The source of our trust, the strategies we pursue, the investment choices we make, and the strength of our commitment to truth, fairness and the building of goodwill define who we are.
Jamaica Broilers Group. Leaders in agri-business.
Jamaica Broilers Group
1
Annual Report 2010
Table of Contents
2
Notice of Annual General Meeting
50
Directors & Senior Management
4
Financial Highlights
51
Operating Divisions & Subsidiaries
6
Directors’ Report
53
Auditors’ Report
7
Mission Statement
8
Chairman & President’s Overview
55 Group Statement of Comprehensive Income
11
Board of Directors with Directors’ Profiles
15
Corporate Governance
16
Executive Team
18
Management Discussion & Analysis
60 Company Statement of Comprehensive Income
42
Corporate Social Responsibility
61
Company Balance Sheet
48 Shareholdings of Directors & Connected Parties
62
Company Statement of Changes in Stockholders’ Equity
49
Shareholdings of Senior Management & Connected Parties
63
Company Statement of Cash Flows
49
10 Largest Ordinary Shareholders
65
Notes to the Financial Statements
56
Group Balance Sheet
57
Group Statement of Changes in Stockholders’ Equity
58
Group Statement of Cash Flows
Jamaica Broilers Group
2
Annual Report 2010
Jamaica Broilers Group
3
Annual Report 2010
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the 52nd Annual General Meeting of Jamaica Broilers Group Limited will be held at the Jamaica Conference Centre, Ocean Boulevard, Kingston Mall, Kingston on Saturday October 9, 2010 at 10:00am to transact the following Business:
Resolution No. 4: “That the two interim dividends of 8 cents and 12 cents paid on November 5, 2009 and April 30, 2010, respectively, be and are hereby ratified and declared final for the financial year ended May 1, 2010.” 4. To Approve the Remuneration of the Directors.
1. To receive the Audited Accounts for the year ended May 1, 2010, together with the reports of the Directors and Auditors thereon,
The Company is asked to consider, and if thought fit, to pass the following resolution:
The Company is asked to consider, and if thought fit, pass the following resolution:
Resolution No. 5
Resolution No.1
“That the amount shown in the Audited Accounts of the Company for the year ended May 1, 2010 as fees of the Directors for their services as Directors, be and is hereby approved.”
“That the Audited Accounts for the year ended May 1, 2010, together with the reports of the Directors and Auditors thereon, be and are hereby adopted.”
5. To Appoint Auditors and to authorize the Directors to fix the remuneration of the Auditors. The Company is asked to consider, and if thought fit, pass the following resolution:
2. To elect Directors. The Directors retiring by rotation in accordance with Regulation 89 of the Company’s Articles of Incorporation are Drs. Claudette Cooke and Trevor Dewdney and Messrs. Barrington Pryce and Andrew Mahfood, who, being eligible for re-election, offer themselves for re-election. The Company is being asked to consider, and if thought fit, pass the following resolutions: Resolution No. 2 “That the Directors, retiring by rotation, be re-elected by a Single Resolution.”
Resolution No. 6
“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 23rd day of August, 2010
NOTE:
By Order of the Board
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.
Resolution No. 3 “That Drs. Claudette Cooke and Trevor Dewdney and Messrs. Barrington Pryce and Andrew Mahfood, who are retiring by rotation in accordance with Regulation 89 of the Articles of Incorporation be and are hereby re-elected as Directors of the Company.”
__________________ PETER A. DePASS Company Secretary
3. To ratify interim dividends
Registered Office
The company is asked to consider, and if thought fit, to pass the following resolution:
Content, McCook’s Pen St. Catherine
Jamaica Broilers Group
4
Annual Report 2010
Jamaica Broilers Group
5
Annual Report 2010
Financial Highlights 2010
25
12
20
10
4.1
4.4
6.2
7.1
10.75 7.4 4.9
5.5
2
6.2
4
7.7
22.447
6
20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10
20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10
Net Sales - J$ Billions
Pre-Tax Profit as % of Net Sales
1000
1000
0
0
20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10
20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10
1003.7
903.5
709.0
756.1
938.4
606.3
335.1
400.6
20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10
Jamaica Poultry Breeders 2,744,772
334.4
335.6
226.2
206.4
300.8
194.6
264.1
740.3
512.1
645.3
721.9
461.3
353.2
313.4
338.0
828.1
600
1312.8
900
339.8
1200
500
International Poultry Breeders 2,722,632
1597.2
1500 1656.9
1500 1628.1
2000
1558.4
2000
500
0
8
0
1500
300
20.444
9.938
9.147
8.173
6.871
6.423
0
6.047
5
11.490
10
24.623
15
Investment in Fixed Assets - J$ Millions
Pre-Tax Profit - J$ Millions
JB Ethanol Limited 22,068,888
Aquaculture 1,712,235 Best Dressed Foods 503,507
Cogeneration 31,559,322
Content Division 57,810,080 Best Dressed Chicken 218,611,901
Net Profit/(Loss) Attrib. to Shareholders J$ Millions
Capital Expenditure (J$)
Jamaica Broilers Group
6
Annual Report 2010
Jamaica Broilers Group
7
Annual Report 2010
Directors’ Report
The Directors present their annual report with the Financial Statements for the year ended 1st May, 2010. RESULTS OF OPERATIONS TURNOVER The Group’s turnover for the year amounted to $22,446,902,000 PROFIT, DIVIDENDS AND APPROPRIATIONS Group Profit after taxation
1,312,801,000
Profits brought forward from previous years were To give an amount of
3,973,607,000 5,286,408,000
Interim Dividends
(239,855,000)
Thereby leaving profits to be carried forward as Retained Earnings of
5,046,553,000
The Directors are recommending that the two interim dividends of 8 cents and 12 cents paid on the 5th November, 2009 and the 30th April, 2010, respectively, be ratified and declared final for the financial year ended May 1, 2010 by the shareholders in general meeting as the Directors do not propose to declare any further dividend(s) from the audited profits realised during the financial year ended May 1, 2010. The Directors retiring in accordance with Regulation 89 of the Articles of Incorporation are Drs. Claudette Cooke and Trevor Dewdney and Messrs. Barrington Pryce and Andrew Mahfood all of whom are eligible for re-election. AUDITORS PricewaterhouseCoopers has agreed to continue in office as Auditors in accordance with the provisions of Section 154(2) of the Companies Act.
Dated this 23rd day of August, 2010
PETER A. DePASS COMPANY SECRETARY REGISTERED OFFICE CONTENT, McCOOK’S PEN, ST. CATHERINE
Mission Statement With God’s guidance we shall efficiently manage our Company to fulfill its obligations to our customers, shareholders, employees, contractors and the community at large, with an attitude of service and a commitment to truth, fairness and the building of goodwill.
Jamaica Broilers Group
8
Annual Report 2010
Jamaica Broilers Group
9
Annual Report 2010
9
Chairman and President’s Overview Financial Highlights In a year of unparalleled economic turmoil across the globe, very few companies have been fortunate enough to have recorded their very best year ever. Jamaica Broilers Group is numbered among the few that can claim that honour and we can only recognize and thank God for the guidance and direction given to us as directors, management and employees, so that we were able to accomplish this. During the year under review, turnover decreased by 8.84% – moving down $2.176 billion from the $24.623 billion recorded in 2008/2009 to $22.447 billion in 2009/2010. However, gross profits increased by 19% from $3.961 billion the previous year to $4.716 billion during 2009/2010; net profit attributable to stockholders grew 59% from the $828 million realized in 2008/2009 to $1.313 billion in 2009/2010. The reduction in turnover resulted from a strategic change in our ethanol business, which saw us moving into 2-year contractual processing or “tolling” arrangements, which allow us to process and deliver ethanol on behalf of clients, instead of selling the finished product directly into the USA marketplace on our own account. The Group is in the second year of this revised business strategy which has paid off handsomely for our ethanol operations. As anticipated, the tolling arrangements also resulted in a significant reduction in our working capital requirements, while also reducing our direct exposure to the current volatility in the international marketplace. This meant that we were not impacted directly when ethanol selling prices fell substantially in the USA because of the change in the commodity price of corn and sugar during the year under review.
The Economic Climate Notwithstanding the foregoing, our Group recognises that we are operating in a very unique economic environment in our country, as well as globally. In Jamaica itself, implementation of the Jamaica Debt Exchange initiative and the resulting adjustments in the financial sector has, understandably, left the country facing a period of uncertainty. The internal challenges that the country is undergoing are exacerbated by the continued shocks being experienced in the global economy. Some of these – for example, the catastrophic explosion that caused an oil spill in the Gulf of Mexico, and developments which have affected the price of some critical raw materials – have had a mix of positive and negative impact on Jamaica and the price that must be paid for products and services such as corn, soy, oil and shipping.
ROBERT E. LEVY CHAIRMAN
Jamaica Broilers Group
10
Annual Report 2010
Board of Directors – with Directors’ Profiles
Mr. Robert Levy, C.D., Hon. LL.D., M.A. CHAIRMAN
Nonetheless, many would agree that, with the attention now being paid to fiscal prudence as a result of the IMF Standby Agreement, Jamaica appears to be in a better financial position than it has been for several years.
The JB Group Response
Mr. Levy is a Poultry Expert with 50 years’ experience acquired at all levels of the Poultry Industry, in general, and at Jamaica Broilers Group, in particular. Especially highly-regarded for his knowledge of the industry, his philanthropic endeavours and his strong sense of nationalism, he is the immediate Past President and Chief Executive Officer of the Group.
What we, as a Group, must continue to recognise is that the fundamental parameters used in decision making have evolved and that the reliance which financiers place on the capital strength and historical reputation of a company are much more significant than they ever were. These financiers now have a significantly reduced appetite for risk. Therefore, during the year under review, we took careful note of how the economic situation in Jamaica was shaping up, read the economic signals correctly and paid close attention to implementing appropriate strategies to counter any threats. The approach bore rich fruits and helped us weather successfully what could have been some very rough economic seas.
Our Team Overall, we believe that the commitment and motivation of our management and staff across the Group during the year under review, and the impressive results recorded as a result of their efforts, can easily be described as “incredible”! One year ago, when we looked down the road, we saw what appeared to be some unsettled times on both the economic and social fronts. However, our entire team – employees, contractors and their workers – managed to demonstrate a level of cohesiveness which allowed everyone to stay focused and to exceed the ambitious targets we had set ourselves. We say very special thanks for the role played by our Board of Directors. Our 12-member Board – along with the three main Board committees which cover the areas of Corporate Governance, Compensation and Audit – again provided yeoman service to the organisation. The Board’s highly-skilled members gave astute and balanced guidance to ensure that the organisation adhered to the best practices, without threatening Jamaica Broilers’ unique corporate culture which has proven, time and time again, that it delivers very positive results for all of our stakeholders. We also say thank you to our shareholders and our customers for faith in us and for loyalty to our brands. And, most of all, we thank the Lord for blessing us with the wherewithal – including all levels of our human resources – to help ensure the enduring success of the Jamaica Broilers Group.
Robert Levy – Chairman
Christopher Levy – President and CEO
Mr. Christopher Levy, MBA PRESIDENT & CEO Christopher Levy has worked with Jamaica Broilers Group since 1985 and has substantial experience and in-depth working knowledge of the company’s business. He played a pivotal role in the Group’s successful diversification into the area of ethanol production.
The Hon. R. Danvers Williams, O.J., C.D., Hon. LL.D., J.P., C.L.U. DIRECTOR EMERITUS Mr. Williams is one of Jamaica’s most respected businessmen – having enjoyed a distinguished career in excess of 56 years in the life insurance industry, inclusive of Founding and serving as President and Chief Executive Officer of Life of Jamaica [now Sagicor Life]. He is the immediate Past Chairman of the Jamaica Broilers Group.
Dr. Claudette Cooke, CMT, Ed.D. EXECUTIVE DIRECTOR The Group’s Vice President for Human Resource Development and Public Relations and a Certified Master Trainer in the area of Human Performance Improvement (HPI).
Dr. Trevor Dewdney, D.V.M. DIRECTOR A well-regarded Veterinary Consultant, he is also a devoted farming practitioner.
Mr. Aubyn Hill, MBA DIRECTOR A Corporate Strategist and CEO of Corporate Strategies Limited, with over 25 years’ expertise in Banking and Finance. He has conducted business in over 84 countries.
Mr. Andrew Mahfood, CA DIRECTOR A Chartered Accountant, he is Financial Director of Wisynco Group Limited.
Mr. Malcolm D. L. McDonald DIRECTOR An Attorney-At-Law and a partner in McDonald Millingen – a firm specializing in Banking, Taxation, Commercial Law and Conveyancing – he has extensive experience, inter alia, in commercial transactions.
Mr. Ian Parsard, MBA (Hons.), A.C.C.A. EXECUTIVE DIRECTOR The Group’s Vice President for Finance & Energy, he is a Chartered Accountant who distinguished himself by graduating with highest honours from the University of Pennsylvania’s Wharton School of Business.
Jamaica Broilers Group
Mr. Barrington Pryce DIRECTOR The General Manager of Jamaica Poultry Breeders Limited, a JBGL subsidiary.
15
Annual Report 2010
Corporate Governance The Board of Directors of Jamaica Broilers Group Of Companies is responsible for the effective governance of the Group. They oversee the Group’s Corporate Affairs on behalf of our shareholders and act as advisors to our management team in setting vision and strategy to enhance shareholder value. As the demands on and the oversight responsibilities of board members continue to increase and become ever more challenging, we are pleased that our board members are qualified, objective, committed and inquisitive. This includes having members with the right mix of qualifications and background to effectively serve on the various committees of the board. Board Composition
As at May 1, 2010, the Board comprised nine non-executive directors and three executive directors. The names of the directors and their qualifications are set out in the Directors Profile section of this report. Mr. Gregory B. Shirley, MBA DIRECTOR A Consultant with a wide range of skills – including Corporate and Strategic Planning, Process Improvement and Performance Measurement.
Board Committees 1. THE CORPORATE GOVERNANCE COMMITTEE Chairman: Gregory B. Shirley, MBA Gregory Shirley joined the Jamaica Broilers Group Board in 2006, having retired just prior to that from the position of Partner in Charge of Advisory Services at KPMG in Jamaica, Board Member of KPMG CARICOM and Head of Advisory Services for KPMG member firms across CARICOM. Among the major achievements of the Corporate Governance Committee, is the production of a comprehensive Corporate Governance Document.
Mr. Hirlie Williams DIRECTOR A Staff Member at Best Dressed Chicken Hatchery Operations.
Committee Members: • Mr. Gregory Shirley • Mr. Malcolm McDonald • Mr. Andrew Mahfood • Mr. Aubyn Hill 2. THE COMPENSATION COMMITTEE Chairman: Gregory B. Shirley, MBA Over Gregory B. Shirley’s professional career, which has spanned more than 30 years, he has distinguished himself as a sought-after Consultant in the areas of Compensation and Benefits Administration, Performance Management, Corporate and Strategic Planning and Process Improvement. Committee Members: • Mr. Gregory Shirley • Mr. Andrew Mahfood
• • •
Dr. Trevor Dewdney Mr. Aubyn Hill Mr. Malcolm McDonald
The Committee is scheduled to meet once per year: Two meetings were held during 2009/2010.
3. THE AUDIT COMMITTEE Chairman: Mr. Andrew Mahfood, CA Andrew Mahfood has been a member of the Jamaica Broilers Group Board since 2003. A Chartered Accountant, he has been Finance Director of Wisynco Group Limited since 1997, having served first as Financial Controller of Wisynco Trading Limited. The work of the Audit Committee, and the Internal Auditors – KPMG, provides credible informational support for the External Audit function, which is carried out by PricewaterhouseCoopers.
Committee Members: • • • • •
Mr. Andrew Mahfood Dr. Trevor Dewdney Mr. Aubyn Hill Mr. Malcolm McDonald Mr. Gregory Shirley
The Committee is scheduled to meet quarterly, however, it may hold additional meetings if the Board requests that members convene to authorize financial results and any other matter which may require that Committee’s specific attention. During the year under review, eight meetings were held.
Jamaica Broilers Group
16
Annual Report 2010
Jamaica Broilers Group
17
Annual Report 2010
Executive Team
Christopher E. Levy, MBA President & Chief Executive Officer
Donald A. Patterson, MBA, FCA Vice President Accounting & Information Systems
Stephen D. E. Levy, B.Sc. Assistant Vice President Energy Operations
Claudette D. Cooke, CMT, Ed.D. Vice President Human Resource Development & Public Relations
Ian S. Parsard, MBA, A.C.C.A. Vice President Finance & Energy
Conley N. Salmon Vice President Marketing – Feeds & Agricultural Supplies
David Mair, MBA Vice President BDC Operations
Leon O. A. Headley Vice President Procurement & Trading
Jamaica Broilers Group
18
Annual Report 2010
Jamaica Broilers Group
19
Annual Report 2010
Management Discussion & Analysis As we unveil details of the performance of the Jamaica Broilers Group for the 2009/2010 operating year, we can report, yet again, that our Group has recorded our best ever performance. This is a highly commendable achievement, given the radical changes that have taken place over the years in both the Jamaican and the global operating environments. We believe that the sustained and outstanding performances are a result of the culture of excellence that exists at Jamaica Broilers, twinned with dedicated and astute management, team work and an enduring reliance on God’s direction. During the year under review, Jamaica Broilers responded successfully in a variety of ways to the emerging economic and social conditions which our strategists had predicted. Among other things, we redeployed our employees strategically and in a timely manner, while concentrating on keeping team members motivated and committed; we also continued to forge effective and mutually-beneficial business relationships with like-minded organisations in Jamaica and overseas.
