Berger Paints Trinidad Limited

Transcription

1 Financial Statements

2 Contents Page Independent Auditors Report 1 Balance Sheet 2 Income Statement 3 Statement of Changes in Equity 4 Cash Flow Statement 5 Notes to the Financial Statements 6-28

3 Independent Auditors Report To the shareholders of Berger Paints Trinidad Limited Report on the Financial Statements We have audited the accompanying financial statements of Berger Paints Trinidad Limited which comprise the balance sheet as of and the income statement, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Port of Spain Trinidad, West Indies 18 February 2008 (1)

4 Balance Sheet 31 December Notes ASSETS Non-current Assets Property, plant and equipment 6 8,221,702 9,539,235 Retirement benefit asset 7 10,550,800 11,545,600 18,772,502 21,084,835 Current Assets Inventories 8 10,453,241 8,562,988 Trade and other receivables 9 17,375,754 12,791,048 Taxation recoverable -- 20,174 Due from related parties 10 1,734,262 2,490,536 Cash 5,900 5,900 29,569,157 23,870,646 Total Assets 48,341,659 44,955,481 EQUITY AND LIABILITIES Capital and Reserves Share capital 11 5,905,374 5,905,374 Revaluation reserve 2,599,391 3,680,803 Retained earnings 17,857,528 17,816,608 26,362,293 27,402,785 Non-current Liabilities Finance lease obligations , ,888 Deferred tax liabilities 13 2,235,811 2,991,052 Deferred income , ,678,133 3,373,940 Current Liabilities Trade and other payables 14 11,244,974 7,170,641 Bank overdrafts 19 4,954,470 4,205,042 Current portion of finance lease obligations , ,417 Due to related parties 10 2,981,518 2,689,656 Tax payable ,301,233 14,178,756 Total Equity and Liabilities 48,341,659 44,955,481 The notes on pages 6 to 28 form an integral part of these financial statements. On February 2008, the Board of Directors of Berger Paints Trinidad Limited authorised these financial statements for issue. Director Director (2)

5 Income Statement Year Ended 31 December Notes Revenue 49,634,839 45,246,776 Cost of Sales (32,982,078) (30,358,217) Gross Profit 16,652,761 14,888,559 Expenses Administration (8,711,519) (6,735,238) Warehouse and distribution (2,743,618) (2,352,164) Selling (2,419,325) (2,658,436) Advertising and promotion (2,235,269) (2,444,974) Technical (1,222,410) (995,279) Marketing and customer service (890,600) (874,179) (18,222,741) (16,060,270) Operating loss (1,569,980) (1,171,711) Other income 16 1,577, Finance Cost 17 (654,400) (291,543) Loss Before Taxation (647,019) (1,463,254) Taxation ,396 62,675 Loss For The Year (234,623) (1,400,579) Earnings Per Share For Loss Attributable To The Equity Holders Of The Company During The Year (expressed in cents per share) Earnings Per Share - Basic 20 ($0.05) ($0.27) The notes on pages 6 to 28 form an integral part of these financial statements. (3)

6 Statement Of Changes In Equity Year Ended Share Revaluation Retained Capital Reserve Earnings Total Balance at 1 January ,905,374 3,680,803 17,816,608 27,402,785 Disposal of land and buildings -- (1,162,000) 1,162, Depreciation transfer -- (94,216) 94, Deferred taxation , ,804 Dividends (980,673) (980,673) Loss for the year (234,623) (234,623) Balance At 5,905,374 2,599,391 17,857,528 26,362,293 Year Ended 31 December 2006 Balance at 1 January ,905,374 3,850,491 19,971,610 29,727,475 Depreciation transfer -- (226,251) 226, Deferred taxation -- 56, ,563 Dividends (980,674) (980,674) Loss for the year (1,400,579) (1,400,579) Balance At 31 December ,905,374 3,680,803 17,816,608 27,402,785 The notes on pages 6 to 28 form an integral part of these financial statements. (4)

