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Facing the challenges...
of Diversification Annual Report 2010 Winfresh
Facing the challenges of diversification
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Table of Contents 2
Corporate Profile
5
Directors’ Report
11
Financial Report
For our latest financial information or to view our Annual Report online, go to: www.winfresh.net
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Corporate Profile THE WINFRESH GROUP The Winfresh Group consists of the parent company, Winfresh Limited, together with the following subsidiary undertakings and associated companies: Subsidiary Companies 1. Winfresh (UK) Limited a. Winfruit Ltd (Subsidiary company of Winfresh (UK) Limited) b. Windward Isles Banana Company (UK) Ltd (Associated company of Winfresh [UK] Limited) 2. Vincyfresh Limited 3. Sunfresh Limited Associated Company 4. Windward Isles Banana Company Holdings (Jersey) Limited
MISSION STATEMENT To serve our customers with a range of high quality products and services at just prices, to pay fair prices to our suppliers and to return fair value to our shareholders. We aim to do so by working in partnership with our suppliers in a manner that is socially and morally responsible and commands respect for our integrity and the positive contributions we make to the societies we serve.
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3 SHAREHOLDERS The shareholders of Winfresh are the Governments of the four Windward Islands, St. Lucia, Dominica, St. Vincent and the Grenadines and Grenada; Saint Lucia Agricultural Holding Company (“SLAHC”), Dominica Banana Holding Company (“DBHC”); St Vincent Banana Growers’ Association (“SVBGA”) and the Grenada Banana Co-operative Society (“GBCS”). SVBGA and GBCS have been dissolved and the shares held by them are to be transferred in accordance with the provisions of the Shareholders’ Agreement.
GROUP DIRECTORS
GROUP EXECUTIVES
REGISTERED ADDRESSES
Montgomery Daniel - Chairman
Cosmos Richardson
Cecil Ryan
Ferron Lowe
Vanoulst Jno Charles
Gemma Bain-Thomas
Deles Warrington
Bernard Cornibert (Winfresh UK only)
Peter Josie
Martina Edwin (Winfresh UK only)
Bernard Cornibert
Chief Executive
Martina Edwin
Company Secretary
Trelford A E Douglas
Finance Director
Roy Hugh
Sales & Marketing Director
Phil Collins
Procurement Director
Ashley James
Operations Director
Errol Reid
Technical Director
Eardley Barrett
Caribbean Director
Business
Development
Winfresh Limited Reg. No. 47 of 1994 99 Chaussee Road • Castries • Saint Lucia WI Winfresh (UK) Limited Reg. No: 2929097 3rd Floor • 24 Old Bond Street • London •W1S 4AP • United Kingdom
BUSINESS ADDRESSES
Winfresh 1st Floor • M&C Building • Bridge Street • P O Box 115 • Castries • Saint Lucia WI Telephone +1 758 457-8600 Fax +1 758 453-1638 Winfresh UK 3700 Parkway • Whiteley • Fareham • P015 7A • United Kingdom Telephone +44 (0) 1489 587 570 Fax +44 (0) 1489 587 588 E-Mail Web
info@wnfresh.net www.winfresh.net
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4 AUDITORS
KPMG Eastern Caribbean L’Anse Road • P O Box 1101 • Castries • Saint Lucia WI J M Shah & Company 3rd Floor • 24 Old Bond Street • London •W1S 4AP • United Kingdom
BANKERS
Bank of St Lucia Bridge Street • P O Box 1031 • Castries • Saint Lucia WI Barclays Bank Plc 50 Pall Mall • London • SW1Y 5AX • United Kingdom Crown Agents Bank St. Nicholas House • Sutton • Surrey • SM1 1EL • United Kingdom
SOLICITORS
Caribbean Law offices 99 Chaussee Road • P O Box 835 • Castries • Saint Lucia WI Bond Pearce LLP Oceana House • 39-49 Commercial Road • Southampton • SO15 1GA • United Kingdom Tees Solicitors High Street • Bishop’s Stortford• Hertfordshire• CM23 2LU
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Directors’ Report The Directors present their report and consolidated financial statements, in Eastern Caribbean Dollars (XCD), for the Winfresh Group for the period ended 1 January 2011. The Eastern Caribbean Dollar is fixed to the US Dollar (USD) at the rate of USD 1 = XCD 2.70.
DIRECTORS WHO SERVED DURING THE YEAR
GEEST LINE
*The Premier Shipping Line serving the Caribbean, Europe and the UK for more than fifty years.
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Montgomery Daniel - Chairman Cecil Ryan Vanoulst Jno Charles Deles Warrington Peter Josie Elias Amorsingh Ferron Lowe Gemma Bain-Thomas Bernard Cornibert—Winfresh UK only Martina Edwin—Winfresh UK only
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6 RESULTS AND DIVIDENDS The Group’s results for the period are set out in the statement of comprehensive income on page 3. The result after taxation was a loss of $ 53,730,750, compared to a profit of $ 23,293,000 in the previous year. The factors that contributed to the $77,023,750 downturn were: (a) drop in earnings from banana trading ($13.330 million), (b) provision for diminution in value of fixed asset investment ($35.769 million), (c) drop in dividend and other income ($7.277 million), (d) change in currency movement ($15.745 million) and actuarial losses on defined benefit pension plans ($5.288 million). The Group’s result on its core principal activities was a consolidated loss after tax of $22,016,693 compared to profit of $8,241,325 in the previous period. The factors that have contributed to the fall in result are explained below The Directors do not recommend payment of a dividend for the period.
