FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited )

Transcription

1 FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) ANNUAL REPORT 2013

2 FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) Contents Page Number Directors and advisors A Notice of the annual general meeting B Chairman s report C D Corporate Governance E - F Directors report 1-3 Statement by Directors 4 Independent Auditor s Report 5-6 Statements of Comprehensive Income 7 Balance Sheets 8 Consolidated statement of changes in Equity 9 Statement of changes in Equity 10 Consolidated statement of cash flows 11 Statement of Cash flow 12 Notes to and forming part of the financial statements Listing requirements of South Pacific Stock Exchange Minutes of the previous AGM Proxy form 49

3 FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) Page A DIRECTORS Mr. Hari Punja ORDER OF FIJI, OBE, - Chairman Mr. Gary Callaghan Mr. Ajai Punja Mr. Pramesh Sharma Ms. Leena Punja ( Alternate to Mr. Hari Punja ) GROUP CHIEF EXECUTIVE OFFICER Mr. Ram Bajekal GROUP CFO & COMPANY SECRETARY Mr. Kumar Shankar B.Com, L.L.B, A.C.A, A.C.S, A.M.I.M.A AUDITORS PricewaterhouseCoopers, Chartered Accountants, Suva. SOLICITORS M/s AK Lawyers M/s Munro Leys M/s Sherani & Co. M/s Diven Prasad Lawyers BANKERS Australia and New Zealand Banking Limited REGISTERED OFFICE Lot 2, Leonidas Street, Walu Bay, Suva. Republic of Fiji. Telephone : Fax : kumars@fmf.com.fj SHARE REGISTRAR AND SHARE TRANSFER AGENTS Central Share Registry Limited Level 2 Provident Plaza 1 FNPF Boulevard 33 Ellery Street, Suva. Telephone : Fax : registry@spse.com.fj

4 FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) Page B NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Forty First Annual General Meeting of the members of FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) will be held at 3.30 p.m. on 31 st October 2013, in the Training Room at Atlantic & Pacific Packaging Company Limited, Leonidas Street, Walu Bay, Suva to transact the following business : Ordinary business 1. Confirmation of the minutes of the previous Annual General Meeting held on 23 rd October Matters arising from the minutes. 3. To receive and adopt the Audited Balance Sheets and Profit and Loss Statements and the reports of the Directors and Auditors for the year ended 30 th June To elect, in accordance with Article 86 of the Articles of Association of the company, Mr. Ajai Punja as a director of the company. He retires by rotation and being eligible, offers himself for re-election. 5. To appoint Auditors from the conclusion of this meeting until the conclusion of the next Annual General Meeting at a fee to be negotiated by the Directors.The retiring Auditors M/s. PricewaterhouseCoopers, Chartered Accountants, being eligible, offer themselves for appointment. 6. Any other business brought up in conformity with the Articles of Association of the company. By order of the Board of Directors, Kumar Shankar CFO & Company Secretary Dated : 27 th September 2013 Suva, Fiji. PROXIES 1. A member who is unable to attend the meeting is entitled to appoint a proxy to attend the meeting and vote on his behalf. The proxy need not be a member of the company. 2. A proxy form is enclosed with this Annual Report. To be effective the form must reach the registered office of the company, no less than 48 hours before the time for holding the meeting.

