United Airways inflates first quarter earnings | The Daily Star
12:00 AM, November 13, 2012 / LAST MODIFIED: 12:00 AM, November 13, 2012

United Airways inflates first quarter earnings

United Airways has doctored its first quarter earnings' report to show positive earnings per share (EPS), says an investigation by the Dhaka Stock Exchange.
“It appears that you have submitted false or incorrect information to Dhaka Stock Exchange and the users [investors] of your financial statements,” said the report, which has also been forwarded to the Securities and Exchange Commission.
The airline, however, denies any wrongdoing, with its company secretary ATM Nazrul Islam claiming they have mentioned everything in their financial statements.
United's first quarter EPS is supposed to be Tk -2.19, but it has publicly disclosed it to be Tk 0.81, the investigation found.
The higher EPS figure is due to the exclusion of deferred taxes -- a liability -- from the computation methodology, which is a clear violation of Bangladesh's accounting standards and securities rules, said the premier bourse.
According to the airline's quarterly accounts, net profit during the July-September period of this year was Tk 35.72 crore, while the deferred taxes as of September 2012 were Tk 132.38 crore.
Deferred tax, basically, represents a company's liability for taxes that is postponed to future periods.
Had United Airways incorporated deferred taxes in its earnings calculations, the first quarter results would have yielded a net loss of around Tk 97 crore.
“We have mentioned it in our financial statements,” said Islam, adding it is a liability for future, the amount of which could not be stated at the time of reporting the first quarter results.
Shareholders' interest, he said, was another reason behind the exclusion of deferred taxes: “Moreover, we may not have been able to give dividend to the shareholders.”
United Airways, which was listed on the stockmarket in 2010, declared a 15 percent stock dividend for the year that ended on June 2012.
“We should be given more time [by the DSE] to defend our position,” added Islam.
The investigation found the figures for travel taxes, fuel costs, aircraft lease and lease interests to be unusual, as well.
The carrier, however, in a reply to the DSE, said the travel tax was lower as labour exports, especially to Saudi Arabia and the Middle East, have declined since the last quarter of fiscal 2011.
Moreover, the airline said it carried mostly Hajj passengers to Saudi Arabia, for whom travel taxes are exempt.
With regards to the figures of high fuel prices, United Airways said it was mainly due to the price hike in the global market.
Yesterday, United Airways shares traded between Tk 22.90 and Tk 25.20 to close the day at Tk 23.30.


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