OPERATING AND FINANCIAL REVIEW: The Business of the Group The Group is involved primarily in the sale of fresh produce in the United Kingdom under the Winfresh brand name. The principal produce that is traded by the Group is bananas. Fresh produce is sourced predominantly from the Windward Islands, but also from other Caribbean and South American countries. The activities and arrangements include purchase, collection and loading of the produce at the source or supplying countries; shipment to and unloading at docks in the United Kingdom; ripening and repacking of the produce at the Group’s specialised ripening and handling facility at Stansted and, finally, distribution and sale to the retail and wholesale food market in the United Kingdom. The Group was also involved in the formulation, testing, manufacturing and production of a new range of dairyfree freezer fruit desserts, a range of processed foods and juices and beverages and purified bottled water.
OPERATING AND FINANCIAL REVIEW: Business Performance, Principal Risks and Uncertainties The period under review was one of the most challenging faced by the Group in recent years. The continuing difficulties inflicted by the negative impact of the financial crisis on the market were compounded by supply problems from the Group’s key Caribbean sources. During the period under review the total volume of bananas purchased from the Windward Islands was 38.9%lower than in the previous period. This situation arose because of drought conditions in the first half of 2010 and then damage caused by tropical storm Tomas in October 2010, both of which severely reduced production in the Windward Islands. Volume purchased from other sources increased by 39.5% compared to the previous period. Overall volume purchased from all sources was 7.8% lower during the period, when compared to the previous period. The volume of bananas imported from the Windward Islands accounted for 40.0% of the Group’s total purchases compared to 60.3% in the previous period and so there was a significant shift to the Dominican Republic and to other sources. The volume of purchases from non-Caribbean sources reduced in the period under review to 4.6% compared to 5.9% in the previous period. The Group’s total income from banana sales fell by 10.4% during the period, from the previous period, By contrast, the cost of sales on its banana and fresh produce trading, including distribution costs, decreased during the period by 7.9%. The reduction, in both cases, was due to the reduction in throughput consequent on the shortfall in www.winfresh.net
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7 available supplies. Notwithstanding that, average fruit cost during the period was 16.4% higher than in the previous period, caused primarily by the increase in the minimum purchase price established by the Fairtrade Labelling Organisation (FLO) for Fairtrade bananas in 2010. This meant that during the period, cost of sales accounted for a higher proportion, at 96.4%, of total sales compared to the previous period, at 93.3%. This resulted in a Gross Margin loss of $ 873,865 during the period compared to a Gross Margin profit of $6,223,281 in the previous period. The Group remained a major importer of Fairtrade bananas, with Fairtrade accounting for 78.5% of its total banana volume sales in the period. Therefore, the increase in the FLO minimum FOB price was bound to have a significant impact on its product cost and cost of sales. The banana market has become increasingly competitive and challenging and the principal supply bases of the Group in the Caribbean, with their particular vulnerability to weather related problems, have made it more difficult for the Group to face up to the challenges of the market. Whilst the Group is not reliant on any single source of supply, the bulk of its supplies come from the Caribbean region, so the Group remains exposed, to a large extent, to the risk of weather problems that affect supplies from that region. Weather problems are unpredictable and irregular but, from time to time, they can have significant negative consequences for the Group’s performance and results. During the period there were also risks and uncertainties associated with unpredictable movements in energy costs and the GBP/USD exchange rate, both of which could impact negatively on the Group’s operating performance. However, in the period under review the Group was able to put in place adequate arrangements to reduce its exposure and mitigate any potential losses.
paid for Fairtrade bananas, effective January 2011. Once again, the increase in the price of Windward Islands bananas was the largest among the Fairtrade banana supplying countries. The Directors of the Group are concerned that this widening of the price gap between the Windward Islands product and those of other suppliers will increase the competitive pressure on supplies from the Windward Islands in a market that, save for the import tariff, is all but fully deregulated. The Group will continue its dialogue on this matter with FLO and the Fairtrade Foundation in order to address those concerns and to ensure that suppliers located in the Windward Islands are not unduly disadvantaged in the market. The Group intends to complete expansion of its ripening and production facility at its Stansted site. As part of this process the Group plans to phase in the installation of new banana ripening chambers, but the immediate requirement will be the outfitting of food processing and manufacturing units. This is in keeping with the Group’s plans to launch the dairy free freezer fruit product of its subsidiary undertaking, Winfruit Limited. The Group is also keeping to its plans to move all of its general administration operations into a newly extended office which forms part of its Stansted site during the first half of 2011. This means that all of its general administration operations will then be at one location, enabling efficiency savings in administration and overhead costs to be maximised. The Group also intends to develop and market test a range of new premium quality crisps, juice drinks, other process foods and food products and bottled water, which it intends to launch in 2011/2012.
The Group has been relatively successful in containing costs and improving operational efficiency. Total cost fell by 8.5% during the period, while total overheads (administration and general expenses) decreased by 14.6% and distribution and other direct costs fell by 7.9% from the previous period. The Group experienced some setbacks in the development of its new non-dairy freezer fruit dessert product lines and was unable to launch any of those new products during the period under review. Consequently, bananas and fresh produce still accounted for all of the Group’s turnover in the period under review.
