Statement by Directors. Independent Audit Report. Consolidated statement of comprehensive income. Consolidated statement of financial position

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER Contents Di e to s epo t 2 4 Statement by Directors 5 Independent Audit Report 6 Consolidated statement of comprehensive income 7 Consolidated statement of financial position 8 Consolidated statement of cash flows 9 Consolidated statement of changes in equity 10 Notes to the consolidated financial statements Disclaimer on additional information South Pacific Stock Exchange disclosure requirements

2 YEAR ENDED 31 DECEMBER DIRECTORS REPORT In accordance with a resolution of the Board of Directors, the directors herewith submit the statements of financial position of the group and of the company as at 31, and the related statements of comprehensive income, changes in equity and cash flows for the year ended on that date and report as follows: DIRECTORS The following were directors of the company at any time during the financial year and up to the date of this report: Cecil Browne; Anthony Scanlan; Gardiner Whiteside; John Murphy resigned on 23rd June ; Nessa O Sulli a resigned on 5th March 2015; George Forster; Shane Richardson appointed on 23rd June ; and Alex Nario appointed on 5th March PRINCIPAL ACTIVITIES The principal activities of the group are the manufacture and sale of beer, readytodrink alcoholic beverages and softdrinks, as well as the distillation and sale of potable and industrial alcohol. TRADING RESULTS The prior period comparatives presents the results for the 18 month period ended 31. The profit after income tax of the group for the year ended 31 was 9,853,415 as compared to 10,662,644 for the 18 month period ended 31 and for the holding company was 10,061,836 as compared to 9,686,044 for the 18 month period ended 31. Included within the 18 months period ended 31 results were significant items charges (before income tax) of 3,997,215 (group) and 3,089,121 (company). There are no significant items recognised in. Refer to note 22 for further details. DIVIDENDS No dividends were declared nor paid during the year (31 period: dividend paid of 1,353,056 for the year ended 30 June 2012). Subsequent to the end of the financial year, the directors have declared a special dividend of 0.05 per share, totalling 520,406.25, payable to shareholders by 2 April RESERVES Apart from the movement in reserves required under the International Financial Reporting Standards, the directors recommend that no transfer be made to reserves within the meaning of the Seventh Schedule of the Fiji companies Act,

3 YEAR ENDED 31 DECEMBER DIRECTORS REPORT (continued) BAD AND DOUBTFUL DEBTS Prior to the completion of the company and the group's financial statements, the directors took reasonable steps to ascertain that action had been taken in relation to writing off bad debts and the provision for doubtful debts. In the opinion of directors, adequate provision has been made for doubtful debts. As at the date of this report, the directors are not aware of any circumstances, which would render the amount written off for bad debts, or the provision for doubtful debts in the company and the group, inadequate to any substantial extent. NONCURRENT ASSETS Prior to the completion of the financial statements of the company and of the group, the directors took reasonable steps to ascertain whether any noncurrent assets were unlikely to be realised in the ordinary course of business for recoverable amounts being less than their carrying value as shown in the accounting records of the company and the group. Where necessary these assets have been written down or adequate provision has been made to bring the carrying values of such assets to an amount that they might be expected to realise. As at the date of this report, the directors are not aware of any circumstances, which would render the values attributed to noncurrent assets in the company's and the group's financial statements to be materially misstated. UNUSUAL TRANSACTIONS The esults of the o pa a d its su sidia s ope atio s du i g the fi a ial ea ha e ot i the opi io of the directors been substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in the financial statements. EVENTS SUBSEQUENT TO BALANCE DATE No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company and the group, the results of those operations, or the state of affairs of the company and the group in future financial years. OTHER CIRCUMSTANCES As at the date of this report: i) no charge on the assets of the company and group has been given since the end of the financial year to secure the liabilities of any other person; ii) no contingent liabilities have arisen since the end of the financial year for which the company and the group could become liable; and iii) no contingent liabilities or other liabilities of the company and the group have become or are likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the company and the group to meet its obligations as and when they fall due. As at the date of this report, the directors are not aware of any circumstances that have arisen, not otherwise dealt with in this report or the company's and its group's financial statements, which would make adherence to the existing method of valuation of assets or liabilities of the company and its subsidiary misleading or inappropriate. 3