7 Cash Flow Statement Year Ended 31 December Operating Activities Loss before taxation (647,019) (1,463,254) Adjustments to reconcile loss to net cash outflow from operating activities: Depreciation 1,410,276 1,334,903 (Gain)/loss on disposal of property, plant and equipment (1,708,805) 15,224 Decrease/(increase) in retirement benefit asset 994,800 (289,400) Net change in current assets and liabilities (Note 21) (496,799) (587,435) (447,547) (989,962) Tax paid (168,921) (159,801) Tax refund 21,745 18,379 Net cash outflow from operating activities (594,723) (1,131,384) Investing Activities Purchase of property, plant and equipment (1,529,585) (1,235,627) Proceeds from sale of property, plant and equipment 3,165, Net cash inflow/(outflow) from investing activities 1,635,545 (1,235,627) Financing Activities Proceeds from borrowings 185, ,942 Repayment of borrowings (308,336) (89,407) Dividends paid (1,667,145) (294,202) Net cash (outflow)/inflow from financing activities (1,790,250) 129,333 Decrease In Cash And Bank Overdrafts (749,428) (2,237,678) Cash And Bank Overdrafts At start of year (4,199,142) (1,961,464) Decrease (749,428) (2,237,678) At end of year (4,948,570) (4,199,142) Represented By Cash 5,900 5,900 Bank overdrafts (4,954,470) (4,205,042) (4,948,570) (4,199,142) The notes on pages 6 to 28 form an integral part of these financial statements. (5)

8 Notes To The Financial Statements 1 General information The Company is incorporated in Trinidad and Tobago and is engaged in the manufacture and distribution of paints and allied products. It is a subsidiary of Lewis Berger (Overseas Holdings) Limited, of the United Kingdom and the ultimate holding Company is Asian Paints (India) Limited, incorporated in India. The registered office of the Company is located at 11 Concessions Road, Sea Lots, Port of Spain. 2 Summary Of Significant Accounting Policies The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to the years presented, unless otherwise stated. a Basis of preparation These financial statements have been prepared under the historical cost convention except for certain property, plant and equipment which were professionally valued in 1998 and are in accordance with International Financial Reporting Standards. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4. i) Standards, amendments and interpretations effective in 2007 IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to IAS 1, Presentation of Financial Statements Capital Disclosures (effective for annual periods beginning on or after 1 January 2007). IFRS 7 introduces new disclosures relating to financial instruments. This standard does not have any impact on the classification and valuation of the Company s financial instruments. ii) Interpretations early adopted by the Company The Company did not early adopt any new standards or interpretations in iii) Standards, amendments and interpretations effective in 2007 but not relevant The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 January 2007 but are not relevant to the Company s operations: IFRIC 7, 'Applying the restatement approach under IAS 29, Financial reporting in hyperinflationary economies'; and IFRIC 9, 'Re-assessment of embedded derivatives'. (6)

9 2 Summary Of Significant Accounting Policies (Continued) a Basis of preparation (continued) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company: The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Company s accounting periods beginning on or after 1 January 2008 or later periods, but the Company has not early adopted them: IFRIC 14, 'IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction' (effective from 1 January 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The Company will apply IFRIC 14 from 1 January 2008, but it is not expected to have any impact on the Company s accounts. IFRS 8, 'Operating segments ' (effective from 1 January 2009). IFRS 8 replaces IAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131, Disclosures about segments of an enterprise and related information. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The Company will apply IFRS 8 from 1 January The expected impact is still being assessed in detail by management, but it appears likely that the number of reportable segments, as well as the manner in which the segments are reported, will change in a manner that is consistent with the internal reporting provided to the chief operating decision-maker. v) Interpretations to existing standards that are not yet effective and not relevant for the Company s operations IFRIC 12, 'Service concession arrangements' (effective from 1 January 2008). IFRIC 12 applies to contractual arrangements whereby a private sector operator participates in the development, financing, operation and maintenance of infrastructure for public sector services. IFRIC 12 is not relevant to the Company s operations. b Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments. (7)

10 2 Summary Of Significant Accounting Policies (Continued) c Foreign currency translation i) Functional and presentation currency Items included in the financial statements of the Company are measured using currency of the primary economic environment in which the Company operates ( the functional currency ). The financial statements are presented in Trinidad and Tobago dollars, which is the Company s functional and presentation currency. ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. d Property, plant and equipment Leasehold properties are shown at market value based on valuations carried out by professional independent valuers less subsequent depreciation for buildings and leasehold improvements. All other property, plant and equipment are stated at historical cost less depreciation. Increases in the carrying amount arising on revaluation are credited to the revaluation reserve in the shareholders equity. Decreases that offset previous increases of the same asset are charged against the revaluation reserve; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to the income statement) and depreciation based on the asset s original cost is transferred from revaluation reserve to retained earnings. Depreciation is calculated on the straight-line method to write off the cost of each asset, or its revalued amount to its estimated residual values over its estimated useful life as follows: Leasehold properties - over the remaining life of the leases Plant and machinery ½ years Office furniture and fixtures years Vehicles years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal of property and equipment are determined by reference to their carrying amounts and are taken into account in determining results for the year. (8)

