Pakistan Oilfields Limited half yearly financial results were announced on 23rd of February 2004, showing 1.24 billion rupees net after tax profit. This shows almost Rs 19 earning per share on an annual basis.
The company has an impressive record of distribution of profits to their shareholders, which is apparent from its previous five years history.
To every one's surprise, ten days before the announcement of its six monthly results, the share price started falling daily from Rs 230 and touched the lowest of Rs 196 on the announcement day.
The Karachi Stock Exchange announced the half yearly results over television, which was incomplete as only the profit figures were announced while omitting the announcement regarding the interim distribution.
During this incomplete announcement by the Karachi Stock Exchange authorities, the share price rose to Rs 209 with a substantial trading recorded between Rs 196 and Rs 209.
After some time, the announcement was again made by reading one additional line that the company has declared no interim dividends.
This announcement brought the share price down to Rs 196, at which price the share was capped.
It is surprising that the share price started falling as soon as the date for board of directors meeting was announced.
It seems certain that, the management leaked out the interim results to those they mattered.
It is also surprising that despite the fact, that the company has made substantial profits during the first half of the current year from its operations, it did not declare any interim distribution, which is a deviation from their previous five years distribution record.
There are several questions, which need to be answered. Was it not intentional?
Is it not good corporate governance to disclose to the shareholders why the interim distribution is not made this time?
Is it not an inside trading? Why the Karachi Stock Exchange announced the results in parts, thereby causing massive losses to the small shareholders? Who is responsible for it?
It is well understood that the directors have a legal right not to declare any distribution of profits as per the Companies Act, currently applicable in Pakistan.
However, the business and investment world is changing fast and we must behave in a manner, which is acceptable to the investment community.
There is a code of governance also, which needs to be acted upon. If these acts are frequently repeated in our emerging capital markets, how we would be able to bring in foreign investors?
Who is going to believe that bourses are part of our capital markets and not the casinos, where the insider is always a winner?
Is there any institution to stop these market manipulations for the protection of the minority shareholders?
Has any action being taken by the Securities and Exchange Authority of Pakistan to step in and find out who were the players behind the scene?
What were the reasons that Karachi Stock Exchange announced the results in parts, thereby causing massive losses to the small shareholders? Was it not at the behest of the big players of the market?
I feel there is a strong case that the company's management must explain the shareholders, why and how the financial results were leaked, well before the company's announcement?
This not only amounts to a serious violation of the corporate governance principles, but is also a violation of trading rules. A serious attention should be paid to these violations.
The management of Karachi Stock Exchange also owes an explanation as to who was responsible for announcing the partial result of this company?
If it is argued that the result received was incomplete then the partial result should have been withheld till the receipt of full result.
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