Shaped by truth... Committed to fairness... Driven to serve...

Transcription

1 ANNUAL REPORT

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3 Shaped by truth... Committed to fairness... Driven to serve...

4 TABLE OF CONTENTS 1 Mission Statement 2 Notice of Annual General Meeting 4 Financial Highlights 6 Chairman & President s Overview 8 Directors Report 9 Corporate Governance 14 Board of Directors 20 Executive Team 23 Management Discussion & Analysis 47 Corporate Social Responsibility 54 Shareholding of Directors & Connected Persons 55 Shareholding of Senior Management & Connected Persons Largest Ordinary Stockholders 56 Directors & Senior Management 57 Operating Divisions & Subsidiaries 58 Advisors 59 Audited Accounts

5 MISSION STATEMENT With God s guidance we shall efficiently manage our Company to fulfill its obligations to our customers, shareholders, employees, contractors and the community at large, with an attitude of service and a commitment to truth, fairness and the building of goodwill

6 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the 57th Annual General Meeting of Jamaica Broilers Group Limited will be held at the Jamaica Conference Centre, Ocean Boulevard, Kingston Mall, Kingston on Saturday, November 14, at 10:00am to transact the following Business: 1. To receive the Audited Accounts for the year ended May 2,, together with the reports of the Directors and Auditors thereon The Company is asked to consider, and if thought fit, pass the following resolution: Resolution No.1 That the Audited Accounts for the year ended May 2,, together with the reports of the Directors and Auditors thereon, be and are hereby adopted. 2. To elect Directors (i) The Directors retiring by rotation in accordance with Regulation 89 of the Company s Articles of Incorporation are Messrs. Omar Azan, Aubyn Hill, Robert Levy and Ian Parsard, who, being eligible for re-election, offer themselves for re-election. The Company is being asked to consider and, if thought fit, pass the following resolutions: Resolution No. 2 That the Directors, retiring by rotation, be re-elected by a single resolution. Resolution No. 3 That Messrs. Omar Azan, Aubyn Hill, Robert Levy and Ian Parsard who are the Directors retiring by rotation in accordance with Regulation 89 of the Articles of Incorporation be and are hereby re-elected as Directors of the Company. (ii) The Director retiring in accordance with Regulation 95 of the Articles of Incorporation is Mr. Edward Barber who, being eligible for re-election, offers himself for re-election. The Company is being asked to consider and, if thought fit, pass the following resolution: Resolution No. 4 That Mr. Edward Barber, who is retiring in accordance Regulation 95 of the Articles of Incorporation, be and is hereby re-elected as a Director of the Company

7 3. To ratify interim dividends The Company is asked to consider and if thought fit to pass the following resolution: Resolution No. 5 That the interim dividend of 8 cents paid on December 5, and of 9 cents paid on May 1,, be and are hereby ratified and declared final for the financial year ended May 2,. 4. To approve the remuneration of the Directors The Company is asked to consider, and if thought fit, to pass the following resolution: Resolution No. 6 That the amount shown in the Audited Accounts of the Company for the year ended May 2, as fees of the Directors for their services as Directors, be and is hereby approved. 5. To appoint Auditors and to authorize the Directors to fix the remuneration of the Auditors The Company is asked to consider, and if thought fit, pass the following resolution: Resolution No. 7 That the remuneration of the Auditors, PricewaterhouseCoopers, who have signified their willingness to continue in office, be such as may be agreed between the Directors of the Company and the Auditors. Dated the 29th day of July, By Order of the Board PETER A. DePASS Company Secretary Registered Office Content, McCook s Pen, St. Catherine NOTE: A member entitled to attend and vote at the meeting may appoint a proxy, who need also be a member, to attend and so on a poll, vote on his/her behalf. A suitable form of proxy is enclosed. Forms of Proxy must be lodged at the registered office of the Company at Content, McCook s Pen, Saint Catherine or with the Registrar of the Company, Duke Corporation 13th Floor, Scotiabank Centre, Cnr. Duke & Port Royal Streets, Kingston not less than 48 hours before the time of the meeting. The Form of Proxy should bear stamp duty of $ The stamp duty may be paid by adhesive stamps which are to be cancelled by the person signing the Proxy. A Corporate shareholder may (instead of appointing a proxy) appoint a representative in accordance with Regulation 74 of the Company s Articles of Incorporation. A copy of Regulation 74 is set out on the enclosed detachable proxy form

8 FINANCIAL HIGHLIGHTS Net Sales J$B Net Profit Attributable to Stockholders J$M

9 Pre-tax Profits J$M Investment in Property, Plant & Equipment J$M Pre-tax Profits as % of Net Sales

10 FINANCIAL HIGHLIGHTS CHAIRMAN & PRESIDENT S OVERVIEW We are pleased to report that Jamaica Broilers Group s / performance was one of the best in the recent history of the organisation. Turnover increased by 12% moving from $30.8 Billion to $34.6 Billion. Gross Profits also increased moving up by 23% from $6.5 Billion to $8 Billion. Additionally, Profits Before Taxation increased by 45.5% from $1.1 Billion to $ 1.6 Billion, while After Tax Profit showed a 9.85% increase up from $919 Million to $1 Billion. We are also pleased that our shareholders have benefitted from the Group s achievement this year as earnings per stock unit saw an increase of 8%. Major contributors to the good performance realised during the year under review were the strategically sound decisions and actions taken by management to strengthen our Company. We continued to make significant investments in the support of our brands and operations both locally and overseas

11 Our focus on customer satisfaction through greater efficiency in the production and delivery of our products has been paying off. Overall, products from our Group whether Best Dressed Chicken, Hi-Pro Feeds, fertile hatching eggs produced by International Poultry Breeders in our U.S. Operation or table eggs from our Haiti Broilers Operation continue to be regarded as premium choices by our customers. Success in these areas has allowed us to enjoy the largest market share in the territories in which we operate. Overall, we believe that the commitment and motivation of our management and staff across the Group during the year under review, and the performance recorded as a result of their efforts have been very gratifying. We are thankful for the strides we have made, and pay tribute to our Board of Directors who once again provided yeoman service to our organisation. The Board s highlyskilled members gave astute and balanced guidance to ensure that the organisation adhered to best practices, without threatening the unique corporate culture we uphold at Jamaica Broilers. We also thank our shareholders and customers for their faith in the Company and for their loyalty to our brands. And most of all, we thank the Lord for blessing us and for ensuring the enduring success of our Company. Robert Levy Chairman Christopher Levy President and CEO - 7 -

12 The Directors present their annual report with the Financial Statements for the year ended May 2,. RESULTS OF OPERATIONS TURNOVER The Group s turnover for the year amounted to $34,570,050,000 as compared with $30,851,350,000 for the previous year. PROFIT, DIVIDENDS AND APPROPRIATIONS DIRECTORS REPORT Net Profit attributable to Stockholders 1,036,168 Re-measurements of pension assets / obligations (112,225) Transfers from Capital Reserves on disposal of subsidiaries 50,925 Profits brought forward from previous years were 8,045,730 To give an amount of 9,020,598 Interim Dividends 203,877 Thereby leaving profits to be carried forward as Retained Earnings of $ 8,816,721 The Directors are recommending that the two interim dividends of 8 cents paid on the 5th of December, and 9 cents paid on the 1st of May,, be ratified and declared final for the financial year ended May 2, by the shareholders in the General Meeting, as the Directors do not propose to declare any further dividend(s) from the audited profits realised during the financial year ended May 2,. The Directors retiring in accordance with Regulation 89 of the Articles of Incorporation are Messrs. Omar Azan, Aubyn Hill, Robert Levy, and Ian Parsard all of whom are eligible for re-election. Mr. Edward Barber who was appointed a Director during the course of the year retires in accordance with Regulation 95 of the Articles of Incorporation and is eligible for re-election. AUDITORS PricewaterhouseCoopers will continue in office as Auditors in accordance with the provisions of Section 154(2) of the Companies Act. Dated the 29th day of July, PETER A. DePASS Company Secretary Registered Office Content, McCook s Pen, St. Catherine - 8 -

13 CORPORATE GOVERNANCE Corporate Governance The Company is committed to maintaining high standards of corporate governance and recognises that this is a key contributor to its long-term success and that of its subsidiaries (the Group). The delivery of exemplary governance consistent with international best practices is central to the Company s strategic objectives. The members of the Board understand their duty of care to the Company and its stakeholders and exercise their fiduciary responsibilities with transparency and integrity. The Company believes that the Board has the right mix of skills, experience, independence and knowledge to enable it to discharge these responsibilities successfully. The Group s Corporate Governance Manual is guided by the governance standards set out in the PSOJ Code of Corporate Governance 2nd Edition, published in The Board considers that its governance practices are generally consistent and compliant with all applicable legislation, regulations, standards and codes and aligns its corporate governance practices with the Group s Corporate Governance Manual and the core values of the Group. The Corporate Governance Committee reviewed its Manual during the course of the financial year of the Company and few changes were made. Our Commitment The Group is proud of the way in which it conducts business and is committed to continuing to uphold the highest levels of corporate transparency, social responsibility and compliance in all of its transactions and interactions. BOARD OVERSIGHT Board Members and attendance at meetings: Mr. Omar Azan 8/10 Dr. Claudette Cooke 9/10 Dr. Trevor Dewdney 10/10 Mr. Aubyn Hill 10/10 Mr. Robert Levy 10/10 Mr. Christopher Levy 10/10 Mr. Malcolm McDonald 4/4 Mr. Ian Parsard 9/10 Mr. Barrington Pryce 10/10 Mr. Gregory Shirley 10/10 The Hon. R. D. Williams 7/10 Mr. Edward Barber 2/2 Board Meetings The Board is scheduled to meet once monthly. However, special meetings are convened if urgent matters arise between the scheduled meetings. The Board met in regular and special sessions 10 times during the year to consider matters relevant to the operation and performance of the Group. Without exception, whenever needed during the year, directors have demonstrated their ability and willingness to provide any additional time required. Mr. Malcolm McDonald resigned as a Director of the Company on the 1st day of November,, and Mr. Edward Barber was appointed as Director on the 5th day of March,. During the year the Board fulfilled several of its key functions, including: Reviewing and approving the Company s - operational plans and budgets Approving capital expenditure Reviewing and approving credit facilities Monitoring financial performance and executive management performance in the implementation and achievement of strategic and business objectives - 9 -

14 CORPORATE GOVERNANCE continued The Board is responsible for providing leadership through oversight and guidance whilst setting the strategic direction and delivering value to its shareholders and other stakeholders. The Board is also responsible for ensuring that, as a collective body, it has the appropriate skills, knowledge and experience to perform its role effectively. The Board is not involved in the Group s dayto-day operation but has delegated to management the power to make decisions on operational matters within an agreed framework. The Company has put in place directors and officers liability insurance in respect of legal actions against its directors; this insurance cover does not extend to fraudulent or dishonest behaviour. Composition of the Board As at May 2,, the Board comprised eight Non-Executive Directors (including the Chairman) and three Executive Directors (the President & Chief Executive Officer, Senior Vice President, Finance, and the Vice President Human Resource Development and Public Relations). The names and summary biographies of the Directors, including details of other material directorships, are set out in the Directors profile section of the Annual Report. Executive and Non-Executive Directors are required to seek the approval of the Board before accepting additional directorships, confirm that no conflict of interest arises from the appointment and provide assurance that any additional appointment will not affect their ability to perform their duties. While all the directors are equally accountable for the proper stewardship of the Company s affairs, the Non-Executive Directors understand that they have a specific responsibility to ensure that business strategies and policies are fully ventilated and critically assessed and considered in Board Meetings. Nomination of Directors Each year at the Annual General Meeting, the Board recommends and the shareholders elect Directors in accordance with Article 89 of the Company s Articles of Incorporation. The Corporate Governance Committee is responsible for the nomination and selection of new Directors. Internal Controls The Board, through its Committees, has reviewed the effectiveness of the Group s risk management practices and systems of internal control for the year ended May 2,. This review involved consideration of the internal audit and risk management functions including operational risk, regulatory risk and compliance. The Chairman of the Audit Committee reports to the Board on all significant issues considered by the Committee. Internal Audit Function The Group s Internal Audit function is an independent function reporting directly to the Board through the Audit Committee. Currently, KPMG carries out part of the internal audit functions of the Group. The scope of the internal audit function encompasses the following activities: Reviewing and ensuring the Annual Internal Audit Plan is designed to assist in attaining the required objectives; Reviewing financial reporting and disclosure controls and advising management in their representations and assertions regarding these controls; Reviewing means of safeguarding the Group s assets; Coordinating with the external auditors and reviewing the Group s relationship with these auditors including independence and management s response to any major external audit recommendations; Participating in the planning and performance of audits of mergers, acquisitions and divestitures; Reviewing guidelines for ethical business conduct and the process for ensuring compliance; and Periodically reviewing and making recommendations concerning procedures for receipt, retention and treatment of complaints about accounting and auditing matters. External Audit Function The Audit Committee annually reviews the appointment of the Group s External Auditors. Currently, the auditors are PricewaterhouseCoopers (PWC). The Board, on the recommendation of the Audit Committee, is satisfied with the effectiveness of the External Auditors and has agreed to recommend to the shareholders the re-appointment of PWC for a further period of one year

15 The fees paid to the external auditors in the financial year are included in the audited financial statements. Conflicts of Interest In keeping with international best practices, the Company s Corporate Governance Manual makes provision for the manner in which members of the Board should handle conflicts of interest. A Director has a duty to avoid, as far as possible, activities that could create conflicts of interest or the appearance of conflicts of interest and must disclose to the Board any matter that may result, or has already resulted, in a conflict of interest. Where a conflict of interest arises, Directors have a responsibility to declare their interest and remove themselves from the relevant Board or Committee meetings without deliberating or voting on the proposal or transaction. Information and Reports Prior to and at each regular meeting of the Board, the Directors receive detailed financial and operational reports to allow them to effectively review and assess the performance of the Group s business. Board Papers are usually issued six days prior to meetings and Committee papers are usually issued five days prior. In an effort to reduce the costs and the environmental impact of printing and distributing Board Papers, and to improve the efficiency of the process, the Company enables each Director to receive Board Papers electronically by way of a secure tablet. At each Board meeting, the President and Chief Executive Officer (Managing Director) presents a report on all aspects of the Group s business and a report on the Group s financial performance is also received. From time to time, members of the Senior Management Team provide the Board with detailed presentations on the Group s major activities. Remuneration Directors remuneration continues to be set at levels that would attract and retain persons with the required skill and experience. For the Executive Directors, a significant portion of the compensation package is variable and dependent on the Group s performance during the year. During the year, the Board s Compensation Committee, comprising three Non- Executive Directors, met to review executive compensation. An Executive Director was invited to attend. The Committee, together with input from the Board, focuses on ensuring that the Company s compensation policies are competitive and remain aligned to best practice. An Executive Director was invited to attend. The Committee, together with input from the Board, focuses on ensuring that the Company s compensation policies are competitive and remain aligned to best practice. For Non-Executive Directors, the level of remuneration generally reflects the experience and level of responsibilities undertaken. The approved remuneration provides for the payment of a retainer for Non-Executive Directors and a fee for each Board and Committee meeting attended. The total fees paid fell within the amounts approved by shareholders at the Annual General Meeting held on November 1,. Board Evaluation The Board, through its Corporate Governance Committee undertook an independent evaluation of the Board s performance. The evaluation was conducted during the third quarter of the financial year and involved the completion of a written self-evaluation questionnaire, a Board evaluation questionnaire, followed by a review and discussion at a meeting of the Board. The evaluation process provided directors with an opportunity to examine and explore their roles as Directors, boardroom dynamics, the suitability and adequacy of meeting agendas and Board Papers, time allocation and generally how the performance of the Board could be enhanced to ensure that the Board functions effectively. A written evaluation report summarising the results was submitted to the Board during the third quarter of the - financial year. Board Committees The Board appoints members to committees of the Board with the objective of ensuring an optimal mix of skill, experience and competence. The Board has delegated specific duties to three Board Committees, each of which operates within specific Terms of Reference as outlined in the Company s Corporate Governance Manual that define the respective roles and responsibilities

16 CORPORATE GOVERNANCE continued The Committees assist the Board in its oversight role. Subsequent to each Committee meeting, the minutes are included in the Board Papers for the review of all Board members. Round robin resolutions approved by the Committees are also included in the Board Papers. Members attendance at Board Committee meetings during the past year is set out below. AUDIT COMMITTEE Members and attendance at meetings: Mr. Aubyn Hill Chairman 3/3 Mr. Omar Azan 3/3 Dr. Trevor Dewdney 3/3 Mr. Gregory Shirley 3/3 Mr. Malcolm McDonald 1/1 Board Meetings The Board has determined that each member of the Audit Committee is independent and that the membership meets the requirements of the Jamaica Stock Exchange and the recommendations of the PSOJ s Code on Corporate Governance. During the year, the President and Chief Executive Officer (Managing Director), the Vice President, Accounting and Information Systems, KPMG as Internal Auditor and the External Auditors normally attended and reported at Audit Committee meetings. The Chairman of the Group Board and other Senior Managers are invited from time to time to present reports and discuss issues of importance. The Audit Committee met three times during the year and focused on the effectiveness of internal controls, compliance, assurance and internal audit functions. Responsibilities discharged during the year, included the following: Financial statements Reviewing significant accounting and reporting issues, considering any changes to accounting standards, and understanding their impact on the financial statements; Ensuring that the Group s quarterly and annual financial statements and quarterly releases represent accurate, clear and balanced assessments of the Group s financial position and prospects. Internal control Monitoring and reviewing the effectiveness of the risk management and internal control systems, including information technology security and control; Review of risk management and internal controls over financial and operational reporting, and obtaining reports on significant findings and recommendations together with management s responses. Internal audit Monitoring and reviewing the effectiveness of the Group s internal audit function. Fraud prevention Receiving and considering reports on significant frauds, forgeries and other irregularities in respect of investigations undertaken. External audit Reviewing the external auditors audit scope and approach; Monitoring and reviewing the objectivity, effectiveness and independence of the external auditors; approving their scope of work, reports and fee proposals for audit services; Compliance Reviewing the effectiveness of the systems for monitoring compliance with laws and regulations, and the results of management s investigations and follow up; Reviewing auditor observations

17 COMPENSATION COMMITTEE Members and attendance at meetings: Board Meetings Mr. Gregory Shirley Chairman 2/2 Dr. Trevor Dewdney 2/2 Mr. Aubyn Hill 2/2 The Compensation Committee is scheduled to meet once per year. Two meetings were held. CORPORATE GOVERNANCE COMMITTEE Members and attendance at meetings: Board Meetings Mr. Gregory Shirley Chairman 2/2 Mr. Aubyn Hill 2/2 The Corporate Governance Committee met two times during the year and considered the following matters: Appointment of New Director Edward Barber; Review of the Group s policies including the Board Corporate Governance Manual and identifying those policies to be updated and presented to the Board for approval. During the year Mr. Malcolm McDonald resigned from the Board, the Audit Committee and the Corporate Governance Committee

18 BOARD OF DIRECTORS Mr. Robert Levy, C.D. Hon. LL.D., M.A. Chairman Robert Levy has been a part of since it s early years, having joined the Company just one year after it was officially formed, when he was 19 years old. In 2001, he was named President and CEO, and under his leadership the Group saw a significant increase in profits. He is highly regarded as an expert in poultry and agriculture, and well-known for his support of community programmes and nation-building initiatives. Mr. Christopher Levy MBA Executive Director Christopher Levy, President & CEO of the, has more than 25 years of senior management experience. Spanning his career, he has worked in most areas of the Company, including managing several divisions. Under his leadership, the Company has seen exponential growth. He has also advanced the Group s focus on empowering communities, through support for education, sports and other nation-building programmes.