11 2 Summary Of Significant Accounting Policies (Continued) d Property, plant and equipment (continued) When revalued assets are sold, the amounts included in revaluation reserve are transferred to retained earnings. e Inventories i) Raw materials are valued at the lower of cost, on the average cost basis, and net realisable value. ii) iii) iv) Work in progress is valued at the lower of raw material cost and net realisable value. Finished goods are valued at the lower of cost of production (which comprises raw materials, direct labour, other directs costs and related production overheads) based on (normal capacity) and net realisable value. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. Goods in transit and other supplies are valued at invoice cost. f Cash and cash equivalents Cash and cash equivalents include cash in hand and bank overdrafts shown in current liabilities on the balance sheet. g Trade receivables Trade receivables are recognised initially at fair value. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial re-organisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of loss is recognised in the income statement within selling expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against selling expenses in the income statement. (9)

12 2 Summary Of Significant Accounting Policies (Continued) h Employee benefits The Company operates two defined benefit plans the assets of which are held in separate trustee -administered funds. The pension plans are funded by payments from employees and by the Company taking account of the recommendations of independent qualified actuaries. Payments are made to a pension trust which is financially separate from the Company. The pension accounting costs are assessed using the projected unit credit method. Under this method, the cost of providing pensions is charged to the income statement so as to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of the plans every three years. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of government securities which have terms of maturity approximating the terms of the related liability. All actuarial gains and losses outside the 10% corridor are spread forward over the average remaining service lives of employees. The last actuarial valuation was carried out as at 31 December The next valuation is due on 31 December On the advice of its actuaries, the Company has entered into a contribution holiday until 2009 in respect of both plans. i Deferred income taxes Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates and laws are used to determine deferred income tax. Under this method the Company is required to make provision for deferred income taxes on the revaluation of certain non-current assets and, in relation to an acquisition, on the difference between the fair values of the net assets acquired and their tax base. The principal temporary differences arise from depreciation on property, plant and equipment, revaluation of certain non-current assets, retirement benefit asset and tax losses carried forward. Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profits will be available against which the unused tax losses can be utilised. j Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Company s activities. Revenue is shown net of valueadded tax and discounts. Revenue is recognised as follows: Sales of goods Sales of goods are recognised when the Company has delivered products to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured. (10)

13 2 Summary Of Significant Accounting Policies (Continued) k Accounting for leases Leases of property, plant and equipment where the Company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in non-current and current liabilities. The interest element of the finance charge is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leasing contracts is depreciated over the useful life of the asset. Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessors are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. l m n Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Dividend distribution Dividend distribution to the Company s shareholders is recognised as a liability in the financial statements in the period in which the dividends are approved by the Company s directors. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. o Comparative Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. (11)

14 3 Financial Risk Management 3.1 Financial risk factors The Company s activities expose it to a variety of financial risks: market risk (including foreign currency risk), credit risk and liquidity risk. The Company s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company s financial performance. Foreign currency risk The Company has both assets and liabilities denominated in foreign currencies which acts as a natural hedge, which is monitored by the Finance Manager. Foreign currency sensitivity The following table details the sensitivity to a 5% increase and decrease in the Trinidad and Tobago dollar against the US Dollar and the sensitivity to a 10% increase and decrease in the Trinidad and Tobago dollar against the Pound Sterling. 5% and 10% is the sensitivity rates used when reporting foreign currency risk internally to key management personnel and represents management s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items. If the Trinidad and Tobago dollar strengthens by 5% against the US Dollar and strengthens by10% against the Pound Sterling the loss will decrease by: US Dollar Impact Pounds Sterling Impact Loss (270,500) (109,500) (40,000) (38,000) If the Trinidad and Tobago dollar weakens by 5% against the US Dollar and weakens by 10% against the Pound Sterling will increase by: US Dollar Impact Pounds Sterling Impact Loss 270, ,500 40,000 38,000 This is mainly attributable to the exposure outstanding on receivables and payables at year end in the Company. (12)