FUTURE DEVELOPMENTS: Objectives and Strategy The FLO announced increases in the minimum prices to be Winfresh
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EMPLOYEES AND EMPLOYEE INVOLVEMENT
AUDITORS
During the period, the Group’s policy of providing employees with information about the Group was continued through announcements and briefings in which the employees have also been encouraged to present their suggestions and views on the Group’s operations.
In accordance with the company’s articles, a resolution proposing that Price Bailey LLP be appointed as auditors of the company will be put to the General Meeting.
CREDITOR PAYMENT POLICY AND PRACTICE The Group’s policy concerning the payment of trade payables (creditors) is to agree the payment terms at the same time that contract terms are agreed with suppliers and to pay trade payables in accordance with those contractual obligations. On average and based on the results during the period, trade payables at the statement of financial position date represented 20 days worth of purchases compared to 43 days for the previous period.
STATEMENT OF DISCLOSURE OF INFORMATION TO AUDITORS The Directors who held office at the date of approval of this Directors’ report confirm that: a.
So far as the Directors are aware, all relevant audit information was disclosed to the Group’s auditors and there is none of which they were uninformed.
b.
The Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Group’s auditors are aware of that information.
The Directors note here that the unusual trading conditions that applied in the period immediately following Hurricane Tomas in October 2010 in the Windward Islands led to distortion of the Group’s normal level of trade payable days.
POST BALANCE SHEET EVENTS
By the Order of the Board
Other than that which is disclosed at note 32 to the consolidated financial statements, there were no significant events after the balance sheet date affecting the Group or the company, which have not been disclosed in the consolidated financial statements.
Martina Edwin COMPANY SECRETARY Approved by the Board of Directors on 8 November 2011
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Investment Focused on Diversification
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KPMG Eastern Caribbean Morgan Building L’Anse Road P.O. Box 1101 Castries,S!’ Lucia
Telephone
(758) 453-1471 (758) 453-0625
Fax
(758) 453-6507
kpmg@kpmg.lc
INDEPENDENT AUDITORS’ REPORT The Shareholders Winfresh Limited
We have audited the consolidated financial statements of Winfresh Limited (“The Group”), which comprise the consolidated statement of financial position as at January 1, 2011 and the consolidated statements of comprehensive loss, changes in equity and cash flows for the period then ended, and a summary of significant accounting policies and other explanatory notes. The financial statements of the prior period were audited by another firm of chartered accountants, which issued an unqualified opinion on September 29,2010. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at January 1, 2011, and its consolidated financial performance and its consolidated cash flows for the period then ended in accordance with International Financial Reporting Standards.
KPMG Eastern Caribbean November 8,2011 Castries, Saint Lucia KPMG Eastern Caribbean, a partnership registered in Anguilla, Antigua & Barbuda. St. Lucia and St. Vincent and the Grenadines, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity
Frank V. Myers Cleveland S. Sea forth Claudel V. V. Romney
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Brian A. Glasgow Reuben M. John
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12 WINFRESH LIMITED January 1, 2011 LIMITED WINFRESH Consolidated Statement of Financial Position Consolidated Statement of January 1, 2011
(Expressed in Eastern Caribbean Dollars)
Financial Position
(Expressed in Eastern Caribbean Dollars)
Notes Assets Current Assets Cash and cash equivalents Held-to-maturity financial assets Trade and other receivables Inventories Due from related parties Deferred tax assets Total current assets Non-Current Assets Due from related parties Other receivables Intangible assets Property, plant and equipment Investments in joint ventures and associates Investment property Total non-current assets Total Assets
6 7 8, 9
$
10 18
10 11 12 13 14 15 $
January 1, 2011
January 2, 2010
13,634,661 1,194,305 22,650,056 8,083,852 5,890,547 246,969 51,700,390
19,805,777 1,184,919 29,988,247 12,936,103 5,790,183 256,179 69,961,408
904,080 904,377 2,566,311 34,987,304 54,239,162 2,936,329 96,537,563 148,237,953
890,307 29,774,475 100,994,537 131,659,319 201,620,727
2,087,419 21,130,617 23,218,036
1,636,338 29,116,484 213,938 30,996,760
Liabilities Current Liabilities Bank overdraft Trade and other payables Income tax payable Total current liabilities
6 16
Non-Current Liabilities Loans and borrowings Total Liabilities
17
6,341,100 29,559,136
30,966,760
19
20,000,000 303,217 (11,756,710 ) 108,515,761 117,062,268 1,616,549 118,678,817 148,237,953
20,000,000 336,908 (8,107,077 ) 158,424,136 170,653,967 170,653,967 201,620,727
Equity Share capital Contributed capital and reserves Currency translation reserve Retained earnings Non-controlling interest Total Equity Total Liabilities and Equity
$
22 $
These financial statements were approved by the Board of Directors on November 8, 2011 and were signed on its behalf by: Director
The noted on pages 16 to 43 are an integral part of these consolidated financial statements.