4 YEAR ENDED 31 DECEMBER DIRECTORS REPORT (continued) BASIS OF ACCOUNTING The directors believe the basis of the preparation of financial statements is appropriate and the company and its subsidiary will be able to continue in operation for at least twelve months from the date of this statement. Accordingly, the directors believe the classification and carrying amounts of assets and liabilities as stated in these financial statements to be appropriate. DIRECTORS' BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than those included in the aggregate amount of emoluments received or due and receivable by directors shown in the financial statements or received as the fixed salary of a fulltime employee of the company or of a related corporation) by reason of a contract made by the company or by a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. DIRECTORS' INTERESTS Particulars of directors' interests in the ordinary shares of the company during the year are as follows: Cecil Browne Gardiner Whiteside Direct interest Indirect interest Nil Nil GROUP CONTRIBUTION Contributions to group profit after income tax are as follows: Year ended 31 10,061,836 (199,447) (8,974) 9,853,415 Paradise Beverages (Fiji) Limited Samoa Breweries Limited (subsidiary) Consolidation eliminations 18 months ended 31 9,686, ,080 (5,480) 10,662,644 Signed on behalf of the Board of Directors in accordance with a resolution of the directors. Dated this 5th day of March Director Anthony Scanlan Director Nessa O Sulliva 4

5 YEAR ENDED 31 DECEMBER STATEMENT BY DIRECTORS In accordance with a resolution of the Board of Directors, we state that in our opinion: i) the accompanying statement of comprehensive income of the company and the group is drawn up so as to give a true and fair view of the results of the company and the group for the year ended 31 ; ii) the accompanying statement of changes in equity of the company and the group is drawn up so as to give a true and fair view of the changes in equity of the company and the group for the year ended 31 ; iii) the accompanying statement of financial position of the company and the group is drawn up so as to give a true and fair view of the state of affairs of the company and the group as at 31 ; iv) the accompanying statement of cash flows of the company and the group is drawn up so as to give a true and fair view of the cash flows of the company and of the group for the year ended 31 ; v) at the date of this statement there are reasonable grounds to believe the company and the group will be able to pay its debts as and when they fall due; and vi) all related party transactions have been adequately recorded in the books of the company and the group. Signed on behalf of the Board of Directors in accordance with a resolution of the directors this 5th day of March Director Anthony Scanlan Director Nessa O Sulliva 5

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7 YEAR ENDED 31 DECEMBER CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Group Holding Company Year ended months Year ended months ended 31 ended 31 Notes Continuing operations Revenue Cost of sales Gross profit ,690,555 (57,330,194) 29,360, ,036,420 (88,056,940) 40,979,480 62,725,222 (39,002,136) 23,723,086 91,378,148 (59,922,918) 31,455,230 Other operating income Selling and distribution expenses Administrative expenses Profit from operations ,565 (11,026,752) (7,852,783) 11,095,391 1,739,698 (13,781,686) (10,861,332) 18,076, ,239 (7,679,738) (5,563,519) 11,266,068 1,884,096 (9,769,753) (8,140,821) 15,428,752 Significant items Finance costs Profit before income tax 22 (282,731) 10,812,660 (3,997,215) (403,519) 13,675,426 (37,212) 11,228,856 (3,089,121) 12,339,631 Income tax expense Profit for the year/period from continuing operations 6a (959,245) (3,012,782) (1,167,020) (2,653,587) 9,853,415 10,662,644 10,061,836 9,686, , , , ,847 10,602,115 11,651,491 9,862,300 (8,885) 9,853,415 10,617,347 45,297 10,662,644 10,553,234 48,881 10,602,115 11,545, ,068 11,651, Other comprehensive income: Exchange differences on translation of foreign operations Other comprehensive income for the year/period Total comprehensive income for the year/period Profit from continuing operations attributable to: Equity holders of the parent Noncontrolling interests Total comprehensive income attributable to: Equity holders of the parent Noncontrolling interests Earnings per share Basic earnings per share 7 10,061,836 The accompanying notes form an integral part of this Consolidated Statement of Comprehensive Income. 7 9,686,044