5 FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) Page C CHAIRMAN S REPORT Dear Shareholders, Forty years ago, the birth of Fiji s first flour mill marked the beginning of a new era that made Fiji self-sufficient in flour. It signaled the end of dependency on imported flour, bringing much needed relief to a nation trying to conserve valuable foreign exchange. It also gave Fijian consumers an opportunity to enjoy freshly milled flour, rather than having to be content with flour reaching them many months after its manufacture. Forty years on, this 100% Fijian owned company that started with milling only basic varieties of flour has emerged as Fiji s largest manufacturing conglomerate, providing far more than just flour to consumers in Fiji and beyond. So, as FMF celebrates its Ruby Anniversary, I look back at the past with much satisfaction and to the future with great optimism. Your company, together with its subsidiaries is proud of the significant role it has played over four decades in providing for the food needs of consumers not just in Fiji but across the Pacific. The FMF s product offering now extends to a variety of flour, rice, yellow split peas, biscuits, noodles, chips, bakery ingredients, wheat, oil and even cardboard cartons. Much has changed in the size and scope of our business, but the one thing that hasn t changed is our unwavering commitment to our customers and to our values. If anything, it has only grown stronger. Looking back over the forty years, I take note with pride that your company has withstood numerous business cycles and served the people of Fiji with utmost dedication. In the process, stakeholders have been well rewarded: Shareholders: With the exception of 2009, your company has never missed a dividend payment which on a share capital of $ 6 million since the year 1990 amounts to $ million. Employees: Since 1990 the group has paid its employees $ million towards wages and salaries. Government: Since 1990 the expense on direct income tax has been in the vicinity of $ million. Additionally, the company has contributed even larger amounts in the form of Customs duty and VAT. Progress since Net sales ( FJD ) No. of employees 250,000, ,000, ,000, ,000,000 50,000, The Board appreciates and thanks all stakeholders for standing by the company during these forty years and looks forward to this partnership continuing into the future. Current year ending June 2013: It is with this backdrop that I report to you the completion of one more successful year of operations. Net revenue increased 2.67% to $ 207,631,635 from $201,967,776 during The increase in net sales can be attributed to a steady growth in demand for our products on the back of vastly improved sales and merchandising efforts and increased disposable income in the hands of Fijian consumers as a consequence of a very progressive Government Budget in , No. of employees

6 FMF FOODS LIMITED (Formerly Flour Mills of Fiji Limited) CHAIRMAN S REPORT (Contd..) Page D Exports to Australia suffered a 33% drop due to aggressive discounting by Australia s leading biscuit brand that had a domino effect on our sales to private label customers. Competition from Asian manufacturers also affected our private labeling business. On the positive side, we were able to pick up additional volumes in New Zealand and Papua New Guinea, though unable to fully compensate the reduction in Australia. profit after tax was $ 11,560,892 against $ 12,931,110 in the previous year. This marginal decrease despite a higher turnover, was because of three main factors : (i) the price determination mechanism resulting in a significant time lag between wheat cost increases that started in May 2012 and flour price change which could be effected only in October 2012; (ii) significantly reduced profit in the biscuit business ; and (iii) last year s income tax expense being lower due to availability of brought forward tax losses which have now been fully exhausted. This year again, for the third time in a row, your Company was able to increase its dividend payout which accounts for $1,500,000 against $1,200,000 last year. Equally encouraging, Shareholder funds have increased by % to $ 70,618,771 from $ 60,969,819 in the previous year. The Company s gearing ratio that compares the proportion of borrowed funds to shareholders funds has been steady at an healthy 37 %. A number of upgrade projects to the tune of FJD 10 million for Flour Mills and Biscuit Company are in progress. These are expected to be finished before the year ending 30 th June Outlook The international price of wheat has been more or less steady since January Bulk of the Company s products still remain within the purview of the Fiji Commerce Commission s price determination mechanism and we are hopeful that the Commission would be quick enough to adjust prices as and when they are due for a correction. While there has been a substantial increase in key input costs like wages, electricity and repairs & maintenance over the past few years, your company has worked on harnessing efficiencies in certain other areas like finance costs and transportation to offset these increases and maintain profitability. Exports to Island markets and New Zealand have shown a promising trend and we hope will mitigate the drop in Australia. Our biscuit business is of particular concern due to very aggressive pricing from Asian suppliers and the effect this has on our margins, both in Fiji and the export market Your company will of course continue to focus on increasing its market share and improving its position in the larger Pacific region, while tirelessly working on managing costs. The company will increase focus on its own FMF and Fine Fare brands to create a more stable base and reduce dependence on the volatile contract packaging business. I would like to again take this opportunity to thank our CEO Ram Bajekal and his team for the excellent results in FMF Foods Limited and its subsidiaries. In our fortieth year, the team has unanimously voiced its shared vision of making FMF the Most Admired Company in the Region. I have seen their commitment to making this happen ; and as we embark on our next forty-year journey, I am heartened by their enthusiasm and rejuvenated by the vision. Hari Punja ORDER OF FIJI, OBE, Chairman th 27 September 2013