19 The Hon. R. Danvers Williams, O.J., C.D. Hon. LL.D., J.P., C.L.U. Director Emeritus Dr. Claudette Cooke Ed.D., CMT, CPC, CCRC Executive Director Danny Williams is one of Jamaica s most respected businessmen. He enjoyed a successful career of more than 56 years in the life insurance industry, during which he founded and served as President of Life of Jamaica (now Sagicor Life). He is the immediate Past Chairman of the. Claudette Cooke who is listed in the International Who s Who of Professionals (U.S.A.) joined the Group in 1994, from her employment as Senior VP for Creative Services at Dunlop Corbin Compton Associates. At Jamaica Broilers, she took on the role of Group Public Relations Executive and just a year later, was appointed to her current role as Vice President of Human Resource Development and Public Relations. Claudette is a Certified Professional Coach

20 BOARD OF DIRECTORS Continued Mr. Ian Parsard MBA (Hons.), A.C.C.A. Executive Director Ian Parsard, Senior Vice President of Finance, has been a part of the family for the past 26 years. He first joined the Group s Information Technology Department in 1989 as a Senior Systems Analyst and was promoted to I.T. Project Leader in He later went on to hold several positions including Senior Corporate Business Analyst and Managing Director of Content Agricultural Products. Dr. Trevor Dewdney D.V.M. Director A well-respected Veterinary Consultant, Trevor Dewdney has served the industry as a devoted farming practitioner. He previously operated in the role of Senior Veterinary Officer of the Group and has been a member of the Board of Directors since He has also served as Vice President of the Jamaica Agricultural Society.

21 Mr. Aubyn Hill MBA Director Aubyn Hill has more than 25 years experience in the banking and finance industry. He is CEO of Corporate Strategies Limited and has conducted business in more than 84 countries. Mr. Omar Azan Director For more than 20 years, Omar Azan has been one of Jamaica s leading manufacturers and exporters of furniture. His commitment to nation-building has led him to serve on the Board of the Jamaica Manufacturers Association for 10 years, where he currently sits as Immediate Past President

22 18 BOARD OF DIRECTORS Continued Mr. Barrington Pryce Director Barry Pryce joined the family in 1988 as the Poultry Manager of Jamaica Poultry Breeders Limited (JPB). He moved on to the position of General Manager of Jamaica Egg Services nine years later, and in 2001 returned to JPB as the Breeder Operations Manager. In February, Barry retired after 26 years of faithful service to the Group. Mr. Gregory B. Shirley MBA Director Gregory Shirley has extensive experience in a wide range of specialties including corporate and strategic planning, and process improvement. With a career spanning 30 years, including a post as Partner-in-Charge at KPMG Caricom, he is a sought after consultant in areas such as compensation and benefits administration, and performance measurement.

23 Mr. Edward Barber B. Acy, CPA Director Edward Barber is the most recent addition to the Board of Directors. He has 30 years experience in real estate, finance, and development, both locally and internationally. He is an expert in strategic planning, capital procurement, financing, acquisition, investment, development and implementation of real estate solutions. He currently holds the position of Managing Principal at CRE Services, a private real estate consulting firm that specialises in capital placement and asset management

24 EXECUTIVE TEAM Christopher E. Levy MBA President & Chief Executive Officer Ian S. Parsard MBA, ACCA Senior Vice President, Finance Claudette D. Cooke Ed.D., CMT, CPC, CCRC Vice President, Human Resource Development & Public Relations

25 Donald A. Patterson MBA, FCA Vice President, Accounting & Information Systems Conley N. Salmon Vice President, Marketing Feeds & Agricultural Supplies Stephen D. E. Levy MBA President, Wincorp International Inc

26 EXECUTIVE TEAM Continued Judy Baugh MSc Asst. Vice President, Procurement John Carberry MSc, MBA, PMP Asst. Vice President, Energy

27 MANAGEMENT DISCUSSION & ANALYSIS The year in review proved to be a year in which we saw Limited (JBGL)beginning to realise the benefits of our long term strategy. The operations located in Jamaica performed very well. There was a refocusing on increasing efficiencies and enhancing customer relationships. This has yielded benefits on many levels. In the Hi-Pro Division we have seen growth, demonstrating not only a strengthening of Jamaica s agricultural sector but also the benefit of broadening the product lines which we offer. This allowed us to reach more customers and provide a complete package of solutions to them. The team has done exceptionally well in establishing value for our customers through technical support, knowledge of their businesses and having the right products at the right price. The impact of the Best Dressed Chicken on JBGL continues to be very significant. The market required a great deal of flexibility this year as many changes were experienced due to external forces. We eventually saw a stabilisation of the Jamaican dollar in the latter part of the operating year and we saw reductions in both feed and fuel prices which we were able to pass on to our customers. However at the same time, we had to focus on improving our efficiencies and costs in our plants. We were able to achieve this first step in good fashion. The team remains motivated and confident in their ability to continue improving each customer s experience with the Best Dressed Chicken. The U.S. Operations also performed very well this year. We continued to experience growth in both our Georgia and Arkansas operations. We were able to bring on great new talent which allowed this growth to be carried out with the long term view in place. The markets there continue to be strong with opportunities for further expansion on the horizon. Our U.S. Operations will continue to play the significant role of earning hard currency for the Group into the future. Haiti Broilers also continued to grow, especially in the table egg market. We were able to expand our production by over 40% on our own farm. The table egg market continues be our main focus, yielding good cash flow and presenting great opportunities for continued growth. We feel confident that we will be able to realise benefits from our fuel terminal at Port Esquivel. The business model for the original investment is no longer functional however with a new approach, we will continue maximise this very useful asset

28 MANAGEMENT DISCUSSION & ANALYSIS continued The Lord saw us through a very dynamic year. With operations in three different countries, the Company required a change in how management performed both at the corporate level and at the local level. The team has responded well. The communication and response time to issues allowed us to be agile and fast. This also yielded benefits in regards to our customer concerns. As we move forward, we will continue to focus on developing and growing in a structured and strategic manner. We will guard against the building of bureaucratic structures which will impede decision making and slow us down in executing our decisions. The Lord has blessed us this year and we recognise His hand in our business and our lives. To Him we are grateful

29 OPERATIONAL HIGHLIGHTS JAMAICA OPERATIONS The major activities within the Jamaica Operations take place in the Best Dressed Chicken Division, Hi-Pro Division and JB Ethanol as discussed below. THE BEST DRESSED CHICKEN DIVISION The fiscal year ended with the Best Dressed Chicken Division posting strong financial results across all Business Lines. We experienced an increase in profitability year over year. All other key financial indicators reflected good comparative performances despite the predictions of a sluggish economy holding true. Our customer-focused sales team, well executed market oriented plans, a diversified book of business and a noticeable uptick in the demand for poultry meat, were some of the main contributors to our significant performance

30 MANAGEMENT DISCUSSION & ANALYSIS continued An analysis of our portfolio revealed that chicken meat demand spiraled across our entire customer base, which signalled an increase in consumers propensity to consume poultry. We are buoyed by this increase in demand for the Best Dressed Chicken; a brand that has had a distinguished history of providing Jamaicans with quality poultry meat and one that has remained the favourite of householders for years. We will be incorporating the key findings from this analysis into our operational enhancement plans to further drive efficiencies and concurrently serve our customers on a needs-based platform. The non-poultry business lines also performed well, with our Further Processing line of products including Reggae Jammin and Imports contributing to our overall financial achievements during the fiscal year. The acquisition of Hamilton s Smokehouse has proven to be a strategic success. We saw an increase in demand for the breadth of products offered under this brand, as the efforts of the sales team to place the products in a wider distribution channel bore fruits. Their efforts were underpinned by the reputation of the Hamilton s Smokehouse brand for offering quality and premium tasting products on the market

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32 MANAGEMENT DISCUSSION & ANALYSIS continued Our achievements transcended Jamaican borders. The Caymanian market experienced steady growth as the Best Dressed Chicken gained traction in that country. Our flagship product is not only available in major and established retail outlets, but has also made its way into the food service industry in the Cayman Islands. Popeye s, one of the island s leading Quick Service Restaurants, has rolled out advertising campaigns highlighting that it uses the Best Dressed Chicken in its meal preparations; tapping into the goodwill resident in the brand. This is an ongoing partnership that has rebounded to the benefit of both brands. As we expanded our footprint across the region, we welcomed the Turks & Caicos Islands to our widening customer base. The Best Dressed Chicken is now available for purchase there and was received with much acclaim in that market. We are proud of this accomplishment - an established Jamaican brand that has made its way into a new market -and we will continue to focus efforts on building out our trade relations. At this juncture, the mantra Think Global, Act Local is a truism for the Best Dressed Chicken. With us being in the Cayman Islands for over two decades and with the recent addition of Turks & Caicos to the fold, we will be leveraging our operational strength in Jamaica to serve both our domestic and regional customers. We are mindful to take on board the learnings from each country as we engage in cross-border trading in order to drive on-going market acceptance of our products.

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34 Spiral IQF Freezer

35 MANAGEMENT DISCUSSION & ANALYSIS continued We continued to leverage the Individual Quick Frozen methodology, which we first brought to Jamaica in the last financial year as a part of our product innovation strategy. We were the forerunners in piloting this freezing technology in Jamaica, where each piece of poultry is Individually Quick Frozen (IQF) during production. Amid the introduction of the mixed parts in a re-sealable pouch and consumers growing acceptance of the product, we are happy to report that the suite has now been widened to include bundled individual parts. Consumers can now make a selection from among the IQF thighs, breasts, wings and drumsticks; all available in re-sealable pouches. This allows consumers to go from pouch to pot without having to thaw the entire package of poultry. The utility derived from this method of freezing is central to consumers embracing the suite of products and we anticipate a continued increase in market acceptance

36 MANAGEMENT DISCUSSION & ANALYSIS continued The Best Dressed Chicken embarked on a number of customer engagement programmes during the financial year. One such engagement unfolded in the Cayman Islands where we announced the staging of the Cayman edition of the Table Talk Awards Function, along with our partner The Jamaica Observer. The Food Awards is renowned in Jamaica for publicly celebrating members of the food services segment, who may not always be recognised for their invaluable contribution to the hospitality industry. As a long standing sponsor of the Jamaica Observer Food Awards, we are fully au fait with the tenets and benefits of this event to the food services industry. We therefore saw it as a good fit for the Cayman Islands a country known for great culinary experiences that is home to over 400 restaurants, ranging from fine dining establishments to on-the-corner eateries. The launch of this initiative has been well-received and we are counting down to the inaugural staging of this event in October. We also undertook a number of sponsorships across various platforms including health, wellness, sports, social outreach and community development. We pride ourselves on being a good corporate citizen working through our staff, the Spring Village Foundation, our customers and individuals with a strong social conscience in shaping lives and building stronger communities. One of our major sponsorships is our 5-year commitment to The Sunshine Girls. The Jamaica national netball squad has been consistent, persistent and has displayed great tenacity and fortitude each time they step on to the world stage to represent our country. This year, as the team prepares to participate in the Netball World Cup in Sydney, Australia in August, they can rest assured that they have a solid sponsor behind them. We are proud of the cohort of players and their individual and collective achievements, and we will be renewing our sponsorship commitment when it ends this year. As we reflect on the year that was and craft plans for the upcoming fiscal year and beyond, we are aware that in the context of consumer confidence remaining flat and spending measured, that the successes of this financial year were remarkable. We are grateful to our customers for their on-going support and our staff for their dedication and commitment, all along the vertical integration chain. The economists are again projecting that the economy will remain sluggish as the government continues its programme of reform as prescribed by the International Monetary Fund (IMF). While this might fuel business confidence, it is expected to have the opposite effect on the consumers. Accordingly, we remain guarded with our outlook for the upcoming year. Notwithstanding, the Division is extremely focused on fulfilling its deliverables to all its shareholders and other interest groups. We understand that as consumers disposable income becomes more suppressed, they will continue to seek alternatives. We will therefore place emphasis on new product development driven by consumers changing buying patterns. A key area of focus for management will also be to re-engineer the manufacturing process to realise further efficiencies. The need to employ this strategy is reinforced by the negative impact on the cost of production emanating from the devaluation of the Jamaican Dollar and the implementation of a new tax regime on manufacturing companies. We are committed to delivering services of real value to our customers, maximising our shareholders wealth, fulfilling our corporate obligations and returning operating profits that will augur well for all stakeholders. This will be the mantra that will drive our plans and actions in the next financial year

37 Careful hands and watchful eyes attend to the Chicken Nugget Line at the Best Dressed Further Processing Facility. Roger Eaton, Chief Operating Officer of Yum! Brands, Inc. and President of KFC International; Christopher Levy, President & CEO ; and Mark Myers, Managing Director of Restaurants of Jamaica.

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39 HI-PRO DIVISION The year began on weak footing with soft sales and low margins for feed and other store products due to three factors, the worst drought in over 100 years that affected sales of all farm inputs, the slow recovery of the layer industry from the prior year s glut, and the pig industry reducing herd size to below half that of the last year, due to market prices being below production cost. We saw the drought ease, the layer and pork industries stabilize and ultimately, a return to profitability. The Broiler industry s small farmers had good prices and demand for product all year round which in turn had a positive effect on the pace at which chick feed was pucharsed. We are optimistic about the sales potential of our Hi-Pro Feeds as we have added Celmanax an all natural additive improving our offering to our customers. This has been received enthusiastically by our clients who have welcomed the improved performance it brings. We added a number of new lines to our plant care offerings with new fertilisers and pesticides that offer new molecules to improve plant health and output while improving economics. The Sugar & Coffee Industries have embraced the agronomy programmes we have introduced. Coffee farmers in particular are excited by the spike in productivity they are experiencing on the programme. Hi-Pro has achieved growth in profitability over the previous year. We continue to work towards further growth and with God s blessing, will achieve this in the coming year.

40 MANAGEMENT DISCUSSION & ANALYSIS continued HI-PRO ACE SUPERCENTRE At the Hi-Pro Ace Supercentre, customer service continues to be our main focus. We strengthened the knowledge base of our staff by providing cross-training in the various departments of the store and brought in a professional in customer service training to ensure that our customers are met with a delightful shopping experience. We continue to work with key suppliers to create value for our customers and have added new suppliers to enhance and differentiate our product assortments in response to market trends. The areas of focus were Power Tools, Lawn and Garden, Crop Care and Pharmaceuticals

41 - 37 -

42 MANAGEMENT DISCUSSION & ANALYSIS continued JB ETHANOL The /15 year has been a transitional year for the Port Esquivel based operation. While it is no secret that the ethanol dehydration model has been challenged as a result of inconsistent and erratic global trends in ethanol production and trade, the facility has attracted significant attention as a fuel terminal. This interest culminated in one such organisation leasing the facility as a bulk liquid fuel terminal for several months during the year. Our team is now exploring and negotiating long term lease options with interested parties. This evolving model has prompted a recent application for a change in the name of the company. The terminal investment has demonstrated its resilience in continuing to operate in a very challenging environment. We look forward with optimism to the /16 year as we strive to adapt to the changing landscape. International Production & Processing Expo

43 Wincorp - Cold Room Expansion U.S. OPERATIONS This year was an excellent one for our United States Operations comprising Wincorp International in Florida and International Poultry Breeders in Georgia and Arkansas. The team was able to achieve record sales, through focusing on new markets and increased production. We were also able to start producing in new areas of the United States resulting in the first fertile hatching egg marketing operation with access to production from three states. Over the last three years, the U.S. Operation has grown to become one of the largest Fertile Egg marketing operations in the U.S.A. With customers in over 17 countries, we continue to look at new opportunities and continued growth. All of this exciting growth has brought the necessity for expansion in our cold storage, growth in our trucking fleet, and the addition of new team members with the desired expertise. We feel that there are still many areas for the U.S. team to explore within the poultry industry to continue to bring strong U.S. dollar earnings to the of Companies. With all the achievements this year, the biggest impact is the profit realised. The team in the U.S. recognises the Lord s hand, and we are thankful for His blessings, and continue to pray for strong results

44 MANAGEMENT DISCUSSION & ANALYSIS continued OTHER CARIBBEAN OPERATIONS Haiti Broilers S.A. is the major activity within this segment. The year - was a break-even year financially for Haiti Broilers. A major contributor to this result was HB Ouefs (table eggs) which accounted for 45% of sales. This is in keeping with our strategic plans of having table eggs become our main business line in another 2-3 years. We continue to market our feeds and chicks under the Hi-Pro brand and our processed chicken under the Le Chic Poulet brand. We now have an established buy-back programme with farmers that see us buying birds under contract to process and sell under our brand. These farmers in turn are required to buy our chicks and feeds. Approximately 90% of the chickens processed are from this programme. As our egg production is slated to grow another 50% in the new financial year, plans are already being put in place to continue to penetrate the market by establishing strategic points of sale and distribution that will not only make our eggs more available but help to insulate us from eggs coming from the Dominican Republic at low prices. For the new fiscal year we expect to see the Company moving into profitability through continued growth. Plans include increasing the Company s visibility as a local company that is not only producing quality products but playing its part in employment, sustainable development and food security. This is expected to increase demand for our products. Dave Fairman Country Manager, Haiti Operations

45 Haiti Operations

46 MANAGEMENT DISCUSSION & ANALYSIS continued HUMAN RESOURCE DEVELOPMENT The Group s Human Resource Department remained responsive to the diversifying and dynamic needs of a globally expanding organisation. As such, the past year saw us undertaking initiatives and programmes focused on strengthening and equipping the human capital for greater productivity and portability of skill sets whilst taking into consideration the nuances of each marketplace and its labour and industrial relations framework. Additionally, much emphasis was placed on enhancing and streamlining the Company s contract administration process in keeping with the current direction of the international and local labour relations codes and best practices. We will continue to pursue recruitment strategies and techniques aimed at identifying the best available talent, ensuring that our workforce is adequately suited and trained to meet the needs of the operation. TRAINING & DEVELOPMENT At the start of the financial year our U.S. Operations came on stream with the Axapta Enterprise Management System. Our Training Team within the Group s Information Systems Department worked hard to ensure that all staff members were properly prepared for a smooth transition to the new programme. The Group s Training Department took great care in addressing the specific needs of our staff this year. We continue to recognise the importance of strong leadership in motivating our workforce and so with the help of our business partners at Elanco we were able to gain collective insight regarding the day-to-day challenges directly affecting our Managers across the Group and address those issues with practical solutions. Similarly, we took the opportunity to work alongside managers and supervisors to facilitate and execute training interventions aimed at equipping employees with the tools needed to thrive in their various roles. Consequently, our staff participated in a number of operational support and area specific trainings throughout the year

47 EMPLOYEE WELFARE As usual, the Group maintains a keen focus on the health and wellness of its employees. We continue to offer counselling services to staff members through our partnership with Family Life Ministries. Our Company Nurse and Doctor also maintain regular visits to our various locations to keep tabs on employees individual and collective health management. The Company Nurse was delighted to report that there was a particularly noticeable improvement in the overall health of the Group due to increased participation in the BDC 5k run/ walk series and other similar events supported by the Company

48 MANAGEMENT DISCUSSION & ANALYSIS continued SPORTS Our sports programme is a significant part our health and wellness initiative at Jamaica Broilers. We continue to encourage our workforce to get involved in activities to help maintain fitness and healthy social interactions; and of course, we enjoy the thrill of the competition while we re at it. This year we had strong competition in the Business House Cricket and Business House Netball Associations Competition Series. We played exceptionally well and were proud to take home 2 nd place in the Reggae Jammin 50 Overs Competition; 3 rd place in the Jamaica Broilers/Western Sports 20/20 Series; and 3 rd place in both the Open and Senior League Netball Series. Our Football Team also put out a good effort this year though we were unable to make it past the semi-finals in the League Competition. The Group also maintained its participation in the Jakes Triathlon and Sigma Corporate Run and of course, represented well at our own BDC Road Race Series. We continue to be encouraged by the overwhelming support of these events by our staff members and reap the rewards that good fun and fellowship bring to the JBG family