15 3 Financial Risk Management (Continued) 3.1 Financial risk factors (continued) (i) Credit risk The Company s exposure to credit risk lies primarily with its trade receivables. The Company does periodic credit reviews of its customers financial status. Customers are not rated independently, however management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set by the board, who regularly monitor the utilisation of credit limits. No credit limits were exceeded during the reporting period. (ii) Liquidity risk Prudent liquidity risk management implies maintaining available funding through an adequate amount of committed credit facilities. Due to the nature of the business, the Company maintains its funding through available committed credit lines. The table below analyses the Company s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. At Less than 1 year $ Between 1 And 2 years $ Between 2 And 5 years $ Finance lease obligations 119, , ,210 Trade and other payables 11,244, Bank overdrafts 4,954, At 31 December 2006 Finance lease obligations 113, , ,799 Trade and other payables 7,170, Bank overdrafts 4,205, (iii) Fair value The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of finance leases for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (13)

16 3 Financial Risk Management (Continued) 3.2 Capital risk management The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to provide returns for shareholders and benefits for other shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders. The Company monitors capital using a gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (finance lease obligation and bank overdrafts) less cash. Total capital is calculated as equity as shown in the balance sheet plus net debt Total borrowings 5,327,672 4,701,347 Less cash (5,900) (5,900) Net debt 5,321,772 4,695,447 Total equity 26,362,293 27,402,785 Total capital 31,684,065 32,098,232 Gearing ratio 17% 15% The increase in the gearing ratio resulted primarily from an increase in bank overdrafts. 4 Critical Accounting Estimates The Company makes estimates and assumptions concerning the future. The resulting accounting will by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. Pension benefits This applies where the Company s accounting policy is to recognise any actuarial gains or losses immediately through the income statement. The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. The Actuaries determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates of high-quality Government of Trinidad and Tobago bonds that are denominated in Trinidad and Tobago dollars in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. (14)

17 5 Segmental Information The segment results for the year ended are as follows: Export $ Local $ Company $ Total segment revenue 5,905,464 43,729,375 49,634,839 Operating profit/(loss)/segment result 615,680 (2,185,660) (1,569,980) Other income ,577,361 Finance costs (654,400) Loss before taxation (647,019) Taxation ,396 Loss for the year (234,623) The segment results for the year ended 31 December 2006 are as follows: Total segment revenue 4,141,073 41,105,703 45,246,776 Operating profit/(loss)/segment result 526,589 (1,697,700) (1,171,711) Finance costs (291,543) Loss before taxation (1,463,254) Taxation ,675 Loss for the year (1,400,579) (15)

18 6 Property, Plant and Equipment At 31 December 2005 Land Plant Furniture and and and Buildings Equipment Vehicles Total Cost/valuation 7,178,657 8,958,863 2,372,202 18,509,722 Accumulated depreciation (1,847,590) (5,420,512) (1,587,885) (8,855,987) Net book amount 5,331,067 3,538, ,317 9,653,735 Year Ended 31 December 2006 Opening net book amount 5,331,067 3,538, ,317 9,653,735 Additions Disposals 51, ,726 (626) 587,651 (14,598) 1,235,627 (15,224) Depreciation charge (277,251) (762,802) (294,850) (1,334,903) Closing net book amount 5,105,066 3,371,649 1,062,520 9,539,235 At 31 December 2006 Cost/valuation 7,229,908 9,319,703 2,672,518 19,222,129 Accumulated depreciation (2,124,842) (5,948,054) (1,609,998) (9,682,894) Net book amount 5,105,066 3,371,649 1,062,520 9,539,235 Year Ended Opening net book amount 5,105,066 3,371,649 1,062,520 9,539,235 Additions Disposals 75,000 (1,259,955) 1,181,218 (24,381) 273,367 (152,506) 1,529,585 (1,436,842) Depreciation charge (265,769) (797,653) (346,854) (1,410,276) Closing net book amount 3,654,342 3,730, ,527 8,221,702 At Cost/valuation 5,922,400 9,555,000 2,683,055 18,160,455 Accumulated depreciation (2,268,058) (5,824,167) (1,846,528) (9,938,753) Net book amount 3,654,342 3,730, ,527 8,221,702 (16)

