Dhaka Insurance Limited, a prominent player in the insurance sector, has received a "Qualified Opinion" — which raises concerns about certain financial practices and regulatory compliance within the company — from its auditor in the Auditor’s Report for the financial year ending on December 31, 2023.
According to the Bangladesh Securities and Exchange Commission (BSEC) directive dated January 14, 2021, any unpaid, unclaimed or unsettled cash dividends, including accrued interest, must be transferred to a designated fund if they remain unclaimed for three years from the date of declaration, approval, or record date, which came to light recently via information published on the Dhaka Stock Exchange (DSE) website.
However, Dhaka Insurance Limited's financial statements, specifically Note No 27, reveal an "Unclaimed Dividend Account" totalling Tk 57.44 lakh, which includes dividends dating from 2009 to 2020 amounting to Tk 49.30 lakh. This situation raises questions about the company's adherence to BSEC regulations.
A "Qualified Opinion" indicates that while the financial statements are generally reliable, certain areas do not comply with accounting standards or regulatory requirements.
This opinion may affect stakeholder confidence, including investors, policyholders, and regulators, and underscores the need for Dhaka Insurance to address these issues promptly.
Additionally, the company’s financial practices have come under scrutiny regarding its provision for the Gratuity Fund.
Dhaka Insurance had made provisions on a lump sum basis amounting to Tk 67 lakh up until the financial year 2018, but it has failed to make any provisions for the Gratuity Fund for the last five years.
This omission could potentially affect the company's long-term financial health and its ability to meet future obligations to employees.
Furthermore, Note No 6.01 of the financial statements reports accrued interest totalling Tk 1.22 crore. This figure includes accrued interest on Fixed Deposit Receipts (FDR) calculated on a lump sum basis amounting to Tk 1.02 crore.
The lack of detailed calculations and transparency in reporting these amounts may have contributed to the auditor’s qualified opinion.
Performance of Q1, 2024
Dhaka Insurance recently released its financial performance for the first quarter ending on March 31, 2024. The company's Earnings per Share (EPS) stood at Tk 0.75, showing a slight decrease from Tk 0.77 recorded during the same period in 2023.
Despite the marginal drop in EPS, the company's Net Operating Cash Flow per Share (NOCFPS) improved to Tk 0.83 for the January-March 2024 period, up from Tk 0.82 in the previous year.
The Net Asset Value (NAV) per share, a critical indicator of a company's asset strength, also saw a positive shift. With revaluation, the NAV per share rose to Tk 35.71 as of March 31, 2024, compared to Tk 34.59 as of December 31, 2023.
This increase reflects the company's ongoing efforts to enhance its asset base and financial stability. Excluding revaluation, the NAV per share also showed an upward trend, reaching Tk 25.08 on March 31, 2024, from Tk 23.95 at the end of the previous year.
Company profile
Dhaka Insurance’s share price increased on Monday and closed the day at Tk 42 per share, marking a 0.70 per cent rise from the previous trading session at DSE.
Listed on the bourses in 2010, Dhaka Insurance has established itself as a reliable provider of general insurance products. Their portfolio includes coverage for fire and allied perils, marine cargo and hull, aviation, automobiles and various miscellaneous risks.
Despite the recent dip, the company remains a significant entity in the insurance market.
As of June 2024, the ownership structure of Dhaka Insurance reveals a strong presence of sponsors and directors, who collectively hold 55.68 per cent of the shares.
Institutional investors account for 13.83 per cent, while foreign investors possess a marginal 0.10 per cent. The remaining 30.39 per cent of the shares are held by the general public.