7 FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) Page E Corporate Governance In June 2008, the Capital Markets Development Authority (now the Capital Markets Unit of Reserve Bank of Fiji) published the corporate Governance Code for the Capital Market (The Code). The Code articulates 10 core principles together with the best practice recommendations. This code is the basis for the FMF s corporate governance standards. On a continuous basis FMF has reviewed its existing policies and has codified / modified policies in line with its goal to improve the standard of corporate governance. Role of the Board The role of the Board is to assume accountability for the success of the company by taking responsibility for its direction and management in order to meet its objective of enhancing shareholder value. The Board Directors are elected by shareholders at the Annual General Meeting. One third of the total strength of the Board, retire by rotation each year and are eligible for re-election. Casual vacancies during the year are filled up by the Board till the conclusion of the next Annual General Meeting. As at the Balance date, the Directors in Office were Messrs Hari Punja (Chairman), Gary Callaghan, Ajai Punja, Pramesh Sharma and Leena Punja ( Alternate to Mr. Hari Punja ). Directors are paid a Board fee for their service rendered during the year. Currently they are also entitled to an allowance of $ 500 per meeting attended, towards travel and accommodation costs. Directors are also covered under a Directors and Officers Liability Insurance Policy. Meetings of the Board The regular business of the Board during its meetings covers business investments and strategic matters, governance and compliance, the Chief Executive s report, financial report and performance of subsidiary companies. Member s attendance at the Board meetings, during the financial year under review : Director Number of meetings Number of meetings Apologies entitled to attend attended Received Mr. Hari Punja Mr. Gary Callaghan 4 4 NA Mr. Ajai Punja Mr. Pramesh Sharma 4 4 NA Ms. Leena Punja 1 1 NA The Board met 4 times during the financial year under review. Sub-committees of the Board The Board has formally constituted two sub-committees ; viz The Audit and Finance Committee and The Share Transfer Committee. As at the Balance date, the Audit and Finance Committee comprised Messrs Hari Punja, Gary Callaghan, Ram Bajekal and Kumar Shankar. The Audit and Finance Committee is responsible for monitoring FMF s financial strategies, monitoring the external audit of the company s affairs, reviewing the half-year and annual financial statements, and monitoring the company s compliance with applicable laws and stock exchange requirements. The Executive management under the directions of this Committee, is also responsible for monitoring the Risk Management to ensure that key business and operational risks are identified and appropriate controls and procedures are put in place to manage those risks. This sub-committee did not meet during the financial year under review. The executive management usually takes its major decisions in consultation with the members of the sub-committee, where necessary.

8 FMF FOODS LIMITED ( Formerly Flour Mills of Fiji Limited ) Page F Corporate Governance ( Contd.. ) As at the Balance date, the Share Transfer Committee comprised Messrs Hari Punja, Ajai Punja, Gary Callaghan, Ram Bajekal and Kumar Shankar. The Share Transfer Committee is responsible for approval of share transfers between the shareholders of the company. The Share transfer committee has met 14 times during the year under review. Responses to the Guidelines on Corporate Governance issued by Reserve Bank of Fiji: Principle Establish clear responsibilities for Board Oversight Constitute an effective Board Appointment of a Chief Executive Officer (CEO) Board and Company Secretary Timely and Balanced disclosure Promote ethical and responsible decision making Register of Interests Respect the rights of Shareholders Accountability and Audit Recognize and Manage Risk Company s response Covered above Covered above The company has appointed a suitably qualified and competent Chief Executive Officer. He is a professionally qualified Chartered Accountant and has also studied Management as a Fulbright Fellow for Management Studies at Carnegie Mellon University, Pittsburgh, U.S.A. The company has appointed a suitably qualified and competent Company Secretary. He is a professionally qualified Chartered Accountant and an Associate Member of the Institute of Company Secretaries of India. Board meetings are held at least once in every quarter of the year. The Board is apprised of the company s performance and major decisions are deliberated and passed at Board level. Progress on carrying out strategies is reviewed at these meetings. The CEO is also in constant contact with the directors for any issues arising within the company. The Company periodically releases the required information to the public by way of market announcements, as required under the rules of the SPSE. FMF promotes and believes that all directors and employees uphold high standards, honesty, fairness and equity in all aspects of their employment and association with the company. The company maintains a Register of Interest wherein the interests of Directors are noted. An Annual General Meeting is held every year in accordance with the Articles of Association of the company. The Annual report is also published each year and circulated to the shareholders of the company. FMF is audited externally each year and receives an independent audit report which forms part of the Annual Report. The Audit and Finance Committee is responsible for overseeing the financial reporting and disclosure process, performance and independence of the external auditors, monitoring internal control processes, reviewing adequacy of the internal audit function and discussing risk management policies and practices with management. The Executive management of the company ensures that key business and operational risks are identified and appropriate controls and procedures are put in place to manage those risks.

