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The stock market regulator has sought explanation from Crown Cement as the company has been found to have provided misinformation in its financial report for the second quarter ending on December 31, 2021.
Noting that the misdeclaration led to an unusual hike in its share price, Bangladesh Securities and Exchange Commission (BSEC) asked the company to justify the issue within the next seven working days.
In this regard, the BSEC issued a letter to the managing director of the publicly traded cement company on Monday.
The cement manufacturer’s share price jumped 22 per cent to Tk74.6 within a week.
According to the letter, the company’s actual growth rate of gross profit in the unaudited financial statement for the second quarter was negative 23.65 per cent. But it showed the figure as negative 5.69 per cent.
“Please, explain the reason of such misdeclaration,” read the BSEC letter.
Besides, the commission observed in the financial statement that the revenue of the company increased 23.14 percent while the cost of sales increased 31.39 per cent.
The regulator termed the cost as irrational and said, “It appears that the irrational increase in cost of sales negatively affected the earnings per share (FPS) of Crown cement.”
It sought proper documents and justification in favour of the figures.
Apart from those, the cement company was asked to explain its stance regarding its tax expenses as the regulator thinks that the Tk 8.15 crore increase in tax expenses, as mentioned in the statement, had negatively impacted its earnings.
Crown Cement has recently changed its name to Crown Cement PLC from MI Cement Factory Limited.
It was listed on the bourses in 2011 and has been paying cash dividends of 10 per cent - 20 per cent for the last seven years.
During July-December ’21 period, its net profit stood at Tk 11 crore, which was 63 per cent lower compared to the same period of the previous year.
The company’s EPS was Tk 0.21 in the October-December’21 period, which was Tk 1.52 in the same period of the previous tear. EPS was Tk 0.75 in July-December’21 as against Tk 2.03 in the same period a year ago.
The company said, due to the high raw material prices in the international market, its EPS decreased 63.25 per cent during the first half of current fiscal year.
In June 2020, the BSEC fined all but independent and nominee directors of the cement company for violations of securities laws. Each director of the company was fined TK 10 lakh.
In September 2018, MI Cement provided interest-free loans to its sister concern. But shareholders' approval was not sought at the company's annual general meeting before the loan had been disbursed. Each director of the company was fined for this violation.