CHRISTOPHER E. LEVY PRESIDENT & C.E.O.
19
Jamaica Broilers Group
At the same time, our Group continued to demonstrate that we are a very aware and conscientious social partner who supports community development and other areas of national life, oftentimes with no public accolades. This is, perhaps, one of the reasons we are held in such high regard by a large segment of the population, who always make the Best Dressed Chicken their protein of choice! Additionally, the respect and appreciation we feel for various agencies which monitor and regulate the sectors in which we operate mean that we are also willing to provide strong support for the development of those agencies and to take the time to build relationships with them. For example, in the area of the environment, Jamaica Broilers has appointed a team member who keeps in close touch with our partners in that sector – monitoring developments and reporting directly to the Group CEO. The holistic approach we have taken to ensuring sustainable growth for our Group means that Jamaica Broilers Group is stronger, both financially and emotionally, than ever. It is very good to be involved with the impressive team which helps to make this a reality and I am pleased to present the highlights of our operations for 2009/2010.
20
Annual Report 2010
Jamaica Broilers Group
21
Annual Report 2010
Jamaica Broilers Group
22
Annual Report 2010
Jamaica Broilers Group
23
Annual Report 2010
Jamaica Broilers Group
24
Annual Report 2010
Jamaica Broilers Group
25
Annual Report 2010
Jamaica Broilers Group
26
Annual Report 2010
Jamaica Broilers Group
OPERATIONAL HIGHLIGHTS POULTRY OPERATIONS Best Dressed Foods The Best Dressed Foods (BDF) Division had another very successful year in 2009/2010. In the main, Poultry sales met the objectives set, including gross margin; sales at Content grew by 12 % when compared with the previous year; and the extended Imported Protein Product line – such as oxtail and salt fish – also saw a 15% increase year-over-year. Additionally, the company realised significant growth throughout the year on the value added products. In particular, BDF’s pickled product range showed a 53 % increase year-over-year; burger sales recorded its highest volumes, reflected in 12% growth over the previous year.
…the new and exciting Reggae Jammin Chicken Franks product… is already being very well received by consumers across Jamaica.
Best Dressed Foods’ customer-focussed strategies were the driving force behind the strong sales performance achieved. Those strategies were geared toward giving customers value, while maintaining the high quality standards to which customers have long been accustomed. The upgraded Incident Tracking System, which maintains a database of customer feedback, was used to assist improvements to product quality and to inform cost containment measures. The success of the strategies employed was reflected in BDF’s performance in the Dealer Satisfaction
27
Annual Report 2010
Survey, which highlighted improvements in service levels offered by all customer contact points, including the company’s Sales force and Distribution teams. From large scale Wholesaler Promotions to Cross Country visits by “Mr. Chicken”, the year saw a plethora of innovative ventures which all sought to help customers survive the prevailing economic turbulence. During the year under review, BDF also seized opportunities to secure business throughout the Caribbean market and will make that market outreach an area of continued focus. BDF brought 2009/2010 to a close with the staging of the novel ‘Hope Links and Lyme’ event on the lawns of Hope Gardens. The event, which feted major corporate customers and their families during an afternoon of “Fun and Flavour”, served a dual purpose; it allowed the company to recognise and award its Top Billing Customers at various levels, while also facilitating the launch of the new and exciting Reggae Jammin Chicken Franks product, which is already being very well received by consumers across Jamaica. The gains recorded during the year were not easily achieved; nonetheless, the company is pleased to have taken advantage of opportunities to grow, while strengthening relationships with those who matter most – our Customers!
International Poultry Breeders Despite the effects of the longest and coldest winter in 55 years in the southern part of the United States of America, International Poultry Breeders (IPB) achieved improved performance in every segment of the operation – that is, at the pullet and breeder levels, as well as in the support service areas of administration, accounting and shipping. Weight, mortality, average production and fertility targets were all exceeded, and this translated into lower costs and greater levels of customer satisfaction. Contributing to the success was the consistent and timely feedback that IPB received from sister operations Best Dressed Chicken and Wincorp regarding the quality of the company’s products. This facilitated a faster response time to any issue which developed and resulted in improved customer approval ratings. The company’s managers and staff thrived on what was accomplished, and experienced a heightened sense of satisfaction at both the team and individual levels. IPB intends to harness that sense of achievement to strengthen efforts to make the delivery of excellent service the defining culture at the company. The company will, therefore, continue to invest in the further development of staff and contractors to bring increased awareness, understanding and focus to what the company does and how this is done.
Jamaica Broilers Group
28
Annual Report 2010
Jamaica Poultry Breeders The 2009/2010 year under review was the most successful year ever for Jamaica Poultry Breeders. The company took advantage of a recent investment in improved production capacity by producing 15.8 million hatching eggs – an increase of 11% over the previous year. Hatchability also increased to 83.7%, which represented 2.2 percentage point growth over the 2008/2009 operating year and resulted from improvement in the fertility of eggs supplied to the hatchery. With construction of another production farm slated to be completed in the upcoming financial year, Jamaica Poultry Breeders anticipates that production of 18 million hatching eggs will be within the company’s reach during 2010/2011.
The Best Dressed Chicken HATCHERY The year ended with the Hatchery producing 38.1 million baby chicks, which represents a 2.9% increase over production levels achieved the previous year. This improvement is attributed to constant upgrading of the Hatchery’s incubation equipment – the latest of which involved implementation of the European Stage Hatchery Programme (ESHP). Implementation of the ESHP has facilitated significantly improved chick quality and has allowed the Hatchery to maintain the lead position, regionally, in terms of hatchery technology and performance. The Programme employs fully computerized controls and monitoring equipment, which reduces machine error and ensure the production of healthy chicks for our farms and customers. Planning is now underway for further expansion of the Hatchery to cope with the ever increasing demand for the quality product that the facility provides.
Hatchability…increased to 83.7%, which represented 2.2 percentage point growth over…2008/2009.
Jamaica Broilers Group
29
Annual Report 2010
Jamaica Broilers Group
The Field & Feed Operations Despite difficult local economic conditions and an aging feed mill, the Best Dressed Field and Feed Operations had a successful year. Plant reliability and operational efficiencies were increased to permit the dispatch of near-record numbers of broilers for processing, and also to release a wide variety of quality feeds into the marketplace to serve a growing export market, as well as a diverse array of internal and external customers. The Field & Feed Operations facilitated several visits from local and overseas consultants who provided management, feed manufacturing, nutritional and health advice as part of strategic efforts to help the Operations better serve customers and improve overall performance. A variety of projects – including infrastructure upgrades and the provision of more comfortable waiting facilities for sack customers and bulk truck drivers – signaled the Field & Feed Operations’ intention to remain focused on improving efficiencies and customer service. Additionally, the feed mill continued on the path towards attaining ISO 22000 certification; that activity has generated positive feedback from the relevant regulatory agencies. In the area of knowledge, technology improvement and discovery, the Research & Development section played a significant role in guiding management’s planning decisions.
30
Annual Report 2010
The Field & Feed Operations will continue the drive toward lowering costs and improving quality and efficiencies, while ensuring that the best service possible is provided to all customers and stakeholders.
The Processing Plant The Best Dressed Chicken (BDC) Processing Plant continued to improve in all operational areas – meeting the goals of improving yield, product flows and efficiencies, as well as providing the highest quality poultry product in the market place. The Plant team remained focused on cost savings and cost cutting activities and this resulted in significant improvements in the Cost results found throughout the plant and recorded by AGRISTATS – the USAbased agribusiness statistical research and analysis firm. The Plant also showed major improvement in the Preventative Maintenance Programme, allowing the facility to perform at 96% Plant Efficiency. Additionally, the BDC Plant was IS14001 re-certified and advanced commendably toward meeting all Environmental Management objectives. The Plant continued to improve on its Quality Assurance Systems and GMP practices, as part of a drive to obtain HACCP certification. For the upcoming financial year the team at the BDC Processing Plant will continue to strive to improve saleable yield and operational efficiencies, while also paying attention to upgrading the Plant’s infrastructure and support services.
Jamaica Broilers Group
31
Annual Report 2010
…the feed mill continued on the path towards attaining ISO 22000 certification…
Jamaica Broilers Group
Jamaica Egg Services During 2009/2010, Jamaica Egg Services (JES) continued the company’s long-standing involvement in all aspects of Jamaica’s table egg industry and remained the supplier of choice for at least 70 percent of the market for replacement layer pullets in the country. Overall, JES was again able to operate profitably, despite the challenge of an ongoing table egg surplus. One major contributor to achievement of the objectives was the cost containment that resulted from successful integration of JES’ accounting services along with aspects of sales and marketing within the Hi-Pro Division. The liquid egg plant, in which Jamaica Broilers Group Ltd is an investor, also continued to play a stabilizing role in the table egg industry, by providing a local alternative to imported liquid eggs. During the year, equipment was added that now allows for the separate production of liquid yolks and albumin (egg whites) – thereby increasing the value added capability of the plant. The year also marked the successful completion of two grant aided programmes for the Jamaica Egg Farmers Association, which was valued at J$45 million and was funded by the European Union and the Government of
32
Annual Report 2010
Jamaica. JES provided technical assistance in the design and implementation phases of the programmes.
Hi-Pro Feed/Farm Supplies The Hi-Pro Division also had another good year, as Division revenues and profits grew at a rate which outweighed the impact of both inflation and devaluation. There was growth in Feed Volume and this was accompanied by increased profits; exports, though small, showed growth of 10%, while overall volumes grew by 15%. Chick sales also reflected volume growth, although profit growth in that area was challenged by tight margins. Other highlights of the year’s operations included a strong marketing thrust, which resulted in new product lines being added in the Agricultural and Horticultural Areas. This meant that the Ace Supercentre store was able to launch several new ranges of crop and plant care products, which boosted sales appreciably. The store also added a wide range of other popular products, including fertilizers from Diamond R, Lines from Caribbean Chemicals and Basf, as well as a range of Organic plant treatments from Agrigro.
Jamaica Broilers Group
Ace Supercentre store was able to launch several new…crop and plant care products.
33
Annual Report 2010
Jamaica Broilers Group
Ethanol Operations Although financial year 2009/2010 was filled with considerable challenges, JB Ethanol (JBE) responded positively to them and was able to post what are, to date, the best results in the company’s brief history. For the first half of 2009/2010, the plant – which now has a capacity of 120 million gallons – was in full production, operating with impressive efficiency and at maximum capacity, so that JBE processed, over that six-month period, the equivalent of the entire 62 million gallons that were produced the previous year. However, during the second half of the year, the volatility of global ethanol markets led to the plant suspending operations temporarily for several months. The fallouts that could have resulted from the halt in production were mitigated by the long term contracts JBE had with several clients. This, along with the strong performance posted in the first half of the year, was one of the main factors which ensured that the company could end the year as another of our Group’s outstanding performers. Another notable success was the fact that JBE achieved the prestigious ISO 9001 certification for the plant’s Quality Management System, making the plant one of an elite few in the industry which can claim to have received that recognition. Despite the current challenging market conditions facing the Industry, the JB Ethanol team remains committed and focused on improving efficiency and operational performance during the 2010/2011 operating year.
34
Annual Report 2010
Jamaica Broilers Group
35
Annual Report 2010
JBE processed, over a six-month period, the equivalent of the entire 62 million gallons that were produced the previous year.
Jamaica Broilers Group
Other Operations Content Agricultural Products Content Agricultural Products posted noteworthy production results for the year under review. The strategy of focusing on high volume/low cost items paid off, with the newest product – Reggae Jammin Chicken Frankfurters – being welcomed by the marketplace and receiving excellent consumer reviews for its taste. Strong marketing and promotion by Best Dressed Foods continue to keep production of that product ahead of targets. The pickled pork tails product, launched during the 2008/2009 financial year continued to be a hit in the market, and demonstrated this by exceeding the production objectives that were set. In respect of Content’s cattle breeding programme, that activity – which also started in the previous financial year – has been performing very well; approximately 200 calves were born in the first year of the programme and the total number of cattle under management now stands at approximately 900 heads. The decision was also taken to consolidate the feedlot operation with the cattle breeding operation, with the objective being to record significant savings in the feedlot operation.
36
Annual Report 2010
For the 2010/2011 financial year, plans are in train for the launch of several new further- processed products to assist growth in the presence of both the company and its products in that market segment.
Aquaculture Jamaica The company’s main objective for financial year 2009/2010 was full implementation of the change in the production model at Aquaculture Jamaica, in order to facilitate production of a smaller fish for the local market, instead of the largersized fish which the original model produced for the export market. Despite achievement of that critical objective, several factors led to Aquaculture realizing lower than anticipated sales during the past year. Among those contributors were the contraction in the Jamaican economy, which was caused primarily by the global economic crisis; an oversupply of Tilapia to the local market; and cheap imports from regional and extra-regional sources. However, the company anticipates that operating conditions will be more favourable in 2010/2011. One reason for the more positive outlook is the renewed focus of the Jamaican government on implementing an improved monitoring and reporting system as it relates to imports – a development which the local production sector believes will result in greater demand for the local product.
Jamaica Broilers Group
37
Annual Report 2010
In the meantime, Aquaculture is targeting further consolidation of operations, with the aim of reducing cost and, thereby, strengthening the company’s position in the marketplace.
Wincorp International Wincorp International is another of our Group companies which reported a strong financial performance in 2009/2010. During that year, the company attained the second highest level of profitability that Wincorp has ever recorded since it was established. Significantly, the company closed the year with no long term debt. The Wincorp team is confident that the company will be able to build upon the successes achieved during the year under review to help ensure continued financial improvement. That confidence is based partly on the fact that the global recession and market turndown which have, for the past two years, plagued the Industry in which Wincorp operates, have been arrested or, at the very least, slowed. The company is certainly well positioned to take advantage of an improving world economy and also plans to implement several new initiatives that are designed to expand product lines, services and Wincorp’s customer base.
Pickled Pigs Tail Pickled Mackerel
Jamaica Broilers Group
Cogeneration Operations The performance of the Cogeneration Power Plant over the past year reflected steady improvement. Powered by a 5 MW engine, the reliability of the Cogeneration Plant improved significantly toward the latter part of the year and this means that the Plant has been able to continue fulfilling its primary purpose of supplying the BDC Processing Plant with electricity and steam.
38
Annual Report 2010
During the year just ended, the two engines that were sent to Wartsila Italy to be rebuilt were also returned and have since been in the process of being commissioned back into service. The addition of those two new engines will bring the total net capacity of the Co-gen Plant up to 12 MW of power and will allow the Plant to continue pursuing improvements in operational efficiency and reliability as part of the objective of becoming a reliable Independent Power Provider.
The performance of the Cogeneration Power Plant over the past year reflected steady improvement.
Jamaica Broilers Group
Human Resource Development The resounding assertion from our Group’s Human Resource Development (HRD) department as the unit reviewed the performance in 2009/2010 was “Yes we can... and yes we did!” The reason for the elation is clear: In the midst of the worldwide economic turmoil, the main challenge the department faced centered on how to keep workers within our Group focused, motivated and optimistic – a matter of critical importance to every area of our Group’s operations. HRD assessed the challenge, explored the people responses that would be needed to take full advantage of those market opportunities which our Group wished to pursue… and set about positioning and equipping our workforce to seize and capitalize on those opportunities. The result: a year of record performance by our Group! Our HRD department constantly upgrades the skills set of employees throughout the Group as a selfdevelopment and morale-boosting measure, while also allowing us to use the tool for strategic human resource management. For 2009/2010, we were able to reap the benefits of our world-class training and development structure as, notwithstanding the significant staff adjustments and realignment undertaken, we managed to fill all staff vacancies from within the organisation, without any disruption to productivity.
39
Annual Report 2010
We recognise that, whether it is in the area of business intelligence, information technology or the vast arena of operations, our talent pool must remain relevant to the changing needs of our business. Our Group continues to pay keen attention to this, while also employing other strategies to engage and keep our employees focused as we continue to go for growth. During the year, for instance, our HRD department launched the Ideas Revolution Portal to facilitate dialogue and the sharing of cost saving ideas, and to also function as a haven for creativity and innovation.
Employee Welfare Our workforce continues to benefit from the Group’s comprehensive welfare programme, which incorporates a fitness regime, wellness workshops, family life and financial counselling and medical checkups. This has resulted in a healthier workforce and a reduction in health and life insurance premiums rate increases for our Group. We continue to strive for good work-life balance for our employees, as we recognise its importance to mental stability, as well as to the productivity of our workforce.
sports It was yet another successful year for our Group’s sportsmen and women. Our cricketers continued to stamp their dominance on the Business House competition by capturing three (3) of the four (4) major ti-
tles on offer during 2009/2010. The trophies won comprised the Digicel 20/20 Trophy, the BDC 30 Overs Trophy and the Noranda Jamaica Bauxite Partners 35 Overs Trophy.
Jamaica Broilers Group
40
Annual Report 2010
Additionally, we turned in an improved performance in the Business House Netball competition – capturing second place in the 2009/2010 event.
Non insurable risks which are peculiar to each operation are discussed below:
Our footballers also performed creditably, as they reached the semi-finals of the Business House Football Competition.
Poultry and Feed Operations
RISK ASSESSMENT Jamaica Broilers Group is pleased that, despite the fact that all agricultural operations are exposed to weather related risks – such as hurricanes and storms – we have, for more than twenty years, been able to secure general insurance which mitigates this risk to a large extent. The normal business risks our Group faces are insured through our Captive Insurer – Atlantic United Insurance Company Ltd.; all major risks, including business interruption, are reinsured in the international market.
