To our: Responsible. We are. Customers Shareholders Employees Contractors Communities Country

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2 To our: Customers Shareholders Employees Contractors Communities Country We are Responsible. At Jamaica Broilers Group, we hold ourselves accountable in all areas of our multifaceted operations, endeavouring to live up to the high standards of our Mission Statement.

3 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 commitment to truth, fairness and the building of goodwill. Mission Statement

4 During /, our Processing Plant continued to operate at international standards achieving the ISO certification. RESPONSIBLE for Quality.

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6 RESPONSIBLE for Service.

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8 RESPONSIBLE for our Future.

9 CONTENTS 8 Notice of Annual General Meeting 10 Financial Highlights 12 Directors Report 13 Chairman s & President s Review Largest Ordinary Shareholders 27 Shareholdings of Directors & Senior Management and Connected Parties 28 Directors and Officers 29 Directors Profiles 36 Group Balance Sheet 37 Group Statement of Changes in Stockholders Equity 38 Group Statement of Cash Flows 40 Company Profit & Loss Account 32 Corporate Divisions & Subsidiaries 33 Auditors Report 35 Group Profit & Loss Account 41 Company Balance Sheet 42 Company Statement of Changes in Stockholders Equity 43 Company Statement of Cash Flows 45 Notes to the Financial Statements Advisers (inside back cover)

10 Notice of AGM NOTICE IS HEREBY GIVEN that the 49th Annual General Meeting of Jamaica Broilers Group Limited will be held at the Jamaica Conference Centre, Ocean Boulevard, Kingston Mall, Kingston on Saturday October 20, at 10:00am to transact the following Business: 1. To receive the Audited Accounts for the year ended April 28,, 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 April 28,, together with the reports of the Directors and Auditors thereon, be and are hereby adopted. 2. To elect Directors. The Directors retiring by rotation in accordance with Regulation 89 of the Company s Articles of Association are Mr. Malcolm McDonald, Mr. Barrington Pryce, Dr. Trevor Dewdney, and Dr. Claudette Cooke who, being eligible for re-election, offer themselves for re-election. Messrs. Gregory Brenton Shirley and Mr. Ian Parsard who were appointed during the year to fill the casual vacancies created by the resignations of Messrs. Philip Levy and Douglas Senior, respectively, retire in accordance with Regulation 95 of the Articles of Incorporation and, being eligible, offer themselves for re-election. The Company is being asked to consider, and if thought fit, pass the following resolution: Resolution No. 2 - That the Directors, retiring by rotation, be re-elected by a Single Resolution. Resolution No. 3 - That Mr. Malcolm McDonald, Mr. Barrington Pryce, Dr. Trevor Dewdney and Dr. Claudette Cooke, who are retiring by rotation in accordance with Regulation 89 of the Articles of Association be and are hereby re-elected as Directors of the Company. Resolution No. 4 - Mr. Gregory Brenton Shirley who is retiring in accordance with Regulation 95 of the Articles of Incorporation, be and is hereby re-elected as a Director. Resolution No. 5 - Mr. Ian Parsard who is retiring in accordance with Regulation 95 of the Articles of Incorporation, be and is hereby re-elected as a Director.

11 3. To approve the remuneration of the Directors. The Company is asked to consider, and if thought fit, pass the following resolution: Resolution No. 6 - That the amount shown in the Audited Accounts of the Company for the year ended April 28, as fees of the Directors for their services as Directors, be and is hereby approved. 4. 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 26th day of September, BY ORDER OF THE BOARD PETER A. DePASS 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. 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.

12 Financial Highlights Year Ended April 28,

13 BDC: $479,992,179 BDF: $13,972,199 Jamaica Eggs: $2,669,975 Content: $3,309,529 Levy Industries: $2,110,252 Aquaculture: $29,299,289 Jamaica Poultry Breeders: $22,081,840 Wincorp Miami: $ 903,846 Capital Expenditure (J$) Year Ended April 28, International Poultry Breeders: $20,847,175 JB Ethanol: $ 983,180,000 TOTAL = $1,558,366,284 11

14 Directors Report The Directors present their annual report with the Financial Statements for the year ended 28th April,. RESULT OF OPERATIONS TURNOVER The Group s turnover for the year amounted to $11,490,300,000 as compared with $9,938,217,000 for the previous year. PROFIT, DIVIDENDS AND APPROPRIATIONS Group Profit after taxation 512,139,000 Profits brought forward from previous years were 2,318,833,000 To give an amount of 2,830,972,000 Interim Dividends (137,917,000) Thereby leaving profits to be carried forward as Retained Earnings of 2,693,055,000 The Directors do not recommend the payment of a final Dividend. DIRECTORS The Directors retiring in accordance with Regulation 89 of the Articles of Incorporation are Mr. Malcolm McDonald, Mr. Barrington Pryce, Dr. Trevor Dewdney and Dr. Claudette Cooke, all of whom are eligible for re-election. Messrs. Philip Levy and Douglas Senior resigned as Directors since the last Annual General Meeting. Messrs. Gregory Brenton Shirley and Mr. Ian Parsard who were appointed during the year to fill the casual vacancies created by the resignations of Messrs. Philip Levy and Douglas Senior, respectively, retire in accordance with Regulation 95 of the Articles of Incorporation and, being eligible, offer themselves 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 this 26th day of September, BY ORDER OF THE BOARD 12 PETER A. DePASS SECRETARY REGISTERED OFFICE CONTENT, MCCOOK S PEN, ST. CATHERINE

15 DR. THE HON. R. DANVERS WILLIAMS, O.J., C.D., LLD, J.P. Chairman ROBERT E. LEVY, C.D. President & CEO Chairman s & President s Annual Review 13

16 Ethanol The Ethanol Plant fully operational. OVERVIEW 14 / was another good operating year for our Group, with our total sales revenue increasing from $9.9 billion to $11.5 billion, while our gross profits improved marginally moving from $2.5 billion to $2.7 billion. The reduction in our after tax profits from $645 million to $512 million is attributable to the non-recurrence of the prior year s exceptional income in relation to the acquisition of the Co-generation Plant amounting to $120 million. The overall operating results, which are essentially in keeping with the results of the prior year, do not necessarily give an indication of the many challenges that the Group faced during the year under review. We will now share some of these challenges with you. During strategic planning sessions in early, we concluded and accepted that the mature poultry and feed industries in Jamaica will not show a future growth rate that is sufficiently above inflation levels. We also looked at the fact that our Group had accumulated over J$1 billion in investment instruments, that could be converted to cash, and we felt that with God s leading, we were in a position to take advantage of an investment opportunity that would significantly increase the revenue streams of our Group. We therefore decided, after prayerful consideration, to effect a large investment in an ethanol processing facility. We have to acknowledge however that the investment will reverse our debt-free position. We are happy to report that at the time of preparation of this overview, the Ethanol Plant was fully operational with the first order of fuel grade ethanol being delivered on August 7,. We commend our executives Christopher Levy and Ian Parsard who took up the lead roles in ensuring that construction was completed in record time and on budget. We also commend the senior management in the Best Dressed Chicken, Aquaculture and Content Divisions who ensured that the core business operations were effectively managed thus allowing the executives responsible for these operations to divert their attention to the ethanol project. The past year has also seen tremendous strides in our Aquaculture operations and Stephen Levy, General Manager and his management team must be commended for directing the changes that have brought the fish operation segment from a J$100 million loss to what is essentially a breakeven position. He convinced the executives and the Board not to lose sight of Aquaculture s stillvibrant potential to be a major player in the future growth of our Group reminding us regularly that Costa Rica, which is geographically close to us and has similar conditions, exports two planeloads of fish per day to the USA. This is an achievement which is equal to the turnover of our poultry Chairman s & President s Annual Review

17 Aquaculture exploring expansion opportunities. Aquaculture operations and is, therefore, not beyond our own capabilities. Boosted by increased cash flow and production breakthroughs in the growing of much bigger fish, Aquaculture is now exploring expansion possibilities. Perhaps the biggest challenge our Group had this year was in our beef operation, where the availability of weaners or finished animals continues to suffer from the depletion of the breeder herds in Jamaica. But despite this and many other challenges being faced, our General Manager, Dave Fairman continues to find ways to keep the Division in a profitable position by producing further processed items. Nonetheless, we believe that the beef industry will require tremendous financial support from the Government of Jamaica if it is ever to get back to previous production and profitability levels. There is one additional challenge which our Group faced this year which remains unresolved. We unfortunately saw the failure of a number of engines at our Cogeneration Plant and although we are well on the way toward correcting the problem, these failures have slowed the profitability we expected to flow from full ownership of the facility. As part of the corrective measures, we have entered into a contract with Intership Ltd. the engineering arm of the company that does all of our grain shipping and which is responsible for all the power generating plants on some 200 ships that belong to that company. Those plants are very similar to ours and Intership has taken over the full operation and management of our cogeneration facility to get us fully operational again. We are also in negotiations with Wartsila, the engine manufacturers, to facilitate full restoration of the plant and we are confident that this is going to take us to the point where we will realize the envisaged profitability potential. OPERATIONAL HIGHLIGHTS D I V I S I O N S Best Dressed Foods The / financial year was another successful one for Best Dressed Foods highlighted by a 3% increase in the sales volume of poultry products, this was achieved through careful and strategic focus on all our market segments. Best Dressed Foods also enjoyed a successful introduction into the import market of refriger- Chairman s & President s Annual Review 15

18 Best Dressed Foods New product innovation continued to be a primary thrust. 16 ated protein products, as we expanded our product range to include most of the major commodity meat and fish items. This synergistic business segment is expected to continue realizing strong sales for the upcoming financial year. New product innovation, development and introduction continued to be a primary thrust in the area of marketing during /. This focus resulted in the launch of four well-accepted products: Chicken Salad Lite, Chicken Salad Hot & Spicy, Chicken Sausage Links (100% Chicken Meat) and Chicken Lasagna. While product diversification and introduction was a driving force during the year under review, extreme care was also taken to ensure that our core brands Best Dressed Chicken, Reggae Jammin, Best Dressed Fish and Content Beef were carefully nurtured so that their Brand Equity and Sales continued to grow. To this end, we launched a new Best Dressed Chicken campaign, Always Safe, which reinforced the message that Best Dressed Chicken provides only the best, that our products are Hormone Free and strictly Health-Regulated, and that this is the brand that has been known and trusted for 50 years. Importantly, Reggae Jammin Rotisserie Chicken continued to dominate that market segment during the year, despite a reduction in the real disposable income of various socio-economic groups. The past year also saw our involvement in a new cooking show which has taken the airwaves by storm. The show, Vibes Cuisine, is a fresh and innovative programme that made its debut on CVM TV on December 6,. Overall, Best Dressed Foods has continued to strive for excellence in customer service, employee development, and new product offerings, to ensure that our customers are always completely satisfied. Our consistent service and customer satisfaction levels were confirmed in our latest Customer Perception Survey which was completed in January, and which highlighted improvements in our Sales/Telesales Representatives and Merchandisers feedback. At the same time, an internal reorganization was recently completed to allow us to pay even closer attention to our customers needs; this is expected to realize additional benefits during /2008. Cross training was also a major initiative which was undertaken during the year under review. This equipped the sales team with improved skills sets, resulting in increased productivity and enabling greater upward mobility for our employees. Best Dressed Foods intends to continue to build on all these gains in the new operating year. Chairman s & President s Annual Review

