Chairman of Banks DIH Ltd Clifford Reis says in his report on the performance of the company for the year ended September 30, 2006 that the failure of the Government of Guyana to honour its obligations for the repayment of bonds to Citizens Bank Guyana Inc was the primary reason for the less than anticipated level of after tax profit achieved by the bank in 2006. Last year, Citizens Bank, a 51 per cent owned subsidiary of Banks DIH Ltd. recorded an after tax profit of $347.3m compared with $345.5m in 2005. The bank has filed a claim in the courts against government for the full repayment of the bonds which the government is contesting.
According to Reis the group’s turnover for 2006 was $14b as against $13.2 b in 2005. After tax profits attributable to shareholders for the group were $781.4m compared with $823.8m in the previous year. Reis attributed the company’s reduced profits to “the steep increase in fuel prices” which he put at 49.9 per cent. During last year increased fuel prices cost the company a further $335.8m in expenditure which its Chairman said was not budgeted for and could not have been passed on in total to consumers.
Reis noted that the company’s operations had to take account of the competitive state of the market which he said resulted in large measure from smuggling and under – invoicing of imports. According to Reis the competitiveness of the company and the demand for its products had also been affected by the increase in consumption tax on beer and liquor from 50 per cent to 60 per cent during last year. He said that total taxes paid to government last year rose to $3,822 b compared with $3,635 b in 2005.
Reis said however that despite the challenges facing the company its working capital was strong and at the end of the year it stood at $2,359 m an increase of 6.4 per cent over the previous year.
The Chairman noted that Banks Holdings Limited now owns 20% of the share capital of Banks DIH Limited and Banks DIH Limited holds 9.2% of the share capital of Banks Holdings Limited as at September 30, 2006. The synergies from this relationship have progressed and benefits in export sales have started to accrue to both companies. Banks DIH Limited will shortly commence the bottling of Plus Energy Beverage under Licence from Banks Holdings Ltd.