9 1 FINANCIAL STATEMENTS Directors report In accordance with a resolution of the board of directors, the directors herewith submit the balance sheets of the and of the Company as at 30 June 2013 and the related statements of comprehensive income, changes in equity and cash flows for the year then ended, and report as follows: 1 Directors The following were directors of the Company at any time during the financial year and up to the date of this report: 2 Principal Activities - Hari Punja Order of Fiji, OBE, - Chairman - Ajai Punja - Gary Callaghan - Pramesh Sharma - Leena Punja (Alternate director to Hari Punja) The principal activities of the comprises of milling of wheat, whole dunfield peas, manufacturing of packaging materials including corrugated cartons and assorted boxes and packets, manufacturing of biscuits and snack food products, sale of rice, crushed and feed wheat and related products and investments. There were no significant changes in the nature of these activities during the year. 3 Trading Results The net profit after income tax of the attributable to the members of the for the year was $ 10,918,870 (2012: $12,274,735) and net profit after tax for the was $ 5,627,479 (2012: $7,054,446). 4 Provisions There were no material movements in provisions. 5 Dividends The directors declared an interim dividend of $1,500,000 during the year (2012: $1,200,000). 6 Bad and Doubtful Debts The directors took reasonable steps before the financial statements were made out, to ascertain that all known bad debts were written off and adequate provision was made for doubtful debts. At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts, or the amount of the allowance for doubtful debts, inadequate to any substantial extent. 7 Current Assets The directors took reasonable steps before the financial statements were made out to ascertain that the current assets of the Company and of the were shown in the accounting records of the Company and the at a value equal to or below the value that would be expected to be realised in the ordinary course of the business. At the date of this report, the directors are not aware of any circumstances which would render the values attributable to the current assets in the Company and the s financial statements misleading.

10 2 FINANCIAL STATEMENTS Directors report - continued 8 Reserves The directors recommend that no amounts be transferred to reserves. 9 Events Subsequent to Balance Date No charge on the assets of the Company and has arisen since the end of the financial year to the date of this report to secure the liabilities of any other person. No contingent liability has arisen since the end of the financial year to the date of this report. No contingent or other liability has become enforceable or is likely to become enforceable within a period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the Company and to meet their obligations as and when they fall due. 10 Basis of Accounting The directors believe the basis of the preparation of the financial statements is appropriate and the Company and the will be able to continue in operation for at least twelve months from the date of this report. Accordingly, the directors believe that the classification and carrying amounts of assets and liabilities as stated in the financial statements to be appropriate. 11 Related Parties Transactions In the opinion of the directors all related parties transactions have been adequately recorded in the books of the Company and its subsidiaries. 12 Other Circumstances At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements which would render any amounts stated in the financial statements misleading. 13 Unusual Transactions The results of the Company and the s operations during the year have not in the opinion of the directors been substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in the financial statements. 14 Directors and Executive Managements Interests Interest of Directors, Executive Managements and any additions thereto during the year in the ordinary shares of the Company are as follows: Beneficially Non-Beneficially Additions Holding Additions Holding Hari Punja ,872,210 Ajai Punja ,872,210 Gary Callaghan - 1,700,225-1,750,000 Anuj K Patel - 17, Leena Punja (Alternate to Hari Punja) ,872,210

11 3 FINANCIAL STATEMENTS Directors report continued 15 Directors Benefits No director of the company has, since the end of the previous financial year, received or become entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due and receivable by directors as shown in the company s financial statements) by reason of any contracts made by the company with the director or with a firm of which he is a member, or with a company in which he has substantial financial interest. For and on behalf of the Board and in accordance with a resolution of the directors. Dated this 27th day of September Ajai Punja - Director Gary Callaghan - Director

