, Dhanmondi, Niketan, and Uttara. As a result, from incorporation, total handed over

projects of the Company reached 59. Average time needed to complete and hand over a

project since inception is 2 to 3 years. NREL had no significant delay in projects handover to

customers except some isolated events.

Name & Description of the Handover Project:

Name of Apartment

projects:

Location Handover Name of Apartment

projects:

Location Handover

Bailey Star Baily Road July-2009 Dianthus Uttara March-2009

Chateau De Husains Gulshan March-2010 Gloria Niketon Nov-2007

Southern Wood Dhanmondi Jan-2010 Paradise Uttara March-2006

Lake Shiri Garden Uttara August-2009 Raza Niloy Mirpur June-2007

Villa Gulshan July-2001 Sea Jewel (Sagor) Uttara July-2010

Suriya Imdad Garden Central Road July-2009 Carmem Skylana Uttara March-2009

Tower Gulshan April-2004 Pride Uttara July-2004

Kabir Garden Dhanmondi Jan-2006 Lake View Niketon April-2005

Verdancy Eskaton Aug-2007 Cottage Banani July-2004

Veneziane Dhanmondi Jan-2008 Sapphire Monami Banani Aug-2008

Garden Kallyanpur April-2009 Condominium Segun Bagicha June-2006

Sardinia Banani May-2010 Myriad Niketon April-2010


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Homes Banani Feb-2001 Ville Akbar Mohakhali April-2010

La Fontana Niketon Nov-2008 Shefali Gulshan July-2006

Grosvenor Residence Gulshan March-2010 Banu Garden Mogbazar August-2006

Wood Sorrel Baridhara March-2010 Ecstasy Dhanmondi Nov-2005

Rangalia Banani Feb-2010 Timit Bashundhara August-2009

Motin Verbena Green Road Mar-2008 Vartex Wari Oct-2008

Laurestine Baridhara Sep-2009 Park Uttara Jan-2007

Cordelia Banani Jan-2010 Glory Mohammadpur July-2006

Karar's Islet New DOHS June-2010 Bliss Elephant Rd May-2005

Cosmos Hatkhola Feb-2007 Saffron DOHS Baridhara June-2010

Kinevart Bashundhara June-2010 Oleander Uttara July-2008

Sandriana Niketon March-2009 Rafia Diapensia Segun Bagicha July-2010

Bilkis Laurent Gulshan Nov-2009 Summer Hill Uttara Feb-2009

Pearl Uttara Sep-2006 Delphinium Mohammadpur Nov-2008

Orchid Gulshan Sep-2005 Villa Marvella New DOHS July-2010

Le Caprice Banani Jan-2010 Shamim Beaumont Banani June-2010

Venus Sukrabad June-2006 Sky View Niketon Sep-2005

Mirabad Navana Mirabad Aug-2008

Ongoing Projects: These projects are geographically concentrated in the northern part of

Dhaka like Uttara, Bashundhara, Baridhara, Gulshan, Banani, DOHS etc. Besides that, areas

like Segunbagicha, Hatkhola, Kamalapur, Kalabagan, Wari, Purana Poltan, Mohammadpur,

Lalmatia, Kakrail, Eskaton, Bashabo etc. also included. As per the acquisition agreements,

NREL will have to hand over 33% to 60% of total built area to the landowner and will retain

residual to NREL for sales.

Name & Description of the ongoing Project

Name Location Present status: % of

completion as per audited

accounts

Possible year

of handover

Apartment projects:

Alpenrose Segunbagicha 90% 2011

Ashir Animone Hatkhola 24% 2012

Aspodal Kamlapur 65% 2011

Ayesha Angelique Uttara 27% 2013

Aziza Serenity Banani 33% 2012

Beaufort Baridhara 24% 2013

Blue Cascade Bashundhara 21% 2012

Carnival Kalabagan 10% 2012

Casa Grande Gulshan 46% 2012

Celestial Wari 48% 2013

Circular Height Razarbagh 23% 2013

Darus Salam Uttara 27% 2012

DH Tower Panthapath 16% 2013

Diamonte Dhanmondi 52% 2011

Ellsworth Banani 35% 2012

Ferdous Fairfield Bashundhara 41% 2012

Feroza Wilhelm Gulshan 57% 2011

Fima Paradiso Bakshibazar 78% 2011

Hermitage Hatkhola 51% 2011

Kanak's Redulent Uttara 27% 2012

Karotowa Baridhara 22% 2013

Kazi Richmond Bara Moghbazar 61% 2011

Khalil Gravillea Bashundhara 36% 2011

Li Sianthus Banani 34% 2012

Lilium Memories Baridhara 14% 2013


Page- 9

Mandale Niketon 28% 2012

Manor Park Uttara 24% 2012

Mid Summer Dream Gulshan 38% 2012

Miru Arimidale Gulshan 29% 2013

Mojibunnessa De Lake Banani 39% 2011

Mukhles Monarch Purana Paltan 41% 2011

Neer Uttara 27% 2012

New Buri Place Subhanbagh 21% 2013

Platinum Residence Gulshan 66% 2011

Rabeya Easdale Mohammadpur 42% 2012

Rahim Ardent Kakrail 55% 2011

Rainbow Terrace Uttara 42% 2013

Rebecca Teodora Uttara 62% 2011

Roosevelt DOHS Baridhara 91% 2011

Saptabarna Lalmatia 72% 2011

Sattar Garden Eskaton 4% 2013

Shahria Rowshan Lalmatia 22% 2012

Shams Anjum Bijoy Nagar 23% 2012

Shaz Sylvan Baridhara 27% 2013

Siddique Sorrento West Dhanmondi 63% 2011

Sikder Wind Flower Bashundhara 30% 2012

Silver Dale Bashaboo 44% 2012

Siraj Lake Aster Dhanmondi 72% 2011

Somerset Shantinagar 39% 2011

South Wind Banani 39% 2011

Splendour Banani 28% 2012

Summer Wind Baridhara 52% 2011

Sylvania Nodda 5% 2013

Usha Sylvestris Gulshan 58% 2011

Water Edge Dhanmondi 63% 2011

Zohra Square Banlamotor 13% 2013

Ahmad Carnation Dorgahat, Ctg 22% 2013

Centifolio CDA R/A, Ctg 36% 2011

Devine Halishohor, Ctg 33% 2011

Faizan Height Mehedibag, Ctg 14% 2012

Florenza Abedin Colony, Ctg. 17% 2012

Jalal Palace Mehedibag, Ctg 7% 2013

Madani Tower Mehedibag, Ctg 4% 2013

Meherun Villa Nizam Rd, Ctg 10% 2012

Motaleb Grandure Nizam Rd, Ctg 31% 2012

Reza Ornilla Khulsi, Ctg 98% 2011

Weakinings Mehedibag, Ctg 12% 2012

Land projects:

Kallayanpur Land Project Kallayanpur, Dhaka 100% 2011

Green Homes Land Project Ashulia, Savar, Dhaka 100% 2011

Village Land Project Ashulia, Savar, Dhaka 100% 2011

Valley Land Project Konabari, Gazipur 100% 2011

Bhuiyan City Land Project Siddirgonj, Narayangonj 100% 2012

Upcoming Projects: To start the upcoming projects as per pre-scheduled manner, NREL

management has already acquired land in different areas. For 84 upcoming residential and

commercial projects, the Company already paid Tk. 179.93 crore as development cost and

upfront cash commitment. Future areas include Mirpur, Mohammadpur, Uttara, Banani,

Gulshan, Baridhara, Kamalapur, Tejgaon etc where it is capturing the market for upper and

upper middle-income class people.


Page- 10

Name & Description of the Proposed Project:

Apartment Projects:

Name Location NREL's

Ownership Ratio

Progoti Bari Nirman Shomiti Plot at Mirpur # 11, Bl # F, Mouja # Senpara Parbata 65%

Sirajgonj Chakrijibee Somobay Somity Plot -1/3, Block-D, Sec-15, Mirpur Housing. 65%

Jamuna Bohumukhi Shamabay Somity Plot # 1/5, Block # D, Section # 15, Mirpur. 68%