19 World-class status ISO certification BDC Processing Plant Best Dressed Chicken Processing Plant During /, our Processing Plant continued to operate at international standards and this was reflected in the high rating that the Plant achieved in almost all critical success areas as reported by AGRISTATS, the USA-based rating agency. We also continued to build on our world-class status with the achieving of ISO certification and the construction of our state-of-the-art cold storage facility. The award of ISO certification to our Processing Plant is particularly significant, in that it conveys to our stakeholders, local and international, that the Best Dressed Chicken Processing Plant has an environmental management system (EMS) in place, which enables the Plant to address the long-term impact of its products, services and processes on the environment. In turn, this allows the Plant to improve its performance, while also satisfying its legal requirements. In January, after 7 months of construction, the new, 12,000-square foot cold storage facility was commissioned. This building was completed in record time and has more than doubled the previous finished product holding capacity of the Plant. The cold room is fitted with a modern penthouse-design cooling system and a 3-tier and 4-tier push back racking system. The Management and staff of the Processing Plant plans to maintain our world class standards by continuously improving the skills set of the personnel who work in the Plant, while also putting in place the systems which are designed to guarantee that we produce an exceptional product at all times. Field/Feed Mill Operations Our Best Dressed Chicken Field and Feed Mill Operations completed another challenging but successful year. The sections met all the requirements of our main customers who comprise the Processing Plant, for `live birds; Hi Pro Farm Supplies, Contract Growers, Jamaica Egg Services, Jamaica Poultry Breeders, and Aquaculture, to whom we supplied sack & bulk feeds. There was increased attention to improving customer relations, maintaining very high quality standards, and improving the response time to customers and other stakeholders. Additionally, production efficiencies in all areas continued to show significant improvement, and this will remain the focus of the entire team for the new financial year. Despite the challenge of rising operating costs, including increases in input costs, our Grow-Out Section continued to realize efficiencies that are in line with the best companies in similar operations in the international arena. Continued improvement in efficiencies is an absolute necessity if Chairman s & President s Annual Review 17

20 Exceeded the previous year s sales revenue by 23% HI-PRO FEEDS the company is to remain viable in what is a highly-competitive global arena. For its part, our Feed Milling Section completed another year of producing the highest quality product, while realizing record levels of efficiency. The Field/Feed Mill Operations team, inclusive of the Contract Growers, Support Contractors and our delivery and haulage personnel, are fully committed to ensuring that the organization s objectives for the new /2008 financial year are surpassed. 18 Hi-Pro Feeds and ACE Supercentre This was a good year during which we recovered fully from the impact of the bad weather of the previous year, and also experienced positive returns from implementation of targeted and effective marketing strategies which were shaped by information gleaned from our customer surveys. The division exceeded the previous year s sales revenue by 23% and pre-tax profit surpassed the previous year by 7%. This was achieved despite a major increase in the price of corn and soy meal, which resulted from the U.S. thrust to significantly increase corn-based ethanol output. Corn prices FOB per metric tonne New Orleans moved from US$106 in May to a high of US$179 in March. This had the impact of slowing the growth of the livestock sector an effect that is expected to continue through the coming year, until the market adjusts to this new regime of high prices which appears to be here to stay. Key performance measures in respect of net margins, overheads, receivables and inventory levels, were kept on target. Hi-Pro s feed sales volume grew by 13% over last year; our sales increased steadily through the first half of the year as a result of several coordinated marketing efforts with significant gains being experienced in the last quarter as a result of our ability to meet a short fall in the marketplace which resulted from production problems at a competitor s plant. Chick sales also grew 11% over last year, as we continued to enhance delivery service and upgrade the trucking fleet to improve the quality of chicks delivered to the market. Additionally, ACE Supercentre formerly Hi-Pro ACE achieved a 22% growth in sales this year, over the previous year. We were also on target in respect of reducing inventory and receivables. In the 1st Quarter, sales lagged behind budget; this led to a change in our marketing strategy as we re-branded the store ACE Supercentre dropping Hi-Pro from the name so that we could appeal to a wider customer base. This, coupled with a new promotional campaign, resulted in significant growth and saw store sales, for the first time, exceeding chick sales. We thank God for his blessings in / and look forward to an even better /2008 op- Chairman s & President s Annual Review

21 Invested in first Liquid Egg Plant in the Caribbean Jamaica Egg Services erating year, as we fine tune our marketing and customer service programmes to better meet the needs of our clients. Content Agricultural Products Our / operating year was a very good one for Content, with sales revenue and gross margins increasing by 15% and 57% respectively over the year, due largely to a number of new products being introduced into the market place. Some of these in particular formed fish products were introduced to fill the void created by Aquaculture s decision to exit the Quick Service Restaurant (QSR) market. However the QSR customers subsequently identified a substitute product which satisfies their desire for a whole muscle tilapia fillet instead of a formed product. The latter half of the financial year presented us with further challenges, as a number of issues affecting the beef industry as a whole started to impact our operations. Firstly, we lost market share to imported burgers from Costa Rica burgers which were offered into the market at prices that appeared to be very low, given the approximately 86% import duty structure that is in place for these items. Secondly, we had to reduce our production by approximately 12% after one of our customers decided to directly import formed chicken patties. The combination of these two factors caused us to embark on a major restructuring exercise in order to contain cost. Other avenues are being pursued in order to address the external factors stated earlier. The objective for the coming year is to maximize profits from the operation, despite the challenges currently being faced. Jamaica Egg Services In spite of a major table egg surplus, depressed wholesale prices for eggs that continued for most of the year, and a significant increase in the price of imported grain, Jamaica Egg Services (JES) was able to operate profitably in /. The company participated in the development of the first Liquid Egg Plant in the Caribbean, and also made a small investment in that respect. Production commenced in the first quarter of calendar year, with the growing hospitality industry being the target market. In addition to its export potential, production from this plant will initially have an import substitution effect, while serving to strengthen the linkage between local agricultural production and the hospitality industry. Our role as a major stakeholder in the table egg industry was enhanced by the successful implementation of this project. Chairman s & President s Annual Review 19

22 Jamaica Poultry Breeders Hatching egg quality improved Hatchability of 84.96% In an attempt to increase domestic demand for table eggs, JES plans to assist the Jamaica Egg Farmers Association to launch a comprehensive, generic egg advertising and public education campaign, during /08, which will focus on the health benefits of egg consumption. JES, by adopting the role of a facilitator, continues to demonstrate a deep commitment to the restructuring of the table egg industry for the benefit of the Jamaica Broilers Group, table egg producers and consumers. S U B S I D A R I E S L O C A L Jamaica Poultry Breeders Jamaica Poultry Breeders Ltd. experienced yet another good year during /. In our key operating areas which included hatching eggs per bird, mortality, feed conversion & hatchability Agristats, the US-based rating agency, placed our company s performance in the top 25 percentile of similar companies operating in the USA. Production cost, in real terms, also declined when compared to the previous year. Our production of million hatching eggs, the highest in recent years, surpassed the previous year s production by 10.3%, due primarily to our investment in tunnel ventilated/black-out housing and expansion of the square footage of existing houses. Consequently, hatching egg quality improved, resulting in hatchability of 84.96% up from 81.7% recorded last year. The company s application for an extension to our Approved Farmer Status was granted. This facilitated implementation of our expansion plan and the start of construction of one new production farm, which is scheduled for completion in the first quarter of the new fiscal year. 20 Aquaculture Jamaica The decision to move away from supplying product to the Quick Service Restaurant market and into the production of large fresh fillets for the export markets had a positive effect. The fish operations segment therefore recovered from a $100M loss the previous year to end /07 with a $23M loss. Much of this loss was due to the write-off of bad debts from previous year receivables and depreciation. The Company closed the year in a cash-positive position for the first time in several years; this was an encouraging result that greatly motivated the management team. Chairman s & President s Annual Review

23 Notwithstanding challenges company remained robust International Poultry Breeders The Company s focus remains on the export market where our large fillets have become recognized for their high quality and are established on the shelves of top retailers in the UK and the USA. Currently, management is planning an expansion to try to keep up with the demands being made for our fillet product. S U B S I D I A R I E S O V E R S E A S International Poultry Breeders The / operating year for International Poultry Breeders (IPB) can be considered reflective of the dynamicity of the wider Poultry Industry, as it tried to survive galloping grain prices caused by the seemingly insatiable demand of the USA s Ethanol industry for corn and grain carbohydrate to produce the commodity. Notwithstanding these challenges which exacerbated the usual vagaries of climate and personnel changes that are associated with operations of this nature our company remains robust. With an experienced management team at the helm, combined with a committed staff complement, we remain confident that the long- term outlook for our industry is buoyant. WINCORP International, Inc. The past year was significant in the ongoing development of this organization. The company underwent an important leadership change, mid-year, with the retirement of our Managing Director after 13 years of service and the installation of our new President. As a consequence of that change, we passed through a period of reevaluation resulting in a refocusing of purpose and a renewing of commitment to the quality product and service for which WINCORP International has become so well known throughout the Caribbean basin. Meeting the needs of the Jamaica Broilers Group of Companies continues to be a primary objective. In consultation with JBG, we continue to fine-tune our systems and processes to attain even higher efficiencies in price competitiveness, as well as in the utilization of our resources for improved service and purchase and delivery requirements. This year s challenge of record high grain and transportation prices are forcing continued consolidation of the supply chain and the customer base we serve. However, we are proud that our involvement in premixes, animal feed ingredients and areas allied to animal production and nutrition Chairman s & President s Annual Review 21

24 Training & Development Group Human Resource Management System implemented continue to be widely accepted by our customers. This has allowed us to continue to show satisfying returns and growth. One area of such growth involves the sale of new and fully- equipped environment control houses, as well as equipment for retrofitted growing units. Our sales are showing a steady increase and exciting new potential exists in several markets outside of Jamaica and the wider Caribbean. H U M A N R E S O U R C E D E V E L O P M E N T A N D P U B L I C R E L A T I O N S A C T I V I T I E S Training and Development The Group continued our training and development programmes throughout the year, with emphasis on enhancing the soft skills of the group s workforce, as well as on filling the training gaps of individuals involved in the more technical areas of our operations. We conducted sessions in public speaking, supervisory skills, preventative maintenance control, and industrial fire fighting techniques, while continuing to provide HACCP certification training at various levels. The Axapta Enterprise Resource Programme, which was introduced to the Group three years ago, continues to be implemented across the Group on a phase-by-phase basis. This year, the Human Resources Module (HRM) of Axapta was implemented. This will lead to improved administrative and operational efficiencies by facilitating a more current, flexible and accessible employee records database, as well as providing managers with a tool that will assist the development and execution of the Group s HR strategic plan. 22 Public Relations Among the major activities we undertook during / was the hosting of the joint Jamaica Broilers Group Fair Play Awards and the biennial Excellence in Media Lecture. The breakfast event recorded a number of firsts. In respect of the Fair Play Awards, we had a record 35 entries, despite limiting to two (2) the number of entries that any single journalist was allowed to submit. Additionally, the awards including certificates of commendation were spread across five (5) media houses, the first occasion on which so many different media houses were considered award-worthy by the judges. The Excellence in Media Lecture recorded its own firsts : Presenter was Mr. Harold Hoyte President and Editor-in-Chief of Barbados leading newspaper company, Nation Publishing who was the first Caribbean-based journalist to present one of the lectures. Importantly, too, his timely Chairman s & President s Annual Review