NC
N
UR
A
Y
INS
LT D
AT L
D TE
C NTI UNI A
A E CO MP
The Poultry Industry in Jamaica is viewed by the authorities as being of special value to the nation from the food security and employment standpoints. We therefore expect that measures implemented several years ago to minimize dumping and undermining of the Poultry Industry will be continued for the foreseeable future.
Ethanol Operations Market volatility is the greatest risk to the viability of this operation. We have mitigated this risk to some extent by moving into Contract Processing or “tolling”, with take-or-pay conditions being important clauses in those arrangements.
Jamaica Broilers Group
DEBT MANAGEMENT During the 3 years ended May 2, 2009, increased levels of borrowing were required to finance the building out of our Ethanol Plant and related operations. During 2009/2010, we focused on debt reduction – a path on which we will continue for the immediate future to return us to a net cash position by the end of April, 2012.
41
Annual Report 2010
THE WAY FORWARD A key focus for Jamaica Broilers Group as we map the way forward for continued growth and development will be on ensuring that we manage how we grow. This means that we will pay keen attention to making sure that our growth is strategic and measured, instead of random, and that we will pick opportunities carefully, instead of pursuing everything that presents itself. As our company grows and we become aware of opportunities, we will ensure that those opportunities we pursue and the investments we make in this challenging economic environment have been carefully scrutinized and evaluated. We do not believe that, at this time in our history, we should be overly aggressive. However, this does not mean that we will be prepared to ignore viable prospects; prudent growth is the key strategy we will apply, as we make every effort to use our financial resources carefully, so that we can continue to have a very com-
petitive business in Jamaica and the wider Caribbean. Part of that prudent growth will require that we continue to tackle, head-on, the issue of cost containment, while remaining open to taking advantage of viable new prospects for cost-effective growth and development of our Group. Additionally, our Group wants to ensure that our people remain trainable, so that they can continue to develop in a nimble manner which will allow them to make a contribution in any area we decide to pursue. This is but one of the ways in which we will make sure that we continue to be very deliberate in the way that we manage our growth. On the wider landscape, our Group remains committed to the food security of Jamaica and the wider region and we will continue to build the relationships that will help to ensure that this is a permanent part of the region’s profile.
We continue to be willing, too, to open up relationships with others, both locally and internationally, as these give us the flexibility needed to help our company thrive. In fact, we place a premium on the building of such relationships, which comes out of a realization that business is far more than financial transactions. And as we chart the way forward, we use the opportunity to acknowledge that the most important relationship we can forge is the one which has God as our guide. We appreciate all of the top talent that resides within our Group, as well as the ones we access through our partners across the globe. However, our ultimate reliance is on the Lord, as we continue to trust Him to guide us on where to go, and to help us to stay on course.
Christopher E. Levy President & CEO
Jamaica Broilers Group
42
Annual Report 2010
Corporate Social Responsibility
Public Relations Fair Play Awards Our Group is preparing to celebrate the milestone 10th Anniversary of the Jamaica Broilers Group “Fair Play” Awards in 2010, with the presentation of Awards for outstanding work done by journalists for 2009/2010. The prestigious Awards – which offer public recognition and financial incentives for journalists who demonstrate excellent and “fair”/balanced investigative and reporting skills – also seek to increase the commitment that journalists feel toward a profession which is classified as the Fourth Estate. This means that journalists must function as “watchdogs” for the society by providing checks on the powers of the three other powers of the state: The Legislative, the Executive and the Judiciary. As a Group, we feel that it is critical that we play a part in encouraging our media to fulfill that sacred duty and are, therefore, pleased to continue to finance this project.
The first set of Jamaica Broilers Group Fair Play Awards was presented in September, 2001 for the judging period August 1, 2000 to July 31, 2001. When the Awards were presented for the 9th consecutive year in 2009 for the period 2008/2009, Chief Judge Dr. Hopeton Dunn of the Mona School of Business commented that the reach of the Awards had extended beyond mainstream media and was, therefore, having a positive impact on the media landscape as a whole. “It was interesting to see a number of newly emerging, alternative media organizations submitting work for judging. This indicates that they are setting their sights quite high… Of the 34 entries received, overall, from all media segments this year, it can be said that about a third really measured up to the high standards this Award Scheme [promotes]. But when they were good, they were VERY GOOD, and gave the judges a hard time to select the winning entries,” Dr. Dunn – himself a journalist – added.
Best Dressed Fun in the Son 2010 This year’s staging of our free-tothe-public Best Dressed Fun in the Son gospel festival was as spiritually fulfilling as it was electrifying. With a record number of patrons turning out for the festival on the grounds of Jamaica College, the Word was delivered in various forms: music, poetry, dance and storytelling – all designed to assist patrons in creating or strengthening their unique relationship with God. We are gratified that, at Fun in the Son, more than 800 persons made a commitment to renew their relationship with God and have participated in follow-up sessions facilitated by our Group and co-ordinated through Youth Reaching Youth of Swallowfield Chapel.
Jamaica Broilers Group
COMMUNITY RELATIONS In that same spirit of positive outreach, we continued to provide critical support for various community and social programmes – especially those in which our Group does business. These activities have been bearing fruit, evidenced by the level of progress being made in the respective communities as a result of our intervention in areas such as sports and education, as well as community development and empowerment.
Sports as a Team Building / Community Development Tool In the area of sports, we have been able to use this as a tool to stimulate community support and interaction, since members of the respective sports teams we sponsor are required to give community service as a condition of our sponsorship. We are very encouraged by the benefits being realized by the communities – including the fact that the JBGsponsored McCook’s Pen Football Club emerged champions of the 2009/2010 Central St. Catherine Division One League!
44
Annual Report 2010
Skills Training The Spring Village Training Institute, which is partly funded by Jamaica Broilers, continued to produce skilled personnel for employment. During 2009/2010, another batch of 150 students received training at the NVQJ Levels 1 and 2 in Housekeeping, Welding Fabrication, Electrical Installation, Commercial Food Preparation and Office Administration. The Institute also constantly seeks to identify opportunities for a variety of income generating projects and this year embarked on a cash crop project which allowed the facility to successfully cultivate an adjoining plot of land, using recycled water from our Group’s facility. The income from that project assists in offsetting the Institute’s operating expenses.
Support for the Needy Our assistance in caring for and feeding the needy in communities in which our Group has operations continued during the year under review. As a result of the economic fallouts facing our nation, the demand for this type of support increased substantially. We were able to sustain all existing programmes and, where possible, we provided additional resources to ensure that we were able to assist greater numbers of the less fortunate.
Assisting Earthquake-hit Haiti Oftentimes when we think of “our communities”, we confine our thoughts to the immediate local surroundings. This geographical boundary was removed in the aftermath of the catastrophic earthquake which hit Haiti on January 12, 2010. Without hesitation, our staff members stretched out their hands to our Haitian brothers and sisters – rallying to the call for help by initiating and coordinating a food and clothing drive. Items collected from that effort were packaged and delivered to the Salvation Army’s Jamaican Chapter, for distribution as a part of the chapter’s relief efforts.
caribbean christian centre for the deaf greenhouse project
projects
2009 - 2010
That staff-driven initiative was truly remarkable and, indeed, demonstrated that altruism and love for mankind are alive and well in the hearts of our employees!
JBG Foundation The Jamaica Broilers Group Foundation continued its mandate to have a transformational impact on the lives of Jamaicans. In addition to the successful implementation and completion of all projects undertaken last year, the BDC Fun in the Son Festival was one of the main projects on which the Foundation focused in 2009/2010.
mustard seed community project
moorlands camp meeting hall
Jamaica Broilers Group
46
Annual Report 2010
Jamaica Broilers Group
47
Annual Report 2010
ENVIRONMENTAL MANAGEMENT
ment System. The Plant was also nominated by the Jamaica Chamber Of Commerce for the Environmental Awareness Award.
Our Group is committed to meeting the needs of society and our customers by continuously improving the environmental performance of our operations and striving to minimize the impact of our activities on the surrounding environment. In functioning as a responsible corporate citizen, we have been steadily strengthening the programmes we use to manage all of the significant environmental areas on which we focus as a Group, as we seek to protect the environment for present and future generations.
The environmental programme our Group has implemented – including waste, energy and water reduction – has resulted in the company minimizing its impact on the environment, while reaping tremendous operational efficiencies.
During the year under review, the Best Dressed Chicken Processing facility has been recertified ISO 14001 – an Environmental manage-
We will continue the scheduled implementation of Environmental Management Programs at all our facilities…
In keeping with the guidelines established by our local National Environmental Planning Agency (NEPA) and those of the Inter-American Investment Corporation (IIC), we will continue the scheduled implementation of Environmental Management Programs at all our facilities, as well as the ongoing monitoring and reporting of our environmental performance in compliance with current legislation.
Jamaica Broilers Group
48
Annual Report 2010
Jamaica Broilers Group
49
Annual Report 2010
Shareholdings of Directors & Connected Parties
Shareholdings of Senior Management & Connected Parties
For purposes of compliance with Rule 408 (ii) of the Jamaica Stock Exchange Rules, details of stockholdings of Directors and Senior Management and their connected persons as at 30 APRIL 2010 are set out hereunder:
N.B - The Senior Management of the Company includes Messrs. Christopher Levy and Ian Parsard, and Dr Claudette Cooke as on the previous page, and connected parties who held shares as is set out in the table below:
DIRECTORS R. Danny Williams Robert E. Levy Chairman
Christopher Levy President & Chief Executive Officer Claudette Cooke Vice President Human Resource Development & Public Relations Trevor Dewdney Aubyn Hill
SHAREHOLDINGS NIL 616,000
2,731,316
NIL
62,651
Andrew Mahfood
NIL
Gregory B. Shirley
1,207,496
Hirlie Williams
Robert E Levy/Judy Levy Portland Corporation Ltd. The Robert Levy Family Foundation Phillip E. Levy The Phillip Levy Family Foundation Christopher Levy / Sarah Levy
500,000 8,373,332 6,907,893 8,805,363 141,896,216 670,000 50,648,932
Senior Management
No. of Shares
David Mair
Leon Headley
Claudette Cooke/ Richard Cooke Richard Cooke Richard Cooke/ Claudette Cooke/ Ryan Cooke Trevor Dewdney Jr.
NIL
Forms R Us Limited Gregory B. Shirley/ Susan Shirley Ian Parsard/ Karen Parsard
4,317,087 9,318 20
Donald Patterson
Conley Salmon
9,318
500,000 3,793,214 NIL
74,548 3,212
Hirlie Williams/ Annette Williams
5,600
143,785
5,173,850
6,103,934 NIL
Barrington Pryce
R. Danny Williams/Shirley Williams Ravers Limited
SHAREHOLDINGS
Peter Depass
Malcolm McDonald
Ian Parsard
CONNECTED PERSONS
85,829
Connected Party
No. of shares
David Mair/ Kim Mair Kim Mair
469,716 9,318
Leon Headley/ June Headley June Headley/Leon Headley June Headley/ Leon Headley/ Jo-Anne Headley June Headley/Leon Headley/ Lauren Headley
2,607,684 50,000 10,000 4,500
NIL 231,283
3,367,238
Donald Patterson/ Irenia Patterson Dayne Patterson
2,119,358 931
Conley Salmon/Juliet Salmon Christopher McClure/Angela McClure/Juliet Salmon
4,651,477 20,000
10 Largest Ordinary Shareholders The Holdings of those persons owning the ten (10) largest blocks of stock units as at 30 APRIL 2010 are set out hereunder: SHAREHOLDER Jamaica Broilers Trust The Robert Levy Family Foundation Halcyon Limited The Phillip Levy Family Foundation National Insurance Fund The Arrol Trust MF&G Trust & Finance Ltd A/C#528 Trading A/C- Life of Jamaica Ltd LOJ PIF Equity Fund NCB Insurance Co Ltd A/C# WT089
AMT. OF STOCK 157,813,769 141,896,216 60,314,945 50,648,932 54,479,759 44,411,830 26,835,355 19,327,362 24,562,299 18,636,796
PETER A. DePASS Secretary 30-Apr-10
Jamaica Broilers Group
50
Annual Report 2010
Jamaica Broilers Group
51
Annual Report 2010
Directors & Senior Management
Operating Divisions & Subsidiaries
DIRECTORS SENIOR MANAGEMENT
JAMAICA BROILERS GROUP LIMITED
Hon. Robert E. Levy Christopher E. Levy, MBA C.D., Hon. LL.D., M.A. President & Chief Executive Officer Chairman Christopher E. Levy Claudette D. Cooke, CMT, Ed.D. MBA Vice President President & Chief Executive Officer Human Resource Development & Public Relations Hon. Raby Danvers Williams Leon O. A. Headley O.J. C.D. Hon. LL.D, J.P Vice President Director Emeritus Procurement & Trading Claudette D. Cooke Stephen D. E. Levy, B.Sc. CMT, Ed.D. Assistant Vice President Vice President Energy Operations Human Resource Development & Public Relations David Mair, MBA Executive Director Vice President BDC Operations Trevor D. Dewdney D.V.M. Ian S. Parsard, MBA, A.C.C.A. Director Vice President Finance & Energy Aubyn Hill MBA Director Donald A. Patterson, MBA, FCA Vice President Andrew J. Mahfood Accounting & Information Systems B.Sc., CA Director Conley N. Salmon Vice President Malcolm D. L. McDonald Marketing – Feeds & Agricultural Supplies Attorney-at-Law Director Ian S. Parsard COMPANY SECRETARY MBA Vice President Peter A. DePass Finance & Energy Attorney-at-Law Executive Director Barrington A. Pryce Director Gregory Shirley MBA (Hons) Director Hirlie E. Williams Director
Group Head Office Content, McCook’s Pen St. Catherine Jamaica, West Indies Tel: 943-4376 Fax: 943-4322 Website: www.jamaicabroilersgroup.com
SUBSIDIARIES - LOCAL AQUACULTURE JAMAICA LIMITED Maggoty, P.O., Box 17 St. Elizabeth Tel: 999-1960; Fax: 607-4613 EAL/ERI CO-GENERATION PARTNERS, LP Content, McCook’s Pen St. Catherine Tel: 943-4370; Fax: 943-4322
DIVISIONS BEST DRESSED CHICKEN Spring Village, St. Catherine Tel: 983-8001-4; Fax: 983-8818
JB ETHANOL LIMITED Port Esquivel, Old Harbour St. Catherine 943-4428; Fax: 525-2113
BEST DRESSED FEED MILL Freetown, P.O. Box 24 Old Harbour P.O., St. Catherine Tel: 983-2322; Fax: 983-9241
JAMAICA POULTRY BREEDERS LIMITED Caentabert, P.O., Box 27 Claremont, St. Ann Tel: 972-3609; Fax 972-3775
BEST DRESSED FOODS Spring Village St. Catherine Tel: 708-5670-5 Fax: 708-5410 Toll Free: 1 888 BUY BDF1 CONTENT AGRICULTURAL PRODUCTS Bog Walk, St. Catherine Mailing Address: Content, McCook’s Pen, St. Catherine Tel: 985-1190; Fax: 708-2876 HI-PRO/ACE FARM & GARDEN SUPERCENTRE P.O. Box 886 White Marl, St. Catherine Tel: 984-7919-20: Fax: 984-5914 JAMAICA EGG SERVICES White Marl. St. Catherine Tel: 749-5433; Fax: 749-5003
SUBSIDIARIES - OVERSEAS ATLANTIC UNITED INSURANCE CO. LTD. One Regis Place 94th Street P.O., Box 472 Georgetown, Grand Cayman ERI SERVICES (ST. LUCIA) LIMITED 20 Micoud Street Castries, St. Lucia INTERNATIONAL POULTRY BREEDERS, L.L.C. 1235 Perry Batts Road Norman Park Georgia 31771 Tel: (229) 769-3410; Fax (229) 769-3425 WINCORP INTERNATIONAL INC. 10025 NW 116 Way, Suite 14 Medley, FL 33178 Tel: (305) 887-4000; Fax: (305) 887-4400
Jamaica Broilers Group
52
Annual Report 2010
Jamaica Broilers Group
53
Annual Report 2010
Independent Auditors’ Report To the Members of Jamaica Broilers Group Limited
PricewaterhouseCoopers Scotiabank Centre Duke Street Box 372 Kingston Jamaica Telephone (876) 922 6230 Facsimile (876) 922 7581
Report on the Financial Statements We have audited the accompanying financial statements of Jamaica Broilers Group Limited and its subsidiaries (the Group) and the financial statements of Jamaica Broilers Group Limited standing alone set out on pages 55 to 125, which comprise the consolidated and company balance sheets as of 1 May 2010 and the consolidated and company statements of comprehensive income, 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.
M.G. Rochester P.W. Pearson E.A. Crawford D.V. Brown J.W. Lee C.D.W. Maxwell P.E. Williams G.L. Lewars L.A. McKnight L.E. Augier A.K. Jain B.L. Scott B.J. Denning G.A. Reece
Jamaica Broilers Group
54
Annual Report 2010
Jamaica Broilers Group
55
Annual Report 2010
Page 1
Jamaica Broilers Group Limited Group Statement of Comprehensive Income Members of Jamaica Broilers Group Limited Independent Auditors’ Report Page 2
Year ended 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Note
Opinion In our opinion, the accompanying financial statements give a true and fair view of the financial positions of the Group and the company as of 1 May 2010, and of the 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.
Revenue
2010
2009
$’000
$’000
22,446,902
24,623,315
(17,730,725)
(20,662,325)
Gross Profit
4,716,177
3,960,990
Other operating income Distribution costs
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.
Administration and other expenses
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.
