Information Memorandum (Abridged Version) aamra · PDF fileInformation Memorandum (Abridged...

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Information Memorandum (Abridged Version)

aamra networks limited

Information Memorandum

(Abridged Version)

of

aamra networks limited

Authorized Capital: BDT 1,000,000,000

(100,000,000 Ordinary Shares of BDT 10 each)

Paid Up Capital: BDT 260,000,000

(26,000,000 Ordinary Shares of BDT 10 each)

Proposed Issue Size: BDT 300,000,000

Offering of 12,000,000 Ordinary Shares of BDT 10/- each at an issue price of BDT 25/- each inclusive a premium of BDT 15/- each through Private Placement

MANAGER TO THE ISSUE

LANKABANGLA INVESTMENTS LIMITED Eunoos Trade Centre, Level - 21,

52-53, Dilkusha C/A, Dhaka - 1000, Bangladesh Phone: +88 02 711 35 85, 712 25 95

Fax: +88 02 711 57 56 e-mail: [email protected]

Web site: www.lankabangla-investments.com

TABLE OF CONTENTS

Executive Summary .................................................................................................................................... 1

Profile of aamra networks limited ............................................................................................................. 3

Background of the company .............................................................................................................................. 3

Nature of Business ............................................................................................................................................. 3

Quality Policy ...................................................................................................................................................... 3

Board of Directors .............................................................................................................................................. 3

Principal Products & Services &Support ................................................................................................. 4

Distribution of Products and Services ...................................................................................................... 5

Strategic Business Units ............................................................................................................................ 5

Ownership of the Companies Securities .................................................................................................. 6

Use of Proceeds & Implementation Schedule.......................................................................................... 6

Industry Outlook ......................................................................................................................................... 7

Strength & Upside Potentials of ANL ........................................................................................................ 9

Revenue Mix ................................................................................................................................................ 9

Key Risk Factors &Risk Management ....................................................................................................... 9

Determination of Offer Price and the Justification of Premium ........................................................... 12

Historical Performance of ANL ................................................................................................................ 14

Rationale behind investments ................................................................................................................. 15

Exit Strategy .............................................................................................................................................. 15

Offering ...................................................................................................................................................... 15

Capacity Enhancement Plan .................................................................................................................... 16

Projected Financial Statements (Post Private Placement & IPO) ........................................................ 18

Information Memorandum I 1 I

Executive Summary

aamra networks limited (ANL) is one of the first Internet Service Providers (ISPs) in Bangladesh

starting its operation in 2001 with a view to providing Internet access for Business houses only. The

idea of positioning in the market as 'Corporate Only' ISP worked well and in 2001 the company

decided to offer Broadband Internet with initial investment for end customers. This was the turning

point for ANL (the then Global Online Services Limited) which helped to take significant lead from the

competitors. ANL invested in the finest radios from Alvarion and partnered with four VSAT service

providers where the competitors were happy with one or two VSAT service providers. Having multiple

VSATs for redundancy and lowering latency worked like magic in striking deals with most of the blue-

chip customers in the market. ANL was the only ISP in the market who could offer lower latency and

redundancy through multiple VSATs.

ANL is the first among the ISPs to offer professional ticketing system for customer care, introduced

24/7 call centre facilities with dedicated customer relationship managers, and independent third-party

proactive monitoring system for all the active devices and customer routers/gateways. ANL is one of

the permanent sponsors of Bangladesh Cricket Board (BCB) since 2004, and Bangladesh Olympic

Association since 2007. In 2007, ANL signed a deal with Telekom Malaysia (TM) to offer Internet

Private Leased Circuit (IPLC) for the first time in Bangladesh. The first connection was provided to

Ericsson followed by reputed customers like IKEA, British High Commission, DHL, HSBC, Standard

Chartered Bank and many more.

In 2007, ANL management realized that Internet would become a commodity and the company future

cannot be vested on a commoditized product. The company then started investing in IT enabled

services and infrastructure services other than Internet with a target of reducing the Internet down to

50% in the product portfolio within 2013. ANL upgraded the major POPs (DEPZ, Banani, Motijheel,

and CTG) into small scale data centers and plans to build tier-3 data centers in the IT-Intelligent

building in Chittagong and 2 other major cities in Bangladesh.

ANL is the first and the only ISO certified ISP upholding the certification since 2003. ANL is also

among the top 500 companies since 2009 listed by Dun & Bradstreet. ANL has more than 850

contracts with corporate houses of Bangladesh to offer Internet and other network services. More

than 50,000 workstations are connected to ANL network.

ANL has also maintained a clean record with regulators and pertinent government bodies since its

inception. ANL is a member of various relevant associations including ISPAB, BCS, and WIBA.

The company is planning to introduce new revenue wings as business expansion plan that includes

introduction of IT Intelligent Buildings, Construction of Data Centers & Office Suites & NTTN Project.

The IT Intelligent Building will be a 10-storied building with all the high-tech facilities with an area of 2.

5 lakh (0.25 million) square feet which will be extended to 20 storied building in future and the area

will be 5 lakh (0.5 million) square feet. The port city of Chittagong is selected for the purpose of

currently owning the selected land in a prime location and keeping in mind the corporate

houses(specially the MNCs) as target market. The customers will have ample opportunities to

complete their back office operations.

aamra networks limited is on its way to apply for Nationwide Telecommunication Transmission

Network license from BTRC and start offering underground cabling and capacity facilities to its

customers and other interested parties and service providers. In this project, ANL will lease out

already laid nationwide network of City Cell for a period of 15 years. ANL has over 900 customers


who will directly and immediately be connected through this expanded network coverage system. By

taking in the license and starting this operation, ANL will save 90% of this monthly expenditure and by

selling remaining capacity make additional revenue.

