Jamaican Teas Limited

Transcription

1 A copy of this Prospectus was delivered to the Registrar of Companies for registration pursuant to section 40(2) of the Companies Act, 2004 and was so registered on Wednesday 9 th June The Registrar of Companies accepts no responsibility whatsoever for the contents of this Prospectus. A copy of this Prospectus was also delivered to the Financial Services Commission for registration pursuant to section 26 of the Securities Act and was so registered on Wednesday 9 th June The Financial Services Commission has not approved the shares for which sale or subscription is invited nor has the Commission passed upon the accuracy or adequacy of this Prospectus. Jamaican Teas Limited 7 Norman Road, Kingston Telephone Fax info@jamaicanteas.com Website Invitation for Sale and Subscription Up to 29,435,695 Ordinary Shares at the Invitation Price of J$3.37 per Share A total of 2,435,500 Shares (the Reserved Shares ) are reserved from the Invitation for priority applications by the following persons: (a) 2,000,000 Reserved Shares for priority applications by the employees of the Company (the Employee Reserved Shares ), including Senior Managers and the newly appointed Non Executive Directors Marcos Dabdoub, Duncan Davidson, and John Jackson, at the price of J$2.90 per Employee Reserved Share, representing a discount of 14% to the Invitation Price, and (b) 435,500 Reserved Shares for priority application by Mayberry Investments Limited (the Mayberry Reserved Shares ), lead broker and financial adviser to the Company, in lieu of certain of their professional fees, which are to be subscribed at the Invitation Price of J$3.37 per Mayberry Reserved Share. If any of the Reserved Shares are not subscribed by those individuals entitled to make priority applications in respect of them, they will become available for allocation to the general public at the Invitation Price of J$3.37. An Application Form for use by both Reserved Share Applicants and the general public is provided at the end of this Prospectus together with notes on how to complete it. The sale and subscription list for the Shares will open at 9:00 a.m. on the Opening Date, Thursday 17 th June Applications submitted prior to the Opening Date will be received, but not processed until the Opening Date. The sale and subscription list for the Shares will close at 4:30 p.m. on the Closing Date, Thursday 24 th June 2010 subject to the right of the Company to: (a) close the sale and subscription list at any time after it opens on 9:00 a.m. on the Opening Date once the issue is fully sold and subscribed and (b) extend the Closing Date for any reason including hurricane, earthquake, or other act of God. In the case of an early closing of the sale and subscription list, or an extension to the Closing Date, notice will be posted on the website of the Jamaica Stock Exchange ( It is expected that the Shares will be admitted to the Junior Market of the Jamaica Stock Exchange within 3 to 4 weeks of the Closing Date (or extended Closing Date, as the case may be), and that dealings in the Shares will commence on the date of admission. Please note that this statement of the Company s intention is not a guarantee that the Shares will in fact be admitted to the Junior Market of the Jamaica Stock Exchange. Authorised SHARE CAPITAL Maximum to be issued fully paid assuming: (1) all 2,000,000 Employee Reserved Shares are subscribed at J$2.90 each (2) all 435,500 Mayberry Reserved Shares are subscribed at J$3.37 each; (3) all 22,730,195 new Shares to be issued by the Company are subscribed at $3.37: 2,000,000 Employee Reserved Shares at J$2.90 each J$ 5,800, ,500 Mayberry Reserved Shares at J$3.37 each J$ 1,467,635 22,730,195 Shares at J$3.37 each J$76,600,757 Total Consideration J$83,868, ,000,000 Shares A total of 4,270,000 Shares are offered for sale in the Invitation by existing shareholders of the Company. The proceeds of such sale will accrue to the selling shareholders and not to the Company.

2 Section 1 Important Disclaimers Responsibility for the Contents of this Prospectus This Prospectus has been reviewed and approved by the Board of Directors of the Company. The Directors of the Company whose names appear in Section 8 of this Prospectus are the persons responsible (both individually and collectively) for the information contained in it. To the best of the knowledge and belief of the Directors, who have taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and no information has been omitted which is likely to materially affect the import of information contained herein. Contents of the Prospectus This Prospectus contains important information for prospective investors in the Company. All prospective investors should read the Prospectus carefully in its entirety before submitting an Application Form. This Prospectus also contains summaries of certain documents which the Board of Directors of the Company believes are accurate. Prospective investors may wish to inspect the actual documents that are summarized, copies of which will be available for inspection as described in Section 15. Any summaries of such documents appearing in this Prospectus are qualified in their entirety by reference to the complete document. The publication of this Prospectus shall not imply that there has been no change in the business, results of operations, financial condition or prospects of the Company since the date of this Prospectus. No person is authorised to provide information or to make any representation whatsoever in connection with this Prospectus, which is not contained in this Prospectus. Neither the FSC nor any Government agency or regulatory authority in Jamaica has made any determination as to the accuracy or adequacy of the matters contained in the Prospectus. The Invitation is made to Jamaican Residents in Jamaica Only This Prospectus (the "Prospectus") is intended for use in Jamaica only and is not to be construed as making an invitation to persons outside of Jamaica to subscribe for any Shares. The distribution or publication of this Prospectus and the making of the invitation in certain jurisdictions outside of Jamaica is prohibited by law. Application to Subscribe for Shares This Prospectus is not a recommendation by the Company that prospective investors should submit Application Forms to subscribe for Shares in the Company. Prospective investors in the Company are expected to make their own assessment of the Company, and the merits and risks of subscribing for Shares. Prospective investors are also expected to seek appropriate advice on the financial and legal implications of subscribing for Shares, including but not limited to any tax implications. Each Applicant who submits an Application Form acknowledges and agrees that: (1) he/she has been afforded a meaningful opportunity to review the Prospectus (including the terms and conditions in section 6.5), and to gather and review all additional information considered by him/her to be necessary to verify the accuracy of the information contained in this Prospectus; (2) he/she has not relied on the Company or any other persons in connection with his/her investigation of the accuracy of such information or his/her investment decision; and (3) no person connected with the Company has made any representation concerning the Company or this Prospectus not contained in this Prospectus, which the Applicant has relied in submitting his/her Application Form. 2

3 Section 2 Issuer: Securities: Invitation Price: Application Form: Terms and Conditions: Acceptable Payment Method: Timetable of Key Dates: Summary of Key Information on the Invitation JAMAICAN TEAS LIMITED UP TO 29,435,695 ORDINARY SHARES* J$3.37 PER SHARE PAYABLE IN FULL ON APPLICATION. (Reserved Share Applicants see * below for Reserved Share pricing). SEE APPENDIX 1 OF THE PROSPECTUS SEE SECTION 6.5 OF THE PROSPECTUS MANAGER'S CHEQUE PAYABLE TO EITHER MAYBERRY INVESTMENTS LIMITED OR JN FUND MANAGERS LIMITED MANDATE TO USE CLEARED FUNDS HELD IN MAYBERRY OR JN FUND MANAGERS ACCOUNT. NO CASH PAYMENTS. REGISTRATION OF PROSPECTUS: Wednesday 9 th June 2010 PUBLICATION OF PROSPECTUS: Wednesday 9 th June 2010 OPENING DATE: 9:00 a.m Thursday 17 th June 2010 CLOSING DATE**: 4:30 p.m. Thursday 24 th June 2010 EARLY APPLICATIONS WILL BE RECEIVED PRIOR TO THE OPENING DATE, but will not processed until the Opening Date. All early Applications will be treated as having been received at the same time, being 9:00 a.m. on the Opening Date. CONFIRMATION OF SHARE ALLOTMENTS: All Applicants may refer to the notice that will be posted on the website of the Jamaica Stock Exchange ( after the Closing Date (or extended Closing Date). RETURNED APPLICATIONS/REFUND CHEQUES: Available for collection from May berry Investments Limited within 10 working days of the Closing Date (or extended Closing Date). ADMISSION OF SHARES TO JUNIOR MARKET OF JSE*** Within 3 to 4 weeks of the Closing Date (or extended Closing Date). *The Company has reserved a total of 2,435,500 Reserved Shares for priority applications by the following persons: (a) 2,000,000 Employee Reserved Shares for priority applications by the employees of the Company, including Senior Managers and the newly appointed Non Executive Directors Marcos Dabdoub, Duncan Davidson, and John Jackson, at the price of J$2.90 per Employee Reserved Share, representing a discount of 14% to the Invitation Price, and (b) 435,500 Mayberry Reserved Shares for priority application by Mayberry Investments Limited, lead brokers and financial advisers to the Company, in lieu of certain of their professional fees, at the Invitation Price. If any of the Reserved Shares are not sold to or subscribed by those individuals entitled to make priority applications in respect of them, they will become available for allocation to the general public at the Invitation Price of J$3.37. **The sale and subscription list will close at 4:30 p.m. on the Closing Date subject to the right of the Company to: (a) close it at any time after 9:00 a.m. on the Opening Date once the issue is fully sold and subscribed, and (b) extend the Closing Date for any reason including a hurricane, earthquake or other act of God. In either case notice will be posted on the JSE website ( ***It is the intention of the Company to apply to the JSE for admission of the Shares to the Junior Market. The application is dependent on the Company's ability to (i) raise at least J$50m as a result of the Invitation and (ii) meet the criteria for admission. Please note that this statement of the Company's intention is not a guarantee that the Shares will in fact be admitted the Junior Market of the JSE. 3