8 AS AT 31 DECEMBER CONSOLIDATED STATEMENT OF FINANCIAL POSITION Group Holding Company ,387 14,204, ,888 30,179,618 45,685,948 1,381,861 17,378, ,603 25,220,284 44,488, ,347 9,409, ,946 20,891,799 31,081,000 1,381,415 10,500,054 18,171,742 30,053, ,857,648 67,463,224 77,320, ,006,820 10,090,097 54,889,083 64,979, ,467,931 18,791,678 8,302,740 42,451,552 69,545, ,626,970 18,791,678 8,535,189 29,434,538 56,761,405 86,814, ,735,260 6,171,875 1,356,803 20,263,938 13,091,529 2,626, ,303 1,589,209 17,576,036 7,981,037 4,538,473 1,191,419 13,710,929 8,590, ,303 1,444,832 10,303, b 1,917,756 4,370,234 6,287,990 26,551,928 96,454,892 1,706,564 4,342,139 6,048,703 23,624,739 85,843,192 1,917, ,669 2,067,425 15,778,354 84,848,616 1,706,564 27,058 1,733,622 12,037,421 74,777, ,081,625 11,228,615 81,369,859 2,081,625 10,528,096 71,507,559 2,081,625 4,765,957 78,001,034 2,081,625 4,756,372 67,939,198 94,680,099 84,117,280 84,848,616 74,777,195 1,774,793 96,454,892 1,725,912 85,843,192 84,848,616 74,777,195 Notes Current assets Cash and cash equivalents Trade and other receivables Current tax assets Inventories Noncurrent assets Investment in subsidiary Intangible assets Property, plant and equipment Total assets Current liabilities Trade and other payables Interestbearing liabilities Income tax payable Employee benefits Noncurrent liabilities Employee benefits Deferred tax liabilities 16 Total liabilities Net assets Equity Share capital Reserves Retained earnings Equity attributable to members of the holding company Noncontrolling interests The accompanying notes form an integral part of this Consolidated Statement of Financial Position. Signed for and on behalf of the Board and in accordance with a resolution of the Directors. Director Anthony Scanlan 5th March 2015 Director Nessa O Sulliva 5th March

9 YEAR ENDED 31 DECEMBER CONSOLIDATED STATEMENT OF CASH FLOWS Group Holding Company Year ended months Year ended months ended 31 ended 31 Note Operating activities Receipts from customers Payment to government excise duty Payments to suppliers and employees Interest paid Income taxes paid Net cash provided by Operating Activities 154,310, ,171, ,697,413 (64,101,243) (88,825,469) (52,781,209) (75,830,055) (107,071,811) (52,503,850) (282,731) (401,550) (37,212) (1,645,393) (3,889,501) (1,643,658) 12,451,387 10,983,206 10,731,484 Investing activities Proceeds from sale of property, plant and equipment Acquisition of property, plant and equipment Acquisition of intangibles Net cash (used in) Investing activities 8,705 (16,993,223) (16,984,518) Financing activities Dividends paid to equity holders of the parent Dividends paid to minority shareholders of subsidiary Net cash (used in) Financing Activities 1,114, ,088,430 (71,970,432) (71,985,851) (3,705,644) 11,426,503 8,705 1,114,309 (7,248,207) (16,211,730) (7,766,976) (13,900,874) (16,203,025) (5,909,354) (7,766,976) (12,562,021) (1,313,070) (1,313,070) (2,961) (1,316,031) (1,313,070) Net (decrease) in cash held (4,533,131) (4,233,699) (5,471,541) (2,448,588) Cash and cash equivalents at the beginning of year/period (1,245,134) 3,030,008 1,381,415 3,830,003 Effects of exchange rate changes on operating cash balances 55,777 (41,443) (5,722,488) (1,245,134) (Overdraft)/cash at the end of the year/period 18 (4,090,126) The accompanying notes form an integral part of this Consolidated Statement of Cash Flows. 9 1,381,415

