M ission S TAT E M E N T To b e t h e m o s t t r u s t e d b r o a d c a s t m e d i u m by
having
a
commitment
to
truth,
a c c u r a c y a n d f a i r n e s s.
To
i n fo r m ,
educate
and
entertain
a u d i e n c e s w i t h c re d i b l e, b a l a n c e d a n d i n n o v a t i ve p ro g r a m m i n g s u p p o r t e d b y n a t i o nw i d e c o v e r a g e a n d a s k i l l e d a n d m o t i v a t e d wo r k fo rc e.
To
further
quality
p ro v i d e
service
and
a d ve r t i s e r s a
with
c o s t - e f fe c t i ve
m e d i u m , t h u s e n h a n c i n g o u r c o m p e t i t i ve a d v a n t a g e a n d e n s u r i n g p r o f i t a b i l i t y.
PAGE 4
Radio Jamaica Limited Annual Report 2014
Directors &
CORPORATE DATA DIRECTORS J.A. Lester Spaulding, C.D., J.P. – Chairman Executive Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Managing Director Non-Executive Carl Domville, B.Sc. (Hons), F.C.C.A., F.C.A. Glenworth Francis, B.Sc., E.M.B.A. Andrew Leo-Rhynie, B.Sc., M.B.A. Minna Israel, B.Sc. (Hons.), M.B.A. Nadine Molloy, B.A. (Hons.), M.A., M.L.S., J.P. Peter Chin, B.Sc., M.B.A. Lawrence Nicholson, B.Sc. , M.Sc., Ph.D SECRETARY Stephen Greig, LL.B. SENIOR MANAGEMENT TEAM Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Managing Director Stephen Greig, LL.B. – Company Secretary/Attorney-at-Law/Acting General Manager JNN and RE-TV Gary Cole – Director of Marketing Andrea Wilson-Messam, F.C.C.A., F.C.A. – Director of Finance Claire Grant – B.Sc. (Hons.), M.A.,M.B.A. (Distinction) General Manager, Television Jamaica Limited Francois St. Juste, B.Sc. (Hons.) – General Manager, Radio Services Trevor Johnson, Dip. Bus. Admin., E.M.B.A. – Deputy General Manager TVJ & Outside Broadcast
Production Manager
Yvonne Wilks, Dip. Cam., B.A. (Hons.) – Director of Corporate & Commercial Strategy
Acting General Manager, Multi-Media Jamaica Limited
GROUP OFFICERS Marcha Christie, A.C.C.A., Dip. Bus. Admin. – Group Financial Controller Milton Walker, B.A. – Group Head of News Tanya Smith, Dip. Insurance, B.Sc., M.B.A. (HRM) – Group Human Resource Manager Patrick Anderson – Group Head of Sports (Acting) Noel Ellis, IMBA, B.Eng. – Chief Engineer, Transmission, Administration & Information Technology Melvis Cummings - Chief Engineer, Operations TELEVISION OPERATIONS Claire Grant –General Manager, Television Jamaica Limited Trevor Johnson, Dip. Bus. Admin., E.M.B.A. – Deputy General Manager TVJ & Outside Broadcast Production Manager
Allia McDonald, B.A., M.A. – Studio Production Manager Judith Alberga, B.A. (Hons.)- Programmes Manager Debbie Powell-Harris, Dip. Graphic Design, B.Sc. (Hons.) – Senior Art Director
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Radio Jamaica Limited Annual Report 2014
PAGE 5
Directors &
CORPORATE DATA SUBSIDIARIES Television Jamaica Limited Lawrence Nicholson, B.Sc., M.Sc.,Ph.D, – Chairman
Reggae Entertainment Television Limited J.A. Lester Spaulding, C.D., J.P. – Acting Chairman
J.A. Lester Spaulding, C.D., J.P. - Director Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Director Gregory Pullen Stephen Greig, LL.B. – Company Secretary
Gary Allen, Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Director Dennis Howard, Ph.D. – Director David Geddes, M.B.A. – Director Angela Patterson, B.Sc., M.B.A. - Director Stephen Greig, LL.B. – Company Secretary
Multi-Media Jamaica Limited Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Chairman J.A. Lester Spaulding, C.D., J.P. – Director Richard McCreath – Director Rupert Hartley – Director Andrea Wilson-Messam – F.C.A., F.C.C.A. – Director Carlette DeLeon - Director Stephen Greig, LL.B. – Director/Company Secretary
Jamaica News Network Limited J.A. Lester Spaulding, C.D., J.P. – Acting Chairman Gary Allen, Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Director Dennis Howard, Ph.D. – Director David Geddes, M.B.A. – Director Angela Patterson, B.Sc., M.B.A. - Director Stephen Greig, LL.B. – Company Secretary
AUDIT COMMITTEE J.A. Lester Spaulding Carl Domville Glenworth Francis
REGISTERED OFFICE Broadcasting House 32 Lyndhurst Road P.O. Box 23, Kingston 5, Jamaica W.I.
AUDITORS PricewaterhouseCoopers
BANKERS First Global Bank National Commercial Bank Jamaica Limited RBC Royal Bank Bank Jamaica Limited
REGISTRAR AND TRANSFER AGENTS Jamaica Central Securities Depository 40 Harbour Street Kingston
Change
PAGE 6
Radio Jamaica Limited Annual Report 2014
Notice of
MEETING
NOTICE IS HEREBY GIVEN that the Sixty-sixthth Annual General Meeting of Radio Jamaica Limited will be held at the Jamaica Pegasus Hotel, 81 Knutsford Boulevard, Kingston 5, on Wednesday, August 27, 2014 commencing at 10:00 a.m. for the following purposes:
1.
To receive the Accounts for the year ended March 31, 2014 and the reports of the Directors and Auditors thereon. To consider and (if thought fit) pass the following Resolution: “THAT the Audited Accounts for the year ended March 31, 2014 together with the Reports of the Directors and Auditors thereon be and are hereby adopted.
2.
To elect Directors:
a) Pursuant to Article 90 of the Company’s Articles of Incorporation, the retiring Director who is eligible for re-election is:
director of the company”.
(iii) “THAT retiring director Peter Chin be and is hereby elected a director of the company”.
3. To
re-appoint the Auditors and to authorize the Directors to fix their remuneration. To consider and (if thought fit) pass the following Resolution: “THAT Messrs. PricewaterhouseCoopers having agreed to continue in office as Auditors, the Directors be and are hereby authorized to agree to their remuneration in respect of the period ending with the conclusion of the next Annual General Meeting.”
J.A. Lester Spaulding To consider and (if thought fit) pass the following Resolution: “THAT retiring director J.A. Lester Spaulding be and is hereby elected a director of the company”.
A member entitled to attend and vote at this meeting may appoint another person as his proxy to attend and vote instead of him and such proxy need not be a member of the company. An appropriate form of proxy is enclosed. Dated this 25 day of June 2014.
b) Pursuant to Article 98 of the Company’s Articles of Incorporation, the retiring Directors all of whom are eligible for re election are:
BY ORDER OF THE BOARD
Minna Israel, Nadine Molloy, Peter Chin To consider and (if thought fit) pass the following Resolutions:
Stephen Greig, LL.B. Secretary
“THAT retiring director Minna (i) Israel be and is hereby elected a director of the company”.
Broadcasting House 32 Lyndhurst Road Kingston 5, JAMAICA, W
“THAT retiring director Nadine (ii) Molloy be and is hereby elected a
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Radio Jamaica Limited Annual Report 2014
PAGE 7
Shareholders as at
MARCH 31, 2014 No. of Units
TEN LARGEST 1
PAM/JPS Employees Superannuation Fund
29,863,401
2
NCB Jamaica Limited
28,064,400
3
Ideal Portfolio Services
27,653,901
4
Grace Kennedy & Co. Ltd. Pension Scheme
23,401,596
5
Mayberry West Indies Limited
22,829,846
6
Jamaica Co-operative Credit Union League
13,674,833
7
L.P. Azar Limited
12,937,688
8
Marlon C. Blake
10,800,000
9
King Alarm Systems
9,822,401
10
VMBS A/C Contributory Pension Scheme
9,621,620
DIRECTORS 1
J.A. Lester Spaulding
7,870,350
2
Carl Domville
317,607
3
Peter Chin
0
4
Minna Israel
0
5
Lawrence Nicholson
0
6
Glenworth Francis
3,000
7
Gary Allen
5,000
8
Nadine Molloy
0
9
Andrew Leo-Rhynie
0
SENIOR MANAGEMENT 1 2 3 4 5 6 7 8
Gary Allen Francois St. Juste Stephen Greig Yvonne Wilks Gary Cole Andrea Messam Marcha Christie Trevor Johnson Change
5,000 362,000 6,000 354,742 0 0 0 6,000
PAGE 8
Radio Jamaica Limited Annual Report 2014
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Radio Jamaica Limited Annual Report 2014
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PAGE 9
PAGE 10
Radio Jamaica Limited Annual Report 2014
Directors’
PROFILES J.A. LESTER SPAULDING, C.D., J.P.
Appointed Managing Director 1978, Retired 2008, Chairman since 1994. Mr. Spaulding also serves as Chairman on two and director on two other subsidiary boards in the Group, a Co-Chair Digital Switchover Committee. Mr. Spaulding also serves as Director/Mentor on the boards of Lasco Distributors Ltd. and Lasco Manufacturing Ltd., Director of Guardsman Alarms Limited, JN Money Services Ltd, GV Media Group in London, PALS Jamaica Limited, Caribbean Community of Retired Persons, JSPCA and Hope Zoo Preservation Boards.
GARY ALLEN, E.M.B.A., J.P. Managing Director
(Appointed June 2006) Managing Director (October 1, 2008). Mr. Allen is a career journalist and Media Manager with experience in local, regional and international media. He has served RJR as a journalist for six years and now in a management capacity for ten years. At the regional level he served the Caribbean Broadcasting Union, (CBU), the Caribbean News Agency, (CANA) and the Caribbean Media Corporation (CMC). At CMC he rose to the position of Chief Operating Officer. He is a graduate of the Caribbean Institute of Media and Communications (CARIMAC), and the Mona School of Business (MSB) at the UWI, is a past Chairman of the Media Association Jamaica Limited and is also past Chairman of the Jamaica Debates Commission. He is Vice President of the CBU; and Vice President of the Commonwealth Broadcasters’ Association.
CARL DOMVILLE, B.Sc. (Hons.), F.C.C.A., F.C.A.
(Appointed June 1990) Mr. Domville was the Chief Operating Officer and Group Treasurer of the Seprod Group of Companies. (Retired October 2013) He serves on the Board of Directors of Barita Investments Limited, Golden Grove Sugar Co. Ltd., United Way of Jamaica and is a Trustee of the Superannuation Fund for Employees of Seprod Ltd. and Approved Organizations.
GLENWORTH FRANCIS, B.Sc., E.M.B.A
(Appointed April 2006) Mr. Francis is the Group Chief Executive Officer of the Jamaica Co-operative Credit Union League. He serves as Chairman of the Board of J.E.T.S. Limited (operator of the Multi Link debit card network) and is a member of the Board of Credit Union Fund Management Company Ltd. and Centralized Strategic Services Company.
ANDREW LEO-RHYNIE, B.Sc. (Acctg.), M.B.A. (Finance), Chartered Business Valuator
(Appointed December 2011) Mr. Leo-Rhynie is the Vice President, Strategy at GraceKennedy Financial Group Limited. Prior to joining GraceKennedy Financial Group in 2009, he was a Management Consultant at Sierra Associates Limited for 13 years where he provided management consulting and business valuation services to corporate clients.
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Radio Jamaica Limited Annual Report 2014
PAGE 11
Directors’
PROFILES MINNA ISRAEL, C.D., J.P. B.Sc. (Hons.), M.B.A. (Finance & General Management)
(Appointed September 26, 2012) Ms. Israel is currently Special Advisor to the Vice Chancellor, at the University of the West Indies. A former banker for over 30 years, Ms. Israel served as President & Country Head of RBC Royal Bank Jamaica and Managing Director of Scotiabank (Bahamas) Limited. She serves on a number of Boards and organisations including First Global Bank, Cari-Med Limited, the Public Accountancy Board and is Chairperson of the Mona School of Business & Management.
PETER D. CHIN, B.Sc., M.B.A
(Appointed September 26, 2012) Mr. Chin is the President of Alliance Investment Management Limited, an investment management company and licensed securities dealer. He is also President of Alliance Financial Services, a licensed Cambio and an Agent of MoneyGram International. He has over thirty years’ experience in the fields of investment and financial management, commercial lending and project finance, providing services to major institutions. Mr. Chin is Company Director of AMG Packaging and Paper Company Limited, a company listed on the Jamaica Stock Exchange Junior Market and is also a Director of Supreme Ventures Limited.
Change
He is past president of the Munro College Old Boys’ Association and the first President of the Jamaica Securities Dealers Association. An ardent sportsman, he is a member of the Caymanas Golf and Country Club, Constant Spring Golf Club and Kingston Cricket Club. He is also the Vice President of the Jamaica Golf Association.
NADINE A. MOLLOY, B.A. (Hons.), M.A., M.L.S., J.P.
(Appointed September 26, 2012) Ms. Molloy is a secondary school principal with more than thirteen years service and is currently the principal of Ardenne High School. She is a former president of the Jamaica Teachers’ Association (JTA) and the Jamaica Association of Principals of Secondary Schools (JAPSS). She remains an executive member of the Jamaica Teachers’ Association and the Caribbean Union of Teachers (CUT). A trained librarian, she has worked at the Brown’s Town Community College as Senior Lecturer Librarian. She is a member of the National Parenting Support Commission and Heritage Clubs of Jamaica. Ms. Molloy was named LASCO/MoE Principal of the Year 2009.
LAWRENCE NICHOLSON, B.Sc., M.Sc., Ph.D
(Appointed September 2013) Dr. Nicholson is a Lecturer in the Faculty of Social Sciences, Mona School of Business and Management, with over a decade of experience in Decision Sciences specializing in the areas of Business Statistics, Quantitative Methods and Operations Management.
PAGE 12
Radio Jamaica Limited Annual Report 2014
Chairman’s
STATEMENT
L ever.
ast year was one of the most challenging for
the
Jamaican
company
emerged
media,
but
stronger
our than
Greater competition for audiences
and revenues against the background of more
radio
stations,
television
channels
and newspapers pushing into electronic media activities, all served to heighten competitiveness to which our companies responded well. During the year under review the company successfully lobbied the Government and Regulators for a more business sensitive approach to the planned Digital Switch Over project, which is planned for implementation within the next six to seven years. The Board provided guidance and oversight to the Management as it continued to diversify
its
programme
distribution
onto
new platforms inside and outside Jamaica. We were pleased with the early progress made in this regard and look forward to an acceleration of the benefits flowing out of our stated strategy of “Going Global for Greater Profitability�. The Board of Radio Jamaica Limited and its subsidiary Boards met 55 times during the year under review, with over 95% attendance by directors. Boards received and analyzed management reports, including Accounts, Budgets, Technology and Marketing and
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Radio Jamaica Limited Annual Report 2014
PAGE 13
Chairman’s
STATEMENT were
satisfied
that
appropriate
and all products and services that are
management practices are being
procured with foreign currency. The
maintained throughout the Group.
ongoing devaluation of the Jamaican dollar continued to increase our costs
The
Finance
Committee
and
met
Compliance
quarterly
but it makes the “Going Global for
and
Profitability” even more attractive for
the Audit Committee with internal
our local copyright owned products,
auditors Ernst and Young monitored
as that is the only point at which
the implementation of policies and
devaluation will benefit the company.
their appropriate application, helping us to strengthen our internal controls,
In this environment we were pleased
stay
to have been able to guide the
in
step
corporate
with
contemporary practices
management’s
the
best
turnaround in the financial performance
operational positions for stakeholders.
of the company, year on year, moving
and
governance
generally
maintain
achievement
of
a
from a Net Loss of $29.8M in March 2013 The company has had to continuously
to a Net Profit of $59.5M in March 2014.
review
This $89M turn around in performance
and
revamp
its
business
processes. This has been in response to
in
these
economic
the constantly changing international
commendable.
conditions
is
media industry that demands ongoing adjustment. The industry’s dynamism
I would like to publicly extend my
has been amplified by the continuous
thanks to the Directors who have
decline
given
in
traditional
advertising
dedicated
service,
and
business from several entities as they
Shareholders for their contribution to
struggle to cope with the slowdown in
making a difference in our company
the economy. It is clear that longevity
and our country.
in this tough economic environment will only be realized through expansion within or outside our industry. Like many businesses the company also felt the harsh effects of the increased cost of petrol, electricity
Change
J.A. Lester Spaulding, C.D, J.P
PAGE 14
Radio Jamaica Limited Annual Report 2014
Managing Director’s
STATEMENT The RJR Communications Group realized better financial health for the financial year ending March 2014 when compared to the same period last year. This could not have been achieved without support from the business community, advertisers, advertising agencies; programme partners, a dependable staff and a dedicated management team and guided by our Boards of Directors of the company.