4 Section 3: Letter to Prospective Investors Dear Prospective Investors, Jamaican Teas Limited 7 Norman Road, Kingston Tel: Fax: info@jamaicanteas.com Website We are pleased to invite you to purchase and subscribe for up to 29,435,695 Shares in the capital of the Company on the terms set out in this Prospectus. The Company 9 th June 2010 The Company is one of the largest tea importation, packaging and distribution concerns in the Caribbean. The Company packages and distributes predominantly herbal teas under its proprietary Caribbean Dreams brands as well as packaging and distributing Tetley branded black and green teas and other teas for its private customers under their own labels. The Company was purchased by its current majority shareholders, the Mahfood family, in January 1996 from Neal & Massy Jamaica Limited when the latter was engaged in the divestment of its non core operations. The Company has been in continuous operation since 1968 but since its acquisition by the Mahfood family its product range has grown significantly. The Company has the exclusive right to sell Tetley branded black and green teas within the Eastern Caribbean including Jamaica, Antigua, Aruba, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Dominica, Grenada, Guyana, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and the U.S. Virgin Islands. It also has the right to sell its own Caribbean Dreams branded herbal and other teas and products worldwide. The Company believes that it enjoys a share of approximately 50% of the overall market for teas in Jamaica, based on its collection of supermarket sales data. Currently, approximately 38% of the Company s overall sales are represented by exports to other Caribbean islands and the United States. The Company further believes that there is potential for expanding its export sales in particular, and it proposes to use part of the proceeds of the Invitation to increase its advertising and marketing efforts for that purpose, inclusive of arranging market visits and tea tastings, the appointment of new distributors, and the expansion of its export product range. The Company also believes that exports of its proprietary Caribbean Dreams line have not yet reached their true potential, and it intends to increase its advertising and marketing efforts for the line in order to emphasise the perceived health benefits of its teas and other products, and the herbal and other natural ingredients they contain. The Invitation and Reserved Shares In order to build on its core competencies and leverage its strengths the Company is seeking to raise approximately $83.87 million by inviting Applications for up to 29,435,695 Shares 1. Of those Shares, 27,000,195 Shares are offered to the general public at the Invitation Price of $3.37 per Share. A total of 2,435,500 Shares are Reserved Shares for priority Applications from the following persons: (1) 2,000,000 Employee Reserved Shares for priority applications from employees, senior managers and the newly appointed non-executive directors of the Company at the discounted price of $2.90 per Employee Reserved Share, and (b) 435,500 Mayberry Reserved Shares for priority application by Mayberry Investments Limited, lead broker and financial adviser to the Company in lieu of a portion of their professional fees, to be allotted at the Invitation Price of $3.37 per Share. If any of the 1 Please note that existing shareholders of the Company have made available 4,270,000 Shares for sale to the general public in the invitation and that the proceeds of such sale will accrue to the benefit of those shareholders rather than the Company. 4

5 Reserved Shares are not subscribed by the persons entitled to make priority Applications for them, the Reserved Shares will be made available for sale to and subscription by the general public at the Invitation Price of $3.37 on the terms set out in this Prospectus. The sale and subscription list opens at 9:00 a.m. on the Opening Date, Thursday 17 h June 2010 and closes at 4:30 p.m. on the Closing Date, Thursday 24 th June 2010 subject to the right of the Company to shorten or extend the time for closing of the sale and subscription list in the circumstances specified in this Prospectus. Prospective applicants should refer to the terms and conditions set out in section 6.5 and this Prospectus generally. If the Invitation is successful in raising at least $50 million the Shares are expected to be admitted to the Junior Stock Market of the JSE within 3 to 4 weeks of the Closing Date (or the extended Closing Date, as the case may be). Please note that this statement of the Company's intention is not a guarantee that the Shares will in fact be admitted to the Junior Market of the JSE. Benefits of listing on the Junior Market of the Jamaica Stock Exchange The Company believes that listing on the Junior Market of the JSE will raise its profile while allowing it to raise funds in order for it to fulfill its strategic plans of significantly increasing its export sales of both its Tetley line of green and black teas to the Eastern Caribbean territories where it enjoys an exclusive distributorship, as well as increasing its export sales of the Caribbean Dreams line generally. In addition, the Company believes that the fundraising resulting from the Invitation, if successful, will enable it to improve both its balance sheet and its capacity to take on debt to further its expansion if required. The Company further believes that a Junior Market listing will enable it to take advantage of a special concessionary tax regime for Junior Market companies provided that the Company remains listed for 15 years. In its first 5 years on the Junior Market, the Company will not be liable to pay any corporate income tax. In years 5 to 10 on the Junior Market, the Company will only be liable to pay corporate income tax at half the usual rate. Furthermore, dividends paid by the Company to its Shareholders will not be subject to tax, and Shareholders will not be liable to pay transfer tax on the Shares, either. See Section 14.2 of this Prospectus for further details of the concessionary tax regime for Junior Market Companies. Use of Proceeds The Company intends to use the greater part of the proceeds of the Invitation to increase its warehouse capabilities and fund increased overseas marketing activities in respect of the Tetley and Caribbean Dreams line of products as described above. The Company also intends to use a part of proceeds of the fundraising to pay the expenses of the Invitation which, the Company estimates will not exceed $5 million (inclusive of brokerage and financial advisory fees, legal fees, registrar s fees, initial fees and GCT). As mentioned above, in recognition of the Company s potential for growth its financial adviser and lead stockbroker Mayberry is supporting the proposed listing by taking a portion of their fee in the form of the Mayberry Reserved Shares. How to make an Application for Shares We hope that prospective investors will join the current shareholders of the Company in this exciting new phase of its development. Those investors who are interested in subscribing for Shares should read the Prospectus in its entirety and the full terms and conditions of the Invitation set out in Section 6.5, and then complete the Application Form set out in at Appendix 1. For and on behalf of the Company John Mahfood, Chief Executive Officer 5

6 Table of Contents Section Page no. 1. Important Disclaimers 2 2. Summary of Key Information on the Invitation 3 3. Letter to Prospective Investors 4 4. Definitions used in this Prospectus 7 5. Disclaimer - Forward Looking Statements 9 6. The Invitation Information about the Company Directors and Senior Officers and their Interests Management Discussion and Analysis Financial Highlights Auditors Report and Historical Financial Data Risk Factors Professional Advisors to the Company Statutory and General Information Documents available for Inspection Directors' Signatures 70 Appendix 1: Application Form 71 6