25 Corporate Citizenship: Sports Education Welfare Programmes presentation on The CSME: Its Implications for the Media Landscape at the Forefront of The 21st Century brought the audience of senior journalists to their feet in a well deserved ovation the first such standing ovation recorded at the event. During the year under review, the Group also maintained our vigilance in monitoring the spread of Avian Influenza (AI) on the international scene. In recognition of the possible threat of the disease, we continued to sensitize our farmers and other local stakeholders, through seminars and workshops, about the importance of maintaining rigid bio-security measures. C O R P O R A T E C I T I Z E N S H I P Sports The Jamaica Broilers Primary School Basketball League, now in its fourth year, was won by Ginger Ridge All-Age School, from amongst a total of 18 competing schools. This League seeks to unearth and showcase basketball talent from within the primary schools in and around the Old Harbour region. As our Group recognizes the health, social and other positive impact that sports have on a nation and its people, we continue to extend our support for the football programmes in the McCook s Pen, Spring Village and the Bodles/Freetown communities. Of significance is the tremendous success that has been achieved by the Bodles Football Club over the last three years, which has seen the Club s advancement from the Divisional League. This was accomplished when the team won the St. Catherine Juiciful Major League Competition and will, therefore, compete in the South Central Super League next season. Education As we continue to promote self empowerment and personal development through educational pursuits, JBG maintained the alliances formed with the HEART Trust/NTA and the Jamaica Foundation for Lifelong Learning (J.F.L.L.), formerly JAMAL, to develop programmes that are geared toward filling the skills gap within the various communities in which we operate. Community support for these programmes continues to grow and we are confident that, through partnership and goal attainment, our Group and the community participants will achieve mutually beneficial results. The Adult Learning sessions facilitated by the Group s Feed Mill at its facilities, has seen a steady Chairman s & President s Annual Review 23

26 Outreach Enhancing the Welfare of Many increase in participants, who all exhibit an unwavering commitment to excel. Participants attend classes funded by the Group twice weekly to improve their numeracy and literacy skills and have been steadily expanding their horizons with interest now being exhibited in the advanced High School Equivalency Programme (H.I.S.E.P). The Spring Village Training Institute, which last year benefited from a donation from the Group to facilitate the purchase of welding equipment and supplies, has been certified by the HEART NCTVET to conduct Level One training in Welding and Electrical Installation. This will boost the Institute s offerings, as graduates will now receive certification that is benchmarked to international standards. Other Outreach Activities The Group continued our support for various outreach activities, such as Relay for Life a fundraiser coordinated by the Jamaica Cancer Society to help support persons battling cancer and the Pan Caribbean Corporate Sigma Run, of which the Jamaica Aids Support was the main beneficiary during the year under review. This is in addition to our commitment to various other non profit and charitable entities. We intend to continue to honour our corporate social responsibility through various intervention programmes in a variety of communities thereby impacting the lives of many in a positive manner. JBG Foundation JBG Group Foundation which was established in 2004 and has since been accumulating funds through investment of the 2.5% of the Group s profit before tax which forms the principal seed funding for the Foundation made its first major donation during /. The sum donated was $1.2 million and it was used to purchase a bus for Youth Reaching Youth, a peer counseling project of the Swallowfield Chapel. The donation is in keeping with the primary purpose of the Foundation, which is to provide assistance to organizations in Jamaica and overseas, which are seeking to enhance the spiritual life and welfare of others. 24 Chairman s & President s Annual Review

27 THE WAY FORWARD We are committed to bringing the company back to a debt-free position in the medium term, leveraging gains from our investment in the property at Port Esquivel on which the Ethanol Plant is situated and taking significant steps forward in reducing our costs, becoming more efficient and fueling even further growth. During the year ahead, the Group will remain fully committed to the continued growth of our poultry and feed business. We are committed to our staff members who go far beyond their roles and functions while on duty and will continue to offer them increased training opportunities, as well as guidance in spiritual and social matters. We also pledge to continue recognizing the various teams that have represented the company in several different sports over the past years; they have performed exceptionally and we are committed to continuing our support for them. Our commitment extends to our wider groups of stakeholders, who include our consumers and the wider communities in which we operate. We will continue to manage our donations to them in a manner which makes it clear that we are providing genuine assistance and are not just seeking promotion for our efforts. Importantly, 2008 will see our Group celebrating our 50th anniversary 50 years in which God has blessed us in ways that are too numerous to count. We intend to acknowledge those blessings in what we hope will be the most meaningful ways, so that thousands of Jamaicans will have opportunities to participate. In closing, we must give thanks to the Board of Directors which has served genuinely, with interest and wisdom; to our management team, which has not counted the cost in doing what had to be done to achieve the successful year we have had; and to our employees in general, who have shown a genuine love for working at Jamaica Broilers Group and have played a very important part in producing good results. We also give special thanks to our Lord Jesus Christ who has protected us and has been a light unto our way and a lamp unto our feet. DR. THE HON. R. DANVERS WILLIAMS, O.J., C.D., LLD, J.P. Chairman ROBERT E. LEVY, C.D. President & CEO 25

28 10 Largest Ordinary Shareholders as at 28 APRIL The holdings of those persons owning the ten (10) largest blocks of stock units as at (date to be inserted), are set out hereunder:- Name of shareholder No. of Shares % of Issued Share Capital Jamaica Broilers Trust (JBT) 157,696, The Robert Levy Foundation 141,896, The Phillip Levy Foundation 61,148, Halcyon Limited 60,899, The Arrol Trust 44,411, National Insurance Fund 45,007, Trading A/C Scotia Bank Ja Trust & Merchant A/C ,031, LOJ Pooled Equity Fund No. 1 26,620, West Indies Trust A/C WT 89 18,636, Pan Caribbean Merchant Bank J ,072, TOTAL 719,370, PETER A. DEPASS Secretary June 15th,

29 Shareholdings of Directors & Senior Management and Connected Parties Directors as at Directors No. of Shares Connected Party No. of Shares R. Danny Williams - Chairman 500,000 Shirley Williams (Joint holder) Ravers Limited 8,373,332 Robert Levy - President & CEO 4,491,789 Portland Corporation Ltd* 12,315,363 Phillip Levy 2,367,878 Trevor Dewdney 53,333 Trevor D Dewdney Jr 9,318 Christopher Levy - Snr. VP Operation 5,151,615 Malcolm McDonald NIL Barrington Pryce 74,548 Nadine Pryce Gregory Shirley 4,141,866 Hirlie Williams 89,041 Andrew Mahfood NIL Wisynco Trading Ltd 463,780 Claudette Cooke - VP Human Resource Development & Public Relations 2,327,867 Aubyn Hill 1,941,251 Ian Parsard - VP Finance & Planning NIL Karen/Ian Parsard 837,445 Sub-total 18,771,310 Senior Management (other than Directors listed above) as at SENIOR MANAGEMENT No. of Shares Connected Party No. of Shares David Mair 5,600 David Mair/Kim Mair 474,877 Leon Headley 162,820 Leon/June Headley 2,414,456 June/Leon/Jo-Anne Headley 10,000 June/Leon/Lauren Headley 4,500 Donald Patterson 918,242 Dayne Patterson 931 Conley Salmon 2,181,025 Julie Salmon 360,692 Julie Salmon 1,619,570 Sub-total 3,267,687 GRAND TOTAL 741,409,810 * Portland Corporation B Account 12,315,363 27

30 Directors and Officers DIRECTORS Dr. the Hon. R. Danvers Williams O.J., C.D., LLD, J.P. Chairman Robert E. Levy C.D. President & Chief Executive Officer Claudette D. Cooke CMT, Ed.D. Vice President Human Resource Development & Public Relations Trevor D. Dewdney D.V.M. Non-Executive Director Aubyn Hill MBA Non-Executive Director Christopher E. Levy MBA Senior Vice President Operations Andrew J. Mahfood B.Sc., CA Non-Executive Director Malcolm D. L. McDonald Attorney-at-Law Non-Executive Director OFFICERS Robert E. Levy, C.D. President Chief Executive Officer Claudette D. Cooke Vice President Human Resource Development & Public Relations Leon O. N. Headley Vice President Procurement & Trading Christopher E. Levy Senior Vice President Operations Donald A. Patterson Vice President Accounting & Information Systems Ian S. Parsard Vice President Finance & Corporate Planning Conley N. Salmon Vice President Marketing Feed & Agricultural Supplies David Mair Vice President Marketing Protein Products Peter A. DePass Company Secretary Ian S. Parsard Vice President Finance & Corporate Planning Barrington A. Pryce Non-Executive Director Gregory Shirley Non-Executive Director 28 Hirlie E. Williams Non-Executive Director

31 Directors Profiles 29

32 Dr. the Hon. Raby Danvers Williams, O.J., C.D., Hon. LLD, J.P, C.L.U. Chairman Dr. R. Danvers (Danny) Williams, Chairman of the Board of Jamaica Broilers Group Limited, has had a distinguished career in the life insurance industry spanning some 53 years. He is the founder and Past President and Chief Executive Officer of Life of Jamaica Ltd., one of the largest life insurance companies in the West Indies. Dr. Williams has served the Government of Jamaica in the capacity of Senator, Minister of State and Minister of Industry and Commerce respectively. He is currently the Chairman of the Board of Jamaica College and serves on the boards of several major Jamaican companies, organizations and foundations. Robert E. Levy, C.D. President and Chief Executive Officer Robert Levy started his career in Jamaica Broilers Group in His management and leadership expertise at all levels of the company s operations has contributed significantly to the level of success the Group currently enjoys today. A graduate of Harvard Business School, his commitment and service to the agri-business industry locally and regionally have earned him the national honours of Commander of the Order of Distinction. Mr. Levy is a Director of Jamaica Group and JB Ethanol Limited. He also serves on several other Boards including Chairman of the Sugar Company of Jamaica, Chairman of National Foundation for the Development of Science and Technology and Chairman of Moorlands Camp. Claudette Cooke, CMT, Ed. D. Dr. Claudette Cooke is an Executive Director of the Jamaica Broilers Group Limited since 2003 and currently holds the post of Vice President of Human Resource Development and Public Relations, having joined the Group in A Certified Master Trainer, in the area of Human Performance Improvement (HPI), Dr. Cooke is listed in the International Who s Who of Professionals and is a member of the American Society for Training and Development (ASTD). She is a Director of Youth Opportunities Unlimited, The Joy Town Community Development Foundation and President of Women of Virtue International. Trevor Dewdney, D.V.M. Dr. Trevor Dewdney, Veterinary Consultant, and past Senior Veterinary Officer of the Jamaica Broilers Group Limited became a member of the company s Board of Directors in He is the Chairman of the College of Agriculture, Science & Education (CASE) and a member of the Jamaica Veterinary Board. A devoted farming practitioner, Dr Dewdney has served the industry as a Vice President of the Jamaica Agricultural Society and Chairman of the St Catherine Parish Development Committee. Aubyn Hill, MBA Aubyn Hill is the Chief Executive Officer of Corporate Strategies Limited, with over 25 years of expertise in the areas of banking and finance. A graduate of Harvard Business School, he has held various senior positions in a number of major financial corporations worldwide, and conducted business in over eighty four countries. Mr Hill became a Director of Jamaica Broilers Group Limited in July He is Chairman of the Strategic Implementation Board of the Jamaica Constabulary Force and board member of Allied Insurance Brokers, Nationwide News Network and Kingston City Centre Improvement Company. Christopher Levy, MBA Christopher Levy has worked with the Jamaica Broilers Group since 1985 and has substantial experience and in-depth knowledge of the company s business. He is currently the Senior Vice President - Operations and an 30 Directors Profiles