The Management team continued to diligently pursue the strategic goal of “Going Global for Greater Growth and Profitability�, entering the United Kingdom, the Caribbean and North America markets mainly with our TV content. These initiatives, plus the tight management of expenses and aggressive sales, led to a $95M turn around in the financial performance of the company, compared to the previous financial period. The Group recorded profits after tax as at March 2014 of $59.8M, contrasting with the $29.8M net loss recorded at the end of March 2013.
The improved performance was driven by our audiovisual segment, as all our television channels recorded profits. Even as the broadcast segment of the media industry continued to experience rapid change, the company moved quickly to pre-empt fallout and to respond effectively to the local and global developments in media. Today we are poised to take advantage of more opportunities as innovation in media still revolves around the fact that attractive local content remains king.
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Radio Jamaica Limited Annual Report 2014
PAGE 15
Managing Director’s
STATEMENT Significant strides were made through our leading brand TVJ. The station continued to dominate TV viewing locally and returned to profitability. Its website grew in popularity and in foreign exchange earnings as people from across the world “logged on”. TVJ and the group’s technology company, Multimedia Jamaica Limited, are now working closely to translate this global interest and audience into greater earning of foreign exchange having embarked on the country’s most ambitious audio visual diversification project during the year. Our entry into the Over the Top Television (OTT) technology has started a phased roll out of “catch up” TV services in Jamaica, On Demand TV services at home and abroad, online subscription television globally entering both the subscription and advertising markets overseas. TVJ still delivered a varied serving of high quality programmes offering extraordinary outcomes in audience interaction, revenue generation, infrastructure expansion and brand equity value last year. TVJ signed a ten year deal with Supreme Ventures Limited to be the new broadcast platform for their seven lottery games that are aired four times a day seven days a week on TV. To facilitate this TVJ invested in a state of the art High Definition Studio. Change
The build out and commissioning were completed in three months, accelerating our competitive advantage in the marketplace. TVJ secured the Free To Air and Cable rights for the American reality singing show “The Voice”, which featured Jamaican Tessanne Chin who eventually won the competition. This investment paid off for TVJ and for sister station RETV that was able to air the product live whilst TVJ ensured that there was the broad viewing audience through Free to Air TV. TVJ and TVJ SN also acquired the exclusive Free To Air and Cable rights for the first ever staging of the Caribbean Premier League cricket competition. The Jamaican team, the Tallawahs, won the competition which was a great addition to the IAAF World Championships exclusive coverage that was in progress at the time on TVJ. Two entertainment products “Reggae Sumfest” and “Jamaica Jazz and Blues Festival” were returned to the TVJ platform last year. Two special mini-series were brought to television “Thicker than Water” and “God’s Way”. They brought a new flavour of drama to television with one of the programmes being shot in TVJ studios.
PAGE 16
Radio Jamaica Limited Annual Report 2014
Managing Director’s
STATEMENT A riveting investigative feature from TVJ’s “All Angles” on the bleaching phenomenon in Jamaica had the nation talking for weeks on talk shows, in social media, in newspapers and online. The “All Angles” team won the prestigious Jamaica Broilers Fair Play Award of Excellence 2013 for its expose of Jamaica’s skin bleaching phenomenon. There were also a number of positives and extraordinary achievements at the 2013 Press Association of Jamaica National Awards Banquet for both News and Sports. Dionne Jackson Miller’s winning the Journalist of the Year Award meant a member of the RJR Group has won the PAJ’s Journalist of the Year prize for 5 of the last 6 years. A cameraman from TVJ has won the Videography award for the last 6 years. We also won two awards in the radio category. Veteran journalist Courtney Barrett was elevated to the Radio News Editor position during the financial year. The News Centre also delivered the most watched and talked about TV coverage of the Vybz Kartel trial and verdict cementing the TVJ’s position as the Market leader in News. Flagship programmes on the brand
continued. The 2014 winner of TVJ’s Schools’ Challenge Quiz was Kingston College over Campion College. In TVJ’s Junior Schools’ Challenge Quiz Mona Prep were the 2013 winners over St. Richard’s Primary. TVJ’s All Together Sing top spot for 2013 went to deCarteret College ahead of Old Harbor and Herbert Morrison High Schools. The Cable division comprising three business units - RETV, JNN and Production Services for TVJ News and Productions took the opportunity to rebrand and reposition the cable stations this year. RETV is the first Jamaican 24 hour music video station featuring the best in Jamaican music videos, lifestyle and entertainment, building a rich and colourful history covering the premier entertainment events in Jamaica and in the Caribbean. With a steadily growing viewership in and outside the Caribbean region, RETV rebranded as REal Jamaican TV, with informative, inspirational and interactive, showcasing of the best of ‘Brand Jamaica’. In keeping with the station’s new and exciting feel and a more modern twist, the music video blocks are now based on genres with hip and trendy names to appeal to target audiences, structured as part of the strategy for
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Radio Jamaica Limited Annual Report 2014
PAGE 17
Managing Director’s
STATEMENT “appointment viewing”.
The “Real Prime” time block was created with programmes scheduled Weekdays @ 8pm-10pm and Weekends @ 6:30pm- 8:30pm. During these times Real Jamaican Television, delivers first class Jamaican content including some of our new and exciting programming. Jamaica News Network (JNN) has also re-launched its brand to be the most credible, concise, and objective long form news station in Jamaica. With a new tagline “News Worth Watching” the station focuses on current affairs, health and financial news and has increased viewership. Along with the new look, the live crawl of the JNN News Ticker Tape also gives viewers the latest news whenever they tune in. JNN’s main newscast at 3PM provides a unique concise, fair and objective standpoint on happenings across the world. “Operation Justice”, a current affairs programme on crime fighting and legal developments is one of the station’s flagship programmes. The Radio Division faced another challenging yet encouraging year in 2013/14. The landscape continues to evolve posing new hurdles but offering up new opportunities.
Change
RJR 94FM, FAME 95FM and Hitz 92FM all improved their delivery of outside broadcasts by volume and by quality for clients and listeners. The signature values of the stations continue to be strong with RJR94FM continuing to be the nation’s leader in the delivery of news and information with regular newscasts, a provocative daytime call in program and probing news analysis. All this is infused with some of the most loved personalities in radio. FAME 95FM continues to hold its place as the entertainment touchstone for promoters and partygoers. Our Association continues to be strong with all major festivals, clubs, parties………. all things social. Hitz 92FM has a growing foothold in the Reggae market with an authentic Jamaican presentation that crosses all demographics and regions of the island. This is supported by comprehensive sports reporting and world-class coverage of major sporting events. Outside of the Cross Country Series, the stations have all staged signature events that have shown growth. The RJR94FM Family Affair and Back to School Fair; the FAME Road Party Series and Hitz 92FM’s Street Dance Series all maintain visibility and relevance.
PAGE 18
Radio Jamaica Limited Annual Report 2014
Managing Director’s
STATEMENT Social Media presents another frontier in broadcasting as listeners are engaged on many different platforms. Our radio brands have employed all the major social media engines and seen strong growth levels. This also has led to a more visual product delivery from radio. All this has come together under the multimedia umbrella as last year proved to be one of the more exciting for that company. As the Group embarked on its “Going Global for Profitability” strategy, it was clear that MMJL would play a critical role in two key areas – the establishment of a solid base of diversified business activities in our home market and our new thrust to earn more revenues from overseas markets. We kicked off the year with our consistent publication of a Sports Magazine, “SportsWorld” which captures the best moments in our sporting accomplishments for the previous year. SportsWorld was one of three major publications done for the year, as we added to it the Annual Report and then inaugurated the TVJ Schools’ Challenge Quiz Magazine. Entering the magazine publishing space is a move into a profitable segment of print media but also an online magazines space where products
can be bought and read all over the world. In our expansion thrust, MMJ also commenced the production of lowcost, graphics driven commercials for TV clients who have to tailor their budgets. This helps build a clientele of business at home and abroad that may otherwise be underserved. To expand services further, MMJ expanded the number of platforms on which our radio stations can be accessed across the world on mobile phones with new phone apps launched. To underpin the advertising and subscription revenue earnings targeted from these sources, Multi Media also worked with the Finance Department to establish an online payment system that will allow people from across the world to book services with the company. These now include obituaries from home and abroad. MMJ has worked closely with our technology partners and TVJ on the OTT system which will see the growth of foreign exchange earnings and the expansion in sale of our content overseas. To support this thrust the Group, having invested substantially in acquiring broadcast sports rights leading into Embracing
Radio Jamaica Limited Annual Report 2014
PAGE 19
Managing Director’s
STATEMENT 2022, has devised and implemented a number of communication plans for supporting TVJ in leveraging these sports properties.
and 22 of the top 25 spending clients also there.
A campaign that supported the launch of Vibe 360 on 94FM with “The Biggest Turn On” launched in support of FAME 95FM were also embarked upon.
The RJR family bade goodbye to Group Engineering Manager, Carroll Lawrence who retired after 45 sterling years. The engineering division, information technology and multimedia services have been reorganised with Mr. Melvis Cummings appointed Chief Engineer with responsibility for studio operations and Mr. Noel Ellis appointed Chief Engineer responsible for Transmission and Information Technology. Multimedia Services have been merged into the Commercial Strategy division.
Three major signature corporate events were concluded during the year, - the RJR Sports Awards, RJR’s Pop-Up Café as part of our Restaurant Week and the Kingston Music Week in early December. The RJR Sports Foundation National Sportsman and Sportswoman of the Year Awards 2013 was stronger than ever. 2013 Sportsman of the Year was Hon. Usain Bolt and Sportswoman was Mrs. Shelly-Ann Fraser-Pryce. Our new media partner is the Jamaica Observer. Our long standing sponsors remained VMBS, Digicel, Sagicor, Pure Juice, Main Event, Jamaica Pegasus and J. Wray and Nephew. CLIENT APPRECIATION RECEPTION We hosted the yearly ‘’Thank You’’ reception for clients and agencies, with 16 of the 18 accredited advertising agencies represented Change
CHIEF ENGINEER RETIRES!
The Engineering Division was busy during the year commissioning into service a new 350ft tower at Flower Hill, St. James and repairing the old tower while making it available for lease to commercial entities. A new antenna was installed for TVJ as a part of transition to the new tower thereby enhancing coverage in the west. New transmitters were installed at Huntley, Manchester and Mt. Airy, Westmoreland for TVJ which led to a doubling of the power transmitted in Manchester and a tripling of power in Westmoreland. The company also commissioned and
PAGE 20
Radio Jamaica Limited Annual Report 2014
Managing Director’s
STATEMENT received an international consultancy study for the first phase of our Digital Switch Over, DSO process. As at March 31, 2014 the staff complement was 451, with a further 208 freelancers engaged in the eight companies/brands in the Group. Ten staff members celebrated their 10 year anniversaries with the Group. The department facilitated the certification of staff in the areas of project management and information technology. Two staff obtained advanced degrees from local and overseas universities and the Group also provided the children of staff with 15 primary and 11 secondary level scholarships. Our Annual Wellness Fair offered more health services to staff this year. HR also implemented an Employee of the Quarter reward scheme and staff members of the year recognition plan. The CAB/RJR Basic School through the efforts of Members of the Board, chaired by Mrs. Norma Brown Bell, Community Outreach Officer and Mr. Derrick Wilks, Vice Chairman, and volunteers, continued to be regarded as the Leader in the Zone 6 area, under which it falls.
Golden Age Home-Cluster C The outpouring of love and graciousness extended year round to the over seventy residents at the National Golden Age Home, Cluster C, brought satisfaction to the management and staff of the RJR Communications Group. The residents are the recipient of frequent visits by Mrs. Brown Bell, and on most of the occasions, the RJR Communications Group is able to offer care packages and personal items. The last 12 months, while challenging, proved to be stimulating and profitable for the RJR Group, in spite of the continued downturn in the economy. The Management and Staff are committed to “Going Global for Greater Growth and Profitability” and look forward to building on the gains made last year while striving to remain the number one media entity on the Jamaican media landscape.
Gary Allen, J.P
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Radio Jamaica Limited Annual Report 2014
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Radio Jamaica Limited Annual Report 2014
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Radio Jamaica Limited Annual Report 2014
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PAGE 24
Radio Jamaica Limited Annual Report 2014
Directors’
REPORT The Sixty-Sixth Annual Report of Radio Jamaica Limited The Directors are pleased to present their report for the financial year ended March 31, 2014.
Financial Results $’000 Profit before Taxation Taxation
$72,905 ($13,429)
Net Profit
$59,476
Retained Earnings at beginning of the year
$719,230
Retained Earnings at the end of the year
$736,399
The Directors as at March 31, 2014 were as follows: J.A. Lester Spaulding – Chairman Minna Israel Gary Allen Peter Chin Carl Domville Nadine Molloy Glenworth Francis Andrew Leo-Rhynie Lawrence Nicholson In accordance with Article 90 of the Company’s Articles of Incorporation, Mr. J.A. Lester Spaulding, having attained the age of 70 years since the last Annual General Meeting will retire but is eligible for re-election up to but not exceeding the age of 75 years or until the next Annual General Meeting when he can offer himself for re-election. In accordance with Article 98 of the Company’s Articles of Incorporation, Ms. Minna Israel, Ms. Nadine Molloy and Mr. Peter Chin will retire by rotation and being eligible offer themselves for re-election. The company auditors, PricewaterhouseCoopers have indicated a willingness to continue in office pursuant with the provisions of Section 153 of the Companies Act. The Directors wish to place on record their appreciation and recognition of the dedicated efforts and hard work given by the officers and staff of the company and its subsidiaries. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
……………………………………………….. J.A. Lester Spaulding, Chairman Embracing
Radio Jamaica Limited Annual Report 2014
PAGE 25
Management
DISCUSSION AND ANALYSIS FINANCIAL HIGHLIGHTS
The Radio Jamaica Limited Consolidated Financial
Statement
reflected
Net Profit After Taxes of
a
$59.5 million
compared with a Net Loss of $29.8 million in the previous year. The turnaround in net profits of $89.3 million resulted from the company’s success in increasing revenues and lowering expenses in spite of the general inflationary trends and
Total revenues for the period ending March 2014 was $1.84 billion up $60.2 million on prior years $1.78 billion. The $60.2 million growth in revenue broke the revenue decline trend of the 3 previous successive years. This was achieved by strategic programming to include the acquisition of the television programme “The Voice” and the refresing and Gross Revenues 2010 - 2014
2010 J$250,000
2011
2012
2013
2014
J$2,000,000
J$200,000 J$150,000
2010
2011
2012
2013
2014
J$2,050,000
221,621
J$1,950,000
132,828
J$100,000
1,944,590
J$1,900,000
87,407
J$50,000
59,476
J$1,850,000 J$1,800,000
J$0 J$50,000
1,995,765
-29,845
1,844,190
1,828,840 1,783,997
J$1,750,000 J$1,700,000
stagnation in the Jamaican economy. Although Jamaica’s Debt to GDP ratio fell from 147% at March 2013 to 131.9% at March 2014, the foreign exchange rate devalued by 10.8%
from April
2013 to March 2014 sliding from $98.89 to $109.57:1 in twelve months. Point to point inflation stood at 8.3% at the end of March 2014 and unemployment grew from 13.7% at the end of 2012 to 15.2% at the end of 2013. The overall econonmic environment remained stagnat during
J$1,650,000
renewing of the sponorship and spot packages. Direct Expenses fell by $7.8million or 0.9% over prior year largely due to savings in staff costs from the wage freeze and the sucessful cost containment strategy on overtime and freelancer payments . The Group had reduction in Agency Commissions due to the shifitng in business placements and lower Broadcast Rights of over $10m.
the financial year and impacted growth in the Media Industry.
Change
Other Operating Income increased by
Radio Jamaica Limited Annual Report 2014
PAGE 26
Management
DISCUSSION AND ANALYSIS $28.6 million on prior year driven mainly by the increase in transmitter rental income, foreign exchange gains and Operating Expenses ($000) 2013 vs 2014 2013 900,000
2014
J$819,096
800,000
J$811,326
2014 compared to a $35.1 million charge in 2013. Finance Costs increased by $22.1 million or over 100% as a result of the twelve months interest charges during the year on a loan started in the previous year as well as new loan and lease facilities.
700,000 600,000 500,000
J$443,142 J$405,390 J$310,166 J$329,724 J$306,750
400,000 300,000
J$330,959
200,000 100,000
The profit before taxes of $72.9million represented a turnaround of $149.5 million on the Group’s prior year performace of $76.6 million in losses.
J$35,108 J$0 Direct Expenses
Selling Administration Other Expenses Operating Expenses Expenses
Impairment Charges
gains on disposals.