49 RISK ASSESSMENT Avian Influenza The Company has significant poultry operations in Jamaica, the U.S.A. and in Haiti. As a consequence, significant management attention is focused on the health and wellbeing of our birds, together with measures to minimise the risk of contracting diseases such as Avian Influenza (AI). During the year under review, there were a number of publicised outbreaks in countries such as the U.S.A., Mexico as well as in the European Zone. We have re-enforced our already robust systems given the potential impact AI can have on our global operations. This has been achieved by focusing on the following: 1. Education includes our people (farmers, employees) as well as Government Authorities and Customers. 2. Communication - re-enforcing new bio-security protocols system wide; as well as having persons on Advisory Boards and First Response Teams. 3. Preparation - putting in place insurance coverage; trade and logistics back-up plans; quarantine plans. Through God s protection, we have not lost birds or eggs, either directly or indirectly, as a result of AI. We continue to be vigilant and focused in our efforts to maintain an AI free operation. Debt Management Notwithstanding the depreciation of the Jamaican currency, as well as growth in our operations, our overall borrowings were flat year-over-year. This is in keeping with our Financial Strategy of stability after the hectic years of acquisition and expansion, primarily in the USA. The level of debt is manageable with all loan covenants being comfortably met

50 MANAGEMENT DISCUSSION & ANALYSIS continued THE WAY FORWARD The Group has accomplished remarkable results this year and we continue to move forward in anticipation of even greater performance. In the new operational year, we will see an internal campaign launched, calling for us all to remain True to the Core. Our core product is poultry and all our investments have been and must continue to be, toward enhancing the business of chicken. We are exploring a new business model for JB Ethanol and have high expectations for its profitability. Through our Hi-Pro Division, we are also committed to working alongside Jamaica s Farmers and Governmental Agencies toward the development of Jamaica s agricultural sector. Our people are at the core of what we do and we are proud of our management, staff and other partners who collectively have demonstrated a commitment to greater efficiency, quality service and the overall development of the Group over the past year. We will continue to strengthen our teams through training and development in the areas of their competencies while encouraging the camaraderie we continue to see growing among our employees. Our core belief in God and solid values are what sustain us. We continue to look to the Lord for guidance as we strive to provide efficient service with a commitment to truth, fairness and the building of goodwill among all our stakeholders. Christopher Levy - President and CEO

51 CORPORATE SOCIAL RESPONSIBILITY PUBLIC RELATIONS Our team has worked assiduously to ensure that our core values are represented before the various groups with whom we interact. Generally, we have experienced positive coverage in the media and have maintained open relationships with the various media houses to ensure transparency in our operations. We also took the opportunity just before the close of the operating year to showcase our President on the fresh new series Conversations in the Kitchen. We enjoyed watching President Christopher Levy interact with Chef Host Charles Mattocks as he demonstrated his flair for cuisine to the chef alongside his daughters and son. He also shared a heart warming interview alongside wife Sarah Levy which truly brought to life the standards and values he holds dear and by which he governs the Group. The Group also facilitated a series of tours in keeping with our goal of highlighting our core business. Invitations were extended to Governor General Sir Patrick Allen; PSOJ President, Dennis Chung; Chief Operating Officer, Yum Brands Inc. & President of KFC International, Roger Eaton; and Minister of Agriculture, Fisheries and Labour, Derrick Kellier among others. All our guests expressed glowing remarks regarding our operations, and in particular, Sir Patrick Allen who bestowed upon the Group a Certificate of Commendation for invaluable contribution to Jamaica s wholistic development. Shaped by truth, committed to fairness, driven to serve

52 CORPORATE SOCIAL RESPONSIBILITY continued JBG FAIR PLAY AWARDS The presented local journalists with the opportunity to earn the largest cash prize ever offered in Jamaica for outstanding work in the field of journalism. A combined prize of J$1,000,000 was shared among the top three entrants to the competition in addition to the prestigious JBG Fair Play Award of Excellence trophies. Arthur Hall and Ryon Jones of The Gleaner Company took home the winning trophy along with $500,000 for their entry entitled Inappropriate Sexual Education. The duo exposed the introduction of ageinappropraite sex education material in some of Jamaica s privately-run children s homes. The exposé created quite a stir among the Jamaican public resulting in a closer look into the practices of the group responsible for the issuing of said material. Chief Judge of the competition, Professor Hopeton Dunn, outlined the fact that a number of the investigative reports were among the top contenders for the awards and seemed pleased with the high standard of reporting in this area

53 COMMUNITY RELATIONS It is widely known that the lends significant support to our neighbouring communities in St. Catherine as we firmly believe in living good with those around us. Throughout the year we engaged in projects geared toward community development and upliftment such as our Back to School Initiative in McCook s Pen, refurbishing the Spring Village to Bushy Park roadway and our Annual Teachers Day Luncheon in St. Catherine to name a few. The Group also continues to play an active role in the advancement and care of Jamaica s youth with our involvement in programmes such as the I Believe Initiative and the Governor General s Awards for Excellence. We also partnered with Chain of Hope Jamaica and made a substantial donation of J$1,000,000 toward the completion of the Cardiac Unit at the Bustamante Children s Hospital. We remain devoted to the building up of Jamaica and Jamaicans and we continue to strive toward seeing our mission fulfilled in the building of goodwill

54 50 Students at Hi-Pro World Egg Day ABOVE: Students at Hi-Pro World Egg Day LEFT: Vaden Maragh, BDC Plant Manager presents Mrs. Esther Tyson with a gift after her address to the guests of the JBG Teacher s Day Luncheon. BELOW: Christopher Levy, President & CEO, Jamaica Broilers Group (right) shakes hands with Dr. Lambert Innis, Head of Anaesthesia and ICU & Director of Chain, Hope Jamaica. Looking on are (left to right) Dr. Claudette Cooke, Vice President HRD & PR, Jamaica Broilers Group; Anthony Wood, CEO & Director of Chain, Hope Jamaica; and Carla Newsam, Executive Director, Chain of Hope Jamaica. Chain of Hope Presentation

55 CORPORATE SOCIAL RESPONSIBILITY continued BEST DRESSED FUN IN THE SON Once again the Best Dressed Fun in the Son was a major success! We had our largest event to date with over 80,000 people in attendance. We continue to give the Lord thanks for this tremendous opportunity to invest in the spiritual wellbeing of the Jamaican people. For, the Best Dressed Fun in the Son goes to Haiti and we look forward to seeing lives transformed as the Lord moves in a mighty way in their nation

56 Carlene Davis (right) and Hezekiah Walker (below) minister to the crowd at the Best Dressed Fun in the Son

57 ENVIRONMENTAL STEWARDSHIP The Group continues to be prudent in managing its environmental resources and the impact of our activities on the communities in which we operate. The conservation and effective management of water resources, energy, fuel, raw and packaging materials have resulted in commendable operational efficiencies. These efficiencies have not only benefitted our Company, but also our customers and other stakeholders. With the installation of a water recycling system at the Best Dressed Chicken Processing Plant we were able to reduce water consumption by 9%. Furthermore, to minimize our environmental footprint, we strengthened our waste management program by diverting more solid waste from the nation s disposal sites as we increased our reuse and reduction efforts. It was another rewarding year for our flagship operations in which the Best Dressed Chicken Processing Plant retained its ISO Environmental Management System certification. We remain proud of our ISO certification since first obtaining it in 2007, as it demonstrates our commitment to best practices and operational decisions that show our environmental stewardship. Our environmental due diligence has been recognized by the Inter-American Investment Corporation (IIC) in annual environmental reports, as well as our processes which are subject to rigorous scrutiny by corporate auditors as well as the registrar of our environmental management system. We will continue the maintenance of Environmental Management Programs at all our facilities and the ongoing monitoring and reporting of our environmental performance in compliance with current legislation

58 SHAREHOLDING OF DIRECTORS & CONNECTED PERSONS For purposes of compliance with Rule 407 of the Jamaica Stock Exchange Rules, details of stockholdings of Directors and Senior Management and their connected persons as at 2 MAY are set out hereunder: DIRECTORS SHAREHOLDING CONNECTED PERSONS SHAREHOLDING Robert E. Levy Chairman 616,000 Robert E. Levy / Judy Levy Portland Corporation Ltd. The Robert Levy Family Foundation Phillip E. Levy The Phillip Levy Family Foundation 6,907,893 8,805, ,412, ,000 35,314,975 Christopher Levy President & Chief Executive Officer Executive Director 2,731,316 Christopher Levy / Sarah Levy 11,378,062 R. Danny Williams, Director Emeritus Nil R. Danny Williams / Shirley Williams Ravers Limited Nil 9,873,332 Claudette Cooke Vice President, Human Resource Development & Public Relations Executive Director Nil Claudette Cooke / Richard Cooke Richard Cooke Richard Cooke / Claudette Cooke Richard Cooke / Claudette Cooke / Ryan Cooke 7,293,905 9,318 7, Ian Parsard Senior Vice President, Finance Executive Director Nil Ian Parsard / Karen Parsard Karen Parsard / Peter-John Parsard 2,014,420 5,250 Trevor Dewdney Director 53,333 Trevor Dewdney Jr. Trevor Dewdney / Gloria Dewdney Don-Pierre Dewdney 9,318 9,318 19,078 Aubyn Hill Director 6,103,934 Malcolm McDonald Director Nil Omar Azan Director Nil Gregory B. Shirley Director 916,871 Gregory B. Shirley / Susan Shirley 4,895,990 Barrington Pryce Director Nil Barrington Pryce / Nadine Pryce Vivienne Pryce /Nikkiesha Pryce 74,548 21,432 Edward Barber Director Nil

59 SHAREHOLDING OF SENIOR MANAGEMENT & CONNECTED PERSONS SENIOR MANAGEMENT SHAREHOLDING CONNECTED PERSONS SHAREHOLDING Peter DePass Nil Donald Patterson 677,332 Donald Patterson/ Irenia Patterson Dayne Patterson Conley Salmon Nil Conley Salmon / Juliet Salmon Christopher McClure / Angela McClure / Juliet Salmon 4,006, ,383,529 20,000 Stephen Levy Nil Stephen Levy/Michka-Mae Levy 177,000 Judy Baugh Nil Dorothy Jaggan / Eric Jaggan 354,066 John Carberry 619, LARGEST ORDINARY STOCKHOLDERS The Holdings of those persons owning the ten (10) largest blocks of stock units as at 02 MAY are set out hereunder: SHAREHOLDER SHAREHOLDING Jamaica Broilers Trust (JBT) 178,968,409 The Robert Levy Family Foundation 100,412,389 Halcyon Limited 60,314,945 National Insurance Fund 56,745,762 SJIML A/C ,545,488 The Arrol Trust 44,411,830 The Philip Levy Family Foundation 35,314,975 Sagicor Pooled Equity Fund 29,486,394 NCB Insurance Co. Ltd. WT109 28,487,667 JCSD Trustee Services Ltd.- Sigma Optima 20,000,000 PETER A. DePASS Company Secretary May 2,

60 DIRECTORS & SENIOR MANAGEMENT DIRECTORS Robert E. Levy, C.D., Hon. LL.D., M.A. Chairman Christopher E. Levy, MBA President & Chief Executive Officer Executive Director Hon. R. Danvers Williams, O.J., C.D., Hon. LL.D., J.P. Director Emeritus Ian S. Parsard, MBA Senior Vice President, Finance Executive Director Claudette D. Cooke, Ed.D., CMT CPC, CCRC Vice President, Human Resource Development & Public Relations Executive Director Trevor D. Dewdney, D.V.M. Director Aubyn Hill, MBA Director Omar Azan Director Barrington A. Pryce Director SENIOR MANAGEMENT Christopher E. Levy, MBA President & Chief Executive Officer Ian S. Parsard, MBA Senior Vice President, Finance Claudette D. Cooke, Ed.D., CMT CPC, CCRC Vice President, Human Resource Development & Public Relations Donald A. Patterson, MBA, FCA Vice President, Accounting & Information Systems Conley N. Salmon Vice President, Marketing Feeds & Agricultural Supplies Stephen D. E. Levy, MBA President, Wincorp International Inc. Judy Baugh, MSc Asst. Vice President, Procurement John Carberry, MSc, MBA, PMP Asst. Vice President, Energy Gregory Shirley, MBA (Hons) Director Edward Barber, B. Acy, CPA Director COMPANY SECRETARY Peter A. DePass Attorney-at-Law

61 OPERATING DIVISIONS & SUBSIDIARIES JAMAICA BROILERS GROUP LIMITED Group Head Office Content, McCook s Pen St. Catherine Jamaica, West Indies Tel: Fax: Website: DIVISIONS BEST DRESSED CHICKEN PROCESSING PLANT & BEST DRESSED FURTHER PROCESSING FACILITY Spring Village, St. Catherine Tel: Fax: SUBSIDIARIES LOCAL EAL/ERI CO-GENERATION PARTNERS, LP Content, McCook s Pen St. Catherine Tel: Fax: JB ETHANOL LIMITED Port Esquivel, Old Harbour St. Catherine Tel: Fax: JAMAICA POULTRY BREEDERS LIMITED Caentabert, P.O., Box 27 Claremont, St. Ann Tel: Fax: BEST DRESSED FEED MILL Freetown, P.O. Box 24 Old Harbour P.O., St. Catherine Tel: Fax: BEST DRESSED FOODS Spring Village St. Catherine Tel: Fax: Toll Free: BUY BDF1 HI-PRO/ACE FARM & GARDEN SUPERCENTRE P.O. Box 886 White Marl, St. Catherine Tel: Fax: JAMAICA EGG SERVICES White Marl. St. Catherine Tel: Fax: SUBSIDIARIES OVERSEAS ATLANTIC UNITED INSURANCE CO. LTD. 20 Micoud Street Castries, St. Lucia ERI SERVICES (ST. LUCIA) LIMITED 20 Micoud Street Castries, St. Lucia HAITI BROILERS S.A. Lafiteau, Port Au Prince Mailing Address: Building #47 Parc Industriel Sonapi, Port Au Prince Haiti INTERNATIONAL POULTRY BREEDERS (GEORGIA) 1235 Perry Batts Road Norman Park, Georgia Tel: Fax: INTERNATIONAL POULTRY BREEDERS (ARKANSAS) 660 Niven Road Rison, Arkansas Tel: Fax: WINCORP INTERNATIONAL INC NW 116 Way, Suite 14 Medley, FL Tel: (305) Fax: (305)

62 ADVISORS AUDITORS PricewaterhouseCoopers Scotiabank Centre Corner Duke & Port Royal Streets P.O. Box 372 Kingston BANKERS EXIM Bank Jamaica First Caribbean International Bank Bank of Nova Scotia Jamaica Limited Inter-American Investment Corporation National Commercial Bank Jamaica Limited Sagicor Investments Jamaica Limited Royal Bank of Canada Citibank N.A. ATTORNEY-AT-LAW Peter A. DePass Attorney-at-Law Old Hope Road Kingston 6 First Caribbean International Bank REGISTRAR & SECRETARIAL AGENTS PwC Corporate Services (Jamaica) Scotiabank Centre Corner Duke & Port Royal Streets Kingston CONSULTANTS KPMG The Victoria Mutual Building 6 Duke Street Kingston

63 AUDITED ACCOUNTS 60 Independent Auditor s Report to The Members STATUTORY FINANCIAL STATEMENTS 62 Group Statement of Comprehensive Income 63 Group Balance Sheet 64 Group Statement of Changes in Stockholders Equity 65 Group Statement of Cash Flows 67 Company Statement of Comprehensive Income 68 Company Balance Sheet 69 Company Statement of Changes in Stockholders Equity 70 Company Statement of Cash Flows 74 Notes to the Financial Statements

64 Independent Auditors Report Independent Auditor s Report To the Members of Limited Report on the Consolidated and Company Stand-Alone Financial Statements We have audited the accompanying consolidated financial statements of Limited and its subsidiaries, set out on pages 60 to 142, which comprise the consolidated balance sheet as at, and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information, and the accompanying financial statements of Limited standing alone, which comprise the balance sheet as at, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Consolidated and Company Stand-Alone Financial Statements Management is responsible for the preparation of consolidated and company stand-alone financial statements that give a true and fair view in accordance with International Financial Reporting Standards and with the requirements of the Jamaican Companies Act, and for such internal control as management determines is necessary to enable the preparation of consolidated and company stand-alone 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 consolidated and company stand-alone 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 consolidated and company stand-alone financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and company stand-alone financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated and company stand-alone 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 consolidated and company stand-alone 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 management, as well as evaluating the overall presentation of the consolidated and company stand-alone financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion

65 Members of Limited Independent Auditor s Report Page 2 Opinion In our opinion, the consolidated financial statements Limited and its subsidiaries, and the financial statements of Limited standing alone give a true and fair view of the financial position of Limited and its subsidiaries and the Jamaica Broilers Group Limited standing aloneas at, and of their financial performance and cash flows for the year then ended, so far as concerns the members of Limited, in accordance with International Financial Reporting Standards and the requirements of the Jamaican Companies Act. Report on Other Legal and Regulatory Requirements As required by 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, so far as appears from our examination of those records, and the accompanying financial statements are in agreement therewith and give the information required by the Jamaican Companies Act, in the manner so required. Chartered Accountants 3 July Kingston, Jamaica

66 Limited Group Statement of Comprehensive Income Year ended Note Restated Revenue 34,570,050 30,851,350 Cost of sales (26,548,665) (24,343,646) Gross Profit 8,021,385 6,507,704 Other income/gains 6 174, ,304 Distribution costs (1,033,495) (863,079) Administration and other expenses (5,041,235) (4,482,845) Operating Profit 2,120,772 1,365,084 Finance income 9 145, ,088 Finance costs 9 (704,701) (592,076) Profit before Taxation 1,561,852 1,073,096 Taxation 10 (552,198) (153,987) Net Profit 1,009, ,109 Other Comprehensive Income, net of taxes - Item that will not be reclassified to profit or loss - Re-measurements of post-employment/pension benefits -, net of taxes (112,225) (103,750) Item that will be reclassified to profit or loss - Exchange differences on translating foreign operations 155, ,800 Total other comprehensive income 43, ,050 Total Comprehensive Income 1,053,053 1,133,159 Net Profit Attributable to: Stockholders of the company 11 1,036, ,283 Non-controlling interests 17 (26,514) (38,174) Total Comprehensive Income Attributable to: 1,009, ,109 Stockholders of the company 1,078,675 1,167,079 Non-controlling interests 17 (25,622) (33,920) 1,053,053 1,133,159 Cents Cents Earnings per Stock Unit