12 4 FINANCIAL STATEMENTS Statement by directors In the opinion of the directors: (a) (b) (c) (d) (e) (f) the accompanying statements of comprehensive income of the Company and of the are drawn up so as to give a true and fair view of the results of the Company and of the for the year ended 30 June 2013; the accompanying balance sheets of the Company and of the are drawn up so as to give a true and fair view of the state of the affairs of the Company and of the at 30 June 2013; the accompanying statements of changes in equity of the Company and of the are drawn up so as to give a true and fair view of the movement in shareholders funds for the year ended 30 June 2013; the accompanying statements of cash flows of the Company and of the are drawn up so as to give a true and fair view of the cash flows of the Company and of the for the year ended 30 June 2013; at the date of this statement, there are reasonable grounds to believe that the Company and the will be able to pay their debts as and when they fall due; and all related party transactions have been recorded in the books of the Company and the and adequately reflected in the attached financial statements. For and on behalf of the Board and in accordance with a resolution of the directors. Dated this 27th day of September Ajai Punja - Director Gary Callaghan - Director

13 5 Independent Auditor s Report To the Shareholders of FMF Foods Limited Report on the financial statements We have audited the accompanying financial statements of FMF Foods Limited (the Company ) and the consolidated financial statements of the Company and its subsidiaries (together the ). The financial statements comprise the balance sheets of the Company and the as at 30 June 2013 and the statements of comprehensive income, changes in equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes as set out on pages 7 to 42. Directors' and Management s Responsibility for the Financial Statements Directors and Management are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and with the requirements of the Fiji Companies Act, 1983, and for such internal control as the directors and management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s 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 about 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 auditor s judgment, 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 of financial statements that give a true and fair view 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 directors and 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. PricewaterhouseCoopers, Level 8 Civic Tower, 272 Victoria Parade, Suva, Fiji. GPO Box 200, Suva, Fiji. T: (679) / , F: (679) / PricewaterhouseCoopers is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

14 6 Opinion In our opinion the financial statements give a true and fair view of the financial position of the Company and as at 30 June 2013, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on other legal and regulatory requirements In our opinion: a) proper books of account have been kept by the Company, so far as it appears from our examination of those books, and b) the accompanying financial statements are in agreement with the books of account and to the best of our information and according to the explanations given to us give the information required by the Fiji Companies Act, 1983 in the manner so required. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. Restriction on Distribution or Use This report is made solely to the Company s shareholders, as a body, in accordance with Section 165(1) of the Fiji Companies Act Our audit work has been undertaken so that we might state to the Company s shareholders those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s shareholders as a body, for our audit work, for this report, or for the opinions we have formed. 27 September 2013 Suva, Fiji PricewaterhouseCoopers Chartered Accountants

15 STATEMENTS OF COMPREHENSIVE INCOME Notes Revenue ,361, ,967, ,582,526 98,523,646 Other operating income 6 799, ,289 1,851,750 1,477,988 Changes in inventories of finished goods and work in progress ( 103,406) ( 954,249) 733,430 ( 739,069) Raw materials and consumables used ( 149,765,251) ( 139,223,580) ( 87,460,180) ( 73,363,449) Staff costs ( 9,995,980) ( 10,083,090) ( 3,706,814) ( 3,639,143) Depreciation/amortisation ( 6,082,285) ( 5,964,944) ( 1,669,656) ( 1,598,633) Other operating expenses ( 26,429,896) ( 29,061,541) ( 11,069,442) ( 11,346,850) Profit from operations 15,783,964 17,480,663 7,261,614 9,314,490 Net finance costs 7 ( 1,542,208) ( 2,278,045) ( 515,683) ( 681,183) Profit before tax 10 14,241,756 15,202,618 6,745,931 8,633,307 Income tax expense 8 ( 2,680,864) ( 2,271,508) ( 1,118,452) ( 1,578,861) Profit for the year from continuing operations 11,560,892 12,931,110 5,627,479 7,054,446 Other comprehensive income Total comprehensive income for the year $ 11,560,892 $ 12,931,110 $ 5,627,479 $ 7,054,446 ============ ========== ========== ========== Attributable to: - Owners of the parent company 10,918,870 12,274,735 - Non-controlling interests 642, ,375 $ 11,560,892 $ 12,931,110 =========== ========== Earnings per share (cents) =========== ========== The above statements of comprehensive income should be read in conjunction with the accompanying notes.

