Most investors on the Dhaka Stock Exchange have never read an annual report cover to cover. They check EPS, glance at the dividend, and move on. That is roughly equivalent to buying a house after looking at one photograph of the living room. The annual report is the single most information-dense document a listed company publishes — and the five numbers buried inside it will tell you more about a stock’s future than a month of candlestick charts.
This walk-through uses Square Pharmaceuticals’ FY2024 annual report (year ended June 2024) as a working example. The same framework applies to every DSE-listed company.
The Structure: What You Are Actually Holding
A typical DSE annual report runs 150 to 300 pages. That sounds intimidating until you realise most of it is filler — corporate governance checklists, sustainability pledges, group photographs of the board. You need four sections. Everything else is optional.
Section 1: Directors’ Report. This is management’s narrative — what happened during the year, why it happened, and what they expect next. Read it critically. When a company’s revenue dropped 15% and the Directors’ Report says “challenging macroeconomic headwinds” without specifics, that is a red flag. Square Pharma’s FY2024 Directors’ Report, by contrast, detailed its Tk 500 crore expansion plan and its rationale — capacity constraints in injectables and cephalosporins. Specificity signals competence.
Section 2: Auditor’s Report. Skip straight to the opinion paragraph. You want two words: “unqualified opinion.” That means the auditor found the financial statements to be a fair representation. A qualified opinion — or worse, a disclaimer — means the auditor is waving a flag that something does not add up. This is the first thing to check before reading a single number.
Section 3: Financial Statements. The income statement, balance sheet, cash flow statement, and the notes that accompany them. This is where the real analysis begins.
Section 4: Notes to the Financial Statements. Most investors skip the notes. That is precisely why the notes contain the most valuable information — contingent liabilities, related-party transactions, changes in accounting policies. If a company changed its depreciation method or revenue recognition policy, the notes will tell you, and the headline EPS number will not.
The Five Numbers That Actually Matter
You do not need an accounting degree. You need five data points, calculated in sequence, and you need to know what each one is hiding.
1. Earnings Per Share (EPS). Square Pharma reported consolidated EPS of Tk 23.61 for FY2024, up from Tk 21.41 the previous year. But EPS alone is dangerously incomplete — it says nothing about how those earnings were generated. A company can boost EPS by selling an asset, cutting R&D, or taking on debt. Always check what drove the change. If you understand how P/E ratios work on the DSE, you know that EPS is only the denominator. The numerator — the price investors are willing to pay — depends on the quality of those earnings.
2. Net Asset Value (NAV) Per Share. Square Pharma’s NAV stood at Tk 119 per share in FY2024, up from Tk 113. NAV tells you the book value of what you own — total assets minus total liabilities, divided by shares outstanding. If the stock price is significantly above NAV, the market is pricing in future growth. If it is below NAV, either the market sees risks you do not, or you have found an opportunity. Context matters more than the number itself.
3. Operating Cash Flow. This is the number that separates real earnings from accounting earnings. Square Pharma’s net operating cash flow per share was Tk 20.90 in FY2024. Compare that to the EPS of Tk 23.61 — the gap is small, which means most of the reported profit actually came in as cash. When operating cash flow is significantly lower than net profit, the company is generating earnings on paper but not collecting money. That divergence has preceded every major DSE corporate blow-up in the last decade.
4. Debt-to-Equity Ratio. Find total borrowings on the balance sheet and divide by total shareholders’ equity. A ratio above 1.0 means the company owes more than its owners have put in. For capital-intensive sectors like cement or power, higher ratios are normal. For a pharma company like Square, a low debt-to-equity ratio reflects the structural advantage of the sector — high margins, low capex relative to revenue. The number matters less than the trend. Is it rising? Why?
5. Dividend Payout Ratio. Square Pharma declared a 110% cash dividend for FY2024 — the highest in nine years. Divide total dividends by net profit to get the payout ratio. A high payout is attractive for income investors, but a payout ratio consistently above 80% means the company is distributing most of its earnings and retaining little for reinvestment. Square’s Tk 500 crore expansion plan alongside the high payout suggests the company can fund growth from operating cash flow without stretching. Not every company can.
The Red Flags You Cannot Afford to Miss
Three patterns should make you read the report more carefully, not less:
Auditor rotation with a qualified opinion. If a company changes auditors and the new auditor issues a qualified opinion, something is wrong. The old auditor may have been pushed out for asking inconvenient questions.
Related-party transactions growing faster than revenue. The notes disclose how much business the company does with its directors, subsidiaries, and affiliated entities. If related-party transactions are growing at 30% while revenue grows at 5%, cash may be flowing to insiders instead of the business. This is the single most common governance failure on the DSE.
Contingent liabilities without adequate provisions. The notes will list pending lawsuits, tax disputes, and regulatory claims. If the total contingent liabilities are material — say, 20% or more of net assets — and the company has not provisioned for them, the balance sheet is understating risk.
Where to Find Annual Reports
Every DSE-listed company is required to publish its annual report. Access them on the company’s investor relations page or through the DSE website’s company information section. BSEC requires listed companies to hold AGMs within six months of the financial year end — July to June for most companies — so FY2024 reports should be available by December 2024 or January 2025.
If you are still building your foundation — setting up a BO account, choosing a broker, or learning how to place your first trade — start there. But the day you buy your first share, the annual report of that company becomes required reading. Not optional. Not aspirational. Required.
The numbers are in the document. The question is whether you will read them before the market prices them in, or after.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. Always conduct your own due diligence before making investment decisions.