33 Executive Director of the Board. He is a Director of JB Ethanol Limited and has also served as a Director of the Jamaica Manufacturers Association (JMA) and the Postal Corporation of Jamaica, as well as the First Vice President of the Munro College Old Boys Association. Andrew Mahfood, CA Andrew Mahfood qualified as a Chartered Accountant in Canada before becoming the Financial Controller for Wisynco Trading Ltd. In 1997 he became the Finance Director of the Wisynco Group Limited, and has been a Director of Jamaica Broilers Group Limited since He currently serves on the boards of Food For The Poor and First Global Financial Services and is a member of the Institute of Chartered Accountants of Ontario. Malcolm D.L. McDonald, Attorney-at-law Malcolm McDonald, Attorney-at-law and partner in the firm McDonald Millingen, specializing in Banking, Taxation, Commercial Law and Conveyancing, has been a Director of the Jamaica Broilers Group limited since He has extensive experience in international commercial transactions and is a keen negotiator in the acquisition and sale of private companies. He is a member of the Law Society of England and the Jamaica Bar Association. Ian Parsard, M.B.A. (Hons), A.C.C.A. Ian Parsard has been with the Group for over sixteen (16) years and is currently the Vice President - Finance & Corporate Planning. An Alumni of the University Of Pennsylvania Wharton School Of Business where he distinguished himself by graduating with highest honours as the Palmer Scholar, he is also a Chartered Accountant. He has held various senior positions throughout the Group and is a Director of Jamaica Broilers Group Limited and Director of JB Ethanol Limited. Mr. Parsard is a member of the Sugar Enterprise Team, Director of Campion College alumni, and a Director of the Mustard Seed Agricultural Programme. Barrington Pryce Barrington Pryce joined the Jamaica Broilers Group Limited in He has been a Director of Company since 1992 and is currently the General Manager of one of the Group s subsidiary, Jamaica Poultry Breeders Limited. A Committee Member of the Lauriston United Church, St. Ann and the Deputy President of the Men s Fellowship, he enjoys music and is an avid sportsman. Gregory B. Shirley, MBA Gregory B. Shirley recently retired from his significant post as Partner in Charge of the Advisory Services of KPMG in Jamaica, Board Member of KPMG Caricom, and head of Advisory Services for the member firms of KPMG Caricom. His professional career, spanning from thirty (30) years, has distinguished him as a sought after Consultant in the areas of Compensation and Benefits Administration, Performance Measurement, Corporate and Strategic Planning and Process Improvement. He is a Director of Jamaica Broilers Group, Chairman of the Board of Munro College and a Past President of the Institute of Management Consultants of Jamaica. Hirlie E. Williams Hirlie Williams has been an employee of Jamaica Broilers Group Ltd for over twenty one years and a Director on the company s Board since He is currently employed in the Hatchery Department of the Best Dressed Chicken Division and is a keen sports fan. Directors Profiles 31

34 Corporate Divisions & Subsidiaries 32 JAMAICA BROILERS GROUP LTD. Group Head Office Content, McCook s Pen St. Catherine Jamaica, West Indies Tel: Fax: Website: Dr. the Hon. R. Danvers Williams Chairman Mr. Robert Levy President and CEO Dr. Claudette Cooke Vice President Mr. Leon Headley Vice President Mr. Christopher Levy Senior Vice President Mr. Ian Parsard Vice President Mr. Donald Patterson Vice President Mr. David Mair Vice President Mr. Conley Salmon Vice President BEST DRESSED CHICKEN Content, McCook s Pen, St. Catherine Tel: / ; Fax: JAMAICA POULTRY BREEDERS LIMITED Caentabert, P.O., Box 27 Claremont, St. Ann Tel: ; Fax MASTER BLEND FEEDS P.O. Box 24 Old Harbour, St. Catherine Tel: ; Fax BEST DRESSED FOODS Spring Village St. Catherine Tel: Fax: Toll Free: BUY BDF1 CONTENT AGRICULTURAL PRODUCTS Bog Walk, St. Catherine Mailing Address: Content, McCook s Pen, St. Catherine Tel: ; Fax: JAMAICA EGG SERVICES Mailing Address: White Marl. St. Catherine Tel: ; Fax: HI-PRO/ACE FARM & GARDEN SUPERCENTRE P.O. Box 886 White Marl, St. Catherine Tel: : Fax: AQUACULTURE JAMAICA LIMITED Maggoty, P.O. Box 17 St. Elizabeth Tel: ; Fax: ERI SERVICES (ST. LUCIA) LIMITED 20 Micoud Street Castries, St.Lucia WINCORP INTERNATIONAL INC NW 116 Way, Suite 14 Medley, FL Tel: (305) ; Fax: (305) INTERNATIONAL POULTRY BREEDERS, L.L.C Perry Batts Road Norman Park, Georgia Tel: (229) ; Fax (229) ATLANTIC UNITED INSURANCE CO. LTD. One Regis Place 94th Street P.O. Box 472 Georgetown, Grand Cayman

35 Independent Auditors Report To the Members of Jamaica Broilers Group Limited Report on the Financial Statements We have audited the accompanying financial statements of Jamaica Broilers Group Limited and its subsidiaries, and the accompanying financial statements of Jamaica Broilers Group Limited standing alone set out on pages 35 to 91, which comprise the consolidated and company balance sheets as of and the consolidated and company profit and loss accounts, statements of changes in stockholders equity, and cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and with the requirements of the Jamaican Companies Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 33

36 Members of Jamaica Broilers Group Limited Independent Auditors Report Page 2 Opinion In our opinion, the accompanying financial statements give a true and fair view of the financial position of the group and the company as of, and of financial performance and cash flows of the group and the company for the year then ended, so far as concerns the members of the company, 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 Act, in the manner so required. Chartered Accountants 25 July Kingston, Jamaica 34

37 Group Profit and Loss Account Year ended Note Turnover 11,490,300 9,938,217 Cost of sales (8,835,842) (7,437,672) Gross Profit 2,654,458 2,500,545 Other operating income 6 139, ,764 Distribution costs (364,081) (326,134) Administration and other expenses (1,644,986) (1,601,455) Operating Profit 784, ,720 Finance costs 9 (75,716) (50,611) Profit before Taxation 709, ,109 Taxation 10 (196,869) (119,775) NET PROFIT 512, ,334 Dealt with in the financial statements of: Holding company 433, ,880 Subsidiaries 79, , , ,334 Cents Cents Earnings per Stock Unit

38 Group Balance Sheet Restated Note Non-Current Assets Property, plant and equipment 12 3,381,104 2,059,904 Intangible asset ,781 99,641 Investments , ,848 Deferred income taxes 16 1,240 3,965 Pension plan asset , ,200 3,961,163 2,789,558 Current Assets Inventories 18 1,309,470 1,034,890 Biological assets , ,078 Receivables , ,849 Affiliates 21 33,248 35,116 Taxation recoverable 6,636 12,365 Financial assets at fair value through profit or loss 22 7,056 67,885 Cash and short term investments , ,156 3,459,379 2,942,339 Current Liabilities Payables 24 1,360, ,817 Taxation payable 197, ,370 Dividends payable 25 77,953 77,953 Borrowings , ,548 2,618,595 1,390,688 Net Current Assets 840,784 1,551,651 4,801,947 4,341,209 Stockholders Equity Share capital , ,137 Capital reserve , ,077 Retained earnings 2,693,055 2,318,833 4,220,125 3,804,047 Non-Current Liabilities Borrowings , ,202 Deferred income taxes , ,460 Post-employment obligation 17 7,700 7,500 4,801,947 4,341,209 Approved for issue on behalf of the Board of Directors on 25 July and signed on its behalf by: 36

39 Group Statement of Changes in Stockholders Equity Year ended Number of Shares Share Capital Capital Reserve Retained Earnings Total Note 000 Balance at 30 April ,199, , ,221 1,811,416 3,250,275 Unrealised gains on available-for-sale securities - - 1,524-1,524 Translation gain ,831-44,831 Net gains recognised directly in stockholders equity ,355-46,355 Net profit , ,334 Total income recognised in current year , , ,689 Dividends (137,917) (137,917) Transfer of share premium to share capital - 165,499 (165,499) - - Balance at 1,199, , ,077 2,318,833 3,804,047 Unrealised losses on available-for-sale securities - - (2,814) - (2,814) Translation gain ,670-44,670 Net gains recognised directly in stockholders equity ,856-41,856 Net profit , ,139 Total income recognised in current year , , ,995 Dividends (137,917) (137,917) Balance at 1,199, , ,933 2,693,055 4,220,125 37

40 Group Statement of Cash Flows Year ended Cash Flows from Operating Activities Note Net profit 512, ,334 Adjustments for: Depreciation , ,497 Amortisation 13 11,760 9,797 Gain on disposal of property, plant and equipment 6 (20,212) (183) Negative goodwill on acquisition - (120,339) Fair value loss on financial assets at fair value through profit or loss 1,772 9,588 Change in pension plan asset and post-employment obligations (33,000) (78,900) Taxation expense , ,775 Interest income 6 (60,495) (80,085) Foreign exchange gains (17,549) (24,922) Interest expense 9 70,756 47,121 Changes in operating assets and liabilities: 884, ,683 Inventories (274,580) (68,612) Biological assets (55,190) (30,337) Receivables (206,496) 210,614 Affiliates 1,868 (2,213) Payables 451,333 (119,948) Financial assets at fair value through profit or loss 59,057 (77,473) Translation gain on working capital of foreign subsidiaries 25,067 47, , ,119 Taxation paid (162,408) (185,486) Cash provided by operating activities 723, ,633 38

41 Group Statement of Cash Flows (Continued) Year ended Note Cash Flows from Operating Activities (Page 4) 723, ,633 Cash Flows from Investing Activities Purchase of property, plant and equipment 12 (1,558,366) (226,172) Proceeds from disposal of property, plant and equipment 49,711 43,323 Purchase of intangible asset 13 (13,900) (15,828) Purchase of investments 2,185 - Proceeds from sale of investments - 242,825 Refund from pension plan ,000 - Interest received 54,197 88,314 Cash (used in)/provided by investing activities (1,266,173) 132,462 Cash Flows from Financing Activities Long term loans repaid (76,471) (426,813) Long term loans received 173, ,000 Interest paid (73,137) (52,069) Dividends paid (137,917) (137,917) Cash used in financing activities (113,969) (376,799) (Decrease)/increase in cash and cash equivalents (656,756) 255,296 Effect of changes in exchange rates on cash and cash equivalents 7,675 11,624 Cash and cash equivalents at beginning of year 417, ,688 CASH AND CASH EQUIVALENTS AT END OF YEAR 23 (231,473) 417,608 39

42 Company Profit and Loss Account Year ended Note Turnover 10,909,861 9,388,219 Cost of sales (8,540,264) (7,280,954) Gross Profit 2,369,597 2,107,265 Other operating income 6 127,552 88,431 Distribution costs (315,060) (322,155) Administration and other expenses (1,476,884) (1,379,756) Operating Profit 705, ,785 Finance costs 9 (75,089) (44,440) Profit before Taxation 630, ,345 Taxation 10 (197,078) (137,465) NET PROFIT 433, ,880 40

43 Company Balance Sheet Note Non-Current Assets Property, plant and equipment 12 2,482,042 1,175,792 Intangible assets 13 98,569 95,922 Investments , ,257 Interest in subsidiaries , ,602 Pension plan asset 17 98, ,400 3,181,548 2,035,973 Current Assets Inventories 18 1,244, ,457 Biological assets , ,307 Receivables , ,135 Subsidiaries 232, ,171 Affiliates 21 33,248 35,116 Taxation recoverable 5,958 11,749 Financial assets at fair value through profit or loss 22 7,056 67,885 Cash and short term investments , ,576 3,005,311 2,641,396 Current Liabilities Payables 24 1,193, ,779 Taxation payable 192, ,834 Dividends payable 25 77,953 77,953 Borrowings , ,132 2,429,246 1,247,698 Net Current Assets 576,065 1,393,698 3,757,613 3,429,671 Stockholders Equity Share capital , ,137 Capital reserve , ,101 Retained earnings 2,354,444 2,059,323 3,256,236 2,961,561 Non-Current Liabilities Borrowings , ,259 Deferred income taxes , ,651 Post-employment obligation 17 6,500 6,200 3,757,613 3,429,671 Approved for issue on behalf of the Board of Directors on 25 July and signed on its behalf by: R. Danvers Williams Director Robert E. Levy Director 41