Finance costs
6
Operating Profit 9
Profit before Taxation Taxation
10
Net Profit Unrealised losses on available-for-sale securities
30 June 2010 Kingston, Jamaica
2 May
Cost of sales
Report on Other Legal and Regulatory Requirements
Chartered Accountants
1 May
105,994
110,902
(556,686)
(479,865)
(2,183,773)
(2,154,824)
2,081,712
1,437,203
(484,475)
(433,476)
1,597,237
1,003,727
(284,436)
(175,664)
1,312,801
828,063
(570)
(9,686)
Exchange differences on translating foreign operations
13,544
369,960
Total other comprehensive income
12,974
360,274
1,325,775
1,188,337
510,029
832,165
Total Comprehensive Income Net profit attributable to: Holding company Subsidiaries
Earnings per Stock Unit
11
802,772
(4,102)
1,312,801
828,063
Cents
Cents
109.47
69.05
Jamaica Broilers Group
56
Annual Report 2010
Page 2
Jamaica Broilers Group Limited Group Balance Sheet
1 May 2010 $’000
2 May 2009 $’000
6,414,590 70,729 123,607 30,180 206,200 6,845,306
6,580,143 77,843 193,481 12,983 157,400 7,021,850
2,617,645 885,999 1,285,190 5,494 1,282,938 6,077,266
3,748,371 810,935 1,030,937 7,750 6,227 785,596 6,389,816
1,480,602 132,380 2,243,194 3,856,176 2,221,090 9,066,396
1,546,793 132,942 131,921 3,807,595 5,619,251 770,565 7,792,415
25 26
765,137 1,071,941 5,046,553 6,883,631
765,137 1,058,967 3,973,607 5,797,711
24 15 16
1,717,023 456,542 9,200 9,066,396
1,670,410 316,294 8,000 7,792,415
12 13 14 15 16
Current Liabilities Payables Taxation payable Dividends payable Borrowings
17 18 19 20 21
22
24
Net Current Assets Stockholders’ Equity Share capital Capital reserve Retained earnings Non-Current Liabilities Borrowings Deferred income taxes Post-employment benefit obligations
Approved for issue on behalf of the Board of Directors on 28 June 2010 and signed on its behalf by:
Robert E. Levy
Director
Page 3
Jamaica Broilers Group Limited
Year ended 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Note
Current Assets Inventories Biological assets Receivables Taxation recoverable Financial assets at fair value through profit or loss Cash and short term investments
Annual Report 2010
Group Statement of Changes in Stockholders’ Equity
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Non-Current Assets Property, plant and equipment Intangible asset Investments Deferred income taxes Post-employment benefit assets
57
Jamaica Broilers Group
Andrew J. Mahfood
Director
Note Balance at 3 May 2008 Unrealised losses on available-for-sale securities
Number of Shares
Share Capital
Capital Reserve
Retained Earnings
Total
‘000
$’000
$’000
$’000
$’000
1,199,277
765,137
698,693
3,277,465
4,741,295
-
-
(9,686)
-
(9,686)
Exchange differences on translating foreign operations
-
-
369,960
-
369,960
Total other comprehensive income
-
-
360,274
-
360,274
Net profit
-
-
-
828,063
828,063
-
-
360,274
828,063
1,188,337
-
-
-
Total comprehensive income Dividends
23
Movement during the year
(131,921)
(131,921)
-
-
360,274
696,142
1,056,416
1,199,277
765,137
1,058,967
3,973,607
5,797,711
Unrealised losses on available-for-sale securities
-
-
Exchange differences on translating foreign operations
-
-
13,544
-
13,544
Total other comprehensive income
-
-
12,974
-
12,974
Net profit
-
-
-
1,312,801
1,312,801
Total comprehensive income
-
-
12,974
1,312,801
1,325,775
-
-
-
Balance at 2 May 2009
Dividends Movement during the year Balance at 1 May 2010
23
(570)
-
(239,855)
(570)
(239,855)
-
-
12,974
1,072,946
1,085,920
1,199,277
765,137
1,071,941
5,046,553
6,883,631
Jamaica Broilers Group
58
Annual Report 2010
Jamaica Broilers Group
Page 4
Jamaica Broilers Group Limited Group Statement of Cash Flows
Note
Jamaica Broilers Group Limited
2 May
2010
2009
$’000
$’000
Cash Flows from Operating Activities
1 May Note Cash Flows from Operating Activities
1,312,801
Net profit
828,063
Adjustments for:
Purchase of property, plant and equipment 12
457,195
373,003 13,100
Purchase of intangible asset
Loss/(gain) on disposal of property, plant and equipment
6
771
(1,583)
Purchase of investments
Fair value loss on financial assets at fair value through profit or loss
6
-
597
Loss on sale of financial assets at fair value through profit or loss
6
2,498
-
(47,600)
(38,400)
10
284,436
175,664
Interest income
6
(45,143)
(37,200)
Dividend income
6
(324)
(277)
13,697
343,721
423,996
449,453
2,414,694
2,106,141
Unrealised foreign exchange losses Interest expense
9
Biological assets Receivables Payables Translation loss/(gain) on working capital of foreign subsidiaries Taxation paid Cash provided by/(used in) operating activities
13
Proceeds from sale of investments Interest received Dividend received Cash used in investing activities
1,130,726
(1,208,622)
(75,064)
(147,483)
(251,982)
232,197
(70,623)
(1,111,454)
7,794
(272,887)
3,155,545
(402,108)
(161,947)
(197,184)
2,993,598
(599,292)
2010
2009
$’000
$’000
2,993,598
(599,292)
(335,584)
(1,656,900)
48,934
23,177
(5,253)
-
74,279
(108,761)
-
77,437
44,983
35,716
324
277
(172,317)
(1,629,054)
(6,137,294)
(1,750,216)
Cash Flows from Financing Activities Long term loans repaid
5,548,940
4,593,881
Interest paid
(444,317)
(415,803)
Dividends paid
(371,776)
(95,942)
(1,404,447)
2,331,920
1,416,834
103,574
922
107,471
Long term loans received
Cash (used in)/provided by financing activities Increase in cash and cash equivalents
Changes in operating assets and liabilities: Inventories
12
Proceeds from disposal of property, plant and equipment
12,367
Changes in post-employment benefits
2 May
Cash Flows from Investing Activities
13
Taxation expense
Page 5
Year ended 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 1 May
Amortisation
Annual Report 2010
Group Statement of Cash Flows (Continued)
Year ended 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Depreciation
59
Effect of changes in exchange rates on cash and cash equivalents Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR
21
(505,595)
(716,640)
912,161
(505,595)
Jamaica Broilers Group
60
Annual Report 2010
Jamaica Broilers Group
Page 6
Jamaica Broilers Group Limited
Company Statement of Comprehensive Income
Note
2010
2009 $’000
17,950,618
16,522,872
Cost of sales
(14,484,733)
(13,380,629)
Gross Profit
3,465,885
3,142,243
31,181
558,368
(499,498)
(456,073)
(2,028,780)
(1,903,959)
968,788
1,340,579
9
(234,975)
(349,159)
733,813
991,420
10
(223,784)
(159,255)
510,029
832,165
Unrealised losses on available-for-sale securities
(3,618)
(742)
Total other comprehensive income
(3,618)
(742)
506,411
831,423
Revenue
6
Distribution costs Administration and other expenses Operating Profit Profit before Taxation Net Profit
Total Comprehensive Income
Jamaica Broilers Group Limited
2 May
$’000
Taxation
Page 7
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 1 May
Finance costs
Annual Report 2010
Company Balance Sheet
Year ended 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Other operating income
61
1 May 2010 $’000
2 May 2009 $’000
2,116,095 68,482 3,946 288,753 163,500 2,640,776
1,785,553 75,334 7,585 288,753 126,200 2,283,425
2,446,395 390,119 830,923 2,736,644 3,422 1,076,287 7,483,790
1,714,694 365,372 621,438 5,476,099 7,072 6,227 652,209 8,843,111
1,322,813 75,389 769,144 1,746,699 3,914,045 3,569,745 6,210,521
1,373,216 128,895 887,631 131,921 2,954,467 5,476,130 3,366,981 5,650,406
25 26
765,137 133,201 3,616,667 4,515,005
765,137 136,819 3,346,493 4,248,449
24 15 16
1,287,325 400,491 7,700 6,210,521
1,129,048 266,309 6,600 5,650,406
Note Non-Current Assets Property, plant and equipment Intangible asset Investments Interest in subsidiaries Post-employment benefit assets
12 13 14 16
Current Assets Inventories Biological assets Receivables Subsidiaries Taxation recoverable Financial assets at fair value through profit or loss Cash and short term investments Current Liabilities Payables Taxation payable Subsidiaries Dividends payable Borrowings
17 18 19 20 21
22
24
Net Current Assets Stockholders’ Equity Share capital Capital reserve Retained earnings Non-Current Liabilities Borrowings Deferred income taxes Post-employment benefit obligations
Approved for issue on behalf of the Board of Directors on 28 June 2010 and signed on its behalf by:
Robert E. Levy
Director
Andrew J. Mahfood
Director
62
Jamaica Broilers Group
Annual Report 2010
Jamaica Broilers Group
Page 8
Jamaica Broilers Group Limited
Company Statement of Changes in Stockholders’ Equity
Year ended 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Share Capital
Capital Reserve
Retained Earnings
Total
‘000
$’000
$’000
$’000
$’000
1,199,277
765,137
137,561
2,646,249
3,548,947
Unrealised loss on available-for-sale securities
-
-
(742)
-
(742)
Net profit
Total other comprehensive income
-
-
(742)
-
(742)
Adjustments for:
Net profit
-
-
Total comprehensive income
-
-
-
-
-
-
1,199,277
765,137
Dividends
23
Movement during the year Balance at 2 May 2009
(742) (742) 136,819
832,165
832,165
832,165
831,423
(131,921)
(131,921)
700,244
699,502
3,346,493
4,248,449
Unrealised loss on available-for-sale securities
-
-
(3,618)
-
Total other comprehensive income
-
-
(3,618)
-
Net profit
-
-
Total comprehensive income
-
-
-
-
-
-
1,199,277
765,137
Dividends Movement during the year Balance at 1 May 2010
23
Page 9
Jamaica Broilers Group Limited
Number of Shares Balance at 3 May 2008
Annual Report 2010
Company Statement of Cash Flows
Year ended 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Note
63
(3,618) (3,618) 133,201
(3,618)
510,029
510,029
510,029
506,411
(239,855)
(239,855)
270,174
266,556
3,616,667
4,515,005
Note
1 May
2 May
2010
2009
$’000
$’000
510,029
832,165
Cash Flows from Operating Activities
Depreciation
12
199,396
183,187
Amortisation
13
12,016
12,749
Loss/(gain) on disposal of property, plant and equipment
6
1,332
(2,667)
Fair value loss on financial assets at fair value through profit or loss
6
-
597
Loss on sale of financial assets at fair value through profit or loss
6
Changes in post-employment benefits
2,498
-
(36,200)
(38,400)
10
223,784
159,255
Interest income
6
(20,737)
(25,545)
Dividend income
6
(324)
(517,857)
11,739
212,049
9
180,348
202,369
1,083,881
1,017,902
(731,701)
(125,057)
(24,747)
(50,918)
Receivables
(205,837)
169,608
Subsidiaries
2,352,708
(2,130,787)
(54,833)
(339,771)
2,419,471
(1,459,023)
(143,108)
(173,818)
2,276,363
(1,632,841)
Taxation expense
Unrealised foreign exchange losses Interest expense Changes in operating assets and liabilities: Inventories Biological assets
Payables Taxation paid Cash provided by /(used in) operating activities
Jamaica Broilers Group
64
Annual Report 2010
Jamaica Broilers Group
Page 10
Jamaica Broilers Group Limited
65
Annual Report 2010
Jamaica Broilers Group Limited
Page 11
Notes to the Financial Statements
Company Statement of Cash Flows
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Year ended 1 May 2010 (Continued) (expressed in Jamaican dollars unless otherwise indicated) 1 May
2 May
2010
2009
$’000
$’000
2,276,363
(1,632,841)
-
(2,151)
(276,925)
(245,939)
13,633
2,810
(5,164)
-
3,729
77,964
20,737
25,545
324
517,857
(243,666)
376,086
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.
(5,172,982)
(1,561,126)
5,054,437
3,194,203
Interest paid
(196,083)
(182,474)
Dividends paid
(371,776)
(95,942)
(a) Basis of preparation The consolidated financial statements of Jamaica Broilers Group Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) under the historical cost convention, as modified by the revaluation of certain financial assets.
Cash (used in)/provided by financing activities
(686,404)
1,354,661
Note Cash Flows from Operating Activities
1.
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 company was incorporated in 1958.
Cash Flows from Investing Activities Additional investment in subsidiary Purchase of property, plant and equipment
12
Proceeds from disposal of property, plant and equipment Purchase of intangible asset
13
Proceeds from sale of investments Interest received Dividend received Cash (used in)/provided by investing activities Cash Flows from Financing Activities Long term loans repaid Long term loans received
Increase in cash and cash equivalents Effect of changes in exchange rates on cash and cash equivalents Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR
21
1,346,293
97,906
910
103,700
(637,860)
(839,466)
709,343
(637,860)
Identification
The principal activities of the company and its subsidiaries include the production and distribution of poultry, ethanol, animal feeds and agricultural items (Note 2(b)). In addition, one of the company’s subsidiaries, JB Ethanol Limited contractually processes hydrous alcohol into anhydrous ethanol on behalf of customers for a fee. The company’s subsidiaries together with the company are referred to as “the Group”. The company is listed on the Jamaica Stock Exchange. 2.
Summary of Significant Accounting Policies
The 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. Standard, interpretation and amendments to published standards effective in current year that are relevant to the Group’s operations • IFRS 8, Operating Segments (effective for annual periods beginning on or after 1 January 2009). IFRS 8 replaces IAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131, ‘Disclosures about segments of an enterprise and related information’. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The segments are now reported in a manner consistent with the internal reporting provided to the chief operating decision maker. There has been no impact on the measurement of the company’s assets and liabilities. The standard was early adopted by the Group for annual period beginning 29 April 2007.
Jamaica Broilers Group
66
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 12
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2. Summary of Significant Accounting Policies (Continued) (a)
Basis of preparation (continued)
67
Annual Report 2010
Jamaica Broilers Group Limited
Page 13
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (a)
Basis of preparation (continued)
Standard, interpretation and amendments to published standards effective in current year that are relevant to the Group’s operations (continued)
Standard, interpretation and amendments to published standards effective in current year that are relevant to the Group’s operations (continued)
IAS 23 (Amendment), Borrowing costs (effective from 1 January 2009). It requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs was removed. The standard was early adopted by the Group for annual period beginning 4 May 2008. The adoption of this standard resulted in $29,404,000 of interest capitalised on the expansion of its ethanol plant in the year ended 2 May 2009. This amount was included in property, plant and equipment (Note 24).
• IAS 41 (Amendment), ‘Agriculture’ The amendment requires use of a market-based discount rate where fair value calculations are based on discounted cash flows, and removes the prohibition on taking into account biological transformation when calculating fair value. This amendment does not have any impact on the current year’s financial statements.
•
•
IAS 1 (Revised), Presentation of financial statements. The revised standard prohibits the presentation of income and expenses (that is, non-owner changes in equity) in the statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity in a statement of comprehensive income. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes are presented in the consolidated statement of comprehensive income. Comparative information has been re-presented so that is also in conformity with the revised standard. The adoption of the amendment results in additional disclosures but does not have an impact on the financial position or the comprehensive income of the Group.
•
IFRS 7 (Amendment), Financial instruments – disclosures. The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share.
•
IAS 38 (Amendment), Intangible assets. An asset may only be recognised in the event that payment has been made in advance of obtaining right of access to goods or receipt of services. Deletion of wording that states that there is ‘rarely, if ever’ support for use of a method that results in a lower rate of amortisation than the straight line method. This amendment does not have any impact on the current year’s financial statements.
•
IAS 36 (Amendment), Impairment of assets. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. This amendment does not have any impact on the current year’s financial statements.
•
IFRIC 13, Customer Loyalty Programmes. IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. This amendment does not have any impact on the current year’s financial statements.
Standard, interpretations and amendments to published standards not yet effective and have not been early adopted by the Group • IFRS 3 (Revised), Business Combinations (effective 1 July 2009). IFRS 3 continues to apply the acquisition method to business combinations, with some significant changes. It requires that all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply this amendment from 2 May 2010. • IFRS 9, Financial instruments part 1: Classification and measurement (effective for annual periods beginning on or after 1 January 2013) was issued in November 2009 and replaces those parts of IAS 39 relating to the classification and measurement of financial assets. Key features are as follows: Financial assets are required to be classified into two measurement categories: those to be measured subsequently at fair value, and those to be measured subsequently at amortised cost. The decision is to be made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. An instrument is subsequently measured at amortised cost only if it is a debt instrument and both the objective of the entity’s business model is to hold the asset to collect the contractual cash flows, and the asset’s contractual cash flows represent only payments of principal and interest (that is, it has only ‘basic loan features’). All other debt instruments are to be measured at fair value through profit or loss. All equity instruments are to be measured subsequently at fair value. Equity instruments that are held for trading will be measured at fair value through profit or loss. For all other equity investments, an irrevocable election can be made at initial recognition, to recognise unrealised and realised fair value gains and losses through other comprehensive income rather than profit or loss. There is to be no recycling of fair value gains and losses to profit or loss. This election may be made on an instrumentby-instrument basis. Dividends are to be presented in profit or loss, as long as they represent a return on investment. While adoption of IFRS 9 is mandatory from 1 January 2013, earlier adoption is permitted. The Group is considering the implications of the standard, the impact on the Group and the timing of its adoption by the Group.