It has been estimated that proposed expansion requires funding of approximately BDT 1,554Million

over a period of 4 years. The Company plans to raise the required funding for Loan repayment as well

as initiating the above mentioned projects through a Private Placement and complete implementation

of the projects through IPO fund, sale of floor spaces and internal cash generation.

This proposal involves Private Placement of 12 Million Ordinary Shares representing 31.58% stake in

aamra networks limited immediately after the said capital raising. The proposed equity offering

provides an attractive upside potential for prospective investors upon successful implementation of

the proposed business plan. The Company would be ready to go public within 1 year from placement

subscription which provides an exit route to investors in the ordinary shares of ANL.The Company has

a plan to go for IPO within one year time after completion of ‘Raising Capital’ through Private

Placement.


Profile of aamra networks limited Background of the company

aamra networks limited (ANL, formerly Global Online Services Limited) over the last decade has

consistently provided its customers with the state-of-the-art IT communication solutions. The clients

have been able to rely on ANL’s ability to provide stable and consistent connectivity solutions. Using

the state of the art backbone and infrastructure, the company has ensured that the clients have had

minimal worry when it comes to dependability of their IT Communication. That in turn has ensured it

an enviable list of blue-chip customers. When Internet and related value added services are critical

input to business, Corporate Bangladesh has but only one obvious choice.

aamra networks limited employs more than 185 employees with diverse skill sets and expertise.

Through years of experience ANL has been able to accurately assess constantly changing customer

requirements, offering the most extensive and affordable IT services available. ANL places due

importance on quickly adopting new technology by investing 30% of its budget for R&D. The company

also strives to maintain international standard products and services; ANL is upholding ISO9001:2008

certification for the last 7 years. The company is one of the 11 concerns of aamra Companies. The

Group has diversified investment in ICT, Textile, and Lifestyle sectors in Bangladesh. Starting in 1985

the Group presently employs more than 550 individuals.

Nature of Business

aamra networks limited (ANL) is a telecommunication & technology company involved in Leased

Bandwidth distribution, IAAS, SAAS and IP enabled value added services. ANL is one of the first

private sector licensed Internet Service Provider (ISP) in Bangladesh. The company holds a major

market share of the Leased Bandwidth Capacity in the corporate sector.

Internet, IT Infrastructure and IT enabled value added services

Software Development

Bundled ITO + BPO Outsourcing

Contact/Call Centers

Quality Policy

aamra networks limited is a Corporate Internet Service and IT Solution Provider. It has implemented a

quality management system to ensure that the customers are served with professional standards.

Company received the following Certifications for its Quality Management System

Dun & Bradstreet - D&B has recognized aamra networks limited in the publication “Bangladesh’s

Top 500 Companies” as one of the top 500 companies in Bangladesh since 2009.

ISO Certification - For maintaining proper organizational Quality Management Practices, aamra

networks limited achieved an independent Quality System Certification body ISO 9001:2000 in the

year 2003. In 2009, ISO 9001:2008 was achieved.

Board of Directors

Name Designation Age Qualification

Syed Faruque Ahmed Chairman 50 M.Com

Syed Farhad Ahmed Managing Director 46 B.Com

Syeda Munia Ahmed Director 43 M.A

Fahmida Ahmed Director 41 B.Com


Principal Products & Services &Support

Major Service Portfolio

Service & Support

ANL maintains 4 dedicated teams for after sales support comprising of 90+ technical services

personnel in three shifts providing 24/7 support.

Network Monitoring

Network Status Monitoring

ANL generates several network status and monitoring reports to make sure that each client is taken

care of well and enjoys the best possible uptime and network quality.

Real Time Bandwidth Graph

The web based Multi Router Traffic Grapher (MRTG) will give visual report on bandwidth consumption

in both local and WAN interface. Statistics are updated in every five minutes. Monitor the traffic load

on network-links.

Monitoring System- UPS Monitoring

ANL’s all POPs are supported by UPS to avoid the downtime caused by power failure. ATS

Monitoring System allows for the monitoring and control of power transfer switches in Emergency or

Standby Power Distribution System which is also called UPS.

Infrastructure as a Service (IAAS)

Security & Storage

Bandwidth

Datacenter & Collocation

Audio & Video Conferencing

Monitoring

Software as a Service (SAAS)


Distribution of Products and Services

Sales and Marketing

ANL is in the business of Leased Bandwidth, IP enabled value added services and Infrastructure

outsourcing. The company uses Direct Marketing and Sales processes thus ensuring customer focus,

satisfaction and accountability. Our customer touch points are continuously trained to ensure that

proper and effective communication reaches our customers and that delivery of service and after

sales service processes are smooth and hurdle free.

Capacity Distribution Flow Chart

The company is authorized to sell or lease Bandwidth & Capacity services Nationwide through its

multiple Point of Presence (POPs) in Dhaka, Chittagong, Sylhet and Cox’s Bazar.

Strategic Business Units


Ownership of the Companies Securities

Shareholding Structure

aamra networks limited is a public limited company by shares. The total invested capital by the

sponsors’ amounts to BDT 260,000,000 as Paid up Capital consisting of 26,000,000 shares at par

value of BDT 10 each. It’s authorized Share Capital is BDT 1,000,000,000 as per the half yearly

audited report dated June 30, 2013.