7 Section 4 Definitions used in this Prospectus Act means the Companies Act, 2004 Allotment Applicant Application Form Articles of Incorporation Auditors report Board of Directors means the allotment of the Shares to successful Applicants by the Jamaica Central Securities Depositary Limited as Registrar, on behalf of the Company means a person (being an individual or a body corporate resident in Jamaica, whether a Reserved Share Applicant or a member of the general public) who submits an Application Form means the Application Form to be used Reserved Share Applicants and the general public in respect of the Invitation, which is set out in Appendix 1 means the Articles of Incorporation of the Company adopted on Tuesday 1 st June 2010 (as they may be amended by the shareholders of the Company from time to time) means the report of BDO, Chartered Accountants dated 9 th June 2010 set out in Section 11 that precedes the Historical Financial Data means the Board of Directors of the Company, details of which are set out in Section 8 of the Prospectus Company means Jamaican Teas Limited, a company incorporated in Jamaica (number 5772) with its registered office at Block A2, Units 2 and 3, 7-9 Norman Road, Kingston Closing Date Director forward looking statements Employee Reserved Shares FSC Historical Financial Data Invitation means the date on which the sale and subscription list in respect of the Invitation closes, being 4:30 p.m. on Thursday 24 th June 2010, subject to the right of the Company to shorten or extend the period in the circumstances set out in the Prospectus means a director of the Company means the forward looking statements referred to in Section 5 of the Prospectus which are disclaimed by the Company on the terms and for the reasons set out in that Section 5 means the 2,000,000 Reserved Shares that are reserved from the Invitation for priority applications by employees of the Company, including senior managers and the newly appointed non executive directors Marcos Dabdoub, Duncan Davidson, and John Jackson, at the price of J$2.90 per such Reserved Share means the Financial Services Commission of Jamaica means the figures set out in Section 15 including those extracted from the audited financial statements of the Company for each of the financial reporting periods ended 30 th September 2005 to 30 th September 2009 and also, the complete audited financial statements of the Company for the financial year ended 30 th September 2009 and also the Unaudited Financial Statements means the invitation to purchase or subscribe for up to 29,435,695 Ordinary Shares in the capital of the Company on the terms and conditions set out in 7

8 Section 6.5 of the Prospectus Invitation Price JN Fund Managers JSE Junior Market Mayberry Mayberry Reserved Shares Mentor Opening Date Prospectus Registrar Reserved Share(s) Reserved Share Applicant Reserved Share Price Shares Shareholders terms and conditions Unaudited Financial Statements means $3.37 per Share that it is not an Employee Reserved Share means JN Fund Managers Limited of 2 4 Constant Spring Road, Kingston, the sole selling agent of Mayberry for the Invitation means the Jamaica Stock Exchange means the Junior Market of the Jamaica Stock Exchange means Mayberry Investments Limited of 1 ½ Oxford Road, Kingston 5, the lead broker and financial adviser to the Company for the purposes of the Invitation means the 435,500 Reserved Shares that are reserved from the Invitation for priority application by Mayberry at the Invitation Price, in lieu of part of their professional fees means the mentor to the Company required to be appointed under the Junior Market Rules, being John Jackson means the date on which the sale and subscription list in respect of the Invitation opens, being 9:00 a.m. on Thursday 17 th June 2010 means this document, which constitutes a prospectus for the purposes of the Companies Act, 2004 and the Securities Act means the Jamaica Central Securities Depository (JCSD) means the 2,435,500 Shares reserved from the Invitation, comprising the Employee Reserved Shares and the Mayberry Reserved Shares means a person who is entitled to make priority application for the Reserved Shares means, in the case of the Employee Reserved Shares, $2.90 per Employee Reserved Share, and in the case of the Mayberry Reserved Shares, the Invitation Price means the no par value ordinary shares in the capital of the Company that are offered for sale and/or subscription on the terms and conditions set out in this Prospectus and in this Prospectus the expression Shares shall include Reserved Shares where the context so requires means holders of the Shares means the terms and conditions of the Invitation for review by Applicants set out in Section 6.5 of the Prospectus means the unaudited financial statements of the Company for the 6 month period ended 31 st March 2010 set out in Section 10 of the Prospectus inclusive of the comparative information for the 6 months ended 31 st March 2009 $ means the Jamaican dollar unless otherwise indicated 8

9 Section 5 Disclaimer: Forward Looking Statements Except for the Historical Financial Data concerning the Company contained in this Prospectus, certain matters discussed in this Prospectus, including without limitation the discussions of future plans and financial projections, contain forward-looking statements. Forward-looking statements are statements that are not about historical facts and speak only as of the date they are made. Although the Company believes that in making any such statements its expectations are based on reasonable assumptions, such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Prospective investors in the Company are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they have been made. Future events or circumstances could cause actual results to differ materially from historical or anticipated results. When used in this Prospectus, the words "anticipates", "believes", "expects", "intends" and similar expressions, as they relate to the Company, are intended to identify those forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. Once this Prospectus has been signed by or on behalf of the Company, and prior to the admission of the Company to the Junior Market of the JSE, the Company undertakes no obligation to update publicly or revise any of the forward-looking statements in light of new information or future events, including changes in the Company's financial or regulatory position, or to reflect the occurrence of unanticipated events (subject to any legal or regulatory requirements for such disclosure to be made). There are important factors that could cause actual results to differ materially from those in forwardlooking statements, certain of which are beyond the Company's control. These factors include, without limitation, the following: economic, social and other conditions prevailing both within and outside of Jamaica, including actual rates of growth of the Jamaican and regional economies, instability, high domestic interest rates or exchange rate volatility adverse climatic events and natural disasters unfavourable market receptiveness to new products changes in any legislation or policy adversely affecting the revenues or expenses of the Company any other factor negatively impacting on the realization of the assumptions on which the Company's financial projections are based other factors identified in this Prospectus Neither the FSC nor any Government agency or regulatory authority in Jamaica has made any determination on the accuracy or adequacy of the matters contained in the Prospectus. 9

10 Section 6 The Invitation 6.1 General Information The Company is making available up to 29,435,695 Shares for sale to, and subscription by, prospective investors. Of those 29,435,695 Shares, 27,000,195 Shares are offered to the general public at the Invitation Price of $3.37 per Share. A total of 2,435,500 Shares are Reserved Shares for priority Applications from the following persons: (1) 2,000,000 Employee Reserved Shares for priority applications from employees, senior managers and the newly appointed non-executive directors of the Company at the discounted price of $2.90 per Employee Reserved Share, and (2) 435,500 Mayberry Reserved Shares for priority application by Mayberry, lead broker and financial adviser to the Company, in lieu of a portion of their professional fees, to be allotted at the Invitation Price per Share. If any of the Reserved Shares are not subscribed by the persons entitled to make priority Applications for them, the Reserved Shares will be made available for sale to and subscription by the general public at the Invitation Price of $3.37 on the terms set out in this Prospectus. In addition, a total of 4,270,000 Shares are made available in the Invitation by existing Shareholders of the Company. The proceeds of the sale of any of those Shares will accrue to the Shareholders and not to the Company. Assuming that (a) the general public subscribe for the 22,730,195 Shares that are not being sold by Shareholders of the Company, at the Invitation Price of $3.37 per Share, and (b) the Employee Reserved Shares and the Mayberry Reserved Shares are taken up by the persons entitled to make priority applications in respect of them, at the applicable Reserved Share Prices, the Company will raise $83.87 million as a result of the Invitation. Prospective investors should read this entire Prospectus carefully. Those prospective investors who wish to subscribe for Shares should review the full terms and conditions of the Invitation set out in Section 6.5 before completing the Application form set out in Appendix Minimum Allotment For the purposes of section 48 of the Companies Act the minimum amount which in the opinion of the Directors must be received by the Company as a result of the sale and subscription of its Shares in the Invitation in order to provide for the matters set out in paragraph 2 of the Third Schedule (the minimum allotment ) is $50 million. That is also the amount that must be raised by the Company as a result of the Invitation in order for it to gain admission to the Junior Market of the JSE Use of Proceeds If the Company is successful in raising at least $50 million as a result of the Invitation it intends to use those monies to fund its strategic plans for growth. Specifically, the Company plans to expand its warehouse facility by leasing an additional 3,000 square feet of space and by purchasing additional packaging and other equipment, for an aggregate cost of approximately $3 million. The Company also plans to undertake a number of advertising and marketing initiatives in the expectation that they will assist it to grow its exports of both the Tetley and Caribbean Dreams product lines. Such initiatives will include increased market visits, organized tastings, and traditional advertising which is focused primarily on the Company s major export markets, being the U.S.A., Barbados, Antigua and Trinidad. The Company anticipates that such measures will cost approximately $10 15 million in the next 12 months. The Company further plans to pay the expenses of the Invitation out of the proceeds of its fundraising, and such expenses are not expected to exceed $5 million inclusive of financial advisory, legal and accountancy services, disbursements, Companies Office filing fees, listing fees, and General Consumption Tax. The Company will retain 10