Jamaica Broilers Group
68
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 14
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2
Summary of Significant Accounting Policies (Continued) (a)
•
IFRIC 13, Customer Loyalty Programmes (effective for annual periods beginning on or after 1 July 2008). IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. Management has determined that there are no material transactions in the Group to which this applies.
•
•
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (b)
Consolidation Subsidiaries The consolidated financial statements of the Group comprise the financial statements of the parent entity and all consolidated subsidiaries, including certain special purpose entities. Subsidiaries are companies in which the Group directly or indirectly holds the majority of the voting rights and where it determines their financial and business policies and is able to exercise control over them in order to benefit from their activities. 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 deconsolidated from the date on which control ceases. The results of the subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective acquisition date or up to the effective date on which control ceases, as appropriate. 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 profit or loss.
IAS 19 (Amendment), ‘Employee benefits’ (effective from 1 July 2009). This amendment clarifies that a plan amendment that result in a change in the extent to which benefit promises are affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service give rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation. The definition of return on plan assets amended to state that plan administration costs be deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined benefit obligation. The distinction between short term and long term employee benefits is now based on whether benefits are due to be settled within or after 12 months of employee service being rendered. There is also the deletion of guidance that states IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’ requires contingent liabilities to be recognised. The Group will apply this amendment from 2 May 2010. IFRIC 17, Distributions of Non-Cash Assets to Owners (effective from 1 July 2009 and is required to be applied prospectively; earlier application is permitted). IFRIC 17 states that a dividend payable should be recognised when appropriately authorised and no longer at the entity’s discretion. Where an owner has a choice of a dividend of a non-cash asset or cash, the dividend payable is estimated considering both the fair value and probability of the owners selecting each option. The dividend payable is measured at the fair value of the net assets to be distributed. The difference between fair value of the dividend paid and the carrying amount of the net assets distributed is recognised in profit or loss. Management has determined that there are no transactions in the Group to which this applies.
Page 15
Notes to the Financial Statements
Standards, interpretations and amendments to published standards not yet effective and have not been early adopted by the Group (continued) IAS 27 (Revised), Consolidated and Separate Financial Statements. IAS 27 requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. It further specifies the accounting when control is lost, requiring that any remaining interest in the entity be re-measured to fair value, and a gain or loss be recognised in profit or loss. The Group will apply this amendment from 2 May 2010.
Annual Report 2010
Jamaica Broilers Group Limited
Basis of preparation (continued)
•
69
Inter-company transactions, balances and intra-group gains on transactions between group companies are eliminated. Intra-group losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. The integration of the subsidiaries into the consolidated financial statements is based on consistent accounting and valuation methods for similar transactions and other occurrences under similar circumstances. Even if there is no shareholder relationship, special purpose entities (SPEs) are consolidated in accordance with SIC-12, if the Group controls them from an economic perspective.
Whenever there is a change in the substance of the relationship between the Group and the SPE, the Group performs a re-assessment of consolidation. Indicators for a re-assessment of consolidation are especially changes in ownership of the SPE, changes in contractual arrangements and changes in the financing structure.
Jamaica Broilers Group
70
Annual Report 2010
Jamaica Broilers Group
Page 16
Jamaica Broilers Group Limited Notes to the Financial Statements
2.
(b) Consolidation (continued) Subsidiaries (continued) The consolidated financial statements include the financial statements of the company and its operating divisions and subsidiaries as follows: Resident in Jamaica: Operating divisions Best Dressed Chicken Best Dressed Foods Content Agricultural Products Subsidiaries Aquaculture Jamaica Limited and its wholly owned subsidiaries: Aqualapia Limited Jamaica Freshwater Snapper Limited T.Hart Farms Limited Best Dressed Chicken Limited Content Agricultural Products Limited Energy Associates Limited CE Jamaica Inc. EAL/ERI Co-generation Partners, LP ERI Jam, LLC (subsidiary of ERI Services (St. Lucia) Limited) JB Ethanol Limited (subsidiary of ERI Services (St. Lucia) Limited) Jabexco Limited Jamaica Eggs Limited Jamaica Poultry Breeders Limited Levy Industries Limited Master Blend Feeds Limited JB. Trading Limited Trafalgar Agriculture Development Limited Resident outside of Jamaica: Atlantic United Insurance Company Limited, St.Lucia ERI Services (St. Lucia) Limited International Poultry Breeders LLC, U.S.A. Jabexco Cayman Limited, Cayman Wincorp International, Inc., U.S.A. and its subsidiary: Consolidated Freight and Shipping, Inc.
Poultry and pullet production and feed milling, feed sales /retailers of farming equipment and supplies Distributors of chicken, beef, fish and importation of protein products Beef production, processing and sale of salted products/pickled products
Jamaica Broilers Group Limited
Page 17
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Summary of Significant Accounting Policies (Continued)
Principal Activities
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
71
% Ownership at 1 May 2010
100 100 100
Fish farming Fish farming Non-trading Non-trading Non-trading Property rental Holding and investment company Non- trading Generation of electricity
100 100 100 100 100 100 100 100 100
Non-trading
100
Ethanol production Non-trading Non-trading Fertile egg production Property rental Property rental Non-trading Non-trading
100 100 100 100 100 100 100 100
Captive insurance Holding company Fertile egg production Non-trading Procurers and distributors of agricultural and industrial supplies Ocean freight consolidator
100 100 90 40 100 100
Summary of Significant Accounting Policies (Continued) (c) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the President and Chief Executive Officer. (d) Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of General Consumption Tax, returns, discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and specific criteria have been met in relation to the Group’s activities as described below: Sales of goods Sales are recognised upon delivery of products, customer acceptance of the products and collectibility of the related receivables is reasonably assured. Interest income Interest income is recognised in profit or loss for all interest bearing instruments on an accrual basis using the effective yield method based on the actual purchase price. Interest income includes coupons earned on fixed income investments and accrued discount on other discounted instruments. 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 Group’s presentation currency. (ii)
Transactions and balances Foreign currency transactions or that require settlement, in a foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary items denominated in foreign currency are translated with the closing rate as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated with the exchange rate as at the date of initial recognition; non-monetary items in a foreign currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. These rates represent the weighted average rates at which the company trades in foreign currency.
Jamaica Broilers Group
72
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 18
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (e ) Foreign currency translation (continued) Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss, except when deferred in equity as gains or losses from qualifying cash flow hedging instruments. All foreign exchange gains and losses recognised in the profit or loss are presented net in the profit or loss within the corresponding item. Foreign exchange gains and losses on other comprehensive income items are presented in other comprehensive income within the corresponding item. Changes in the fair value of monetary securities denominated in foreign currency classified as availablefor-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in stockholders’ equity. Translation differences on non-monetary financial instruments, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial instruments, such as equities classified as available-for-sale financial assets, are included in the capital reserve in stockholders’ equity. On consolidation, exchange differences arising from the translation of borrowings that forms a part of the net investment in foreign operations are taken to stockholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in stockholders’ equity are recognised in the profit or loss. (f)
Income taxes Taxation expense in profit or loss comprises current and deferred tax charges. (i)
Current taxation Current tax charges are based on taxable profit for the year, which differs from the profit before tax reported because it excludes items that are taxable or deductible in other years, and items that are never taxable or deductible. The Group’s liability for current tax is calculated at tax rates that have been enacted at balance sheet date.
(ii) Deferred taxation Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability settled. Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised.
73
Annual Report 2010
Page 19
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (f )
Income taxes (continued) 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. 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
11 – 100 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 profit or loss. Repairs and maintenance expenditure are charged to profit or loss during the financial period in which they are incurred.
Jamaica Broilers Group
74
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 20
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (h) Intangible assets (i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the acquisition date. Goodwill on acquisition of subsidiaries is included in intangible assets. Separately recognised goodwill is tested for impairment and carried at cost less accumulated impairment. Impairment losses on goodwill are not reversed Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. An excess of the identifiable net assets acquired over the acquisition cost is treated as negative goodwill. Negative goodwill related to expected post-acquisition losses is taken to profit or loss during the period the future losses are recognised. Negative goodwill which does not relate to expected future losses is recognised as income immediately. (ii)
Computer software Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over the estimated useful life of ten years for software on a straight line basis. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred.
(i)
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.
75
Annual Report 2010
Jamaica Broilers Group Limited
Page 21
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (j)
Financial assets The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. (i)
Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated as fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date. 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) Available-for sale financial assets Available-for-sale investments are non-derivative financial assets intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. Available-for-sale investments are initially recognised at fair value, which is the cash consideration including any transaction costs. Purchases and sales of available-for-sale financial assets are recognised at the trade date – the date on which the Group commits the purchase or sell the asset. Loans and receivables are recognised when cash is advanced to the borrowers. Subsequent to initial recognition at cost, financial assets at fair value through profit or loss and available-for-sale financial assets are carried at fair value. Loans and receivables financial assets are carried at amortised cost using the effective interest method. Gains and losses arising from changes in the fair value of available-for-sale financial assets are recognised directly in other comprehensive income, until the financial asset is derecognised or impaired. At this time, the cumulative gain or loss previously recognised in other comprehensive income is recognised in profit or loss. However, interest calculated using the effective interest method and foreign currency gains and losses on monetary assets classified as available for sale are recognised in the profit or loss. Dividends on available-forsale equity instruments are recognised in profit or loss when the Group’s right to receive payment is established.
Jamaica Broilers Group
76
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 22
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (j )
Financial assets (continued) The fair values of quoted investments in active markets are based on current bid prices. Unquoted securities are recorded initially at cost. They are subsequently measured at fair value. Where fair value cannot be measured reliably they are measured at cost less impairment. Financial assets are derecognised when the right to received cash flows from the financial assets have expired or where the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when they are extinguished, that is, when the obligation is discharged, cancelled or expires. The Group may choose to reclassify a non-derivative financial asset held for trading out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near-term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification. Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively 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 has a defined benefit plan; the assets of which are generally held in separate trusteeadministered funds. The pension obligations are determined by periodic actuarial calculations. 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.
77
Annual Report 2010
Jamaica Broilers Group Limited
Page 23
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (l )
Employee benefits (continued) (i) Pension obligations (continued) 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. (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.
Jamaica Broilers Group
78
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 24
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (m) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method and comprises: (i)
Processed broilers, beef and fish at accumulated cost of growing and processing, or landed cost.
(ii)
Finished feeds and fertilisers at cost of production.
(n) Biological assets Biological assets which include fish, cattle, poultry, and flocks in field including breeder, layer and pullets are stated at cost as there are no external market prices available at the various stages of growth for these biological assets and no alternative measures for determining fair value have been determined to be reliable. Cost is determined as the accumulated cost of livestock, feed, medication, and in respect of breeder flocks, accumulated production costs. (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 or loss in administration and other expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in profit or loss. (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.
Annual Report 2010
Jamaica Broilers Group Limited
Page 25
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Significant Accounting Policies (Continued) (r) Borrowings and borrowing costs Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of these assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(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.
79
(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 profit or loss over the lease period. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments under operating leases are charged to profit or loss on a straightline basis over the period of the lease.
(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.
Jamaica Broilers Group
80
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 26
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 3.
Financial Risk Management The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme includes a focus on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice. The Board of Directors is ultimately responsible for the establishment and oversight of the Group’s risk management framework. The Board approves principles for overall risk management. The Board has established functions/committees for managing and monitoring risks, as follows: (i)
Treasury Function The Treasury function is responsible for managing the Group’s assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the Group. The Treasury function identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
(ii)
Audit Committee The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. The most important types of risk are credit risk, liquidity risk and market risk. Market risk includes currency risk, interest rate and other price risk.
(a) Credit risk The Group takes on exposure to credit risk, which is the risk that its customers or counterparties will cause a financial loss for the Group by failing to discharge their contractual obligations. Credit exposures arise principally from the Group’s receivables from customers and investment activities. The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to a single counterparty or groups of related counterparties.
81
Annual Report 2010
Jamaica Broilers Group Limited
Page 27
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 3.
Financial Risk Management (a) Credit risk (continued) Credit review process The Group has an established credit process which involves regular analysis of the ability of borrowers and other counterparties to meet repayment obligations. (i)
Trade and other receivables The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Customers of the Group include wholesalers, farm store and feed customers, and chicken and fish farmers. There is a credit policy in place under which each wholesaler and feed customer is analysed individually for creditworthiness prior to the Group offering them a credit facility. Customers are assigned credit limits, which represent the maximum credit allowable. The Group has procedures in place to restrict customer orders if the orders will exceed their credit limits. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group on a prepayment basis. Credit risk relating to fish farmers is significantly reduced based on contracts the Group has with farmers who grow fish. Fingerlings, feed and medication are supplied to these farmers and the amounts treated as receivables. These farmers are then obliged to sell the harvested fish at an agreed price to the Group; at which time the receivables are offset. The credit quality of the customer is assessed, taking into account its financial position, past experience and other factors. The utilisation of credit limits is regularly monitored. Sales to farm store customers are settled in cash or by the use of major credit cards. Credit risk is managed for ethanol sales by obtaining letters of credit from reputable overseas financial institutions. JB Ethanol Limited contractually processes hydrous alcohol into anhydrous ethanol on behalf of customers for a fee; credit risk is managed by entering into contracts with reputable customers. The Group establishes a provision for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Impairment is assessed for each customer balance over 30 days. The Group’s credit period on the sale of goods ranges from 7 to 30 days. The Group has provided fully for all receivables where collectibility is deemed doubtful. This is generally in relation to balances over 120 days.
(ii) Investments The Group limits its exposure to credit risk by investing mainly in liquid securities, with counterparties that have high credit quality and Government of Jamaica securities. Accordingly, management does not expect any counterparty to fail to meet its obligations.
82
Jamaica Broilers Group
Annual Report 2010
Page 28
Jamaica Broilers Group Limited Notes to the Financial Statements
Financial Risk Management (Continued) (a) Credit risk (continued)
Maximum exposure to credit risk
Ageing analysis of trade receivables that are past due and impaired The Group
The Company
1 May 2010
2 May 2009
1 May 2010
2 May 2009
$’000
$’000
$’000
$’000
119,661
185,896
-
-
1,051,716
963,934
687,172
580,008
Credit risk exposures are as follows: Receivables Cash and short term investments
Jamaica Broilers Group Limited
3.
Credit risk (continued)
Investments
Page 29
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Financial Risk Management (Continued) (a)
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 3.
83
Jamaica Broilers Group
1,277,648
784,127
1,071,072
650,814
2,449,025
1,933,957
1,758,244
1,230,822
The above table represents a worst case scenario of credit risk exposure to the Group and company at 1 May 2010 and 2 May 2009. Ageing analysis of trade receivables that are past due but not impaired Trade receivables that are less than 30 days past due are not considered impaired. Trade receivables over 30 days overdue are considered impaired.
As of 1 May 2010, trade receivables of $188,732,000 (2009 - $152,381,000) and $60,734,000 (2009 - $84,998,000) for the Group and company respectively were impaired. The amount of the provision was $110,523,000 (2009 - $73,047,000) and $66,337,000 (2009 - $53,849,000) for the Group and company, respectively. The impairment recognised represents an estimate of incurred losses in respect of trade receivables. The main components of the provision for impairment are a specific loss component that relates to individually significant exposures, and a collective loss component based on the time value of money. The impaired receivables mainly relate to wholesalers who are in unexpected difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered. The Group 1 May 2010
2 May 2009
The Company 1 May 2 May 2010 2009
$’000
$’000
$’000
$’000
31 to 60 days
77,502
68,048
29,361
29,603
61 to 90 days
33,858
6,363
3,884
1,619
Over 91 days
77,372
77,970
27,489
53,776
188,732
152,381
60,734
84,998
Movement on the provision for impairment of trade receivables The movement on the provision for impairment of trade receivables was as follows: The Group 1 May 2010 At 2 May 2009 Provision for receivables impairment Receivables written off during the year as uncollectible Recoveries Translation At 1 May 2010
2 May 2009
The Company 1 May 2 May 2010 2009
$’000
$’000
$’000
$’000
73,047
45,958
53,849
36,941
49,018
38,665
13,313
20,315
(10,708)
(12,092)
(825)
(2,400)
(846)
(1,007)
-
(1,007)
12
1,523
-
-
110,523
73,047
66,337
53,849
Jamaica Broilers Group
84
Annual Report 2010
Jamaica Broilers Group
Page 30
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
3.
Financial Risk Management (Continued) (a) Credit risk (continued)
(a) Credit risk (continued)
Exposure to credit risk for investments
Movement on the provision for impairment of trade receivables (continued) The creation and release of provision for impaired receivables have been included in expenses in profit or loss. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
The following table summarises the Group’s and company’s credit exposure for investments at their carrying amounts, as categorised by issuer. The carrying amounts below represent the total for investments (adjusted for equity securities) included in Note 14, financial assets at fair value through profit or loss in Note 20 and short term investments included in Note 21:
There are no financial assets other than those listed above that were individually impaired.
The Group
Exposure to credit risk for trade receivables The following table summarises the Group’s and company’s credit exposure for trade receivables at their carrying amounts, as categorised by the customer sector: The Group
Wholesalers and retail distributors Hotels Contract farmers Other Overseas customers Less: Provision for impairment
Page 31
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Financial Risk Management (Continued)
In Jamaica Supermarket chains
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 3.