Existing Shareholdings Position

Shareholders No. of Shares

Face Value Taka Percentage of Shares

aamra holdings Ltd 12,600,000 10 126,000,000 48.46%

aamra resources ltd 4,522,030 10 45,220,300 17.39%

Augere Holdings (Netherlands) 8,477,970 10 84,779,700 32.61%

Syed Faruque Ahmed 100,000 10 1,000,000 0.38%

Syed Farhad Ahmed 100,000 10 1,000,000 0.38%

SyedaMunia Ahmed 100,000 10 1,000,000 0.38%

Fahmida Ahmed 100,000 10 1,000,000 0.38%

Total 26,000,000 - 260,000,000 100%

Shareholding Position after Private Placement:

(After addition of 12,000,000 Shares @ Tk.25.00 Including premium of TK. 15)

Shareholders No. of Shares

Face Value Taka Percentage of Shares

aamra holdings Ltd 12,600,000 10 126,000,000 33.16%

aamra resources ltd 4,522,030 10 45,220,300 11.90%

Augere Holdings (Netherlands) 8,477,970 10 84,779,700 22.31%

Syed Faruque Ahmed 100,000 10 1,000,000 0.26%

Syed Farhad Ahmed 100,000 10 1,000,000 0.26% Syeda Munia Ahmed 100,000 10 1,000,000 0.26%

Fahmida Ahmed 100,000 10 1,000,000 0.26%

Private Placement 12,000,000 10 120,000,000 31.58%

Total 38,000,000 - 380,000,000 100%

Use of Proceeds & Implementation Schedule

PARTICULARS AMOUNT IN TAKA

IMPLEMENTATION MONTH

A. DEBT REDUCTION

BANK LOAN REPAYMENT 155,000,000 Within the month after completion

of subscription

REPAYMENT OF LEASE FINANCE ( IN PROCESS FOR EXISTING

INFRASTRUCTURE DEVELOPMENT) 40,000,000

Within the month after completion

of subscription

B. INVESTMENT

LAND DEVELOPMENT 50,000,000 Within 6 months after completion

of subscription

IT INTELLIGENT BUILDING CONSTRUCTION 40,000,000

Processing will start within 6

months of completion of

subscription

C. EXPENSES RELATED TO RAISING CAPITAL EQUITY 15,000,000 Within December 14

TOTAL 300,000,000 -


Industry Outlook

Bangladesh Telecommunication Market

Telecommunication is one of the vital sectors of the Bangladesh economy contributing approximately

6.0% of the GDP. Further, the Telecommunication sector had attracted Foreign Direct Investment to

the value of USD 18.09 Million for the year 2011 according to World Investment Report, 2012. The

sector is expected to play a dominant role in facilitating social and economic development of the

country. Having identified the importance of the Telecommunication sector, the Government of

Bangladesh established Bangladesh Telecommunication Regulatory Commission (BTRC) in 2002 as

the regulatory body of Telecommunication industry with a view to liberalize the industry and create a

regulatory policy framework that would support the growth of the industry.

As a result of the liberalization initiatives, the state monopoly was lifted and gradually the private

sector was allowed to participate in the Telecommunication industry. Further, the state owned

Bangladesh Telegraph and Telephone Board (BTTB) was converted to a limited liability Company

named Bangladesh Telecommunications Company Limited (BTCL) to make it responsive to the

market needs.

With the opening up of the sector, an intense competition has resulted in drastic reduction in tariff

levels especially among mobile operators and ISPs. With significant reductions in tariff levels,

Bangladesh is now one of the fastest growing telecommunication markets in the world as the mobile

market passed 80 Million subscribers by the middle of 2011 as penetration neared 50%. This growth

has supported the economic growth of Bangladesh both at urban and rural levels.

Industry Structure

The Industry structure is dictated by International Long Distance Telecommunication Services (ILDTS)

Policy 2007. Accordingly, the industry is organized as reflected in the following diagram:

Figure: Telecommunication Industry Structure

Voice Market

The voice market consists of fixed line and mobile phone services. The fixed line operators mainly use

CDMA technology except BTCL which is still on conventional wired technology while mobile phone

operators use both GSM and CDMA technology. Telecom voice market in Bangladesh is dominated

by Mobile phone operators with 97% share, while land phone has 3% share of which BTCL

represents 2% and all private land phones represent 1%.

Data Market Scenario

The data market consists of the internet and other data services such as intranet/networking services.

Telecommunication Industry

Voice Market Data Market

Fixed Mobile Internet Other Data

Services


The Regulatory Framework

Bangladesh Telecommunication Regulatory Commission (BTRC or the Commission) is the apex body

authorized to regulate the telecommunication industry of Bangladesh. The industry is governed by

The Bangladesh Telecommunication Act 2001 and several other Acts, policies, regulations and

guidelines for specific purposes and segments of the industry as follows:

Acts Telecommunication Act, 2001, Telegraphy Act, 1933 and Telegraph Act, 1885.

Policies Information and Communications Policy, International Long Distance Telecommunication Services Policy

Guidelines Infrastructure Sharing, International Internet Gateway, Interconnection Exchange, IP Telephony

Regulations Interconnection Regulations, 2004, Licensing Procedure, 2004

Types of Data Service Providers

SERVICE PROVIDER OVERVIEW

Nationwide

Telecommunication

Transmission Network

Service Provider (NTTN)

License was issued to separate transmission from the access

services and in the process to replace the overhead optical fibers

and lay nationwide underground fiber backbone. The licensees

are Summit Power and Fiber @ Home Limited

Broadband Wireless Access (BWA)

This license was issued to promote broadband internet access

using WiMAX technology. Operators are Augere Wireless

Broadband and Banglalion Communications Limited

International Internet

Gateway (IIG)

To streamline the use of submarine cable, BTRC issued IIG

licenses to Mango Teleservices Ltd. and BTCL who work as an

exchange to control international data traffic.