16 BALANCE SHEETS FMF FOODS LIMITED AND SUBSIDIARIES AS AT 30 JUNE Notes CURRENT ASSETS Cash and cash equivalents 11(a) 14,794,192 8,745,325 3,464,148 96,201 Inventories 12 40,108,186 31,338,361 21,080,210 11,070,238 Trade receivables 13 24,597,576 19,388,445 6,698,242 6,486,944 Other receivables 14 3,821,609 2,177,310 3,039, ,441 Held-to-maturity investments 15 8,588,225 8,171,000 5,188,000 4,779,700 Amounts owing by related companies 28(c) , ,167 91,909,788 69,820,441 39,730,295 23,260,691 NON-CURRENT ASSETS Investments in subsidiaries ,979,246 13,979,246 Property, plant and equipment 17 28,292,217 28,510,359 10,866,187 8,460,666 Investment properties 18 16,871,409 17,216, Deferred tax assets 9(a) 664, , , ,472 45,828,286 46,321,677 25,121,440 22,714,384 TOTAL ASSETS 137,738, ,142,118 64,851,735 45,975,075 CURRENT LIABILITIES Bank overdraft 11(a) 21,701,976 4,632,705 8,679,755 1,068,721 Trade and other payables 20 7,007,396 6,368,467 2,460,321 2,438,697 Current tax liabilities 8 12, ,988 28,944 ( 52,935) Borrowings 22 11,162,800 8,000,000 6,082,800 2,920,000 Amounts owing to related companies 28(d) 503, ,581 6,445,766 20,290 40,387,876 20,513,741 23,697,586 6,394,773 NON-CURRENT LIABILITIES Borrowings 22 23,500,000 31,500,000 6,320,000 8,880,000 Deferred tax liabilities 9(b) 3,231,487 3,158, , ,050 26,731,487 34,658,558 6,800,418 9,354,050 TOTAL LIABILITIES 67,119,363 55,172,299 30,498,004 15,748,823 NET ASSETS $ 70,618,711 $ 60,969,819 $ 34,353,731 $ 30,226,252 ========== =========== ========== ========== EQUITY Share capital 23 6,000,000 6,000,000 6,000,000 6,000,000 Retained earnings 60,700,104 51,281,234 28,353,731 24,226,252 66,700,104 57,281,234 34,353,731 30,226,252 Non-controlling Interests 3,918,607 3,688, TOTAL EQUITY $ 70,618,711 $ 60,969,819 $ 34,353,731 $ 30,226,252 ========== =========== ========== ========== The above balance sheets should be read in conjunction with the accompanying notes. For and on behalf of the Board and in accordance with a resolution of the directors. Dated this 27th day of September Ajai Punja - Director Gary Callaghan - Director

17 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to the members of the Notes Share Capital Foreign Retained Total Non-controlling Total Capital Profit Currency Earnings Interest Equity Reserve Translation Reserve $ $ $ Balance at 1 July ,000,000 41,500 1,844 40,163,155 46,206,499 3,294,210 49,500,709 Comprehensive income Profit for the year ,274,735 12,274, ,375 12,931,110 Other comprehensive income Total comprehensive income ,274,735 12,274, ,375 12,931,110 Transfer from reserves ( 41,500) ( 1,844) 43, Transactions with owners Dividends ( 1,200,000) ( 1,200,000) ( 262,000) ( 1,462,000) Balance at 30 June ,000, ,281,234 57,281,234 3,688,585 60,969,819 Comprehensive income Profit for the year ,918,870 10,918, ,022 11,560,892 Other comprehensive income Total comprehensive income ,918,870 10,918, ,022 11,560,892 Transactions with owners Dividends ( 1,500,000) ( 1,500,000) ( 412,000) ( 1,912,000) Balance at 30 June 2013 $ 6,000,000 $ - $ - $60,700,104 $ 66,700,104 $ 3,918,607 $ 70,618,711 =========== ======== ========== ========= ========= =========== ========== The above statement of changes in equity should be read in conjunction with the accompanying notes. 9

18 STATEMENT OF CHANGES IN EQUITY 10 Notes Share Capital Profit Retained Total Capital Reserve Earnings Balance at 1 July ,000,000 41,500 18,330,306 24,371,806 Comprehensive income Profit for the year - - 7,054,446 7,054,446 Total comprehensive income - - 7,054,446 7,054,446 Transfer from reserve - ( 41,500) 41,500 - Transactions with owners Dividend ( 1,200,000) ( 1,200,000) Balance at 30 June ,000,000-24,226,252 30,226,252 Comprehensive income Profit for the year - - 5,627,479 5,627,479 Total comprehensive income - - 5,627,479 5,627,479 Transactions with owners Dividend ( 1,500,000) ( 1,500,000) Balance at 30 June 2013 $ 6,000,000 $ - $ 28,353,731 $ 34,353,731 ============ =========== ============ ============ The above statement of changes in equity should be read in conjunction with the accompanying notes.