19 6 Property, Plant and Equipment (Continued) Included in furniture and vehicles are assets held under finance leases as follows: Accumulated Net book amount Cost depreciation Vehicles 563, , , ,908 Historical cost and accumulated depreciation on the revalued assets were: Land 2007 Building Land 2006 Building Historical cost -- 3,477,000 43,000 3,543,000 Accumulated depreciation -- (3,453,000) -- (3,473,000) Net book amount -- 24,000 43,000 70,000 Land and buildings were last revalued in 1998 by independent valuers. Valuations were made on the basis of market value. During the year, $1,162,000 representing the revaluation surplus on land and building of freehold property in San Fernando was transferred to Retained Earnings on the disposal of this property. (17)

20 7 Retirement Benefit Asset The Company has established two pension plans covering substantially all monthly and weekly paid employees. The pension plans are final salary defined benefit plans. The assets of the plans are held independently of the Company s assets in separate trustee administered funds. The information that follows was extracted from actuarial reports dated 21 December 2007 and 5 January The amounts recognised in the balance sheet are as follows: Present value of funded obligations (22,429,400) (20,178,600) Fair value of plan assets 32,423,600 31,388,700 9,994,200 11,210,100 Unrecognised actuarial gains 556, ,500 Defined benefit asset 10,550,800 11,545,600 The amount recognised in the income statement is as follows: Amortised net gain (19,300) (1,300) Current service cost 971,700 1,027,500 Interest cost 1,803,900 1,585,800 Expected return on plan assets (2,977,500) (2,901,400) Past service cost 1,216, Net pension expense/(income) 994,800 (289,400) Actual return on plan assets: Expected return on plan assets 2,977,500 2,901,400 Actuarial gain/(loss) on plan assets 97,000 (3,142,200) Movement in the asset recognised in the balance sheet: 3,074,500 (240,800) At beginning of year 11,545,600 11,256,200 Net pension (expense)/income (994,800) 289,400 At end of year 10,550,800 11,545,600 The principal actuarial assumptions used for accounting purposes were: Discount rate - pension plan active members and deferred pensioners 8.75% 8.75% - current pensioners 8.75% 8.75% Expected return on non-annuity pension plan assets 10.00% 10.01% Expected return on insured annuity assets 8.75% 8.75% Future salary increases % % Future pension increase 2.50% % (18)

21 8 Inventories Raw materials 6,223,377 4,266,993 Finished goods 3,603,812 4,030,181 Work in progress 453, ,948 Goods in transit 165,164 9,559 Other supplies 7,545 23,307 10,453,241 8,562,988 The cost of inventories recognised as expense and included in cost of sales amounted to $26,722,410 (2006: $24,498,652). 9 Trade And Other Receivables Trade receivables 17,267,490 13,017,130 Less: provision for impairment (647,811) (797,517) Trade receivables - net 16,619,679 12,219,613 Other receivables 756, ,435 The fair values of trade and other receivables are as follows: 17,375,754 12,791,048 Trade receivables - net 16,619,679 12,219,613 Other receivables 756, ,435 17,375,754 12,791,048 Not past due and not impaired 7,318,544 7,196,444 Past due but not impaired 9,301,135 5,023,169 16,619,679 12,219,613 Trade receivables that are less than three months past due are not considered impaired. As of, trade receivables of $9,301,135 (2006: $5,023,169) were past due but not impaired. There has been no history of default with these customers. Ageing analysis of trade receivables that are past due but not impaired: Up to 3 months 7,561,216 4,581,082 3 to 6 months 1,447, ,342 6 to 12 months 292, ,745 9,301,135 5,023,169 (19)

22 9 Trade And Other Receivables (Continued) As of, trade receivables $647,811 (2006: $797,517) were impaired and provided for. The ageing of these receivables is as follows: Over 1 year 647, ,517 The carrying amounts of the Company s trade and other receivables are denominated in following currencies. Currency TT dollar 12,866,679 10,180,843 US dollar 3,753,000 2,038,770 16,619,679 12,219,613 Movement on the Company s provision for impairment of trade receivables is as follows: At 1 January 797, ,206 Provision for receivables impairment 112, ,311 Receivables written off during the year (262,329) -- At 31 December 647, ,517 The creation and release of provision for impaired receivables have been included in selling expenses in the income statement. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at is the fair value of each class of receivable mentioned above. The Company does not hold any collateral as security. (20)