2010
J$400,000
Selling Expenses declined by 1.1% or $3.4 million although revenues grew by 3.4% or $60.2 million. The reduction was largely due to a shift from Agencies generated revenue carrying a higher commission rate to revenues earned from direct business. Other Operating Expenses increased by $1.2m or 0.4% during the financial year. The minor increase in this expense category, which reflected a below inflationary increase, was achieved through the management of electricity usage, internet and other information telecommunication costs as well as staff overtime costs. The Administration Expenses decreased by $37.8 million or 8.5%. The decrease was achieved by a salary freeze and other favourable cost reductions. There was no impairment charge during
2011
2013
2012
2014
J$500,000 J$390,966
J$300,000 J$200,000
J$186,265 J$146,521
J$72,905
J$100,000 J$0 J$100,000
($76,628)
J$200,000
The Group’s Total Assets increased by $95.1 million or 5.3% during the financial year and the Shareholders’ Equity rose by 1.45% or $17.1 million. Long term loans and Finance lease obligation increased by $34.1 million and $25.2 million respectively during the year. BUSINESS SEGMENTS The Group’s business segments are based on the reports reviewed by the company’s Board of Directors that are used in making strategic business decisions. The Group is organised in two main business segments based on
Embracing
Radio Jamaica Limited Annual Report 2014
PAGE 27
Management
DISCUSSION AND ANALYSIS its business activities. Operating results for each segment are used to measure performance, as management deems that information to be the most relevant in evaluating segments relative to other entities that operate within these
INVESTMENTS One Caribbean Media Limited (Formerly, Caribbean Communications Network (CCN)) Earnings (Cents) 2010 - 2014
Total Assets ($000) 2010 - 2014 2010
2011
2013
2012
J$1600,000
J$1,573,087
J$1,500,000
J$1,496,651 J$1,415,499
J$1,436,583
J$1,400,000 J$1,350,000
70
J$1,341,693
2013
2014
64
50 40 30
J$1,250,000
10
J$1,200,000
0
industries. The designated segments are:Audio Visual, comprising the operations of the group’s free- to-air television station and its cable stations; and
2. Radio and Other, comprising the operations of the group’s radio stations and radio infrastructure STOCK PRICE As at March 31, 2014, the Company’s shares traded at $1.29, down $0.04 from the $1.32 at March 2013. Earnings per share improved by over 100% on 2013 from (9 cents) to 17 cents.
Change
2012
17
20
J$1,300,000
1.
2011
60
J$1,550,000
J$1,450,000
2010
2014
10
9
The Company currently holds 48,254 shares in OCM with fair value of $16.3 million up from the $11.4 million at March 31, 2013. OCM is a multi media company which operates in Trinidad & Tobago, Barbados, Grenada, Guyana, Antigua and St.Lucia. Shares of the OCM are listed on the Trinidad & Tobago Stock Exchange and traded at TT$20 .00 at the end of March 2013 compared to TT$15.50 at the end of March 2013 reflecting an increase of 29%.
PAGE 28
Radio Jamaica Limited Annual Report 2014
Embracing
Radio Jamaica Limited Annual Report 2014
Change
PAGE 29
RADIO JAMAICA LIMITED Financial Statements 31 March 2014 Independent Auditors’ Report to the Members Financial Statements
36 Consolidated statement of comprehensive income
37 Consolidated balance sheet
38 Consolidated statement of changes in equity
39 Consolidated statement of cash flows
40 Company statement of comprehensive income
41 Company balance sheet
42 Company statement of changes in equity
43 Company statement of cash flows
44-98 Notes to the financial statements
PricewaterhouseCoopers Scotiabank Centre Duke Street Box 372 Kingston Jamaica Telephone (876) 922-6230 Facsimile (876) 922-7581
Independent Auditors’ Report Independent Auditors’ Report To the Members of To the Members of Radio Jamaica Limited
Radio Jamaica Limited
Report on the Consolidated and Company Stand Alone Financial Statements Report on the Consolidated and Company Stand Alone Financial Statements We have audited the accompanying consolidated financial statements of Radio Jamaica Limited and its We have audited the accompanying consolidated financial statements of Radio Jamaica Limited and its subsidiaries, set out on pages 36 to 98, which comprise the consolidated balance sheet as at 31 March 2014 subsidiaries, set out on pages 32 to 82, which comprise the consolidated statement of financial position as andatthe consolidated statements of comprehensive income, changes in equity and cash flows for the year 31 March 2013 and the consolidated statements of comprehensive income, changes in equity and cash then ended, andyear the accompanying financial statements offinancial Radio Jamaica Limited standing alone,Limited which flows for the then ended, and the accompanying statements of Radio Jamaica comprise thealone, balance sheetcomprise as at 31 March 2014 and statements of comprehensive changes in standing which the statement ofthe financial position as at 31 Marchincome, 2013 and the statements equity and cash flows income, for the year then ended, andand a summary of for significant policies other of of comprehensive changes in equity cash flows the yearaccounting then ended, and a and summary explanatory information. significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated and Management’s Responsibility for the Consolidated and Company StandStand Alone Alone Financial Statements Company Financial Statements Management is responsible for the preparation of consolidated and company stand alone financial statements thatManagement give a true and fair view in accordance with International Financial and with the is responsible for the preparation of consolidated andReporting company Standards stand alone financial requirements thegive Jamaican Act, for such with internal control as management determines is statementsofthat a trueCompanies and fair view inand accordance International Financial Reporting Standards and with requirements of theofJamaican Companies Act, and foralone such financial internal control as management necessary to the enable the preparation consolidated and company stand statements that are is necessary to enable the preparation of consolidated and company stand alone financial freedetermines from material misstatement, whether due to fraud or error. statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated and company stand alone financial statements based on our audit. We conducted our audit in accordance with International Standards on Our responsibility is to express on these and company stand alone financial Auditing. Those standards require an thatopinion we comply withconsolidated ethical requirements and plan and perform the statements based on our audit. We conducted our audit in accordance with International Standards audit to obtain reasonable assurance about whether the consolidated and company stand alone financial on Auditing. standards require that we comply with ethical requirements and plan and perform the statements areThose free from material misstatement.
audit to obtain reasonable assurance about whether the consolidated and company stand alone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and company stand alone financial statements. The procedures selected depend on the An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated and the consolidated and company stand alone financial statements. The procedures selected depend on the company stand alone financial statements, whetherof due fraudoformaterial error. Inmisstatement making those of risk assessments, auditor’s judgment, including the assessment thetorisks the consolidated and thecompany auditor considers internal control relevant whether to the entity’s of consolidated and risk company stand alone financial statements, due topreparation fraud or error. In making those stand alone financial statements that give a true control and fairrelevant view in order designpreparation audit procedures that are and assessments, the auditor considers internal to theto entity’s of consolidated appropriate the circumstances, not for the purpose of expressing an opinion ontothe effectiveness companyin stand alone financialbut statements that give a true and fair view in order design audit of theprocedures entity’s internal control. An audit includes evaluating the for appropriateness of expressing accounting an policies that are appropriate inalso the circumstances, but not the purpose of opinion on used the reasonableness of accounting by management, well as evaluating the overall of theand effectiveness of the entity’s internalestimates control. made An audit also includesas evaluating the appropriateness presentation ofpolicies the consolidated stand alone financial statements. accounting used andand the company reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated and company stand alone financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit Weopinion. believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
PricewaterhouseCoopers, Scotiabank Centre, Duke Street, Box 372, Kingston, Jamaica T: (876) 922 6230, F: 876 922 7581, www.pwc.com/jm C.D.W. Maxwell P.W. Pearson E.A. Crawford J.W. Lee P.E. Williams L.A. McKnight L.E. Augier A.K. Jain B.L. Scott B.J. Denning G.A. Reece P.A. Williams R.S. Nathan
Members of Radio Jamaica Limited Independent Auditors’ Report Page 2 Opinion
In our opinion, the consolidated financial statements of Radio Jamaica Limited and its subsidiaries, and the financial statements of Radio Jamaica Limited standing alone give a true and fair view of the financial position of the group and the company as at 31 March 2014, and of their financial performance and cash flows for the year then ended, so far as concerns the members of Radio Jamaica Limited, in accordance with International Financial Reporting Standards and the requirements of the Jamaican Companies Act.
Report on Other Legal and Regulatory Requirements
As required by the Jamaican Companies Act, we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. In our opinion, proper accounting records have been kept, so far as appears from our examination of those records, and the accompanying consolidated financial statements are in agreement therewith and give the information required by the Jamaican Companies Act, in the manner so required.
Chartered Accountants 30 May 2014 Kingston, Jamaica
Annual Report 2014 Page 1
Radio Jamaica JamaicaLimited Limited Radio
ConsolidatedStatement Statementofof Comprehensive Income Consolidated Comprehensive Income Year 2014 Year ended ended31 31March March 2014 (expressed dollars unless otherwise indicated) (expressedininJamaican Jamaican dollars unless otherwise indicated)
Note Revenue Direct expenses
2014 $’000
Restated 2013 $’000
1,844,190
1,783,997
(811,326)
Gross Profit
1,032,864
Other operating income
964,901
110,940
82,332
Selling expenses
(306,750)
(310,166)
Administration expenses
(405,390)
(443,142)
Other operating expenses
(330,959)
(329,724)
Impairment charge
5
(819,096)
14
-
(35,108)
100,705
(70,907)
8
(27,800)
(5,721)
72,905
(76,628)
9
(13,429)
46,783
59,476
(29,845)
(42,307)
(18,213)
17,169
(48,058)
$0.17
($0.09)
Operating (Loss)/Profit Finance costs Profit/(Loss) before Taxation Taxation Net Profit/(Loss) Other Comprehensive Income, net of taxes Item that will not be reclassified to profit or loss Re-measurements of post-employment benefits
9
TOTAL COMPREHENSIVE INCOME Earnings per Ordinary Stock Unit Attributable to Stockholders of the Company
PAGE 36
Radio Jamaica Limited
12
Annual Report 2014
Radio Jamaica Limited
Page 2
Consolidated Balance Sheet Radio Jamaica Limited 31 March 2014 Consolidated Balance Sheet 31 March 2014in Jamaican dollars unless otherwise indicated) (expressed (expressed in Jamaican dollars unless otherwise indicated)
Radio Jamaica Limited Non-Current Assets Fixed assets Balance Sheet Consolidated
Note
2014 $’000
Restated 2013 $’000
Restated 2012 $’000
13
912,914
682,677
696,259
Intangible2014 assets 14 178,112 31 March Retirement in benefit assets dollars unless otherwise indicated) 15 189,802 (expressed Jamaican Investment securities
19
16,356
20 Note
2014 40,658 $’000
Current Assets Inventories Receivables
22
Non-Current Assets
Taxation recoverable
Fixed assets
13
Cash and short term investments
23
Intangible assets
14
Retirement benefit assets Current Liabilities
15
Investment Payablessecurities
2419
Current Assets Taxation payable
83,553
37,978
205,791
199,291
11,416
8,182
Restated 2013 50,833 $’000
Restated 2012 43,687 $’000
369,923
419,539
5,140
2,426
4,215
155,075
316,678
265,029
570,796
789,476
720,894
16,356 275,290
271,81711,416 179,161
912,914 178,112 189,802
19,603
682,677 83,553
205,791
4,445
Page 2
407,963
696,259 37,978
199,291 8,182
46,860
Inventories
20
40,658 294,893
276,26250,833
226,021 43,687
Net Current Assets Receivables
22
275,903 369,923
513,214 419,539
494,873407,963
Taxation recoverable
1,573,087 5,140
Cash and short term investments
23
Equity
Stockholders’
ShareLiabilities capital Current
Retained earnings
Payables
155,075 570,796
25
467,656
24
Taxation payable
Finance lease obligations
789,476
467,656
720,894
467,656
719,230
795,322
1,186,886
1,262,978
275,290
271,817 4,445
276,262 -
4,215
265,029
736,399
294,893 25,193
26
Net Long Current termAssets loans
316,678
1,204,055
19,603
Non-Current Liabilities
1,496,651 2,426 1,436,583
179,161 46,860
-226,021
26
275,903 231,161
513,214 197,097
15,351494,873
Deferred tax liabilities
16
59,597 1,573,087
77,290 1,496,651
132,372 1,436,583
Retirement benefit obligations
15
Stockholders’
Equity
Share capital
25
53,081
35,378
25,882
1,573,087
1,496,651
1,436,583
467,656
467,656
467,656
1,204,055
1,186,886
1,262,978
Approved for issue by the Board of Directors on 30 May 2014 and signed on its behalf by:719,230 Retained earnings 736,399 J.A. Lester Liabilities Spaulding Non-Current
Director
Gary Allen
795,322 Director
Finance lease obligations
26
25,193
-
-
Long term loans
26
231,161
197,097
15,351
Deferred tax liabilities
16
59,597
77,290
132,372
Retirement benefit obligations
15
53,081
35,378
25,882
1,573,087
1,496,651
1,436,583
Approved for issue by the Board of Directors on 30 May 2014 and signed on its behalf by: J.A. Lester Spaulding
Director
Gary Allen
Radio Jamaica Limited
Director
PAGE 37
Annual Report 2014
Radio Jamaica Limited
Page 3
Radio Jamaica Limited Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity Year ended 31 March 2014 Year ended 31 March 2014 (expressed in Jamaican dollars unless indicated) otherwise indicated) (expressed in Jamaican dollars unless otherwise
Note Balance at 1 April 2012, as previously stated Effects of restatement Balance at 1 April 2012, as restated
Number of Shares
Share Capital
Retained Earnings
’000
$’000
$’000
$’000
350,154
467,656
800,538
1,268,194
-
-
(5,216)
(5,216)
795,322
1,262,978
Total
350,154
467,656
Total comprehensive income as restated
30
-
-
(48,058)
Ordinary dividends
11
-
-
(28,034)
(28,034)
350,154
467,656
719,230
1,186,886
Balance at 31 March 2013 Total comprehensive income Balance at 31 March 2014
PAGE 38
Radio Jamaica Limited
(48,058)
-
-
17,169
17,169
350,154
467,656
736,399
1,204,055
Annual Report 2014
Radio Jamaica Limited
Consolidated Statement of Cash Flows Year ended 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2014 $’000
Restated 2013 $’000
Cash Flows from Operating Activities Net profit/(loss) Items not affecting cash: Amortisation of intangible assets Depreciation Fixed assets adjustment Gain on disposal of fixed assets Spares utilised Interest income Dividend income Impairment charge Interest expense Income tax (credit)/charge Exchange gain on foreign currency balances Retirement benefits Revaluation of investment securities Changes in operating assets and liabilities: Inventories Receivables Payables Income tax paid Net cash provided by operating activities Cash Flows from Investing Activities Proceeds from disposal of fixed assets Purchase of fixed assets Purchase of intangible assets Interest received Dividends received Net cash used in investing activities Cash Flows from Financing Activities Loans received Loans repaid Principal lease repayments Interest paid Dividends paid Net cash provided by financing activities (Decrease)/increase in cash and cash equivalents Exchange gains on cash and cash equivalents Cash and cash equivalents at beginning of year Cash and Cash Equivalents at End of Year (Note 23)
59,476
(29,845)
102,616 72 (1,705) 5,048 (8,056) (545) 22,326 13,429 (3,369) (22,719) (4,940) 161,633
2,870 112,928 723 (802) 6,602 (8,190) (282) 35,108 5,721 (46,783) (3,134) (21,287) (3,234) 50,395
10,175 49,618 (18,379) 203,047 (4,576) 198,471
(7,146) (11,576) 89,738 121,411 (42,855) 78,556
2,230 (306,643) (94,559) 8,056 545 (390,371)
2,851 (108,720) (83,553) 8,190 282 (180,950)
75,000 (24,300) (1,446) (22,326) 26,928 (164,972) 3,369 316,678 155,075
201,500 (16,836) (5,721) (28,034) 150,909 48,515 3,134 265,029 316,678
Radio Jamaica Limited
PAGE 39
Annual Report 2014
Page 5
Radio Jamaica Limited Radio Jamaica Limited Company Statement of Comprehensive Income
Company of Comprehensive Income Year endedStatement 31 March 2014 (expressed Jamaican dollars unless otherwise indicated) Year endedin31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) Restated Note Revenue Direct expenses Gross Profit Other operating income
5
2014 $’000
2013 $’000
552,075
622,883
(223,768)
(252,797)
328,307
370,086
117,987
96,765
Selling expenses
(119,523)
(129,168)
Administration expenses
(181,518)
(202,983)
(150,293)
(154,241)
Other operating expenses Impairment charge
17
Operating Loss Finance costs
8
Loss before Taxation Taxation
9
Net Loss
-
(36,377)
(5,040)
(55,918)
(19,247)
(3,825)
(24,287)
(59,743)
10,293
27,249
(13,994)
(32,494)
Other Comprehensive Income, net of taxes Item that will not be reclassified to profit or loss Re-measurements of post-employment benefits TOTAL COMPREHENSIVE INCOME
PAGE 40
Radio Jamaica Limited
9
(36,138)
(19,582)
(50,132)
(52,076)
Annual Report 2014
Radio Jamaica Limited Radio Jamaica Limited
Page 6
Company Balance Sheet Company Balance Sheet 31 2014 31 March March 2014 (expressed in in Jamaican dollars dollars unless otherwise indicated) (expressed Jamaican unless otherwise indicated)
Note
2014 $’000
Restated 2013 $’000
Radio Jamaica Limited Fixed assets
13
283,943
280,912
298,131
Retirement benefit asset
15
157,757
176,551
183,634
431,924
121,513
Non-Current Assets
Company Balance Sheet
31 March 2014 Investment in subsidiaries 17 431,924 (expressed in Jamaican dollars unless otherwise indicated)
Restated 2012 $’000 Page 6
Long term receivables
18
-
2,950
2,950
Investment securities
19
16,356
20 Note 21
2014 10,558 $’000 275,591
11,416 Restated 2013 7,189 $’000 162,630
8,182 Restated 2012 8,588 $’000 370,410
123,138 283,943 4,632 157,757
164,999 298,131 3,918 183,634
18
154,742 431,924 568,661-
131,624 280,912 1,990 176,551
19 24
16,356 134,945
11,416 135,786
8,182 94,164
20
10,558134,945 275,591 433,716 123,138
3,181 7,189 138,967 162,630 480,736 131,624
20,435 8,588 114,599 370,410 693,447 164,999
1,323,696 4,632
1,384,489 1,990
1,307,857 3,918
154,742
316,270
260,131
568,661
619,703
808,046
467,656
467,656
467,656
Current Assets Inventories Due from subsidiaries Non-Current Assets Receivables Fixed assets Taxation recoverable Retirement benefit asset
22 13
15 23 17
Cash and short term investments Investment in subsidiaries
Long term receivables Current Liabilities Investment securities PayablesAssets Current Taxation payable Inventories
Due from subsidiaries Net Current Assets Receivables
21 22
Taxation recoverable Cash and short term investments
23
Equity
Current Liabilities Share capital
25
Retained earnings Payables
24
Taxation payable Non-Current Liabilities
316,270 431,924 619,703 2,950
260,131 121,513 808,046 2,950
613,624 134,945
663,756 135,786
743,866 94,164
1,081,280-
3,181 1,131,412
20,435 1,211,522
134,945 12,860 433,716
138,967 480,736-
114,599 693,447-
179,195 1,323,696 13,324
197,097 1,384,489 31,401
13,310 1,307,857 65,176
Finance lease obligations Net Current Assets Long term loans
26
Deferred tax liabilities
16
Retirement benefit obligations Equity
15
37,037
24,579
17,849
Share capital
25
1,323,696 467,656
1,384,489 467,656
1,307,857 467,656
613,624
663,756
743,866