19 11 CONSOLIDATED STATEMENT OF CASH FLOWS Note $ $ Cash flows from operating activities Receipts from customers 288,045, ,398,971 Payments to suppliers and employees ( 281,685,486) ( 240,303,477) Cash generated from operations 6,359,655 28,095,494 Income tax paid ( 3,298,522) ( 645,185) Interest paid ( 1,731,887) ( 2,812,789) Net cash from operating activities 1,329,246 24,637,520 Cash flows from investing activities Acquisition of property, plant and equipment ( 5,472,499) ( 1,117,420) Proceeds from sale of property, plant and equipment 100,000 84,717 Interest received 189, ,391 Investment in term deposits ( 417,225) ( 2,698,652) Net cash used in investing activities ( 5,600,045) ( 3,323,964) Cash flows from financing activities Proceeds from borrowings 3,162,800 2,000,000 Repayment of borrowings ( 8,000,000) ( 12,000,000) Dividends paid ( 1,912,405) ( 1,463,980) Net cash used in financing activities ( 6,749,605) ( 11,463,980) Net (decrease) / increase in cash and cash equivalents ( 11,020,404) 9,849,576 Cash and cash equivalents at the beginning of the year 4,112,620 ( 5,736,956) Cash and cash equivalents at the end of the year 11(a) ($ 6,907,784) $ 4,112,620 ============ =========== The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

20 STATEMENT OF CASH FLOWS Cash flows from operating activities Note $ $ Receipts from customers 110,070, ,921,342 Payments to suppliers and employees ( 107,485,833) ( 90,509,503) Cash generated from operations 2,585,012 16,411,839 Interest paid on borrowings ( 707,128) ( 918,131) Income tax paid / (received) ( 1,031,739) 13,414 Net cash from operating activities 846,145 15,507, Cash flows from investing activities Acquisition of property, plant and equipment ( 4,075,177) ( 487,975) Interest received 191, ,948 Proceeds from sale of property, plant and equipment 100,000 84,717 Investment in term deposits ( 408,300) ( 1,363,700) Net cash used in investing activities ( 4,192,032) ( 1,530,010) Cash flows from financing activities Proceeds from borrowings 3,162,800 1,000,000 Repayment of borrowings ( 2,560,000) ( 3,840,000) Dividends paid ( 1,500,000) ( 1,200,000) Net cash used in financing activities ( 897,200) ( 4,040,000) Net (decrease) / increase in cash and cash equivalents ( 4,243,087) 9,937,112 Cash and cash equivalents at the beginning of the year ( 972,520) ( 10,909,632) Cash and cash equivalents at the end of the year 11(a) ($ 5,215,607) ($ 972,520) ============ =========== The above statement of cash flows should be read in conjunction with the accompanying notes.

21 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 1 GENERAL INFORMATION FMF Foods Limited ( the Company ) and its subsidiaries (together forming the ) engage in the milling of wheat, whole dunfield peas, manufacturing of packaging materials including corrugated cartons and assorted boxes and packets, manufacturing of biscuits and snacks food products, sale of rice, crushed and feed wheat and related products and investments. The Company is a limited liability company incorporated and domiciled in the Republic of Fiji. The Company and two of its subsidiaries, The Rice Company of Fiji Limited and Atlantic & Pacific Packaging Company Limited are listed on the South Pacific Stock Exchange. These financial statements were authorised for issue by the Board of Directors on.27 th September SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted by FMF Foods Limited and its subsidiaries are stated to assist in a general understanding of these financial statements. These policies have been consistently applied by the Company and its subsidiaries except where otherwise indicated. 2.1 Basis of preparation The financial statements of the Company and the have been drawn up in accordance with the provisions of the Companies Act 1983 and International Financial Reporting Standards ( IFRS ). The financial statements have been prepared under the basis of historical costs. a) New and amended standards adopted by the company and the group There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 July 2012 that would be expected to have a material impact on the Company and the. b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 July 2012 and not early adopted A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 July 2012, and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the financial statements of the Company and the, except the following set out below: Topic Key Requirements Effective Date IFRS 10, Consolidate d financial statements This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess. This new standard might impact the entities that a group consolidates as its subsidiaries. Annual periods beginning on or after 1 January IAS 27 (revised 2011) Separate financial statements This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. Annual periods beginning on or after 1 January 2013