23 10 Related Party Balances Due from Related Parties Berger International SDN Malaysia 753, ,927 Berger Paints Thailand Limited 344, ,039 Berger Paints Jamaica Limited 323, ,189 Berger Paints Barbados Limited 268, ,087 Berger Paints Singapore Limited 43,989 48,978 Berger International Limited -- 2,316 Due to Related Parties 1,734,262 2,490,536 Lewis Berger (Overseas Holdings) Limited 2,411,947 2,282,880 Berger International Limited 233, ,248 Berger Paints Jamaica Limited 187, Asian Paints India Limited 148,188 96,122 Berger Paints Thailand Limited -- 1, Share Capital 2,981,518 2,689,656 Authorised Unlimited number of shares of no par value Issued and fully paid 5,161,444 ordinary shares of no par value 5,905,374 5,905, Finance Lease Obligations Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default. The gross finance lease obligation is as follows: No later than 1 year 149, ,167 Later than 1 year and not later than 5 years 280, , , ,053 Future finance charges on finance leases (57,294) (85,748) Present value of finance lease liabilities 373, ,305 The present value of finance lease liabilities is as follows: No later than 1 year 119, ,417 Later than 1 year and not later than 5 years 253, , , ,305 (21)

24 13 Deferred Income Tax a) Opening amount 2,991,052 3,231,668 Deferred tax attributable to: Current year credit to income statement (580,437) (184,053) Current year credit to revaluation reserve (174,804) (56,563) Closing amount 2,235,811 2,991,052 b) Deferred tax liabilities: (Credit)/ Charge Revaluation to Income 2006 Reserve Statement 2007 Retirement benefit asset 2,886, (248,700) 2,637,700 Accelerated tax depreciation 716, (61,754) 654,510 Asset revaluation 923,971 (174,804) ,167 Deferred tax assets: 4,526,635 (174,804) (310,454) 4,041,377 Finance lease (145,433) -- 37,809 (107,624) Tax losses (1,390,150) -- (307,792) (1,697,942) (1,535,583) -- (269,983) (1,805,566) Deferred tax liabilities (Net) 2,991,052 (174,804) (580,437) (2,235,811) Deferred tax liabilities: Charge (Credit) Revaluation to Income 2005 Reserve Statement 2006 Retirement benefit asset 2,814, ,350 2,886,400 Accelerated tax depreciation 505, , ,264 Asset revaluation 980,534 (56,563) ,971 Deferred tax assets: 4,300,469 (56,563) 282,729 4,526,635 Finance lease (20,453) -- (124,980) (145,433) Tax losses (1,048,348) -- (341,802) (1,390,150) (1,068,801) -- (466,782) (1,535,583) Deferred tax liabilities (Net) 3,231,668 (56,563) (184,053) (2,991,052) (22)

25 13 Deferred Income Tax (Continued) The Company believes that the deferred tax asset of $1,696,942 should be recognised, since planned measures to reduce cost and increase sales are expected to result in future taxable profit being available against which tax losses can be utilised. 14 Trade And Other Payables Trade and other payables 9,107,644 4,492,148 Accrued liabilities 2,137,330 2,678, Expenses By Nature 11,244,974 7,170,641 Changes in inventories of finished goods and work in progress 26,722,410 24,498,652 Employee benefit expense (Note 26) 11,869,620 10,156,618 Other expenses 4,764,729 4,923,028 Depreciation 1,410,276 1,334,903 Technical service fees 1,405,411 1,219,475 Advertisements 1,196,000 1,372,000 Freight and handling charges 1,056, ,000 Repairs and maintenance 1,012,000 1,107,000 Printing, stationery, postage and telephone 609, ,000 Rent, rates and insurance 555, ,000 Audit fee 391, ,000 Provision for impairment of receivables 112, ,311 Directors fees 100,750 11,500 Total cost of sales and expenses 51,204,819 46,418,487 (23)

26 16 Other Income This represents the gain on disposal of the Company s freehold property in San Fernando $ Sales proceeds 3,004,000 Less: carrying value of property (1,441,939) 1,562,061 Add: current portion of amortised gain 15,300 1,577,361 The transaction resulted in a deferred gain of $204,000 which is being amortised over a ten year period. The unamortised balance is $188, $ Sale proceeds 3,004,000 Less: fair value of property (2,800,000) 204,000 Less: current portion of amortised gain (15,300) 188, Finance Cost Interest expense 491, ,600 Net foreign exchange transactions losses 163,186 18, , ,543 (24)