11 the balance of the fundraising proceeds of approximately $17-22 million for future expansion including, potentially, acquisition of complementary, export - oriented and other businesses. 6.4 Key Dates An Application form for use by all Applicants including applicants for Reserved Shares and the general public is provided at the end of this Prospectus, together with notes on how to complete it. The sale and subscription list for the Shares will open at 9:00 a.m. on the Opening Date, Thursday 17 th June 2010 and will close at 4:30 p.m. on the Closing Date, Thursday 24 th June 2010 subject to the right of the Company to (a) close the sale and subscription list at any time after 9:00 a.m. on the Opening Date once the issue is fully subscribed and (b) extend the Closing Date for any reason including in the event of a hurricane or other act of God. In either case the Company will arrange for an informational notice to be posted on the website of the JSE ( It is expected that the Shares will be admitted to the Junior Market of the JSE within 3 to 4 weeks of the Closing Date (or the extended Closing Date, as the case may be) and that dealings will commence on that date. Please note that this statement of the Company's intention is not a guarantee that the Shares will in fact be admitted to trading on the Junior Market of the JSE. 6.5 Terms and Conditions for Applicants 1. All Applicants (whether Reserved Share Applicants or members of the general public) must submit the original Application Form provided at Appendix 1 to this Prospectus. 2. Applicants for the Employee Reserved Shares must specify their employment with the Company on the Application Form. The Employee Reserved Shares will be allocated to employees based on seniority. Each Applicant for the Employee Reserved Shares must make payment for the number of Employee Reserved Shares specified in the Application Form as set out in paragraph 6 below. 3. All Applicants will be deemed to have accepted the terms and conditions of the Invitation and any other terms and conditions set out in this Prospectus, including the Appendix hereto. 4. Each Applicant acknowledges and agrees that: (a) (b) (c) he/she has been afforded a meaningful opportunity to review the Prospectus (including the terms and conditions in this section 6.5), and to gather and review all additional information considered by him/her to be necessary to verify the accuracy of the information contained in this Prospectus; he/she has not relied on the Company or any other persons in connection with his/her investigation of the accuracy of such information or his/her investment decision; and no person connected with the Company has made any representation concerning the Company or this Prospectus not contained in this Prospectus, on which the Applicant has relied in submitting his/her Application Form. 5. Application Forms from the general public must request a minimum of 5000 Shares and be made in multiples of Application Forms from the general public in other denominations may not be processed or accepted. 6. All Application Forms must be delivered to Mayberry Investments Limited at l'/ 2 Oxford Road, Kingston 5 together with payment for the specified number of Shares in the form of either: (a) (b) a manager's cheque made payable to either Mayberry Investments Limited ("Mayberry") or JN Fund Managers Limited ( JN Fund Managers ); or authorization from the Applicant on the Application Form, instructing either Mayberry or JN Fund 11

12 Managers to make payment from cleared funds held with Mayberry or JN Fund Managers (as the case may be) in an investment account in the Applicant's name. Shares that are not Reserved Shares are priced at the Invitation Price of $3.37 per Share. Employee Reserved Shares are priced at the discounted price of $2.90 per Employee Reserved Share. 7. Applications submitted in advance of the Opening Date will be received at Mayberry and JN Fund Managers, but will not processed until the Opening Date. All advance Applications will be treated as having been received at the same time, being 9:00 a.m. on the Opening Date. All Applications received from 9:00 a.m. onwards on the Opening Date will be time stamped for processing in the order in which they were received. Applications that meet the requirements set out in this section 6.5 will be accepted on a first come, first served basis. 8. For the purposes of this section 6.5 above the Company, in its sole discretion, may: (a) (b) accept or reject any Application in whole or part without giving reasons, and neither the Company nor its Directors or agents shall be liable to any Applicant or any other person for doing so; and allot Shares to Applicants on a pro rata or other basis if the Invitation is oversubscribed prior to the closing of the Invitation lists. 9. Neither the submission of an Application by an Applicant nor its receipt by the Company will result in a binding contract between the Applicant and the Company. Only the allotment of Shares by the Jamaica Central Securities Depositary on behalf of the Company to an Applicant (whether such Shares represent all or part of those specified by the Applicant in his/her Application Form) will result in a binding contract under which the Applicant will be deemed to have agreed to subscribe for the number of allotted Shares, subject to the Articles of Incorporation of the Company and these terms and conditions. 10. Successful Applicants will be allotted Shares for credit to their account in the Jamaica Central Securities Depositary specified in their Application Forms. Applicants may refer to informational notice that will be posted on the website of the Jamaica Stock Exchange ( after the Closing Date. Applicants who wish to receive share certificates must make a specific request to the Jamaica Central Securities Depositary. 11. The Company will endeavour to return cheques for the amounts refundable to Applicants whose Application Forms are not accepted, or whose Application Forms are only accepted in part, to Mayberry within 10 working days after the Closing Date (or the extended Closing Date, as the case may be) or as soon as practicable thereafter. Each refund cheque will be sent to Mayberry for collection by the Applicant (or the first-named joint Applicant) stated in the Application Form. Any other persons purporting to collect a cheque on behalf of an Applicant must be authorised in writing to do so. 12. Applicants must be at least 18 years old. 12

13 Section Information about the Company The Company, Its History and Strategic Goals The Company began its operations on October 3, 1967 as the Tetley Tea Company (Jamaica) Limited, a joint venture between the Tetley Tea Company of London England, and a group of local companies and individuals. At that time, it imported, packaged and sold black tea under the Tetley brand to the Jamaican market. The Company was later purchased by Neal & Massy (Jamaica) Limited and in January 1996 it was sold by that entity to the current majority shareholders, the Mahfood family. Shortly after the Mahfood family s acquisition of the Company its product line for Tetley expanded to include other varieties of black tea such as Earl Grey, as well as green tea, and chamomile and peppermint herbal tea. The Company operates from an industrial warehouse space on the Sagicor estate that features specialized packaging and other machinery. It has recently expanded its factory operations by using an off-site warehouse at Port Royal and Harbour Streets owned by its subsidiary. The Company also started exporting in the late 1990 s and it continues to do so today. Since 2000 it has received a number of awards from the Jamaica Exporters Association. As an exclusive distributor of Tetley products in the Eastern Caribbean it exports to Antigua, Aruba, Bahamas, Barbados, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, Dominica, Grenada, Guyana, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and the U.S. Virgin Islands. The Company also exports its Caribbean Dreams line of tea and other products, including drinking cocoa and powdered coconut milk, to virtually all the countries in the English speaking Caribbean and the USA. The Company believes that exports currently account for approximately 38% of its total sales for the year ended Along with packaging the Tetley and Caribbean Dreams lines of teas, the Company also packages teas under private labels for customers including the Grace Kennedy group of companies. In addition, the Company sells its Tetley and Caribbean Dreams products to the hospitality industry (namely, hotels and restaurants). 13

14 The Company believes that its market share for its combined range of Tetley and Caribbean Dreams tea products exceeds 50% in Jamaica, based on its review of supermarket sales statistics, but the Company also believes that its market share for tea products in the countries it exports to is relatively low and that it could benefit from advertising and marketing efforts including market visits and tastings, as well as traditional advertising. The Company is particularly proud of its Caribbean Dreams line of herbal teas, the raw materials for some of which are sourced from local farmers. The Company has found that Jamaicans have a long tradition of herbal tea consumption and that many Jamaicans are aware of the perceived health benefits of its herbal teas. On the other hand, the Company has also found that the average non-jamaican s consumption of herbal tea is relatively low compared to Jamaica. The Company therefore believes that it can potentially increase its sales by increasing its advertising and marketing activity. For instance, the Company believes that it could increase sales of its black tea products in the Caribbean export markets it operates in, by increasing its marketing activity. The Company also believes that its product sales can benefit from increasing its marketing activities in Canada and the U.S. (particularly in supermarkets). If the Company successfully raises at least $50 million as a result of the Invitation it proposes to spend between $10 - $15 million on increased advertising and marketing efforts in the forthcoming year, including market visits, organized tastings, and traditional advertising. 7.2 Products and Competition 7.2 Products and competition The company currently offers approximately 40 products in total in the Tetley and Caribbean Dreams lines. Tetley line of products The Company acts as the exclusive importer, packer and distributor of Tetley branded teas in the Eastern Caribbean. It has recently renewed its longstanding agreement with Tetley GB Limited for that purpose. The new agreement is for a 5 year term that is capable of extension for further periods of 5 years. The Company distributes the renowned Tetley black tea as well as a Premium Blend of black tea, together with Earl Grey black tea, Green Tea, and Peppermint and Chamomile herbal teas. 14