44 Company Statement of Changes in Stockholders Equity Year ended Number of Shares Share Capital Capital Reserve Retained Earnings Total Note 000 Balance at 30 April ,199, , ,335 1,087,664 1,999,637 Unrealised losses on available-for-sale securities - - (1,049) - (1,049) Net loss recognised directly in stockholders equity - - (1,049) - (1,049) Net profit , ,880 Total (expense)/income recognised in current year - - (1,049) 311, ,831 Dividends (137,917) (137,917) Transfer of share premium to share capital - 165,499 (165,499) - - Translation loss on subsidiary assumed - - (8,686) - (8,686) Assumed on amalgamation , ,696 Balance at 1,199, , ,101 2,059,323 2,961,561 Unrealised losses on available-for-sale securities - - (446) - (446) Net loss recognised directly in stockholders equity - - (446) - (446) Net profit , ,038 Total (expense)/income recognised in current year - - (446) 433, ,592 Dividends (137,917) (137,917) Balance at 1,199, , ,655 2,354,444 3,256,236 42

45 Company Statement of Cash Flows Year ended Cash Flows from Operating Activities Note Net profit 433, ,880 Adjustments for: Depreciation , ,831 Amortisation 13 11,253 9,697 Loss on disposal of property, plant and equipment ,392 Fair value loss on financial assets at fair value through profit or loss 1,772 9,588 Change in pension plan asset and post-employment obligations (29,000) (79,600) Taxation expense , ,465 Interest income 6 (51,995) (66,361) Dividend income 6 (68,205) (885) Foreign exchange gains (6,899) (8,630) Interest expense 9 70,129 40,950 Changes in operating assets and liabilities: 726, ,327 Inventories (270,451) (128,717) Biological assets 8,037 (47,985) Receivables (178,288) 83,231 Subsidiaries 97, ,418 Affiliates 1,867 (2,212) Payables 389,912 (10,626) Financial assets at fair value through profit or loss 59,057 (77,473) 833, ,963 Taxation paid (148,596) (181,391) Cash provided by operating activities 684, ,572 43

46 Company Statement of Cash Flows (Continued) Year ended Note Cash Flows from Operating Activities (Page 9) 684, ,572 Cash Flows from Investing Activities Purchase of property, plant and equipment 12 (1,483,124) (180,305) Proceeds from disposal of property, plant and equipment 7,991 36,347 Purchase of intangible asset 13 (13,900) (12,673) Proceeds from sale of investments - 206,937 Refund from pension plan ,000 - Interest received 50,522 76,663 Dividend received 68, Cash (used in)/provided by investing activities (1,170,306) 127,854 Cash Flows from Financing Activities Long term loans repaid (57,734) (406,902) Long term loans received 146, ,000 Interest paid (71,949) (45,982) Dividends paid (137,917) (137,917) Cash used in financing activities (121,600) (350,801) (Decrease)/increase in cash and cash equivalents (607,124) 133,625 Effect of changes in exchange rates on cash and cash equivalents 3,538 6,479 Cash and cash equivalents at beginning of year 273, ,631 CASH AND CASH EQUIVALENTS AT END OF YEAR 23 (329,851) 273,735 44

47 Notes to the Financial Statements 1. Identification Jamaica Broilers Group 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 principal activities of the company and its subsidiaries (the Group) include the production and distribution of poultry, beef, fish, animal feeds and agricultural items (Note 2(b)). 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 Jamaica Broilers Group Limited have been prepared in accordance with International Financial Reporting Standards (IFRS). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of 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. Standards, interpretations and amendments to published standards effective in Certain 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 interpretations and amendments, and has adopted the following IFRS, which are relevant to its operations. The comparative figures have been amended as required, in accordance with the relevant requirements. 45

48 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards effective in (continued) IAS 19 (Amendment) Employee Benefits IAS 21 (Amendment) Net Investment in a Foreign Operation IAS 39 (Amendment) The Fair Value Option IFRIC 4 Determining whether an Arrangement contains a Lease The adoption of IAS 19, 21 and 39 and IFRIC 4 did not result in substantial changes to the Group s accounting policies. In summary: IAS 19 (Amendment), Employee Benefits, introduces the option of an alternative recognition approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is available to apply defined benefit accounting. It also adds new disclosure requirements. As the Group does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and does not participate in any multi-employer plans, adoption of this amendment only impacts the format and extent of disclosures presented in the financial statements. IAS 39 (Amendment), The Fair Value Option, Following amendments to IAS 39 Financial Instruments: Recognition and Measurement in June 2005, the ability of entities to designate a financial instrument as fair value through the profit and loss has been limited. Financial assets that can no longer be so designated are now classified as loans and receivables, held-to-maturity or available-for-sale financial assets, and measured using a basis appropriate to the category. Financial liabilities that can no longer be so designated are classified as other liabilities and measured at amortised cost. IFRIC 4, Determining whether an Arrangement contains a Lease, IFRIC 4 requires the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. The Group assessed the impact of IFRIC 4 and concluded that there are no transactions to which this applies. There was no impact on opening retained earnings at 30 April from the adoption of any of the above-mentioned standards. 46

49 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 At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been issued which were not yet effective at balance sheet date, and which the Group has not early adopted. The Group has assessed the relevance of all such new standards, interpretations and amendments, has determined that the following may be relevant to its operations, and has concluded as follows: IFRS 7 Financial Instruments: Disclosures, and a complementary Amendment to IAS 1, Presentation of Financial Statements - Capital Disclosures (effective from 1 January ). IFRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. It replaces IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions, and disclosure requirements in IAS 32, Financial Instruments: Disclosure and Presentation. The amendment to IAS 1 introduces disclosures about the level of an entity s capital and how it manages capital. The Group assessed the impact of IFRS 7 and the amendment to IAS 1 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by the amendment of IAS 1. The Group will apply IFRS 7 and the amendment to IAS 1 from annual periods beginning. IFRIC 10 Interim Financial Reporting and Impairment (effective for annual periods beginning on or after 1 November ) IFRIC 10 prohibits the impairment losses recognised in an interim period on goodwill, investments in equity instruments and investments in financial assets carried at cost to be reversed at a subsequent balance sheet date. The Group will apply IFRIC 10 from, but it is not expected to have any impact on the Group s financial statements; and IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2009) IFRS 8 sets out requirements for disclosure of information about an entity s operating segments and also about the entity s products and services, the geographical areas in which it operates, and its major customers. It requires identification of operating segments on the basis of internal reports that are regularly reviewed by, and the amount reported for each operating segment item to be the measure reported to, the entity s chief operating decision maker in order to allocate resources to the segment and assess its performance. IFRS 8 will replace IAS 14 Segment Reporting. The Group will apply IFRS 8 from 1 May 2009, but it is not expected to have any significant impact on the Group s financial statements. IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies (effective for annual periods beginning on or after 1 March ) IFRIC 7 provides guidance on how to apply the requirements of 1AS 29 in a reporting period in which an entity identifies the existence of hyperinflation in the economy of its functional currency, when the economy was not hyperinflationary in the prior period. As none of the group entities have a currency of a hyperinflationary economy as its functional currency, IFRIC 7 is not relevant to the Group s operations. 47

50 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 (continued) The Group has concluded that the following interpretations to existing standards, which are published but not yet effective, are not relevant to the Group s operations: IFRIC 9 Reassessment of Embedded Derivatives (effective for annual periods beginning on or after 1 June ) IFRIC 11 IFRS 2 - Group and Treasury Share Transactions (effective for annual periods beginning on or after 1 March ) IFRIC 12 Service Concession Arrangements (effective for annual periods beginning on or after 1 January 2008) (b) Consolidation Subsidiaries Subsidiaries are all 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. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the profit and loss account. Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. 48

51 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (b) Consolidation (continued) Subsidiaries (continued) The Group financial statements include the financial statements of the company and its operating divisions and subsidiaries as follows: % Ownership at Principal Activities Resident in Jamaica: Operating divisions Best Dressed Chicken Poultry production and feed milling, feed sales / retailers of farming equipment and supplies 100 Best Dressed Foods Distributors of chicken, beef and fish 100 Content Agricultural Products Beef production 100 Jamaica Eggs Services Pullet production 100 Subsidiaries Aquaculture Jamaica Limited and its wholly owned subsidiaries: Fish farming 100 Aqualapia Limited Fish farming 100 Jamaica Freshwater Snapper Limited Fish farming 100 T.Hart Farms Limited Fish farming 100 Content Agricultural Products Limited Property rental 100 Energy Associates Limited Holding and investment company 100 CE Jamaica Inc. Non- trading 100 EAL/ERI Co-generation Partners, LP Generation of electricity 9 ERI Services (St. Lucia) Limited Holding company 100 Eri Jam, LLC Non-trading 100 EAL/ERI Co-generation Partners, LP Generation of electricity 91 Jabexco Limited Non-trading 100 Jamaica Eggs Limited Non-trading 100 Jamaica Poultry Breeders Limited Hatching egg production 100 Levy Industries Limited Property rental 100 Master Blend Feeds Limited Property rental 100 Best Dressed Chicken Limited Non-trading 100 J. B. Trading Limited Non-trading 100 Trafalgar Agriculture Development Limited Non-trading 100 Resident outside of Jamaica: Atlantic United Insurance Company Limited, Cayman Captive insurance 100 International Poultry Breeders LLC, U.S.A. Hatching egg production 90 Jabexco Cayman Limited, Cayman Non-trading 40 Wincorp International, Inc., U.S.A. and its subsidiary: Procurers and distributors of agricultural and industrial supplies 100 Consolidated Freight and Shipping, Inc. Ocean freight consolidator

52 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (c) (d) Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments. 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 Groups 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 entity 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. Interest income Interest income is recognised in the profit and loss account 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. Dividend income Dividend income is recognised when the right to receive payment is established. (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 company s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account. 50

53 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 hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Assets and liabilities of foreign subsidiaries are translated into Jamaican dollars at year end rates and items affecting the profit and loss account are translated at average rates. All resulting exchange differences are recognised as a separate component of stockholders equity. (f) Income taxes Taxation expense in the profit and loss account comprises current and deferred tax charges. (i) (ii) 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. 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 is 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. (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 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 benefit associated with the item will flow to the Group or the cost of the item can be measured reliably. 51

54 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (g) Property, plant and equipment (continued) 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 each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals of property, plant and equipment are determined by comparing the proceeds with the carrying amount and are recognised in other income in the profit and loss account. Repairs and maintenance expenditure are charged to the profit and loss account during the financial period in which they are incurred. (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 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 the profit and loss account during the period the future losses are recognised. Negative goodwill which does not relate to expected future losses is recognised as income immediately. (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. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. 52

55 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (i) (j) 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. Financial assets The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables, available-for-sale and held to maturity. 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. These assets are classified as current assets in the balance sheet. (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) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group s management has the positive intention and ability to hold to maturity. (iv) Available-for sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of them within 12 months of the balance sheet date. Purchases and sales of investments are recognised on trade-date the date on which the Group commits to purchase or sell the asset. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit and loss. Available-for-sale financial assets are subsequently carried at fair value. 53