85
Government of Jamaica Financial institutions
The Company
1 May 2010 $’000
2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
71,818
59,002
71,818
59,002
367,809
291,174
367,809
291,174
36,853
37,615
36,853
37,615
50,514
78,178
2,783
-
182,871
125,594
126,372
114,834
709,865
591,563
605,635
502,625
265,653
195,689
15,663
5,392
975,518
787,252
621,298
508,017
(110,523)
(73,047)
(66,337)
(53,849)
864,995
714,205
554,961
454,168
Overseas customers mainly relate to customers in the United States of America in 2010 and 2009.
Interest receivable
The Company
1 May 2010 $’000
2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
113,391
113,465
-
-
628,304
398,110
612,551
290,440
741,695
511,575
612,551
290,440
2,956
6,276
2,956
165
744,651
517,851
615,507
290,605
(b) Liquidity risk Liquidity risk is the risk that the Group may be unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Liquidity risk management process The Group’s liquidity management process, as carried out within the Group and monitored by the Treasury function, includes: (i)
Monitoring future cash flows and liquidity periodically. This incorporates an assessment of expected cash flows.
(ii)
Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow;
(iii)
Maintaining committed lines of credit;
(iv)
Managing the concentration and profile of debt maturities.
86
Jamaica Broilers Group
Annual Report 2010
Page 32
Jamaica Broilers Group Limited Notes to the Financial Statements
Financial Risk Management (Continued) (b)
The matching and controlled mismatching of the maturities and interest rates of assets and liabilities are fundamental to the management of the Group. It is unusual for companies ever to be completely matched since business transacted is often of uncertain term and of different types. An unmatched position potentially enhances profitability, but can also increase the risk of loss. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to changes in interest rates and exchange rates. Financial liabilities cash flows The tables below summarise the maturity profile of the Group’s and company’s financial liabilities at 1 May 2010 and 2 May 2009 based on contractual undiscounted payments. The Group 1 to 5 3 to 12 Months Years $’000 $’000
Over 5 Years $’000
Total $’000
Borrowings
1,442,089 752,075
14,811 1,985,104
1,839,128
- 1,456,900 - 4,576,307
Total financial liabilities (contractual maturity dates)
2,194,164
1,999,915
1,839,128
- 6,033,207
Within 3 Months $’000 As at 2 May 2009 Payables
Jamaica Broilers Group Limited
3.
Liquidity risk (continued)
As at 1 May 2010 Payables
Page 33
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
3. Financial Risk Management (Continued)
Within 3 Months $’000
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
(b)
87
Jamaica Broilers Group
The Group 1 to 5 3 to 12 Months Years $’000 $’000
Over 5 Years $’000
Liquidity risk (continued) Financial liabilities cash flows (continued)
Within 3 Months $’000
The Company 1 to 5 3 to 12 Months Years $’000 $’000
Over 5 Years $’000
Total $’000
As at 1 May 2010 Payables Borrowings
1,299,111 600,462
1,592,163
1,397,070
- 1,299,111 - 3,589,695
Total financial liabilities (contractual maturity dates)
1,899,573
1,592,163
1,397,070
- 4,888,806
Within 3 Months $’000
The Company 1 to 5 3 to 12 Months Years $’000 $’000
Over 5 Years $’000
Total $’000
As at 2 May 2009 Payables Borrowings
1,223,410 1,149,990
126,017 2,075,575
1,367,885
- 1,349,427 179,768 4,773,218
Total financial liabilities (contractual maturity dates)
2,373,400
2,201,592
1,367,885
179,768 6,122,645
Assets available to meet liabilities and to cover financial liabilities include cash and short term investments. Total $’000
Borrowings
1,423,386 1,417,706
99,618 2,656,017
1,924,265
- 1,523,004 179,768 6,177,756
Total financial liabilities (contractual maturity dates)
2,841,092
2,755,635
1,924,265
179,768 7,700,760
Jamaica Broilers Group
88
Annual Report 2010
Jamaica Broilers Group
Page 34
Jamaica Broilers Group Limited Notes to the Financial Statements
3. Financial Risk Management (Continued)
(b) Liquidity risk (continued) Off-balance sheet items – Contingent liabilities and commitments (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 line of credit of up to US$750,000 with an overseas bank for Wincorp International Corporation, a subsidiary.
(c)
The company has guaranteed $680,000,000 and US$10,000,000 in favour of various financial institutions for loans undertaken.
(d)
The Group had capital commitments in respect of projects being undertaken of $177,868,000 (2009 - $189,374,000).
(e)
JB Ethanol, a subsidiary, has guaranteed US$7,000,000 in favour of the company with an overseas financial institution.
(f)
The Group has obligations under long term operating leases for premises. Future minimum lease payments under such commitments are as follows: The Group 1 May 2 May 2010 2009
Later than 1 year and not later than 5 years
(g)
Jamaica Broilers Group Limited
Page 35
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Financial Risk Management (Continued)
Not later than 1 year
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 3.
89
$’000
$’000
7,001
10,481
714
7,701
7,715
18,182
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.
(c) Market risk The Group takes on exposure to market risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks mainly arise from changes in foreign currency exchange rates, interest rates and commodity prices. Market risk is monitored by the Group’s Treasury function which carries out research and monitors the price movement of financial assets on the local and international markets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. There has been no change to the Group’s exposure to market risk or the manner in which it manages and measures the risk. (i) Currency risk Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group manages its foreign exchange risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. The Group further manages this risk by maximising foreign currency earnings and holding foreign currency balances. The Group has operations in two functional currencies, Jamaican dollar and United States dollar, which provide a natural hedge in currency risk. The Group’s and the company’s balance sheets at 1 May 2010 includes aggregate net foreign liabilities of approximately US$18,804,000 (2009 – US$46,204,000) and US$13,098,000 (2009 – US$33,099,000) respectively in respect of transactions arising in the ordinary course of business respectively. Foreign currency sensitivity The following tables indicate the currencies to which the Group and company had significant exposure on its monetary assets and liabilities and its forecast cash flows. The change in currency rate below represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis represents outstanding foreign currency denominated monetary items and adjusts their translation at the year end for 5% depreciation and a 5% appreciation of the Jamaican dollar against the US dollar.
90
Jamaica Broilers Group
Annual Report 2010
Jamaica Broilers Group
Page 36
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
3. Financial Risk Management (Continued)
Market risk (continued) (i) Currency risk (continued)
(c) The Group
Market risk (continued) (ii) Interest rate risk (continued) Interest rate sensitivity
% Change in Currency Rate
Effect on Net Profit
% Change in Currency Rate
Effect on Net Profit
1 May 2010 $’000
1 May 2010 $’000
2 May 2009 $’000
2 May 2009 $’000
+5 -5
(83,614) 83,614
+15 -5
(315,342) 105,114
The following tables indicate the sensitivity to a reasonable possible change in interest rates, with all other variables held constant, on the Group’s and company’s profit or loss and stockholders’ equity. The sensitivity of the profit or loss is the effect of a 1% change in interest rates on net profit based on the floating rate borrowings. The sensitivity of stockholders’ equity is calculated by revaluing fixed rate available-for-sale financial assets for the effects of a 2% change in interest rates. The investment at year end matures in May 2010 and therefore the impact on equity is not material. Effect on net profit from a 100 change in basis points:
The Company
Currency: USD USD
Page 37
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
3. Financial Risk Management (Continued)
Currency: USD USD
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
(c)
91
The Group
% Change in Currency Rate 1 May 2010 $’000
Effect on Net Profit 1 May 2010 $’000
% Change in Currency Rate 2 May 2009 $’000
Effect on Net Profit 2 May 2009 $’000
+5 -5
(58,245) 58,245
+15 -5
(335,416) 111,805
(ii) Interest rate risk Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Effect on Net profit 1 May 2010 $’000
Effect on Net profit 2 May 2009 $’000
Effect on Net profit 1 May 2010 $’000
Effect on Net profit 2 May 2009 $’000
-100
14,630
9,030
6,330
8,180
+100
(14,630)
(9,030)
(6,330)
(8,180)
Change in basis points:
Effect on stockholders’ equity from a 200 change in basis points: The Group
Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk. The Group’s interest rate risk mainly arises from its long term investments. This risk is managed by analysing the economic environment and obtaining fixed rate loans when interest rates are expected to rise and floating rate loans when interest rates are expected to fall. The policy also requires it to manage the maturities of interest bearing financial assets and liabilities. Investments At 2 May 2010 and 2 May 2009, the Group’s investments were fixed rate instruments.
The Company
Effect on Equity 1 May 2010 $’000
Effect on Equity 2 May 2009 $’000
Change in basis points: -200
-
76
+200
-
(24)
Jamaica Broilers Group
92
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 38
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 3.
Financial Risk Management (Continued)
93
Annual Report 2010
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 3.
Financial Risk Management (Continued) (e) Capital management (continued)
(c) Market risk (continued)
During 2010, the Group’s strategy, which was unchanged from 2009, was to maintain the gearing ratio below 1:1. The gearing ratios at 1 May 2010 and 2 May 2009 were as follows:
(iii) Commodity price risk Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market.
The Group 1 May 2 May 2010 2009
The Group and the company are exposed to price risk relating to corn, soya bean meal and ethanol. The Group and the company enter into commodity contracts or related financial instruments in respect of its future usage requirements. To manage price risk in the ethanol operation, purchases and related sales are effected on the same bases to the extent possible to create a hedge. In the few instances in which a mismatch occurs a short term financial hedging instrument may be used to minimise attendant risks. Price risk was also managed by entering into contracts to process hydrous alcohol into anhydrous ethanol on behalf of customers for a fee. To manage price risk on imported corn and soya bean meal, short term commodity instruments are used. (d) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for its stockholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital as well as meet externally imposed capital requirements. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total stockholders’ equity. The Board of Directors also monitors the level of dividends to ordinary stockholders. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net borrowings divided by total capital. Net borrowings are calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘stockholders’ equity’ as shown in the consolidated balance sheet plus net borrowings.
Page 39
$’000
$’000
Net borrowings
3,589,440
4,186,813
Total capital
8,745,443
8,160,422
1:2
1:2
Gearing ratio
There were no changes to the Group’s approach to capital management during the year. 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.
Jamaica Broilers Group
94
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 40
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 4.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty (Continued)
95
Annual Report 2010
Page 41
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 5.
Segmental Financial Information (Continued)
(b) Key sources of estimation uncertainty (continued) 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 16). 5.
Management has determined the operating segments based on the reports reviewed by the President and Chief Executive Officer that are used to make strategic decisions. The business is considered from mainly a product perspective. Geographically, however, the poultry operations and feed and farm supplies are located in these two geographic areas, Jamaica and the United States. The segment information provided for the reportable segments is as follows:
(b)
Feed and Farm Supplies
(c) Ethanol Operations
Poultry Operations External revenues Revenue from other segments Total revenue
Segmental Financial Information
(a) Poultry Operations
2010
-
-
Rearing of poultry for fertile egg production and for sale, broiler grow out, broiler processing and sales grow out and sale of started pullets. Manufacturing and sale of feeds and sale of farm supplies. The processing and export sale of fuel grade ethanol.
Segment result
Feed and Farm Supplies
Ethanol Operations
Other
Eliminations
$’000
$’000
$’000
$’000
$’000
$’000
9,987,010
6,668,369
3,633,463
2,158,060
-
22,446,902
167,413
531,525
-
555,325
(1,254,263)
-
10,154,423
7,199,894
3,633,463
2,713,385
(1,254,263)
22,446,902
985,185
834,748
715,795
222,471
-
Unallocated corporate expenses
2,758,199 (676,487)
Operating profit
2,081,712
Finance costs
(484,475)
Profit before tax
1,597,237
Taxation
(284,436)
Net profit Segment assets
Group
1,312,801 6,929,196
1,780,487
3,881,006
3,652,490
(5,799,933)
Unallocated corporate assets
10,443,246 2,479,326
Total assets
12,922,572
Other operations of the Group include the sale of feed ingredients; cattle rearing; processing and sale of beef products; grow out and sale of fish; and co-generation energy supplies.
Segment liabilities
Interest income and interest expense is not included in the measure of segment results and is not regularly reviewed by the President and Chief Executive Officer.
Unallocated corporate liabilities
4,216,631
Total liabilities
6,038,941
The company is domiciled in Jamaica. Revenue from its external customers in Jamaica is $21,208,573,000 (2009 - $24,432,771,000) and $1,036,157,000 (2009 - $190,544,000) from external customers in other countries. Property, plant and equipment and intangible assets located in Jamaica and United States of America are $6,419,544,000 (2009 - $6,580,706,000) and $65,775,000 (2009 - $77,280,000) respectively.
409,383
441,603
2,520,626
3,791,854
(5,341,156)
1,822,310
Other segment items159,348
70,399
22,069
89,021
-
Amortisation
Capital expenditure
12,016
-
-
351
-
340,837 12,367
Depreciation
206,836
1,839
178,239
70,281
-
457,195
Jamaica Broilers Group
96
Annual Report 2010
Jamaica Broilers Group
Page 42
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
6.
Other Operating Income
2009
External revenues Revenue from other segments Total revenue Segment result
Feed and Farm Supplies
Ethanol Operations
Other
Eliminations
$’000
$’000
$’000
$’000
$’000
$’000
5,700,265
7,367,280
1,898,178
-
24,623,315
151,037
511,136
-
540,408
(1,202,581)
-
9,808,629
6,211,401
7,367,280
2,438,586
(1,202,581)
24,623,315
867,371
665,754
443,395
1,067
-
1,977,587 (540,384)
Operating profit
1,437,203
Finance costs
(433,476)
Profit before tax
1,003,727
Taxation
(175,664)
Net profit
828,063 4,547,716
1,386,251
5,779,570
3,634,537
(8,105,178)
Unallocated corporate assets
Segment liabilities
7,242,896 6,168,770
Total assets
13,411,666 136,779
558,012
4,998,443
3,564,500
(7,609,900)
1,647,834
Unallocated corporate liabilities
5,966,121
Total liabilities
7,613,955
Other segment itemsCapital expenditure
The Group 1 May 2 May 2010 2009 $’000 $’000
Group
9,657,592
Unallocated corporate expenses
Segment assets
Page 43
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Segmental Financial Information (Continued)
Poultry Operations
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 5.
97
250,083
7,825
1,304,231
97,319
-
Amortisation
12,749
-
-
351
-
1,659,458 13,100
Depreciation
141,758
1,500
155,533
74,212
-
373,003
Dividend income Fair value losses on financial assets at fair value through profit or loss Loss on sale of financial assets at fair value through profit or loss
The Company 1 May 2 May 2010 2009 $’000 $’000
324
277
324
517,857
-
(597)
-
(1,124)
(2,498)
-
(2,498)
-
Insurance claim
-
11,079
-
-
Interest income
45,143
37,200
20,737
25,545
(Loss)/gain on sale of property, plant and equipment
(771)
1,583
(1,332)
2,667
Reinsurance commissions
40,784
42,118
-
-
Other
23,012
19,242
13,950
13,423
105,994
110,902
31,181
558,368
Jamaica Broilers Group
98
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 44
Expenses by Nature
13)
expense
Page 45
Jamaica Broilers Group Limited 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
The Group 1 May 2 May 2010 2009 $’000 $’000 Auditors’ remuneration 19,288 16,834 Advertising and promotions 310,736 231,588 12,367 13,100 Amortisation of intangible assets (Note 13) Bad debts 61,191 39,000 Bank charges 73,446 73,446 Cleaning and sanitation 44,615 24,504 Computer expenses 142,710 132,515 12,003,334 15,693,346 Cost of inventories recognised as Fuel 919,887 683,024 Depreciation (Note 12) 457,195 373,003 Donations and subscriptions 33,557 48,448 Insurance 287,116 208,474 Occupancy – rent and utilities 636,934 682,330 Legal and professional fees 132,942 112,436 Repairs and maintenance 781,314 659,102 Security 152,734 131,655 Staff costs (Note 8) 3,415,936 3,166,584 Stationery 33,221 29,106 Supplies 204,182 173,682 Taxes and licenses 37,342 27,420 Travelling and entertainment 88,760 76,971 Trucking 340,956 326,015 Fiftieth anniversary celebrations 38,419 Haiti relief and market research 12,730 Other expenses 268,691 336,012 20,471,184 23,297,014
Annual Report 2010
Notes to the Financial Statements
Notes to the Financial Statements
7.
99
8.
The Company 1 May 2 May 2010 2009 $’000 $’000 9,512 8,700 304,801 229,956 12,016 12,749 24,943 21,666 72,741 62,240 41,636 23,501 135,615 127,590 10,690,851 9,958,412 133,270 68,563 199,396 183,187 31,725 47,171 293,715 244,201 499,900 512,963 70,664 63,607 611,090 524,879 115,381 102,781 2,996,788 2,758,890 28,819 25,153 171,873 152,259 34,475 23,637 76,984 60,109 315,116 315,952 38,419 12,730 128,970 174,076 17,013,011 15,740,661
Expenses by nature include the total of cost of sales, distribution costs, administration and other expenses.
Staff Costs
Wages, salaries and contractors’ costs Payroll taxes – Employer’s portion Pension costs - defined contribution plan Pension costs - defined benefit plan (Note 16) Post-employment medical benefits (Note 16) Termination costs Other - benefits and welfare
9.
The Group 1 May 2 May 2010 2009 $’000 $’000 2,982,958 2,714,410 140,295 110,017 4,883 3,220 (36,800) (35,600) 2,500 1,000 9,114 138,522 312,986 235,015 3,415,936 3,166,584
The Company 1 May 2 May 2010 2009 $’000 $’000 2,622,332 2,378,939 121,697 93,600 (26,300) (35,900) 2,300 900 9,114 122,361 267,645 198,990 2,996,788 2,758,890
The Group 1 May 2 May 2010 2009 $’000 $’000 6,284 (24,309) 423,996 449,453
The Company 1 May 2 May 2010 2009 $’000 $’000 7,915 145,934 180,348 202,369
54,195 484,475
46,712 234,975
Finance Costs
Foreign exchange losses/(gains) Interest expense Amortisation of debt financing fees and other expenses
8,332 433,476
856 349,159
10. Taxation (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 2006 by the Ministry of Finance and Planning. The approved farmer status expired in December 2009. Accordingly, a provision for taxation has been included for Jamaica Poultry Breeders Limited in current year.