67 Limited Group Balance Sheet Note Restated Restated 27 April 2013 Non-Current Assets Property, plant and equipment 13 9,939,598 9,395,304 8,308,510 Intangible assets , , ,702 Investment property 15 23,315 58,098 58,988 Investments 16 68,749 65,669 60,289 Deferred income taxes 18-14,510 16,643 Post-employment benefit assets ,300 Affiliate 30 18, ,018 86,004 10,940,947 10,587,615 8,698,436 Current Assets Inventories 20 3,948,883 3,693,396 2,964,774 Biological assets 21 2,569,781 2,267,869 1,344,672 Receivables 22 2,789,062 2,699,011 2,127,522 Taxation recoverable 18,447 4,057 3,655 Financial assets at fair value through profit or loss , , ,048 Cash and short term investments 24 1,828, ,757 1,511,999 11,627,101 9,771,136 8,693,670 Current Liabilities Payables 25 3,666,685 2,825,867 1,879,759 Taxation payable 463, , ,024 Borrowings 27 2,763,024 2,635,849 2,202,134 6,893,195 5,617,239 4,197,917 Net Current Assets 4,733,906 4,153,897 4,495,753 15,674,853 14,741,512 13,194,189 Stockholders Equity Share capital , , ,137 Capital reserve 29 1,850,181 1,746,374 1,432,828 Retained earnings 8,816,721 8,045,730 7,384,081 11,432,039 10,557,241 9,582,046 Non-controlling interests 17 (35,625) (36,023) (55,877) 11,396,414 10,521,218 9,526,169 Non-Current Liabilities Shareholders loan payable ,643 Borrowings 27 3,591,907 3,568,071 3,241,562 Deferred income taxes , , ,715 Pension scheme benefit liabilities 19 94, ,900 - Post-employment benefit obligations 19 24,800 15,500 15,100 15,674,853 14,741,512 13,194,189 Approved for issue by the Board of Directors on 3 July and signed on its behalf by: Robert E. Levy Chairman Christopher Levy Director

68 Limited Group Statement of Changes in Stockholders Equity Year ended Note Attributable to the Company s Stockholders Number of Shares Share Capital Capital Reserve Retained Earnings Noncontrolling Interests Total Equity 000 Balance at 27 April ,199, ,137 1,432,828 7,384,081 (55,877) 9,526,169 Remeasurements of pension asset/obligation, net of taxes (103,750) - (103,750) Exchange differences on translating foreign operations ,546-4, ,800 Total other comprehensive income ,546 (103,750) 4, ,050 Net profit ,283 (38,174) 919,109 Total comprehensive income , ,533 (33,920) 1,133,159 Dividends (191,884) - (191,884) Additional investment/loan conversion ,774 53,774 Total transactions with owners (191,884) 53,774 (138,110) Movement during the year , ,649 19, ,049 Balance at 1,199, ,137 1,746,374 8,045,730 (36,023) 10,521,218 Remeasurements of pension asset/obligation, net of taxes (112,225) - (112,225) Exchange differences on translating foreign operations , ,624 Total other comprehensive income ,732 (112,225) ,399 Net profit ,036,168 (26,514) 1,009,654 Total comprehensive income , ,943 (25,622) 1,053,053 Dividends (203,877) - (203,877) Additional investment ,020 26,020 Transfer from capital reserves (50,925) 50, Total transactions with owners - - (50,925) (152,952) 26,020 (177,857) Movement during the year , , ,196 Balance at 1,199, ,137 1,850,181 8,816,721 (35,625) 11,396,

69 Limited Group Statement of Cash Flows Year ended Cash Flows from Operating Activities Note Net profit 1,009, ,109 Adjustments for: Depreciation , ,509 Amortisation 14 90,517 70,209 Property, plant and equipment write-off 13 6,314 8,332 Property, plant and equipment adjustment 13 (2,741) - Loss/(gain) on disposal of property, plant and equipment 6 5,702 (18,346) Loss on disposal of intangible assets 55 - Loss on disposal of subsidiaries 33 1,323 - Investment write-off 3,566 - Impairment of investment 31,217 - Fair value loss on investment property Fair value loss/(gain) on financial assets at fair value through profit or loss 6 28,248 (3,227) Changes in post-employment benefits (150,800) 30,400 Taxation expense , ,987 Interest income 9 (23,715) (18,368) Unrealised foreign exchange losses 60,567 11,069 Interest expense 9 664, ,333 Changes in operating assets and liabilities: 3,008,644 2,246,897 Inventories (264,354) (708,622) Biological assets (354,912) (450,425) Receivables (22,489) (463,276) Payables 761, ,002 Financial assets at fair value through profit or loss (64,684) 308,229 Translation gain on working capital of foreign subsidiaries (66,382) (161,495) 2,997,210 1,547,310 Taxation paid (195,420) (131,195) Cash provided by operating activities 2,801,790 1,416,

70 Limited Group Statement of Cash Flows (Continued) Year ended Note Cash Flows from Operating Activities (Page 4) 2,801,790 1,416,115 Cash Flows from Investing Activities Acquisition of subsidiaries, net of cash acquired 32 - (1,292,941) Purchase of property, plant and equipment 13 (1,060,948) (1,131,891) Proceeds from disposal of property, plant and equipment 8,094 36,208 Purchase of intangible assets 14 (3,615) (4,726) Loan repayments received 6,335 - Proceeds from disposal of subsidiaries 33 88,103 - Interest received 23,715 18,368 Cash used in investing activities (938,316) (2,374,982) Cash Flows from Financing Activities Long term loans repaid (1,342,756) (1,918,794) Long term loans received 1,455,094 2,679,839 Additional investments from non-controlling interest 17 26,020 10,131 Interest paid (665,643) (468,138) Dividends paid (203,877) (191,884) Cash (used in)/provided by financing activities (731,162) 111,154 Effect of changes in exchange rates on cash and cash equivalents 21,617 36,554 Increase/(decrease) in cash and cash equivalents 1,153,929 (811,159) Cash and cash equivalents at beginning of year 514,628 1,325,787 CASH AND CASH EQUIVALENTS AT END OF YEAR 24 1,668, ,628 Non-cash additions during the year amounted to $8,867,000. These amounts were transferred from inventory

71 Limited Company Statement of Comprehensive Income Year ended Restated Note Revenue 26,732,162 25,286,157 Cost of sales (21,306,394) (20,650,066) Gross Profit 5,425,768 4,636,091 Other income/gains 6 1,469, ,846 Distribution costs (806,177) (621,233) Administration and other expenses (3,578,088) (3,454,412) Operating Profit 2,511,117 1,493,292 Finance income 9 270, ,289 Finance costs 9 (558,023) (529,334) Profit before Taxation 2,223,123 1,367,247 Taxation 10 (291,648) (61,186) Net Profit 1,931,475 1,306,061 Other Comprehensive Income, net of taxes - Item that will not be reclassified to profit or loss - Re-measurements of post-employment benefits (100,275) (99,450) TOTAL COMPREHENSIVE INCOME 1,831,200 1,206,

72 Limited Company Balance Sheet Note Restated Restated 27 April 2013 Non-Current Assets Property, plant and equipment 13 3,829,523 3,503,655 2,806,903 Intangible asset 14 90,066 96,023 99,576 Investments 16 7,136 10,702 10,702 Interest in subsidiaries 888, , ,612 Affiliate 30 18, ,018 86,004 Loans receivable 30 2,412,668 2,585,473 1,908,014 Post-employment benefit assets ,500 7,246,192 7,239,331 5,380,311 Current Assets Inventories 20 3,434,202 3,318,526 2,540,585 Biological assets , , ,075 Receivables 22 1,782,235 1,834,903 1,642,002 Subsidiaries 30 3,148,840 2,721,524 2,641,964 Taxation recoverable 14,792 1, Cash and short term investments 24 1,599, ,483 1,040,529 10,479,569 8,845,044 8,332,420 Current Liabilities Payables 25 2,977,456 2,288,846 1,504,673 Taxation payable 194,828 96,763 89,529 Subsidiaries , , ,110 Borrowings 27 2,102,727 2,128,859 1,925,996 5,564,149 5,264,336 4,307,308 Net Current Assets 4,915,420 3,580,708 4,025,112 12,161,612 10,820,039 9,405,423 Stockholders Equity Share capital , , ,137 Capital reserve , , ,201 Retained earnings 7,772,069 6,144,746 5,130,019 8,670,407 7,043,084 6,028,357 Non-Current Liabilities Borrowings 27 3,085,651 3,405,805 3,038,560 Deferred income taxes , , ,506 Pension scheme benefit liabilities 19 91, ,200 - Post-employment benefit obligations 19 23,400 14,300 14,000 12,161,612 10,820,039 9,405,423 Approved for issue by the Board of Directors on 3 July and signed on its behalf by: Robert E. Levy Chairman Christopher Levy Director

73 Limited Company Statement of Changes in Stockholders Equity Year ended Number of Shares Share Capital Capital Reserve Retained Earnings Total Note 000 Balance at 27 April ,199, , ,201 5,130,019 6,028,357 Remeasurement of pension asset/obligation, net of taxes (99,450) (99,450) Total other comprehensive income (99,450) (99,450) Net profit, as restated ,306,061 1,306,061 Total comprehensive income ,206,611 1,206,611 Dividends (191,884) (191,884) Movement during the year ,014,727 1,014,727 Balance at 1,199, , ,201 6,144,746 7,043,084 Remeasurement of pension asset/obligation, net of taxes (100,275) (100,275) Total other comprehensive income (100,275) (100,275) Net profit ,931,475 1,931,475 Total comprehensive income ,831,200 1,831,200 Dividends (203,877) (203,877) Movement during the year ,627,323 1,627,323 Balance at 1,199, , ,201 7,772,069 8,670,

74 Limited Company Statement of Cash Flows Year ended Cash Flows from Operating Activities Note Restated Net profit 1,931,475 1,306,061 Adjustments for: Depreciation , ,315 Amortisation 14 22,154 19,707 Property, plant and equipment write off 6,314 8,332 Property, plant and equipment adjustment (2,741) - Gain on disposal of property, plant and equipment 6 (561) (3,561) Investment write off 3,566 - Changes in post-employment benefits (134,700) 27,400 Taxation expense ,648 61,186 Interest income 6,9 (146,209) (121,568) Dividend income 6 (1,224,120) (855,458) Unrealised foreign exchange gains (132,251) (167,983) Interest expense 9 545, ,712 Changes in operating assets and liabilities: 1,447, ,143 Inventories (124,543) (777,941) Biological assets 128,807 (162,120) Receivables 154,152 (185,783) Subsidiaries (625,495) (95,946) Payables 609, ,954 1,590, ,307 Taxation paid (138,133) (90,806) Cash provided by operating activities 1,451, ,

75 Limited Company Statement of Cash Flows (Continued) Year ended Note Restated Cash Flows from Operating Activities (Page 9) 1,451, ,501 Cash Flows from Investing Activities Acquisition of subsidiary 32 - (111,160) Disposal of subsidiaries 32,344 - Loan repayments received 123, ,587 Loans issued - (1,139,688) Purchase of property, plant and equipment 13 (624,373) (972,189) Proceeds from disposal of property, plant and equipment 3,917 3,561 Purchase of intangible asset 14 (3,615) (559) Interest received 131, ,568 Dividend received 1,224, ,458 Cash provided by/(used in) investing activities 887,533 (943,422) Cash Flows from Financing Activities Long term loans repaid (1,017,737) (1,661,856) Long term loans received 675,000 2,210,000 Interest paid (551,275) (479,517) Dividends paid (203,877) (191,884) Cash used in financing activities (1,097,889) (123,257) Effect of changes in exchange rates on cash and cash equivalents 21,617 37,984 Increase/(decrease) in cash and cash equivalents 1,263,189 (673,194) Cash and cash equivalents at beginning of year 183, ,548 CASH AND CASH EQUIVALENTS AT END OF YEAR 24 1,446, ,354 Non-cash additions during the year amounted to $8,867,000. These amounts were transferred from inventory

76 Limited Notes to the Financial Statements 1. Identification Limited (the company) is a company limited by shares, incorporated and domiciled in Jamaica. Its registered office is located at Content, McCooks Pen, St. Catherine. The company was incorporated in The principal activities of the company and its subsidiaries include the production and distribution of poultry products, animal feeds and agricultural items (Note 2(b)). In addition, one of the company s subsidiaries, JB Ethanol Limited contractually processes fuel products on behalf of customers for a fee. The company s subsidiaries together with the company are referred to as the Group. The company is listed on the Jamaica Stock Exchange. 2. Summary of Significant Accounting Policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation The consolidated financial statements of Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) under the historical cost convention, as modified by the revaluation of biological assets and certain financial assets. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group s accounting policies. Although these estimates are based on management s best knowledge of current events and action, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. Certain new standards, interpretations and amendments to existing standards have been published that became effective during the current financial year. The Group has assessed the relevance of all such new standards, interpretations and amendments and has put into effect the following IFRS, which are immediately relevant to its operations. Amendment to IAS 32, Financial instruments: Presentation (effective for annual periods beginning on or after 1 January ) on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant effect on the group financial statements. Amendments to IAS 36, Impairment of assets, (effective for annual periods beginning on or after 1 January ) on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13. The adoption of this amendment did not have a significant impact on the financial statements. IFRIC 21, Levies, (effective for annual periods beginning on or after 1 January ) sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 Provisions. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material

77 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group The Group has concluded that the following standards which are published but not yet effective are relevant to its operations and will impact the Group s accounting policies and financial disclosures as discussed below. These standards and amendments to existing standards are mandatory for the Group s accounting periods beginning after or later periods, but the Group has not early adopted them: Amendment to IAS 1, Disclosure initiative. These amendments clarify the existing requirements of IAS 1 and provide additional assistance to apply judgement when meeting the presentation and disclosure requirements in IFRS. The amendment does not affect recognition and measurement and is effective for accounting periods beginning on or after 1 January The amendment is not expected to have a significant impact on the financial statements. IFRS 9, Financial Instruments (effective for annual periods beginning on or after 1 January 2018). This standard specifies how an entity should classify and measure financial instruments, including some hybrid contracts. It requires all financial assets to be classified on the basis of the entity s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset; initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, particular transaction costs; and subsequently measured at amortised cost or fair value. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of IAS 39. They apply a consistent approach to classifying financial assets and replace the four categories of financial assets in IAS 39, each of which had its own classification criteria. For financial liabilities, the standard retains most of the IAS 39 requirements. 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. There has been no significant change in the recognition and measurement of financial liabilities carried at amortised cost from that obtained under IAS 39.While adoption of IFRS 9 is mandatory from 1 January 2018, earlier adoption is permitted. The Group is considering the implications of the standard, the impact on the Group and the timing of its adoption. IFRS 15, 'Revenue from Contracts with Customers'. The IASB has published its new revenue standard, IFRS 15 'Revenue from Contracts with Customers'. The U.S. Financial Accounting Standards Board (FASB) has concurrently published its equivalent revenue standard which is the result of a convergence project between the two Boards. IFRS 15 applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. It specifies how and when an entity will recognise revenue. It also requires entities to provide more informative, relevant disclosures. The standard supersedes IAS 18, 'Revenue', IAS 11, 'Construction Contracts' and a number of revenue-related interpretations. Application of the standard is mandatory for accounting periods beginning on or after 1 January The Group is assessing the impact of future adoption of the standard. IAS 19 (Amendment) Defined Benefit Plans: Employee Contributions, (effective for annual periods beginning 1 July ). The amendment allows entities to recognise employee contributions as a reduction in the service cost in the period in which the related employee service is rendered, instead of attributing the contributions to the periods of service, if the amount of the employee contributions is independent of the number of years of service. The Group will apply the standard effective but does not expect any significant impact from its adoption

78 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group (Continued) IASB Annual Improvements - The IASB annual improvements project for the cycle resulted in amendments to the following standards which may be relevant to the Group s operations. These amendments are effective for the accounting periods beginning on or after 1 July. The Group is assessing the impact of future adoption of the amendments. IFRS 8, Operating Segments. The standard is amended to require disclosure of the judgements made by management in aggregating operating segments. This includes a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The standard is further amended to require a reconciliation of segment assets to the entity s assets when segment assets are reported. IFRS 13, Fair value measurements. When IFRS 13 was published, certain paragraphs of IAS 39 were deleted as consequential amendments. This led to a concern that entities no longer had the ability to measure short-term receivables and payables at invoice amounts where the impact of not discounting is immaterial. The IASB has amended the basis for conclusions of IFRS 13 to clarify that it did not intend to remove the ability to measure short-term receivables and payables at invoice amounts in such cases. IAS 16, Property, plant and equipment and IAS 38, Intangible assets. Both standards are amended to clarify how the gross carrying amount and the accumulated depreciation are treated where an entity uses the revaluation model. The carrying amount of the asset is to be restated to the revalued amount. The split between gross carrying amount and accumulated depreciation is treated in one of two ways. The gross carrying amount may restated in a manner consistent with the revaluation of the carrying amount, and the accumulated depreciation is adjusted to equal the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. Alternatively, the accumulated depreciation may be eliminated against the gross carrying amount of the asset. IASB Annual Improvements - The IASB annual improvements project for the cycle resulted in amendments to the following standards which may be relevant to the Group s operations. These amendments are effective for the accounting periods beginning on or after 1 January The Group is assessing the impact of future adoption of the amendments. IFRS 7, Financial instruments: Disclosures. The amendment clarifies, among other things, that the additional disclosure required by the amendments to IFRS 7, Disclosure Offsetting financial assets and financial liabilities is not specifically required for all interim periods, unless required by IAS 34. IAS 19 (Revised), Employee benefits. The amendment clarifies that, when determining the discount rate for post-employment benefit obligations, it is the currency that the liabilities are denominated in that is important, and not the country where they arise. The assessment of whether there is a deep market in high-quality corporate bonds or not is based on corporate bonds in that currency, and not corporate bonds in a particular country. Similarly, where there is no deep market in high-quality corporate bonds in that currency, government bonds in the relevant currency should be used

79 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group (Continued) IASB Annual Improvements - IAS 34, Interim financial reporting. The amendment clarifies what is meant by the reference in the standard to information disclosed elsewhere in the interim financial report. The amendment further amends IAS 34 to require a cross-reference from the interim financial statements to the location of that information. There are no other IFRS or IFRIC interpretations that are published but not yet effective that would be expected to have an impact on the accounting policies or financial disclosures of the Group. (b) Consolidation (i) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group 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 group controls another entity. The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Group s voting rights relative to the size and dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies, etc. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree 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. If a business combination is achieved in stages, the acquisition date carrying value of the acquirer s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity

80 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (b) Consolidation (continued) (i) Subsidiaries (continued) Goodwill is recorded at cost and represents the excess of the value of consideration paid over the Group s interest in net fair value of the identifiable assets, liabilities and contingent liabilities of the acquire and the fair value of the non-controlling interest in the acquire. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment. Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company 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 Group. Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment

81 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (b) Consolidation (continued) (i) Subsidiaries (continued) The consolidated financial statements include the financial statements of the company and its operating divisions and subsidiaries as follows: Resident in Jamaica: Operating divisions Best Dressed Chicken (including Best Dressed Feed Mill and Best Dressed Further Processing Facility) Best Dressed Foods Hi-Pro Ace Principal Activities % Ownership by Company at % Ownership by Group at Poultry and pullet production and feed milling, processing and sale of salted products/pickled products Distributors of chicken, beef, fish and imported of protein products Feed sales, suppliers of farming equipment and supplies Subsidiaries Best Dressed Chicken Limited Non-trading Content Agricultural Products Limited Property rental Energy Associates Limited and its subsidiary: Holding and investment company CE Jamaica Inc. Non- trading EAL/ERI Co-generation Partners, LP Generation of electricity ERI Jam, LLC (subsidiary of ERI Services (St. Lucia) Limited) Non-trading Hamilton Smoke House Limited Non-trading JB Ethanol Limited (subsidiary of ERI Services (St. Lucia) Limited) Fuel processing Jabexco Limited Non-trading Jamaica Eggs Limited Non-trading Jamaica Poultry Breeders Limited Fertile egg production and cattle rearing for sale Levy Industries Limited Property rental Master Blend Feeds Limited Property rental JB. Trading Limited Non-trading Trafalgar Agriculture Development Limited Non-trading S.G Developments Limited Non-trading Resident outside of Jamaica: Atlantic United Insurance Company Limited, St.Lucia Captive insurance ERI Services (St. Lucia) Limited, St. Lucia Holding company International Poultry Breeders, Inc, Arkansas USA and its subsidiaries Holding company England Packing Company Inc Arkansas. USA Holding company England Transport Company Inc, USA Transportation England Farms Inc. USA Fertile egg production Haiti Broilers, S.A. and its subsidiary: Production and sale of broilers, layer pullets, table eggs and animal feeds T&S Rice S.A., Haiti Lessee of production facilities in Haiti - 68 Wincorp Air Services Limited, St.Lucia Aircraft ownership International Poultry Breeders LLC Georgia, U.S.A. Fertile egg production Jabexco Cayman Limited, Cayman Non-trading Wincorp International, Inc., U.S.A. and its subsidiary: Procurers and distributors of agricultural and industrial supplies Consolidated Freight and Shipping, Inc. Ocean freight consolidator