Internet Service Provider

(ISP)

Licenses under this category are Nationwide ISP, Zonal ISP, and

Central Zone ISP. Nationwide ISPs are eligible to provide intranet

and internet services in any part of Bangladesh; Zonal ISP license

permits an operator to provide services in certain zones of

Bangladesh other than Dhaka whereas a Central Zone ISP

license is meant for those operators providing services only within

Dhaka Metropolitan Area. There are about 200 Internet Service

Providers in Bangladesh.

Nationwide Optical Fiber

Telecommunication

Transmission Network

Power Grid Company Bangladesh (PGCB) Limited, a company

that provides electrical transmission, has laid nationwide fiber

network along with the electrical transmission line. This license

allows it to lease these fiber optic backbones to Telecom, internet

and other data operators. The major difference between NTTN

operators and PGCB is that PGCB does not provide backbone for

last mile connections; it only provides backhaul connectivity.

Guidelines for Infrastructure Sharing

On September 8, 2008, the BTRC published guidelines for infrastructure sharing among

telecommunication service providers. The guidelines provide for sharing certain infrastructure and

facilities, including non-electronic infrastructure and fiber optic networks. Sharing infrastructure is an

approach to minimize the cost of network deployment and to protect the environment by reducing the

proliferation of towers and facilities installation. Operators will be required to provide capacity to other

operators on a non-discretionary “first come, first serve” basis.


Strength & Upside Potentials of ANL

Strengths

Experience in the ISP market (12+ years)

Known and respected name

Innovation

Peering agreements

Experienced personnel

Network management and economics knowledge

Ability to change rapidly in dynamic Marketplace

Can take advantage of best tariffs in country

Opportunities

Relationships with telcos, vendors, local regulators

Mergers with content providers

Acquire smaller enterprises

Development of web applications

Revenue Mix

Key Risk Factors &Risk Management The proposed project and existing business of aamra networks limited is exposed to different types of

risks. The sponsors have carried out a careful analysis of the internal/external risks involved and have

identified risk mitigation and risk management strategies. A discussion of key risk factors involved is

given below.

Industry Risk

Liberalization of permission to set up new IT companies by government may result in severe

competition amongst companies’ causes’ reduction of income and profitability of the company.

Management Perception

ANL provides comprehensive IT solutions and services including Systems Integration, Information

Systems Outsourcing, Core Banking Software & Switching Solution supply, implementation &

maintenance. Our positive attitude plays the dominant role in our success, in our ability to innovate

63% 8%

0%

29% Internet Service

Web Page & Networking Installation

Domain Registration

IT Support & Software Services


and in our ability to serve valued clients. ANL loves to compete, because competition brings out the

best in us. The Company has the finest people, the latest technology, the best spirit, and the best

team in the industry. Each member of the company plays a vital role in the great chain of our success.

Interest Rate Risk

Interest rate risk concerned with borrowed funds of short term and long term maturity, volatility of

money market, which ultimately influences the interest rate structure of fund.


The Management of the Company is always aware of interest rate. If the interest rate increases the

cost of credit fund will increase. ANL has always been a cash-rich company and operates with low

dependence on debt. As the company maintains very low debt equity ratio, adverse impact of interest

rate fluctuation is insignificant. Moreover the company is confident of meeting its need for future

expenses from its internal sources. In addition, the company emphasizes on equity based financing to

reduce the dependence on bank borrowings. Therefore the management perceives that the

fluctuation of interest rate would have little impact upon the performance of the company.

ANL is currently carrying both long term and short term loans. All the facilities are subject to revision

with change of interest rates in the market. The exposure will be minimized as ANL plans to retire

some portion of the debt gradually in the following years.

Exchange Rate Risk

Devaluation of local currency against major international currencies i.e. USD, GBP and Euro may

affect company’s income.


Volatility of Taka against USD, GBP and Euro and recent trend of local currency devaluation may

expose foreign currency risk. In such cases, the management of the company is confident to

significantly cushion the foreign currency risk and price escalation risk through forward contracts if it is

justifiable in terms of the cost benefit analysis. The company has been hedging exchange rate risk by

strategic purchases of products of foreign currency.

Market and technology related Risk

In the global market of 21st century, developed technology, products and services render obsolete the

old service and product strategy. So, the existing organization may not be able to cope up with the

future needs and demands.


The market of IT sector in worldwide is full of risk. As soon as the new technology entered in the

market, the previous products become obsolete. For this ANL always deals with latest technologies

and the market analyzing team of ANL plays vital role in keeping and expand the present market.

Technology related Risk

Technology always plays a vital role for existence of any industrial concern. Innovation of new and

cost effective technology may obsolescence existent technology, which may cause negative impact.


Management of ANL is aware of recent technological developments in the IT sector and keeps their

employees up to date by providing necessary training. Furthermore ANL is marketing latest

technological equipment and also well equipped with latest technology.


Potential or existing government regulations

The company operates under Companies ACT, 1994, taxation policy adopted by NBR, SEC rules and

rules adopted by other regulatory bodies. Any abrupt changes of the policies formed by those bodies

may impact the business of the company adversely.


Unless any adverse policy is taken, which may materially affect the industry as a whole; the business

of the company will not be affected. Furthermore the government is encouraging private sector

entrepreneurs in IT sector. Therefore it is expected that any new policies of this sector will be

business favorable which also be helpful for expansion of business of the company.