Approved for issue by the Board of Directors on 30 May 2014 and 1,081,280 signed on its behalf by: 1,131,412
1,211,522
26
Retained earnings Non-Current Liabilities Finance lease obligations J. A. term Lester Spaulding Long loans
Director
26
12,860 26 Gary Allen 179,195
197,097
-
Director 13,310 65,176
Deferred tax liabilities
16
13,324
31,401
Retirement benefit obligations
15
37,037
24,579
17,849
1,323,696
1,384,489
1,307,857
Approved for issue by the Board of Directors on 30 May 2014 and signed on its behalf by:
J. A. Lester Spaulding
Director
Gary Allen
Radio Jamaica Limited
Director
PAGE 41
Annual Report 2014
Radio Jamaica Limited
Page 7
Radio Jamaica Limited Company Statement of Changes in Equity Company Statement of Changes Year ended 31 March 2014 in Equity Year ended 31 March 2014 (expressed in Jamaican unless otherwise (expressed in Jamaican dollars dollars unless otherwise indicated) indicated) Number of Shares
Share Capital
’000
$’000
350,154
467,656
-
-
350,154
467,656
Note Balance at 1 April 2012, as previously stated Effects of restatement Balance at 1 April 2012, as restated
Retained Earnings $’000
Total $’000
744,782 1,212,438 (916)
(916)
743,866 1,211,522
Total comprehensive income
30
-
-
(52,076)
(52,076)
Ordinary dividends
11
-
-
(28,034)
(28,034)
350,154
467,656
Balance at 31 March 2013 Total comprehensive income Balance at 31 March 2014
PAGE 42
Radio Jamaica Limited
-
-
350,154
467,656
663,756 1,131,412 (50,132)
(50,132)
613,624 1,081,280
Annual Report 2014
Page 8
Radio Radio Jamaica JamaicaLimited Limited
Company CompanyStatement StatementofofCash CashFlows Flows
Year ended 31 March 2014 Year ended 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) (expressed in Jamaican dollars unless otherwise indicated) 2014 $’000
Cash Flows from Operating Activities Net loss
Restated 2013 $’000
(13,994)
(32,494)
31,708
34,914
72
550
Items not affecting cash: Depreciation Fixed assets adjustment Gain on disposal of fixed assets
(1,705)
(70)
Spares utilised
1,635
Interest income
(6,758)
(7,901)
(545)
(10,282)
Dividend income Interest expense Income tax Exchange gain on foreign currency balances Retirement benefits Revaluation of investment securities
2,658
19,247
3,825
(10,293)
(27,249)
(3,369)
(3,134)
(16,933)
(12,295)
(4,940)
(3,234)
(5,875)
(54,712)
Changes in operating assets and liabilities: Inventories Due from subsidiaries(2) Receivables Payables
(3,369) (110,011) 8,487
33,375
(4,581)
28,501
(115,349) Income tax paid Net cash used in operating activities
1,399 (102,631)
(94,068)
(1,561)
(15,326)
(116,910)
(109,394)
Cash Flows from Investing Activities Proceeds from disposal of fixed assets Purchase of fixed assets(1) Interest received
2,230 (21,404) 6,758
7,901
545
10,282
Dividends received Net cash used in investing activities
239 (21,072)
(11,871)
(2,650)
Cash Flows from Financing Activities Loan received Loans repaid
(16,671)
Principal lease repayments Interest paid
(198) (19,247)
Dividends paid
-
201,500 (4,592) (3,825) (28,034)
Net cash(used in)/ provided by financing activities
(36,116)
165,049
Decrease/(increase) in cash and cash equivalents
(164,897)
53,005
Exchange gains on cash and cash equivalents
3,369
3,134
Cash and cash equivalents at beginning of year
316,270
260,131
Cash and Cash Equivalents at End of Year (Note 23)
154,742
316,270
(1) (2)
The principal non-cash transaction was the offset of the finance lease additions against the fixed assets additions. The principal non-cash transaction for the prior year was the offset of the additional investment in subsidiaries against due from subsidiaries.
Radio Jamaica Limited
PAGE 43
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)
1. Identification and Principal Activities
Radio Jamaica Limited (“the company”) is incorporated and domiciled in Jamaica. The company is listed on the Jamaica Stock Exchange, and has its registered office at 32 Lyndhurst Road, Kingston 5. These financial statements present the results of operations and financial position of the company and its subsidiaries, which are collectively referred to as “the group”. The group’s primary activities are the operation of a ‘free-to-air’ television station, cable television stations and radio stations. All subsidiaries are wholly owned. The company’s subsidiaries are as follows: Television Jamaica Limited Multi-Media Jamaica Limited Media Plus Limited, and its subsidiaries – Reggae Entertainment Television Limited Jamaica News Network Limited The subsidiaries are incorporated and domiciled in Jamaica, with the exception of Media Plus Limited, which is incorporated and domiciled in St. Lucia.
2. Summary of Accounting Policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), and have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale investment securities. 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 managements’ 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 financial statements are disclosed in Note 4.
PAGE 44
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Accounting Policies (Continued) (a) Basis of preparation (continued)
Standards, interpretations and amendments to published standards effective in the current year
Certain new standards, interpretations and amendments to existing standards that have been published, became effective during the current financial year. The group has assessed the relevance of all such new standards, interpretations and amendments and has put into effect the following IFRS, which are immediately relevant to its operations. Amendment to IAS 1, ‘Financial statement presentation’ regarding other comprehensive income. The main change resulting from these amendments is a requirement for entities to group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). IAS 19, ‘Employee benefits’ was revised in June 2011. The changes on the Group’s accounting policies has been as follows: to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). See note 15 for the impact on the financial statements. IFRS 10, ‘Consolidated financial statements’ builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. This did not impact on the financial statements as all subsidiaries are controlled. IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off statement of financial position vehicles. There were no additional disclosures which impacted the Group IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements, which are largely aligned between IFRS and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS or US GAAP. Amendment to IAS 16, ‘Property, plant and equipment which clarifies that spare parts and servicing equipment are classified as PP&E rather than inventory when they meet the definition of PP&E.
Radio Jamaica Limited
PAGE 45
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2. Summary of Accounting Policies (Continued) (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group The following standards and amendments to existing standards have been published and are mandatory for the Group’s accounting periods beginning after 1 April 2014 or later periods, but the Group has not early adopted them: IFRS 9, ‘Financial Instruments’ (effective for annual periods beginning on or after 1 January 2015). This standard specifies how an entity should classify and measure financial instruments, including some hybrid contracts. It requires all financial assets to be classified on the basis of the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset; initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, particular transaction costs; and subsequently measured at amortised cost or fair value. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of IAS 39. They apply a consistent approach to classifying financial assets and replace the four categories of financial assets in IAS 39, each of which had its own classification criteria. They also result in one impairment method, replacing the two impairment methods in IAS 39 that arise from the different classification categories. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. There has been no significant change in the recognition and measurement of financial liabilities carried at amortised cost from what obtained under IAS 39. While adoption of IFRS 9 is mandatory from 1 January 2015, 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.
IFRS 15, 'Revenue from Contracts with Customers'. The IASB has published its new revenue standard, IFRS 15 'Revenue from Contracts with Customers'. The U.S. Financial Accounting Standards Board (FASB) has concurrently published its equivalent revenue standard which is the result of a convergence project between the two Boards. IFRS 15 applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. It specifies how and when an entity will recognise revenue as well as requiring entities to provide more informative, relevant disclosures. The standard supersedes IAS 18, 'Revenue', IAS 11, 'Construction Contracts' and a number of revenue-related interpretations. Application of the standard is mandatory for accounting periods beginning on or after 1 January 2017. The Group is assessing the impact of future adoption of the standard.
PAGE 46
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2. Summary of Accounting Policies (Continued) (b) Basis of consolidation Subsidiaries are all entities (including special purpose entities) over which the group has power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill. Intercompany transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. Investments in subsidiaries are stated in the company’s financial statements at cost. (c) Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the group’s entities are measured using the currency of primary economic environment in which the entity operates, referred to as the functional currency. The functional currency of each entity is the same as its presentation currency. The consolidated financial statements are presented in Jamaican dollars, which is the group’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from such transactions and from the translation of foreign currency monetary assets and liabilities at the year end exchange rates are recognised in arriving at net profit or loss except when deferred in other comprehensive income. (d) Revenue and income recognition Revenue comprises the sale of airtime, programme material, and the rental of studios and equipment, net of General Consumption Tax. Revenue in respect of airtime and programming is recognised on performance of the underlying service. Rental income is recognised as it accrues. Interest income is recognised as it accrues unless collectibility is in doubt. Dividend income is recognised when the right to receive payment is established. Radio Jamaica Limited
PAGE 47
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Accounting Policies (Continued) (e)
Financial instruments
A financial instrument is any contract that gives rise to both a financial asset in one entity and a financial liability or equity of another entity.
Financial assets The group classifies its financial assets in the following categories: loans and receivables, available-for-sale, and at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. At reporting date, trade receivables were classified as loans and receivables; cash and bank balances, short term investments and quoted investment securities were classified as financial assets at fair value through profit or loss; and unquoted investment securities were classified as available-for-sale.
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.
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 end of the reporting period. These are classified as non-current assets. Available-for-sale Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.
Financial liabilities The group’s financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method. At the balance sheet date, the following items were classified as financial liabilities: bank overdraft, finance lease obligations, long term loans and trade payables.
PAGE 48
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2. Summary of Accounting Policies (Continued) (f) Income taxes Taxation expense in the statement of comprehensive income comprises current and deferred tax charges. Current tax charges are based on taxable profits for the year, which differ 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 reporting date. Deferred tax is the tax expected to be paid or recovered on differences between the carrying amounts of assets and liabilities and the corresponding tax bases. 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. Currently enacted tax rates are used in the determination of deferred income tax. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference can be controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is charged or credited in arriving at profit or loss and other comprehensive income, except where it relates to items charged or credited to equity, in which case, deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority.
Radio Jamaica Limited
PAGE 49
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Accounting Policies (Continued) (g)
Fixed assets Freehold land and buildings are stated at deemed cost less subsequent depreciation for buildings. All other fixed assets are carried at historical cost less accumulated depreciation. Historical costs include expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost o the item can be reliably measured. All other repairs and maintenance are charged to profit or loss during the financial period in which they were incurred. Depreciation is calculated on the straight-line basis at rates estimated to write off the cost of the assets over their expected useful lives. Annual rates used are as follows: Freehold buildings
2.5%
Improvements to leasehold property
2.5%
Furniture, office machinery and rental equipment
10 - 15%
Station equipment - Radio
10 - 15%
Station equipment - Television
6.67 - 25%
Computer equipment
10 - 33⅓%
Motor vehicles
10 - 25%
Land is not depreciated as it deemed to have an indefinite life. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amounts is greater than its estimated recoverable amount. Gains and losses on disposal of fixed assets are determined by reference to their carrying amount and are taken into account in determining profit or loss. (h)
Intangible assets 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 date of acquisition, and is included in intangible assets on the balance sheet. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Brands Brands acquired in a business combination are recognised at fair value at the acquisition date. Brands have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of brands over their estimated useful lives of 10 to 20 years.
PAGE 50
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Accounting Policies (Continued) (h)
Intangible assets (continued) Broadcast rights Broadcast rights acquired are recognised at fair value at the acquisition date. These represent the exclusive rights to broadcast FIFA events for the period 2015 to 2022. Broadcast rights have a finite useful life. Amortisation is calculated using the straight-line method to allocate the cost of the rights over their estimated contractual lives. Amortisation will commence once the first event under the rights have been broadcast.
(i)
Investment securities Investment securities classified as financial assets at fair value through profit or loss and availablefor-sale are carried at fair value. Realised and unrealised gains and losses arising from changes in the fair value of investments classified as financial assets at fair value through profit or loss are included in the determination of profit or loss in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in profit or loss. The fair values of quoted investments are based on current bid prices. If the market for an investment is not active, the group establishes fair value by using valuation techniques. Where fair values cannot be reliably measured, the group carries the investment at cost.
(j)
Retirement benefits Pension plans The group operates defined benefit plans, the assets of which are generally held in separate trustee-administered funds. A defined benefit plan is one that defines an amount of benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. The asset or liability in respect of defined benefit plans is the difference between present value of the defined benefit obligation at the reporting date and the fair value of plan assets. Where a pension asset arises, the amount recognised is limited to the present value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. The pension costs are assessed using the Projected Unit Credit Method. Under this method, the cost of providing pensions is charged in arriving at profit or loss so as to spread the regular cost over the service lives of the employees in accordance with the advice of the actuaries, who carry out a full valuation of the plans every year. The pension obligation is measured at the present value of the estimated future cash outflows using discount estimated rates based on market yields on government securities which have terms to maturity approximating the terms of the related liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
Radio Jamaica Limited
PAGE 51
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2. Summary of Accounting Policies (Continued) (j)
Retirement benefits (continued) Other retirement benefits The group provides retirement health care and life insurance to its retirees. The entitlement for these benefits is usually based on the employee remaining in services up to retirement age and the completion of a minimum period. The expected costs of these benefits are accrued over the period of employment, using a methodology similar to that for defined benefit pension plans. Valuations for these benefits are carried out annually by independent qualified actuaries.
(k)
Impairment of non-financial assets Assets that have an indefinite useful life – for example, goodwill or intangible assets not ready to use – are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation 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 asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
(l)
Inventories Inventories are stated at the lower of cost and net realisable value, cost being determined as follows: Film, other
-
actual cost
Net realisable value is the estimated proceeds of disposal in the ordinary course of business, less applicable expenses. (m)
Trade receivables Trade receivables are carried at original invoice amount less provision for impairment of these receivables. 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 carrying amount and the recoverable amount, being the present value of expected cash flows, discounted at the market rate of interest for similar borrowers.
(n)
Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost and comprise balances which mature within 90 days of the date of acquisition, including cash and bank balances, net of bank overdrafts.
(o)
Trade payables Trade payables are stated at historical cost.
PAGE 52
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 2.
Summary of Accounting Policies (Continued) (p)
Leases Leases of fixed assets where the group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term liabilities. The interest element of the finance cost is charged in arriving at profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The fixed asset acquired under a finance lease is depreciated over the shorter of the useful life of the asset or the lease term.
(q) Borrowings Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in arriving at profit or loss over the period of the borrowings. (r)
Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any group entity purchases the company’s equity (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received (net of any directly attributable transaction costs and income taxes) is included in equity attributable to the company’s equity holders.
(s)
Dividends Dividends are recorded as a liability in the financial statements in the period in which they have been approved by shareholders.
(t)
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 company’s Board of Directors.