Uttaran Shomity Shamiti Plot # 1/4-A, Block # B, Rd. # 01, Sec # 15, Mirpur. 70%

Nobodoy Housing Plot #27, Rd. #6/A, Nobodhoy housing, Mohammadpur. 55%

HatirJheel Eskaton, Hatirjheel. 50%

Unnamed P-272,275……, R-8/A, West Dhanmondi. 56.50%

Unnamed Plot- 174, Block- B, Basundhara. 50%

Unnamed Plot # 20, Garib E Newaz Avenue, Sec # 11, Uttara. 50%

Unnamed Plot- 309, 325, 325/A, Baro-Mogbazar, Dhaka. 58%

Unnamed Plot- 403, Block- A, Basundhara. 50%

Unnamed Plot # 21, Road # 12, Sector # 1, Uttara. 50%

Unnamed Plot # 52, Road # 7/C, Sec-9 Uttara. 50%

Unnamed Plot # 32, Road # 18, Block J, Banani. 38%

Unnamed Plot 52, Road 13, Sector-3, Uttara. 50%

Unnamed Plot 95,Road 13, Block E, Banani. 50%

Unnamed Plot # 18, Road # 5, Sector # 1, Uttara. 50%

Unnamed Plot # 11, Monipuri Para. 47%

Unnamed Plot # 17A & 18, Road # 3A & 4A, Sec # 05, Uttara. 50%

Unnamed Plot # 13, Road # 128, Gulshan. 44%

Unnamed Plot # 31/10, Block # D, Tajmahol Road. 50%

Unnamed Plot # 277, Elephant Road, Dhaka. 50%

Unnamed 1/15A, Iqbal Road, Mohammadpur, Dhaka. 50%

Unnamed Plot # 16, 17 Darus Salam Road, Kallyanpur, Dhaka. 57%

Unnamed Plot #4, Road# 2, Bl-K Baridhara, Dhaka. 40%

Unnamed Plot- 35, Road- 06, Dhanmondi R/A. 42%

Unnamed Plot- 06, Road-02, Bl-K, Baridhara. 40%

Unnamed Plot # 2A, Gulshan North Avenue. 50%

Wage Wood Plot # 24, Road # 65, Gulshan. 100%

Unnamed Plot # 19, Road # 01, Baridhara. 40%

Unnamed Plot # 10, Road # 12, Sec # 06, Uttara. 50%

Unnamed Plot- 22 Road- 1 Block- K, Baridhara. 30%

Unnamed Plot 4 Road -50 Block NWK , Gulshan. 40%

Unnamed Plot- 30A, 32, 32A, Road # 08, Gulshan. 50%

Unnamed 47 Lalchan Mokem Lane, Dholai Khal. 64%

Candle Light Plot -275/K, Road-27 Dhanmondi R/A. 50%

NAVANA HR TOWER Plot # 410-412-205,Tejgaon I/A. 50%

Unnamed Plot # 05, Sonargaon Janapath, Sec # 07, Uttara. 50%

Unnamed Plot # 35 & 35/A, Siddeswari New Circular Road. 53%

Unnamed Plot # 16, Mohakhali C/A. 50%

Unnamed Plot # 23, Road # 07, Block # K, Baridhara. 38%

Unnamed 64, Kakrail. 48%

Unnamed 12 Katha, 42/A, Zigatola. 60%

Unnamed 3 Nawab Abdul Gani Street, Wari, Dhaka. 50%

Chayabithi P-34, B-Cen(H), R-115, Gulshan. 40%

Islam Florentine P-14D, R-68, Gulshan 50%

Unnamed P 10, B Cws R-33, Gulshan 45%

Unnamed P 28/B, 29/A, Kakrail 50%

Unnamed P 312 B-C, Bashundhara 50%

Unnamed P 33,Segunbagicha. 50%


Page- 11

Unnamed P 35, R-18,Bl-J, Banani 40%

Unnamed P 65, Bijoynogor, Dhaka. 50%

Unnamed P-07(New), 701(Old) R-13, Dhanmondi. 50%

Unnamed P-24, R-4, B-C, Banani. 50%

Pristine Pavilion Gulshan. 50%

Sharif Oakdale P-28, R-99, B-Cen (D), Gulshan. 40%

Unnamed Fuwang Club 205,Tejgaon I/A. 50%

Unnamed P # 2, R # 8/A, Sector # 10, Uttara. 50%

Unnamed P 444, Gulbagh Malibagh. 68%

Unnamed P # 47, R- 3/F, Sector-09, Uttara. 50%

Unnamed P 17A,& B Kabi Jasimuddin Road, Komlapur. 50%

Villa Novera P-28, r-06, Sector-3, Uttara. 50%

Edenton P- 11/3/A, Kabi Jashimuddin Road, Kamalapur. 60%

G H Height P 767(Old) . 67(New) Satmasjid Road Dhanmondi. 50%

Hem Periwincle P # 419, B-A, Bashundhara. 50%

Lucky Water Fort P 29, R-8, Gulshan. 50%

Navana @ Link P 214, Tejgaon I/A. 50%

Rosedale P-100,B-D, R-10/2, Niketon, Gulshan. 40%

Sobia P 12, Bakshibazar, Lalbagh. 50%

Wisteria P-20&21, R-11, S- 9, Uttara. 50%

Unnamed Khilkhat. 100%

Regious Regious. 100%

Unnamed P 1047 & 1287 Nizam Road Ctg. 51%

Unnamed H # 2, R # 01, Khulshi 50%

Navana Kaligonj Commercial Complex Kaligonj 100%

Unnamed Plot # 33, Road # 30/24, Gulshan, Dhaka 50%

Unnamed P-10A,B-Nw(K),R-50,Gulshan 40%

Unnamed P-2/3, B-C, Lalmatia 50%

Unnamed P-34, R-6, Dhanmondi 33%

Land Projects:

Name Location Area in

Katha

NREL's

Ownership Ratio

Kaligonj Land Kaligonj, Gazipur 876.00 100%

Bhatara Land Badda, Dhaka 45.00 100%

Barua Land Khilkhet, Dhaka 49.09 100%

Dhogari Land Rajendrapur, Gazipur 171.51 100%

* The area mentioned in the proposed project is under planning and it will be finalised upon approval Rajuk and

other related Authority.

Relative contribution of Products/Services contributing more than 10% of the total

revenue

The relative contribution to sales and income of each product that accounts for more than

10% of the Company’s total revenue are mentioned below:

For the year ended Aug 31, 2010 For the year ended Aug 31, 2009 Product

Volume % Volume %

Apartments 2,821,617,292 99% 1,651,866,356 99%

Plot 22,195,000 1% 20,938,488 1%

Total 2,843,812,292 100% 1,672,804,844 100%


Page- 12

Associates, subsidiary/related holding Company & their core areas of business

NREL belongs to Navana Group, one of the well reputed business conglomerates in

Bangladesh. Navana Group emerged into a separate corporate entity from Islam Group after

the death of its Chairman, Mr. Jahurul Islam, which was then the largest business group in

Bangladesh. They comprise of a number of companies, have diversified their activities in

various areas like product and project marketing, construction and real estate business,

international trading, distributorship and production of various items and already attained

significance in the business arena of Bangladesh. There is no associate, subsidiary or holding

Company except the following sister companies:

NREL’s Sister Companies

Company Area of Operation

Navana Limited Toyota, Hino, Good year Tire, forklift, Toyota 3S Centre.

Aftab Automobiles Ltd. Automobile Assembling, Body Building

Navana Electronics Ltd IPS, UPS, Stabilizer, Generator manufacturing, marketing & sales.

Navana CNG Ltd CNG conversion & refueling.

Navana Logistics Ltd Freight Forwarders & Shipping Agent

Biponon Ltd Medical & Scientific equipment marketing & sales

Navana Interlinks Ltd Generator, building solution & energy savings light unit

Navana Construction Ltd Building and Road construction.

Navana Toyota Service Center Ltd. Servicing of Motor Vehicles.

Navana Computer & Techno. Ltd. Trading of ICT Products

Navana Building Products Limited Production of Ready Mix Concrete & Other Building Products

Navana Textiles Ltd. Readymade Garments

Navana Distributions Ltd. Consumable Goods Producer & Distributor

Navana Petroleum Ltd. Trading of Petroleum Products

Navana Taxi Cab Co. Ltd. Taxi cab service

Navana Power Co. Ltd. Power generation

Navana Renewable Energy Ltd. Renewable energy & solar system

Navana Batteries Ltd. Automotive batteries manufacturing

Navana Furniture Ltd. Home, office, hospital & Industrial furniture manufacturing

Navana Paints Ltd. Decorative paint manufacturing

Distribution of products/Services:

A strong team of marketing & sales are engaged to cater the product though Daily news

paper, web site, Direct mailing, REHAB fair, Personal contact, Project sign board, Bill board

and through existing buyer.


Page- 13

Competitive Condition

Competitive conditions in the business

There are more than 1500 Companies in Real Estate sector in Bangladesh. Among them 898 are the members of REHAB. The sector contributed 14% to the Gross Domestic Product

(GDP) on the last fiscal year 09-10, & within a span of three decades, the turnover from this

industry has reached to more than 28000 million taka. The Govt. revenue has stands on

average 2000 million BD Taka per year from this sector. The market share of NREL is

approximately 10%. The followings are the major real estate companies in Bangladesh.

1. Building Technology & Ideas Limited.

2. Concord Real Estate & Development Ltd.

3. Bay Developments Ltd.

4. Asset Developments & Holdings Ltd.

5. South Breeze Housing Ltd. 6. Rangs Properties Ltd.

7. Shanta Properties Ltd.

8. Assurance Developments Ltd.

9. Eastern Housing Ltd.

10. Dom-Inno Builders ltd.

11. Sheltac.

12. Advanced Developments &

Technologies Ltd.

Description of the Property

Location of principal plants and other property of the company and their condition

The head office the Company is located at Dhanmondi, Dhaka.

