Banks has announced a 46% increase in pre-tax profit of $1.5B ($1.04B) on sales of $11.B, an increase of 10.3%, for the year ending September 30, 2004.
For the first half of 2004, pre-tax profits were $500M on $5.9B and in the second half were $1B on a reduced turnover of $5.7B. In 2003 the figures were profits of $447M in the first half on revenue of $5.5B and in the second, $589B on revenue of $5.2B.
Meanwhile Citizens Bank, a 51% owned subsidiary of the Company also realised a 44% growth in its after tax profit for 2004.
The financial highlights of the accounts show a total dividend payout of $353M ($155M), a 128% increase. This translates to 40 cents per share compared to 22 cents in 2003. This is a big increase in the payout ratio (the proportion of earnings per share declared as dividend), of some 58% as compared to 43%. Even after the substantial appreciation in Banks' share price in recent weeks, the dividend yield still stands at 6.2%, close to that of most other companies traded and almost double last year's figure.
The gains in earnings, despite the price having been bid up some 60% in the last month, means a P/E ratio of 7.0.
Most notable is the substantial increase in net asset value. The profit attributable to shareholders for the year is $820M; however, shareholders' equity has increased $3.6B. A $5.762B, or 30.5% increase in the value of the assets to $24.6B suggests a sizeable revaluation has occurred, but the information in the highlights is not sufficient to draw any firm conclusions.
The net asset value per share figure has gone to $12.54 from $8.45. Using the current price of $6.5 this puts the price to book ratio at a little over 51.8% - a considerable discount to net asset value. Ironically, if the net asset value does reflect the realisable value of assets, even at current share prices Banks remains an attractive prospect for take-over.
Chairman Clifford Reis noted in his comments that the Group's investments "over the years to expand and upgrade all of our production facilities including the restaurants begin to bear fruit. These investments have allowed the directors to revise the estimated useful lives of plant and equipment to industry norms reflecting more accurately the group's financial performance."
Reis' shareholdings increased by 300,000 in 2004 to 1.9M shares, as was the case with finance director, Azam Khan, both increases on top of the 1 for every 4 share bonus.
Banks has been the subject of much speculation both on and off the exchange with Trinidad conglomerate Ansa McAl recently revealing it is considering making an offer for the company.
With the financial highlights, Banks has become the first company traded to acknowledge, though indirectly, the price of its shares in its statements. GASCI director Patrick van Beek explains that "since the dividend yield is dividend per share divided by price per share, from the information in the highlights provided, the share price as of Sep 30 2004 and 30 Sep 2003 can be determined thus: 0.4 divided by the yield 8.9% = $4.5 and 0.22 divided by the yield of 3.2% = $6.9 respectively."
The Banks share price (DIH) has had a turbulent time relative to the rest of the manufacturing sector (DDL, DIH, GSI and SPL) at one point almost 20% down relative to the industry index. Now that the price has recovered, the question remains whether the increase in shareholder value is sustainable.
Meanwhile Citizens Bank Ltd has proposed a final dividend of $0.5 per share for year ending September 30, 2004.
And the directors of Demerara Bank Ltd have recommended a final dividend of $0.12 per share, a 9% increase over the $0.11 paid in respect of the 2003 financial year. The Annual General Meeting is to be held on December 30.