82 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (b) Consolidation (continued) (ii) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions, that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. (iii) Disposal of subsidiaries When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (iv) Changes in year During the year the Group disposed of two of its subsidiaries, Aquaculture Jamaica Limited and Aqualapia Limited (Note 33). (c) (d) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the President and Chief Executive Officer. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group s activities. Revenue is shown net of General Consumption Tax, returns, discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and specific criteria have been met in relation to the Group s activities as described below: Sales of goods Sales are recognised upon delivery of products, customer acceptance of the products and collectibility of the related receivables is reasonably assured. Sales of services Fees and commission income fees arising from tolling and insurances contracts are generally recognised on an accrual basis when the service has been provided. Dividend income Dividend income is recognised when the right to receive payment is established

83 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (d) Revenue recognition (continued) Interest income Interest income is recognised in profit or loss for all interest bearing instruments on an accrual basis using the effective yield method based on the actual purchase price. Interest income includes coupons earned on fixed income investments and accrued discount on other discounted instruments. (e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group 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 Jamaican dollars, which is the Group s presentation currency and the company s functional currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement in other income. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss, except when deferred in equity as gains or losses from qualifying cash flow hedging instruments. All foreign exchange gains and losses recognised in the profit or loss are presented net in the profit or loss within the corresponding item. Foreign exchange gains and losses on other comprehensive income items are presented in other comprehensive income within the corresponding item. Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in stockholders equity. Translation differences on non-monetary financial instruments, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial instruments, such as equities classified as available-for-sale financial assets, are included in the capital reserve in stockholders equity

84 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (e) Foreign currency translation (continued) (iii) Group companies The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) (b) (c) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and all resulting exchange differences are recognised in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income. (f) Income taxes Taxation expense in profit or loss comprises current and deferred tax charges. (i) Current taxation Current tax charges are based on taxable profit for the year, which differs from the profit before tax reported because it excludes items that are taxable or deductible in other years, and items that are never taxable or deductible. The Group s liability for current tax is calculated at tax rates that have been enacted at balance sheet date. (ii) Deferred taxation Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability settled. Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising from investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference will not reverse in the foreseeable future. The tax effects of income tax losses available for carry-forward are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised

85 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (g) Property, plant and equipment Property, plant and equipment are stated at historical cost, less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Land is carried at cost and is not depreciated. 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 Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. Depreciation is calculated on the straight line basis at such rates as will write off the carrying value of the assets over the period of their estimated useful lives. The expected useful lives are as follows: Freehold buildings Leasehold property Plant, machinery and equipment Furniture and fixtures Motor vehicles years Life of lease 4 33 years 10 years 3 5 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. 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 of property, plant and equipment are determined by comparing the proceeds with the carrying amount and are recognised in other income in profit or loss. Repairs and maintenance expenditure are charged to profit or loss during the financial period in which they are incurred

86 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (h) Intangible assets (i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group s share of the net identifiable assets of the acquired subsidiary at the acquisition date. Goodwill on acquisition of subsidiaries is included in intangible assets. Separately recognised goodwill is tested for impairment annually and carried at cost less accumulated impairment. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. An excess of the identifiable net assets acquired over the acquisition cost is treated as negative goodwill. Negative goodwill related to expected post-acquisition losses is taken to profit or loss during the period the future losses are recognised. Negative goodwill which does not relate to expected future losses is recognised as income immediately. For the purposes of impairment testing goodwill acquired in a business combination is assigned to cash generating units that is expected to benefit from the synergies of the combination. (ii) Computer software Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over the estimated useful life of ten years for software on a straight line basis. Amortisation is recognised in the profit or loss in administration and other expenses. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. (iii) Brands Brands are recorded at historical cost. They are acquired in a business combination and are recognised at the fair value at acquisition date. These costs have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight line method over their expected useful lives of 7 years. (iv) Customer relationships Customer relationships are recorded at cost and represent the value of the consideration paid to acquire customer contract and the related customer relationships. These costs are amortised over the estimated useful lives of the relationships, of 10 years. (v) Non-compete agreements Non-compete agreements are recorded at cost and represent the attributed consideration paid to acquire them. These costs are amortised over the estimated useful lives of the non-compete agreements which is between 2 to 10 years. (vi) Product formulation Product formulation are recorded at cost and represent the value of the consideration paid to have rights to the use of recipes and formulations. These costs are amortised over their estimated useful lives of 20 years

87 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (i) (j) Investment properties Investment properties are held for long-term rental yields and are not occupied by the Group. Investment properties are treated as long-term investments and are carried at deemed cost less accumulated depreciation. Freehold buildings are depreciated on the straight line basis over their expected useful lives of 60 years. Impairment of non-financial assets Property, plant and equipment and other non-current assets 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 carrying amount of the asset exceeds its recoverable amount, which is the greater of an asset s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (k) Financial assets The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. (i) Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated as fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Loans and receivables are classified as trade and other receivables in the balance sheet. (iii) Available-for sale financial assets Available-for-sale investments are non-derivative financial assets intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. Available-for-sale investments are initially recognised at fair value, which is the cash consideration including any transaction costs. Purchases and sales of available-for-sale financial assets are recognised at the trade date the date on which the Group commits the purchase or sell the asset. Loans and receivables are recognised when cash is advanced to the borrowers

88 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (k) Financial assets (continued) Subsequent to initial recognition at cost, financial assets at fair value through profit or loss and availablefor-sale financial assets are carried at fair value. Loans and receivables financial assets are carried at amortised cost using the effective interest method. Gains and losses arising from changes in the fair value of available-for-sale financial assets are recognised directly in other comprehensive income, until the financial asset is derecognised or impaired. At this time, the cumulative gain or loss previously recognised in other comprehensive income is recognised in profit or loss. However, interest calculated using the effective interest method and foreign currency gains and losses on monetary assets classified as available for sale are recognised in the profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group s right to receive payment is established. The fair values of quoted investments in active markets are based on current bid prices. Unquoted securities are recorded initially at cost. They are subsequently measured at fair value. Where fair value cannot be measured reliably they are measured at cost less impairment. Financial assets are derecognised when the right to received cash flows from the financial assets have expired or where the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when they are extinguished, that is, when the obligation is discharged, cancelled or expires. The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated cash flows of the financial asset or financial group of assets that can be reliably estimated. For loans and receivables category, the amount of the loss is measured as the difference between the asset s carrying value amount and the present value of estimated cash flows discounted at the financial asset s original effective interest rate. The carrying amount is reduced and the amount of the loss is recognised in the consolidated profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the consolidated profit or loss. For equity investments, a significant or prolonged decline in the fair value of the security below its costs is also evidence that the assets are impaired. If any such assets exists the cumulative loss is removed from the equity and recognised in the profit or loss. Impairment losses recognised in the consolidated profit or loss on equity instruments are not reversed through the profit or loss. Financial liabilities The Group s financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest method. These liabilities are classified as current and non-current liabilities. (l) Interest in subsidiaries Interests in subsidiaries are stated at cost

89 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (m) Employee benefits (i) Pension obligations The Group has a defined benefit plan; the assets of which are generally held in separate trusteeadministered funds. The pension obligations are determined by periodic actuarial calculations. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The asset or liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability. The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense, except where included in the cost of an asset, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes curtailment and settlements. Past-service costs are recognised immediately in income. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the profit or loss. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions of the defined benefit obligation are charged or credited to equity in other comprehensive income in the period in which they arise. An overseas subsidiary operates a defined contribution plan. The subsidiary s contributions are based primarily on employee participation. Once the contributions have been paid, the subsidiary has no further legal or constructive obligations. The contributions are recognized as employee benefit expense when they are due. (ii) Other post-employment benefits The Group also provides supplementary medical and life insurance benefits to qualifying employees upon retirement. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions are charged or credited to equity in other comprehensive income. These obligations are valued annually by independent qualified actuaries. (iii) Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits

90 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (m) Employee benefits (continued) (iii) Termination benefits (continued) The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to present value. (iv) Leave entitlements Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date. (v) Profit-sharing and performance incentives The Group recognises a liability and an expense for performance incentives and profit-sharing based on a formula that takes into consideration the profit before taxation after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation. (n) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less the cost of selling expenses. (o) Biological assets Biological assets include beef cattle, breeder flocks held for the production of hatching eggs, layer pullets being grown for sale to table egg farmers, layer pullets held for the production of table eggs, and broiler flocks at various stages of growth. There is an active market in Jamaica for beef cattle. No active markets exist for breeder flocks, layer pullets in grow out and broiler flocks at various stages of growth. Biological assets, except breeder flocks and pullets in production, are measured at fair value less cost to sell. Fair value is determined by reference to available market data. In the absence of market data, fair value is based on management s best estimate considering available data and benchmark statistics. Gains and losses arising from changes in fair values are recorded in profit or loss for the period in which they arise. Breeder flocks and pullets in production are capitalised. Breeder flocks and pullets in production are not sold and no active market exists for these birds. Other references to market prices such as market prices for similar assets are also not available. Valuation based on a discounted cash flow method is considered to be unreliable given the uncertainty with respect to mortality rates and production. Consequently, breeder flocks and pullets in production are measured at cost, less depreciation and impairment losses. Pullets in production are depreciated on a straight line basis over the production life cycle which is estimated to be one year on average Breeder flocks are depreciated over the production cycle which is estimated to be nine months on average based on the anticipated production output month to month

91 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (p) (q) (r) (s) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. 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 profit or loss in administration and other 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 in profit or loss. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand, short term deposits and investments with original maturity dates of ninety days or less, net of short term loans and bank overdrafts. Trade payables Trade payables are stated at cost. Borrowings and borrowing costs Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of these assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. (t) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, if it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. (u) Leases Leases of property, plant and equipment, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are recognised at the inception of the lease at the lower of the fair value of the leased asset or the present value of minimum lease payments. Each lease payment is allocated between the liability and interest charges so as to produce a constant rate of charge on the lease obligation. The interest element of the lease payments is charged to profit or loss over the lease period. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term

92 Limited Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (u) (v) Leases (continued) Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments under operating leases are charged to profit or loss on a straightline basis over the period of the lease. Dividends paid Dividends on ordinary shares are recognised in stockholders equity in the period in which they are approved by the company s stockholders. Dividends for the year that are declared after the balance sheet date are dealt with in the subsequent events note. 3. Financial Risk Management The Group s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group s overall risk management programme includes a focus on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. The Group s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice. The Board of Directors is ultimately responsible for the establishment and oversight of the Group s risk management framework. The Board approves principles for overall risk management. The Board has established functions/committees for managing and monitoring risks, as follows: (i) (ii) Treasury Function The Treasury function is responsible for managing the Group s assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the Group. The Treasury function identifies, evaluates and hedges financial risks in close co-operation with the Group s operating units. Audit Committee The Audit Committee oversees how management monitors compliance with the Group s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. The most important types of risk are credit risk, liquidity risk and market risk. Market risk includes currency risk, interest rate and other price risk. (a) Credit risk The Group takes on exposure to credit risk, which is the risk that its customers or counterparties will cause a financial loss for the Group by failing to discharge their contractual obligations. Credit exposures arise principally from the Group s receivables from customers and investment activities. The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to a single counterparty or groups of related counterparties

93 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (a) Credit risk (continued) Credit review process The Group has an established credit process which involves regular analysis of the ability of borrowers and other counterparties to meet repayment obligations. (i) Trade and other receivables The Group s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Customers of the Group include wholesalers, farm store and feed customers, and chicken farmers. There is a credit policy in place under which each wholesaler and feed customer is analysed individually for creditworthiness prior to the Group offering them a credit facility. Customers are assigned credit limits, which represent the maximum credit allowable. The Group has procedures in place to restrict customer orders if the orders will exceed their credit limits. Customers that fail to meet the Group s benchmark creditworthiness may transact with the Group on a prepayment basis. The credit quality of the customer is assessed, taking into account its financial position, past experience and other factors. The utilisation of credit limits is regularly monitored. Sales to farm store customers are settled in cash or by the use of major credit cards. JB Ethanol Limited contractually processes fuel products on behalf of customers for a fee; credit risk is managed by entering into contracts with reputable customers. The Group establishes a provision for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Impairment is assessed for each customer balance over 30 days. The Group s credit period on the sale of goods ranges from 7 to 30 days. The Group has provided fully for all receivables where collectibility is deemed doubtful. (ii) Investments The Group limits its exposure to credit risk by investing mainly in liquid securities, with counterparties that have high credit quality and Government of Jamaica securities. Accordingly, management does not expect any counterparty to fail to meet its obligations

94 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (a) Credit risk (continued) Ageing analysis of trade receivables that are past due but not impaired Trade receivables that are less than 30 days past due are not considered impaired. Trade receivables over 30 days overdue are considered for impairment assessment. As of, trade receivables of $457,046,000 ( - $554,478,000) and $286,866,000 ( - $244,041,000) for the Group and company, respectively, were past due for more than 30 days. The amount of the provision was $312,171,000 ( - $212,337,000) and $262,578,000 ( - $177,182,000) for the Group and company, respectively. The impairment recognised represents an estimate of incurred losses in respect of trade receivables. The main components of the provision for impairment are a specific loss component that relates to individually significant exposures, and a collective loss component based on the time value of money. The impaired receivables mainly relate to wholesalers who are in unexpected difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered. The Group The Company Past due 31 to 60 days 129, ,828 91, ,646 Past due 61 to 90 days 97, ,022 71,604 24,774 Past due over 91 days 230, , ,800 82, , , , ,041 Movement on the provision for impairment of trade receivables The movement on the provision for impairment of trade receivables was as follows: The Group The Company At beginning of year 212, , , ,062 Provision for receivables impairment 104,721 39,775 90,890 38,071 Receivables written off during the year as uncollectible (2,720) (4,783) (2,155) (2,101) Recoveries (3,339) (1,850) (3,339) (1,850) Translation 1,172 2, At end of year 312, , , ,

95 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (a) Credit risk (continued) Movement on the provision for impairment of trade receivables (continued) The creation and release of provision for impaired receivables have been included in expenses in profit or loss. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash. There are no significant financial assets other than those listed above that were individually impaired. Exposure to credit risk for trade receivables The following table summarises the Group s and company s credit exposure for trade receivables at their carrying amounts, as categorised by the customer sector: The Group The Company Supermarket chains 136, , , ,702 Wholesalers and retail distributors 612, , , ,118 Hotels 154, , , ,589 Farmers/farm stores 540, ,003 4,043 2,927 Other 978, , , ,128 2,423,703 2,049,552 1,544,504 1,365,464 Less: Provision for impairment (312,171) (212,337) (262,578) (177,182) 2,111,532 1,837,215 1,281,926 1,188,

96 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (a) Credit risk (continued) Exposure to credit risk for investments The following table summarises the Group s and company s credit exposure for investments at their carrying amounts, as categorised by issuer. The carrying amounts below represent the total for investments (adjusted for equity securities) included in financial assets at fair value through profit or loss in Note 23 and short term investments included in Note 24: The Group The Company Financial institutions 1,551, ,231 1,078,522 40,185 (b) Liquidity risk Liquidity risk is the risk that the Group may be unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Liquidity risk management process The Group s liquidity management process, as carried out within the Group and monitored by the Treasury function, includes: (i) (ii) (iii) (iv) Monitoring future cash flows and liquidity periodically. This incorporates an assessment of expected cash flows; Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow; Maintaining committed lines of credit; Managing the concentration and profile of debt maturities

97 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (b) Liquidity risk (continued) The matching and controlled mismatching of the maturities and interest rates of assets and liabilities are fundamental to the management of the Group. It is unusual for companies ever to be completely matched since business transacted is often of uncertain term and of different types. An unmatched position potentially enhances profitability, but can also increase the risk of loss. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to changes in interest rates and exchange rates. Financial liabilities cash flows The tables below summarise the maturity profile of the Group s and company s financial liabilities at and based on contractual undiscounted payments. Within 3 Months 4 to 12 Months The Group 2 to 5 Years Over 5 Years Total As at Payables 3,647, ,647,403 Borrowings 1,196,865 1,809,052 3,885, ,628 7,374,692 Total financial liabilities (contractual maturity dates) 4,844,268 1,809,052 3,885, ,628 11,022,095 Within 3 Months 4 to 12 Months The Group 2 to 5 Years Over 5 Years Total As at Payables 2,825, ,825,867 Borrowings 945,382 1,921,016 3,506, ,766 6,748,569 Total financial liabilities (contractual maturity dates) 3,771,249 1,921,016 3,506, ,766 9,574,

98 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (b) Liquidity risk (continued) Financial liabilities cash flows (continued) The Company Within 3 Months 3 to 12 Months 1 to 5 Years Over 5 Years Total As at Payables 2,927, ,927,939 Borrowings 1,027,028 1,264,005 3,400, ,217 6,010,810 Total financial liabilities (contractual maturity dates) 3,954,967 1,264,005 3,400, ,217 8,938,749 The Company Within 3 Months 3 to 12 Months 1 to 5 Years Over 5 Years Total As at Payables 2,288, ,288,846 Borrowings 919,320 1,681,751 3,456, ,622 6,397,573 Total financial liabilities (contractual maturity dates) 3,208,166 1,681,751 3,456, ,622 8,686,419 Assets available to meet liabilities and to cover financial liabilities include cash and short term investments

99 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (b) Liquidity risk (continued) Off-balance sheet items Contingent liabilities and commitments (a) (b) The company has issued a letter of comfort indicating its intention to provide financial support to its subsidiaries, International Poultry Breeders LLC, ERI Services (St. Lucia) Limited and Wincorp Air Services Limited. The company has guaranteed $400,000,000 ( - $686,963,000) and US$4,860,000 ( - US$3,860,000) in favour of various financial institutions for loans undertaken by the company and certain subsidiaries. (c) The Group has capital commitments authorised but not contracted for amounting to $92,592,000 ( - $190,249,000). (d) (e) JB Ethanol Limited, a subsidiary, has no guarantees at year end and US$3,500,000 for in favour of the company with Inter-American Investment Corporation. The Group has obligations under long term operating leases for premises. Future minimum lease payments under such commitments are as follows: The Group The Company Not later than 1 year 78,355 74,806 16,978 17,244 Later than 1 year and not later than 5 years 126, ,811-16,173 Later than 5 years 40,866 85, , ,182 16,978 33,417 (f) The Group is subject to various claims, disputes and legal proceedings, in the normal course of business. Provisions are made for such matters when in the opinion of management and its legal counsel, it is probable that a payment will be made by the Group and the amount can be reasonably estimated