Value of the Properties

Company owns the following operating assets and they are situated at different locations of

the Head Office/projects of the Company. Following table represents the classifications of

operating assets along with the written down value of the same as at 31 August 2010:-

Cost Depreciation Carrying amount

As at Addition As at As at Charged As at As at Particulars

01.09.09 during the year

31.08.10 01.09. 09 during the year

31.08.10 31.08.2010

Office space

3,595,203 -

3,595,203

-

-

-

3,595,203

Office equipments

5,338,318

1,203,760

6,542,078

1,632,410

883,740

2,516,150

4,025,928

Furniture & fixtures

3,093,275

6,885,132

9,978,407

1,307,454

867,095

2,174,549

7,803,858

Air conditioning system

12,732,694

-

12,732,694

1,903,022

1,082,967

2,985,989

9,746,705

Power

generator & electrical equipment

13,268,397

897,000

14,165,397

2,522,718

2,095,682

4,618,400

9,546,997

Construction equipments

74,590,943

5,334,550

79,925,493

17,998,973

11,146,774

29,145,747

50,779,746

Vehicles

70,924,062

37,990,000

108,914,062

33,496,918

13,575,086

47,072,004

61,842,058

Total

183,542,892

52,310,443

235,853,335

58,861,495

29,651,345

88,512,840

147,340,495


Page- 14

Board of Directors

The Board of Directors of NREL comprises of 5 (five) Directors. The name, age and position

of all Directors of the Company are as follows:-

Sl.

No. Name and address of director Age (Years) Position

1 Mr. Shafiul Islam 61 Chairman

2 Mrs. Khaleda Islam 55 Director

3 Mr. Saiful Islam 35 Director

4 Mr. Sajedul Islam 31 Director

5 Ms. Farhana Islam 27 Director

Short Bio-data of Directors:

Mr. Shafiul Islam Kamal, Chairman, 1949:

A Bachelor of Science, Mr. Kamal joined the Islam Group, a reputed business conglomerate

in Bangladesh in 1968 and started his career with automobile business as well as in the

construction, real estate business. In the early years, he gained valuable experience by being

involved in the management of the Group’s diverse business operations. He played a major

role in establishing “Navana” as the Toyota brand car trading company in Bangladesh, and

finally set up Aftab Automobiles Ltd. He was also responsible for the construction company

named Bengal Development Corporation (BDC) where he was directly responsible for the

construction work of BDC in the Middle East and from 1981, he was also taking care of

Eastern Housing Limited, then the largest real estate developing company in Bangladesh. In

1996, the then Chairman of Islam Group, he separated from Islam Group with Navana Ltd

and Aftab Automobiles Ltd and formed Navana Group. He has a very good relationship with

all the top politicians, bureaucrats, top military officials and other business key persons of

the country.

Mrs. Khaleda Islam, Director, 1955:

Mrs. Khaleda is the wife of Mr. Shafiul Islam Kamal, Chairman of the Navana Group. Mrs

Khaleda has experience in business for more than 30 years. She traveled many countries of

the world.

Mr. Saiful Islam, Vice-Chairman, 1975:

An MBA, Mr. Saiful joined the Navana Group in 1997. In the early years, he gained valuable

experience by being involved in the management of the Group’s diverse business operations.

He has been appointed as Managing Director & CEO of Aftab Automobiles Ltd and Navana

CNG Limited in 2006. He took various business related professional courses at home and

abroad. He traveled almost all the countries of the world.

Mr. Sajedul Islam, Director, 1979:

A BBA, Mr. Sajedul, a young enthusiastic entrepreneur of the country, joined the Navana

Group in 1999. In the early years, he gained valuable experience by being involved in the

management of the Group’s diversified business operations. He is the Chief Executive of

Navana Real Estate Limited and Navana Construction Limited. He took various business

related professional courses at home and abroad. He traveled many countries of the world.


Page- 15

Ms. Farhana Islam, Director, 1983:

A BBA, Ms Farhana, a young enthusiastic entrepreneur of the country, joined the Navana

Group in 2004. In the early years, she gained valuable experience by being involved in the

management of the Group’s diversified business operations. She took various business

related professional courses at home and abroad. She traveled many countries of the world.

Description of the directors:

Sl.

No. Name

Age

Years Position

Date of Becoming

Director for the

first time

1. Mr. Shafiul Islam 61 Chairman 22 September 1996

2. Mr. Saiful Islam 35 Vice Chairman 22 September 1996

3. Mrs. Khaleda Islam 55 Director 22 September 1996

4. Mr. Sajedul Islam 31 Director 22 September 1996

5. Ms. Farhana Islam 27 Director 22 September 1996

Date of becoming first Directors and date of expiry of current term

Sl.

No. Name Present Position

Date of First

Directorship

Expiry of current

term

1. Mr. Shafiul Islam Chairman 22 September 1996

2. Mr. Saiful Islam Vice Chairman 22 September 1996

3. Mrs. Khaleda Islam Director 22 September 1996

4. Mr. Sajedul Islam Director 22 September 1996

5. Ms. Farhana Islam Director 22 September 1996

One third of total directors take retirement at every Annual General Meeting and re-elect is eligible other than Managing Director.

Directors Ownership in other Companies

Sl. No. Name Designation with

NREL

Entities where they have

Interest

Position

Navana Ltd. Chairman

Aftab Automobiles Ltd. Chairman

Navana Electronics Ltd. Chairman

Navana CNG Ltd. Chairman

Navana Logistics Ltd. Chairman

Biponon Ltd. Chairman

Navana Interlinks Ltd. Chairman

Navana Construction Ltd. Chairman

Navana Toyota Service Center Ltd. Chairman

Navana Computers & Tech Ltd. Chairman

Navana Building Products Ltd Chairman

Navana Textiles Ltd. Chairman

Navana Distribution s Ltd Chairman

Navana Petroleum Ltd. Chairman

Navana Taxi Cab Co. Ltd. Chairman

Navana Power Co. Ltd. Chairman

Navana Renewable Energy Ltd. Chairman

Navana Batteries Ltd. Chairman

Navana Furniture Ltd. Chairman

1. Mr. Shafiul Islam

Chairman

Navana Paints Ltd. Chairman

Navana Ltd. Vice-Chairman

Aftab Automobiles Ltd. Managing Director

Navana Electronics Ltd. Director

Navana CNG Ltd. Vice-Chairman & CEO

Navana Logistics Ltd. Director

Biponon Ltd. Director

Navana Interlinks Ltd. Director

Navana Construction Ltd. Director

Navana Toyota Service Center Ltd. Vice-Chairman & CEO

2. Mr. Saiful Islam

Vice-Chairman

Navana Computers & Tech Ltd. Director


Page- 16

Navana Building Products Ltd Vice-Chairman

Navana Textiles Ltd. Director

Navana Distribution Ltd Director

Navana Taxi Cab Co. Ltd. Director

Navana Power Co. Ltd. Director

Navana Renewable Energy Ltd. Director

Navana Batteries Ltd. Vice-Chairman

Navana Furniture Ltd. Vice-Chairman

Navana Paints Ltd. Vice-Chairman

Navana Ltd. Director

Aftab Automobiles Ltd. Director









Navana CNG Ltd. Director


Navana Petroleum Ltd. Director



Navana Batteries Ltd. Director

Navana Furniture Ltd. Director

Navana Paints Ltd. Director

Navana Building Products Ltd Director

3. Mrs. Khaleda Islam Director

Navana Toyota Service Center Ltd. Director


















Navana Building Products Ltd. Director

4. Mr. Sajedul Islam Director











Navana Distribution Ltd. Director



Navana Petroleum Ltd. Director






Navana Building Products Director

5.

Ms. Farhana Islam

Director



Page- 17

Management of the Company

Particulars of Top Executives & Departmental Heads of the Company

Sl.

No. Name of the Officers Position

Educational

Qualification

Date of

Joining in the

Company

Last Job

Experience/

Last 5 Years Experience

Total

Experience

(Years)

1 Engr. Md. Shahidullah Executive

Director

B.sc. (Mech) 1-Feb-1996 Director, Islam

Group

39

2 Maj Gen (Retd) Mohammad Ali Advisor BA, MDS, NDC 16-Oct-2007 Bangladesh Army 37

3 Md. Alamgir Hossain, FCA Chief Financial Officer

Chartered Accountant

25-June-09 Finance Controller, Rangs Group

29

4 Engr. Md. Shakawat Hossain Sr. General

Manager (Project Operation)

B.Sc. (Civil) 1-Mar-2010 Vice Precedent,

Sanmar Properties Ltd.

24

5 Mohammed Fasiul Mowla Sr. General

Manager (Sales & Land

Development)

M. Com. 18-Sep-2004 D.G.M. (Sales &

Marketing), Advance

Development Ltd.

17

6 Md. Wahiduzzaman General Manager (Procurement &

Inventory)

M. Com, CC 3-Sep-2007 G.M. (Procurement),

Asset

Developments Ltd.

17

7 Syed Mobinul Bari General Manager

(Customer

Service)

B.Com. 8-June-2008 G.M. (Customer

Service), Asset

Developments Ltd.

