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Wednesday, October 24, 2012
Business

Ibn Sina Pharma inflates profit, EPS

Dhaka bourse also finds other irregularities

IBN Sina Pharmaceutical Industry Ltd inflated its key financial values, including profit and earnings-per share, in its latest audited financial statements, the Dhaka Stock Exchange has found.

Investors were misled by the wrong information that the listed company disclosed during dividend declaration in April this year and also in its audited financial statements.

The premier bourse found the breach of standards after reviewing the company's financial statements for the year that ended in December 2011.

The DSE found that Ibn Sina had purchased different types of fixed assets worth Tk 2.77 crore during the accounting year, but the company did not charge any depreciation on the new addition of fixed assets.

"Due to non-recognition of depreciation on addition of fixed assets, profit as well as EPS of the company was overstated," the Dhaka bourse said in a report sent to the Securities and Exchange Commission recently.

It is a violation of accounting standards, while investors were not able to know the actual performance of the company, the report said.

In April, Ibn Sina announced 10 percent cash and 25 percent stock dividends and declared the annual EPS, net asset value (NAV) per share and net operating cash flow per share (NOCFPS).

The EPS for the year 2011 was Tk 5.46, while the NAV per share was Tk 25.37 and the NOCFPS was Tk 7.50.

Ibn Sina in its financial statements showed that investment has been increased at cost in 2011 by adding Tk 1.66 crore, which has been arrived from receiving stock dividend, declared by Islami Bank Bangladesh.

The company, which was listed on the stockmarket in 1989, also showed the amount as other income in the statements.

"The receipt of stock dividend does not increase the cost of investment, it raises the number of shares only," the DSE report said

"Due to recognition of stock dividend as other income, the profit as well as the EPS has been overstated."

Ibn Sina, an enterprise of Ibn Sina Trust, did not also fairly represent the value of its investment in other stocks, the DSE said.

The DSE also sent a letter to Ibn Sina on October 9, seeking clarification from it.

In reply, the company admitted the irregularities and said these were inadvertent mistakes.

"We have submitted our clarification to the stock exchange," Md Shahid Farooqui, company secretary of Ibn Sina, told The Daily Star without elaborating.

sarwar@thedailystar.net

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