56 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (j) Financial assets (continued) (iv) Available-for sale financial assets (continued) Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences are recognised in profit or loss, and other changes in carrying amount are recognised in stockholders equity. Changes in the fair value of monetary securities classified as available-for-sale and non-monetary securities classified as available-for-sale are recognised in stockholders equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in stockholders equity are included in the profit and loss account as other income. Interest on available-for-sale securities calculated using the effective interest method is recognised in the profit and loss account. Dividends on available-for-sale equity instruments are recognised in the profit and loss account when the Group s right to receive payments is established. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm s length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis making maximum use of market inputs and relying as little as possible on entity-specific inputs. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered an indicator that the security is impaired. If any such evidence exists for available-forsale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously not recognised in profit or loss is removed from stockholders equity and recognised in the profit and loss account. Impairment losses recognised in the profit and loss account on equity instruments are not reversed through the profit and loss account. Impairment provisioning of trade receivables is described in Note 2(o). 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. (k) Interest in subsidiaries Interests in subsidiaries are stated at cost. (l) Employee benefits (i) Pension obligations The Group operates a defined benefit plan, the assets of which are generally held in separate trustee- administered funds. The pension obligations are determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans. 54

57 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (l) Employee benefits (continued) (i) Pension obligations (continued) A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. 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 difference between the present value of the defined benefit obligation at the balance sheet date and the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. 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. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the greater of 10% of the value of plan assets or 10% of the defined benefit obligation are charged or credited to income over the employees expected average remaining working lives. Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. 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. (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 in excess of the greater of 10% of the value of plan assets or 10% of the defined benefit obligation, are charged or credited to income over the expected average remaining working lives of the related employees. These obligations are valued annually by independent qualified actuaries. 55

58 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (l) Employee benefits (continued) (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. 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. (m) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined as follows: (i) (ii) Processed broilers, beef and fish at accumulated cost of growing and processing, or landed cost. Finished feeds and fertilisers at cost of production. (iii) All other items of inventory at landed cost or purchase price. Net realisable value is the estimated selling price in the ordinary course of business, less the cost of selling expenses. (n) Biological assets Biological assets which include fish, cattle, poultry, and flocks in field including breeder, layer and pullets are stated at cost as no reliable measure for determining fair value has been identified. Cost is determined as the accumulated cost of livestock, feed, medication, and in respect of breeder flocks, accumulated production costs. 56

59 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (o) 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 and loss account. 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 the profit and loss account. (p) 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. (q) Trade payables Trade payables are stated at cost. (r) Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss account over the period of the borrowings using the effective interest method. (s) 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. (t) 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 the profit and loss account over the lease period. 57

60 Notes to the Financial Statements 2. Summary of Significant Accounting Policies (Continued) (t) Leases (continued) Property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term. 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 the profit and loss account on a straight-line basis over the period of the lease. (u) 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. (v) Comparative information Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current year. In particular, comparatives have been adjusted to reflect revised fair values that were previously determined provisionally (Note 31). 3. Financial Risk Management (a) Financial risk factors The Group s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. Risk management is carried out by a central treasury function which identifies, evaluates and manages financial risks in close co-operation with the Group s operating business units. The Board of Directors sets guidelines for overall risk management including specific areas, such as foreign exchange risk, interest rate risk, credit risk, and investing excess liquidity. (i) Market risk Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group operates internationally and is exposed to foreign exchange risk primarily arising from its US Dollar transactions for purchases, and its US Dollar denominated investments. The Group balance sheet at includes aggregate net foreign liabilities of approximately US$10,570,000 ( US$15,000) in respect of transactions arising in the ordinary course of business. 58 The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from net assets of the Group s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.

61 Notes to the Financial Statements 3. Financial Risk Management (Continued) (a) Financial risk factors (continued) (i) Market risk (continued) 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 is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. (ii) (iii) (iv) Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group has no significant concentrations of credit risk attached to trade receivables as the Group has a large and diverse customer base, with no significant balances arising from any single economic or business sector, or any single entity or group of entities. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. Cash transactions are limited to high credit quality financial institutions. A significant level of investments is held in various forms of Government securities. Liquidity risk Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available. Cash flow and fair value Interest rate risk Cash flow risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. The Group s interest rate risk arises from long-term borrowings and investments. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest margins may increase as a result of such changes but may reduce or create losses in the event that unexpected movements arise. 59

62 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. There were no significant estimates included in the income tax and deferred tax provision. 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 17). 5. Segmental Financial Information The Group is organised into three primary business segments: (a) Poultry Operations - The rearing of poultry for fertile egg production and for sale, as well as processed broilers. (b) Feed and Farm Supplies - The manufacture and sale of animal feeds, and the retailing of agricultural items. (c) Fish Operations - The grow out, processing and sale of fish. Other operations of the Group include the sale of feed ingredients, cattle rearing and energy supply. 60

63 Notes to the Financial Statements 5. Segmental Financial Information (Continued) Poultry Operations Feed and Farm Supplies Fish Operations Other Eliminations Group External revenues 6,436,588 3,478, ,853 1,060,349-11,490,300 Revenue from other segments 39, , ,148 (1,023,643) - Total revenue 6,475,617 3,756, ,853 1,766,497 (1,023,643) 11,490,300 Segment result 858, ,802 (23,412) 80,078-1,377,868 Unallocated corporate expenses (593,144) Operating profit 784,724 Finance costs (75,716) Profit before tax 709,008 Taxation (196,869) Net profit 512,139 Segment assets 2,782,593 1,054, ,558 2,795,443 (2,054,046) 5,165,566 Unallocated corporate assets 2,254,976 Total assets 7,420,542 Segment liabilities 1,491, , , ,474 (1,677,002) 1,408,605 Unallocated corporate liabilities 1,791,812 Total liabilities 3,200,417 Other segment items- Capital expenditure 530,116 5,498 29,299 35, ,960 Unallocated capital expenditure 958,406 1,558,366 Amortisation 8, ,686-11,760 Depreciation 170,396 1,096 25,202 26, ,695 61

64 Notes to the Financial Statements 5. Segmental Financial Information (Continued) Poultry Operations Feed and Farm Supplies Fish Operations Other Eliminations Group External revenues 5,594,495 2,818, ,621 1,005,431-9,938,217 Revenue from other segments 28, , ,797 (697,791) - Total revenue 5,622,963 3,115, ,621 1,378,228 (697,791 9,938,217 Segment result 848, ,357 (100,140) 24,092-1,171,439 Unallocated corporate expenses (476,118) Negative goodwill on acquisition 120,399 Operating profit 815,720 Finance costs (50,611) Profit before tax 765,109 Taxation (119,775) Net profit 645,334 Segment assets 3,466, , ,201 1,871,721 (2,460,225) 4,165,659 Unallocated corporate assets 1,566,238 Total assets 5,731,897 Segment liabilities 1,413, , , ,186 (2,092,369) 511,343 Unallocated corporate liabilities 1,416,507 Total liabilities 1,927,850 Other segment items- Capital expenditure 175,234 2,346 19,082 29, ,172 Amortisation 7, ,204-9,797 Depreciation 152, ,272 22, ,887 Unallocated depreciation 610 Total depreciation 198,497 62

65 Notes to the Financial Statements 6. Other Operating Income The Group The Company Dividend income 1, , Fair value losses on financial assets at fair value through profit or loss (4,681) (9,588) (4,681) (9,588) Insurance claim 29,249 4,045-4,045 Interest income 60,495 80,085 51,995 66,361 Gain/(loss) on sale of property, plant and equipment 20, (904) (5,392) Negative goodwill arising on acquisition - 120, Reinsurance commissions 14,926 12, Other 17,593 34,540 12,937 32, , , ,552 88, Expenses by Nature The Group The Company Auditors remuneration 13,497 12,616 7,015 6,783 Advertising and promotions 179, , , ,395 Amortisation of intangible assets (Note 13) 11,760 9,797 11,253 9,697 Cost of inventories recognised as expense 7,017,137 6,004,628 7,261,519 6,091,796 Depreciation (Note 12) 222, , , ,831 Donations and subscriptions 21,624 16,156 20,048 16,089 Insurance 170, , ,942 99,531 Occupancy rent and utilities 446, , , ,077 Legal and professional fees 79,520 97,121 72,157 95,785 Repairs and maintenance 419, , , ,278 Security 47,581 38,420 44,209 37,827 Staff costs (Note 8) 1,881,554 1,626,512 1,555,905 1,366,510 Stationery 30,142 35,956 14,846 35,003 Travelling and entertainment 37,734 26,644 34,713 24,465 Trucking 234, , , ,674 Other expenses 30,200 23,595 11,706 33,124 10,844,909 9,365,261 10,332,208 8,982,865 Expenses by nature include the total of cost of goods sold, distribution costs, administration and other expenses. The profit and loss account includes net foreign exchange (losses)/gains of ($87,000) ( $9,944,000). 63

66 Notes to the Financial Statements 8. Staff Costs The Group The Company Wages, salaries and contractors costs 1,595,547 1,440,879 1,307,819 1,217,058 Payroll taxes Employer s portion 86,018 79,025 74,117 69,999 Pension costs - defined contribution plan 2,524 2, Pension costs - defined benefit plan (Note 17) 600 (48,700) 1,300 (45,800) Post-retirement medical benefits (Note 17) 1,100 1, Termination costs 20,819 2,415 19,041 2,415 Other 174, , , ,938 1,881,554 1,626,512 1,555,905 1,366,510 The number of persons employed by the Group at the year end was as follows: 9. Finance Costs The Group No. No. The Company No. No. Full - time Part - time Contractors and their employees 1,587 1,557 1,348 1,333 1,916 1,915 1,611 1, Taxation The Group The Company Foreign exchange losses 4,960 3,490 4,960 3,490 Interest expense 70,756 47,121 70,129 40,950 75,716 50,611 75,089 44, (a) The egg production operation of Jamaica Poultry Breeders Limited was relieved from income tax until 1989 by virtue of the provisions of the Industrial Incentives Act. With effect from 1990 the egg production and crop growing operations were relieved from income tax for ten years under the provisions of the Income Tax (Approved Farmers) Act. A further five year period of relief was granted in by the Ministry of Finance and Planning.

67 Notes to the Financial Statements 10. Taxation (Continued) (b) Taxation is based on the profit for the year adjusted for tax purposes and comprises: The Group The Company Income tax at 33 % 238, , , ,909 Adjustment to prior year provision 2,370 (29,728) 2,348 (12,382) Deferred taxation (Note 16) (44,458) 12,960 (41,517) 17, , , , ,465 (c) The tax on the Group s profit differs from the theoretical amount that would arise using the applicable tax rate of 33 %, as follows: The Group The Company Profit before taxation 709, , , ,345 Tax calculated at a tax rate of 33 % 236, , , ,782 Adjusted for: Income not subject to tax (89,392) (50,199) (28,304) (5,678) Negative goodwill arising on acquisition - (40,113) - - Deferred tax not recognised on tax losses 33, Adjustment to prior year provision - current tax 2,370 (29,728) 2,348 (12,382) Adjustment to prior year provision - deferred taxation 8,087 (9,803) 8,087 - Expenses not deductible for tax purposes and other allowances 6,286 (5,418) 4,908 5,743 Income tax expense 196, , , ,465 Subject to agreement with the Taxpayer Audit and Assessment Department, losses available for offset against future profits of certain local subsidiaries amount to approximately $2,934,000 ( $23,664,000). 11. Earnings Per Stock Unit The calculation of earnings per ordinary stock unit is based on the Group net profit and 1,199,277,000 ordinary stocks units in issue. 65

68 Notes to the Financial Statements 12. Property, Plant and Equipment The Group Freehold Land Freehold Buildings Leasehold Property Plant, Machinery & Equipment Furniture & Fixtures Motor Vehicles Capital Work in Progress Total At Cost - At 44,006 1,122,334 67,949 1,818, , ,812 21,497 3,798,524 Additions 67,740 9,193-71,076 39,938 48,164 1,322,255 1,558,366 Translation , ,300 Disposals (800) (12,382) - (23,946) (4,295) (25,783) - (67,206) Transfers/reclassifications - 216, ,415 25, (356,269) - At 111,546 1,335,908 68,106 1,996, , , ,483 5,307,984 Depreciation - At - 413,190 37, , , ,601-1,738,620 Charge for the year - 32,347 2, ,094 39,291 35, ,695 Translation , ,271 Relieved on disposals - (5,053) - (10,178) (2,204) (20,271) - (37,706) At - 440,741 40, , , ,122-1,926,880 Net Book Value - At 111, ,167 27,709 1,093, , , ,483 3,381,104 66