27

8 Md. Mazedur Rahman General Manager

(Engineering)

B.Sc. (Civil) 15-Sep-2010 G.M.

(Engineering),

Dom-Inno

Developments Ltd.

20

9 A.S.M. Moin Dy. General

Manager

(Engineering)

B.Sc. (Civil) 3-Jan-1998 Project Engineer,

BDC Ltd, Islam

Group

24

10 Ezaz Ahmed, ACMA Sr. Manager ( F &

A)

Cost &

Management Accountant

14-May-2008 Manger, Premier

Leasing & Finance Ltd.

10

11 Tareque Enamur Rahim Company

Secretary

Honors Graduate 1982 Deputy Company

Secretary, Aftab

Auto Mobiles

33

12 Muhammad Shahidul Islam Khan,

ACA

Head of Internal

Audit

Chartered

Accountant

01-10-2004 Head of Internal

Audit, Navana

CNG Ltd.

10

VAT, income tax, customs duty or other tax liability

VAT: There is no VAT liability outstanding of the company.

Customs duty: There is no outstanding customs duty due to the company.

Tax: There is no outstanding tax due to the company and got clearance certificate from

National Board of Revenue up to Tax Year 2010-2011.

Determination of the offering price

Navana Real Estate Limited is one of the leading market participants in the real industry of

Bangladesh. The Company is enjoying a high growth in revenue and net profit in the past

couple of years.

Net Asset Value (NAV) gives asset-backing to the shares of the Company. Earnings Per Share

(EPS) indicates profitability against shares of the Company. Earnings-based Value and Book

Value-based Value have been taken to estimate a theoretical fair price that gives us good

indication of market demand for the shares of the Company. The weighted average price

derived from the four valuation methods, giving equal weight, is the indicative offer price for

the shares of Navana Real Estate Limited to be issued through the IPO under Book Building

Method.


Page- 18

Different methods used to determine the fair price per share of the Company are presented

below:

Method 1 –Price based on Net Asset Value (NAV) based price per share:

Particulars Amount

A. Share Capital as at 31 August 2010 300,000,000

B. Reserve and Surplus as at 31 August 2010 881,924,935

C. Total Shareholders' Equity as at 31 August 2010 (A+B) 1,181,924,935

D. Number of shares as at 31 August 2010 30,000,000

E. Net Asset Value (NAV) Per Share as at 31 August 2010 (C/D) 39.40

Method 2 –Price based on Earning per Share (EPS):

The Company’s operational performances and financial results reflect its growth, financial

strength, earning and prospects that help investors in making informed investment decision.

These are summarized as follows:

Financial Year

Net Profit Paid-up Capital

no. of

outstanding share

Earning

per share

(EPS)

Diluted

no. of Share

Restated EPS

31-Aug-10 290,097,916 300,000,000 30,000,000 9.67 30,000,000 9.67

31-Aug-09 146,773,585 51,000,000 5,100,000 28.78 30,000,000 4.89

31-Aug-08 23,692,499 1,000,000 100,000 236.92 100,000 236.92

31-Aug-07 2,164,282 1,000,000 100,000 21.64 100,000 21.64

31-Aug-06 2,385,465 1,000,000 100,000 23.85 100,000 23.85

Average 64.17 59.40

Capital Issue Date & form:

Allotment no. Date of Allotment Consideration Amount in Tk.

1st

22-09-1996 Cash 1,000,000.00

2nd

27-08-2009 Cash 50,000,000.00

3rd

13-04-2010 Cash 49,000,000.00

4th

25-07-2010 Bonus 200,000,000.00

Total 300,000,000.00

The weighted average net profit after tax for the last 5 (five) years stands at Tk.

93,022,749.40 and the restated average EPS stands at Tk. 59.40. 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. 594.

Method 3 - Price Based On P/E Ratio of Similar Stocks:

Average P/E Ratio of Similar Companies

Sl. No.

Company Face Value

NAV EPS Market Price (12 months avg.)

P/E Ratio

1 Samorita Hospital Ltd. 100.00 138.48 27.77 1101.21 39.65

2 Eastern Housing Ltd. 100.00 153.96 18.28 859.65 47.03

3 Summit Alliance Port Ltd. 10.00 30.81 3.66 219.76 60.04

4 *Ocean Containers Ltd. 10.00 49.62 3.39 187.54 55.32

Average 50.51


Page- 19

Determining the Fair Value of Navana’s Stock:

Diluted EPS 9.67

Representative P/E Multiple (X) 50.51

Fair Value (BDT) 488.45

Method 4 - Price based on P/BV Ratio of Similar Stocks:

Average P/BV Ratio of Similar Companies

Sl.

No.

Company Face

Value

EPS NAV Market

Price

(12 months

avg)

P/BV

Ratio

1 Samorita Hospital Ltd. 100.00 27.77 138.48 1101.21 7.95

2 Eastern Housing Ltd. 100.00 18.28 153.96 859.65 5.58

3 Summit Alliance Port Ltd. 10.00 3.66 30.81 219.76 7.13

4 *Ocean Containers Ltd. 10.00 3.39 49.62 187.54 3.78

Average 6.11

Determining the Fair Value of Navana’s Stock:

NAV 39.40

Representative P/BV Multiple (X) 6.11

Fair Value (BDT) 240.73

* Seven Month Average Price

Finding and Calculation of the fair Price of share of NREL:

Particulars Value

Price based on Net Asset Value /Equity based value per share (NAV) 39.40

Price based on Earning per share (EPS) 594.00

Price Based On P/E Ratio of Similar Stock 488.43

Price based on P/BV Ratio of Similar Stock 240.73

*Average (Geometric Mean) 229.05

*The above valuation methods show highly skewed data. Therefore we use geometric mean rather than arithmetic mean. The geometric mean is a measure of central tendency, just like a median.

Therefore Based on the above calculation the fair value of the Stock of the Company stands

at Tk. 229.05 and we conservatively fix up the expected price @ Tk. 140.00 per share

including a premium of Tk. 130.00 per share.

OWNERSHIP OF THE COMPANY’S SECURITIES

In the financial year 2009-10, shareholding pattern of the Company changed. New four

shareholders were included in the Company. The authorized share capital of the Company

increased to Tk. 100.00 crore from Tk. 10.00 crore, and paid-up capital increased to Tk.

30.00 crore from Tk. 5.10 crore. Present shareholding pattern of the Company is given

below (as per audited accounts):


Page- 20

NREL’s Directors List and Shareholding Pattern

Name Position Held Total number of Share

% of share held

Mr. Shafiul Islam Chairman 1,19,800 39.93% Mr. Saiful Islam Vice Chairman 13,800 4.60% Mrs. Khaleda Islam Director 13,800 4.60%

Mr. Sajedul Islam Director 13,800 4.60% Ms. Farhana Islam Director 13,800 4.60% Mr. Md. Aminul Hoque Shareholder 15,000 5.00% Aftab Automobiles Ltd Shareholder 60,000 20.00% Laguna Autos Ltd Shareholder 25,000 8.33% Biponon Ltd Shareholder 25,000 8.33%

Total 3,00,000 100.00%

5% or more of the Shareholding structure of the Company (as per audited

accounts):

Sl.

No.

Name Status with

the

Company

No. of

Shares

Percentage of

ownership

1. Mr. Shafiul Islam Chairman 119,800 39.933%

2 Mr. Md. Aminul Hoque Share Holder 15,000 5.000%

3 Aftab Automobiles Ltd. Share Holder 60,000 20.000%

4 Laguna Autos Ltd. Share Holder 25,000 8.333%

5 Biponon Ltd. Share Holder 25,000 8.333%

Securities of the Company owned by each director (as per audited accounts):

Securities owned by each director are given below (as on 31 August 2010):

Sl.

No.

Name Status with the

Company

No. of

Shares

Percentage of

ownership

1. Mr. Shafiul Islam Chairman 119,800 39.933%

2. Mrs. Khaleda Islam Director 13,800 4.600%

3. Mr. Saiful Islam Director 13,800 4.600%

4. Mr. Sajedul Islam Director 13,800 4.600%

5. Ms. Farhana Islam Director 13,800 4.600%

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.


Page- 21

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; and

- 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.

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.


Page- 22

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.

Description of Securities Outstanding or Being Offered

a) 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


Page- 23

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 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 held by 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.

b) 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.

c) 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.

d) 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


Page- 24

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.

IV. No dividends shall be paid otherwise than out of the profits of the year or any other

undistributed 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.

e) 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.

Availability of Securities

Sl.

Number Particulars

Number of

Shares

1 20% of IPO of Ordinary Shares are reserved for Eligible

Institutional Investors through Book Building Method

6,000,000

2 10% of IPO of Ordinary Shares are reserved for Mutual Funds 3,000,000

3 10% of IPO of Ordinary Shares are reserved for Non-Resident

Bangladeshis (NRB)

3,000,000

4 Remaining 60% of IPO of Ordinary Shares are reserved for

General Public

18,000,000

Total 30,000,000


Page- 25

1) 20% of the total public offering 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 offered to the

Institutional investors.