Jamaica Broilers Group
100
Annual Report 2010
101
Jamaica Broilers Group
Page 46
Jamaica Broilers Group Limited Notes to the Financial Statements
Page 47
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
10. Taxation (Continued)
12. Property, Plant and Equipment
(b) Taxation is based on the profit for the year adjusted for tax purposes and comprises:
Current tax at 33⅓% Prior year (over)/under provision Deferred taxation (Note 15)
The Group 1 May 2 May 2010 2009 $’000 $’000 183,183 191,163 (21,798) 3,027 123,051 (18,526) 284,436 175,664
The Group
The Company 1 May 2 May 2010 2009 $’000 $’000 112,266 173,450 (22,664) 134,182 (14,195) 223,784
159,255
(c) The tax on the Group’s and company’s profit differs from the theoretical amount that would arise using the applicable tax rate of 33⅓%, as follows: The Group 1 May 2 May 2010 2009 $’000 $’000 Profit before taxation Tax calculated at a tax rate of 33⅓%
1,597,237
1,003,727
The Company 1 May 2 May 2010 2009 $’000 $’000 733,813
991,420
532,412
334,576
244,604
330,473
(251,587)
(292,242)
(108)
(172,619)
Deferred tax not recognised on tax losses
21,742
235,198
-
-
Exchange losses on subsidiary’s loan recognised in stockholders’ equity
(1,132)
(104,232)
-
-
(21,798)
3,027
(22,664)
-
4,799
(663)
1,952
1,401
284,436
175,664
223,784
159,255
Adjusted for: Income not subject to tax
Prior year (over)/under provision current tax Expenses not deductible for tax purposes and other allowances Income tax expense
Annual Report 2010
Subject to agreement with the Taxpayer Audit and Assessment Department, losses available for offset against future profits of certain local subsidiaries amount to approximately $985,617,000 (2009 – $783,228,000). 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.
2010
Leasehold Property
Plant, Machinery & Equipment
Furniture & Fixtures
Motor Vehicles
Capital Work in Progress
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
116,212 1,743,634
71,279
4,115,137 1,214,689
456,512
1,468,671
9,186,134
37,810
142,458
335,584
Freehold Freehold Land Buildings $’000 At Cost At 2 May 2009 Additions Translation Disposals
43 (3,485)
Transfers/reclassifications At 1 May 2010
-
23,147
-
167
13
(31,525) 84,084
112,770 1,819,507
-
118,576 6,188 (168,865)
13,593 410 (185,084)
32 (137,599)
-
(963) (1,370,315)
6,853 (526,558)
(5,217)
1,635,956
(401,221)
(57,676)
66,075
5,706,992
642,387
355,792
240,814
8,944,337
Depreciation At 2 May 2009
-
542,111
46,477
1,282,556
404,776
330,071
-
2,605,991
Charge for the year
-
80,490
3,218
259,431
70,263
43,793
-
457,195
Translation
-
451
355
284
1
1
-
1,092
Relieved on disposals
-
(17,381) (47,030)
(3,236)
1,463
-
-
558,641
46,814
1,395,395
293,430
235,467
-
2,529,747
112,770 1,260,866
19,261
4,311,597
348,957
120,325
240,814
6,414,590
Transfers/reclassifications At 1 May 2010
-
(146,151) (725)
(173,462) (8,148)
(139,861)
-
(476,855) (57,676)
Net Book Value At 1 May 2010
Jamaica Broilers Group
102
Annual Report 2010
Jamaica Broilers Group
Page 48
Jamaica Broilers Group Limited
103
Page 49
Jamaica Broilers Group Limited Notes to the Financial Statements
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
12. Property, Plant and Equipment (Continued)
12. Property, Plant and Equipment (Continued) The Group
The Company
2009
Freehold Freehold Land Buildings $’000
$’000
2010
Leasehold Property
Plant, Machinery & Equipment
Furniture & Fixtures
$’000
$’000
$’000
Motor Vehicles
Capital Work in Progress
Total
$’000
$’000
$’000
Additions Translation Disposals Transfers/reclassifications At 2 May 2009
112,361 1,575,288
68,605
3,104,299 1,080,505
408,244
559,591
6,908,893
At 2 May 2009
Motor Vehicles
Capital Work in Progress
Total
Freehold Buildings
Leasehold Property
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
78,149
975,746
15,890
1,446,020
458,302
389,932
81,096
3,445,135
102,927
276,925
-
-
1,373
39,364
31,881
59,456
1,524,826
1,656,900
Additions
-
21,051
-
102,540
12,597
37,810
4,328
20,951
1,301
702,538
64,338
7,723
4,726
805,905
Disposals
-
(2,017)
-
(133,538)
(185,084)
(135,203)
(32,196)
(6,869)
(185,564)
Transfers/reclassifications
(443) (34)
(127,145)
-
274,540
-
116,212 1,743,634
71,279
301,132
(18,911)
44,834
-
4,115,137 1,214,689
456,512
(620,472) 1,468,671
9,186,134
-
9,745
7,042
606
-
-
265,410
-
2,568
-
267,978
78,182
997,474
13,510
1,690,177
292,857
295,713
183,115
3,551,028
At 2 May 2009
-
215,872
2,056
830,538
325,455
285,661
-
1,659,582
Charge for the year
-
45,648
398
-
-
-
33
Transfers from subsidiary At 1 May 2010
2,694 -
(2,380)
(908)
(455,842) 16,832
Depreciation -
Depreciation At 3 May 2008
-
493,574
43,022
1,064,113
336,276
299,851
-
2,236,836
Charge for the year
-
54,982
2,758
202,420
69,768
43,075
-
373,003
Translation
-
2,592
Relieved on disposals
-
(9,037)
At 2 May 2009
-
542,111
697 46,477
35,179
3,447
3,774
-
45,689
Relieved on disposals
(19,156)
(4,715)
(16,629)
-
(49,537)
Transfers/reclassifications
-
330,071
-
At 1 May 2010
-
78,182
1,282,556
404,776
2,605,991
(334)
82,226
34,448
36,676
-
199,396
(130,850)
(173,462)
(136,565)
-
(440,877)
335
10,452
6,025
354
-
16,832
261,186
2,789
792,366
192,466
186,126
-
1,434,933
736,288
10,721
897,811
100,391
109,587
183,115
2,116,095
Net Book Value -
Net Book Value At 2 May 2009
Furniture & Fixtures
Freehold Land
Machinery & Equipment
At Cost -
At Cost At 3 May 2008
Annual Report 2010
116,212 1,201,523
24,802
2,832,581
809,913
126,441
1,468,671
6,580,143
At 1 May 2010
Jamaica Broilers Group
104
Annual Report 2010
Jamaica Broilers Group
Page 50
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
13. Intangible Asset The Company
The Group
The Company
Computer Software
Computer Software
$’000
$’000
128,624
124,202
2,558
2,558
131,182
126,760
5,253
5,164
136,435
131,924
At 3 May 2008
40,239
38,677
2009 Freehold Buildings $’000
Leasehold Property $’000
Machinery & Equipment $’000
Furniture & Fixtures $’000
Motor Vehicles $’000
Capital Work in Progress $’000
Total $’000
78,183
723,319
15,890
1,338,808
386,176
339,326
Additions
-
-
-
11,660
30,278
56,355
Disposals
-
-
-
(5,244)
(2,986)
(9,026)
Transfers/reclassifications At 2 May 2009
Cost At 3 May 2008
At Cost At 3 May 2008
(34) 78,149
Page 51
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
12. Property, Plant and Equipment (Continued)
$’000
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Freehold Land
105
252,427
-
100,796
44,834
3,277
975,746
15,890
1,446,020
458,302
389,932
322,308 147,646 (388,858) 81,096
3,204,010
Additions
245,939
At 2 May 2009
(17,256)
Additions
12,442 3,445,135
Depreciation -
At 1 May 2010 Amortisation -
At 3 May 2008
-
197,531
1,917
753,035
281,592
259,461
-
1,493,536
Charge for the year
13,100
12,749
Charge for the year
-
18,341
139
82,751
46,888
35,068
-
183,187
At 2 May 2009
53,339
51,426
Relieved on disposals
-
-
-
(5,248)
(2,994)
(8,868)
-
(17,110)
Charge for the year
12,367
12,016
Transfers
-
-
-
-
-
-
(31)
At 1 May 2010
65,706
63,442
At 2 May 2009
-
215,872
2,056
830,538
325,455
285,661
-
1,659,582
1 May 2010
70,729
68,482
78,149
759,874
13,834
615,482
132,847
104,271
81,096
1,785,553
2 May 2009
77,843
75,334
(31)
Net Book Value At 2 May 2009
Net Book Value -
Jamaica Broilers Group
106
Annual Report 2010
Jamaica Broilers Group
Page 52
Jamaica Broilers Group Limited Notes to the Financial Statements
Annual Report 2010
Page 53
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
14. Investments
15. Deferred Income Taxes (Continued) The Company
The Group
Available-for-sale Government of Jamaica securities Quoted equities Unquoted equities Certificates of deposit
Interest receivable
1 May
2 May
1 May
2 May
2010
2009
2010
2009
$’000
$’000
$’000
$’000
113,391 1,322 2,624 117,337
113,465 4,961 2,624 66,321 187,371
1,322 2,624 3,946
4,961 2,624 7,585
6,270 123,607
6,110 193,481
3,946
7,585
The weighted average effective interest rate on Government of Jamaica securities was 11.75% (2009 – 11.75%). 15. Deferred Income Taxes Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 33⅓ %.
Deferred tax assets Deferred tax liabilities
107
The Group 1 May 2 May 2010 2009 $’000 $’000 (30,180) (12,983) 456,542 316,294 426,362 303,311
The Company 1 May 2 May 2010 2009 $’000 $’000 400,491 266,309 400,491 266,309
The movement on the deferred income tax account is as follows:
Balance at start of year
The Group 1 May 2 May 2010 2009 $’000 $’000 303,311 321,837
The Company 1 May 2 May 2010 2009 $’000 $’000 266,309 280,504
Charged/(credited) to profit or loss (Note 10) Balance as at end of year
123,051 426,362
134,182 400,491
(18,526) 303,311
(14,195) 266,309
The deferred tax assets and liabilities at the end of the year are as follows:
Deferred income tax assets Accrued vacation Tax losses unused Unrealised foreign exchange losses Other Deferred income tax liabilities Accelerated tax depreciation Pension and other post-employment benefits Unrealised foreign exchange gains Other Net deferred tax liability
The Group 1 May 2 May 2010 2009 $’000 $’000
The Company 1 May 2 May 2010 2009 $’000 $’000
6,761 45,721 3,758 56,240
8,062 25,878 29,331 9,825 73,096
6,558 3,758 10,316
7,888 29,496 9,825 47,209
415,367 65,033 1,218 984 482,602 426,362
326,820 49,533 54 376,407 303,311
356,777 51,933 1,112 985 410,807 400,491
273,596 39,867 55 313,518 266,309
The deferred tax charged/(credited) in profit or loss comprises the following temporary differences: The Group
Accelerated tax depreciation Accrued vacation Post-employment benefits Tax losses Unrealised foreign exchange losses/gains Other temporary differences
1 May 2010 $’000 88,547 1,301 15,500 (19,843) 30,549 6,997 123,051
2 May 2009 $’000
11,241 (820) 15,600 (2,233) (26,231) (16,083) (18,526)
The Company 1 May 2 May 2010 2009 $’000 $’000 83,181 3,567 1,330 (1,534) 12,066 12,801 30,608 (25,442) 6,997 (3,587) (14,195) 134,182
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 $963,352,000 (2009 - $754,569,000). These undistributed earnings are in foreign subsidiaries. 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.
Jamaica Broilers Group
108
Annual Report 2010
Jamaica Broilers Group
Page 54
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
16. Post-employment Benefits (Continued) (a) Pension scheme benefits
These balances include the following: The Group 1 May 2010 $’000
The Company 2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
Deferred tax assets -
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 30 April 2010. The defined benefit asset recognised in the balance sheet was determined as follows:
Deferred tax assets to be recovered after more than 12 months
45,721
25,878
-
-
Deferred tax assets to be recovered within 12 months
10,519
47,218
10,316
47,209
56,240
73,096
10,316
47,209
480,400
376,353
408,710
313,463
2,202
54
2,097
55
482,602
376,407
410,807
313,518
426,362
303,311
400,491
266,309
Deferred tax liabilities -
Net deferred tax liability
Fair value of plan assets Present value of obligations Unrecognised actuarial gains
206,200
157,400
The Company 2 May 1 May 2010 2009 $’000 $’000 1,524,900 1,235,300 (1,105,400) (676,000) 419,500 559,300 (256,000) (433,100) 163,500
126,200
Pension plan assets include investment in ordinary stock units of the company with a fair value of $41,031,000 (2009 - $19,507,000).
The Group 1 May 2010 $’000
Amounts recognised in the balance sheet are as follows:
Amounts recognised in the profit or loss (Note 8) Pension scheme benefits Post-employment medical benefits
The Group 2 May 1 May 2010 2009 $’000 $’000 1,668,500 1,341,300 (1,209,500) (734,000) 459,000 607,300 (252,800) (449,900)
The movement in the defined benefit asset during the year was as follows:
16. Post-employment Benefits
Pension scheme benefits Post-employment medical benefits
Page 55
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
15. Deferred Income Taxes (Continued)
Deferred tax liabilities to be recovered within 12 months
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Deferred tax liabilities to be recovered after more than 12 months
109
The Group 1 May 2 May 2010 2009 $’000 $’000 206,200 157,400 (9,200) (8,000)
The Company 1 May 2 May 2010 2009 $’000 $’000 163,500 126,200 (7,700) (6,600)
(36,800) 2,500 (34,300)
(26,300) 2,300 (24,000)
(35,600) 1,000 (34,600)
(35,900) 900 (35,000)
At start of year Amounts recognised in profit or loss (Note 8) Contributions paid At end of year
2 May 2009 $’000
The Company 1 May 2 May 2010 2009 $’000 $’000
157,400
119,000
126,200
87,800
36,800
35,600
26,300
35,900
12,000
2,800
11,000
2,500
206,200
157,400
163,500
126,200
Jamaica Broilers Group
110
Annual Report 2010
Jamaica Broilers Group
Page 56
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 16. Post-employment Benefits (Continued)
(a) Pension scheme benefits (continued)
(a) Pension scheme benefits (continued)
The movement in the present value of obligations was as follows:
The amount recognised in profit or loss is determined as follows:
The Group
The Company
The Group
1 May 2010 $’000
2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
734,000
893,900
676,000
802,300
64,700
77,000
58,500
69,000
Interest cost
120,200
120,900
110,400
108,600
Expected return on plan assets
Benefits paid
(29,700)
(59,700)
(25,200)
(56,200)
Loss on settlement
(144,300)
-
(143,800)
-
Annuities purchased
47,300
-
47,200
-
417,300
(298,100)
382,300
(247,700)
1,209,500
734,000
1,105,400
676,000
Loss on settlement Actuarial loss/(gain) on obligations At end of year
The movement in the fair value of plan assets was as follows:
2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
1,341,300
1,395,100
1,235,300
1,252,100
Members’ contribution
47,400
44,700
43,100
44,400
Employer’s contribution
12,100
6,800
11,000
2,600
198,100
173,800
182,100
155,900
Benefits paid Annuities purchased Actuarial gain/(loss) on plan assets At end of year
Current service cost
The Company 2 May 2009 $’000
1 May 2010 $’000
3 May 2009 $’000
17,300
28,400
15,400
24,600
120,200
120,900
110,400
108,600
(198,100)
(173,800)
(182,100)
(155,900)
46,600
-
47,200
-
Net actuarial gains recognised in year
(22,800)
(11,100)
(17,200)
(13,200)
Total included in staff costs (Note 8)
(36,800)
(35,600)
(26,300)
(35,900)
(441,700)
(45,600)
(404,500)
(7,600)
Interest cost
Actual return on plan assets
1 May 2010
The Company
1 May 2010 $’000
Expected return on plan assets
1 May 2010 $’000
The principal actuarial assumptions used were as follows: The Group
At start of year
Page 57
Jamaica Broilers Group Limited
16. Post-employment Benefits (Continued)
Current service cost
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
At start of year
111
(29,700)
(59,700)
(25,200)
(56,200)
(144,300)
-
(143,800)
-
243,600
(219,400)
222,400
(163,500)
1,668,500
1,341,300
1,524,900
1,235,300
2 May 2009
Discount rate
11.5%
16.0%
Expected return on plan assets
11.5%
15.0%
Future salary increases
8.5%
11.0%
Future pension increases
5.0%
5.0%
18.0
18.0
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 10.5% per year (2009 - 15% per year).