22 NOTES TO AND FORMING PART OF 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued 2.1 Basis of preparation - continued b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 July 2012 and not early adopted - continued Topic Key Requirements Effective Date IFRS 9, Financial instruments This standard on classification and measurement of financial assets and financial liabilities will replace IAS 39, Financial instruments: Recognition and measurement. IFRS 9 has two measurement categories: amortised cost and fair value. All equity instruments are measured at fair value. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities, the standard retains most of the IAS 39 requirements. These include amortised-cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. Annual periods beginning on or after 1 January The Company and the is yet to assess the impact of the above standards and intends to adopt the standards no later than the accounting period in which it becomes effective. 2.2 Principles of consolidation Subsidiaries Subsidiaries are all entities over which the has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the statement of comprehensive income. The group recognises any non-controlling interest in the acquire on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of acquiree s identifiable net assets. Acquisitionrelated costs are expensed as incurred. Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the.

23 NOTES TO AND FORMING PART OF 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued 2.2 Principles of consolidation - continued The financial statements are prepared as consolidated financial statements as described in IAS 27 while financial statements are prepared as separate financial statements as described in IAS Segment reporting An operating 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 operating segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those of segments operating in other economic environments. The operates predominantly within one geographical segment, that is, Fiji. For reporting purposes, the considers itself to be operating in three business segments, that is, food, packaging and the properties. 2.4 Foreign currency translation i) Functional and presentation currency Items included in the financial statements of each of the s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Fijian Dollars, which is the s functional and presentation currency. ii) Transactions and balances Foreign currency transactions are translated into the Fijian currency using the exchange rates prevailing at the dates of the transactions. Foreign 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 statement of comprehensive income. 2.5 Property, plant and equipment Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: Premium on leasehold land - term of lease Buildings - 2% - 10% Plant and machinery - 4% - 33% Motor vehicles - 25% Furniture, fittings and office machines - 6.7% - 25% Computers - 33% 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 disposals are determined by comparing the proceeds with the carrying amount and are recognised in statement of comprehensive income. 15

24 NOTES TO AND FORMING PART OF 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued 2.6 Investment properties Investment properties, principally comprising leasehold land and buildings, are held for long-term rental yields. Investment properties are stated at historical cost less any accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation rates are as noted in Note I ntangible assets Audio Visual copyright is recognised upon coming into existence of the copyright to an audio visual production. Audio Visual copyright has a finite useful life and are carried at cost less accumulated amortisation. Acquired Audio Visual copyright is shown at historical cost. Amortisation is charged on a straight line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period. 2.8 Financial assets The classifies its financial assets in the following categories: loans and receivables and held to maturity financial assets. Management determines the classification of its financial assets at initial recognition. The classification depends on the purpose for which the financial assets were acquired Classification (a) Loans and receivables The Company and the s loans and receivables comprise trade and other receivables and cash and cash equivalents that are included in current assets in the balance sheet. (b) Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the s management has the positive intention and ability to hold to maturity. For the, these comprise term deposit investments Recognition and measurement Regular purchases and sales of financial assets are recognised on trade-date the date on which the commits to purchase or sell the asset. Investments are initially recognised at cost plus transaction costs that are directly attributable to their acquisition. Loans and receivables and held-to-maturity investments are subsequently carried at cost less provision for impairment. Financial assets are derecognised when the rights to receive cash flows from them have expired or where they have been transferred and the has also transferred substantially all risks and rewards of ownership. Interest income on held-to-maturity investments are included in the statement of comprehensive income and are reported under finance income as interest income. In the case of impairment, it has been reported as a deduction from the carrying value of the investment and recognised in the statement of comprehensive income as impairment on investment. 16

25 NOTES TO AND FORMING PART OF 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued 2.9 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously Impairment of financial assets The company assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. For receivables category, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of comprehensive income Impairment of non-financial assets Assets that have an indefinite useful life, are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and the value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost (WAC) method. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses Trade receivables Trade receivables are recognised at invoice amount. 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 the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments 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 the loss is recognised in the statement of comprehensive income within other operating 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 to other operating income in the statement of comprehensive income. 17