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13 WINFRESH LIMITED WINFRESH January 1, 2011LIMITED
(Expressed in Eastern Caribbean Dollars)
Consolidated Statement of Comprehensive Loss Consolidated Statement of For the year ended January 1, 2011
Comprehensive Loss
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
January 2, 2010
242,500,372 (233,755,709 ) 8,744,663 (9,618,528 ) (20,614,896 ) (21,488,761 ) (29,350,115 ) 5,798,892
270,508,073 (252,436,494 ) 18,071,579 (11,848,298 ) (14,381,888 ) (8,158,607 ) 4,432,857 13,075,516
(45,039,984 ) 775,184 (44,264,800 ) (527,932 )
9,349,766 1,930,486 11,280,252 (82,718 )
Notes Banana trading income Cost of goods sold Profit from banana trading Distribution and selling Administrative and general expenses
$
Other (losses)/gains Other income (Loss)/profit before share of profit in joint ventures, associates and income tax Share profit in joint ventures and associates (Loss)/profit before income tax Income tax expense
20 21
(Loss)/profit for the year
$
(44,792,732 )
11,197,534
(Loss)/profit after taxation attributable to: Owners of the company Non-controlling interest
$
(44,659,281 ) (133,451 )
11,197,534 -
(44,792,732 )
11,197,534
(3,649,633 )
12,095,466
(48,442,365 ) (5,288,385 )
23,293,000 -
(Loss)/profit for the year Other comprehensive income Currency movement for the year Actuarial losses on defined benefit pension plans Total comprehensive (loss)/profit for the year
$
(53,730,750 )
23,293,000
Total comprehensive (loss)/profit attributable to: Owners of the company Non-controlling interest
$
(53,597,299 ) (133,451 )
23,293,000 -
$
(53,730,750 )
23,293,000
22
noted6on 16 an to 43 are an integral of these consolidatedfinancial financial statements. The notes onThe pages to pages 33 are integral part ofpart these consolidated statements. 3 Winfresh Facing the challenges of diversification
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14 WINFRESH LIMITED Consolidated Statement of Changes in Equity
WINFRESH LIMITED For the year ended January 1, 2011 January 1, 2011 (Expressed in Eastern Caribbean Dollars)
(Expressed in Eastern Caribbean Dollars)
Consolidated Statement of Changes in Equity Currency Contributed translation Share Capital Capital Reserves At December 28, 2008
$
20,000,000
Total
363,486 (20,202,543 ) 147,205,624 147,366,567
Total comprehensive income: Profit for the year
-
-
Other income: Currency translation movements
-
-
12,095,466
-
-
12,095,466
-
(26,578 )
Total comprehensive income Amortisation of contributed capital
Retained Earnings
-
11,197,534
-
11,197,534 26,578
11,197,534 12,095,466 23,293,000 -
At January 2, 2010
20,000,000
336,908
(8,107,077 ) 158,429,736 170,659,567
At January 3, 2010
20,000,000
336,908
(8,107,077 ) 158,429,736 170,659,567
Total comprehensive income: Loss for the year
-
-
-
Other comprehensive income: Currency translation movements
-
-
(3,649,633 )
-
-
(3,649,633 ) (49,947,666 ) (53,597,299 )
Total comprehensive income Amortisation of contributed capital At January 1, 2011
$
20,000,000
(33,691 )
(49,947,666 ) (49,947,666 )
-
-
33,691
-
303,217 (11,756,710 ) 108,515,761 117,062,268
The notes on pages 6 to 33 are an integral part of these consolidated financial statements. 4 The noted on pages 16 to 43 are an integral part of these consolidated financial statements. www.winfresh.net
(3,649,633 )
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15 WINFRESH LIMITED WINFRESH January 1, 2011 LIMITED
Consolidated Statement of Cash Flows For the year ended January 1, 2011 Consolidated Statement
(Expressed in Eastern Caribbean Dollars)
of Cash Flows
(Expressed in Eastern Caribbean Dollars)
Notes Cash flows from operating activities (Loss)/profit for the year Adjustments for: Depreciation Impairment of goodwill Unrealised exchange loss/(gain) Gain on disposal of property, plant and equipment Interest income Share of profit in joint ventures and associates Provision for diminution in value of investments Discount on acquisition Dividend income Finance costs Operating loss before working capital changes
January 1, 2011 $ (44,264,800 )
January 2, 2010 11,280,252
2,341,671 800,000 217,913 (220,768 ) (155,612 ) (775,184 ) 35,769,219 (699,530 ) (4,126,400 ) 70,840 (11,042,651 )
2,484,388 (1,878,616 ) (46,711 ) (75,237 ) (1,930,485 ) (10,896,025 ) 17,407 (1,045,027 )
Decrease/(increase) in trade and other receivables Decrease in inventories Decrease in amounts due from related parties (Decrease)/increase in payables Net cash (used in)/ generated from operating activities
5,149,105 5,654,602 107,637 (8,879,087 ) (9,010,394 )
(4,505,814 ) 2,188,939 1,062,670 10,168,512 7,869,280
Income tax paid Interest paid Net cash (used in)/from operating activities
(207,422 ) (70,840 ) (9,288,656 )
(272,452 ) (17,407 ) 7,579,421
Cash flows from investing activities Acquisition of subsidiary, net of cash Payments to acquire intangible fixed assets Payments to acquire property, plant and equipment Investments in joint ventures Increase in other investments Interest received Dividends received Proceeds from disposal of property plant and equipment Net cash used in investing activities
(957,726 ) (803,226 ) (6,242,646 ) (9,386 ) 155,612 4,126,400 56,331 (3,674,641 )
(27,356,459 ) (1,079,630 ) 37,341 10,896,025 91,166 (17,411,557 )
Cash flows from financing activities Dividends paid Loan repayment received from related party New bank loan Net cash (used in)/generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year
6,341,100 6,341,100 (6,622,197 ) 18,169,439 $ 11,547,242
(2,000,000 ) 10,315,109 8,315,109 (1,517,027 ) 19,686,466 18,169,439
14 14
6
-
The notes on pages 6 to 33 are an integral part of these consolidated financial statements. 5 The noted on pages 16 to 43 are an integral part of these consolidated financial statements. Winfresh
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16 WINFRESH LIMITED
WINFRESH LIMITED Notes to1,Consolidated Financial Statements January 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
Notes to Consolidated Financial Statements (Expressed In Eastern Caribbean Dollars) 1.