Potential changes in global or national policies

The performance of the company may be affected by the political and economic instability both in

Bangladesh and worldwide. Any instance of political turmoil and disturbance in the country may

adversely affect the economy in general.


The company can prosper in a situation of political stability and a congenial business environment.

Political turmoil and disturbance are bad for the economy and so also for this sector. This is why the

management of the company is always concerned about the prevailing and upcoming further changes

in the global or national policy and shall response appropriately and timely to safeguard its interest.

History of non-operation, if any

Is there any history of the Company to become non-operative?


The Company has no history of non-operation in the past. The Company is an independent body. It

has been in operation by its Memorandum & Articles of Association and other applicable laws

Implemented by the Government. Besides, the Company’s financial strength is satisfactory. It has

very experienced Directors and Management team to make the Company more efficient and stronger

in market capturing. So, the chance of becoming non-operative of the Company is minimum.

Operational risk

Shortage of power supply, human resources migration, unavailability or price increase of IT hardware

and software, natural calamities like flood, cyclone, earthquake etc. may disrupt the activities of the

company and can adversely impact on the profitability of the company. The present government has

taken various necessary steps to increase the power supply of the country which will help us to run

the day to day operations smoothly. Apart from this, the company is equipped with alternative

electricity supply such as generator back-up to be operational during power shortage. Highly

competitive compensation as well as benefit package will refrain the employees to leave their

assignments and go for any movement of employees for higher benefit packages.


The location of the company premises is situated on a flood free Zone. The current office and storage

building has strong RCC foundation with pre-fabricated steel structure to withstand wind, storm, heavy

rain etc. with good drainage facilities. The risks from these factors are also covered through adequate

insurance policies.


Determination of Offer Price and Justification of Premium The offering price has been set in accordance with the provision of the Securities and Exchange

Commission (Public issue), 2006.

Valuation under Different Methods Price in BDT

NAV per Share 12.30

Earnings Based Value Per Share 34.96

Valuation Based of Market P/E 73.60

Valuation Based on P/NAV ratio 17.71

Based on the valuation mentioned above, aamra networks limited is offering 12,000,000 ordinary

shares to the general public through private placement for a price of BDT 25/- including BDT 15/-

premium

Method 1: Valuation Based On Net Asset Value (NAV) Per Share

Particulars Amount (in Taka)

Share Capital 260,000,000

Retained Earnings 59,818,056

Total Shareholders' Equity 319,818,056

Number of Ordinary Shares 26,000,000

Net Asset Value (NAV) per share 12.30

Method 2: Historical Earnings Based Value per Share Based On Weighted Average

Number of Shares Outstanding

Year

(Ended on December 31) Number of Shares

Weight of

Total Number

of Shares

Net Profit

After Tax

(BDT)

Weighted

Net Profit

After Tax

(BDT)

2008 5,400,000 0.1134 5,156,055 1,031,211

2009 5,400,000 0.1134 24,811,576 4,962,315

2010 5,400,000 0.1134 51,861,653 10,372,331

2011 5,400,000 0.1134 58,163,152 11,632,630

2012 26,000,000 0.5462 80,545,174 16,109,035

Total 47,600,000 1.0000 220,537,610 44,107,522

No. of Shares before Private Placement 26,000,000

EPS based on Weighted Average of Net Profit After Tax 2.30

Market Earnings Multiple (DSE Monthly Review, August-2013) 15.18

Price per share (BDT) 34.96


Method 3: Valuation based on Average Market Price per Share of Similar Stocks

Closing Price as on

Closing Price (BDT)

One Year

Information Services

Network BDCOM Online

In tech

Online

Agni

Systems

September 21.9 26.2 21.1 35.5

October 19.6 27 21.8 33.7

November 17.3 20.3 20 25.5

December 16.4 19.1 17.7 23.9

January 18.4 21.5 21.6 25.6

February 17.3 21.5 19.2 23.7

March 15 17.4 17.8 21

April 14.1 16.6 14.5 19.6

May 15.8 22 17.6 23.7

June 14 20.9 15.7 23.1

July 13.3 20.1 12.7 21.5

August 13.4 22.8 14.5 23.6

Average Closing

Price (BDT)

16.38 21.28 17.85 25.03

Method 3 (A): Valuation with reference to the P/E ratio of similar stocks

Name of the Peer Companies

Average Closing

Price (BDT) of Last

One Year

EPS (BDT)

as on

August,

2013

P/E

Ratio

(i) (ii) (i)/(ii)

Information Services Network 16.38 0.27 60.65

BDCOM Online 21.28 1 21.28

In Tech Online 17.85 0.94 18.99

Agni Systems 25.03 0.93 26.92

Average P/E Ratio 31.96

EPS (BDT) based on Weighted Average Net Profit

After Tax of ANL 2.30

Price per share (BDT) based on P/E ratio of similar

stocks (2.3 × 31.96) 73.60

Method 3 (B): Valuation with reference to the P/NAV ratio of similar stocks

Name of the Peer Companies

Average

Closing

Price (BDT)

of Last One

Year

NAV (BDT)

as on

August,

2013

P/NAV

Ratio

(i) (ii) (i)/(ii)

Information Services Network 16.38 17.32 0.95

BDCOM Online 21.28 14.91 1.43

In Tech Online 17.85 10.08 1.77

Agni Systems 25.03 15.34 1.63

Average P/NAV Ratio 1.44

Net Asset Value per Share (BDT) of aamra networks limited 12.30

Price per share (BDT) based on P/NAV ratio of similar stocks (12.30 × 1.44) 17.71