3) The securities offered to the Mutual Funds, NRBs and General Public will be at the cut-off

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 over-subscription 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 offering, 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.

Corporate Directory

Miscellaneous Information:

Registered Office: Islam Chamber, 125A Motijheel C/A, Dhaka-1000.

Auditors:

Rahman Mostafa Alam & Co. Chartered Accountants

Banker AB Bank Limited City Bank Ltd.

Dhaka Bank Ltd. Pubali Bank Ltd. Southeast Bank Ltd. United Commercial Bank Ltd.

Manager to the Issue ICB Capital Management Limited

8, DIT Avenue, Dhaka-1000

Registrar to the Issue Lanka Bangla Finance Limited 20, Kemal Ataturk Avenue, Safura Tower (11th Floor) Banani, Dhaka.

Company’s Compliance Officer Md. Tareq Enamur Rahim Company Secretary


Page- 26

Financial Statements as at and for the period ended 30 September 2010

AUDITORS’ REPORT

To

The shareholders of Navana Real Estate Limited

We have audited the accompanying financial statements of Navana Real Estate Limited

(NREL) which comprise the statement of financial position as at August 31, 2010, and the

statement of comprehensive income, the statement of changes in equity and statement of

cash flows for the year then ended, and a summary of significant accounting policies and

other explanatory notes.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial

statements in accordance with Bangladesh Financial Reporting Standards (BFRS), and for

such internal control as management determines is necessary to enable the preparation of

financial statements that are free from material misstatements, whether due to fraud or

error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those

standards require that we comply with ethical requirements and plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditors’

judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the

circumstance, but not for the purpose of expressing an opinion on the effectiveness of the

entity’s internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of

NREL as at August 31, 2010, and its financial performance and its cash flows for the year

then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) and comply

with the applicable sections of the Companies Act, 1994, the Securities and Exchange Rules,

1987 and other applicable laws and regulations.

We also report that:

a) we have obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purposes of our audit and made due

verification thereof;


Page- 27

b) in our opinion, proper books of account as required by the law have been kept by the

Company so far as it appeared from our examination of those books;

c) the Company’s financial position and statement of comprehensive income dealt with by

the report are in agreement with the books of account and returns; and

d) the expenditure incurred was for the purposes of the Company’s business.

Dated: Dhaka Rahman Mostafa Alam & Co. 14 October 2010 Chartered Accountants


Page- 28

Navana Real Estate Limited

Statement of Financial Position

As at 31 August 2010

Notes 31/8/10 31/8/09

BD Taka BD Taka

Assets

Non-current assets

Property, plant & equipment 3.00 147,340,495 133,401,599

Investment properties 4.00

396,550,000

-

Total non-current assets 543,890,495 133,401,599

Current assets

Inventories 5.00 1,485,600,054 870,687,489

Construction works in progress 6.00 3,166,160,453 2,067,986,787

Deferred revenues 7.00 1,004,022,468 255,455,671

Advances, deposits & pre-payments 8.00 1,909,692,127 1,355,935,466

Cash & bank balances 9.00 96,835,996 42,594,451

Total current assets 7,662,311,098 4,592,659,864

Total assets 8,206,201,593 4,726,061,463

Equity and liabilities

Capital and reserves

Share capital 10.00 300,000,000 51,000,000

Retained earnings 11.00 881,924,935 408,218,519

Total equity 1,181,924,935 459,218,519

Non-current liabilities

Long-term borrowings 12.00 367,844,124 468,324,514

Lease finance 13.00 89,713,415 22,446,735

Total non-current liabilities 457,557,539 490,771,249

Current liabilities

Current maturity: long term borrowings 12.00 115,018,179 130,692,535

Current maturity: lease finance 13.00 25,684,602 13,646,365

Short-term loan 14.00 1,342,577,118 852,463,068

Advance against sales 15.00 4,568,214,590 2,620,776,246

Accounts payable 16.00 289,230,349 67,818,737

Accrued expenses and other payables 17.00 225,994,281 90,674,744

Total current liabilities 6,566,719,119 3,776,071,695

Total liabilities 7,024,276,658 4,266,842,944

Total equity and liabilities 8,206,201,593 4,726,061,463

Net assets value per share (par value Tk. 1000 each)

3,940

1,531

The annexed notes 1 to 27 form an integral part of these financial statements

Sd/- Sd/- Sd/-

Chairman Director Chief Financial Officer

Signed in terms of our separate report of even date

Date: Dhaka Rahman Mostafa Alam & Co.

14 October 2010 Chartered Accountants


Page- 29


Statement of Comprehensive Income

for the year ended 31 August 2010

Notes Year ended

Year ended

31/8/10 31/8/09

BD Taka BD Taka

Revenues 18.00 2,843,812,292 1,672,804,844

Cost of revenues 19.00 (2,123,729,045) (1,247,066,909)

Gross profit 720,083,247 425,737,935

Other gains 20.00 580,104 5,300,616

Administration expenses 21.00 (120,796,067) (102,229,868)

Finance costs 22.00 (198,465,443) (165,613,695)

Profit before tax 401,401,841 163,194,988

Income tax expense 23.00 (111,303,925) (16,421,403)

Profit for the year 290,097,916 146,773,585

Earnings per share (par value Tk. 1000 each)

24.00 966.99 489.25

The annexed notes 1 to 27 form an integral part of these financial statements

Sd/- Sd/- Sd/-


Signed in terms of our separate report of even date

Date: Dhaka Rahman Mostafa Alam & Co.

14 October 2010 Chartered Accountants


Page- 30


Statement of Changes in Equity

for the year ended 31 August 2010

Share capital

Retained

earnings Total

BD Taka BD Taka BD Taka

Balance at 1 September 2008 1,000,000 33,001,501 34,001,501

Capital raised during the year 50,000,000 - 50,000,000

Prior years' adjustment - 228,443,433 228,443,433

Profit for the year - 146,773,586 146,773,586

Balance at 31 August 2009 51,000,000 408,218,519 459,218,519

Balance at 1 September 2009 51,000,000 408,218,519 459,218,519

Capital raised during the year 49,000,000 - 49,000,000

Issue of bonus share 200,000,000 (200,000,000)

-

Revaluation surplus of investment

properties - 383,608,500 383,608,500

Profit for the year - 290,097,916 290,097,916

Balance at 31 August 2010 300,000,000 881,924,935 1,181,924,935

Sd/- Sd/- Sd/-



Page- 31


Statement of Cash Flows

For the year ended 31 August 2010

Year ended Year ended

31/8/10 31/8/09

BD Taka BD Taka

A. Cash flows from operating activities

Receipts from customers 2,844,392,396 1,860,413,351

Payment for cost & expenses (2,547,125,174) (2,180,804,223)

Finance cost paid (172,881,774) (165,613,695)

Income tax paid (17,042,131) (4,110,593)

Net cash generated by/(used in)

operating activities 107,343,317 (490,115,160)

B. Cash flows from investing activities

Acquisition of property, plant and equipment (52,310,443) (97,436,885)

Acquisition of investment properties (12,941,500) -

Disposal of investment in shares - 5,697,071

Net cash used in investing activities (65,251,943) (91,739,814)

C. Cash flows from financing activities

Proceeds from issue of ordinary shares 49,000,000 50,000,000

Received from long-term borrowings - 549,405,543

Received from lease finance 79,304,917 1,718,312

Repayment of long-term borrowings (116,154,746) -

Net cash inflows from financing

activities 12,150,170 601,123,855

D. Net cash inflows in this year (A+B+C) 54,241,545 19,268,881

E. Cash and cash equivalents at the

beginning of year 42,594,451 23,325,570

F. Cash and cash equivalents at the end of

year (D+E) 96,835,996 42,594,451

Net operating cash flows per share (par

value Tk. 1000 each) 358

(1,634)

Sd/- Sd/- Sd/-



Page- 32

Notes to the financial statements

For the year ended 31 August 2010

1.00 Corporate history of the reporting entity

1.01 Legal status

Navana Real Estate Ltd (the Company) was incorporated in 1996 as a private company

under the Companies Act 1994.

The registered office of the company is located at 125/A, Motijheel Commercial Area,

Dhaka 1000, Bangladesh.

1.02 Principal activities

The main objectives of the Company are to carry out the business of real estate by

erecting building and structure and selling and hand over of the erected building and

structure, maintenance as post sales services and contract signing thereof and the company is also engaged in purchasing land and developing the same for urban housing

and selling to the different income group and carry out other related business as

management of the company deemed think appropriate and proper.

2.00 Significant accounting policies and basis of preparation of the financial

statements

2.01 Corporate financial statements and reporting

This comprises Statement of financial position, statement of comprehensive income,

statement of changes in equity, statement of cash flows, notes and explanatory

materials covering accounting policies.

This is prepared under the historical cost convention and in accordance with the

requirements of the Companies Act, 1994, the Securities and Exchanges Rules 1987

and other applicable laws, rules & regulations and the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) adopted by the

Institute of Chartered Accountants of Bangladesh (ICAB) as well as those standards,

disclosures recommended by IASs and as applicable to this Company.