69 Notes to the Financial Statements 12. Property, Plant and Equipment (Continued) The Group Freehold Land Freehold Buildings Leasehold Property Machinery & Equipment Furniture & Fixtures Motor Vehicles Capital Work in Progress Total At Cost - At 30 April ,213 1,081,438 56,948 1,427, , ,376 59,800 3,301,171 Additions 5,124 2,656 4,846 71,545 28,206 47,405 66, ,172 Transferred from investment properties - - 3, ,589 Acquisition of subsidiary (Note 31) , ,311 Translation , ,438 Disposals - (201) (2,791) (40,804) (6,111) (15,715) (535) (66,157) Transfers/reclassifications - 37,600 5,131 29,913 31,514 - (104,158) - At 44,006 1,122,334 67,949 1,818, , ,812 21,497 3,798,524 Depreciation - At 30 April ,243 34, , , ,280-1,557,029 Transferred from investment properties - - 1, ,136 Charge for the year - 32, ,237 39,901 32, ,497 Translation , ,975 Relieved on disposals - (132) - (7,258) (5,313) (10,314) - (23,017) Transfers/reclassifications - (1,739) 1, (120) At - 413,190 37, , , ,601-1,738,620 Net Book Value - At 44, ,144 30,225 1,020, ,942 99,211 21,497 2,059,904 - As previously stated 44, ,144 30,225 1,053, ,942 99,211 21,497 2,092,535 Adjustment to valuation (Note 31) (32,631) (32,631) Restated balance 44, ,144 30,225 1,020, ,942 99,211 21,497 2,059,904 67

70 Notes to the Financial Statements 12. 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 10, ,860 15,890 1,168, , ,427 14,248 2,360,606 Additions 67, ,619 37,619 36,555 1,300,591 1,483,124 Disposals (1,985) (4,232) (24,839) - (31,056) Transfers/reclassifications - 200, ,682 25, (331,659) - At 78, ,233 15,890 1,313, , , ,180 3,812,674 Depreciation - At - 164,832 1, , , ,608-1,184,814 Charge for the year - 14, ,594 37,890 30, ,979 Relieved on disposals (693) (2,141) (19,327) - (22,161) At - 179,425 1, , , ,044-1,330,632 Net Book Value - At 78, ,808 14, , ,500 85, ,180 2,482,042 68

71 Notes to the Financial Statements 12. 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 30 April , ,312 9,943 1,113, , ,976 46,083 2,239,683 Additions ,353 27,702 37,532 46, ,305 Amalgamated assets - - 3,607 4,443 1, ,705 Disposals - - (2,791) (33,770) (26,309) (6,682) (535) (70,087) Transfers/reclassifications - 27,548 5,131 16,702 29,172 - (78,553) - At 10, ,860 15,890 1,168, , ,427 14,248 2,360,606 Depreciation - At 30 April , , , ,163-1,052,626 Charge for the year - 12, ,230 37,410 28, ,831 Relieved on disposals (8,268) (5,312) (4,063) - (17,643) Transfers/reclassifications - (1,739) 1, (120) At - 164,832 1, , , ,608-1,184,814 Net Book Value - At 10, ,028 14, , ,854 84,819 14,248 1,175,792 Included in property, plant and equipment for the Group are motor vehicles and equipment with net book value of $1,325,000 ( - $3,976,000), which are being acquired under finance leases. An amount of $958,406,000 is included in capital work-in-progress which represents costs incurred in relation to the construction of an Ethanol Production Facility. 69

72 Notes to the Financial Statements 13. Intangible Asset Cost - The Group Computer Software The Company Computer Software At 30 April ,896 97,629 Additions 15,828 12,673 At 114, ,302 Additions 13,900 13,900 At 128, ,202 Amortisation - At 30 April ,286 4,683 Charge for the year 9,797 9,697 At 15,083 14,380 Charge for the year 11,760 11,253 At 26,843 25,633 Net Book Value - 101,781 98,569 99,641 95,922 70

73 Notes to the Financial Statements 14. Investments Available-for-sale- The Group The Company Government of Jamaica securities 129, , Quoted equities 4,506 6,582 4,506 6,582 Unquoted equities 2, , Held-to-maturity - 136, ,796 7,129 7,205 Government of Jamaica securities 198, , , ,283 Interest receivable 10,100 3,769 5,242 3, , , , ,257 The weighted average effective interest rate on Government of Jamaica securities was 12.44% ( 11.44%). 15. Interest in Subsidiaries The Company Balance at start of year 286,602 81,964 Acquired - 195,787 Disposed - (10,242) Assumed on amalgamation - 19,093 Balance at end of year 286, ,602 71

74 Notes to the Financial Statements 16. Deferred Income Taxes Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 33 %. The Group The Company Deferred tax assets (1,240) (3,965) - - Deferred tax liabilities 342, , , ,651 The movement on the deferred income tax account is as follows: 341, , , ,651 The Group The Company Balance at start of year 385, , , ,713 (Credited)/charged to profit and loss account (Note 10) (44,458) 12,960 (41,517) 17,938 Balance as at end of year 341, , , ,651 72

75 Notes to the Financial Statements 16. Deferred Income Taxes (Continued) The deferred tax assets and liabilities at the end of the year are as follows: The Group The Company Deferred income tax assets - Accrued vacation 12,635 11,209 11,797 9,185 Tax losses unused 19,706 7, Other 11,969 6,689 6,479 6,553 44,310 25,786 18,276 15,738 Deferred income tax liabilities - Accelerated tax depreciation 330, , , ,842 Pension and other post-employment benefits 41,633 96,900 30,633 87,733 Unrealised foreign exchange gains 2,154 1,610 1,938 1,610 Other 11,207 4,380 2,045 3, , , , ,389 Net deferred tax liability 341, , , ,651 The deferred tax (credited)/charged in the profit and loss account comprises the following temporary differences: The Group The Company Accelerated tax depreciation 21, ,952 1,469 Accrued vacation (1,426) (7,485) (2,612) (6,098) Post-employment benefits (55,267) 28,000 (57,100) 26,985 Tax losses (11,818) 3, Unrealised foreign exchange gains 544 (3,164) 328 (3,164) Other temporary differences 1,547 (8,285) (1,085) (1,254) (44,458) 12,960 (41,517) 17,938 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 totalled $338,611,000 ( - $259,510,000). Deferred income tax assets are recognised for tax losses carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. 73

76 Notes to the Financial Statements 16. Deferred Income Taxes (Continued) These balances include the following: Deferred tax assets - The Group The Company Deferred tax assets to be recovered after more than 12 months 19,706 7, Deferred tax assets to be recovered within 12 months 24,604 17,898 18,276 15,738 Deferred tax liabilities - 44,310 25,786 18,276 15,738 Deferred tax liabilities to be recovered after more than 12 months 371, , , ,575 Deferred tax liabilities to be recovered within 12 months 13,361 5,990 3,983 4, , , , ,389 Net deferred tax liability 341, , , , Post-employment Benefits Amounts recognised in the balance sheet are as follows: The Group The Company Pension scheme benefits 131, ,200 98, ,400 Post-employment medical benefits (7,700) (7,500) (6,500) (6,200) Amounts recognised in the profit and loss account (Note 8) - Pension scheme benefits 600 (48,700) 1,300 (45,800) Post-employment medical benefits 1,100 1, ,700 (47,600) 2,200 (44,900) 74

77 Notes to the Financial Statements 17. 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 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 defined benefit asset recognised in the balance sheet was determined as follows: The Group The Company Fair value of plan assets 1,129,900 1,206,900 1,021,000 1,096,900 Present value of obligations (813,500) (683,600) (735,100) (621,300) 316, , , ,600 Unrecognised actuarial gains (185,000) (225,100) (187,500) (206,200) 131, ,200 98, ,400 Pension plan assets include investment in ordinary stock units of the company with a fair value of $23,661,000 ( - $21,403,000). The movement in the defined benefit asset during the year was as follows: The Group The Company At start of year 298, , , ,500 Amalgamated assets - (300) - 6,300 Refund to company (200,000) - (200,000) - Amounts recognised in the profit and loss account (Note 8) (600) 48,700 (1,300) 45,800 Contributions paid 33,800 30,900 30,300 27,800 At end of year 131, ,200 98, ,400 75

78 Notes to the Financial Statements 17. 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 683, , , ,000 Current service cost 65,800 53,300 58,900 48,000 Interest cost 78,800 64,700 71,500 59,900 Benefits paid (31,500) (11,200) (29,800) (10,800) Annuities purchased (23,000) (2,700) (21,700) (2,700) Actuarial loss on obligation 39,800 54,900 34,900 40,900 At end of year 813, , , ,300 The movement in the fair value of plan assets was as follows: The Group The Company At start of year 1,206,900 1,185,200 1,096,900 1,098,000 Members contribution 31,800 28,800 28,600 25,800 Employer s contribution 33,800 30,900 30,300 27,800 Expected return on plan assets 106, ,800 95, ,800 Annuities purchased (23,000) (2,700) (21,700) (2,700) Refund to company (200,000) - (200,000) - Benefits paid (31,500) (11,200) (29,800) (10,800) Actuarial gain/(loss) 5,700 (144,900) 21,600 (153,000) At end of year 1,129,900 1,206,900 1,021,000 1,096,900 76

79 Notes to the Financial Statements 17. Post-employment Benefits (Continued) (a) Pension scheme benefits (continued) The amount recognised in the profit and loss account is determined as follows: The Group The Company Current service cost 33,900 24,400 30,300 22,200 Interest cost 78,800 64,700 71,500 59,900 Expected return on plan assets (106,300) (120,800) (95,100) (111,800) Net actuarial gains recognised in year (5,800) (17,000) (5,400) (16,100) Total included in staff costs (Note 8) 600 (48,700) 1,300 (45,800) Actual return on plan assets 111,900 (24,100) 116,700 (41,200) The principal actuarial assumptions used were as follows: Discount rate 12.00% 12.00% Expected return on plan assets 10.00% 10.00% Future salary increases 9.00% 9.00% Future pension increases 5.00% 5.00% Remaining working lives - years (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 11% per year ( - 11% per year). 77

80 Notes to the Financial Statements 17. Post-employment Benefits (Continued) (b) Post-employment medical benefits (continued) The liability recognised in the balance sheet was determined as follows: The Group The Company Present value of unfunded obligations 8,500 9,000 6,800 7,600 Unrecognised actuarial losses (800) (1,500) (300) (1,400) 7,700 7,500 6,500 6,200 The movement in the liability during the year was as follows: The Group The Company At start of year 7,500 7,100 6,200 5,900 Amounts recognised in the profit and loss account (Note 8) 1,100 1, Contributions paid (900) (700) (600) (600) At end of year 7,700 7,500 6,500 6,200 The movement in the present value of obligations was as follows: The Group The Company At start of year 9,000 8,600 7,600 7,300 Interest cost 1,100 1, Benefits paid (800) (700) (600) (600) Actuarial gain on obligation (800) - (1,100) - At end of year 8,500 9,000 6,800 7,600 78