Jamaica Broilers Group
112
Annual Report 2010
Jamaica Broilers Group
Page 58
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
16. Post-employment Benefits (Continued) (b) Post-employment medical benefits (continued)
(b) Post-employment medical benefits (continued)
The amount recognised in profit or loss is as follows:
The liability recognised in the balance sheet was determined as follows:
The Group
The Company
The Group
14,400
1 May 2010 $’000 13,000
2 May 2009 $’000 13,000
(5,300)
(6,400)
(5,300)
(6,400)
9,200
8,000
7,700
6,600
1 May 2010 $’000
2 May 2009 $’000
Present value of funded obligations
14,500
Unrecognised actuarial losses
(Note 8)
2 May 2009 $’000
2,500
1,000
2,300
900
1 May 2010
The Company 2 May 1 May 2010 2009
$’000
$’000
$’000
$’000
8,000
8,000
6,600
6,600
2,500
1,000
2,300
900
(1,300)
(1,000)
(1,200)
(900)
9,200
8,000
7,700
6,600
The Group
Effect on the aggregate of current service cost and interest cost Effect on the defined benefit obligation
The Company 2 May 2009
1 May 2010
2 May 2009
$’000
$’000
$’000
$’000
Effect on the aggregate of current service cost and interest cost Effect on the defined benefit obligation
14,400
8,500
13,000
7,500
2,200
1,000
2,000
900
Benefits paid
(1,300)
(1,000)
(1,200)
(900)
(800)
5,900
(800)
5,500
14,500
14,400
13,000
13,000
The Company 1 May 2010
1 May 2010
1 May 2010
$’000
$’000
$’000
$’000
Decrease
Increase
Decrease
Increase
(100)
200
(91)
183
(1,000) (1,100)
1,100 1,300
(914) (1,005)
1,005 1,188
2 May 2009
2 May 2009
2 May 2009
2 May 2009
$’000
$’000
$’000
$’000
Decrease
Increase
Decrease
Increase
(100)
100
(92)
92
(900) (1,000)
1,000 1,100
(745) (837)
828 920
The Group
1 May 2010
Interest cost
At end of year
1 May 2010 $’000
The effects of a 1% movement in the assumed medical cost trend rate were as follows:
The movement in the present value of obligations was as follows:
Actuarial (gain)/loss on obligation
2 May 2009 $’000
The Group
The Group 2 May 1 May 2010 2009
At start of year
The Company
1 May 2010 $’000 Interest cost, included in staff costs
The movement in the liability during the year was as follows:
At end of year
Page 59
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
16. Post-employment Benefits (Continued)
Amounts recognised in profit or loss (Note 8) Contributions paid
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
At start of year
113
The Company
Jamaica Broilers Group
114
Annual Report 2010
Jamaica Broilers Group
Page 60
Jamaica Broilers Group Limited Notes to the Financial Statements
(d) Other pension plan disclosures The Group 1 May 2010
1 May 2010
2 May 2009
2 May 2009
Equities Property
$’000 346,600 347,400
% 21 21
$’000 213,600 296,000
% 16 22
Government securities and reverse repurchase agreements
768,200
46
634,100
47
101,200 55,200 49,900 1,668,500
6 3 3 100
104,500 58,000 35,100 1,341,300
8 4 3 100
1 May 2010
1 May 2010
2 May 2009
2 May 2009
Equities Property
$’000 316,769 317,500
% 21 21
$’000 196,719 272,607
% 16 22
Government securities and reverse repurchase agreements
702,082
46
583,987
47
92,490 50,449 45,610 1,524,900
6 3 3 100
96,241 53,416 32,330 1,235,300
8 4 3 100
The Company
Corporate bonds
Jamaica Broilers Group Limited
16. Post-employment Benefits (Continued)
(c) Distribution of pension plan assets -
Leased assets Other
Page 61
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
16. Post-employment Benefits (Continued)
Leased assets Other
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Corporate bonds
115
Expected contributions to post-employment plan for the year ending 30 April 2011 are $34,500,000 and $31,500,000 for the Group and company respectively. The expected return on plan assets is based on market expectation of inflation plus a margin for real returns on a balanced portfolio. Pension scheme benefits The five-year trend for the defined benefit obligation and experience adjustments is as follows:
Fair value of plan assets Present value of defined benefit obligation Surplus Experience adjustments to plan liabilities Experience adjustments to plan assets
2010 $’000
2009 $’000
The Group 2008 $’000
2007 $’000
2006 $’000
1,668,500
1,341,300
1,395,100
1,129,900
1,206,900
(1,209,500)
(734,000)
(893,900)
(813,500)
(683,600)
459,000
607,300
501,200
316,400
523,300
6,500
18,100
19,900
(39,800)
5,500
243,700
(219,500)
124,200
(5,700)
144,900
116
Jamaica Broilers Group
Annual Report 2010
Jamaica Broilers Group
Page 62
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
17. Inventories
(d) Other pension plan disclosures (continued)-
The Group
2010 $’000 1,524,900
2009 $’000 1,235,300
The Company 2008 $’000 1,252,100
2007 $’000 1,021,000
2006 $’000 1,096,900
(1,105,400)
(676,000)
(802,300)
(735,100)
(621,300)
419,500
559,300
449,800
285,900
475,600
4,500
(5,100)
(77,700)
33,900
(12,700)
222,400
(163,500)
105,100
(21,600)
153,000
2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
Grain and feed ingredients
1,013,532
712,341
995,309
678,379
Inventories for resale and spares
1,437,906
2,799,892
1,293,088
821,113
Processed broilers, beef and fish
91,318
74,977
88,912
62,467
Goods in transit and others
99,156
177,708
88,643
164,660
2,641,912
3,764,918
2,465,952
1,726,619
Less: Provision for obsolescence
Experience adjustments to plan liabilities
Present value of funded obligation Experience adjustments to plan liabilities
(24,267)
(16,547)
(19,557)
(11,925)
2,617,645
3,748,371
2,446,395
1,714,694
18. Biological Assets The Group
Post-employment medical benefits
Present value of funded obligation
The Company
1 May 2010 $’000
Pension scheme benefits (continued)
Experience adjustments to plan liabilities Experience adjustments to plan assets
Page 63
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
16. Post-employment Benefits (Continued)
Surplus
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Fair value of plan assets Present value of defined benefit obligation
117
The Company
1 May 2010 $’000
2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
75,608
50,340
75,326
50,340
2010 $’000
2009 $’000
The Group 2008 $’000
2007 $’000
2006 $’000
Cattle
14,500
14,400
7,500
8,500
9,000
Fish
200,544
138,634
-
-
Poultry
609,847
621,961
314,793
315,032
885,999
810,935
390,119
365,372
1 May 2010 $’000
2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
810,935
663,452
365,372
314,454
4,956,351
4,095,605
4,342,092
3,877,983
(4,881,287)
(3,948,122)
(4,317,345)
(3,827,065)
885,999
810,935
390,119
365,372
900
(6,200)
(700)
1,100
800
2010 $’000
2009 $’000
The Company 2008 $’000
2007 $’000
2006 $’000
13,000
13,000
6,800
7,600
7,500
The movement in biological assets was determined as follows: The Group
At start of year 900
(5,800)
(700)
1,100
1,300
Increase due to purchases and accumulated costs Decrease due to sales and amortisation of costs At end of year
The Company
Jamaica Broilers Group
118
Annual Report 2010
Jamaica Broilers Group Limited
Jamaica Broilers Group
Page 64
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 18. Biological Assets (Continued)
119
Page 65
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 19. Receivables
The physical quantities at the end of the year and output for each group of biological assets are as follows: (i)
The Group
Cattle The number of cattle at the end of the year was 962 (2009 – 533). The number of cattle harvested during the year was 376 (2009 – 410).
(ii)
Fish
Trade receivables Less: Provision for impairment
The estimated weight of fish and fingerlings at the end of the year was 498 tonnes (2009 – 479 tonnes).
Contract farmers’ receivables
The estimated weight of fish and fingerlings harvested during the year was 773 tonnes (2009 – 1,612 tonnes).
G.C.T recoverable
(iii) Poultry The number of birds in the field, including breeder, layer and pullets at the year end was 7,415,000 (2009 – 6,977,000) and the number of fertile (hatching) eggs was 3,985,000 (2009 – 3,611,000). The number of birds delivered for processing during the year was 27,762,000 (2009 – 24,183,000) and the number of fertile (hatching) eggs produced was 43,195,000 (2009 – 45,080,000).
Annual Report 2010
Deposits Insurance claims receivable Jamaica Public Service Company Limited Prepayments Staff receivables Other
The Company
1 May 2010
2 May 2009
1 May 2010
2 May 2009
$’000
$’000
$’000
$’000
975,518
787,252
621,298
508,017
(110,523)
(73,047)
(66,337)
(53,849)
864,995
714,205
554,961
454,168
91,808
45,147
91,808
45,147
3,070
3,132
703
701
97,880
107,444
17,746
14,936
3,897
17,222
-
13,324
38,200
14,767
-
-
135,593
64,433
126,005
40,729
15,040
14,111
14,692
11,542
54,568
62,361
44,869
52,776
1,305,051
1,042,822
850,784
633,323
Less: Provision for impairment
(19,861)
(11,885)
(19,861)
(11,885)
1,285,190
1,030,937
830,923
621,438
20. Financial Assets at Fair Value through Profit or Loss This represents quoted equity 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 (Note 6). 21. Cash and Short Term Investments The Group
Cash at bank and in hand Short term investments Interest receivable
1 May 2010 $’000 651,679 628,303 1,279,982 2,956 1,282,938
2 May 2009 $’000 453,641 331,790 785,431 165 785,596
The Company 1 May 2010 $’000 460,780 612,551 1,073,331 2,956 1,076,287
2 May 2009 $’000 361,604 290,440 652,044 165 652,209
Jamaica Broilers Group
120
Annual Report 2010
Jamaica Broilers Group
Page 66
Jamaica Broilers Group Limited Notes to the Financial Statements
121
Annual Report 2010
Page 67
Jamaica Broilers Group Limited Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated) 23. Dividends
21. Cash and Short Term Investments (Continued) The weighted average effective interest rate on short term deposits was 2.75% (2009 – 7.75%) These deposits have an average maturity of 41 days (2009 – 14 days).
The Group and The Company
For the purposes of the cash flow statement, cash and cash equivalents comprise the following:
Cash and short term investments Short term borrowings and bank overdraft
The Group 1 May 2 May 2010 2009
The Company 1 May 2 May 2010 2009
$’000
$’000
$’000
$’000
1,282,938
785,596
1,076,287
652,209
(370,777)
(1,291,191)
(366,944)
(1,290,069)
912,161
(505,595)
709,343
(637,860)
First interim – 8 cents per stock unit ( 2009 – 5 cents) Second interim – 12 cents per stock unit (2009 – 6 cents)
The Group
The Group 1 May 2 May 2010 2009 $’000 $’000
The Company 2 May 2009 $’000
1 May 2010 $’000
2 May 2009 $’000
332,959
296,171
282,755
242,081
451
2,574
415
2,357
Payroll taxes payable
23,702
23,789
23,702
23,789
Staff related payables
31,087
12,310
20,724
2,961
1,001,531
1,123,295
894,305
981,139
Unclaimed cheques
42,381
39,601
42,102
39,346
Other
48,491
49,053
58,810
81,543
1,480,602
1,546,793
1,322,813
1,373,216
Accrued charges Contractors retention payable
Trade payables
2 May
2010
2009
$’000
$’000
95,942
59,964
143,913
71,957
239,855
131,921
24. Borrowings
22. Payables
1 May 2010 $’000
1 May
The Company 1 May 2 May 2010 2009 $’000 $’000
Non-Current Borrowings
1,717,023
1,670,410
1,287,325
1,129,048
1,273,343
2,330,487
1,268,608
2,329,365
943,529
1,433,877
466,817
595,626
26,322
43,231
11,274
29,476
2,243,194
3,807,595
1,746,699
2,954,467
3,960,217
5,478,005
3,034,024
4,083,515
Current Short term borrowings and bank overdraft (Note 23) of non-current borrowings Current portion Interest payable
Interest rates on these loans ranged from 12% to 17.75% on Jamaican currency loans and 3.95% to 7.95% on United States currency loans. Negative pledges have been issued in respect of loans, guarantees and other banking facilities extended by the various financial institutions. In 2009, the company early adopted IAS 23 (Amendment), Borrowing costs which resulted in the capitalisation of interest of $29,404,000 for the expansion of its ethanol plant; this amount has been included in property, plant and equipment. The expansion of the ethanol plant was completed in 2009 and therefore there were no capitalised costs in 2010. The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation in the year ended 2 May 2009 was 8.19%.
Jamaica Broilers Group
122
Annual Report 2010
Jamaica Broilers Group
Page 68
Jamaica Broilers Group Limited Notes to the Financial Statements
123
Jamaica Broilers Group Limited 1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
25. Share Capital
27. Related Party Transactions and Balances
1 May 2010
Number of Stock Units ‘000 1,199,277
Ordinary Stock Units $’000 765,137
2 May 2009
1,199,277
765,137
Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operational decisions. Related parties include fellow subsidiaries, directors and key management. Subsidiaries buy and sell inventory to other entities within the Group. Key management includes directors (executives and non-executives) and members of the senior management team.
The total authorised number of ordinary shares is 1,209,324,000 shares (2009 – 1,209,324,000). The stock units in 2009 and 2010 are stated in these financial statements without a nominal or par value.
(i)
The following transactions were carried out with related parties:
26. Capital Reserve The Group
Fair value (loss)/gain on available-for-sale securities
2 May 2009
1 May 2010
2 May 2009
$’000
$’000
$’000
$’000
32,618
32,618
3,227
3,227
399,975
399,975
139,198
139,198
2,039
3,080
3,822
Translation loss on subsidiary assumed
(8,686)
(8,686)
Gains on translation of financial statements of foreign subsidiaries
(7,647) -
-
634,021
264,061
-
-
1,058,967
698,693
136,819
137,561
Movements during the year Fair value loss on available for sale securities Translation gain At end of year
(570)
(9,686)
(3,618) -
(742)
13,544
369,960
1,071,941
1,058,967
133,201
136,819
32,618
32,618
3,227
3,227
Unrealised surplus on revaluations Fair value (loss)/gain on available-for-sale securities
399,975
399,975
139,198
139,198
Translation loss on subsidiary assumed Gains on translation of financial statements of foreign subsidiaries
(8,217)
(7,647)
(538) (8,686)
The Company 1 May 2 May 2010 2009 $’000 $’000
With directors and key management Salaries, profit sharing and other short-term employee benefits Gratuity on separation Payroll taxes – Employer’s portion Pension benefits Professional fees paid Directors’ emoluments Fees Management remuneration (included above)
346,574
237,204
328,604
208,063
-
85,767
-
85,767
138
115
125
104
1,493
309
1,424
288
10,193
5,447
10,193
5,447
358,398
328,842
340,346
299,669
14,590
15,850
14,590
15,850
190,702
239,816
172,652
216,467
-
Consisting of Realised capital gains
The Group 1 May 2 May 2010 2009 $’000 $’000
The Company
1 May 2010 At start of year Unrealised surplus on revaluations
Page 69
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
Realised capital gains
Annual Report 2010
3,080
-
-
(8,686)
647,565
634,021
-
-
1,071,941
1,058,967
133,201
136,819
Included in the Group’s management remuneration for directors’ emoluments is an amount of $12,030,000 (2009 - $23,349,000) representing payments made to directors of a subsidiary company.
Jamaica Broilers Group
124
Annual Report 2010
Jamaica Broilers Group
Page 70
Jamaica Broilers Group Limited Notes to the Financial Statements
Jamaica Broilers Group Limited
28.
Fair Value of Financial Instruments (Continued) The following table provides an analysis of financial instruments that are measured in the balance sheet at fair value at 1 May 2010, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Year end balances with directors and key management are as follows: The Group 1 May 2 May 2010 2009 $’000 $’000
The Company 1 May 2 May 2010 2009 $’000 $’000
5,216
4,630
2,726
1,877
(i)
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
(ii)
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
(iii)
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Receivables are repayable within 3 months. 28. Fair Value of Financial Instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Market price is used to determine fair value where an active market (such as a recognised stock exchange) exists as it is the best evidence of the fair value of a financial instrument. However, market prices are not available for a significant number of the financial assets and liabilities held and issued by the Group. Therefore, for financial instruments where no market price is available, the fair values presented have been estimated using present value or other estimation and valuation techniques based on market conditions existing at balance sheet dates. The values derived from applying these techniques are significantly affected by the underlying assumptions used concerning both the amounts and timing of future cash flows and the discount rates. The following methods and assumptions have been used: (i)
(ii)
Page 71
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
27. Related Party Transactions and Balances (Continued)
Receivables
Annual Report 2010
Notes to the Financial Statements
1 May 2010 (expressed in Jamaican dollars unless otherwise indicated)
(ii)
125
The Group
Financial Assets
(iii) The fair value of financial liabilities approximates to carrying value as the contractual cash flows are at current market interest rates that are available to the Group for similar financial instruments; and (iv) The amounts included in the financial statements for receivables, cash and short term investments, payables and short term borrowings reflect their fair values due to the short term maturity of these instruments.
Level 2
Level 3
1 May 2010
113,391
Investments Government of Jamaica securities Quoted equities
Investment securities at fair value through profit or loss are measured at fair value by reference to quoted prices when available. If quoted market prices are not available, then fair values are estimated on the basis of pricing models, or discounted cash flows. Fair value is equal to the carrying amount of these items; Investment securities classified as available-for-sale are measured at fair value by reference to quoted market prices when available. If quoted market prices are not available, then fair values are based on pricing models or other recognised valuation techniques;
Level 1
-
113,391
-
1,322
-
-
1,322
1,322
113,391
-
114,713
The Company
Financial Assets
Level 1
Level 2
Level 3
1 May 2010
1,322
-
-
1,322
Investments Quoted equities
There were no transfers between Level 1 and 2 in the year.
Jamaica Broilers Group
126
Notes
Annual Report 2010