Historical Performance of ANL

Income Statement (In BDT Thousands)

2008 2009 2010 2011 2012 2013 (Half

Yearly)

Turnover 172,906 203,613 270,495 336,594 414,953 222,582

Cost of Service 128,565 136,802 168,131 204,037 239,269 122,376

Gross Profit 44,341 66,811 102,364 132,557 175,684 100,206

Operating Expenses 37,047 39,443 54,654 69,213 87,297 51,837

Operating Profit/Loss 7,294 27,368 47,710 63,344 88,386 48,369

Non-Operating Income 56 234 8,784 1,714 1,440 605

Loss on sale of shares & securities - - - 134 5,606 560

Net Profit before Tax and Provision 7,350 27,602 56,494 64,924 84,221 48,414

Provision for Expenses 46 67 272 2,349 3,697 4,832

Net Profit before Tax 7,303 27,534 56,222 62,575 80,524 43,582

Provision for Income Tax 2,147 2,723 4,361 4,546 5,584 3,245

Net Profit after Tax 5,156 24,812 51,862 58,029 74,939 40,338

Earnings Per Share 0.20 0.95 1.99 2.23 2.88 1.55

Financial Position (In BDT Thousands)

2008 2009 2010 2011 2012 2013 (Half

Yearly)

Property, Plant and Equipment 61,383 73,174 74,490 95,880 127,098 342,868

Investment in ACE IT Networks 1,000 1,000 1,000 1,000 1,000 1,000

Investment on Shares - - 19,867 28,759 22,999 -

Current Assets 31,366 41,421 76,227 108,682 163,783 166,799

Total Assets 93,750 115,594 171,584 234,320 314,880 510,667

Share Capital 54,000 54,000 54,000 54,000 54,000 260,000

Reserve & Surplus 9,159 33,971 85,832 143,862 218,801 53,139

Non-Current Liabilities - - - - - 101,118

Current Liabilities and Provisions 30,591 27,624 31,752 36,459 42,079 96,410

Total Equity &Liabilities 93,750 115,594 171,584 234,320 314,880 510,667

Key Ratios 2008 2009 2010 2011 2012 2013 (Half

Yearly)

Liquidity Ratio

Current Ratio 1.03 1.50 2.40 2.98 3.89 1.73

Quick Ratio 0.92 1.44 2.34 2.77 3.16 1.44

Debt Equity Ratio(In times) 0.48 0.31 0.23 0.18 0.15 0.63

Operating Ratios

Accounts Receivable Turnover 26.57 30.45 9.40 10.77 7.13 3.51

Inventory Turnover 40.34 77.36 83.76 26.95 7.74 4.35

Asset Turnover 1.84 1.76 1.58 1.44 1.32 0.44

Profitability Ratio

Gross Margin Ratio 25.64% 32.81% 37.84% 39.38% 42.34% 45.02%

Operating Income Ratio 4.22% 13.44% 17.64% 18.82% 21.30% 21.73%

Net Income Ratio 2.98% 12.19% 19.17% 17.24% 18.06% 18.12%

Return on Assets(ROA) 5.50% 21.46% 30.23% 24.77% 23.80% 7.90%

Return on Equity (After Tax) 8.16% 28.20% 37.09% 29.33% 27.47% 12.88%

Earnings Per Share (EPS) 0.95 4.59 9.60 10.75 13.88 1.55

Net Assets Value (NAV) 11.70 16.29 25.89 36.64 50.52 12.04


Rationale behind investments

Financial Considerations This proposal involves Private Placement of Equity representing 31.58% stake in aamra networks

limited at an investment of BDT 300.00 Million. The proposed equity offering provides an attractive

upside potential for prospective investors upon successful implementation of the proposed business

plan. The Company has a plan to go for IPO within one year time after completion of “Raising

Additional Capital “through Private Placement.

Non-Financial Considerations Key qualitative aspects related to proposed Private Equity investment are highlighted below:

The potential investors

would be given a reasonable representation in the board depending on the ownership stake in

ANL

can conduct their own due diligence with regard to legal, regulatory, accounting and business

aspects of ANL

and present shareholders would execute a share subscription agreement and/or shareholder

agreement as the case may be prior to the investment

Exit Strategy

IPO: The most feasible and attractive exit option for potential Private Equity investor(s) especially

given the liquidity and attractive valuations in the market. The supplies of quality stocks are still very

low and thus there is a huge price appreciation potential in the secondary market. The majority IPOs

are oversubscribed multiple times and investor base is rapidly expanding. However, IPO itself is not

an exit for prospective investor(s) since present SEC regulations allow only offer for subscription in

the IPO. Therefore, prospective investors would have to divest in the secondary market subject to

lock-in provisions mentioned in Section 12.5 (vi) of Information Memorandum.

The probable timeframe for the IPO can be mutually agreed between ANL/present shareholders and

potential private equity investors. Based on projected financial statements ANL has a plan to go for

IPO within the one year time after completion of “Raising Capital” through Private Placement.

Offering

The placement

ANL will place among selected investors 12,000,000 ordinary shares of BDT 10/- each at an issue

price of BDT 25/- each inclusive a premium of BDT 15/- each and ANL has obtained consent from

BSEC in this regard.

Objectives of Placement

The main objective of the placement it to raise proceeds through placement and use it for Loan refund

including interest, Land development, Repayment of lease finance and Initial Investment for IT

Intelligent building.

Allotment of Shares

The shares will be placed through the Manger to the Issue, LankaBangla Investments Limited,

amongst selected investors through a Private Placement. Shares will be allotted at the discretion of

the Management of the company.