27 18 Taxation Current tax - business levy 112,614 90,493 Deferred tax - credit (580,437) (184,053) Prior year s over provision (880) (14,362) Green fund levy 56,307 45,247 (412,396) (62,675) The reconciliation between the loss shown in these accounts and the tax provision is as follows: Loss for the year (647,019) (1,463,254) Tax at the applicable rate 25% (161,755) (365,814) Expenses not deductible for tax purposes 8,682 10,833 Income not subject to income tax (394,340) -- Other differences (33,024) 170,928 Prior year s over provision (880) (14,362) Business levy 112,614 90,493 Green fund levy 56,307 45,247 (412,396) (62,675) 19 Bank Overdrafts The bank overdrafts bear interest at the rates of 9.0% to 11.75% per annum and are secured by a letter of undertaking dated 16 June 1978, not to encumber the assets of the Company without the Bank s consent. 20 Earnings Per Share (EPS) Basic EPS is calculated by dividing the loss attributable to equity holders by the weighted average number of ordinary shares in issue during the year Loss to equity holders (234,623) (1,400,579) Weighted average number of ordinary shares in issue 5,161,444 5,161,444 Basic EPS $(0.05) $(0.27) (25)

28 21 Net Change In Current Assets And Liabilities (Increase)/decrease in inventories (1,890,253) 1,514,332 Increase trade and other receivables (4,584,706) (2,220,596) Decrease/(increase) in due from related parties 756,274 (672,710) Increase in trade and other payables 4,244,024 70,321 Increase in due to related parties 977, ,218 (496,799) (587,435) 22 Financial Instruments By Category The accounting policies for financial instruments have been applied to the line items below: Financial assets as per balance sheet Trade and other receivables 17,375,754 12,791,048 Due from related parties 1,734,752 2,490,536 Cash 5,900 5,900 Total 19,116,406 15,287,484 Financial liabilities as per balance sheet Trade and other payables 11,244,974 7,170,641 Due to related parties 2,981,518 2,689,656 Bank overdrafts 4,954,470 4,205,042 Finance lease obligations 373, ,305 Total 19,554,164 14,561,644 (26)

29 23 Credit Quality Of Financial Assets The credit quality of the financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available). 24 Commitments And Contingent Liabilities a) At year-end there are contingent liabilities with respect to Immigration and Customs bonds amounting to $205,000 (2006: $163,000). b) The Company and Berger International Limited are engaged in litigation initiated by the former Regional Managing Director who also was a Director on the Board of the Company. This matter is subject to High Court Action No 2241 of As at the date these financial statements were approved, it cannot be determined with any certainty the likely outcome of this matter. No provision is made in these financial statements for this matter. c) The Company leases the land located at 11 Concessions Road, Sea Lots, under the terms of an operating lease. The unexpired portion of the lease is 20 years and 7 months. The Company has the option to renew the lease for a 30 year period upon expiry. The Company does not have an option to purchase the land. The lease does not contain an escalation clause No later than 1 year 16,000 16,000 Later than 1 year and no later than 5 years 64,000 64,000 Later than 5 years 249, , , ,000 d) The Company also leases the warehouse at Princes Margaret Street, San Fernando under the terms of an operating lease for a period of five years, the Company has the option to renew the lease for a further period of five years. The future lease payments are as follows: No later than 1 year 252, Later than 1 year and no later than 5 years 1,008, Later than 5 years ,260, (27)

30 25 Related Party Transactions Sales 1,084,000 1,969,974 Purchases 349, ,000 Key management compensation 986, ,000 Service fees 1,405,411 1,219,475 a) Sales Berger Paints Barbados Limited 464,000 95,000 Berger Paints Jamaica Limited 101, ,676 Other related parties 519,000 1,205,298 1,084,000 1,969,974 Berger Paints Barbados Limited and Berger Paints Jamaica Limited are fellow subsidiaries of Lewis Berger (Overseas Holdings) Limited. All sales were conducted at arms-length. b) Purchases Berger Paints Barbados Limited 162,000 55,000 Berger Paints Jamaica Limited 187,000 56, , ,000 Purchases were made from Berger Paints Barbados Limited and Berger Paints Jamaica Limited both fellow subsidiaries of Lewis Berger (Overseas Holdings) Limited. These transactions were conducted at arms-length. c) Service Fees This is due to Lewis Berger (Overseas Holdings) Limited which is the parent company of Berger Paints Trinidad Limited. 26 Employee Benefit Expense Wages and salaries 10,540,959 10,116,763 National insurance 333, ,255 Pension expense/(income) 994,800 (289,400) 11,869,620 10,156,618 Average number of employees (28)