15 Caribbean Dreams line of products The Company s proprietary Caribbean Dreams line of products consists of herbal teas sourced by the Company from Jamaican and other sources, as well as drinking cocoa and powdered natural coconut milk. The herbal teas include a number of popular Jamaican flavours that are also known for their perceived health benefits including Peppermint, Cerasee, Ginger (as well as Honey Ginger, Ginger Lemon, Ginger Mint and Noni Ginger), Bissy (made from kola nut), Sorrel and Lemon Grass. The Company also produces teas that complement cleansing and slimming regimes. The Company s Competitors The Company s main competitors in the market for traditional black teas are Lipton, and Unilever Plc s Red Rose. The Company s main competitors in the market for herbal teas are the Celestial Seasonings, Twinings and Bigelow branded lines. The Company believes that in Jamaica, based on supermarket sales statistics, its overall market share in teas is approximately 50% owing to its high quality product, competitive pricing and attractive packaging. 7.3 Corporate Structure The Company The Company was incorporated on 3 rd October 1967 as the Tetley Tea Company (Jamaica) Limited. It was acquired from Neal & Massy (Jamaica) Limited in January 1996 by its current majority shareholders, the Mahfood family. The Company operates from leased facilities on the Sagicor Industrial Estate at 7 9 Norman Road in Kingston which provides approximately 10,000 square feet of space and adequate room for the modern equipment needed for its tea packaging operation. The Company distributes its products through local distributors in each of its markets. These distributors in turn sell to supermarkets, shops, hotels and restaurants. The Company s distributor in Jamaica is Amalgamated Distributors Limited and sales to that distributor account for approximately 50% of the Company s total sales overall, including exports. 15

16 Recent Capital Reorganisation On Monday 1 st June 2010 the shareholders of the Company approved its re-registration as a public company and also, a subdivision of the authorised and issued capital such that each ordinary share was split into 5 shares. In addition, the Company paid a final dividend in the amount of $15 million. Following the payment of such dividend certain of the director shareholders also repaid loans made to them by the Company, amounting in the aggregate to $9.97 million as at 30 September 2009, the Company s last audited balance sheet date. Subsidiaries of the Company The Company has a wholly owned subsidiary, H. Mahfood & Sons Ltd. The subsidiary does not carry on any trade or business, rather it is a real estate holding company. The subsidiary owns 2 properties which are located at 130 ½ Harbour Street and 35 Port Royal Street. The property at 130 ½ Harbour Street is used by the Company as an offsite warehouse. It is carried on the books at historic costs. The company also owns an apartment at Manor Court Apartments jointly with Violet Mahfood. Recently, the Company acquired a partial subsidiary when it purchased 80% of the issued shares of JRG Shoppers Delite Enterprises Limited from John Mahfood and two other persons, for a nominal consideration. That subsidiary owns the Shoppers Delite supermarket at 9 Chancery Street, Kingston 19. The Company has renovated the supermarket in time for its re-opening at the end of March, the cost of which was approximately $9 million. 7.4 Authorised and Issued Share Capital and details of the Shares in the Invitation As at Monday 7 th June 2010, being the latest practicable date prior to publication of this Prospectus, the authorized and issued share capital of the Company was as follows. Authorised: 250,000,000 Issued: 142,662,270 The Shares that are subject to the Invitation are to be newly issued Shares of the Company for subscription by successful Applicants (including Reserved Share Applicants) save for 4,270,000 of existing Shares for sale by existing shareholder and director Nancy Milne (who holds such Shares jointly with her husband Mark Milne) to successful Applicants. 7.5 Major Shareholdings As at Monday 7 th June 2010, being the latest practicable date prior to publication of this Prospectus, the holdings of Shares in the capital of the Company (including legal and, where known to the Company, beneficial holdings) were as follows: Name of Shareholder Number of Shares before Opening Date of invitation % of Issued Share Capital before Opening Date of Invitation Adeeb Mahfood (Chairman) jointly with Violet Mahfood (Director) John Mahfood (Chief Executive Officer) 64,198,200 45% 64,198,200 45% 16

17 Nancy Milne (Director) jointly with Mark Milne 14,266,270 10% Total Issued Share Capital 142,662, % After the sale and subscription lists for the Invitation are closed, and assuming that the Invitation is fully taken up by the general public and also, by relevant Reserved Share Applicants, the percentage shareholdings in the Company will be as follows: Name of Shareholder Number of Ordinary Shares after Opening Date of invitation % of Issued Share Capital after Opening Date of Invitation (Rounded) Adeeb Mahfood (Chairman) jointly with Violet Mahfood (Director) 64,198, % John Mahfood (Chief Executive Officer) 64,198, % Nancy Milne (Director) jointly with Mark Milne* 9,996, % Shares available to the general public at the Invitation Price of $3.37** 27,000, % Employee Reserved Shares 2,000, % Mayberry Reserved Shares 435, % Total Issued Share Capital 167,828, % * Nancy and Mark Milne are selling 4,270,000 Shares out of their existing holding in the Invitation at the Invitation Price of $3.37 per share. The proceeds of any sales of the Shares will accrue directly to Nancy and Mark Milne and not to the Company. ** Excluding the Reserved Shares but including the Milne shares referred to in * 7.6 Applicable Regulatory Regime The Company is an importer, packer and distributor of teas. It is registered with the Bureau of Standards of Jamaica as an establishment for the production of teas and herbal infusions. The registration is renewed every year and the current certificate is valid until 15 th November The Company is also registered with the Food Storage and Prevention of Infestation Division of the Ministry of Industry, Investment and Commerce. The Company complies with the Food Storage and Prevention of Infestation Act 1958 and the Regulations made thereunder. Its compliance certificate is renewed annually and the current certificate is valid until 29 th November

18 7.7 Intellectual and Real Property As Monday 7 th June 2010 being the latest practicable date prior to the publication of this prospectus, the Company has the following interests in real and intellectual property: Intellectual property The intellectual property rights in the Caribbean Dreams trademark are owned by the Company. The mark is registered with the Jamaica Intellectual Property Office (no. 34,346) as of 28 th January The current registration is valid until 31 st January 2016 and is capable of extension for further periods of 10 years. The Company has also registered Caribbean Dreams as a trademark in Canada (registration number TMA 561,607). The registration is valid until 8 th May 2017 and is capable of extension for further periods of 15 years. The Company has further registered Caribbean Dreams as a trademark in the United States (registration number 2,513,147). The registration was granted on 27 th November 2001 and is valid for an initial term of 10 years that is capable of extension. The Company uses the Tetley trademarks under a royalty free trademark license agreement with Tetley GB Limited dated as of 19 th May 2010 which is valid for the duration of the Company s exclusive distributorship see the section on Material Contracts, below, for further details. The Company also packages teas for private customers including the Grace Kennedy group of companies under royalty free license. Real Property The Company has entered into a lease for its premises at 7-9 Norman Road, on arm s length commercial terms. The lessor is Sagicor Pooled Investment Funds Ltd and the lease is for a period of three years commencing 14 th August The H Mahfood and Sons Ltd subsidiary of the Company also holds investments in real estate as follows: Acquisition date Location Acquisition Cost Brief Description October A Birdsucker Lane Kingston 6 $8.5 million Commercial development comprising 3 units that was refitted at a cost of $23 million, and completed by April Since then, one unit has been leased at a cost of $60,000 per month and the Company is seeking tenants for the 2 remaining units. January 2009 March ½ Harbour Street & 35 Port Royal Street Kingston Apt 6F Manor Park Apartments Kingston 8 $5 million Warehouse wholly owned by subsidiary H. Mahfood & Sons Ltd. and used by the Company. $27 million Two bedroom residential apartment owned jointly by wholly owned subsidiary H. Mahfood & Sons Ltd and Violet Mahfood, the property has been leased as of February 2010 on arm s length terms, at US$1,500 per month. 18