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 focuses 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-todate information systems. There has been no change to the group’s exposure to financial risks or the manner in which it manages and measures the risks. The Board of Directors is ultimately responsible for the establishment and oversight of the group’s risk management framework. The Board has established committees/departments for managing and monitoring risks, as follows:
Radio Jamaica Limited
PAGE 53
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 3. Financial Risk Management (Continued) Department of Finance and Administration The Department of Finance and Administration 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 department identifies, evaluates and hedges financial risks in close co-operation with the group’s operating units. The credit department is primarily responsible for managing the group’s credit risk. It evaluates, monitors and manages credit risks through the close assessment of potential and present clients. (a)
Credit risk Finance Committee The Finance 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. An important risk for the group is credit risk, other significant risks include liquidity risk, market risk and other operational risk. Market risk includes currency risk, interest rate and other price risk. The group takes on exposure to credit risk, which is the risk that its customers, clients or counterparties will cause a financial loss for the group by failing to discharge their contractual obligations. Credit risk is the most important financial risk for the group’s business; management therefore carefully manages its exposure to credit risk. 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 and to industry segments. Credit review process The Department of Finance and Administration has overall responsibility for the ongoing analysis of the ability of customers and other counterparties to meet repayment obligations. (i)
Trade and other receivables Trade and other receivables relate mainly to the group’s direct customers and advertising agencies. The group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Finance Committee reviews monthly all material direct client accounts with balances over 90 days. The Department of Finance and Administration has established a credit policy under which each customer is analysed individually for creditworthiness prior to the group offering them a credit facility. Credit limits are assigned to each customer and approval is required from the Credit Manager for all direct customer transactions. The group has procedures in place to restrict customer orders if the order will exceed their credit limits. Customers that fail to meet the group’s benchmark creditworthiness may transact with the group on a prepayment basis. Customer’s credit risks are monitored according to their credit characteristics, such as whether it is an individual or company, geographic location, industry, aging profile, and previous financial difficulties. The group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The group addresses impairment assessment in two areas: individually assessed allowances and collectively assessed allowances. The group’s average credit period for airing advertisements is 30 days for direct customers and 60 days for advertising agencies. The group has provided for most receivables over 90 days based on historical experience which indicates that amounts past due beyond 90 days are generally not recoverable.
PAGE 54
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 3. Financial Risk Management (Continued) (a)
Credit risk (continued) (i)
Trade and other receivables (continued) Trade receivables between 60 and 90 days are provided for based on an estimate of amounts that would be irrecoverable, determined by taking into consideration past default experience, current economic conditions and expected receipts and recoveries once impaired.
(ii)
Cash, deposits and investments The group limits its exposure to credit risk by maintaining cash, deposits and monetary investments with counterparties that have high credit quality. Accordingly, management does not expect any counterparty to fail to meet its obligations. The Finance Committee performs monthly reviews of the investments and securities held as part of their assessment of the group’s credit risk.
Trade receivables are primarily receivable from customers in Jamaica. The credit exposure for trade receivables at their carrying amounts, as categorised by the customer sector, is as follows: The Group
The Company
2014
2013
2014
2013
$’000
$’000
$’000
$’000
Advertising agencies
154,372
153,085
36,904
43,632
Direct customers
168,350
197,630
38,896
64,700
322,722
350,715
75,800
108,332
(19,889)
(15,750)
(10,145)
(8,440)
302,833
334,965
65,655
99,892
Less: Provision for impairment
Ageing analysis of trade receivables that are past due but not impaired Trade receivables that are less than three months past due are not considered impaired. At reporting dates trade receivables relating to the group and the company amounting to $73,827,000 (2013 – $77,882,000) and $18,372,000 (2013 – $22,450,000), respectively, were past due but not impaired. Trade receivables that are past due relate to a number of independent customers and advertising agencies for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows: The Group
The Company
2014
2013
2014
2013
$’000
$’000
$’000
$’000
30 – 60 days
21,918
29,257
5,805
9,260
60 – 90 days
9,574
17,216
2,236
2,790
42,335
31,409
10,331
10,400
73,827
77,882
18,372
22,450
Greater than 90 days
Radio Jamaica Limited
PAGE 55
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 3. Financial Risk Management (Continued) (a)
Credit risk (continued) Ageing analysis of trade and other receivables that are impaired At reporting dates, trade receivables and other receivables of $31,224,000 (2013 – $30,543,000) for the group and $21,480,000 (2013 – $23,233,000) for the company were considered impaired. These receivables are all aged over 90 days and were fully provided for. The individually impaired receivables mainly relate to direct customers and agencies that are in unexpected difficult economic situations. The creation and release of provision for impaired receivables have been included in administration expenses in the profit and loss account. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash. The movement on the provision for impairment was as follows: The Group 2014
The Company 2013
2014
2013
$’000
$’000
$’000
$’000
At 1 April
30,543
10,669
23,233
6,675
Provision for receivables impairment
11,662
28,323
6,474
18,872
(6,140)
(292)
(742)
Receivables written off during the year as uncollectible Unused amounts reversed/recovered
(524) (10,457)
(2,309)
(7,935)
(1,572)
31,224
30,543
21,480
23,233
At 31 March
The provision includes amount relating to other receivables of $11,335,000 (2013 – $14,793,000) for the group and the company. (b)
Liquidity risk Liquidity risk is the risk that the group is 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 and the availability of funding through an adequate amount of committed credit facilities. Liquidity risk management process The group’s liquidity management process, as carried out within the group and monitored by the Department of Finance and Administration, includes: (i)
Monitoring future cash flows and liquidity on an ongoing basis. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure funding if required.
(ii)
Maintaining a portfolio of highly marketable and diverse assets that can easily be liquidated as protection against any unforeseen interruption to cash flow;
(iii)
Maintaining committed lines of credit;
(iv) Optimising cash returns on investment.
PAGE 56
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)
3. Financial Risk Management (Continued) (b)
Liquidity risk (continued) Cash flows of financial liabilities Trade payables are due within one month. The maturity profile of long term liabilities at year end based on contractual undiscounted payments was as follows: The Group Within 1 Year
1 to 5 Years
Over 5 Years
Total
$’000
$’000
$’000
$’000
2014 Finance lease obligations Long term loans
8,264
30,604
-
38,868
51,760
178,885
119,955
350,600
60,024
209,489
119,955
389,468
150,598
321,556
2013 Long term loans
37,360
133,598
The Company Within 1 Year
1 to 5 Years
Over 5 Years
Total
$’000
$’000
$’000
$’000
2014 Finance lease obligations Long term loans
4,014
15,722
-
19,736
30,624
122,521
119,955
273,100
34,648
138,243
119,955
292,836
150,598
319,487
2013 Long term loans
35,291
133,598
Assets available to meet all liabilities, including financial liabilities, include cash and short term deposits.
Radio Jamaica Limited
PAGE 57
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 3.
Financial Risk Management (Continued) (c)
Market risk The group takes on exposure to market risks, 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 and interest rates. Market risk is monitored by the Department of Finance and Administration which seeks to minimise potential adverse effects on the performance of the group by applying procedures to identify, evaluate and manage this risks, based on guidelines set by the Board of Directors. 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 movements in market prices are not expected to have a significant impact on the net results or stockholders’ equity as the group does not hold significant equity securities. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The group is exposed to foreign exchange risk, arising primarily with respect to the US dollar, from commercial transactions such as the purchase of investment securities and station equipment, and the recognised assets and liabilities arising therefrom. 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. As the group has no significant foreign currency exposure, currency fluctuations are unlikely to have any material effect on the net results or stockholders’ equity. At 31 March 2014, the group and company had net USD dominated monetary assets carried at a Jamaican Dollar equivalent of $18,474,000 (2013 – $38,362,000) and $38,693,000 (2013 – $54,214,000) respectively. Foreign currency sensitivity The sensitivity analysis represents the impact on the profit or loss due to the movement in the US dollar exchange rate. If the rate adjusts for a 1% revaluation and 10% devaluation (2013 – 1% revaluation and 10% devaluation), the pre-tax impact on the profit or loss would amount to ($185,000) – revaluation, $2,771,000 –devaluation (2013 – ($384,000)/ $3,836,000) and ($387,000) – revaluation and $5,804,000 – devaluation (2013 – ($542,000)/ $5,421,000) for the group and the company respectively.
PAGE 58
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 3.
Financial Risk Management (Continued) (c)
Market risk (continued) Interest rate risk Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate instruments expose the group to cash flow interest risk, whereas fixed interest rate instruments expose the group to fair value interest risk. The group earns interest on its short term deposits disclosed in Note 23. As these deposits have a short term to maturity and are constantly reinvested at current market rates, they are not significantly exposed to interest rate risk. The group incurs interest on its borrowings disclosed in Note 26. These borrowings are at fixed rates, and expose the group to fair value interest rate risk. Interest rate fluctuations are not expected to have a material effect on the net results or stockholders’ equity. The group analyses its interest rate exposure arising from borrowings on an ongoing basis, taking into consideration the options of refinancing, renewal of existing positions and alternative financing.
(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 stockholders and benefits for other stakeholders. 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 shareholders. No company within the group is subject to externally imposed capital requirements.
(e)
Fair value estimation 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. Financial instruments that, subsequent to initial recognition, are measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical instruments. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets is the current bid price. At 31 March 2014, these instruments are quoted investment securities (Note 19), which are grouped in Level 1. The group has no financial assets group in Levels 2 and 3. The following methods and assumptions have been used in determining fair values: (i)
The face value, less any estimated credit adjustments, for financial assets and liabilities with a maturity of less than one year are estimated to approximate their fair values. These financial assets and liabilities include cash and bank balances, short term investments, and trade receivables and payables.
(ii)
The carrying values of long term loans, approximate their fair values, as these loans are carried at amortised cost reflecting their contractual obligations and the interest rates are reflective of current market rates for similar transactions.
Radio Jamaica Limited
PAGE 59
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 4.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
(a) Critical judgements in applying the company’s accounting policies In the process of applying the group’s accounting policies, management has not made any judgements that it believes would cause a significant impact on the amounts recognised in the financial statements.
(b) 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. Retirement benefit obligations The cost of these benefits and the present value of the future obligations depend on a number of factors that are determined by actuaries using a number of assumptions. The assumptions used in determining the net periodic cost or income for retirement benefits include the expected long-term rate of return on the relevant plan assets, the discount rate, and, in the case of health benefits, the expected rate of increase in health costs. Any changes in these assumptions will impact the net periodic cost or income recorded for retirement benefits and may affect planned funding of the pension plan. The expected return on plan assets assumption is determined on a uniform basis, considering long-term historical returns, asset allocation and future estimates of long-term investment returns. The group determines the appropriate discount rate at the end of each year, which represents the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the retirement benefit obligations. In determining the appropriate discount rate, the group considered interest rate of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and have terms to maturity approximating the terms of the related obligations. The expected rate of increase of health costs has been determined by comparing the historical relationship of the actual health cost increases with the rate of inflation. Other key assumptions for the retirement benefits are based on current market conditions. The principal actuarial assumptions used in valuing retirement benefits are disclosed in Note 15. Intangible assets arising from the acquisition of subsidiaries The fair market value of the intangible assets arising from the group’s acquisition of subsidiaries (Note 14) was determined by professional valuers. On the instructions of management, the valuers used the excess of earnings method to determine fair market value. The approach used was deemed by management to be most appropriate to value the respective intangible assets. The excess of earnings method utilises discounted cash flow techniques. The cash flows discounted are derived by applying certain growth rates that management hads determined are reasonable and deem to be best estimates, considering all known information about the markets and industries in which the acquired entities operate at the time of acquisition. The intangibles are tested annually for impairment by utilising discounted cash flows derived by applying certain growth rates that management has determined are reasonable and deem to be best estimates, considering all known information about the markets and industries in which these acquired entities operate and applying an appropriate long term growth rate and discount rate. As a result of the impairment testing performed by management an impairment charge of $35,108,000 was recognised in 2013 (Note 14).
PAGE 60
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (Continued) (b) Key sources of estimation uncertainty (continued) 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 initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Recognition of deferred tax assets Deferred tax assets have not been recognised on tax losses carried forward in respect of certain subsidiaries based on management’s expectation that the subsidiaries will not generate sufficient taxable profits to utilise the tax losses carried forward (Note 16). At 31 March 2014, unrecognised deferred tax assets in respect of tax losses carried forward amounted to $66,740,000 (2013 – $72,144,000).
5. Other Operating Income The Group
Interest income Dividend income
The Company
2014 $’000
2013 $’000
2014 $’000
8,056
8,190
6,758
7,901
2013 $’000
545
282
545
10,282
Net foreign exchange gains
7,127
4,876
6,967
5,460
Unrealised losses on revaluation of investment securities classified as financial assets at fair value through profit or loss
4,940
3,234
4,940
3,234
Gain on disposal of fixed assets Rental income Compensation for damages Other income
1,705
802
1,705
70
55,180
44,263
70,159
58,726
5,736
3,404
5,737
3,404
27,651
17,281
21,176
7,688
110,940
82,332
117,987
96,765
Radio Jamaica Limited
PAGE 61
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 6.
Expenses by Nature Total direct, selling, administration and other operating expenses: The Group 2014 $’000
Restated 2013 $’000
2014 $’000
7,288
6,353
3,607
3,294
Commissions
159,838
158,896
47,782
55,464
Depreciation
102,616
112,928
31,708
34,914
1,160
22,007
-
-
-
35,108
-
36,377
Insurance
57,983
54,167
23,442
22,703
Programming expenses
63,409
61,127
18,518
16,800
Publicity
24,958
28,693
14,579
18,079
Repairs and maintenance
88,422
76,178
36,776
39,101
Special events
166,450
186,861
4,066
10,219
Staff costs (Note 7)
744,711
744,891
304,709
304,303
Utilities
168,121
154,051
70,082
78,247
Other
269,469
295,976
119,833
156,065
1,854,425
1,937,236
675,102
775,566
Auditors' remuneration
Distribution costs Impairment charge
7.
The Company Restated 2013 $’000
Staff Costs The Group
The Company
2014 $’000
2013 $’000
2014 $’000
650,548
644,018
258,565
255,995
63,153
58,529
33,243
31,091
Pension benefits (Note 15)
(131)
(478)
(3,014)
(3,934)
Other retirement benefits (Note 15)
6,093
6,325
4,165
Wages and salaries Statutory contributions
Redundancy costs Other
PAGE 62
2013 $’000
4,205
-
915
-
579
25,048
35,582
11,750
16,367
744,711
744,891
304,709
304,303
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 8.
Finance Costs The Group
The Company 2013 $’000
2014 $’000
2014 $’000
2013 $’000
Interest expense – Bank borrowings
20,106
3,811
18,620
2,820
Finance leases
1,014
359
136
359
Other
1,206
1,551
491
646
22,326
5,721
19,247
3,825
5,474
-
-
-
27,800
5,721
19,247
3,825
Foreign exchange losses
9.
Taxation Expense During the year, the Government of Jamaica continued its reform of taxes. As a result of this the Fiscal Incentives Act dated 20 December 2013 was signed into law. Under this Act the tax rate for large unregulated companies was reduced from 30% to 25% effective 1 January 2014. As such a blended rate of 28.75% was used in computing the income tax for a major subsidiary. Taxation is computed on the profit or loss for the year adjusted for tax purposes. The charge for taxation comprises income tax at 25%/28.75%: The Group 2014 $’000
The Company
Restated 2013 $’000
Restated 2013 $’000
2014 $’000
Current tax
21,282
2,229
-
-
Prior year over accrual
(4,262)
-
(4,262)
-
Deferred tax (Note 16)
(3,591)
(49,012)
(6,031)
(27,249)
13,429
(46,783)
(10,293)
(27,249)
Radio Jamaica Limited
PAGE 63
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 9. Taxation Expense (Continued) The tax on the group and the company’s profit was derived as follows. Deferred tax was derived as detailed in Note 16. The Group
The Company
Restated 2013 $’000
2014 $’000
2014 $’000
Restated 2013 $’000
Profit/Losse before taxation
72,905
(76,628)
(24,287)
(59,743)
Tax calculated at a tax rate of 25%
18,226
(19,157)
(6,071)
(14,936)
324
(31,447)
-
(15,435)
2,305
-
Prior year over accrual
(4,262)
-
(4,262)
-
Income not subject to tax
(1,008)
(688)
(1,008)
(688)
3,891
12,536
506
9,452
-
2,794
-
-
Recognition of previously unrecognised deferred taxes
(1,095)
-
(211)
-
Tax losses utilised
(5,365)
(3,692)
-
-
413
(7,129)
753
(5,642)
13,429
(46,783)
(10,293)
(27,249)
Adjusted for the effects of : Effect of change in the income tax rate Effect of different tax rates
Expenses not deductible for tax purposes Tax loss carried forward for which no deferred tax has been accounted for
Other
Tax (charge)/credit relating to components of other comprehensive income are as follows: Group Before Tax
Tax Effect
After Tax
$'000
$'000
$'000
Remeasurements of post-employment benefit liabilities 2014
(56,409)
14,102
(42,307)
Remeasurements of post-employment benefit liabilities 2013
(24,283)
6,070
(18,213)
PAGE 64
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)
9.