10 YEAR ENDED 31 DECEMBER CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Group Holding Company Year ended months Year ended months ended 31 ended 31 Notes Retained earnings Balance at the beginning of the year/period Operating profit after tax Dividends paid/proposed Balance at the end of the year/period Share premium reserve Balance at the beginning of the year/period Movement during the year/period Balance at the end of the year/period Foreign currency translation reserve Balance at the beginning of the year/period Other comprehensive income Balance at the end of the year/period General reserve Balance at the beginning of the year/period Movement during the year/period Balance at the end of the year/period Sharebased payments reserve Balance at the beginning of the year/period Employee sharebased payments Balance at the end of the year/period Share capital Balance at the beginning of the year/period Movement during the year/period Balance at the end of the year/period 71,507,559 9,862,300 81,369,859 62,243,268 10,617,347 (1,353,056) 71,507,559 67,939,198 10,061,836 78,001,034 59,606,210 9,686,044 (1,353,056) 67,939, ,652,625 4,652,625 4,652,625 4,652,625 4,652,625 4,652,625 4,652,625 4,652, ,771, ,934 6,462,658 4,843, ,076 5,771, ,000 75, ,000 75,000 75,000 75,000 75,000 75, ,747 9,585 38,332 28,747 28,747 28,747 9,585 38,332 28,747 28, ,081,625 2,081,625 2,081,625 2,081,625 2,081,625 2,081,625 2,081,625 2,081,625 1,725,912 (8,885) 57,766 1,774,793 1,619,844 45,297 60,771 1,725,912 96,454,892 85,843,192 Noncontrolling interests Balance at the beginning of the year/period Operating (loss)/profit after tax Other comprehensive income Balance at the end of the year/period Total equity 84,848,616 The accompanying notes form an integral part of this consolidated Statement of Changes in Equity ,777,195

11 YEAR ENDED 31 DECEMBER 1. CORPORATE INFORMATION Paradise Beverages (Fiji) Limited is a limited liability company incorporated and domiciled in Fiji whose shares are publicly traded on the South Pacific Stock Exchange. The registered office is located at Foster Road, Walu Bay, Suva, Fiji. The consolidated financial statements of Paradise Beverages (Fiji) Limited and its subsidiary company ("the Group") for the year ended 31 were authorised for issue in accordance with a resolution of the directors on 5th March BASIS OF PREPARATION The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared on a historical cost basis. The consolidated financial statements are presented in Fiji dollars and all values are rounded to the nearest dollar, except when otherwise indicated. Basis of consolidation The consolidated financial statements comprise the financial statements of Paradise Beverages (Fiji) Limited ("the holding company") and its subsidiary company as at 31 each period. The Group controls an investee if and only if the Group has: Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); Exposure, or rights, to variable returns from its involvement with the investee; and The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the other vote holders of the investee; Rights arising from other contractual arrangements; and The G oup s oti g ights a d pote tial oti g ights. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income ("OCI") are attributed to the equity holders of the parent of the Group and to the noncontrolling interests, even if this results in the noncontrolling interests having a deficit balance. When necessary, adjustments are made to the financial state e ts of su sidia ies to i g thei a ou ti g poli ies i to li e ith the G oup s a ou ti g poli ies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 11

12 YEAR ENDED 31 DECEMBER 2.1 BASIS OF PREPARATION (continued) Basis of consolidation (continued) A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: Derecognises the assets (including goodwill) and liabilities of the subsidiary; Derecognises the carrying amount of any noncontrolling interests; Derecognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or deficit in profit or loss; and e lassifies the pa e t s sha e of o po e ts p e iousl e og ised i OCI to p ofit o loss o retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities. Noncontrolling interest represents that part of the net results of operations and net assets of the subsidiary, which are not owned, directly or indirectly by the company. On consolidation, the subsidiary company's (Samoa Breweries Limited) assets and liabilities has been translated at the rate of exchange ruling at balance date. Revenue and expense accounts have been translated using the average of the exchange rates ruling at the end of each month during the current financial period. The rate used to translate the assets and liabilities of Samoa Breweries Limited was :1 (:1.2331:1) while the average rate used to translate revenue and expense accounts was :1 (: :1). 2.2 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the company and the group's financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods. Judgments I the p o ess of appl i g the G oup s a ou ti g poli ies, a age e t has ade the follo i g judgments, which have the most significant effect on the amounts recognised in the consolidated financial statements: Impairment of accounts receivable Impairment of accounts receivable balances is assessed at an individual as well as on a collective level. At a collective level, all debtors in the 120 days plus category (excluding those covered by a specific impairment provision and those covered by security) are estimated to have been impaired and are accordingly provided for. Impairment of property, plant and equipment and intangible assets The group assesses whether there are any indicators of impairment of all property, plant and equipment and intangible assets at each reporting date. Property, plant and equipment and intangible assets are tested for impairment and when there are indicators that the carrying amount may not be recoverable, a reasonable provision for impairment is created. For the year ended 31, no additional provision for impairment has been made as the group reasonably believes that no indicators for impairment exist. 12