81 Notes to the Financial Statements 17. Post-employment Benefits (Continued) (b) Post-employment medical benefits (continued) The amount recognised in the profit and loss account is as follows: Interest cost, included in staff costs The Group The Company (Note 8) 1,100 1, The effects of a 1% movement in the assumed medical cost trend rate were as follows: The Group The Company Decrease Increase Decrease Increase Effect on the aggregate of current service cost and interest cost Effect on the defined benefit obligation 600 (500) 540 (450) 700 (500) 630 (450) (c) Distribution of pension plan assets - The Group % % Equities 372, , Property 240, , Government securities and reverse repurchase agreements 386, , Corporate bonds 57, ,900 3 Other 72, , ,129, ,206,

82 Notes to the Financial Statements 17. Post-employment Benefits (Continued) (c) Distribution of pension plan assets (continued) - The Company % % Equities 336, , Property 217, , Government securities and reverse repurchased agreements 349, , Corporate bonds 51, ,993 3 Other 65, , ,021, ,096, (d) Other pension plan disclosures - Expected contributions to post-employment plan for the year ended 3 May 2008 are $38,000,000. The expected return on plan assets is based on market expectation of inflation plus a margin for real returns on a balanced portfolio. The five-year trend for the defined benefit obligation and experience adjustments is as follows: The Group Fair value of plan assets 1,129,900 1,206,900 1,185, , ,500 Present value of defined benefit obligation (822,000) (692,600) (533,200) (423,900) (475,900) Surplus 307, , , , ,600 Experience adjustments to plan liabilities 48,300 5,500 12,300 13,100 (24,800) Experience adjustments to plan assets (5,700) 144,900 (134,900) (374,400) 25,500 80

83 Notes to the Financial Statements 17. Post-employment Benefits (Continued) (d) Other pension plan disclosures (continued)- 18. Inventories The Company Fair value of plan assets 1,021,000 1,096,900 1,098, , ,100 Present value of defined benefit obligation (741,900) (628,900) (493,300) (389,400) (445,900) Surplus 279, , , , ,200 Experience adjustments to plan liabilities 33,900 (12,700) 5,600 3,900 (30,200) Experience adjustments to plan assets (21,600) 153,000 (130,700) (338,600) 17,000 The Group The Company Grain and feed ingredients 418, , , ,619 Inventories for resale and spares 515, , , ,594 Processed broilers, beef and fish 290, , , ,579 Goods in transit and others 98, ,125 94,314 97,407 1,322,606 1,053,901 1,256, ,199 Less: Provision for obsolescence (13,136) (19,011) (11,414) (14,742) 1,309,470 1,034,890 1,244, ,457 81

84 Notes to the Financial Statements 19. Biological Assets The Group The Company Cattle 44,333 59,424 44,333 59,424 Fish 108,973 78, Poultry 409, , , , , , , ,307 The movement in biological assets was determined as follows: The Group The Company At start of year 508, , , ,322 Increases due to purchases 3,075,537 2,457,957 2,587,987 2,146,060 Decreases due to sales (3,020,347) (2,427,350) (2,596,024) (2,098,075) At end of year 563, , , ,307 82

85 Notes to the Financial Statements 20. Receivables The Group The Company Trade receivables 698, , , ,964 Less: Provision for impairment and doubtful debts (51,237) (47,215) (43,120) (41,322) 646, , , ,642 Contract farmers receivables 38,629 75,720 38,629 75,720 Deposits 14, , G.C.T recoverable 5,636 3,501 5,636 3,501 Insurance claims receivable 6,554 5,299 2,460 5,299 Jamaica Public Service Company - 8,109-8,109 Prepayments 98,070 57,462 86,513 47,984 Staff receivables 19,778 23,902 19,778 23,902 Other 55,938 31,808 20,875 16, , , , ,508 Less: Provision for doubtful debts (11,594) (37,373) (11,594) (42,373) 21. Related Party Transactions and Balances The following transactions were carried out with related parties: (a) Key management compensation: 874, , , ,135 Salaries, profit sharing and other short-term employee benefits 159, ,058 Statutory contributions Pension benefits 4,028 3,500 Other - 2,250 Directors emoluments - 163, ,931 Fees 17,700 5,600 Management remuneration (included above) 78,114 91,838 83

86 Notes to the Financial Statements 21. Related Party Transactions and Balances (Continued) The following transactions were carried out with related parties (continued): (b) Due from affiliated parties: Portland Corporation Limited - 10 Jamaica Broilers Trust 33,248 35,106 The loan with Jamaica Broilers Trust attracts an interest rate based on Bank of Jamaica 30-day Treasury Bill. Of the total amount, $20 million is repayable on 20 November ; the remaining balance has no set repayment terms. (c) Loan to director : At start of the year 2,810 3,512 Repayments (703) (702) At end of the year 2,107 2,810 The loan is interest free and repayable within three years. 22. Financial Assets at Fair Value through Profit or Loss This represents quoted shares 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 operating income in the profit and loss account (Note 6). 23. Cash and Short Term Investments 84 The Group The Company Cash at bank and in hand 409, , , ,513 Short term investments 254, , , , , , , ,832 Interest receivable 894 1, ,744 Included in cash and cash equivalents 665, , , ,576

87 Notes to the Financial Statements 23. Cash and Short Term Investments (Continued) The weighted average effective interest rate on short term deposits was 7.45% ( 10.4%). These deposits have an average maturity of 21 days ( 30 days). For the purposes of the cash flow statement, cash and cash equivalents comprise the following: 24. Payables The Group The Company Cash and short term investments 665, , , ,576 Short term borrowings and bank overdraft (Note 26) (897,100) (204,548) (890,275) (191,841) (231,473) 417,608 (329,851) 273,735 The Group The Company Accrued charges 278, , , ,585 Contractors retention payable 12,749-12,749 - Ethanol Project payables 134, ,411 - Jamaica Public Service Company 10,019 12,924 10,019 12,924 Statutory contributions payable 16,828 13,813 16,438 13,581 Staff related payables 24,033 14,715 24,033 14,715 Trade payables 741, , , ,121 Unclaimed cheques 29,458 29,390 29,458 29,390 Other 113,198 90,710 81,995 96,463 1,360, ,817 1,193, ,779 85

88 Notes to the Financial Statements 25. Dividends The Group and The Company Interim 5.0 cents per stock unit ( 5.0 cents), paid 59,964 59,964 Second interim 6.5 cents per stock unit ( 6.5 cents), declared 77,953 77, , , Borrowings Non-Current - Current - The Group The Company Borrowings 231, , , ,952 Finance lease obligations , , , ,259 Short term borrowings and bank overdraft (Note 23) 897, , , ,841 Current portion of non-current borrowings and finance lease obligations 83,614 76,209 72,832 56,061 Interest payable 2,490 4,791 2,410 4, , , , ,132 1,215, ,750 1,168, ,391 86

89 Notes to the Financial Statements 26. Borrowings (Continued) The Group has long term financing agreements with several financial institutions as follows: (a) The Group The Company Bank of Nova Scotia/Development Bank of Jamaica -13% 20,167 28,233 20,167 28,233 (b) Development Bank of Jamaica 2004/ % 11,128 19, (c) Citibank N.A. US$1.08M % 34,808 48,497 34,808 48,497 (d) Citibank N.A. /Development Bank of Jamaica 13% 220, , , ,193 (e) GMAC % 928 1, (f) GMAC % 1, (g) Sundry mortgages and loans 26,674 11, , , , ,923 Finance lease obligations , , , ,320 Less: Current portion of non current borrowings (83,614) (76,209) (72,832) (56,061) 231, , , ,259 Negative pledges have been issued in respect of loans, guarantees and other banking facilities extended by Bank of Nova Scotia Jamaica Limited, Citibank N.A and National Commercial Bank Jamaica Limited to the Group. The Development Bank of Jamaica Limited loan is repayable by 21 consecutive quarterly installments commencing March It is guaranteed by a promissory note to the value of the loan. Under the terms of certain agreements with the Bank of Nova Scotia Jamaica Limited and Citibank N.A, the company and the Group are required to maintain certain financial ratios. At, the company was in compliance with these requirements. 87

90 Notes to the Financial Statements 27. 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. 88

91 Notes to the Financial Statements 28. Capital Reserve At start of year - The Group The Company Share premium - 165, ,499 Realised capital gains 32,618 32,618 3,227 3,227 Unrealised surplus on revaluations 399, , , ,198 Fair value gain on available-for-sale securities 5,935 4,411 3,362 4,411 Translation loss on subsidiary assumed - - (8,686) - Gains on translation of financial statements of foreign subsidiaries 281, , Movements during the year - 720, , , ,335 Fair value gain on available for sale securities (2,814) 1,524 (446) (1,049) Transfer to share capital - (165,499) - (165,499) Translation gain 44,670 44,831 - (8,686) At end of year 761, , , ,101 Consisting of - Realised capital gains 32,618 32,618 3,227 3,227 Unrealised surplus on revaluations 399, , , ,198 Fair value gains on available-for-sale securities 3,121 5,935 2,916 3,362 Translation loss on subsidiary assumed - - (8,686) (8,686) Gains on translation of financial statements of foreign subsidiaries 326, , , , , ,101 89

92 Notes to the Financial Statements 29. Fair Value of Financial Instruments The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The nominal value less impairment provision of trade receivables and payables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. 30. Commitments and Contingencies (a) The company has issued a letter of comfort indicating its intention to provide financial support to its subsidiary, International Poultry Breeders LLC. (b) The company has guaranteed a loan facility of US$210,000 with American Banking Company DBA Ameris for one of its subsidiaries, International Poultry Breeders, LLC. (c) The company had capital commitments in respect of projects being undertaken of $374,220,000 ( - $122,523,000). (d) The Group has obligations under long term operating leases for premises. payments under such commitments are as follows: Future minimum lease The Group Not later than 1 year 7,720 6,518 Later than 1 year and not later than 5 years 31,316 5,178 39,036 11,696 (e) 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. (f) The Group has entered into contracts with farmers who grow fish and chicken for its operations. Fingerlings, baby chicks, feed and medication are supplied to these farmers who are then obliged to sell the harvested fish and chickens to the Group. 90

93 Notes to the Financial Statements 31. Business Combination In, as part of a Settlement Agreement, the company gained control of ERI Services (St. Lucia) Limited and its wholly owned subsidiary ERI Jam LLC, a 91% partner in EAL/ERI Cogeneration Partners, LP. As permitted by IFRS 3, Business Combinations, provisional values were used to account for the identifiable assets and liabilities then acquired. During the year, the company received updated values for those identifiable assets and liabilities and has made adjustments to the provisional values, retrospectively, from the date of acquisition as follows: Provisional Values Adjustments Final Values Property, plant and equipment 358,942 (32,631) 326,311 Payables (42,816) 32,631 (10,185) Net assets 316, ,126 There was no effect on net profit for the year ended. 91

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95 Advisers Auditors Bankers PricewaterhouseCoopers Bank of Nova Scotia Jamaica Limited Scotiabank Centre Corner Duke & Port Royal Streets Citibank N. A. P.O., Box 372 Kingston National Commercial Bank Jamaica Limited Attorneys-at-Law Peter A. DePass Attorney-at-Law 96 3/4 Old Hope Road Kingston 6 Merchant Bankers Capital & Credit Merchant Bank Limited Malcolm D. L. McDonald 82 Knutsford Boulevard McDonald Millingen Kingston 5 Attorneys-at-Law 58 Hope Road Pan Caribbean Merchant Bank Ltd. Kingston 6 60 Knutsford Boulevard Kingston 5 Registrar & Secretarial Agents Duke Corporation Scotiabank Centre Corner Duke & Port Royal Streets Kingston Consultants KPMG Peat Marwick The Victoria Mutual Building 6 Duke Street Kingston Capital Options Limited 64 Knutsford Boulevard Kingston 5

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