Taxation Expense (Continued) Tax (charge)/credit relating to components of other comprehensive income are as follows: Company Before Tax
Tax Effect
After Tax
$'000
$'000
$'000
Remeasurements of postemployment benefit liabilities
2014
(48,184)
12,046
(36,138)
Remeasurements of postemployment benefit liabilities
2013
(26,110)
6,528
(19,582)
10. Net Profit and Retained Earnings Attributable to Stockholders of the Company (a)
The net (loss)/profit attributable to stockholders of the company is dealt with in the financial statements as follows: 2014 $’000 The company The subsidiaries
(b)
Restated 2013 $’000
(13,994)
(32,494)
73,470
2,649
59,476
(29,845)
Retained earnings are dealt with in the financial statements as follows: 2014 $’000
Restated 2013 $’000
The company
613,624
663,756
The subsidiaries
122,775
55,474
736,399
719,230
11. Ordinary Dividends
Interim dividends – Nil (2013 – 8 cents) per stock unit
2014
2013
$'000
$'000
-
28,034
Radio Jamaica Limited
PAGE 65
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 12. Earnings per Ordinary Stock Unit Basic earnings per stock unit is calculated by dividing the net profit attributable to stockholders by the weighted average number of ordinary stock units in issue during the year.
2014 Net profit/(loss) attributable to stockholders $’000 Weighted average number of ordinary stock units in issue (‘000) Basic earnings per ordinary stock unit
PAGE 66
Radio Jamaica Limited
59,476 350,154 $0.17
Restated 2013 (29,845) 350,154 ($0.09)
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 13.
Fixed Assets The Group
Freehold Land
Freehold Buildings
Improvements to Leasehold Property
Furniture, Fixtures & Equipment
Motor Vehicles
Spares
Work in Progress
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
5,516
333,166
16,901
1,129,667
87,415
30,072
10,097
1,612,834
Additions
-
8,319
-
27,051
4,230
-
69,120
108,720
Disposals
-
-
-
(1,105)
(5,093)
(6,602)
-
(12,800)
Adjustment
-
-
-
-
-
-
(723)
(723)
Transfers
-
-
-
1,046
-
-
(1,046)
-
5,516
341,485
16,901
1,156,659
86,552
23,470
77,448
1,708,031
Additions
-
4,668
-
42,852
32,596
4,836
253,546
338,498
Disposals
-
-
-
(550)
(7,246)
(5,048)
-
(12,844)
Adjustment
-
-
-
-
-
-
(72)
(72)
Cost 1 April 2012 (restated)
31 March 2013 (restated)
-
-
100,615
107,605
-
-
(208,220)
-
5,516
346,153
117,516
1,306,566
111,902
23,258
122,702
2,033,613
1 April 2012 (restated)
-
75,175
6,966
775,312
55,741
3,381
-
916,575
Charge for the year
-
8,226
3,486
88,958
8,200
4,058
-
112,928
Relieved on disposals
-
-
-
-
(4,149)
31 March 2013 (restated)
-
83,401
10,452
863,406
60,656
7,439
-
1,025,354
Charge for the year
-
8,356
742
80,122
9,172
4,224
-
102,616
Relieved on disposals
-
-
-
-
(7,271)
31 March 2014
-
91,757
11,194
943,504
62,581
11,663
-
1,120,699
31 March 2014
5,516
254,396
106,322
363,062
49,321
11,595
122,702
912,914
31 March 2013
5,516
258,084
6,449
293,253
25,896
16,031
77,448
682,677
Transfers 31 March 2014 Depreciation -
(864)
(24)
-
(3,285)
(7,247)
-
Net Book Value -
Radio Jamaica Limited
PAGE 67
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 13. Fixed Assets (Continued) The Company
Freehold Land
Freehold Buildings
$’000
$’000
5,516 -
Furniture, Fixtures & Equipment Motor Vehicles
Spare s
Work in Progress
Total
$’000
$’000
$’000
$’000
$’000
279,841
323,321
27,247
8,051
11,003
-
-
2,018
21,072
Cost 1 April 2012 (restated) Additions
13,547
1,115 650,587
Disposals
-
-
(973)
-
(2,658)
-
(3,631)
Transfers
-
-
207
-
-
(207)
-
Adjustments
-
-
-
-
-
(550)
(550)
5,516
287,892
333,558
27,247
Additions
-
1,468
9,385
16,309
1,281
8,528
36,971
Disposals
-
-
(550)
(7,246)
(1,635)
-
(9,431)
Transfers
-
-
2,014
-
-
(2,014)
-
Adjustments
-
-
-
-
-
(72)
(72)
5,516
289,360
344,407
36,310
10,535
8,818 694,946
1 April 2012 (restated)
-
65,105
262,268
23,521
1,562
- 352,456
Charge for the year
-
6,892
24,989
1,090
1,943
-
34,914
Relieved on disposals
-
-
(804)
-
-
(804)
31 March 2013 (restated)
-
71,997
286,453
31 March 2013 (restated)
31 March 2014
10,889
2,376 667,478
Depreciation -
24,611 1,091
3,505
- 386,566
2,107
-
31,708
-
-
(7,271)
Charge for the year
-
6,983
21,527
Relieved on disposals
-
-
(25)
31 March 2014
-
78,980
307,955
18,456
5,612
- 411,003
31 March 2014
5,516
210,380
36,452
17,854
4,923
8,818 283,943
31 March 2013
5,516
215,895
47,105
2,636
7,384
2,376 280,912
(7,246)
Net Book Value -
The tables above include carrying values of $30,561,000 (2013: Nil) and $16,309,000 (2013: Nil) for the Group and the company, respectively, representing assets being acquired under finance leases. All amounts related to finance leases are shown in the ‘Motor Vehicles’ category of fixed assets.
PAGE 68
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 14.
Intangible Assets Goodwill and brands Intangible assets in the balance sheet were determined as follows: Brands
Broadcast Rights
Total
$'000
$'000
$'000
-
178,112
178,112
53,726
50,472
83,553
187,751
(53,726)
(50,472)
Goodwill $'000
2014 Cost and net book value at 31 March 2014
2013
Cost Accumulated amortisation and impairment
-
(104,198)
83,553
83,553
Brands
Broadcast Rights
Total
$'000
$'000
$'000
$'000
Net book value at 31 March 2013
-
-
The movement in intangible assets was due to the following: Goodwill
Net book value at 31 March 2012
2,813
35,165
-
37,978
Additions
-
-
83,553
83,553
Amortisation charge
-
(2,870)
-
(2,870)
(32,295)
-
(35,108)
Impairment charge
(2,813)
Net book value at 31 March 2013
-
-
83,553
83,553
Additions
-
-
94,559
94,559
Net book value at 31 March 2014
-
-
178,112
178,112
The goodwill balance of $2,813,000 at prior year reporting date was allocated to Reggae Entertainment Television Limited. Amortisation and impairment charges are included in administration expenses in arriving at net profit or loss. Impairment charge At 31 March 2013, goodwill and brands were deemed to be impaired based on current and projected losses being experienced by the related subsidiaries. The amount of the goodwill and brands impairment is based on the recoverable amount of the related subsidiary or cash generating unit (CGU). The recoverable amount of a CGU was determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using an estimated growth rate. The growth rate did not exceed the longterm average growth rate for the business in which the CGU operates.
Radio Jamaica Limited
PAGE 69
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 14.
Intangible Assets (Continued) Goodwill and brands (continued) The key assumptions used for value-in-use calculations were as follows: Discount rate – 21.5%; Projected revenue growth rates – 10% in year 2, 10% to 30% in year 3, and 10% to 20% thereafter; Projected expense growth rate – 10%; The discount rate used is pre-tax and reflects specific risks relating to the respective subsidiaries. The rate was derived by computing the cost of equity for similar companies within the industry using imputs from Bloomberg as well as the risk free rate for GOJ long term bond. Management projected the revenue and expense growth rates based on past performance and its expectations of market development. Broadcast rights The amount of $83,553,000 represents the exclusive rights to broadcast FIFA events for the period 2015 to 2022. Amortisation will commence once the first event under the rights have been broadcast.
15. Retirement Benefits The Group
The Company
2014 $’000
2013 $’000
2014 $’000
Pension schemes
189,802
205,791
157,757
176,551
Other retirement benefits
(53,081)
(35,378)
(37,037)
(24,579)
Pension schemes
(131)
(478)
(3,014)
(3,934)
Other retirement benefits
6,093
6,325
4,165
4,205
2013 $’000
Amounts recognised in the balance sheet –
Amounts recognised in profit or loss –
Pension schemes The company operates a defined benefit pension scheme covering all permanent employees of Radio Jamaica Limited, Multi-Media Jamaica Limited and Television Jamaica Limited. The scheme is managed by an outside agency under a management contract, and by Trustees. The scheme is funded at 13.18% of pensionable salaries, being 5% by members and 10% (2012 - 8.18%) by the sponsoring entity. Members may contribute up to an additional 5%. The scheme is valued annually by independent actuaries. The latest actuarial valuation was done as at 28 February 2014. The Board of the pension fund is required by law and its articles and association to act in the interest of the fund and all relevant stakeholders. The Board of the fund is responsible for the investment policy with regard to the assets of the fund. The funds are managed by First Global Financial Services who has responsibilities for the general management of the portfolio of investments and the administration of the fund.
PAGE 70
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 15.
Retirement Benefits (Continued) Pension schemes (continued) The amounts recognised in the balance sheet were determined as follows: The Group 2014 $’000 Fair value of plan assets Present value of funded obligation Asset in the balance sheet
738,071 (548,269) 189,802
The Company 2014 $’000
Restated 2013 $’000
666,182
598,323
554,616
(460,391)
(440,566)
(378,065)
205,791
157,757
176,551
Restate d 2013 $’000
The movement in the present value of the funded obligation was as follows: The Group 2014 $’000 Balance at start of year
The Company Restated 2013 $’000
2014 $’000
Restated 2013 $’000
460,391
425,749
378,065
356,892
Current service cost
16,666
15,085
11,400
10,595
Interest cost
48,170
42,181
39,237
35,099
525,227
483,015
428,702
402,586
(8,206)
(1,803)
-
19,730
-
45,790
(28,315)
35,003
(22,454)
38,282
(16,791)
33,200
(9,728)
Remeasurements Experience gains Losses from change in demographic assumptions Losses/(gains) from change in financial assumptions
Employee contributions Benefits paid
(7,508)
20,981
(4,084) 16,810
19,545
13,081
(36,221)
(25,378)
(34,417)
(23,037)
548,269
460,391
440,566
378,065
Radio Jamaica Limited
8,244
PAGE 71
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 15.
Retirement Benefits (Continued) Pension schemes (continued) The movement in the fair value of plan assets was as follows: The Group
Balance at start of year
The Company
2014 $’000
Restated 2013 $’000
2014 $’000
Restated 2013 $’000
666,182
625,040
554,616
540,526
Employee contributions
20,981
19,545
13,081
8,244
Employer contributions
27,648
26,262
17,245
11,873
Interest income on plan assets
71,008
63,135
58,505
54,055
(36,221)
(25,378)
(34,417)
(23,037)
Administrative fees
(6,041)
(5,391)
(4,854)
(4,427)
Remeasurements of the plan assets
(5,486)
(37,031)
(5,853)
(32,618)
738,071
666,182
598,323
554,616
Benefits paid
Balance at end of year
The amounts recognised in arriving at profit or loss were determined as follows: The Group
Current service cost Interest cost Interest income on plan assets
The Company
2014 $’000
Restated 2013 $’000
2014 $’000
Restated 2013 $’000
16,666
15,085
11,400
10,595
48,170
42,181
39,237
35,099
(71,008)
(63,135)
(58,505)
(54,055)
Administrative fees
6,041
5,391
4,854
4,427
Total included in staff costs (Note 7)
(131)
(478)
(3,014)
(3,934)
The amounts recognised in other comprehensive income were determined as follows: The Group
Remeasurements of the defined benefit obligation Remeasurements of the plan assets Total
PAGE 72
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
38,282
(16,791)
33,200
(9,728)
5,486
37,031
5,853
32,618
43,768
20,240
39,053
22,890
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 15. Retirement Benefits (Continued) Pension schemes (continued) At the last valuation date, the present value of the defined benefit obligation was comprised of approximately $327,898,000 and $224,072,000 relating to active members, $1,841,000 relating to deferred members and $218,530,000 and $214,653,000 relating to the members in retirement for the group and the company respectively. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets. Expected employer contributions to the plan for the year ended 31 March 2015 amount to $29,690,000 for the group and $18,700,000 for the company. The distribution of plan assets was as follows: The Group & Company 2014
2013
%
%
Equities
19
17
Government of Jamaica securities
54
61
Repurchase agreements
13
13
4
3
10
6
100
100
Corporate bonds Other
Plan assets include the company’s ordinary shares with a fair value of $968,000 (2013 - $896,000). The sensitivity of the defined benefit obligation to changes in the principal assumptions is : The Group Impact on post-employment obligations Change in assumption
Increase in assumption
Decrease in assumption
$’000
$’000
Discount rate
1%
(66,770)
84,705
Future salary increases
1%
34,800
(29,854)
Pension increases
1%
42,271
(37,153)
Radio Jamaica Limited
PAGE 73
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 15. Retirement Benefits (Continued) Pension schemes (continued) The sensitivity of the defined benefit obligation to changes in the principal assumptions is : The Company Impact on post-employment obligations Change in assumption
Increase in assumption $’000
Decrease in assumption $’000
Discount rate
1%
(49,988)
62,477
Future salary increases
1%
22,857
(19,853)
Pension increases
1%
34,293
(30,175)
The Group Decrease Increase Assumption by Assumption by One Year One Year
Life expectancy
$’000
$’000
16,300
(16,800)
The Company Decrease Increase Assumption by Assumption by One Year One Year
Life expectancy
$’000
$’000
14,300
(14,400)
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.
PAGE 74
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 15.
Retirement Benefits (Continued) Other retirement benefits In addition to pension benefits, the group offers retiree medical and life insurance benefits that contribute to the health care and life insurance coverage of employees after retirement. The method of accounting and frequency of valuations are similar to those used for defined benefit pension schemes. The amounts recognised in the balance sheet were determined as follows: The Group
Present value of unfunded obligations
The Company
2014 $’000
Restate d2013 $’000
2014 $’000
53,081
35,378
37,037
Restated 2013 $’000 24,579
The movement in the present value of unfunded obligations was as follows: The Group Restated 2013 $’000
2013 $’000 Balance at start of year
The Company 2014 $’000
Restated 2013 $’000
35,378
25,882
24,579
17,849
Current service cost
2,433
2,326
1,629
1,348
Interest cost
3,660
2,646
2,536
-
1,353
-
1,006
41,471
32,207
28,744
22,054
8,750
289
6,522
283
-
1,818
-
1,159
3,893
1,938
2,610
1,778
12,643
4,045
9,132
3,220
Benefits paid
(1,033)
(874)
(839)
(695)
Balance at end of year
53,081
35,378
37,037
24,579
Past service cost
1,851
Remeasurements Experience gains Losses from change in demographic assumptions Losses from change in financial assumptions
Radio Jamaica Limited
PAGE 75
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 15. Retirement Benefits (Continued) Other retirement benefits The amounts recognised in arriving at net profit or loss were as follows: The Group
The Company
Restated 2013 $’000
2014 $’000
Restated 2013 $’000
2014 $’000
Current service cost
2,433
2,326
1,629
1,348
Interest cost
3,660
2,646
2,536
1,851
-
1,353
-
1,006
6,093
6,325
4,165
4,205
Past service cost Total included in staff costs (Note 7)
The amounts recognised in other comprehensive income were determined as follows: The Group 2014 $’000 Remeasurements of the defined benefit obligation
The Company
2013 $’000
12,643
2014 $’000
4,045
2013 $’000
9,132
3,220
At the last valuation date, the present value of the defined benefit obligation was comprised of approximately $31,382,000 and $18,440,000 relating to active members and $1,698,000 and $18,596,000 relating to the members in retirement for the group and the company respectively. The sensitivity of the defined benefit obligation to changes in the principal assumptions is: The Group Impact on post-employment obligations Change in assumption
Increase in assumption
Decrease in assumption
$’000
$’000
Discount rate
1%
(4,941)
6,186
Future salary increases
1%
5,995
(4,868)
The Company Impact on post-employment obligations Change in assumption
Increase in assumption
Decrease in assumption
$’000
$’000
Discount rate
1%
(7,387)
9,274
Future salary increases
1%
9,012
(7,302)
PAGE 76
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)
15. Retirement Benefits (Continued) Other retirement benefits
The Group Decrease Increase Assumption by Assumption by One Year One Year
Life expectancy
$’000
$’000
2,377
(1,904)
The Company Decrease Increase Assumption by Assumption by One Year One Year
Life expectancy
$’000
$’000
1,628
(1,271)
Principal actuarial assumptions used in valuing retirement benefits The principal actuarial assumptions used were as follows: The Group & The Company 2014
2013
Discount rate
9.5%
10.5%
Inflation rate
5.5%
6.0%
Future salary increases
6.5%
7.0%
2.75%
3.0%
7%
7.5%
24
24
Future pension increases Long term increase in health cost Expected remaining working lives (years)
Radio Jamaica Limited
PAGE 77
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)
15. Retirement Benefits (Continued) Risks associated with pension plans and post-employment plans Through its defined benefit pension plans and post-employment medical plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The plan liabilities are calculated using a discount rate set with reference to Government of Jamaica bond yields; if plan assets underperform this yield, this will create a deficit. As the plan matures, the Company intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The Government bonds represent investments in Government of Jamaica securities. The Company believes that due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of the Company’s long term strategy to manage the plans efficiently. See below for more details on the Company’s asset-liability matching strategy. Changes in bond yields A decrease in Government of Jamaica bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings. Inflation risk Higher inflation will lead to higher liabilities. The majority of the plan’s assets are either unaffected by fixed interest bonds, meaning that an increase in inflation will reduce the surplus or create a deficit. Life expectancy The majority of the plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities. This is particularly significant, where inflationary increases result in higher sensitivity to changes in life expectancy. The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension scheme. Within this framework, the company’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due. The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company does not use derivatives to manage its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2014 consists of bonds and equities. Funding levels are monitored on an annual basis and the current agreed contribution rate is 10% of pensionable salaries. The next triennial valuation is due to be completed as at 31 December 2014. The Company considers that the contribution rates set at the last valuation date to be sufficient to prevent a deficit and that regular contributions, which are based on service costs, will not increase significantly.