Listing Undertaking

The Company has a plan to go for IPO within one year time after completion of “Raising Additional

Capital “through Private Placement.


Capacity Enhancement Plan

New Revenue Wings - Collocation/Data Center Facilities

ANL is recognized as a pioneer in the development of Value Based Services in Bangladesh to push

forward the frontiers of broadband technology relentlessly. In keeping with its drive towards total

integration, ANL introduces telco-class internet Data Centers Solutions.

Service Offerings

ANL provides the core data center infrastructure and services to maintain industry-class facilities and

support for our Collocation customers. In addition, ANL’s Managed Collocation offerings allow

customers to select the independent services required to support their critical applications everything

from managed Internet access and data backup, such as usage based tape and SAN services, to

security services ranging from firewall and intrusion prevention to advanced offerings such as two-

factor authentication and content filtering.

Assumptions

Revenue generation: From July 2017 Estimated revenue: 3.96 million (full year) Revenue growth: 15-20% in every year Gross profit margin: 50%

New Revenue Wings - Intelligent Buildings

Intelligent Buildings: The Power of Intelligence

Leverages the power of building automation and IP connectivity to monitor, control, rectify and

repair equipment/systems remotely over the Internet/intranet/private networks.

Allows the customer to view real-time operations and gives early warnings and signals that

equipment/systems are about to experience a problem/error.

Provides a comprehensive view into all assets to optimize their functions effectively,

enhances performance efficiencies, reduce costs and generates maximum value from

respective deployments.

An Opportunity to Save

This is the power to gain intelligence through building automation which translates into one very

important benefit: savings. By integrating and automating the control of all the systems in any

building, or even just the mechanical systems, one can reduce design and building costs, lower

energy costs, and increase system efficiency and tenant satisfaction. It also extends the life of the

building and decreases possible emergency costs. This is all achieved by measuring, monitoring and

maintaining the entire building systems through one integrated and intelligent solution. Furthermore,

intelligent buildings are inherently green.

Smart Systems. Brilliant Results.

When the building is intelligent, it drives cost out of business and increases efficiencies. It also

enhances operational capacities and abilities for both owners and property managers

Assumptions

Revenue generation: From January 2018

Estimated revenue: 189.00 million

Gross profit margin: 78%


New Revenue Wings – Office Suite

aamra networks limited (ANL) offers Virtual Office Suite which is a complete office solution, offering

private and shared furnished offices. This rented office includes Internet access, phone and voice mail

services, and access to meeting rooms. It also provides clerical support and makes available the

business services that will allow anyone to devote all the time and attention to the business. There will

be numerous facilities available to support a growing business. The shared office staffs and classy,

affordable virtual office suite will be ready to be offered in lease terms.

Intelligent Office will give a customer’s business a desirable and virtual business address. This virtual

business address will reflect customer’s company name. It is a smart, affordable way to establish a

business' presence in another country/city. Offsite project teams, mobile consultants, and businesses

that need professional and flexible shared offices for a short time or long-term basis will find that this

suite’s business addresses meet their office space needs, precisely.

Assumptions

Revenue generation: From July 2017

Estimated revenue: 11.88 million (full year)

Revenue growth: 15-20% in every year


New Revenue Wings – NTTN Operations

BTRC, in 2009 issued multiple licenses for NTTN operations in Bangladesh. In this light, aamra

networks limited wishes to acquire NTTN license from BTRC and start offering underground cabling

facilities to its customers. In this project, ANL will lease out already laid nationwide network of City

Cell for a period of 15 years. ANL has over 900 customers who will directly and immediately be

connected through this expanded network coverage system. Additionally, ANL will resale the network

facility to other interested parties (service providers) and corporate entities who require intercompany

connectivity in multiple locations throughout the country. Currently, ANL leases around monthly BDT

1.5 million worth of network connectivity from the NTTN and Telco service providers. By taking in the

license and starting this operation, ANL will save 90% of this monthly expenditure and by selling

remaining capacity make additional revenue.

Once the ANL NTTN operation is completely set up in the country, it will be providing a very high-

speed broadband internet service to the people and is likely to open up many possibilities and

services like Telecommunication operators, ISPs, cable TV operators.

Assumptions

Revenue generation: From July 2015

Estimated revenue: 109.75 million (full year)

Revenue growth: 10% in every year



Projected Financial Statements (Post Private Placement & IPO)

Statement Financial Position

Particulars

DEC - '2020 DEC - '2019 DEC- '2018 DEC - '2017 DEC- '2016 DEC- '2015 DEC- '2014

FIXED ASSETS:

1,391,363,185 1,422,315,530 1,753,141,237 1,169,812,921 651,968,678 499,878,053 432,235,808

CURRENT ASSETS:

1,299,932,519 934,987,067 1,218,227,663 1,456,802,746 696,888,710 736,707,787 408,451,649

Cash & Bank Balance

984,237,122 614,437,036 971,935,078 1,235,096,925 496,960,862 556,098,380 245,004,595

Accounts Receivable

187,419,566 201,442,809 144,275,166 127,035,125 111,937,000 98,705,000 87,100,000

Advance & Prepayments

74,298,996 70,760,948 67,391,379 64,182,266 61,125,968 58,215,207 55,443,054

Inventory

53,976,835 48,346,274 34,626,040 30,488,430 26,864,880 23,689,200 20,904,000

TOTAL ASSETS

2,691,295,704 2,357,302,597 2,971,368,900 2,626,615,667 1,348,857,388 1,236,585,840 840,687,458

EQUITY:

2,540,764,597 2,212,413,485 1,907,920,841 1,783,872,104 1,242,694,692 1,134,447,530 741,599,565