19 In March 2010 the Company also acquired 80% of the shares of JRG Shoppers Delite Limited, a company which has entered into a lease for the Shoppers Delite supermarket as of 1 st February The supermarket was refitted at a cost of approximately $9 million and it re-opened at the end of March, Material Contracts The following material contracts, not being contracts entered into in the ordinary course of business, have been entered into by the Company with the following persons ( counterparties ) in the 2 years preceding Monday 7 th June 2010 being the latest practicable date prior to the publication of this Prospectus, and earlier (as the case may be): Effective date Counterparty 19 th May 2010 Tetley GB Limited (U.K.) 19 th May 2010 Tetley GB Limited (U.K.) 29 th April 2010 John Mahfood and 2 others. Brief description Agreement appointing the Company as exclusive distributor in Jamaica, Antigua, Aruba, Bahamas, Barbados, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, Dominica, Grenada, Guyana, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and the U.S. Virgin Islands. Five year initial term capable of indefinite extension. Royalty free trademark license agreement for duration of exclusive distributorship described above. Transfer of 80% of the issued share capital of JRG Shoppers Delite Enterprises Limited to the Company for a nominal consideration. 30 May st March st March st January st January st January 2010 Mayberry Investments Limited (Jamaica) Food Brokerage Services Limited (Antigua) First World Imports (Miami, Florida, U.S.A.) Amalgamated Distributors Limited (Jamaica) Bahamas Wholesale Agencies Limited (Bahamas) Eve Sales Corporation (New York, New York, U.S.A.) Financial advisory and lead brokerage services agreement for the Invitation. See paragraph 17 of section 14 for further details. Appointment of exclusive distributor of the Company s Tetley and Caribbean Dreams products for the Bahamas. Indefinite period subject to 90 days termination by either party. Appointment of exclusive distributor of the Company s Caribbean Dreams products for the state of Florida. Indefinite period subject to 90 days termination by either party. Appointment of exclusive distributor of the Company s Tetley and Caribbean Dreams products for Jamaica. Indefinite period subject to 90 days termination by either party. Appointment of exclusive distributor of the Company s Tetley and Caribbean Dreams products for the Bahamas. Indefinite period subject to 90 days termination by either party. Appointment of exclusive distributor of the Company s Caribbean Dreams products for Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Virginia, Washington DC, Illinois, Indiana, Michigan, Minnesota, Ohio. Indefinite period subject to 90 days termination by either party. 19

20 Effective date Lender Amount Brief Details April 2009 First Global Bank $3 million 5 year loan at 10% secured on term deposit. This loan was repaid in March April 2009 First Global Bank $5 million 5 year loan at 7.875% secured on term deposit Please also see the details of the Real Properties owned by the subsidiaries of the Company set out in section 7.7 above the leases for or acquisitions of which are also material contracts of the Company. The material contracts referred to in this section (together with certain other documents) will be available for inspection as described in Section Litigation As at Monday 7 th June 2010 being the latest practicable date prior to the publication of this Prospectus, there were no litigation, arbitration, or similar proceedings pending or threatened against the Company, nor do the Directors believe that there are circumstances which may give rise to such proceedings Dividend Policy The Directors expect that in the absence of any adverse changes in the Jamaican economic climate, the profits of the company will continue to grow. Accordingly, going forward the Board anticipates a payment of an annual dividend of not less than 15% of the annual after tax profits where such profits are available for distribution, subject to the Company's need for reinvestment of some or all of its profits from time to time in order to finance its growth and development Insurance Arrangements The Company has procured reasonable insurance cover for major risks facing its operations. The current cover includes (amongst other things) Public Liability Insurance, Products Liability Insurance, Employer's Liability Insurance, Commercial All Risks Property Insurance (Fire and Allied Perils, Machinery Breakdown, Burglary, Accidental Damage), and Directors and Officers Liability Insurance. The policies are current to October 2010 (in the case of the Commercial All Risks cover) and November 2010 (in the case of the Liability cover save for the Directors and Officers Liability cover, which is valid until end May 2011). Confirmation of the insurance arrangements referred to in this section (together with certain other documents) will be available for inspection as described in Section Charges registered against the Company As at Monday 7 th June 2010 being the latest practicable date prior to the publication of this Prospectus, there are 2 charges registered against the Company s file at the Registrar of Companies. The charges are both in favour of the National Export Import Bank of Jamaica Limited (the EXIM Bank ), in respect of amounts borrowed by the Company for the purchase of machinery. The charges were created and registered on 3 rd March 2008 (J$1.25 million) and 29 th July 2008 (in respect of J$850,000). The amounts owed by the Company to the EXIM Bank carried interest at a rate of 12% and were repaid in March Accordingly, the Company has requested that the EXIM Bank file memoranda of satisfaction at the Registry of Companies to release the charges against the machinery. 20

21 Section 8 Directors and Senior Officers and their Interests 8.1 Biographical details of the Directors and Senior Managers of the Company Brief biographical details of the Directors and Senior Managers of the Company appear below. All of the Directors may be contacted at the registered office of the Company, 7 Norman Road, Kingston CSO, telephone or fax or via at info@jamaicanteas.com Adeeb Mahfood Chairman (appointed 1996) Mr. Mahfood is a prominent local businessman. He chairs the Board of Directors and will assume oversight responsibility for its overall corporate governance. In addition, Mr. Mahfood will Chair the Audit and Remuneration Committes of the Board required to be established under the Junior Market Rules. Mr. Mahfood has considerable experience as a director having participated in the management of many private companies. He has also played an integral role in the management of the Company having been instrumental in its purchase from Neal & Massy (Jamaica) Limited in John Mahfood - Chief Executive Officer (appointed January 2007) As the Chief Executive Officer of the company, Mr. Mahfood is responsible for developing and implementing guidelines, internal controls and human resource procedures. Prior to joining the Company, Mr. Mahfood acted as Director of Grace Kennedy Ltd and served as Chief Operating Officer of its retail and trading division. During his tenure at Grace Kennedy he headed its international division, and led the merger of Rapid Sheffield and Hardware & Co. Ltd to form the largest hardware group in the Caribbean. Mr. Mahfood also led the successful expansion and turnaround of the Hi Lo Supermarket chain. Mr. Mahfood is a Certified Public Accountant and is a fellow of the Institute of Chartered Accountants. Nancy Milne - Non Executive Director (appointed October 1996) Mrs. Milne is a non executive director of the Company. She is a licensed Customs Broker and, having retired earlier to raise her family she is now in the process of returning to the business world. Mrs. Milne was born and raised in new York City. She too is active in St. Paul s Episcopal Church in Kinderhook, New York and enjoys reading, exercise and cooking. Violet Mahfood - Non Executive Director (appointed October 1996) Mrs. Mahfood is a non executive director of the Company, and also a homemaker and the proud mother of 4. She is involved in many charitable causes including International Proxy Parents and the American Women s Group. Mrs. Mahfood is also an active member of St. Margaret s and St. Andrew s Parish churches. In her spare time she is an avid bridge teacher and player, and enjoys cookery specialising in dishes with Arabic origins. Marcos Dabdoub - Non Executive Director (appointed May 2010) Mr. Dabdoub is a founding director and current Managing Director of Amalgamated Distributors Limited, the Company s exclusive Jamaican distributor of its Tetley and Caribbean Dreams product lines, which generates approximately 50% of the Company s overall sales. Mr. Dabdoub has 45 years experience in sales and distribution. Mr. Dabdoub will be a member of the Audit and Remuneration Committes of the Board required to be established under the Junior Market Rules. Mr. Dabdoub began his career in 1963 when he joined J & J Dabdoub Limited as a salesman. In 1967 he opened the Mark s Department Store in Kingston. Mr. Dabdoub attended St. Georges College, Kingston and graduated 21