PAGE 78
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 16.
Deferred Taxation Deferred income taxes are calculated in full on all temporary differences under the liability method using a principal rate of 25%. The Group 2014 $’000 Deferred income tax assets Deferred income tax liabilities
The Company
Restated 2013 $’000
2014 $’000
Restated 2013 $’000
45,684
26,917
(105,281)
(104,207)
(48,066)
34,742
(52,141)
20,740
(59,597)
(77,290)
(13,324)
(31,401)
The movement on the deferred income tax account is as follows: The Group
Balance as at 1 April restated Credited/(charged) in arriving at profit or loss Credited/(charged) to other comprehensive income Balance as at 31 March
The Company
2014 $’000
Restated 2013 $’000
2014 $’000
Restated 2013 $’000
(77,290)
(132,372)
(31,401)
(65,176)
3,591
49,012
14,102
6,070
(59,597)
(77,290)
6,031
27,247
12,046
6,528
(13,324)
(31,401)
The movement in the deferred tax assets and liabilities (prior to appropriate offsetting of balances) during the year is as follows: Group Accelerated Tax Depreciation
Retirement Benefit Assets
$’000
Unrealised Foreign Exchange Gains
Interest Receivable
$’000
$’000
$’000
-
147
Deferred tax liabilities
Total
$’000
At 1 April 2012 restated
80,698
67,754
(Credited)/charged to profit or loss
(28,302)
(11,246)
161
55
(5,060)
-
-
(5,060)
51,448
161
202
104,207
6,943
85
95
12,015
-
-
246
297
(Credited)/charged to other comprehensive income At 31 March 2013 (Credited)/charged to profit or loss
52,396 4,892
(Credited)/charged to the statement of comprehensive income At 31 March 2014
57,288
(10,941) 47,450
Radio Jamaica Limited
148,599 (39,332)
(10,941) 105,281
PAGE 79
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 16. Deferred Taxation (Continued) The movement in the deferred tax assets and liabilities (prior to appropriate offsetting of balances) during the year is as follows: Group
Deferred tax assets
Retirement Benefit Obligation
Accrued Vacation
Tax losses
Other
Total
$’000
$’000
$’000
$’000
$’000
-
176
16,227
At 1 April 2012 restated
4,950
11,101
(Credited)/charged to profit or loss
2,884
(1,591)
8,331
55
9,679
Credited/(charged) to the statement of comprehensive income
1,011
-
-
-
1,011
9,510
8,331
231
26,917
At 31 March 2013
8,845
(Credited)/charged to profit or loss
1,264
(1,664)
8,355
7,651
15,606
(Charged)/credited to the statement of comprehensive income
3,161
-
-
-
3,161
16,686
7,882
45,684
At 31 March 2014
13,270
7,846
Company
Deferred tax liabilities
Accelerated Tax Depreciation
Retirement Benefit Assets
Interest Receivable
$’000
$’000
$’000
At 1 April 2012 restated
15,087
60,753
147
(Credited)/charged to profit or loss
(7,286)
(10,892)
55
-
(5,723)
(Credited)/charged to other comprehensive income At 31 March 2013
7,801
(Credited)/charged to profit or loss (Credited)/charged to other comprehensive income At 31 March 2014
PAGE 80
Radio Jamaica Limited
44,138
Total
$’000 75,987 (18,123) -
(5,723)
202
52,141 (9,763)
-
(9,763)
-
524
5,064
100
5,688
8,325
39,439
302
48,066
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 16. Deferred Taxation (Continued) The movement in the deferred tax assets (prior to appropriate offsetting of balances) during the year is as follows: Company
Deferred tax assets
At 1 April 2012 restated (Credited)/charged to profit or loss (Credited)/charged to other comprehensive income At 31 March 2013 (Credited)/charged to profit or loss (Credited)/charged to other comprehensive income At 31 March 2014
Retirement Benefit Obligation
Tax Losses
$’000
$’000
$’000
$’000
3,415
-
7,364
32
10,811
(1,331)
199
9,124
1,925 805
Accrued Vacation
8,331 -
-
8,331
6,033
831
8,355
2,283
-
6,145
9,259
16,686
Other
Total $’000
-
805
231
20,740
(1,078)
3,611
11,719
-
-
2,283
3,842
34,742
4,955
Deferred income tax assets/liabilities amounts which are expected to be recovered/settled within one year: The Group
Deferred income tax assets Deferred income tax liabilities
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
-
231
-
231
543
202
302
202
Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through the future taxable profits is probable. Subject to agreement with the Taxpayer Audit and Assessment Department, tax losses available for offset against future taxable profits amounted to $333,702,000 (2013 – $321,901,000) for the group and $66,743,000 (2013 – $33,326,000) for the company, and these losses may be carried forward indefinitely. Deferred income tax assets have not been recognised for tax losses carried forward in respect of certain subsidiaries. These tax losses amounted to $266,958,000 (2013 – $288,575,000).
Radio Jamaica Limited
PAGE 81
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 17. Investment in Subsidiaries 2014 $’000
2013 $’000
50
50
20,002
20,002
Reggae Entertainment Television Limited
174,930
174,930
Jamaica News Network Limited
236,942
236,942
431,924
431,924
Multimedia Jamaica Limited Television Jamaica Limited Media Plus Limited –
In the previous year a decision was taken to convert the amount receivable from Reggae Entertainment Television Limited and Jamaica News Network to an investment in these entities. An impairment charge of $36,377,000 was recorded based on impairment assessment undertaken. 18. Long Term Receivables The Group 2014 $’000
The Company 2013 $’000
2014 $’000
2013 $’000
GV Media Group Limited
10,829
10,829
10,829
10,829
Less: Provision for impairment
(10,829)
(10,829)
(10,829)
(10,829)
Subsidiary
-
-
-
-
-
-
-
2,950
-
-
-
2,950
GV Media Group Limited In a revised shareholders’ deed dated 1 December 2007, the company disposed of its 20% shareholding in GV Media Group Limited. Arising from this revision, an unsecured loan (‘Layer One Debt’) from GV Media Group Limited of £179,000 was created. Management has determined that this is fully impaired and should, therefore, be carried at nil value in the financial statements. No foreign exchange gains/losses have been recognised in respect of this receivable since the date of impairment in 2007. Subsidiary This represents the amount receivable in respect of the background music equipment transferred by the company to Multi-Media Jamaica Limited.
PAGE 82
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 19. Investment Securities The Group & The Company 2014 $’000
2013 $’000
16,349
11,409
7
7
16,356
11,416
At fair value through profit or loss – One Caribbean Media Limited, quoted Available-for-sale – Caribbean News Agency, unquoted
20. Inventories
Spares
The Company
2014 $’000
2014 $’000
Restated 2013 $’000
Restated 2013 $’000
3,055
3,173
1,049
1,161
Film
18,119
23,897
-
-
Goods in transit
11,434
16,492
3,606
1,368
8,050
7,271
5,903
4,660
40,658
50,833
10,558
7,189
Other
21.
The Group
Due from Subsidiaries 2014 $’000
2013 $’000
83,633
67,260
144,615
95,370
8,259
-
39,084
-
275,591
162,630
Multi-Media Jamaica Limited Television Jamaica Limited Reggae Entertainment Television Limited Jamaica News Network Limited
In the previous year a decision was taken to convert the amount receivable from Reggae Entertainment Television Limited and Jamaica News Network to an investment in these entities.
Radio Jamaica Limited
PAGE 83
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 22. Receivables The Group
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
322,722
350,715
75,800
108,332
Prepayments
14,286
54,624
7,299
7,780
Other
64,139
44,743
61,519
38,745
401,147
450,082
144,618
154,857
(31,224)
(30,543)
(21,480)
(23,233)
369,923
419,539
123,138
131,624
Trade receivables
Less: Provision for impairment
23. Cash and Cash Equivalents The Group
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
Cash
57,591
55,822
57,258
55,414
Short term investments
97,484
260,856
97,484
260,856
155,075
316,678
154,742
316,270
(a)
Cash comprises amounts held in current accounts, which currently attract interest at a rate of 1% per annum.
(b)
Short term investments comprise securities purchased under resale agreements and are classified as financial assets at fair value through profit or loss. The average maturity of these investments was under 90 days. The weighted average effective interest rate on these instruments was as follows: The Group & Company
(c)
2014
2013
%
%
United States dollar
3.46
2.46
Jamaican dollar
6.68
6.65
The group has unsecured bank overdraft facilities. The effective interest rate on account overrun is between 24.75% - 48%.
PAGE 84
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 24. Payables The Group
The Company
2014 $’000 Trade
2013 $’000
2014 $’000
2013 $’000
121,747
123,566
46,158
48,140
Accrued vacation leave
32,055
38,897
19,819
24,132
Other accruals
20,645
30,168
13,115
12,236
Current portion of finance leases (Note 26)
5,216
-
2,509
-
Current portion of long term loans (Note 26)
35,347
18,711
17,901
16,670
Statutory deductions
17,554
17,960
9,294
9,947
Other
42,726
42,515
26,149
24,661
275,290
271,817
134,945
135,786
2014 $’000
2013 $’000
472,695
472,695
25. Share Capital Authorised – 50,000 5% Cumulative participating preference shares 378,000,000 Ordinary shares
Issued and fully paid – 357,467,991 (2012 – 357,476,991) Ordinary shares of no par value 7,323,100 Treasury shares (2012 – 7,323,100) Ordinary shares of no par value
(5,039) 467,656
(5,039) 467,656
The treasury shares are held by the RJR Employee Share Scheme.
Radio Jamaica Limited
PAGE 85
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 26. Long Term Loans & Finance Leases Long term loans The Group
(a)
RBC Bank Jamaica Limited
(b)
RBC Bank Jamaica Limited
(c)
RBC Bank Jamaica Limited
(d)
Prime Sports Limited
Less: Current portion (Note 24)
The Company
2014 $’000
2013 $’000
2013 $’000
2012 $’000
9,759
13,308
9,759
13,308
2,041
-
-
187,337
200,459
187,337
200,459
69,412
-
-
-
266,508
215,808
197,096
213,767
(17,901)
(16,670)
179,195
197,097
(35,347) 231,161
(18,711) 197,097
(a)
This loan is repayable on a monthly basis, maturing in December 2016 and attracts interest at 9.5% (2013 –9.5%). It is secured by a second mortgage over commercial properties owned by the company.
(b)
This loan was repayable on a monthly basis and matured in April 2013 and attracted interest at 11% (2013 – 11%). It was secured by a first mortgage over commercial properties owned by the company.
(c)
This loan is repayable on a monthly basis, maturing in September 2019 and attracts interest at 9% (2013 – 9%). It is secured by a first mortgage over commercial properties owned by the company.
(d)
This loan is unsecured and repayable on a monthly basis, maturing in November 2017 and attracts interest at 6% (2013 – Nil).
Finance leases Finance lease liabilities – minimum lease payments The Group
Not later than 1 year Later than 1 year and not later than 5 years
Future finance charges on finance leases Present value of finance lease obligations
PAGE 86
Radio Jamaica Limited
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
8,264
-
4,014
-
30,604
-
15,722
-
38,868
-
19,736
-
(8,459) 30,409
-
(4,367) 15,369
-
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)
26. Long Term Loans & Finance Leases (Continued) The present value of finance lease obligations is as follows: The Group
Not later than 1 year Later than 1 year and not later than 5 years
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
5,216
-
2,509
-
25,193
-
12,860
-
30,409
-
15,369
Radio Jamaica Limited
-
PAGE 87
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 27.
Segment Reporting Management has determined the group’s operating segments based on the reports reviewed by the company’s Board of Directors that are used to make strategic decisions. The group is organised and managed in two main business segments based on its business activities. Operating results for each segment are used to measure performance, as management deems that information to be the most relevant in evaluating segments relative to other entities that operate within these industries. The designated segments are: (a)
Audio visual, comprising the operations of the group’s free-to-air television station and its cable stations; and
(b)
Radio and other, comprising the operations of the group’s radio stations.
The group’s operations are primarily located in Jamaica. Transactions between segments are done under terms similar to that with third parties. Audio Visual Radio and Other $’000
Sub-total
Eliminations
Total
$’000
$’000
$’000
1,962,083
(117,893)
1,844,190
$’000 2014
Revenues
1,350,339
Operating profit
611,744
112,095
47
112,142
1,319,986
1,567,664
2,887,650
Liabilities
752,063
480,062
1,232,125
Capital expenditure
298,080
40,418
338,498
-
338,498
Depreciation
69,566
33,050
102,616
-
102,616
Finance costs
8,543
19,257
27,800
-
27,800
(122,823)
1,783,997
Assets
(11,437)
100,705
(1,019,670) 1,867,980 (568,200)
663,925
2013 Restated Revenues
1,214,662
Operating loss
(8,456)
692,158 (52,451)
1,906,820 (60,907)
(10,000)
(70,907)
Assets
942,197
1,610,611
2,552,808
Liabilities
449,253
476,636
925,889
Capital expenditure
86,411
22,309
108,720
-
108,720
Depreciation & amortisation
78,514
37,284
115,798
-
115,798
1,882
3,839
5,721
-
5,721
35,108
-
35,108
-
35,108
Finance costs Impairment charge
(779,895) 1,772,913 (339,862)
586,027
The Group’s customers are mainly resident in, and operate from, Jamaica. The result of its revenue from external customers in Jamaica is $1,812,354,000 (2013 - $1,744,658,000), and the total of revenue from external customers from other countries is $31,836,000 (2013 - $39,339,000).
PAGE 88
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 28. Related Party Transactions and Balances (a)
Sale of services The company did not have any sale of services to its subsidiaries.
(b)
Purchase of services
(c)
2014 $’000
2013 $’000
Multi-Media Jamaica Limited
26,658
37,009
Jamaica News Network Limited
10,220
12,890
36,878
49,899
Rental expense – The company has rental expense with its subsidiaries as follows
Television Jamaica Limited
(d)
2014 $’000
2013 $’000
14,315
13,671
Multi-Media Jamaica Limited
245
93
Reggae Entertainment Television Limited
240
135
Jamaica News Network Limited
240
135
15,039
14,034
Key management compensation for the group was as follows: The Group
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
35,509
29,129
35,509
29,129
Statutory contributions
2,178
1,769
2,178
1,769
Other
3,251
2,913
3,251
2,913
40,938
33,811
40,938
33,811
Wages and salaries
The Group
The Company
2014 $’000
2013 $’000
2014 $’000
2013 $’000
4,284
4,138
2,324 2,114
13,230
13,206
13,230 13,206
Directors' emoluments – Fees Management remuneration (included in staff costs)
Radio Jamaica Limited
PAGE 89
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 28. Contingencies The company and its subsidiaries are subject to various claims, disputes and legal proceedings, in the normal course of business. Provision is 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. In respect of claims asserted against the group which has not been provided for, management is of the opinion that such claims are either without merit, can be successfully defended or will result in exposure to the group which is immaterial to both financial position and results of operations. 29. Restatement Restatement of prior year balances relate to both the adoption of a new standard and the correction of prior year errors. Adoption of new standard – (a)
The impact of the adoption of IAS 19 (Revised) and consequential adjustments to deferred tax. The amendment eliminates the corridor approach to recognition of actuarial gains and losses arising from IAS 19 pension valuations and results in the recognition of all actuarial gains and losses in other comprehensive income (OCI) as they occur. Additionally, all past service costs are immediately recognised and interest cost and expected return on plan assets are replaced with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability. The effect of these revisions on 2012 statement of comprehensive income was the immediate recognition in other comprehensive income of actuarial losses of $3,478,000 and $2,911,000 on pension benefits and actuarial losses $1,241,000 and $1,143,000 on other retirement obligations, the recognition in profit or loss of $29,000 of past service cost and the recognition of a net interest expense decrease of $ 329,000 and $538,000 for group and company respectively. The effect of these revisions on 2013 statement of comprehensive income was the immediate recognition of actuarial losses of $9,801,000 and $13,977,000 on pension benefits and actuarial losses $2,812,000 and $2,079,000 on other retirement obligations, and the recognition of a net interest expense decrease of $646,000 and $596,000 for group and company respectively. As a result of the impact of the restatement in relation to IAS 19 (Revised) the effect of the change in tax rate from 331/3% to 25% on the restated amounts are also included.