Share Capital

500,000,000 500,000,000 500,000,000 500,000,000 500,000,000 500,000,000 380,000,000

Share Premium

360,000,000 360,000,000 360,000,000 360,000,000 360,000,000 360,000,000 180,000,000

Retain Earnings

1,680,764,597 1,352,413,485 1,047,920,841 923,872,104 382,694,692 274,447,530 181,599,565

CURRENT LIABILITIES:

150,531,107 144,889,112 1,063,448,059 842,743,563 106,162,696 102,138,311 99,087,893

Accounts Payable

37,799,113 35,999,155 34,284,910 32,652,295 31,097,424 29,616,594 28,206,280

Short Term Loan

52,584,126 52,584,126 52,584,126 52,584,126 52,584,126 52,584,126 52,584,126

Advance Against Floor Sale

- - 950,000,000 500,000,000 - -

Liabilities For Other Finances

12,982,340 11,802,127 10,729,206 9,753,824 8,867,113 8,061,012 7,328,192

Liabilities for Expenses

5,681,641 5,165,128 4,695,571 4,268,701 3,880,637 3,527,852 3,207,138

Provision For Income Tax

41,483,887 39,338,576 11,154,246 243,484,617 9,733,396 8,348,727 7,762,157

LONG TERM LIABILITIES:

- - - - - -

TOTAL EQUITY AND LIABILITIES

2,691,295,704 2,357,302,597 2,971,368,900 2,626,615,667 1,348,857,388 1,236,585,840 840,687,458


Statement of Comprehensive Income

Particulars 2020 2019 2018 2017 2016 2015 2014

NET REVENUE 1,626,006,232 1,467,191,143 1,033,908,554 916,037,020 811,959,350 720,026,125 638,788,437

LESS: COGS 966,879,924 852,198,595 689,001,732 602,589,716 529,853,905 467,794,536 390,276,470

GROSS PROFIT 659,126,308 614,992,548 344,906,822 313,447,304 282,105,444 252,231,588 248,511,967

LESS: ADMIN EXPENSES 293,689,876 274,948,284 212,962,403 181,587,499 166,533,140 153,103,154 141,200,182

OPERATING PROFIT 365,436,432 340,044,264 131,944,419 131,859,804 115,572,305 99,128,434 107,311,785

LESS: FINANCIAL EXPENSES 958,482 871,347 792,134 720,122 654,656 595,142 15,541,038

PROFIT BEFORE OTHER INCOME 364,477,950 339,172,917 131,152,285 131,139,682 114,917,649 98,533,292 91,770,746

OTHER INCOME /(LOSS) 5,357,049 4,658,303 4,050,698 3,522,347 3,062,910 2,663,400 2,316,000

OTHER INCOME (INCOME FROM SALE OF SPACE) - - - 650,000,000 - - -

PROFIT BEFORE TAX 369,834,999 343,831,220 135,202,984 784,662,029 117,980,559 101,196,692 94,086,746

LESS:PROVISION FOR TAX 41,483,887 39,338,576 11,154,246 243,484,617 9,733,396 8,348,727 7,762,157

NET PROFIT AFTER TAX 328,351,112 304,492,644 124,048,738 541,177,412 108,247,162 92,847,965 86,324,590


Assumptions of Projected Financial Statement (Post Private Placement and IPO)

Assumption for Balance Sheet Particulars

Fixed Asset As per depreciation schedule

Accounts Receivable 1.5 month gross revenue

Advance & Prepayments 5% increase from last year balance

Inventory 3% of Gross revenue

Accounts Payable 5% increase from last year balance

Liabilities for Expenses 10% increase from last year balance

Liabilities for Other Expenses 10% increase from last year balance Assumptions for Income Statement Particulars

1. Revenue

Growth for existing product:

Internet access 10%, IT Support & Software maintenance 20%, IPLC & NPLC 10%, Equipment sale & installation 10%, application 20% in every year

New product :

NTTN revenue will be generated from January'15 and in second Qtr. Of 2016 utilization will be 100%. 10 % revenue will be increased in every year from 2017

Rental Income from IT intelligent building will be generated from January'18. Rent will be Tk. 50 per Sqft (Rentable space 175,000 Sqft)

Income from value added service of IT intelligent building will be Tk. 40 per Sqft and cost against this revenue will be Tk. 20 per Sqft. ( Space 175,000 Sqft)

Income from Data centre and office suit will be generated from July'17. 15 % revenue growth estimated

2. Variable COGS

Variable COGS estimated @ following % of respective revenue:

Internet access 75%, IT Support & Software maintenance 10%, IPLC & NPLC 30%, Equipment sale & installation 80%, application 25%, Data centre& office suite 45%,Value added service of IT intelligent building 50%

3. Fixed COGS :

20% of increment of all fixed COGS expenses estimated

4. Administrative expenses :

10% increment of all administrative expenses estimated

Depreciation estimated as per schedule

Projected Revenue Mix in 2020

46%

9%

13%

15%

1%

9%

7% Internet Access

IT Support & Software Maintenance

IPLC & NPLC

Equipment Sale & Installation

Data Centre & Office suite

CONTACT INFORMATION

Dhaka Office:

LankaBangla Investments Limited

Level - 21 of Eunoos Trade Centre

52 - 53 Dilkusha C / A, Dhaka – 1000

Phone: +880-2-7113585, 9561238, 9512621

Fax: +880-2-7115756, 9561107

www.lankabangla-investments.com &www.lankabangla.duinvest.com

http://www.lankabangla.duinvest.com/

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