General Information Incorporation These consolidated financial statements include the financial statements of Winfresh Limited (the Company) and its subsidiary companies, Winfresh UK Limited, Winfruit Limited, Vincyfresh Limited (formerly Lauders Agro Processors Inc.) and Sunfresh Limited. Winfresh Limited is a private company that was incorporated under the laws of Saint Lucia and continued under the 1996 Companies Act. The Company commenced trading effective January 1, 1995 with the takeover of the operations formally undertaken by Windward Islands Banana Growers’ Association (“WINBAN”). Winfruit Limited is a private company incorporated in 2006. Vincyfresh Limited (formally Lauders Agro Processors Inc.) is a private company incorporated in 2010. Winfresh (UK) Limited is a private company that was incorporated under the Companies Act 2006 of the United Kingdom and commenced operations in May 1994. Winfruit Limited is a private company that was incorporated under Companies Act 2006 of the United Kingdom and commenced trading in December 2008. Vincyfresh Limited was incorporated under the 1994 Companies Act of Saint Vincent and the Grenadines as Lauders Agro Processors Inc. and commenced trading in October 2007. Sunfresh Limited, which was incorporated under 1996 Companies Act in Saint Lucia, has not yet commenced trading activity. The Company’s registered office is located at 99 Chaussee Road, Castries, Saint Lucia. Principal activity The principal activity of the Group is the importation, marketing and distribution of bananas and fresh produce. Shareholdings The shareholders of the Company are the Governments of the four Windward Islands: Saint Lucia, Dominica, Saint Vincent and the Grenadines and Grenada and the Banana Grower Associations ("BGAs") of the four Windward Islands: St. Lucia Banana Corporation ("SLBC"), Dominica Banana Marketing Corporation ("DBMC"), St. Vincent Banana Growers' Association ("SVBGA") and the Grenada Banana Co-operative Society ("GBCS"). The Group’s financial year represents a 52 week period ended January 1, 2011 (January 2, 2010 – 53 weeks period ended January 2, 2010).
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17 WINFRESH LIMITED
WINFRESH LIMITED
Notes to Consolidated Financial Statements (Continued) Notes to Consolidated Financial Statements (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed In Eastern Caribbean Dollars)
2.
Basis of Preparation
(a)
Statement of compliance These consolidated financial statements have been prepared in accordance with International Reporting Standards (IFRS). The consolidated financial statements as at and for the period ended January 1, 2011 were authorized for issue by the Board of Directors on November 8, 2011.
(b)
Basis of measurement The consolidated financial statements have been prepared under the historical cost convention except for financial assets that have been measured at fair value.
(c)
Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The Group’s functional currencies include Eastern Caribbean dollars (EC$), and the UK pound (GBP). The consolidated financial statements are presented in Eastern Caribbean dollars (EC$), which is the Group’s presentation currency.
(d)
Use of estimates and judgements The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimated are revised and in any future periods affected. In particular, information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment with the next accounting period are included in the following notes: •
Allowances for impairment losses
Note 3
•
Estimated useful lives of plant property and equipment
Note 3
•
Determination of fair values of financial assets
Note 4
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18 WINFRESH LIMITED LIMITED WINFRESH Notes Financial Notesto to1,Consolidated Consolidated FinancialStatements Statements (Continued) (Continued) January 2011 January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
2. (e)
Basis of Preparation (Cont’d) Standards and amendments effective and relevant to the Group The following standards and amendments to existing standards have been published and are mandatory for the Group’s accounting period beginning on or after January 3, 2010 or later periods and are relevant to the Group. Effective from January 3, 2010 • • • • • • •
IAS 1 IAS 7 IAS 17 IAS 36 IAS 39 IFRS 2 IFRS 5
Presentation of financial statements Statement of assets Leases Impairment of assets Financial statements – recognition and measurement Share based payments – group settled transactions Non-current assets
Effective from July 1, 2010 • •
IAS 27 IFRS 3
Consolidated and separate financial statements Improvements to IFRSs
Effective from January 1, 2011 •
IFRS 1
Improvements to IFRSs
The adoption of these standards is not expected to have a significant impact on the Group’s consolidated financial statements. 3.
Summary of significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been consistently applied by the Group entities unless otherwise stated.
(a)
Consolidation Subsidiaries Subsidiaries are all the 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. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed as at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. 8
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19 WINFRESH LIMITED
WINFRESH LIMITED Notes (Continued) Notes to to Consolidated Financial Financial Statements Statements (Continued) January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
3.
Summary of significant accounting policies (Cont’d) Consolidation (cont’d)
(a)
Subsidiaries (Cont’d) The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated statement of comprehensive income. Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated but are considered an impairment indicator of the assets transferred. Accounting policies of subsidiaries are consistent with the policies adopted by the Group.