The Board of Directors is responsible for preparing and presenting the financial

statements including adequate disclosures, who approved and authorized for issue of

this financial statements.

The preparation of the financial statements in conformity with the Bangladesh

Accounting Standards (BASs) requires Board of Directors to make estimates and

assumptions that affect the reported amounts of revenues and expenses, assets and

liabilities at the date of the reporting period. Due to the inherent uncertainty involved in

making estimates, actual result reported could differ from those estimates.

2.02 Principal accounting policies

The specific accounting policies selected and applied by the company’s directors for

significant transactions and events that have material effect within the framework of

BAS-1 “Presentation of Financial Statements”, in preparation and presentation of

financial statements have been consistently applied throughout the year and were also

consistent with those used in earlier years.

For a proper understanding of the financial statements, these accounting policies are

set out below in one place as prescribed by the BAS-1 “Presentation of Financial

Statements”. The recommendations of BAS-1 relating the format of financial statements

were also taken into full consideration for fair presentation.


Page- 33

2.03 Fundamental accounting concepts/assumption

The financial statements have been prepared based on going concern, consistency

concept, accrual concept and such other convention as required by BAS-1 for fair

presentation of financial statements.

2.04 Going concern

The company has adequate resources to continue in operation for the foreseeable

future. For this reasons the directors continue to adopt going concern basis in preparing the accounts. The current credit facilities and resources of the company provides

sufficient fund to meet the present requirements of its existing business.

2.05 Corporate accounting standards practiced

The following BAS is applicable to the financial statements for the year under review:

BAS 1 Presentation of financial statements

BAS 2 Inventories

BAS 7 Cash flow statement

BAS 8 Accounting policies, changes in accounting estimates and errors

BAS 10 Events after the reporting period

BAS 11 Construction contracts

BAS 12 Income taxes

BAS 16 Properties, plant and equipment

BAS 17 Leases

BAS 18 Revenue

BAS 19 Employee benefits

BAS 23 Borrowing costs

BAS 24 Related party disclosures

BAS 33 Earnings per share

BAS 34 Interim financial reporting

BAS 36 Impairment of assets

BAS 37 Provisions, contingent liabilities and contingent assets

BAS 38 Intangible assets

BAS 40 Investment property

2.06 Regulatory and legal compliance

The company complied with requirement of the following regulatory and legal

authorities:

a) The Companies Act, 1994;

b) The Securities and Exchange Rules, 1987;

c) The Securities and Exchange Ordinance, 1969;

d) The Securities and Exchange Commission Act, 1993

e) The Securities and Exchange (Public Issues) Rules, 2006;

f) The Income Tax Ordinance, 1984;

g) The Value Added Tax Act, 1991;

2.07 Reporting period

The period of the financial statements covers from 1st September to 31st August

consistently.

2.08 Functional and presentational (reporting) currency

The financial statements are prepared and presented in Bangladesh Currency (Taka),

which is the company's' functional currency.

2.09 Recognition of property, plant & equipment

These are capitalized at cost of acquisition and subsequently stated at cost less

accumulated depreciation. The cost of acquisition comprises of purchase price, including

import duties and non-refundable taxes and any directly attributable cost of bringing


Page- 34

the assets to its working condition for its intended use. Expenditure incurred after the

assets have been put into operation, such as repairs and maintenance is normally

charged off as revenue expenditure in the period in which it is incurred. In situation

where it can be clearly demonstrated that the expenditure has resulted in an increase in

the future economic benefit expected to be obtained from the use of the fixed assets,

the expenditure is capitalized as an additional cost of the assets.

There is no intangible asset and the fixed assets do not include any assets held under lease.

On retirement or otherwise disposal of fixed assets, the cost and accumulated

depreciation are eliminated and any gain or loss on such disposal is reflected in the

income statement which is determined with reference to the net book value of assets

and the net sales proceeds.

2.10 Depreciation of property, plant & equipment

No depreciation has been charged on the office space considering value appreciation

taken place in every year.

Depreciation on all other fixed assets is computed using the reducing balance method

so as to write off the assets over their expected useful life.

Full year’s depreciation has been charged on additions irrespective of the date when the

related assets are put into use and no depreciation is charged on retirement,

irrespective of date of retirement.

After considering the useful life of assets as per BAS-16, the annual depreciation rates

have been applied as under which is considered reasonable by the management.

2.11 Investment property

Investment property, which is property held to earn rentals and/or for capital

appreciation (including property under construction for such purposes), is measured

initially at its cost, including transaction costs. Subsequent to initial recognition,

investment property is measured at fair value. Gains and losses arising from changes in

the fair value of investment property are included in profit or loss in the period in which

they arise.

2.12 Inventories

Inventories represents stock of land, construction materials and construction work in

progress in the ordinary course of business within the company’s normal operating

cycles. a) Stock of land has been valued at cost. Cost includes the purchase consideration,

government duties related to purchase, land filling, wages and other direct

expenses related to development;

b) Stocks of construction materials and construction works in progress have been

valued at cost.

2.13 Impairment of assets

An asset is impaired if its recoverable amount is below the value currently shown on the

statement of financial position. Recoverable amount is taken as the higher of:

a) fair value less cost to sell (net selling price), and

b) value in use

At each statement of financial position, the company reviews all assets to look for any

indication that an asset may be impaired as per BAS 36. Based on such review

management considers that no indication of impairment for any assets existed on the

statement of financial position date.

2.14 Provisions

In accordance with the guidelines as prescribed by BAS-37: Provisions, contingent

liabilities and contingent assets, provisions are recognized in the following situations:


Page- 35

a) when the company has an obligation (legal or constructive) as a result of past

events;

b) when it is probable that an outflow of resources embodying economic benefits

will be required to settle the obligation; and

c) reliable estimates can be made of the amount of the obligation.

2.15 Taxation

a) Current tax

The company is to pay income tax @ Taka 250/- per square meter for apartments sold

in the financial year 2009-2010 and @ Tk. 2,000/- per square meter in case of building

or apartments situated at Gulshan Model Town, Banani, Baridhara, Defense Officers

Housing Society (DOHS), Dhanmondi R/A, Lalmatia Housing Society, Uttara Model

Town, Bashundhara Residential Area, Dhaka Cantonment Area, Motijheel C/A, Dilkusha

C/A, Karwan Bazar C/A of Dhaka and Khulsi R/A, Panchlaish R/A and Agrabad of

Chittagong and in other than areas mentioned above @ Tk. 800/- per square meter for

apartments sold in the financial year 2010-2011 at the time of registration as full and

final settlement of company’s tax liability.

The company is to pay income tax @ 1% on deed value U/S 53H of the Income Tax

Ordinance 1984, in case of land in pursuance of Finance Act 2010.

b) Deferred tax

Deferred tax is recognized on difference between the carrying amounts of assets and

liabilities in the financial statements and the corresponding tax base used in the

computation of taxable profit, and are accounted for using balance sheet liability

method. Deferred tax liabilities are generally recognized for all taxable temporary

differences and deferred tax assets are recognized to the extent that it is probable that

the profits will be available against which deductible temporary difference, unused tax

loses or unused tax credits can be utilized. Such assets and liabilities are not recognized

if the temporary difference arises from goodwill or from the initial recognition (other

than in a business combination) of other assets and liabilities in a transaction that

affects neither the taxable profit nor accounting profit. Considering the practices

generally followed in Bangladesh the Company have been reserved deferred tax assets

or deferred tax liabilities in accordance with BAS 12 “Income Tax”.

2.16 Borrowing costs

In compliance with the requirements of BAS 23 “Borrowing Costs” borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,

which are assets that necessarily take a substantial period of time to get ready for their

intended use or sale, are added to the cost of those assets, until such time as the

assets are substantially ready for their intended use or sale.

Borrowing costs are recognized as expenses in the period in which they incurred and

capitalized the same that incurred before commencement of commercial operation.

2.17 Revenue recognition

In compliance with the requirements of BAS 18 “Revenue”, revenue is recognized to the

extent that it is probable that the economic benefits will flow to the entity and the

revenue can be reliably measured. Revenue is measured at the fair value of the

consideration received of receivable excluding VAT, discounts, commission, rebates and

other sales taxes where applicable.

Company traditionally makes allotment the plots of land and apartments ahead of

commencement of land reclamations & development and construction of apartments.

Company also receives money against such allotments on installments basis during

span of two to six years. The amount is booked under advance against sales at the time

of receipt and treaded as sale only when the allotted plots of land are registered and

handed over. In case of apartments, revenue is recognised by applying the percentage


Page- 36

of completion method in the manner explained in Bangladesh Accounting Standard 11

“Construction Contracts”.