100 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (c) Market risk The Group takes on exposure to market risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks mainly arise from changes in foreign currency exchange rates, interest rates and commodity prices. Market risk is monitored by the Group s Treasury function which carries out research and monitors the price movement of financial assets on the local and international markets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. There has been no change to the Group s exposure to market risk or the manner in which it manages and measures the risk. (i) Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group manages its foreign exchange risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. The Group further manages this risk by maximising foreign currency earnings and holding foreign currency balances. The Group has operations in two functional currencies, Jamaican dollar and United States dollar, which provide a natural hedge in currency risk. The Group s balance sheet at includes aggregate net foreign liabilities of approximately US$6,890,000 ( US$13,823,000) in respect of transactions arising in the ordinary course of business. The company s balance sheet at includes aggregate net foreign assets of approximately US$26,956,000 ( US$22,391,000), in respect of transactions arising in the ordinary course of business. Foreign currency sensitivity The following tables indicate the currencies to which the Group and company had significant exposure on its monetary assets and liabilities and its forecast cash flows. The change in currency rate below represents management s assessment of the possible change in foreign exchange rates with all variables held constant. The sensitivity analysis on pre-tax profit is based on outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for 1% ( 1%) depreciation and a 10% ( 15%) appreciation of the US dollar against the Jamaican dollar. There was no impact on other components of equity

101 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (c) Market risk (continued) (i) Currency risk (continued) % Change in Currency Rate The Group Effect on Pre-Tax Profit % Change in Currency Rate Effect on Other Comprehensive Income Currency: USD +10 (100,347) ,613 USD -1 10,035-1 (54,161) % Change in Currency Rate The Group Effect on Pre-Tax Profit % Change in Currency Rate Effect on Other Comprehensive Income Currency: USD +15 (219,041) ,141 USD -1 14,603-1 (50,340) % Change in Currency Rate The Company Effect on Pre-Tax % Change in Profit Currency Rate Effect on Pre-Tax Profit Currency: USD , ,237 USD -1 (31,128) -1 (24,616)

102 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (c) Market risk (continued) (ii) Interest rate risk Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk. The Group s interest rate risk mainly arises from its long term investments and borrowings. This risk is managed by analysing the economic environment and obtaining fixed rate loans when interest rates are expected to rise and floating rate loans when interest rates are expected to fall. The policy also requires it to manage the maturities of interest bearing financial assets and liabilities. Investments At and, the Group s investments were fixed rate instruments. Interest rate sensitivity The following tables indicate the sensitivity to a reasonable possible change in interest rates, with all other variables held constant, on the Group s and company s profit or loss and stockholders equity. The sensitivity of the profit or loss is the effect of a 2.5% increase/1% decrease ( 2.5% increase and 1% decrease) for Jamaican dollar denominated loans and a 2.5% increase/1% decrease for US dollar denominated loans for and in interest rates on pre-tax profit based on the floating rate borrowings. The sensitivity of other components of stockholders equity is calculated by revaluing fixed rate available-for-sale financial assets for the effects of an assumed change in interest rates. There were no available-for-sale financial assets at the current or prior year end. The Group Effect on Pre-tax Profit Effect on Pre-tax Profit The Company Effect on Pre-tax Profit Effect on Pre-tax Profit Change in basis points: Jamaican dollars - 100(: -100) 5,493 1,516 5, (: 250) (13,732) (3,790) (12,732) (790) US dollars - 100(: -100) (: 250) (1,733) (2,748) (1,733) (2,748)

103 Limited Notes to the Financial Statements 3. Financial Risk Management (Continued) (c) Market risk (continued) (iii) Commodity price risk Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. The Group and the company are exposed to price risk relating to corn, soya bean meal and ethanol. The Group and the company enter into commodity contracts or related financial instruments in respect of its future usage requirements. The price of these commodities is reviewed regularly in considering the need for active financial risk management. To manage price risk in the ethanol operation, purchases and related sales are effected on the same bases to the extent possible to create a hedge. In the few instances in which a mismatch occurs a short term financial hedging instrument may be used to minimise attendant risks. Price risk is also managed by entering into contracts to process hydrous alcohol into anhydrous ethanol on behalf of customers for a fee. To manage price risk on imported corn and soya bean meal, the prices are tracked and items purchased in advance if prices are increasing. (d) Capital management The Group s objectives when managing capital are to safeguard the Group s ability to continue as a going concern in order to provide returns for its stockholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital as well as meet externally imposed capital requirements. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total stockholders equity. The Board of Directors also monitors the level of dividends to ordinary stockholders. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as borrowings divided by total capital. Borrowings include current and non-current borrowings as shown in the consolidated balance sheet. Total capital is calculated as stockholders equity as shown in the consolidated balance sheet plus borrowings. During, the Group s strategy, which was unchanged from, was to maintain the gearing ratio below 1:1. The gearing ratios at and were as follows: The Group Borrowings 6,354,931 6,203,920 Total capital 17,786,970 16,761,161 Gearing ratio 1:3 1:3 There were no changes to the Group s approach to capital management during the year

104 Limited Notes to the Financial Statements 4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Critical judgments in applying the Group s accounting policies In the process of applying the Group s accounting policies, management has made no significant judgements regarding the amounts recognised in the financial statements. (b) Key sources of estimation uncertainty Income taxes Estimates are required in determining the provision for income taxes. There are some transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for possible tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were originally recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Post-employment benefits Accounting for some post employment benefits requires the use of actuarial techniques to make a reliable estimate of the amount of benefit that employees have earned in return for their service in the current and prior periods. These actuarial assumptions are based on management s best estimates of the variables that will determine the ultimate cost of providing post-employment benefits and comprise both demographic and financial assumptions. Variations in the financial assumptions can cause material adjustments in the next financial year, if it is determined that the actual experience differed from the estimate (Note 19). Depreciable assets Estimates of the useful life and the residual value of property, plant and equipment are required in order to apply an adequate rate of transferring the economic benefits embodied in these assets in the relevant periods. The Group applies a variety of methods in an effort to arrive at these estimates from which actual results may vary. Actual variations in estimated useful lives and residual values are reflected in profit or loss through impairment or adjusted depreciation provisions. Assessment of goodwill The Group test annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2h. The assessment of goodwill impairment involves the determination of the value in use. Determination of value in use involves the estimation of future cash flows from the business taking into consideration the growth rates, inflation rates and the discount rate. Any changes in these variables would impact the value in use calculations. A 1% increase in the discount rates would result in a reduction in the value in use by $1,766,758,000 which would not result in an impairment of goodwill of $372,545,000 (Note 14)

105 Limited Notes to the Financial Statements 5. Segmental Financial Information Management has determined the operating segments based on the reports reviewed by the President and Chief Executive Officer that are used to make strategic decisions. During the year, with the expansion into operations overseas in the previous year, management has revised the operating segments which are reported on. These reports are reviewed by the President and Chief Executive Officer in making strategic decisions. Segment information is provided for reportable segments as follows: Jamaica Operations US Operations Other Caribbean Operations The business is now considered primarily from a geographical perspective. Interest income and interest expense are not included in the measure of segment results and are not regularly reviewed by the President and Chief Executive Officer. The segment report was restated to conform to the revised operating segments

106 Limited Notes to the Financial Statements 5. Segmental Financial Information (Continued) Jamaica Operations US Operations Other Caribbean Operations Eliminations Group External revenues 26,205,116 7,127,917 1,237,017-34,570,050 Revenue from other segments 401,213 2,160, ,987 (2,974,574) - Total revenue 26,606,329 9,288,291 1,650,004 (2,974,574) 34,570,050 Segment result 2,141,453 1,001, ,506-3,291,362 Unallocated corporate expenses (1,170,590) Operating profit 2,120,772 Finance income 145,781 Finance costs (704,701) Profit before tax 1,561,852 Taxation (552,198) Net profit 1,009,654 Segment assets - Current assets 11,259,012 4,085,236 3,402,175 (7,119,323) 11,627,101 Non-current assets 11,638,397 1,299,030 1,269,031 (3,265,501) 10,940,947 Total assets 22,897,409 5,384,266 4,671,206 (10,384,824) 22,568,048 Segment liabilities - Current liabilities 10,692,246 3,789,410 1,943,696 (9,532,157) 6,893,195 Non-current liabilities 3,848, ,091 2,552-4,278,439 Total liabilities 14,541,042 4,216,501 1,946,248 (9,532,157) 11,171,634 Other segment items- Capital expenditure 651, , ,976-1,073,430 Amortisation 33,641 56, ,517 Depreciation 581,597 53,762 96, ,151 Impairment charge ,217-31,

107 Limited Notes to the Financial Statements 5. Segmental Financial Information (Continued) Jamaica Operations US Operations Other Caribbean Operations Eliminations Group External revenues 25,356,721 4,590, ,445-30,851,350 Revenue from other segments 445,549 2,378, ,125 (3,288,886) - Total revenue 25,802,270 6,968,396 1,369,570 (3,288,886) 30,851,350 Segment result 2,000, , ,460-2,486,613 Unallocated corporate expenses (1,121,529) Operating profit 1,365,084 Finance income 300,088 Finance costs (592,076) Profit before tax 1,073,096 Taxation (153,987) Net profit 919,109 Segment assets - Current assets 13,780,612 2,534,647 3,212,782 (9,756,905) 9,771,136 Non-current assets 11,775,398 1,053,912 1,218,370 (3,460,065) 10,587,615 Total assets 25,556,010 3,588,559 4,431,152 (13,216,970) 20,358,751 Segment liabilities - Current liabilities 13,685,507 2,565,074 1,709,093 (12,342,435) 5,617,239 Non-current liabilities 3,886, , ,220,294 Total liabilities 17,571,953 2,898,922 1,709,093 (12,342,435) 9,837,533 Other segment items- Capital expenditure 1,005,087 30, ,613-1,136,617 Amortisation 27,076 43, ,209 Depreciation 504,761 45,349 73, ,

108 Limited Notes to the Financial Statements 6. Other Income/Gains The Group Restated The Company Restated Dividend income from subsidiary - - 1,224, ,458 Fair value (loss)/gain on financial assets at fair value through profit or loss (Note 23) (28,248) 3, Foreign exchange gains 21,585 37,984 21,585 37,984 (Loss)/gain on sale of property, plant and equipment (5,702) 18, ,561 Loss on disposal of subsidiaries (Note 33) (1,323) - (36,271) - Interest income 23,715-21,961 - Management fees ,168 - Reinsurance commissions 38,330 50, Other 125,760 93,183 30,490 35, Expenses by Nature 174, ,304 1,469, ,846 The Group The Company Restated Restated Auditors remuneration 46,393 32,090 14,226 11,865 Advertising and promotions 481, , , ,802 Amortisation of intangible assets (Note 14) 90,518 70,209 22,153 19,707 Impairment charge 31, Bad debts 105,477 53,949 91,645 43,407 Cost of inventories recognised as expense 19,549,244 17,822,816 16,360,346 15,645,027 Fuel 813, , , ,945 Depreciation (Note 13) 732, , , ,315 Occupancy rent and utilities 715, , , ,689 Repairs and maintenance 935, , , ,962 Staff costs (Note 8) 5,635,852 4,362,184 3,722,229 3,493,027 Trucking 995, , , ,350 Other expenses 2,491,022 2,840,946 2,115,280 2,344,615 32,623,395 29,689,570 25,690,659 24,725,711 Expenses by nature include the total of cost of sales, distribution costs, administration and other expenses

109 Limited Notes to the Financial Statements 8. Staff Costs The Group The Company Restated Restated Wages, salaries and contractors costs 4,887,044 3,600,234 3,210,864 2,884,674 Payroll taxes - Employer s portion 289, , , ,678 Pension costs - defined contribution plan 20,771 7, Pension costs - defined benefit plan (Note 19) (103,100) 72,500 (89,200) 68,500 Post-employment medical benefits (Note 19) 1,400 1,400 1,300 1,300 Termination costs 45,783 22,276 36,462 22,020 Other - benefits and welfare 494, , , ,855 5,635,852 4,362,184 3,722,229 3,493, Finance Income and Costs 10. Taxation The Group Restated The Company Restated Finance income - Foreign exchange gains 145, , , ,720 Interest income - 18, , , , , , ,289 Finance costs - Foreign exchange losses 40,298 54,872 6,608 47,622 Interest expense 638, , , ,786 Amortisation of debt financing fees and other expenses 25,714 66,871 18,290 11, , , , ,334 The Group s subsidiary, JB Ethanol Limited, is an approved enterprise under the Jamaica Export Free Zone Act 1982, and accordingly has been granted total relief from income tax in respect of profits earned from its manufacturing and retailing operations until December. Subsidiaries incorporated and domiciled in Jamaica, United States of America and St. Lucia are taxable at a rate of 25%, 34% and 1% on their income, respectively. The companies located in Haiti has been given a tax relief status of ten years. This expires in

110 Limited Notes to the Financial Statements 10. Taxation (Continued) (a) Taxation is based on the profit for the year adjusted for tax purposes and comprises: The Group The Company Current taxation 459, , ,643 96,892 Prior year under provision 28,713-27,176 - Deferred taxation (Note 18) 63,528 (16,305) 68,829 (35,706) 552, , ,648 61,186 (b) The tax on the Group s and company s profit differs from the theoretical amount that would arise using the applicable tax rate as follows: The Group The Company Restated Profit before taxation for taxable entities 1,886,326 1,142,196 2,223,123 1,367,247 Loss before taxation for non-taxable entities (324,474) (69,100) - - 1,561,852 1,073,096 2,223,123 1,367,247 Tax calculated at applicable tax rates 390, , , ,812 Adjusted for: Income not subject to tax (7,250) (52,800) (332,359) (213,864) Employment tax credit (52,239) - (52,239) - Adjustment to deferred tax 70,308 (2,207) 70,993 - Effect of changes in tax rates - (58,689) - (53,044) Prior year under provision - current tax 28,713-27,176 - Different tax rate in other countries 68,073 6, Expenses not deductible for tax purposes 60,390 1,513 30,500 1,513 Other allowances (6,260) (8,181) (8,204) (15,231) Income tax expense 552, , ,648 61,

111 Limited Notes to the Financial Statements 10. Taxation (Continued) (c) The tax charge/(credit) relating to components of other comprehensive income is as follows: The Group The Company Other comprehensive income - Retirement benefit assets Remeasurements on retirement benefit 148, , , ,600 Tax assets, charge before (Note 18) tax (36,675) (34,450) (33,425) (33,150) 112, , ,275 99, Net Profit/Retained Earnings Attributable to the Stockholders Net profit attributable to: Holding company 1,931,475 1,306,061 Intercompany dividend and management fees (1,431,288) (855,458) Adjusted Holding company profits 500, ,603 Subsidiaries 535, ,680 Retained earnings attributable to: 1,036, ,283 Holding company 7,772,069 6,144,746 Subsidiaries 1,044,652 1,900, Earnings Per Stock Unit 8,816,721 8,045,730 The calculation of earnings per ordinary stock unit is based on the Group s net profit and 1,199,277,000 ordinary stocks units in issue

112 Limited Notes to the Financial Statements 13. Property, Plant and Equipment At Cost - Freehold Land Freehold Buildings Leasehold Property The Group Plant, Machinery & Equipment Furniture & Fixtures Motor Vehicles Capital Work in Progress Total At 354,746 2,512, ,559 8,396, , , ,857 14,120,321 Additions 29,332 83,848 74,798 52,769 51,600 85, ,668 1,069,815 Disposals - - (2,063) (4,000) (1,502) (31,630) - (39,195) Transfer from CWIP - 221,459 13, ,330 17,164 28,148 (1,108,459) (13,622) Transfer from intangible assets , ,177 Transfer from investment property 10, , ,489 Disposal of subsidiaries - (155,860) - (115,108) (18,014) (16,958) - (305,940) Reclassifications/ adjustment ,900 (78,294) (1,865) - 2,741 Write off (134,805) (10,278) (4,624) - (149,707) Translation 2,900 21,249 6, ,443 18,748 5,584 2, ,979 At 397,088 2,820, ,259 9,360, , , ,892 15,157,058 Depreciation - At - 892,017 34,681 2,771, , ,821-4,725,017 Charge for the year - 82,052 30, ,696 79, , ,275 Relieved on disposals - - (2,028) (748) (1,476) (21,147) - (25,399) Transfer from intangible assets , ,218 Transfer from investment property - 113, ,565 Disposal of subsidiaries - (139,331) - (106,466) (18,014) (17,970) - (281,781) Reclassifications/ adjustment ,370 (76,451) - - 1,919 Write off (130,959) (3,539) (8,895) - (143,393) Translation - 7, ,678 11,352 3,161-88,039 At - 956,163 63,672 3,123, , ,513-5,217,460 Net Book Value - At 397,088 1,863, ,587 6,237, , , ,892 9,939,

113 Limited Notes to the Financial Statements 13. Property, Plant and Equipment (Continued) At Cost - Freehold Land Freehold Buildings Leasehold Property The Group Plant, Machinery & Equipment Furniture & Fixtures Motor Vehicles Capital Work in Progress Total At 28 April ,646 2,256, ,840 7,605, , , ,447 12,268,589 Additions - 79,433 7,395 28,598 6,252 73, ,327 1,131,891 Acquisition of subsidiaries 34,882 55,193-56, , ,819 Translation 2,218 34,200 9, ,265 35,933 8,431 4, ,302 Disposals (20,353) - (20,353) Transfers/reclassifications - 86, , ,771 57,122 1,188 (485,031) - Write-off (8,332) (8,332) Transfer to intangible assets (15,595) (15,595) At 354,746 2,512, ,559 8,396, , , ,857 14,120,321 Depreciation - At 28 April ,456 16,230 2,280, , ,129-3,960,079 Charge for the year - 66,643 17, ,838 64,371 89, ,509 Translation - 13,918 1, ,120 18,905 4, ,920 Relieved on disposals (2,491) - (2,491) At - 892,017 34,681 2,771, , ,821-4,725,017 Net Book Value - At 354,746 1,620, ,878 5,625, , , ,857 9,395,

114 Limited Notes to the Financial Statements 13. Property, Plant and Equipment (Continued) The Company Freehold Land Freehold Buildings Leasehold Property Machinery & Equipment Furniture & Fixtures Motor Vehicles Capital Work in Progress Total At Cost - At 28 April ,182 1,239,600 13,510 2,197, , , ,383 4,797,267 Additions - 77,798-25, , , ,189 Transfers from CWIP - 81,820-91,525 27,023 - (200,368) - Transferred to subsidiary (12,195) (12,195) Write off (8,332) (8,332) Transfer to intangible assets (15,595) (15,595) At 78,182 1,399,218 13,510 2,315, , , ,097 5,733,334 Additions - 33,443 25,000 12,930 31,370 40, , ,240 Disposals (3,239) - (11,265) - (14,504) Transfers from CWIP - 215, ,963 10,918 27,686 (1,079,285) (13,622) Transfer from intangible assets , ,177 Reclassifications/ adjustment ,900 (78,294) (1,865) - 2,741 Write off (134,805) (10,278) (4,624) - (149,707) At 78,182 1,647,757 38,510 3,096, , , ,831 6,202,659 Depreciation - At 28 April ,316 3,983 1,082, , ,450-1,990,364 Charge for the year - 31, ,855 24,138 64, ,315 At - 367,855 4,381 1,201, , ,835-2,229,679 Charge for the year - 36,070 3, ,545 30,443 70, ,861 Disposal (11,148) - (11,148) Transfer from intangible assets , ,218 Reclassifications/ adjustment ,370 (76,451) - - 1,919 Write off - - (130,959) (3,539) (8,895) - (143,393) At - 403,925 7,545 1,304, , ,431-2,373,136 Net Book Value - At 78,182 1,243,832 30,965 1,791, , , ,831 3,829,523 At 78,182 1,031,363 9,129 1,113, , , ,097 3,503,655 Depreciation is charged to cost of sales and administration and other expenses in profit or loss