(b)
Associates Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investment in associates is accounted for by the equity method of accounting and initially recognised at cost. The Group’s share of its associates’ post-acquisition profits of losses is recognised in the consolidated statement of comprehensive income, and its share of post-acquisition movements in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any secured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associate. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
(c)
Joint ventures A joint venture exists where the Group has a contractual arrangement with one or more parties to undertake activities typically, however not necessarily, through entities that are subject to joint control. The Group recognizes interest in a jointly controlled entity using the equity method. The Group’s share of the results of joint ventures is based on financial statements made up to date not earlier than three months before the reporting date. Intergroup gains on transactions are eliminated to the extent of the Group’s interest in the investee. Intergroup losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Non- controlling interest For business combinations completed on or after January 3, 2010 the Group has the choice, on a business combination by business combination basis, to initially recognize any noncontrolling interest in the acquiree at either acquisition date fair value or, as was required prior to January 3, 2010, at the non-controlling interest’s proportionate share of the acquiree’s net assets. The Group has not elected to take the option to use fair value in acquisitions completed to date.
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20 WINFRESH LIMITED
WINFRESH LIMITED Notes (Continued) Notes to Consolidated Financial Financial Statements Statements (Continued) January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
3.
Summary of significant accounting policies (continued) Non- controlling interest (cont’d) From January 3, 2010, the total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests. Before this date, unfunded losses in such subsidiaries were attributed entirely to the Group. In accordance with the transitional requirements of IAS 27 (2008), the carrying value of non-controlling interests at the effective date of the amendment was not restated. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the consolidated statement of financial position. Investments The Group classifies its investments as loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of loans and receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to their original terms. Regular way purchases and sales of investments are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus, in the case of all financial assets not carried at fair value through the consolidated statement of comprehensive income, transaction costs that are directly attributable to their acquisition. Investments are derecognised when the rights to receive cash flows from the investment have expired or where they have been transferred and the Group has also transferred substantially all risks and rewards of ownership. Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at fair value less provision of impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the consolidated statement of comprehensive income. Inventories Inventories, which are comprised of shipments of bananas in transit, bananas held in storage at a ripening depot and packaging materials, are stated at the lower of cost and net realisable value. Cost for bananas is determined by reference to the invoiced price together with the delivery costs incurred in shipping the bananas to the United Kingdom and to a ripening depot. Cost for packaging materials is determined using the weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses. 10
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21 WINFRESH LIMITED
WINFRESH LIMITED Notes to Consolidated Consolidated Financial Financial Statements (Continued) Notes to Statements (Continued) January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
3.
Summary of significant accounting policies (continued) Property, plant and equipment Land and buildings comprise warehouses and offices. All assets are stated at historical cost less depreciation. Historical cost includes 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 of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated statement of comprehensive income during the financial year in which they are incurred. Increases in the carrying amount arising on revaluation of land and buildings are credited to other reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the other reserves directly in equity; all other decreases are charged to the consolidated statement of comprehensive income. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to the consolidated statement of comprehensive income and depreciation based on the asset’s original cost is transferred from “other reserves” to “retained earnings”. Land is not depreciated. Depreciation on other assets is calculated using the straight-line and reducing balance method to allocate their costs or revalued amounts to their residual values over their estimated useful lives, as follows: Buildings-(straight-line) Plant and machinery- (straight –line) Office furniture and equipment-(straight-line and reducing method) Computer equipment-(straight-line) Motor Vehicles-(straight-line)
2% 15% - 20% 25% - 33% 25% - 33% 25%
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the consolidated statement of comprehensive income. Investment property Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. The Credit Union’s investment property is being held for long term capital appreciation and is recorded at cost. When the use of a property changes such that it is reclassified as property, and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.
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22 WINFRESH LIMITED
WINFRESH LIMITED Notes to to Consolidated Consolidated Financial FinancialStatements Statements (Continued) (Continued) Notes January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
3.
Summary of significant accounting policies (continued) Impairment of non-financial assets Assets that have an indefinite useful life, for example land, 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). Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date. Deferred income tax 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 consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit of loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax assets is realised or the deferred income liability is settled. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not be reverse in the foreseeable future. Share capital Ordinary shares are classified as equity. Preference shares, which have discretionary dividend obligations and are not redeemable at a specific date or at the option of the shareholders, are also classified as equity. Dividend distribution A dividend distribution to a group company‘s shareholders is recognised as a liability in the Group’s consolidated financial statements in the period in which the dividends are approved by the company’s shareholders.
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23 WINFRESH LIMITED
WINFRESH LIMITED Notes Consolidated Financial (Continued) Notes to to Consolidated Financial Statements Statements (Continued) January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
3.
Summary of significant accounting policies (continued) Contributed capital Property, plant and equipment transferred and donated to the Group are included in property, plant and equipment at cost or valuation, and the corresponding credit is recorded in contributed capital reserve. This contributed capital reserve is amortised to retained earnings on a straight line basis using the same rates used to provide depreciation on the applicable assets. Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the lease. Employee benefits Pension obligations The subsidiary company, Winfresh (UK) Limited, is party to a multi-employer defined benefit pension scheme. The actuaries of the scheme have confirmed to the directors that the company is unable to identify its share of the underlying assets and liabilities of the scheme on a reasonable consistent basis. Accordingly, there is insufficient information for the scheme to be accounted using defined benefit accounting and so it is accounted for as if it were a defined contribution pension scheme. A defined contribution pension scheme is pension plan under which the company pays fixed contributions to a separate entity, typically being a pension fund. The company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior year. The assets of the scheme are held in separate independently administered fund. The subsidiaries’ contributions are charged to the consolidated statement of comprehensive income in the year to which they relate. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Company’s activities. Revenue is recognised as follows: (a) Banana trading Banana trading income (including fees, recoveries, sales and commissions) is recognised upon delivery of products and customer acceptance. (b)
Interest income Interest income is recognised on a time-proportion basis using the effective interest method.