2.18 Employees benefit

a) Provident fund scheme

The company operates a Contributory Provident Fund Scheme for its permanent

employees (who are interested to contribute to the Scheme). The company’s

contribution to the fund is charged off as revenue expenditure during the year to which the contribution relates. The fund is operated by a Board of Trustees. All confirmed

employees of the company are contributing 10% of their basic salary or Tk. 2,500/-

whichever is lower as subscription to the fund. The company contributes equal amount

of the employees’ contribution. Interest earned from the investment is credited to the

members account on yearly basis.

b) Gratuity scheme

Company provides unfunded gratuity benefit scheme. The company has been so long

providing @ one month’s basic pay. The company provide gratuity in actuarial basis as

per BAS 19. The accumulated amount provided so far is equal to the amount which is

required to pay off the gratuity of all the employees were they leave the company as on

date of statement of financial position.

2.19 Cash and cash equivalents

Cash in hand and cash at banks have been considered as cash and cash equivalents for

the preparation of these financial statements, which were held and available for use by

company without any restriction and there was insignificant risk of changes in value of

the same.

2.20 Statement of cash flows

Statement of cash flows is prepared principally in accordance with BAS-7 “Cash Flow

Statement” and the cash flows from the operating activities have been presented under

direct method.

2.21 Earnings per share

The company calculates earnings per share (EPS) in accordance with BAS 33. Basic

earnings per share have been calculated taking a capital base of 3,00,000 Ordinary

Shares of Tk. 1000/- each as issued up to August 31, 2010 which is shown in the face

of the statement of comprehensive income.

2.22 Events after the reporting period

In compliance with the requirements of BAS 10: Events after the reporting period, post

balance sheet events that provide additional information about the company's position

at the balance sheet date are reflected in the financial statements and events after the

balance sheet date that are not adjusting events are disclosed in the notes when

material.

2.23 Segmental reporting

No segmental reporting is applicable for the company as required by BFRS 14: Segment

Reporting as the company operates in a single industry segment and within a single

geographical segment.

2.24 Financial assets & liabilities

Financial assets and liabilities are recognized on the statement of financial position date

when the entity has become a party to a contractual provision of the instruments.

a) Receivables


Page- 37

Account receivables are stated at their real value and consider good. No provision has

been made for doubtful debts and no amount was written off as bad.

b) Payable

Liabilities are recorded at the amount payable for settlement in respect of goods and

services received by the company.

2.25 Related party disclosure

As per BAS 24 parties are considered to be related if one the parties have the ability to control the other party or exercise significant influence over the other party in making

financial and operating decisions.

2.26 Borrowings

Interest bearing bank loans and overdrafts are recorded at the proceeds received net of

direct issue costs. Financial charges are accounted for on an accrual basis.

2.27 Foreign currency translation

Transactions in foreign currencies are translated into Bangladesh taka at the rate of

exchange ruling on date of transaction. Monetary assets and liabilities expressed in

foreign currencies are translated into Bangladesh taka at the rate of exchange ruling

the statement of financial position date. Gain or losses resulting from foreign currency

transactions are taken to the statement of comprehensive income complying with BSA 21.

2.28 General

a) Figures shown in the accounts have been rounded off to the nearest taka.

b) Comparative figures and account titles in the financial statements have been re-

arranged/re-classified where necessary, to conform to changes in presentation in

the current year.

c) Figures in brackets indicated deductions.


Page- 38

31/8/10 31/8/09

BD Taka BD Taka

3.00 Property, plant and equipment

(Annexure A)

Cost 235,853,335 183,542,892

Accumulated depreciation 88,512,840 50,141,293

Carrying amount 147,340,495 133,401,599

Office space 3,595,203 3,107,282

Office equipments 4,025,928 3,828,017

Furniture & fixtures 7,803,858 2,366,989

Air conditioning system 9,746,705 10,952,029

Power generator & electrical equipment 9,546,997 10,786,141

Construction equipments 50,779,746 57,096,282

Vehicles 61,842,058 45,264,859

147,340,495 133,401,599

4.00 Investment properties

Fair value of investment properties 396,550,000 -

The fair value of the Company’s investment

properties at 31 August 2010 have been arrived

at on the basis of a valuation carried out at that

date by Messrs Ata Khan & Co., Chartered

Accountants, independent valuers not related to

the Company. Messrs Ata Khan & Co., are

members of the Institute of Chartered

Accountants of Bangladesh and they have

appropriate qualifications and experience in the

valuation of properties in the relevant locations. The valuation, which conforms to International

Valuation Standards, was arrived at by

reference to market evidence of transaction

prices for similar properties.

5.00 Inventories

Land stock (Note: 5.01) 1,444,084,843 479,054,977

Construction materials stock (Note: 5.02) 41,515,211 391,632,512

1,485,600,054 870,687,489

5.01 Land stock

Kallayanpur Land Project 1,380,000 4,332,806

Green Homes Land Project 4,821,000 3,013,783

Village Land Project 106,604,000 15,525,568

Valley Land Project 285,823,471 158,902,547

Bhuiyan City Land Project 452,745,723 246,506,251

Kaligonj Land 480,297,591 39,053,818

Bhatara Land 8,638,000

-

Barua Land 41,825,058 -

Kuturia Savar Land 55,000,000 11,720,202

Dhogari Land 6,950,000 -

1,444,084,843 479,054,977


Page- 39

5.02 Construction materials stock

Bricks & Brick Chips 256,754 23,487,645

Cement 488,763 45,986,743

Electrical Materials 1,960,054 43,298,576

M S Rod 10,643,217 124,870,951

Sand 37,651 7,865,773

Sanitary & Plumbing Materials 3,011,125 12,398,745

Stone & Stone Chips 1,111,342 12,398,211

Tiles, Marbles & Granite Materials 3,266,114 35,436,781

Other Material 1,004,432 31,274,195

Store in Transit 19,735,760 54,614,892

41,515,211 391,632,512

6.00 Construction works in progress 3,166,160,453 2,067,986,787

7.00 Deferred revenues

Opening balance 255,455,671

Addition during the year 1,029,894,043

1,285,349,714

-

Recognized as revenue during the year 281,327,246

Closing balance 1,004,022,468 255,455,671

Deferred revenues stand for the amount due

from the customers against calculation of

revenue based on percentage of work

completion in the manner explained in

Bangladesh Accounting Standard 11

“Construction Contracts”

8.00 Advances, deposits & prepayments

Advance against office rent 14,251,600 3,770,905

Advance against software purchase 2,700,000 2,100,000

Advance against construction materials

purchase 61,635,598

265,128,005

Advance against expenses 9,732,866 7,414,394

Advance against advertisement 4,517,063

-

Advance against salary 601,798 342,312

Advance to consultant 13,337,540 8,632,431

Advance to security service provider

- 566,231

Advance to others 3,000,000 41,373,372

Total advances 109,776,465 329,327,650

Security deposit 609,068

-

Prepayments for upcoming projects 1,799,306,594 1,026,607,817

1,909,692,127 1,355,935,466


Page- 40

9.00 Cash & bank balances

(a) Cash in hand 703,168 3,566,203

(b) Cash at bank 96,132,828 39,028,248

A B Bank Ltd. 48,520,960 15,654,379

City Bank Ltd. 2,138,359

-

Dhaka Bank Ltd. 6,278,856 1,807,232

Dutch Bangla Bank Ltd.

- 2,000

EXIM Bank Ltd. -

2,534,970

ICB Islamic Bank Ltd. 4,712

-

Mercantile Bank Ltd. 17,884,423 5,099,487

Mutual Trust Bank Ltd. 56,976 56,976

National Bank Ltd. 2,663,130 7,285,881

NCC Bank Ltd. 560,488 562,729

One Bank Ltd. 8,873,850

-

Pubali Bank Ltd. 1,414,379 348,329

Shahjalal Islami Bank Ltd. 96,387 112,400

Southeast Bank Ltd. 10,000

-

Standard Bank Ltd. 3,935,973 31,333

Standard Chartered Bank 2,389,423 5,336,707

United Commercial Bank Ltd. 2,419 13,045

Al-Arafah Islami Bank Ltd. 2,448 34,923

Bank Alfalah Ltd. 66,812 173

IFIC Bank Ltd. 763,514 94,743

Social Islami Bank Ltd. 469,720 52,941

96,835,996 42,594,451


Page- 41

31/8/10 31/8/09

10.00 Share capital

Authorized capital:

(1,000,000 Ordinary Shares @ Tk.1000 each) 1,000,000,000 100,000,000

Issued, Subscribed and Paid-up Capital:

(300,000 Ordinary Shares @ Tk.1000 each) 300,000,000 51,000,000

Number

of Shares

Share Capital Share Capital

Quantity BD Taka BD Taka

Balance at beginning of year 51,000 51,000,000 1,000,000

Issue of ordinary shares for cash 49,000 49,000,000 50,000,000

Issue of bonus shares 200,000 200,000,000 -

Balance at end of year 300,000 300,000,000 51,000,000

Share capital: Cash consideration 100,000,000 51,000,000

Share capital: Bonus issues 200,000,000 -

300,000,000 51,000,000

Shareholding position of the company:

Mr. Shafiul Islam 119,800 119,800,000 40,600,000

Mrs. Khaleda Islam 13,800 13,800,000 2,600,000

Mr. Saiful Islam 13,800 13,800,000 2,600,000

Mr. Sajedul Islam 13,800 13,800,000 2,600,000

Ms. Farhana Islam 13,800 13,800,000 2,600,000

Mr. Md. Aminul Hoque 15,000 15,000,000 -

Aftab Automobiles Ltd. 60,000 60,000,000 -

Laguna Autos Ltd. 25,000 25,000,000 -

Biponon Ltd. 25,000 25,000,000 -

300,000 300,000,000 51,000,000

11.00 Retained earnings

Balance at beginning of year 408,218,519 33,001,501

Prior years' adjustment - 228,443,433

Restated opening balance 408,218,519 261,444,934

Revaluation surplus of investment properties 383,608,500

Net profit for the year 290,097,916 146,773,586

Payment of dividends:

Cash dividend - -

Bonus dividend (200,000,000) -

Balance at end of year 881,924,935 408,218,519


Page- 42

12.00 Long-term borrowings

AB Bank Ltd. - 103,067,434

City Bank Ltd 65,912,923 -

Delta Brac Housing Ltd. 11,034,428 38,823,395

Dhaka Bank Ltd. 38,000,000 -

Pubali Bank Ltd. 2,919,258 56,183,534

Southeast Bank Ltd. 140,720,039 151,338,640

United Commercial Bank Ltd. 109,257,476 118,911,511

Total 367,844,124 468,324,514

Current maturity 115,018,179 130,692,535

482,862,303 599,017,049

13.00 Lease finance

Dhaka Bank Ltd. 9,520,650 13,469,719

Dutch Bangla Bank Ltd. - 1,604,565

EXIM Bank Ltd. 72,856,675 7,372,451

Standard Bank Ltd. 7,336,090 -

Total 89,713,415 22,446,735

Current maturity 25,684,602 13,646,365

115,398,017 36,093,100

14.00 Short-term loan

Al-Arafah Islami Bank Ltd. 53,807,500 68,780,277

Bank Alfalah Ltd. 49,600,000 57,379,331

Bank Asia Ltd. 215,000,000 -

EXIM Bank Ltd. 71,971,667 168,521,583

IFIC Bank Ltd. 140,626,648 153,791,532

NCC Bank Ltd. 154,490,723 182,798,021

National Bank Ltd. 77,439,941 88,034,040

One Bank Ltd. 150,000,000 17,887,113

Pubali Bank Ltd. 133,827,899 -

Social Islami Bank Ltd. 100,610,216 94,566,051

Southeast Bank Ltd. 20,000,000 20,705,120

Standard Bank Ltd. 175,202,524 -

1,342,577,118 852,463,068

15.00 Advance against sales

Against apartments projects & land projects 4,562,053,957 2,617,195,162

Against registration 4,123,768 2,376,841

Against utility 1,276,865 654,367

Against apartments owners association 760,000 549,876

4,568,214,590 2,620,776,246


Page- 43

16.00 Accounts payable

Liability for goods purchased 231,200,228 40,531,304

Payable to construction labors 58,030,121 27,287,433

289,230,349 67,818,737

17.00 Accrued expenses and other payables

Land owner signing money 62,928,361 56,882,057

Salary expense payable 17,118,231 9,492,652

Audit fee payable 100,000 30,000

Contributory provident fund 316,904 295,268

Liability against salary income tax 298,042 208,629

Liability for security services 199,785 -

Provision for gratuity 12,659,146 11,218,628

Provision for bank interest 25,583,669 -

Provision for tax 106,790,143 12,528,349

225,994,281 90,655,584


Page- 44

Year ended Year ended

31/8/10 31/8/09

BD Taka BD Taka

18.00 Revenues

Apartment projects: 2,821,617,292 1,651,866,356

(Against 17 completed projects & 67 on-

going projects

calculated based percentage of completion as

per BAS 11)

Land projects: 22,195,000 20,938,488

(Against 33 nos. plot in 3 land projects)

2,843,812,292

1,672,804,844

19.00 Cost of revenues

Apartment projects 2,109,793,746 1,231,731,129

Land projects 13,935,299 15,335,780

2,123,729,045

1,247,066,909

20.00 Other gains

Capital gain - 4,720,502

Rental income 580,104 580,104

Dividend income - 10

580,104 5,300,616


Page- 45

21.00 Administration expenses

Salary & Allowances 73,733,123 56,241,054

Festival bonus 5,314,974 3,534,302

Gratuity 1,440,517 1,292,245

Over time 1,065,832 877,982

Contributory provident fund 650,345 622,667

Office decoration 1,023,432 734,096

House rent 7,917,750 5,941,788

Traveling expenses 666,721 567,654

Conveyance 543,276 452,682

Entertainment 553,214 376,161

Plantation 332,134 326,339

Paper & Periodicals 537,032 445,609

Printing 162,355 45,231

Stationery 946,846 911,663

Books 145,823 83,550

Forms & Fees 245,000 218,000

Postage 386,245 356,401

Phone 432,341 350,980

FAX 111,204 187,500

Mobile phone 657,643 753,620

Water bill 673,263 513,500

Utilities bill 973,223 865,024

Mineral water bill 450,128 320,369

Legal fee 30,000 25,324

Audit fee 100,000 50,000

Bank Charges & Commission 475,300 430,520

Medical expenses 1,165,471 952,316

Office expenses 365,981 155,068

Welfare expenses 1,187,942 876,325

Liveries & Uniform 982,276 812,302

Survey expenses 411,765 320,356

Donation, subscription & gift 386,654 332,362

Mobilization expenses 354,642 156,321

Fuel, oils & lubricants 452,467 326,325

Sundry expenses 1,210,250 936,841

Office maintenance 983,372 732,125

Stamp (Judicial/Non-judicial) 376,865 325,140

Director remuneration 1,776,000 400,000

Publication expense 1,028,790 870,321

Sales promotion expenses 650,032 452,189

Business development expense 1,000,436 800,320

Preliminary expenses written off - 112,314

Deferred expenses written off - 8,997,763

Depreciation 8,895,403 8,147,219

120,796,067

102,229,868


Page- 46

22.00 Finance costs

Interest on long-term borrowings 81,374,765 87,672,576

Interest on lease finance obligations

7,067,425 2,301,389

Interest on short-term loan

110,023,253 75,639,730

198,465,443

165,613,695

23.00 Income tax expense

Tax paid under section 53FF of ITO '84

4,291,832 3,665,702

Tax pad under section 53H of ITO '84

221,950 227,350

Tax provision under section 53FF of ITO

'84

106,572,604 12,310,810

Tax provision for rental income

217,539 217,539

Tax deducted at source from dividend -

2

111,303,925

16,421,403

24.00 Earnings per share

Profit attributable to ordinary shareholders

290,097,916 146,773,585

Number of ordinary shares used to compute EPS

300,000 300,000

Basic earnings per share

966.99

489.25

*EPS for 2009 has been restated.

25.00 Related party disclosures

During the year, the company carried out a number of transactions with related

parties in the normal course of business. The names of related parties, nature of

transactions and total transaction value have been set out in accordance with the provision.

Nature of Transaction Outstanding value:

31/8/10

Name of related

party

Relationship transactions value Receivable/(payable)

Navana Electronics

Ltd.

Sister

concern

Buy of

products

37,370,060

(28,782,060)

Navana Building

Products Ltd

Sister

concern

Buy of

products

112,878,715 (31,516,615)


Page- 47

Navana Interlinks

Ltd.

Sister

concern

Buy of

products

5,228,413 -

26.00 Number of

employees

Number of regular employees receiving remuneration of Tk. 36,000 or above per annum

was 438 as at 31 August 2010.

27.00 Contingent liability

There were no contingent liabilities as at 31 August 2010


Page- 48

Schedule of Property, plant & equipment For the year ended 31 August 2010

Particulars Cost Depreciation

As at

01.09.2009 Addition

during the year As at

31.08.2010 Rate

As at 01.09.2009

Charged during the

year

As at 31.08.2010

Carrying amount As at

31.08.2010

Office space 3,595,203 - 3,595,203 0% - - - 3,595,203

Office equipments 5,338,318 1,203,760 6,542,078 18% 1,632,410 883,740 2,516,150 4,025,928

Furniture & fixtures 3,093,275 6,885,132 9,978,407 10% 1,307,454 867,095 2,174,549 7,803,858

Air conditioning system 12,732,694 - 12,732,694 10% 1,903,022 1,082,967 2,985,989 9,746,705

Power generator & electrical

equipment 13,268,397 897,000 14,165,397 18% 2,522,718 2,095,682 4,618,400 9,546,997

Construction equipments 74,590,943 5,334,550 79,925,493 18% 17,998,973 11,146,774 29,145,747 50,779,746

Vehicles 70,924,062 37,990,000 108,914,062 18% 33,496,918 13,575,086 47,072,004 61,842,058

Total 183,542,892 52,310,443 235,853,335 58,861,495 29,651,345 88,512,840 147,340,495

Allocation of depreciation to:

Cost of revenues 70%

20,755,941

Administration expense 30%

8,895,403

Total 100% 29,651,345

NAVANA REAL ESTATE LIMITED - Dhaka Stock Exchange · Issuer: Navana Real Estate Limited Issue...

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