Sonali Aansh EPS, net profit 'overstated', says auditor

FE Report
The net profit and earnings per share (EPS) of Sonali Aansh Industries are being 'overstated' as the company has not been charging 'depreciation' on the additional value resulting from revaluation of fixed assets.
The company's auditor said this in an 'adverse' audit opinion given in the company's audit report for the year ended on June 30, 2018.
Identifying incomplete information, the auditor has given adverse opinion as the company has not followed accounting standards in some clauses.
The company has reported EPS of Tk. 1.71 and NAV per share of Tk. 225.90 for the year ended on June 30, 2018 as against Tk. 1.65 and Tk. 225.19 respectively for the same period of the previous year.
For the year 2018, the company's board of directors has recommended 10 per cent stock dividend.
According to the auditor's opinion, the company has not done any impairment review on the revalued fixed assets as required by International Accounting Standard (IAS).
"In consequence the net assets value of the company remained overstated to the extent of chargeable impairment, if any," the auditor mentioned.
Deferred tax liabilities have not been shown in the financial statements on the revaluation surplus of property, plant and equipment from the year 2006-07 as prescribed by the IAS, the auditor said.
An amount of above Tk 7.57 million receivable from Saiful Enterprise since 2016 is being doubtful of recovery.
"… but the company has made no provision of the amount in the financial statements," the auditor said.
The effects of foreign exchange transactions (gain/loss) have also not been shown in respect of sales (foreign) and trade receivables (foreign) as at 30 June 2018 in the financial statements, according to basis of auditor's adverse opinion.
Sonali Aansh Industries has issued a corporate guarantee as per decision of the board of directors held on 08 June 2017 to Brac Bank against the loan facility of Tk 250 million allowed to Veloxo Trading.
In this regard, the auditor said the corporate guarantee was given without any power given by the Memorandum and Articles of Association of the company.
Sonali Aansh Industries, presently an 'A' category company, was listed with the stock exchange in 1985.
The company's sponsor-directors hold 52.48 per cent shares, institutes 5.63 per cent and general shareholders 41.89 per cent as of November 30, 2018.
The share price of Sonali Aansh Industries closed at Tk 708.60 each on Thursday with a loss of 3.64 per cent or Tk 26.90 on Dhaka Stock Exchange (DSE).
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