115 Limited Notes to the Financial Statements 14. Intangible Assets The Group The Company Goodwill Brands and Customer Relationships Non- Compete Agreement Product Formulation Computer Software Total Computer Software Cost - At 28 April , , ,500 Additions ,726 4, Acquisition of subsidiaries 357, ,064 89,550 20, ,611 - Transfer from PPE ,595 15,595 15,595 Translation At 357, ,064 89,550 20, ,006 1,114, ,654 Additions ,615 3,615 3,615 Disposal (3,239) (3,239) - Transfer to PPE (11,177) (11,177) (11,177) Transfer from CWIP ,622 13,622 13,622 Disposal of subsidiary (4,511) (4,511) - Translation 15,328 18,020 4, ,082 - At 372, ,084 93,738 20, ,862 1,151, ,714 Amortisation - At 28 April , , ,924 Charge for the year - 32,101 15, ,418 70,209 19,707 Translation - 1, ,246 - At - 33,491 15, , , ,631 Charge for the year - 43,252 20,384 1,039 25,842 90,517 22,154 Relieved on disposal (3,184) (3,184) - Transfer to PPE (8,218) (8,218) (8,218) Adjustment (1,919) (1,919) (1,919) Disposal of subsidiary (3,703) (3,703) - Translation - 2, ,313 - At - 78,881 37,108 1, , , ,648 Net Book Value - 372, ,203 56,630 19,135 94, ,602 90, , ,573 73,820 20, , ,016 96,

116 Limited Notes to the Financial Statements 14. Intangible Assets (Continued) Impairment tests for goodwill The Group determines whether goodwill is impaired at least on an annual basis or when events or changes in circumstances indicate the carrying value may be impaired. This requires an estimation of the recoverable amount of the cash generating unit (CGU) to which the goodwill is allocated. The recoverable amount is usually determined by reference to the value in use. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the CGU and also to choose an appropriate discount rate in order to calculate the present value of those future cash flows. The amortisation of intangible assets is included in administration and other expenses in profit or loss. The allocation of goodwill to the Group s cash generating units (CGUs) identified according to segment is as follows: England Farms operations 319, ,184 Best Dressed Foods operations 53,033 53, , ,217 The recoverable amount of a CGU is determined based on value in use. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates. Key assumptions used for value in use calculations: Revenue Growth Rate EBITDA to Revenue Capital Expenditure to Revenue Discount Rate England Farms operations 9.0% 13.0% 0.3% 15.3% Best Dressed Foods operations 7.6% 8.9% 0.1% 14.0%

117 Limited Notes to the Financial Statements 15. Investment Property Cost - At 28 April 2013 and Transfer to property, plant & equipment The Group Land and Buildings 206,428 (147,489) At 58,939 Depreciation - At 28 April 2013 Charge for the year At Charge for the year Transfer to property, plant & equipment 147, , (113,565) At 35,624 Net Book Value - At 23,315 At 58,098 The investment properties were valued by independent valuers, Property Consultants Limited as at March 2012 and Allison Pitter & Company as at December, on the basis of open market value. The market value of the two properties is estimated to be $132,000,000. During the year a property was transferred from investment property to property, plant and equipment as it was being occupied by a company within the group. Rental income earned on these properties amounted to $10,826,000 ( - $9,936,000). Repairs and maintenance on the properties amounted to Nil ( $169,000)

118 Limited Notes to the Financial Statements 16. Investments The Group The Company Available-for-sale - Unquoted equities- at cost 68,749 65,669 7,136 10, Non-controlling Interests The Group Beginning of year (36,023) (55,877) Share of total comprehensive income, as restated: Share of net profit of subsidiaries (26,514) (38,174) Revaluation surplus 892 4,254 Conversion of shareholder s loan - 43,643 Additional investments during the year 26,020 10,131 End of year (35,625) (36,023) Summarised financial information on subsidiaries with material non-controlling interests Set out below is the summarised financial information for the subsidiary that has non-controlling interests that are material to the Group. Summarised balance sheet The Group Current Assets 504, ,827 Liabilities (1,042,752) (979,632) Total current net assets (538,131) (463,805) Non-current Assets 623, ,192 Total non-current net assets 623, ,192 Net assets 85, ,

119 Limited Notes to the Financial Statements 17. Non-controlling Interests (Continued) Summarised financial information on subsidiaries with material non-controlling interests Set out below is the summarised financial information for the subsidiary that has non-controlling interests that are material to the Group. Summarised income statement The Group Revenue 1,237, ,444 Loss before income tax (82,858) (119,294) Taxation expense - - Loss after tax (82,858) (119,294) Other comprehensive income - - Total comprehensive income (82,858) (119,294) Total comprehensive income allocated to noncontrolling interest (25,622) (33,920) Dividends paid to non-controlling interest - - Summarised cash flows The Group Cash flows from operating activities Cash generated from operations 69,635 68,500 Interest paid (12,652) (34,529) Income tax recovered - - Net cash generated from operating activities 56,983 33,971 Net cash used in investing activities (60,529) (128,230) Net cash (used in)/provided by financing activities (41,216) 151,256 Net (decrease)/increase in and cash equivalents (44,762) 56,997 Cash and cash equivalents at the beginning of year 70,090 13,093 Cash and cash equivalents at end of year 25,328 70,090 The information above represents amounts before intercompany eliminations

120 Limited Notes to the Financial Statements 18. Deferred Income Taxes Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 25% ( 25%). The Group The Company Deferred tax assets - (14,510) - - Deferred tax liabilities 567, , , , , , , ,650 The movement on the deferred income tax account is as follows: The Group The Company Balance at start of year 516, , , ,506 Credited to profit or loss (Note 10) 63,528 (16,305) 68,829 (35,706) Credited to other comprehensive income (Note 10) (36,675) (34,450) (33,425) (33,150) Acquisition of intangibles - 215, Disposal of subsidiaries 11, Translation 12, Balance as at end of year 567, , , ,650 The deferred tax assets and liabilities at the end of the year are as follows: The Group The Company Deferred income tax assets - Pension and other post-employment benefits 29,725 30,225 28,625 28,875 Accrued vacation and general provisions 10,562 11,401 8,860 10,308 Tax losses unused 1, Interest payable 14,979 14,978 13,731 14,977 Other 3,774 2, ,704 59,515 51,216 54,160 Deferred income tax liabilities - Property, plant and equipment 386, , , ,585 Unrealised foreign exchange gains 41,293 91,089 41,283 91,089 Intangible assets 191, , Other 8, , , , , ,810 Net deferred tax liability 567, , , ,

121 Limited Notes to the Financial Statements 18. Deferred Income Taxes (Continued) The deferred tax credited in profit or loss and other comprehensive income comprises the following temporary differences: The Group The Company Profit or loss Property, plant and equipment 90,130 (94,906) 73,690 (96,214) Accrued vacation and general provisions 895 7,118 1,448 6,731 Post-employment benefits 37,175 (10,078) 33,675 (9,075) Tax losses (1,664) 34, Unrealised foreign exchange losses/gains (49,796) 65,375 (49,806) 65,373 Intangible assets (20,402) (13,376) - - Interest payable (1) (2,494) 1,246 (2,494) Other temporary differences 7,191 (2,724) 8,576 (27) 63,528 (16,305) 68,829 (35,706) Other comprehensive income Post-employment benefits (36,675) (34,450) (33,425) (33,150) Deferred income tax liabilities have not been provided for in respect of the withholding and other taxes that would be payable on the undistributed earnings of certain subsidiaries to the extent that such earnings are permanently reinvested. Such undistributed earnings, included in the consolidated results, totalled $915,013,000 ( - $509,600,000). These undistributed earnings are in foreign subsidiaries

122 Limited Notes to the Financial Statements 18. Deferred Income Taxes (Continued) These balances include the following: The Group The Company Deferred tax assets - Deferred tax assets to be recovered after more than 12 months 31,389 30,885 28,625 28,875 Deferred tax assets to be recovered within 12 months 29,315 27,740 22,591 25,285 60,704 58,625 51,216 54,160 Deferred tax liabilities - Deferred tax liabilities to be recovered after more than 12 months 577, , , ,585 Deferred tax liabilities to be recovered within 12 months 50,006 91,225 49,996 91, , , , ,810 Net deferred tax liability 567, , , , Post-employment Benefits Amounts recognised in the balance sheet are as follows: The Group The Company Pension scheme benefit liabilities (94,700) (105,900) (91,100) (101,200) Post-employment benefit obligations (24,800) (15,500) (23,400) (14,300) Amounts recognised in the profit or loss (Note 8) - Pension scheme benefit liabilities (103,100) 72,500 (89,200) 68,500 Post-employment benefit obligations 1,400 1,400 1,300 1,300 (101,700) 73,900 (87,900) 69,800 Amounts recognised in other comprehensive income Pension scheme benefit assets 138, , , ,900 Post-employment benefit obligations 10, , , , , ,

123 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (a) Pension scheme benefits The Group participates in a defined benefit scheme, which is open to all permanent employees and administered by an external agency. The plan provides benefits to members based on average earnings for the final two years of service or the two years in which the highest salaries of the employee have been earned. The defined benefit scheme is valued by independent actuaries annually using the Projected Unit Credit Method. The latest actuarial valuation was carried out as at. The Board of the pension fund is required by law and its articles and association to act in the interest of the fund and all relevant stakeholders. The Board of the fund is responsible for the investment policy with regard to the assets of the fund. The funds are managed by NCB Insurance Company Limited who has responsibilities for the general management of the portfolio of investments and the administration of the fund. The post-employment benefit asset recognised in the balance sheet was determined as follows: The Group The Company Fair value of plan assets 2,531,600 2,201,800 2,435,500 2,105,100 Present value of obligations (2,626,300) (2,307,700) (2,526,600) (2,206,300) (94,700) (105,900) (91,100) (101,200) Pension plan assets include investment in ordinary stock units of the company with a fair value of $58,000,000 ( - $13,124,000). The pension fund earned and received rental income from the company of $2,557,000 ( - $2,375,000). The movement in the defined benefit asset during the year was as follows: The Group The Company At start of year (105,900) 62,300 (101,200) 58,500 Transfer from subsidiary ,000 Amounts recognised in profit or loss (Note 8) 103,100 (72,500) 89,200 (68,500) Amounts recognised in other comprehensive income (Note 8) (138,800) (137,400) (123,900) (131,900) Contributions paid 46,900 41,700 44,800 39,700 At end of year (94,700) (105,900) (91,100) (101,200)

124 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (a) Pension scheme benefits (continued) The movement in the present value of obligations was as follows: The Group The Company At start of year 2,307,700 1,944,500 2,206,300 1,825,500 Transfer from subsidiary ,800 Current service cost 88,900 71,600 84,600 67,700 Interest cost 229, , , ,500 Past service cost (210,500) - (191,400) - 2,416,000 2,220,100 2,319,500 2,118,500 Remeasurement loss on obligations 210,300 82, ,300 85,400 Members contribution 77,800 69,600 74,100 66,300 Benefits paid (77,800) (64,500) (68,300) (63,900) At end of year 2,626,300 2,307,700 2,526,600 2,206,300 The movement in the fair value of plan assets was as follows: The Group The Company At start of year 2,201,800 2,006,800 2,105,100 1,884,000 Transfer from subsidiary ,800 Members contribution 77,800 69,600 74,100 66,300 Employer s contribution 46,900 41,700 44,800 39,700 Interest income on plan assets 211, , , ,700 Benefits paid (77,800) (64,500) (68,300) (63,900) Remeasurement loss on plan assets 71,500 (54,900) 77,400 (46,500) At end of year 2,531,600 2,201,800 2,435,500 2,105,

125 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (a) Pension scheme benefits (continued) The amount recognised in profit or loss is determined as follows: The Group The Company Current service cost 88,900 71,600 84,600 67,700 Interest cost 229, , , ,500 Interest income on plan assets (211,400) (203,100) (202,400) (193,700) Past service costs (210,500) - (191,400) - Total included in staff costs (Note 8) (103,100) 72,500 (89,200) 68,500 The amount recognised in other comprehensive income is determined as follows: The Group The Company Remeasurements of the defined benefit obligation 210,300 82, ,300 85,400 Remeasurements of the plan assets (71,500) 54,900 (77,400) 46,500 Total 138, , , ,900 At the last valuation date, the present value of the defined benefit obligation was comprised of approximately $2,163,900,000 and $2,101,900,000 relating to active members, $169,000,000 and $167,400,000 relating to deferred members, $289,700,000 and $254,200,000 relating to the members in retirement and 3,700,000 and $3,100,000 relating to other liabilities for the group and the company respectively. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets. Expected employer contributions to the plan for the year ended 2016 amount to $110,800,000 for the group and $107,600,000 for the company. The principal actuarial assumptions used were as follows: Discount rate 9.5% 9.5% Future salary increases 7.0% 6.5% Future pension increases 2.5% 4.25%

126 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (a) Pension scheme benefits (continued) The sensitivity of the defined benefit obligation to changes in the principal assumptions is: The Group Impact on post-employment obligations Change in assumption Increase in assumption Decrease in assumption Discount rate 1% (389,300) 514,500 Future salary increases 1% 239,400 (191,500) Pension increases 1% 236,900 (196,200) The Company Impact on post-employment obligations Change in assumption Increase in assumption Decrease in assumption Discount rate 1% (376,700) 498,900 Future salary increases 1% 233,400 (482,400) Pension increases 1% 228,300 (188,400) Increase Assumption by One Year The Group Decrease Assumption by One Year Increase Assumption by One Year The Company Decrease Assumption by One Year Life expectancy 28,600 (32,500) 27,800 (31,000) The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position

127 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued (b) Post-employment medical benefits In addition to pension benefits, the Group offers qualifying retirees medical and life insurance benefits. Funds are not built up to cover the obligations under these retirement benefit schemes. The method of accounting and frequency of valuations are similar to those used for the defined benefit pension scheme. In addition to the assumptions used for the pension scheme, the main actuarial assumption is a long term increase in health costs of 8% per year ( 8.5% per year). The liability recognised in the balance sheet was determined as follows: The Group Restated The Company Restated Present value of funded obligations 24,800 15,500 23,400 14,300 The movement in the liability during the year was as follows: The Group The Company At start of year 15,500 15,100 14,300 14,000 Amounts recognised in profit or loss (Note 8) 1,400 1,400 1,300 1,300 Amounts recognised in other comprehensive income 10, , Contributions paid (2,200) (1,800) (2,000) (1,700) At end of year 24,800 15,500 23,400 14,

128 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (b) Post-employment medical benefits (continued) The movement in the present value of obligations was as follows: The Group The Company At start of year 15,500 15,100 14,300 14,000 Interest cost 1,400 1,400 1,300 1,300 Benefits paid (2,200) (1,800) (2,000) (1,700) Remeasurement loss on obligation 10, , At end of year 24,800 15,500 23,400 14,300 The amount recognised in profit or loss is as follows: The Group The Company Interest cost 1,400 1,400 1,300 1,300 Total included in staff costs (Note 8) 1,400 1,400 1,300 1,300 The amount recognised in other comprehensive income is determined as follows: The Group The Company Remeasurements of the defined benefit obligation 10, ,

129 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (b) Post-employment medical benefits (continued) The sensitivity of the defined benefit obligation to changes in the principal assumptions is: The Group Impact on post-employment obligations Change in assumption Increase in assumption Decrease in assumption Discount rate 1% (6,400) (3,200) Medical cost 1% (3,200) (6,400) The Company Impact on post-employment obligations Change in assumption Increase in assumption Decrease in assumption Discount rate 1% (6,200) (3,200) Medical cost 1% (3,200) (6,200) Increase Assumption by One Year The Group Decrease Assumption by One Year Increase Assumption by One Year The Company Decrease Assumption by One Year Life expectancy 1,000 (1,800) 800 (1,600)

130 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (c) Distribution of pension plan assets - The Group % % Equities 682, , Property 272, , Government securities and reverse repurchase agreements 1,136, , Corporate bonds 228, ,900 7 Leased assets 43, ,500 2 Other 168, , ,531, ,201, The Company % % Equities 656, , Property 261, , Government securities and reverse repurchase agreements 1,093, , Corporate bonds 219, ,800 7 Leased assets 42, ,700 2 Other 161, , ,435, ,105,

131 Limited Notes to the Financial Statements 19. Post-employment Benefits (Continued) (d) Other pension plan disclosures - Risks associated with pension plans and post-employment plans Through its defined benefit pension plans and post-employment medical plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The plan liabilities are calculated using a discount rate set with reference to Government of Jamaica bond yields; if plan assets underperform this yield, this will create a deficit. As the plan matures, the Company intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The Government bonds represent investments in Government of Jamaica securities. The Company believes that due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of the Company s long term strategy to manage the plans efficiently. See below for more details on the Company s asset-liability matching strategy. Changes in bond yields A decrease in Government of Jamaica bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans bond holdings. Inflation risk Higher inflation will lead to higher liabilities. The majority of the plan s assets are either unaffected by fixed interest bonds, meaning that an increase in inflation will reduce the surplus or create a deficit. Life expectancy The majority of the plan s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan s liabilities. This is particularly significant, where inflationary increases result in higher sensitivity to changes in life expectancy. The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension scheme. Within this framework, the company s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due. The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company does not use derivatives to manage its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in consists of bonds and equities. Funding levels are monitored on an annual basis and the agreed employer contribution rate was 5% of pensionable salaries up to. The next triennial valuation is due to be completed as at 30 April

132 Limited Notes to the Financial Statements 20. Inventories The Group The Company Grain and feed ingredients 896,839 1,607, ,744 1,456,274 Inventories for resale and spares 2,215,859 1,908,814 2,002,780 1,700,617 Processed broilers, beef and fish 13,053 6, Goods in transit and others 871, , , ,054 3,996,881 3,737,424 3,471,611 3,351,945 Less: Provision for obsolescence (47,998) (44,028) (37,409) (33,419) There were no inventory write-downs for the current or the previous year. 21. Biological Assets 3,948,883 3,693,396 3,434,202 3,318,526 The Group The Company Cattle 54,274 61, Fish - 85,014-32,014 Poultry 2,515,507 2,120, , ,181 The movement in biological assets at fair value was determined as follows: 2,569,781 2,267, , ,195 The Group The Company At start of year 724, , , ,172 Fair value (losses)/gains (3,775) 1, Increase due to purchases and transfers 6,390,230 4,716,343 6,389,549 4,451,747 Decrease due to sales (6,637,245) (4,681,509) (6,504,996) (4,323,769) Disposal of subsidiary (53,000) Translation (2,227) 4, At end of year 418, , , ,

133 Limited Notes to the Financial Statements 21. Biological Assets (Continued) The movement in biological assets at cost was determined as follows: The Group The Company At start of year 1,542, , , ,903 Increase due to purchases and acquisition 5,065,534 4,411,008 1,876,566 1,865,686 Decrease due to sales and depreciation (4,523,126) (3,587,900) (1,889,926) (1,831,544) Translation 65,520 59, At end of year 2,150,805 1,542, , ,045 Biological assets for the Group comprise of: The Group The Company Biological assets at fair value 418, , , ,150 Biological assets at cost 2,150,805 1,542, , ,045 2,569,781 2,267, , ,195 Fair value of livestock is determined as the best available estimate for livestock with similar attributes. Any gains or losses arising on initial recognition of livestock at fair value less estimated point of sale costs and from a change in fair value less estimated point of sale costs is included in other income in the period in which it arises. The physical quantities at the end of the year and output for each group of biological assets are as follows: (i) Cattle The number of cattle at the end of the year was 723 ( 898). The number of cattle harvested during the year was 407 ( 343). (ii) Fish The estimated weight of fish and fingerlings at the end of the year was Nil ( 60 tonnes). The estimated weight of fish and fingerlings harvested during the year was 173 tonnes ( 173 tonnes). (iii) Poultry The number of birds in the field, including broilers, breeders, and layer pullets at year end was 4,994,685 ( 5,005,950) and the number of eggs at year end was 4,459,268 ( 5,565,001). The total number of birds produced during the year was 43,428,000 ( 43,248,000). The total number of eggs produced during the year was 16,898,180 ( 12,894,847) dozens