(c)
Other income Other income is recognised on an accruals basis.
(d)
Dividend income Dividend income is recognised when the right to receive payment is established. 13 Winfresh
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24 WINFRESH LIMITED
WINFRESH LIMITED Notes Notes to to Consolidated Consolidated Financial FinancialStatements Statements (Continued) January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
3.
Summary of significant accounting policies (continued) Foreign currency transactions
(a)
Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year- end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income. Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss.
(b)
Group companies The results and financial position of all the group’s entities that have a functional currency different from the presentational currency are translated into the presentational currency as follows: (i)
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that balance.
(ii)
Income and expenses for each statement of comprehensive income are translated at the average exchange rates for the financial period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the date of the transaction); and
(iii)
All resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations and of borrowing are taken to shareholders’ equity. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the consolidated statement of comprehensive income as part of the gain or loss of sale. Comparatives Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with comparative information. 4.
Financial risk management Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and fair value risk), credit risk, liquidity risk and interest rate risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise the potential adverse effects on the Group's financial performance. Risk management The Directors are charged with the overall responsibility of establishing and monitoring the Group's risk management policies and processes. The Company's overall risk management policies and processes focuses on identifying, analysing and monitoring all potential risks such as foreign exchange risk, interest rate risk and credit risk that are faced by the Group. All treasury transactions are reported to and approved by the Directors. 14
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25 WINFRESH LIMITED
WINFRESH LIMITED Notes Notes to Consolidated Financial Statements (Continued) to Consolidated Financial Statements (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed In Eastern Caribbean Dollars)
4.
Financial risk management (Cont’d)
(a)
Market risk (i)
Foreign exchange risk The Group trades internationally and is exposed to foreign exchange rate risk from various currency exposures, primarily with respect to the US dollar and Sterling/UK pound. The exchange rate of the Eastern Caribbean dollar (EC$) to the United States dollar (US$) has been formally pegged at EC$2.70 = US$1.00 since July 1976. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities re nominated in a currency that is not the entity functional currency. The Group purchases its bananas and fresh produce in foreign currency and forward currency contracts are occasionally used for the purchase. All costs denominated in foreign currency are settled using the spot rate. There were no outstanding forward currency contracts at the balance sheet date.
The following table summarizes the Company's exposure to foreign currency exchange rate risk at January 1, 2011. At January 1, 2011
EC
US
STG
Euro
Total
136,718
4,478,356
8,868,517
151,070
13,634,661
-
1,194,305
-
23,554,433
Financial assets Cash and cash equivalents
$
Investments: Loans and receivables
1,194,305
-
Trade and other receivables
3,523,143
990,408
Due from related parties
6,794,627
Total financial assets
11,648,793
19,040,882
5,468,764
-
6,794,627
27,909,399
-
151,070
45,178,026
6,341,100
-
8,428,519
Financial liabilities Bank overdraft and borrowings
2,087,419
Trade and other payables
3,521,866
4,771,211
12,837,540
Total financial liabilities Net balance sheet financial Position
5,609,285
4,771,211
$
6,039,508
$
-
-
21,130,617
19,178,640
-
29,559,136
697,553
8,730,759
151,070
15,618,890
9,987,839
5,869,265
40,853,207
58,815
56,769,126
(3,627,273)
(11,861,413)
(15,264,136)
(55,645)
(30,808,467 )
6,360,566
(5,992,148)
25,589,071
3.170
25,960,659
At January 2, 2010 Total financial assets Total financial liabilities Net balance sheet financial Position
$
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26 WINFRESH LIMITED
WINFRESH LIMITED Notes Notesto to Consolidated ConsolidatedFinancial FinancialStatements Statements (Continued) (Continued) January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
4.
Financial risk management (Cont’d)
(a)
Market risk (cont’d) (i)
Foreign exchange risk (cont’d) At January 1, 2011 if the EC$ had weakened/strengthened by 10% against the GBP with other variables held constant, post tax loss/profit for the year would have been $873,076 (January 2, 2010 - $2,558,907) lower, mainly as a result of foreign exchange gains / losses on translation of GBP denominated bank balances, trade receivables, and trade payables.
(ii) Cash flow and fair value interest rate risk The Group has interest bearing assets at fixed interest rates which expose the Group to fair value interest rate risk. The Group has determined that the value interest rate risk was not significant at the balance sheet date. (b)
Credit risk Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, investments classified as loans and receivables, trade and other receivables, due from related parties and committed transactions. The Group manages its exposure to this risk by applying contractual terms that have been approved by the Directors to the amount of credit exposure to any one counterparty. It also employs strict minimum credit worthiness criteria as to the choice of counterparty, thereby ensuring that there is significant concentration on credit risk. The Group assesses the credit quality of customers on a case by case basis taking into account their financial position, past experience and other factors. Management does not set individual credit limits. If customers are independently rated, these ratings are used. If there is no independent rating, management assesses the credit quality of the customer, taking into account their financial position, past experience and other factors. The amount of the Group's maximum exposure to credit risk is indicated by the carrying amount of its financial assets at the balance sheet date. Management does not foresee any losses from non-performance by these counterparties as at January 1, 2011 and January 2, 2010. The credit quality of the financial assets that are neither past due nor impaired (fully performing) can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. The independent ratings are based on publicly available ratings supplied by Standard & Poor, CRIF Decision Solutions Limited and Fitch Ratings Limited.