13 YEAR ENDED 31 DECEMBER 2.2 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued) Judgments (continued) Provision for stock obsolescence Provision for stock obsolescence is assessed and raised on a specific basis based on a review of inventories. Inventories considered obsolete or unserviceable are written off in the period in which they are identified. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur. Taxes Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the longterm nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences in interpretation may arise for a wide variety of issues depending on the conditions prevailing in the respective domicile of the group companies. Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred income tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Impairment of nonfinancial assets Impairment exists when the carrying value of an asset or cash generating unit ("CGU") exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales t a sa tio s, o du ted at a s le gth, fo si ila assets o o se a le a ket p i es less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that ill e ha e the asset s pe fo a e of the CGU ei g tested. The e o e a le a ou t is sensitive to the discount rate used for the DCF model as well as the expected future cashinflows and the growth rate used for extrapolation purposes. 13

14 YEAR ENDED 31 DECEMBER 2.3 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES New and amended standards and interpretations The following standards, amendments and interpretations to existing standards were published and are mandatory for the annual periods beginning on or after 1 January or later periods: Reference Title IAS 27 Separate Financial Statements Offsetting Financial Assets and Financial Liabilities Consolidated Financial Statements Disclosure of Interests in Other Entities IAS 32 Application date of standard 1 January Impact on financial report No impact 1 January No impact IFRS 10 IFRS 12 Amendments Related party disclosures to IFRS 3 Amendments Clarification of acceptable methods of to IAS 16 and depreciation and amortisation IAS 38 1 January 1 January No impact No impact 1 July No impact 1 January 2016 No impact IFRS 9 Financial Instruments 1 January 2015 IFRS 15 Revenue from contracts with customers 1 January 2017 Impact on disclosure only The impact of the standard is yet to be assessed There were no significant changes to the group's accounting policies during the financial year. 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the statement of comprehensive income in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial period end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in the statement of comprehensive income in the expense category consistent with the function of intangible asset. 14

15 YEAR ENDED 31 DECEMBER 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Intangible assets (continued) The useful lives of intangible assets are assessed as either finite or indefinite. (continued) Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. Intangible Asset Vonu brand SPD brands Estimated Useful Lives 50 years Infinite Gains or losses arising from derecognizing of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of comprehensive income when the asset is derecognised. (i) Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the o side atio t a sfe ed o e the o pa s i te est i et fai alue of the et ide tifia le assets, liabilities and contingent liabilities of the acquiree and the fair value of the noncontrolling interest in the acquiree. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Cash Generating Units (CGUs), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed. (ii) Brand Names Separately acquired brand names are shown at historical cost. Brand names acquired in a business combination are recognised at fair value at the acquisition date. Brand names have either a finite or infinite useful life. Brand names having a finite useful life are carried at cost less accumulated amortisation and impairment, whereby amortisation is recognised on a straight line basis in the income statement, over the assets estimated useful life. Brand names having an infinite useful life are carried at cost less impairment. 15

16 YEAR ENDED 31 DECEMBER 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of nonfinancial assets The group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cashgenerating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or other groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in the statement of comprehensive income in those expense categories consistent with the function of the impaired assets, except for property previously revalued where the revaluation was taken to equity. In this case, the impairment is also recognised in equity up to the amount of any previous revaluation. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods. Such reversal is recognised in the statement of comprehensive income unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. The following criteria are also applied in assessing impairment of specific assets: (i) Goodwill The group assesses whether there are any indication that goodwill is impaired at each reporting date. Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cashgenerating units, to which the goodwill relates. Where the recoverable amount of the cashgenerating unit is less than their carrying amount an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The group performs its annual impairment test of goodwill as at 31. (ii) Intangible assets Intangible assets with indefinite useful lives are tested for impairment annually as at 31 either individually or at the cash generating unit level, as appropriate. 16