134 Limited Notes to the Financial Statements 22. Receivables The Group The Company Trade receivables 2,423,703 2,049,552 1,544,504 1,365,464 Less: Provision for impairment (312,171) (212,337) (262,578) (177,182) 2,111,532 1,837,215 1,281,926 1,188,282 Contract farmers receivables 136, , , ,988 Deposits 8,935 55,127 2,247 42,247 G.C.T recoverable 10, , ,538 Insurance claims receivable 71,110 15,733 11,649 10,222 Jamaica Broilers Trust (Note 30) 98,000-98,000 - Prepayments 181, , , ,481 Staff receivables 25,782 24,569 17,545 17,889 Other 146, , , ,574 2,789,380 2,699,329 1,782,553 1,835,221 Less: Provision for impairment (318) (318) (318) (318) 2,789,062 2,699,011 1,782,235 1,834, Financial Assets at Fair Value through Profit or Loss This represents amount invested in investment funds that have been designated at fair value on initial recognition. Changes in fair values of financial assets at fair value through profit or loss are included in other (losses)/gains (Note 6). 24. Cash and Short Term Investments The Group The Company Cash at bank and in hand 745, , , ,298 Short term investments 1,078,522 40,185 1,078,522 40,185 1,824, ,757 1,595, ,483 Interest receivable 3,929-3,929-1,828, ,757 1,599, ,

135 Limited Notes to the Financial Statements 24. Cash and Short Term Investments (Continued) The weighted average effective interest rate on Jamaica dollar and US dollar short term deposits was 4% ( 5.75%) and 1% ( 1%) respectively. These represent call deposits which are repayable on demand. In prior year, the deposits had an average maturity of 28 days. For the purposes of the cash flow statement, cash and cash equivalents comprise the following: 25. Payables The Group The Company Cash and short term investments 1,828, ,757 1,599, ,483 Short term borrowings and bank overdraft (159,889) (156,129) (152,569) (156,129) 1,668, ,628 1,446, ,354 The Group The Company Accrued charges 448, , , ,490 Contractors retention payable 7, GCT payable Payroll taxes payable 49,312 46,413 49,518 46,413 Staff related payables 88,712 87,661 14,585 24,971 Trade payables 2,777,158 2,025,167 2,206,024 1,618,937 Unclaimed cheques 70,408 68,360 70,408 68,360 Other 224, , , ,261 3,666,685 2,825,867 2,977,456 2,288,

136 Limited Notes to the Financial Statements 26. Dividends The Group and The Company First interim 8 cents per stock unit ( 8 cents) 95,942 95,942 Second interim 9 cents per stock unit ( 8 cents) 107,935 95, , , Borrowings Non-Current - The Group The Company Borrowings 3,591,907 3,568,071 3,085,651 3,405,805 Current - Short term borrowings and bank overdraft 1,756,917 1,545,905 1,257,569 1,136,129 (Note 23) Current portion of non-current borrowings 946,193 1,030, , ,820 Interest payable 59,914 59,910 54,927 59,910 2,763,024 2,635,849 2,102,727 2,128,859 6,354,931 6,203,920 5,188,378 5,534,664 Interest rates on these loans ranged from 7% to 10% on Jamaican currency loans and 4.34% to 6.19% on United States currency loans. Negative pledges have been issued in respect of loans, guarantees and other banking facilities extended by the various financial institutions. At year end the group has access to undrawn financing facilities amounting to $782,004,

137 Limited Notes to the Financial Statements 28. Share Capital Number of Stock Units Ordinary Stock Units 000 1,199, ,137 1,199, ,137 The total authorised number of ordinary shares is 1,209,324,000 shares ( 1,209,324,000). The stock units in and are stated in these financial statements without a nominal or par value. 29. Capital Reserve The Group The Company At start of year - Realised capital gains 32,618 32,618 3,227 3,227 Unrealised surplus on revaluations 399, , , ,198 Fair value loss on available-for-sale securities - - (538) (538) Translation loss on subsidiary assumed - - (8,686) (8,686) Gains on translation of financial statements of foreign subsidiaries 1,313,781 1,000, ,746,374 1,432, , ,201 Movements during the year - Translation gain 154, , Transfer to retained earnings (50,925) At end of year 1,850,181 1,746, , ,201 Consisting of - Realised capital gains 32,618 32,618 3,227 3,227 Unrealised surplus on revaluations 349, , , ,198 Fair value loss on available-for-sale securities - - (538) (538) Translation loss on subsidiary assumed - - (8,686) (8,686) Gains on translation of financial statements of foreign subsidiaries 1,468,513 1,313, ,850,181 1,746, , ,

138 Limited Notes to the Financial Statements 30. Related Party Transactions and Balances Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operational decisions. Related parties include fellow subsidiaries, directors and key management. Subsidiaries buy and sell inventory to other entities within the Group. Key management includes directors (executives and non-executives) and members of the senior management team. (i) The following transactions were carried out between the company and its related parties: Sale of goods 878, ,157 Purchases of goods 3,010,283 3,180,066 Interest income earned 124, ,409 Management fees earned 207,168 - Rental expense incurred 4,680 7,743 Dividend received 1,224, ,458 Other expenses 55,590 - (ii) Key management compensation The Group The Company With directors and key management - Salaries, profit sharing and other short-term employee benefits 348, , , ,325 Payroll taxes - Employer s portion 29,742 15,171 28,018 15,171 Pension benefits 5,899 4,452 4,690 4,452 Professional fees paid 11,048 23,071 11,048 9, , , , ,309 Directors emoluments - Fees 18,503 17,780 18,503 17,780 Management remuneration (included above) 222, , , ,

139 Limited Notes to the Financial Statements 30. Related Party Transactions and Balances (Continued) (iii) Year end balances with related parties: Directors and key management - The Group The Company Receivables 1,109 7, ,440 Receivable from subsidiaries - - 3,148,840 2,721,524 Payable to subsidiaries , ,868 Loan to Jamaica Broilers Trust(a) 116, , , ,018 Loan to Haiti Broilers S.A.(b) , ,160 Loans receivable : Loan to JB Ethanol Limited long term portion of loans receivable (c) - - 1,331,010 1,471,948 Loan to International Poultry Breeder Inc. long term portion of loans receivable (d) - - 1,081,658 1,113, ,412,668 2,585,473 (a) Loan receivable from Jamaica Broilers Trust is payable by August 2016 and interest is payable at WATBY plus 2% per annum. The loan is secured with stock units in Limited. The current portion of the balance is included in receivables (Note 22) and the long term portion is $18,683,000 ( - $123,018,000). (b) The balance represents the outstanding amounts on a loan of US$1,655,000 at a rate of 8% and has no set repayment. (c) The balance represents the outstanding amounts on a loan of US$18,000,000 at a rate of LIBOR + 2% and matures Principal is repaid quarterly in the amount of US$500,000. Included in receivable from subsidiaries is the current portion of the loan in the amount of $324,072,000 ( - $220,500,000). (d) The balance represents the outstanding amounts on a loan of US$10,750,000 at a rate of US Prime + 3% and matures Principal is repaid quarterly in the amount of US$700,000. Included in receivable from subsidiaries is the current portion of the loan in the amount of $80,549,000 ( - Nil). 31. Fair Value of Financial Instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm s length transaction. Market price is used to determine fair value where an active market (such as a recognised stock exchange) exists as it is the best evidence of the fair value of a financial instrument. However, market prices are not available for a significant number of the financial assets and liabilities held and issued by the Group. Therefore, for financial instruments where no market price is available, the fair values presented have been estimated using present value or other estimation and valuation techniques based on market conditions existing at balance sheet dates

140 Limited Notes to the Financial Statements 31. Fair Value of Financial Instruments (Continued) The values derived from applying these techniques are significantly affected by the underlying assumptions used concerning both the amounts and timing of future cash flows and the discount rates. The following methods and assumptions have been used: (i) (ii) Financial assets at fair value through profit or loss are measured at fair value by reference to quoted prices when available. If quoted market prices are not available, then fair values are estimated on the basis of pricing models, or discounted cash flows. Fair value is equal to the carrying amount of these items; Investment securities classified as available-for-sale are measured at cost. Fair value cannot be reliably determined as no active market for these securities exist as they relate to investment in private entities. (iii) The fair value of long term borrowings approximates carrying value as the contractual cash flows are at current market interest rates that are available to the Group for similar financial instruments; and (iv) The amounts included in the financial statements for receivables, cash and short term investments, payables short term borrowings and bank overdraft reflect their fair values due to the short term maturity of these instruments. Financial instruments that are measured in the balance sheet at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable: (i) (ii) (iii) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Financial assets measured at fair value are all categorised as level 2 and comprise financial assets at fair value through profit or loss amounting to $472,482,000 ( - $436,046,000) for the Group. These investments represent units in investment funds which are stated at unit prices determined by the fund manager. There were no transfers between levels in the year. Biological assets which are measured at fair value totalling $418,977,000 ( $724,993,000) and $364,703,000 ($480,150,000) for the Group and the Company respectively are included in Level

141 Limited Notes to the Financial Statements 32. Business Combinations During the previous year, the Group acquired the entire share capital of two entities: In July 2013, the Group acquired England Packing Co. Inc., an entity incorporated in the United States. The principal activity of this entity is the production and distribution of fertile (hatching) eggs to the poultry industry. As a result of the acquisition, the Group is expected to increase its presence in the North American, Caribbean and Central American markets. In October 2013, the Group acquired Hamilton Smoke House Limited, an entity incorporated in Jamaica. The principal activity of this entity is the production and distribution of further processed meat products. This entity was acquired to expand the processed food line. The acquired businesses contributed revenues of $1,781,676,000 and profits of $139,911,000 for the year ended,. Had the companies been acquired at the beginning of the year, they could have contributed revenues of approximately $2,229,600,000 and profits of approximately $202,641,000 to the Group for the year ended. Details of the net assets acquired, goodwill and net cash outlay on acquisition, determined on a provisional basis, were as follows: Hamilton England Total Fair Values Fair Values Fair Values Net assets arising on the acquisition 58, , ,731 Goodwill on acquisition: Purchase consideration 111,160 1,181,788 1,292,948 Less: Fair value of net assets acquired (58,126) (877,605) (935,731) 53, , ,217 Net cash outlay on acquisition: Purchase consideration paid in cash 111,160 1,181,788 1,292,948 Cash and cash equivalents acquired 345 (352) (7) 111,505 1,181,436 1,292,941 The goodwill acquired in both entities represents the synergies inherent in the consolidation of a market competitor. 33. Disposal of Subsidiaries During the year the Group disposed of two of its subsidiaries, Aquaculture Jamaica Limited and Aqualapia Limited. The disposals were not significant to the Group s operations as there were no operating activities during the year. The operations were previously included in the Jamaica Operations segment. Proceeds received 111,160 1,181,788 88,103 Net assets disposed 345 (352) (89,426) Loss on disposal 111,505 1,181,436 (1,323)

142 Limited Notes to the Financial Statements 34. Restatement Restatement of certain prior year balances relate to reclassification between categories are as follows: (a) (b) (c) (d) The balance due from the affiliate which was previously included in current assets has been reclassified to non-current assets based on its maturity date. Intercompany loans receivable was previously included in full in current assets, the long term portion has been reclassified to non-current assets. Foreign exchange gains previously included in cost of sales have been reclassified to finance income and other gains/(losses). Costs relating to the transportation of products previously included in cost of sales and administrative and other expenses have been reclassified to distribution costs. There was no impact on the net profit for either the Group or the Company from these reclassifications and therefore no impact on the Group or the Company statement of changes in equity. Effect on balance sheet at 27 April 2013: Note Group At 27 April As 2013 Adjustment Restated $'000 $'000 $'000 Non-Current Assets Affiliate (a) - 86,004 86,004 Other non-current assets 8,612,432-8,612,432 Total Non-Current Assets 8,612,432 86,004 8,698,436 Receivables (a) 2,213,526 (86,004) 2,127,522 Other current assets 6,566,148-6,566,148 Total Current Assets 8,779,674 (86,004) 8,693,670 Total Current Liabilities 4,197,917-4,197,917 Net Current Assets 4,581,757 (86,004) 4,495,753 13,194,189-13,194,189 Stockholders Equity 9,582,046-9,582,046 Non-controlling interest (55,877) - (55,877) Non-Current Liabilities 3,668,020-3,668,020 13,194,189-13,194,

143 Limited Notes to the Financial Statements 34. Restatement (Continued) Effect on balance sheet at : Note Group At Adjustment As Restated $'000 $'000 $'000 Non-Current Assets Affiliate (a) - 123, ,018 Other non-current assets 10,464,597-10,464,597 Total Non-Current Assets 10,464, ,018 10,587,615 Receivables (a) 2,822,029 (123,018) 2,699,011 Other current assets 7,072,125-7,072,125 Total Current Assets 9,894,154 (123,018) 9,771,136 Total Current Liabilities 5,617,239-5,617,239 Net Current Assets 4,276,915 (123,018) 4,153,897 14,741,512-14,741,512 Stockholders Equity 10,557,241-10,557,241 Non-controlling interest (36,023) - (36,023) Non-Current Liabilities 4,220,294-4,220,294 14,741,512-14,741,

144 Limited Notes to the Financial Statements 34. Restatement (Continued) Effect on statement of comprehensive income at : Note Group At Adjustment As Restated $'000 $'000 $'000 Revenue 30,851,350-26,522,970 Cost of sales (c), (d) (24,127,169) (216,477) (24,343,646) Gross Profit 6,724,181 (216,477) 6,507,704 Other gains/(losses) (c) 165,320 37, ,304 Distribution costs (d) (991,747) 128,667 (863,080) Administration and other expenses (d) (4,250,950) (231,895) (4,482,845) Operating Profit 1,646,804 (281,721) 1,365,083 Finance income (c) 18, , ,089 Finance costs (592,076) - (592,076) Profit before Taxation 1,073,096-1,073,096 Taxation (153,987) - (153,987) Net Profit 919, ,109 Other Comprehensive Income, net of taxes - Item that will not be reclassified to profit or loss - Re-measurements of post-employment benefits (103,750) - (103,750) Item that will be reclassified to profit or loss - Exchange differences on translating foreign operations 317, ,800 Total other comprehensive income 214, ,050 Total Comprehensive Income 1,133,159-1,133,159 Net Profit Attributable to: Stockholders of the company 957, ,283 Non-controlling interests (38,174) - (38,174) 919, ,109 Total Comprehensive Income Attributable to: Stockholders of the company 1,167,079-1,167,079 Non-controlling interests (33,920) - (33,920) 1,133,159-1,133,159 Cents Cents Cents Earnings per Stock Unit There was no impact on the statement of cash flows from the above reclassifications

145 Limited Notes to the Financial Statements 34. Restatement (Continued) Effect on balance sheet at 27 April 2013: Note Company At 27 April 2013 Adjustment As Restated $'000 $'000 $'000 Non-Current Assets Affiliate (a) - 86,004 86,004 Loans receivable (b) 366,229 1,541,785 1,908,014 Other non-current assets 3,386,293-3,386,293 Total Non-Current Assets 3,752,522 1,627,789 5,380,311 Receivables (a) 1,728,006 (86,004) 1,642,002 Subsidiaries (b) 4,183,749 (1,541,785) 2,641,964 Other current assets 4,048,454-4,048,454 Total Current Assets 9,960,209 (1,627,789) 8,332,420 Total Current Liabilities 4,307,308-4,307,308 Net Current Assets 5,652,901 (1,627,789) 4,025,112 9,405,423-9,405,423 Stockholders Equity 7,043,084-7,043,084 Non-Current Liabilities 2,362,339-2,362,339 9,405,423-9,405,

146 Limited Notes to the Financial Statements 34. Restatement (Continued) Effect on balance sheet at : Note Company At Adjustment As Restated $'000 $'000 $'000 Non-Current Assets Affiliate (a) - 123, ,018 Loans receivable (b) - 2,585,473 2,585,473 Other non-current assets 4,530,840-4,530,840 Total Non-Current Assets 4,530,840 2,708,491 7,239,331 Receivables (a) 1,957,921 (123,018) 1,834,903 Subsidiaries (b) 5,306,997 (2,585,473) 2,721,524 Other current assets 4,288,617-4,288,617 Total Current Assets 11,553,535 (2,708,491) 8,845,044 Total Current Liabilities 5,264,336-5,264,336 Net Current Assets 6,289,199 (2,708,491) 3,580,708 10,820,039-10,820,039 Stockholders Equity 7,043,084-7,043,084 Non-Current Liabilities 3,776,955-3,776,955 10,820,039-10,820,

147 Limited Notes to the Financial Statements 34. Restatement (Continued) Effect on statement of comprehensive income at : Note Company At Adjustment As Restated $'000 $'000 $'000 Revenue 25,286,157-26,286,157 Cost of sales (c), (d) (20,433,589) (216,477) (20,650,066) Gross Profit 4,852,568 (216,477) 4,636,091 Other gains/(losses) (c) 894,862 37, ,846 Distribution costs (d) (749,900) 128,667 (621,233) Administration and other expenses (d) (3,222,517) (231,895) (3,454,412) Operating Profit 1,775,013 (281,721) 1,493,292 Finance income (c) 121, , ,289 Finance costs (529,334) - (529,334) Profit before Taxation 1,367,247-1,367,247 Taxation (61,186) - (61,186) Net Profit 1,306,061-1,306,061 Other Comprehensive Income, net of taxes - Item that will not be reclassified to profit or loss - Re-measurements of post-employment benefits (99,450) - (99,450) Total Comprehensive Income 1,206,611-1,206,

148 Limited Notes to the Financial Statements 34. Restatement (Continued) Impact on statement of cash flows for the year ended Company At Adjustment As Restated $'000 Cash Flows from Operating Activities Net profit 1,306,061-1,306,061 Adjustments for: Depreciation 239, ,315 Amortisation 19,707-19,707 Write-off property, plant and equipment 8,332-8,332 Gain on disposal of property, plant and equipment (3,561) - (3,561) Changes in post-employment benefits 27,400-27,400 Taxation expense 61,186-61,186 Interest income (121,568) - (121,568) Dividend income (855,458) - (855,458) Unrealised foreign exchange losses/(gains) 113,737 (281,720) (167,983) Interest expense 481, ,712 1,276,863 (281,720) 995,143 Changes in operating assets and liabilities: Inventories (777,941) - (777,941) Biological assets (162,120) - (162,120) Receivables (222,797) 37,014 (185,783) Subsidiaries (1,180,753) 1,084,807 (95,946) Payables 672, ,954 (393,794) 840, ,307 Taxation paid (90,806) - (90,806) Cash provided by operating activities (484,600) 840, ,501 Cash flows from investing activities Loans repayments received - 299, ,587 Loans issued - (1,139,688) (1,139,688) Cash used in investing activities (103,321) (840,101) (943,422) Cash flows from financing activities Cash provided by financing activities (123,257) - (123,257) Effect of changes in exchange rates on cash and cash equivalents 37,984-37,984 Increase in cash and cash equivalents (673,194) - (673,194) Cash and cash equivalents at the beginning of the year 856, ,548 Cash and cash equivalents at the end of year 183, ,

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