22 from St. Mary s College, St. Andrew. Duncan Davidson - Non Executive Director (appointed April 2010) Mr. Davidson brings to the Board his experience as a businessman. He is currently a business consultant, having worked for supermarket chain Hi Lo Food Stores and JSE listed company Hardware and Lumber Limited. Mr. Davidson previously worked in the Jamaican shipping industry, having been a Managing Director of H. McCauley Orrett Limited, a subsidary of Grace Kennedy & Co. Limited, and a director of Port Services Limited, Grace Kennedy Shipping Liminted, and the Maritime Training Institute (amongst other entities). Mr. Davidson spent a number of years working in Canada prior to returning to Jamaica in He is also the holder of a diploma in mechanical engineering (Ryerson University, Toronto 1971). John Jackson - Non Executive Director and Mentor to the Board (appointed April 2010) Mr. Jackson brings to the Board his experience in the financial services industry, and he will participate in the corporate governance of the Company as a member of the Audit and Remuneration Committees of the Board, both of which are required to be established under the Junior Market Rules. Mr. Jackson will also act as the Mentor to the Board, and be responsible for advising it on the implementation of adequate procedures, systems and controls for financial reporting, corporate governance, timely disclosure of information to the market, and compliance generally as is required under the Junior Market Rules. Mr. Jackson is a Chartered Accountant and Financial Analyst. He is an associate of Crooks Jackson Burnett, having been a founder of its predecessor firm Jackson Burnett Parkinson Jackson. Mr. Jackson is a director of Bridgeton Management Services Limited, a private investment and management company, since He is also a director of Boston Holdings Limited, publisher of the financial journal Investor s Choice, SandCastles Resorts Limited, the Strata Corporation of SandCastles, the Strata Corporation of Point Village, and several other private entities. Mr. Oliver Goldsmith - Chief Accountant Mr. Goldsmith joined the Company in 1998 from Grace Kennedy Limited where he held the position of Accountant. Mr. Norman Russell - Factory Manager Mr. Russell joined the Company in 1995 from Beric Battery Factory where he held the position of Factory Supervisor. He is responsible for all aspects of the Company s factory and warehouse operations. Mr. Charles Barrett - Sales and Marketing Manager Mr. Barrett joined the Company in January 2009 upon his graduation from the University of the West Indies. Mr. Barrett has a Bachelor of Science (B.Sc) degree in Biochemistry. Miss Tanisha Samuels - Administrative Manager Miss Samuels joined the Company in As a Certified Professional Secretary she supports the CEO in the day to day operations of the Company. 8.2 Directors and Senior Managers interest in Ordinary Shares The Directors and Senior Managers interests in the Ordinary Shares of the Company (including legal and beneficial holdings) as at Monday 7 th June 2010, being the latest practicable date prior to the publication of the Prospectus are set out below. 22

23 Name of Director/ Senior Manager Number of Shares Adeeb Mahfood Chairman 64,198,200* John Mahfood Chief Executive Officer 64,198,200 Nancy Milne Director 14,266,270** Violet Mahfood Director 64,198,200* Mark D Abdoub Director 0 Duncan Davidson Director 0 John Jackson Director and Mentor 0 Oliver Goldsmith Chief Accountant 0 Norman Russell Factory Manager 0 Charles Barrett Sales and marketing Manager 0 Tanisha Samuels Administrative Manager 0 * joint holder withviolet Mahfood ** joint holder with Mark Milne Save as set out above, no Director or Senior Manager receives Ordinary Shares, or options in respect of Ordinary Shares, in consideration of the services rendered by him or her to the Company. Please note however that the senior employees, including the senior managers and newly appointed non executive directors, being Marcos Dabdoub, Duncan Davidson, and John Jackson, are eligible to apply for Employee Reserved Shares in the Invitation. 23

24 Section 9 Management Discussion and Analysis The Company has recorded steady growth in its revenue and profits since its acquisition from Neal & Massy (Jamaica) Limited by the Mahfood family in That growth has been driven by the Company s development of the Caribbean Dreams line of teas which complements its Tetley brands, as well as by growth in the Company s exports of both Tetley and Caribbean Dreams products, particularly to the U.S.A (Caribbean Dreams only), and to Barbados, Antigua and Trinidad (both lines of products). Growth in revenue in the last 3 years has been particularly significant, moving from $ million in 2006 to $ million in The Company s profits before tax have also grown significantly during the relevant 3 year period, moving from $32.94 million in 2006 to $96.01 million in The Company embarked on an aggressive expansion plan in 2008 which served to increase its warehouse capacity, as well as its overall spend on advertising & marketing. It also embarked on a quality certification (HACCP) program. These efforts impacted positively on the Company s sales, which increased by 32% compared to However, the impact of the efforts also increased the Company s cost profile, both directly & indirectly. In addition, the Company s raw material costs increased during the same period, primarily because of the decline in the J$/US$ exchange rate which affected the price of imported raw material items. Finally, during the relevant period the price of oil also rose significantly and this impacted negatively on electricity and transportation costs. The Company chose not to fully pass on the increases to customers and therefore, its gross and net profit margins on sales also declined. The Company considers that its overall market share for teas in Jamaica is significant (being approximatly 50% based on supermarket sales statistics), but it also recognizes that its market share in its various export markets is, in aggregate, comparatively insignificant. The Company believes that, with additional resources from the proceeds of the Invitation to fund marketing and advertising efforts, particularly in its key markets, there is significant opportunity for it to grow its market share. The Directors also recognize that there has been a down turn in economic activities in most of the Company s export markets, although they note this has not impacted the Company s profits in a significant way. The Company earns approximately 38% of its revenue from exports and is self sufficient in funding its foreign exchange requirements. The Directors now wish to focus greater efforts on growing the Company s exports, particularly as regards exports of Caribbean Dreams teas to U.S. supermarkets, using a combination of methods including advertising, market visits, tastings, promotions, etc. In doing so, the Company intends to highlight the perceived health benefits of its teas generally and its green and herbal teas in particular. The admission of the Company to the Junior Market of the JSE, if successful, will represent an important juncture in its development. The Company will also benefit from the increased profile and marketing opportunities a junior Market listing brings. In addition, the Company will enjoy a 10 year tax concession, under which it will pay no corporate income tax for the first 5 years after the listing and 50% of the full corporate tax rate for the next 5 years. 24

25 Section 10 Financial Highlights 10.1 Turnover and Net Profit For the 2009 fiscal year the Company recorded turnover of $ million. This represents a 139% growth rate when compared to 2005 turnover of $ million. The growth in the Company s gross revenues over that period has been achieved primarily through diversification of the Company s revenue streams and growth in exports. The chart below illustrates the growth in the Company s turnover over the relevant 5 year period covered by its Historical Financial Data, being the audited financial years ending 30 September 2005 to 30 September 2009 inclusive: Turnover Movement 350, ,000 Turnover ($000) 250, , , ,000 50, Year The charts below also help to illustrate the growth in the Company s gross and net profit margins over the period covered by its Historical Financial Data. Sales grew from $133.8m in 2005 to J$320.1m in 2009 representing a 139% increase. The company embarked on a massive expansion drive in 2008 which resulted in a positive impact on sales and saw an increase in expenses both direct and indirect. The margins decrease in 2008 to 31.28% and 11.38% for gross profit and net profit respectively when compared to % gross profit margin and a 21.17% net profit margin in This decline was as a result of (amongst other things) the expansion described in section 9. Gross Profit Margin Net Profit Margin 38.00% 36.00% 34.00% 32.00% 35.69% 33.09% 34.04% 31.28% 36.05% 25.00% 20.00% 15.00% 10.00% 14.94% 18.74% 21.17% 11.58% 22.78% 30.00% 5.00% 28.00% % Year Year 25

26 Net profits after tax have also grown by 265%, by moving from $19.99 million in 2005 to $72.92 million in The chart below illustrates overall growth in the Company s net profits during the period covered by its Historical Financial Data. Net Profit Movement 80,000 70,000 Net Profit ($000) 60,000 50,000 40,000 30,000 20,000 10, Year To date the Company has reinvested nearly all of its earnings and as a result it has recorded growth in shareholders equity of 143% with shareholders equity moving from $ million in 2005 to $ million as at 30 September Activity Ratios The charts below illustrate decreased growth in turnover of accounts receivable and increased inventory turnover during the same period. These ratios measure sales as a multiple of receivables and inventory for the period. Of note is the increase in inventory turnover in Moving from 3.41 times in 2007 to 3.67 representing a 7.62% increase. This can be attributed to the fact that there was an increase in both warehouse capacity and advertising (amongst other things): Accounts Receivable Turnover Inventory Turnover N u m b e r o f T i m e s Year N u m b e r o f T im e s Year 26