17 YEAR ENDED 31 DECEMBER 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Investments and other financial assets Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held to maturity investments or availableforsale financial assets, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The group determines the classification of its financial assets on initial recognition and, where allowed and appropriate, reevaluates this designation at each financial period end. All regular way purchases and sales of financial assets are recognised on the trade date, which is the date that the group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. Loans and receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables are carried at amortised cost using the effective interest method less any allowance for impairment. Gains and losses are recognised in the statement of comprehensive income when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Fair value The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business at balance date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm's length market transaction; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis or other valuation models. Amortised cost Loans and receivables are measured at amortised cost. This is computed using the effective interest method less any allowance for impairment. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. Impairment of financial assets The Group assess at each balance date whether a financial asset or group of financial assets is impaired. Assets carried at amortised cost If there is an objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss shall be recognised in statement of comprehensive income. 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 previously recognised impairment loss is reversed, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in the statement of comprehensive income. 17

18 YEAR ENDED 31 DECEMBER 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of financial assets (continued) Assets carried at amortised cost (continued) In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible. Inventories Inventories are valued at the lower of cost and net realizable value. Costs include invoice value plus associated costs incurred in bringing each product to its present location and condition. Raw materials: purchase cost on a weighted average basis; and Finished goods and work in progress: cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Cash and cash equivalents Cash and shortterm deposits in the statement of financial position comprise cash at banks and on hand and shortterm deposits with a maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Trade and other receivables Trade receivables are recognised at original invoice amount (inclusive of VAT) less any provision for uncollectible debts. Bad debts are written off during the period in which they become known. A specific provision is raised for any doubtful debts. Trade and other payables Liabilities for trade payables and other amounts are carried at cost (inclusive of VAT where applicable) which is the fair value of the consideration to be paid in the future for goods and services received whether or not billed to the entity. Borrowing costs Borrowing costs are recognised as an expense when incurred. Property, plant and equipment All property, plant and equipment are shown at cost less accumulated depreciation except for those assets revalued in prior periods. The exemption permitted under IFRS 1 has been adopted for previously revalued assets whose balances are now deemed to be their cost. Costs include expenditure that is directly attributable to acquisition of the items. Premium on leasehold land Buildings Plant and equipment Vehicles Furniture and fittings Rate per annum Various 1.17% 20% 2.5% 100% 8% 33% 1.25% 25% 18 Method Over period of lease Straight line Straight line and diminishing value Straight line Straight line and diminishing value

19 YEAR ENDED 31 DECEMBER 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property, plant and equipment (continued) Profit and loss on disposal of property, plant and equipment are taken into account in determining profit or loss for the year. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cashgenerating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is greater of carrying value and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Impairment losses are recognised in the statement of comprehensive income. Leases Finance leases, which transfer to the group substantially all the risks and benefits incidental to the ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Capitalised leased assets are depreciated over the period the benefit is expected to be realised from their use. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight line basis over the lease term. Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue is recognised when the significant risk and rewards of ownership have passed to the buyer and can be reliably measured and collectability of the related receivables is reasonably assured. Risk and rewards are considered to have passed to buyers when goods are delivered to customers. Dividends Revenue is recognised when the shareholders' right to receive the payment is established. Interest Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset. Employee benefits Annual leave Provision is made for annual leave to be payable to employees on the basis of statutory requirement on employment contract. 19

20 YEAR ENDED 31 DECEMBER 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Employee benefits (continued) Long service leave A liability for long service leave is recognised, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates on government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows. Foreign currencies The consolidated financial statements are presented in Fiji dollars, which is the holding company's functional and presentation currency. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at balance date. All differences are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in comprehensive income. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in equity. Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value is determined. The assets and liabilities of foreign operations are translated into Fiji dollars at the rate of exchange ruling at balance date and its income statement is translated at the weighted average exchange rate for the period. The exchange differences arising on translation are taken directly to a separate component of equity. On disposal of the foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the statement of comprehensive income. Business combinations and goodwill Business combinations are accounted for using the purchase method. Goodwill is initially measured at cost being the excess of the cost of the business combination over the Group's share in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the cash generating unit that is expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to that unit. Where goodwill forms part of a cash generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. 20

21 YEAR ENDED 31 DECEMBER 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Sharebased payments Employees (including senior executives) of the Group receive remuneration in the form of sharebased payments, whereby employees render services as consideration for equity instruments (equitysettled transactions). Taxes Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at balance date in the countries where the Group operates and generates taxable income. Current income tax relating to items recognised directly in equity is recognised in equity and not in comprehensive income. Deferred tax Deferred income tax is provided using the liability method on temporary differences at balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences, except: where the deferred income tax liability arises from goodwill amortisation or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that it is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. 21