WHEN I report on stocks listed on the Philippine Stock Exchange (PSE), I write my piece as readable as possible so that non-CPAs like me could also understand it. In other words, I write my column as a layman should because I presume that not all readers of The Manila Times who also read Due Diligencer are CPAs, or graduates of business courses that require few accounting units in college.
With this introduction, I thank Jose Samilin, a reader of this paper, for his email. He wrote in reaction to my column on declaring dividends: “Per your article, you are aware that the basis of dividend declaration is the availability of retained earnings,” which he agreed with me is correct.
Then he cited the numbers that I provided in my previous column such as the “retained earnings of P117.37 million as of 12/31/14 with dividends payable of P265.49 million as of 12/31/13.” Together with “another P100 million as of 03/05/15, the amounts totaled P365.49 million.”
As far as Mr. Samilin is concerned, “SBS Company may still have proper compliance with legal accounting, considering at least two CPAs had confirmed the figures based on financial statements filed with the SEC” (Securities and Exchange Commission).
Then Mr. Samilin explained that “dividend payable is not the same as dividend declared by the board or dividend paid on 03/05/15. The proposed figures in your article obviously don’t correspond to each other.”
Well, I appreciate Mr. Samilin for sending me that email and for elucidating on what could be a layman’s wrong interpretation of accounting entries.
Coming from a CPA and a former auditor that he is, his comments are most welcome, especially when they enlighten readers on the intricacies of accounting.
Perhaps, I failed to effectively send my message across in tackling retained earnings for a topic. What I asked was where SBS got the funds to pay the P365.49 million dividends declared by the majority owners before they took the company public. How does this huge dividend payable impact SBS’s public stockholders? Does this mean they would be able to enjoy the company dividends only when the Sytengcos’ claims would have been fully paid?
I hope Mr. Samilin would also provide the answer or answers to these questions.
As in my past columns, I am for the welfare of the public investors who trade in listed stocks hoping that their placements would earn more than saving their money in a bank.
Going back to SBS, I urge Mr. Samilin to review SBS’s financial quarterly filings if there are reporting errors such as “the possible misstatement of quarterly earnings” as alleged by a reader of this paper.
I have also asked the market watchers of the PSE and the examiners of the SEC to do the same for the sake of the investing public. Their findings would erase doubts on the reliability of SBS’s financials for investment purposes.
Let me make it clear that I am not accusing anyone among SBS’s insiders of anomalous disclosures of material facts.
I wrote about the company’s financial posting based on an analysis of the company’s disclosures by a CPA like Mr. Samilin. As a matter of fact, I could provide both the SEC and PSE of the CPAs’ emails so that they could have something to start with in re-auditing SBS’s quarterly financials.
As for Mr. Samilin’s request that I email him SBS’s audited balance sheets as of 12/31/13 and 12/31/14 an 09/30/15, I suggest he access www.edge.pse.com.ph, PSE’s website, for the company’s disclosures, including the prospectus, which it submitted to the exchange and the SEC.
As I had written in Wednesday’s Due Diligencer, if SBS was able to provide the public with its quarterly earnings from January to September, it is possible that it could also post on PSE’s website the numbers even for just the first quarter of 2015.