27 10.3 Profitability and Leverage Ratios The following charts illustrate growth in return on equity, and increasing leverage ability during the period covered by the Historical Financial Data. There was no debt in 2007, however in 2008 debt to equity increased to This was due to the need for increased advertising and marketing as well as warehouse expansion and the need for financing of the latter: Return on Equity Debt to Equity 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 26.93% 22.77% 17.96% 18.52% 14.21% N um b er o f Tim es Year Year 27

28 Section 11 Auditors Report and Historical Financial Data 28

29 Historical Financial Data HISTORICAL FINANCIAL DATA: BALANCE SHEETS 30 September 30 September 30 September 30 September 30 September ASSETS: $ $ $ $ $ Cash and cash equivalents 5,912,382 6,594,420 7,354,420 20,157,543 11,432,795 Short term investments 100,584,134 31,139,850 21,351,353 9,249,763 - Directors' current account 60,000 70, , ,452 Due from subsidiary: current 146, Due from subsidiary: noncurrent 18,398, Receivables 61,180,395 45,899,523 33,324,758 23,361,528 22,415,195 Inventories 58,958,249 46,384,059 35,903,023 27,990,432 26,427,220 Long term receivables 9,968,065 9,092,625 11,360,335 11,764,777 11,348,277 Investment in subsidiary 5,538,035 5,538, Investments 12,771,696 58,125,545 64,138,679 55,067,605 52,958,750 Property, plant & equipment 33,613,919 27,188,605 12,339,063 11,902,733 7,705,742 TOTAL ASSETS 307,131, ,032, ,771, ,714, ,783,431 LIABILITIES: Taxation 12,797,319 7,202,012 4,686,415 3,004,855 7,513,084 Short term borrowings 5,233,171 4,273,108-1,319,864 1,344,425 Payables 7,416,316 12,956,205 4,437,083 14,700,059 7,693,204 Long term liabilities 6,283,889 2,654, ,283 Deferred tax liabilities 4,664,448 2,909,785 4,157,149 2,207,925 4,629,287 Total liabilities 36,395,143 29,995,860 13,280,647 21,232,703 21,453,283 SHAREHOLDERS' EQUITY: Share capital 57,065,068 28,532,534 28,532,534 28,532,534 28,532,534 Share premium 697, , , , ,388 Fair value reserve 446,385 2,665,731 3,538,224 8,805,179 5,795,860 Retained earnings 212,527, ,141, ,722, ,446,985 76,304,366 Total shareholders' equity 270,736, ,036, ,490, ,482, ,330,148 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 307,131, ,032, ,771, ,714, ,783,431 29

30 HISTORICAL FINANCIAL DATA: INCOME STATEMENTS 30 September 30 September 30 September 30 September 30 September $ $ $ $ $ TURNOVER 320,131, ,417, ,513, ,798, ,812,187 COST OF SALES (204,713,643) (168,646,939) (122,361,471) (91,529,620) (86,056,400) GROSS PROFIT 115,417,478 76,770,857 63,152,293 45,268,859 47,755,787 Other income 5,760,634 5,179,585 16,991,480 7,830,443 2,268, ,178,112 81,950,442 80,143,773 53,099,302 50,024,090 Administrative expenses (24,223,217) (39,311,646) (27,102,657) (19,911,605) (19,565,405) OPERATING PROFIT 96,954,895 42,638,796 53,041,116 33,187,697 30,458,685 Finance cost (946,002) (848,173) (86,432) (251,745) (476,458) PROFIT BEFORE TAXATION 96,008,893 41,790,623 52,954,684 32,935,952 29,982,227 Taxation (23,089,715) (13,372,171) (13,678,831) (7,293,333) (9,990,738) PROFIT FOR THE YEAR 72,919,178 28,418,452 39,275,853 25,642,619 19,991,489 30

31 TETLEY TEA COMPANY (JAMAICA) LIMITED FINANCIAL STATEMENTS 30 SEPTEMBER

32 TETLEY TEA COMPANY (JAMAICA) LIMITED FINANCIAL STATEMENTS 30 SEPTEMBER 2009 I N D E X PAGE Independent Auditors' Report to the Members 1-2 FINANCIAL STATEMENTS Profit and Loss Account 3 Balance Sheet 4 Statement of Changes in Shareholders Equity 5 Statement of Cash Flows 6 Notes to the Financial Statements 7-24 SUPPLEMENTARY INFORMATION Independent Auditors' Report to the Directors 25 Trading and Profit and Loss Account 26 Manufacturing Account 27 Schedule of Expenses 28 32

33 INDEPENDENT AUDITORS' REPORT To the Members of Tetley Tea Company (Jamaica) Limited Report on the Financial Statements We have audited the financial statements of Tetley Tea Company (Jamaica) Limited set out on pages 3 to 24, which comprise the balance sheet as at 30 September 2009 and the statements of income, changes in shareholders equity and cash flows 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 and the Jamaican Companies Act. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and consistently 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 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 auditors 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 auditors consider internal controls relevant to the company 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 company's internal controls. 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. 33

34 INDEPENDENT AUDITORS' REPORT (CONT D) To the Members of Tetley Tea Company (Jamaica) Limited Opinion In our opinion, the financial statements give a true and fair view of the company s financial position as at 30 September 2009, and of its financial performance, changes in shareholders equity and cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the provisions of the Jamaican Companies Act. Report on additional requirements of the Jamaican Companies Act 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. In our opinion, proper accounting records have been kept and the financial statements are in agreement therewith, and give the information required by the Act, in the manner so required. Chartered Accountants 5 March

35 TETLEY TEA COMPANY (JAMAICA) LIMITED PROFIT AND LOSS ACCOUNT YEAR ENDED 30 SEPTEMBER 2009 Note $ $ TURNOVER 6 320,131, ,417,796 COST OF SALES (204,713,643) (168,646,939) GROSS PROFIT 115,417,478 76,770,857 Other income 7 5,760,634 5,179, ,178,112 81,950,442 Administrative expenses ( 24,223,217) ( 39,311,646) OPERATING PROFIT 8 96,954,895 42,638,796 Finance cost 9 ( 946,002) ( 848,173) PROFIT BEFORE TAXATION 96,008,893 41,790,623 Taxation 10 ( 23,089,715) ( 13,372,171) NET PROFIT 72,919,178 28,418,452 35

36 TETLEY TEA COMPANY (JAMAICA) LIMITED BALANCE SHEET 30 SEPTEMBER 2009 Note $ $ ASSETS NON-CURRENT ASSETS : Property, plant and equipment 11 33,613,919 27,188,605 Investments 12 12,771,696 58,125,545 Investment in subsidiary 13 5,538,035 5,538,035 Long term receivables 14 9,968,065 9,092,625 Due from subsidiary 14 18,398,210-80,289,925 99,944,810 CURRENT ASSETS: Inventories 15 58,958,249 46,384,059 Receivables 16 61,180,395 45,899,523 Due from subsidiary ,833 - Directors current account 60,000 70,141 Short term investments ,584,134 31,139,850 Cash and cash equivalents 18 5,912,382 6,594, ,841, ,087, ,131, ,032,803 EQUITY AND LIABILITIES CAPITAL AND RESERVES: Share capital 19 57,065,068 28,532,534 Share premium 697, ,388 Fair value reserve ,385 2,665,731 Retained earnings 212,527, ,141, ,736, ,036,943 NON-CURRENT LIABILITIES: Deferred tax liabilities 21 4,664,448 2,909,785 Long term liabilities 22 6,283,889 2,654,750 10,948,337 5,564,535 CURRENT LIABILITIES: Payables 23 7,416,316 12,956,205 Short term borrowings 24 5,233,171 4,273,108 Taxation 12,797,319 7,202,012 25,446,806 24,431, ,131, ,032,803 36