In order to protect the interests of investors, the Bangladesh Securities and Exchange Commission (BSEC) has recently appointed a special auditor for FAS Finance and Investment Limited to audit the company's financial statements for the year ended 31 December, 2019.
A Wahab & Co chartered accountants will review the financial statements of the company as special auditors.
The securities regulator will issue letters to both FAS Finance and A Wahab & Co in this regard very soon.
Sources said the auditor will examine the related party transactions, reserve, non-performing loans, total income, earnings per share (EPS), net asset value, and other financial issues of the company.
The company did not declare any cash dividends since its listing.
FAS Finance's reserves and surplus stood at a negative Tk120.28 crore, after adding Tk16.20 crore as revaluation reserve.
The auditor informed that the company's classified or non-performing loans (NPLs) stood at Tk1,311 crore for 2019, which is 73% of the company's total loan advance and lease investment.
The required provision of loan advance and lease for the year was Tk514.55 crore, of which Tk134.59 crore was kept as loan provision and the remaining Tk379.96 crore shall be divided in equal instalments over the next seven years.
But if the whole amount of required provision is shown in the profit or loss statement, then the company will face a loss of Tk530.96 crore for 2019, and loss per share would be Tk35.6.
Incidentally, interest income was overcharged by Tk120.35 crore during the year.
The company's margin loan balance with negative equity was Tk157.8 crore as of 31 December, 2019.
FAS Finance has no other security of this margin loan, except the share portfolios of margin loan holders.
It is highly doubtful the unsecured loans can be recouped, since the market value of the portfolios of negative equity holders is only Tk1.3 crore.
In 2019, company revenue was Tk175.18 crore and its net loss was Tk146.47 crore.
The company was listed on the stock exchanges in 2008. As of February 2021, sponsors and directors hold 13.2% shares, institutions 11.86%, and general investors 74.94% shares of the company.
The last trading price of FAS Finance at the Dhaka Stock Exchange was Tk5 per share on Tuesday.
FAS Finance and Investment Limited provides lease financing, transport financing, term financing, project financing, house financing, SME financing, and service sector financing.