(b)
The impact of adopting amendments to IAS 16 resulted in amounts being reclassified from inventory to fixed assets with the amounts being depreciated. The impact on the statement of changes in equity of the adoption of IAS 19 (revised) and the corrections are represented by the movements in the statement of comprehensive income as no other equity accounts were affected. In accordance with the requirements of IAS 8 par 28 (f) the company is required to show the effect on each financial statement line item of the adoption of IAS 19 (revised) for the 2014 amounts presented. In the opinion of management this effect is not material and hence this disclosure has not been presented in these financial statements. The financial statements for the years ended 31 March 2013 and 2012 have been restated to reflect the financial position and results for these corrections. The financial effects of these corrections are as follows:
PAGE 90
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Effect on statement of financial position at 1 April 2012 Group As at 31 March 2012 $’000
(a) $’000
As at 31 March 2012 $’000 presented
(b) $’000
Non-Current Assets Fixed assets
669,568
-
26,691
696,259
Retirement benefit assets
195,813
3,478
-
199,291
Other non-current assets
46,160
-
-
46,160
911,541
3,478
26,691
941,710
Total Non-Current Assets
(30,072)
43,687
73,759
-
Other current assets
677,207
-
Total Current Assets
750,966
-
Total Current Liabilities
226,021
-
Net Current Assets
524,945
-
(30,072)
494,873
1,436,486
3,478
(3,381)
1,436,583
467,656
-
Inventory
(30,072) -
Stockholders’ Equity Share capital Retained earnings
800,538
(1,835)
1,268,194
(1,835)
(3,381) (3,381)
Deferred tax liabilities Retirement benefit obligations
720,894 226,021
467,656 795,322 1,262,978
-
Non-Current Liabilities Long term liabilities
677,207
15,351
-
-
15,351
125,789
6,583
-
132,372
27,152
(1,270)
-
25,882
1,436,486
3,478
(3,381)
Radio Jamaica Limited
1,436,583
PAGE 91
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Effect on statement of financial position at 31 March 2013 Group As at 31 March 2013 $’000
As at 31 March 2013 $’000 presented
(a) $’000
(b) $’000
-
16,031
682,677
-
205,791
Non-Current Assets Fixed assets
666,646
Retirement benefit assets
215,592
Other non-current assets Total Non-Current Assets
94,969 977,207 74,303
Inventory
(9,801) (9,801) -
Other current assets
738,643
-
Total Current Assets
812,946
-
276,262
-
536,684
-
Total Current Liabilities Net Current Assets
1,513,891
(9,801)
16,031 (23,470) (23,470) (23,470) (7,439)
94,969 983,437 50,833 738,643 789,476 276,262 513,214 1,496,651
Stockholders’ Equity 467,656
Share capital Retained earnings
-
736,129
(9,460)
1,203,785
(9,460)
(7,439) (7,439)
197,097
-
719,230 1,186,886
-
197,097 77,290 35,378
Deferred tax liabilities
80,443
(3,153)
-
Retirement benefit obligations
32,566
2,812
-
1,513,891
PAGE 92
467,656
-
Non-Current Liabilities Long term liabilities
-
Radio Jamaica Limited
(9,801)
(7,439)
1,496,651
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Effect on statement of comprehensive income at 31 March 2013
Group As at 31 March 2013 $’000
(a) $’000
(b) $’000
As at 31 March 2013 $’000 presented
Revenue
1,783,997
-
-
1,783,997
Direct expenses
(819,096)
-
-
(819,096)
964,901
-
-
964,901
82,332
-
-
82,332
Selling expenses
(310,166)
-
-
(310,166)
Administration expenses
(446,006)
6,922
Other operating expenses
Gross Profit Other operating income
(4,058)
(443,142)
(329,724)
-
-
(329,724)
Impairment charge
(35,108)
-
-
(35,108)
Operating Loss
(73,771)
6,922
(5,721)
-
(79,492)
6,922
43,117
3,666
(36,375)
10,588
Finance costs Loss before Taxation Taxation Net Loss Other Comprehensive Income, net of taxes Item that will not be reclassified to profit or loss Re-measurements of post-employment benefits TOTAL COMPREHENSIVE INCOME
(36,375)
(18,213)
(4,058)
(70,907)
-
(5,721)
(4,058)
(76,628)
-
46,783
(4,058)
(29,845)
-
(18,213)
(7,625)
(4,058)
(48,058)
0.02
(0.01)
($0.09)
Earnings per Ordinary Stock Unit Attributable to Stockholders of the Company
($0.10)
Radio Jamaica Limited
PAGE 93
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Impact on statement of cashflows for the year ended 31 March 2013 Group 2013 $’000
(a), (b) $’000
Restated 2013 $’000
(36,375)
6,530
(29,845)
Cash Flows from Operating Activities Net loss Items not affecting cash: Amortisation of intangible assets Depreciation Fixed assets adjustment Spares utilised Gain on disposal of fixed assets Interest income Dividend income Impairment charge
2,870
-
2,870
108,870
4,058
112,928
723
-
723
-
6,602
6,602
(802)
-
(802)
(8,190)
-
(8,190)
(282)
-
(282)
35,108
-
35,108
Interest expense
5,721
-
5,721
Income tax credit
(43,117)
(3,666)
(46,783)
Exchange gain on foreign currency balances Retirement benefits Revaluation of investment securities
(3,134)
-
(3,134)
(14,365)
(6,922)
(21,287)
(3,234)
-
(3,234)
43,793
6,602
50,395
Changes in operating assets and liabilities: Inventories Receivables Payables Income tax paid Net cash provided by operating activities
(544)
(6,602)
(7,146)
(11,576)
-
(11,576)
89,738
-
89,738
121,411
-
121,411
(42,855)
-
(42,855)
78,556
-
78,556
Cash Flows from Investing Activities Proceeds from disposal of fixed assets
2,851
-
2,851
(108,720)
-
(108,720)
(83,553)
-
(83,553)
8,190
-
8,190
282
-
282
(180,950)
-
(180,950)
150,909
-
150,909
48,515
-
48,515
3,134
-
3,134
Cash and cash equivalents at beginning of year
265,029
-
265,029
Cash and Cash Equivalents at End of Year (Note 23)
316,678
-
316,678
Purchase of fixed assets Purchase of intangible assets Interest received Dividends received Net cash used in investing activities Cash Flows from Financing Activities Net cash provided by financing activities Increase in cash and cash equivalents Exchange gains on cash and cash equivalents
PAGE 94
Radio Jamaica Limited
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Effect on statement of financial position at 1 April 2012 Company As at 31 March 2012 $’000
(a) $’000
(b) $’000
As at 31 March 2012 $’000 presented
Non-Current Assets Fixed assets
286,146
-
11,985
298,131
Retirement benefit assets
180,723
2,911
-
183,634
Other non-current assets
132,645
-
-
132,645
Total Non-Current Assets
599,514
2,911
11,985
614,410
22,135
-
Inventory
(13,547) -
8,588 799,458
Other current assets
799,458
-
Total Current Assets
821,593
-
Total Current Liabilities
114,599
-
Net Current Assets
706,994
-
(13,547)
693,447
1,306,508
2,911
(1,562)
1,307,857
467,656
-
(13,547) -
808,046 114,599
Stockholders’ Equity Share capital Retained earnings
744,782
646
-
467,656
(1,562)
743,866
(1,562)
1,211,522
1,212,438
646
Long term liabilities
13,310
-
-
13,310
Deferred tax liabilities
61,739
3,437
-
65,176
Retirement benefit obligations
19,021
(1,172)
-
17,849
1,306,508
2,911
-
Non-Current Liabilities
(1,562)
Radio Jamaica Limited
1,307,857
PAGE 95
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Effect on statement of financial position at 31 March 2013
As at 31 March 2013 $’000
Company
As at 31 March 2013 $’000 presented
(a) $’000
(b) $’000
-
7,384
280,912
-
176,551
-
446,290
7,384
903,753
Non-Current Assets Fixed assets
273,528
Retirement benefit assets
190,528
Other non-current assets
446,290
Total Non-Current Assets
910,346
(13,977) (13,977)
(10,889)
18,078
Inventory Other current assets
612,514
-
Total Current Assets
630,592
-
138,967
-
Total Current Liabilities
491,625
Net Current Assets
1,401,971
(13,977)
Stockholders’ Equity 467,656
Share capital Retained earnings
-
679,303
(12,042)
1,146,959
(12,042)
Deferred tax liabilities Retirement benefit obligations
-
619,703 138,967
(10,889)
480,736
(3,505)
1,384,489
(3,505) (3,505)
467,656 663,756 1,131,412
-
197,097
35,415
(4,014)
-
31,401
22,500
2,079
-
24,579
197,097
1,401,971
PAGE 96
(10,889)
7,189 612,514
-
Non-Current Liabilities Long term liabilities
-
Radio Jamaica Limited
-
(13,977)
(3,505)
1,384,489
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Effect on statement of comprehensive income at 31 March 2013
Company As at 31 March 2013 $’000 Revenue Direct expenses Gross Profit Other operating income
(a) $’000
As at 31 March 2013 $’000 presented
(b) $’000
622,883
-
-
622,883
(252,797)
-
-
(252,797)
370,086
-
-
370,086
96,765
-
-
96,765
Selling expenses
(129,168)
-
-
(129,168)
Administration expenses
(207,009)
5,969
(1,943)
(202,983)
Other operating expenses
(154,241)
-
-
(154,241)
Impairment charge
(36,377)
-
-
(36,377)
Operating Loss
(59,944)
5,969
(1,943)
(55,918)
(3,825)
-
-
(3,825)
(63,769)
5,969
-
(59,743)
925
-
27,249
6,894
(1,943)
(32,494)
(19,582)
-
(19,582)
(12,688)
(1,943)
(52,076)
Finance costs Loss before Taxation Taxation
26,324
Net Loss
(37,445)
Other Comprehensive Income, net of taxes Item that will not be reclassified to profit or loss Re-measurements of post-employment benefits TOTAL COMPREHENSIVE INCOME
(37,445)
Radio Jamaica Limited
PAGE 97
Annual Report 2014
Radio Jamaica Limited
Notes to the Financial Statements 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated) 30. Restatement (Continued) Impact on statement of cashflows for the year ended 31 March 2013
Company Restated 2013 $’000
2013 $’000
(a), (b) $’000
(37,445)
4,951
(32,494)
Cash Flows from Operating Activities Net loss Items not affecting cash: Depreciation
32,971
1,943
34,914
Fixed assets adjustment
550
-
550
Gain on disposal of fixed assets
(70)
-
Spares utilsed
-
2,658
(70) 2,658
Interest income
(7,901)
-
(7,901)
Dividend income
(10,282)
-
(10,282)
Interest expense
3,825
Income tax credit
(26,324)
Exchange gain on foreign currency balances
(3,134)
Retirement benefits
(6,326)
Revaluation of investment securities
(925) (5,969)
3,825 (27,249) (3,134) (12,295)
(3,234)
-
(3,234)
(57,370)
2,658
(54,712)
4,057
(2,658)
Changes in operating assets and liabilities: Inventories Due from subsidiaries
(102,631)
-
1,399 (102,631)
Receivables
33,375
-
33,375
Payables
28,501
-
28,501
(94,068)
-
(94,068)
(15,326)
-
(15,326)
(109,394)
-
(109,394)
Income tax paid Net cash used in operating activities Cash Flows from Investing Activities Proceeds from disposal of fixed assets Purchase of fixed assets Interest received
239
-
(21,072)
-
239 (21,072)
7,901
-
7,901
Dividends received
10,282
-
10,282
Net cash used in investing activities
(2,650)
-
(2,650)
Cash Flows from Financing Activities Net cash provided by financing activities
165,049
-
165,049
53,005
-
53,005
3,134
-
3,134
Cash and cash equivalents at beginning of year
260,131
-
260,131
Cash and Cash Equivalents at End of Year (Note 23)
316,270
-
316,270
Increase in cash and cash equivalents Exchange gains on cash and cash equivalents
PAGE 98
Radio Jamaica Limited
Five-Years Summary
Consolidated Profit & Loss Account
2010 $000 Turnover Profit/(Loss) (before tax) Taxation Exceptional Item
1,995,765
2011 $000 1,944,590
Restated
2012 $000
1,828,840
Restated
2013 $000
1,783,997
2014 $000 1,844,190
390,966 (169,345) -
186,265 (53,437) -
146,521 (59,114) -
(76,628) 46,783 -
72,905 (13,429) -
Profit (Loss) for the Financial Year Other Comprehensive Income Dividends/Capital Distribution Net Transfer of Capital Reserve
221,621
132,828
17,599 -
41,584 -
87,407 (5,216) 34,995 -
(29,845) (18,213) 28,034 -
59,476 (42,307) -
Retained (Loss)/Profit for the year
204,022
91,244
47,196
(76,092)
17,169
Shareholders Funds Capital: Ordinary Preference Share Premium Unissued Shares Reserves
467,656 -
467,656 -
467,656 -
467,656 -
467,656 -
656,882
748,126
795,322
719,230
736,399
1,124,538
1,215,782
1,262,978
1,186,886
1,204,055
217,155
199,717
173,605
309,765
369,032
1,341,693
1,415,499
1,436,583
1,496,651
1,573,087
964,939 376,754
929,228 486,271
941,710 494,873
983,437 513,214
1,297,184 275,903
1,341,693
1,415,499
1,436,583
1,496,651
1,573,087
Ordinary Shares in Issue (mls) Year end
357.5
357.5
357.5
357.5
357.5
Dividends Per Ordinary Shares
cents 5.0
cents 11.6
cents 9.8
cents 7.8
cents -
Earnings Per Ordinary Shares
63.70
37.97
24.96
(8.52)
16.99
314.6 %
340.1 %
353.3 %
332.0 %
336.8 %
19.59
9.58
8.01
(4.30)
3.95
Gearing (Net Borrowing as a Percentage of Capital and Reserves)
8.6
5.8
2.5
18.2
24.2
Return on Net Assets (Profit After Tax as a Percentage of Net Assets)
16.52
9.38
6.08
(1.99)
3.78
Long Term Liability Total Funds Employed Represented by: Fixed Assets & Investments Net Current Assets
Shareholders Funds Per Ordinary Stock Unit Returns on Sales (Profit before tax as a Percentage of Turnover)
FORM OF PROXY I/We ......................................................................................................................................................................
Place $100.00 stamp here
of ............................................................................................................................................................................ being a Member/Members of the above-named Company hereby appoint ................................................................of......................................................................................................... or failing him/her.............................................of.......................................................................................... As my/our proxy to vote for me/us on my/our behalf at the Sixty-sixth Annual General Meeting of the Company to be held on Wednesday, August 27, 2014 at 10:00 a.m. and at any adjournment thereof. I/We desire this form to be used for/against the resolutions as indicated below. Signed this ........................................... day of ................................................................ 2014 Signature: .................................................................................................................................................. Unless otherwise directed the proxy will vote, as he thinks fit. Please indicate by inserting an “X� in the spaces below how you wish your votes to be cast. If no indication is given your Proxy will vote for or against each resolution or abstain, as he thinks fit. RESOLUTIONS
FOR
AGAINST
RESOLUTION 1 RESOLUTION 2 (a) RESOLUTION 2b (i) RESOLUTION 2b (ii) RESOLUTION 2b (iii) RESOLUTION 3 (For text of Resolutions please refer to Notice of Meeting) NOTES: 1. An instrument appointing a proxy, shall, unless the contrary is stated thereon be valid as well for any adjournment of the meeting as for the meeting to which it relates and need not be witnessed. 2.
If the appointer is a corporation, thisform must be under its common seal or under the hand of an officer or attorney duly authorized in writing.
3.
In the case of joint holders, the vote of the senior will be accepted to the exclusion of the votes of others, seniority being determined by the order in which the names appear on the register.
4.
To be valid, this form must be received by the Registrar of the Company at the address given below not less than 48 hours before the time fixed for holding the meeting or adjourned meeting.
5.
The proxy form should bear stamp duty of One Hundred dollars ($100.00) which may be in the form of adhesive stamp duly cancelled by the person signing the proxy form.
REGISTRAR AND TRANSFER AGENTS Jamaica Central Securities Depository 40 Harbour Street, Kingston