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27 WINFRESH LIMITED
WINFRESH LIMITED
Notes to Consolidated Financial Statements (Continued) Notes to Consolidated Financial Statements (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed In Eastern Caribbean Dollars)
4.
Financial risk management (Cont’d)
(b)
Credit risk (cont’d) Cash and cash equivalents Bank
Ratings
Bank 1 Bank 2 Bank 3 Bank 4 Bank 5
BB AAA A AA Unrated
January 1, 2011 $
$
475,874 3,843,565 8,855,541 182,493 87,748 181,176 13,626,397
January 2, 2010
Ratings A- to A-2 AA- to A-1+ A A to A-1
1,718,276 8,060,741 8,625,221 1,096,664 301,787 19,802,689
Unrated
The rest of the item cash and cash equivalents in the statement of financial position comprises cash on hand. Trade receivables – neither past due nor impaired Customers
Ratings
1 2 3 3
A-3 B
January 1, 2011 $
AUnrated $
7,599,364 2,410,299 N/A 892,734 10,902,397 3,048,622 13,951,019
January 2, 2010
Ratings A- 3 B Unrated
11,061,906 2,731,596 2,644,448 N/A 16,437,950 4,588,561 21,026,511
Unrated
January 1, 2011
January 2, 2010
Counterparties without external credit ratings: New customers less than 6 months Existing customers more than 6 months no defaults in the past Existing customers more than 6 months with defaults in the past
$
3,048,622 -
$
3,048,622
266,400 6,966,609 7,233,009
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28 WINFRESH LIMITED
WINFRESH LIMITED Notes Notesto to Consolidated ConsolidatedFinancial FinancialStatements Statements (Continued) (Continued) January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed In Eastern Caribbean Dollars)
4.
Financial risk management (Cont’d)
(c)
Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and the ability of funding through an adequate amount of committed credit facilities. Bank overdrafts and trade and other payables are due within twelve (12) months based on the remaining period at the balance sheet date to the contractual maturity date. The contractual undiscounted cash flows of the bank overdrafts and trade payables approximate the carrying amounts at the balance sheet date as the impact of discounting is not significant.
(d)
Capital risk 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 shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, or a return capital to shareholders.
5.
Determination of fair values A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Property, plant and equipment The fair value of property, plant, and equipment recognised as a result of a business combination is the estimated amount for which a property could be exchanged on the date of acquisition between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had acted knowledgeably. The fair value of items of plant, equipment, fixtures, and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and replacement cost when appropriate. Depreciated replacement cost estimates reflect adjustments for physical deterioration as well as functional and economic obsolescence. Goodwill Goodwill is recorded at its fair value, this being the amount in excess of the fair market value of the separately identifiable assets of the subsidiary company that was acquired during the year. In future periods, goodwill be assessed for impairment. Trade and other Receivables The fair values of trade and other receivables approximate their carrying amounts due to the short term nature of the related transactions. Cash and cash equivalents Due to the short term nature of the transactions, the fair values of cash and cash equivalents approximate their carrying amounts at the reporting date. 18
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29 WINFRESH LIMITED
WINFRESH LIMITED Notes Notes to to Consolidated Consolidated Financial Financial Statements Statements (Continued) (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed In Eastern Caribbean Dollars)
5.
Determination of fair values (Cont’d) Trade and other payables Due to the short term nature of the related transactions, the fair values of trade and other payables approximate their carrying amounts at the reporting date.
6.
Cash and Cash Equivalents Cash and cash equivalents comprise:
Cash at bank and on hand
$
January 1, 2011
January 2, 2010
13,634,661
19,805,777
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following:
Cash at bank and on hand Bank overdrafts
$
January 1, 2011
January 2, 2010
13,634,661 (2,087,419)
19,805,777 (1,636,338)
$ (11,547,242) 7.
Held-to-maturity financial assets
January 1, 2011
Debt security at amortised cost
$
1,194,305
18,169,439 January 2, 2010 1,184,919
Held-to-maturity financial assets comprise term deposits with banks. The weighted average effective interest rate on term deposits is 3% and 3.25% (January 2, 2010 - 3% and 3.25%) per annum. Term deposits mature within one year. 8.
Trade and other receivables
January 1, 2011
Trade receivables Less: provision for impairment of trade receivables
$
Trade receivables, net Other receivables Prepayments $
January 2, 2010
19,214,484 (639,252)
27,715,269 (854,543)
18,575,232 2,718,460 1,356,364
26,860,726 3,033,298 94,223
22,650,056
29,988,247
Included in trade and other receivables are amounts totalling $Nil (January 2, 2010 -$1,072,042) due from related parties. No impairment has been recognised in respect of these balances. 19 Winfresh
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30 WINFRESH LIMITED
WINFRESH LIMITED Notes (Continued) Notes to Consolidated Financial Financial Statements Statements (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed In Eastern Caribbean Dollars)
8.
Trade and other receivables (cont’d) The credit quality of trade and other receivables is summarised as follows:
Neither past due nor impaired
$
January 1, 2011
January 2, 2010
13,951,019
21,026,511
4,624,213 639,252
5,834,215 854,543
19,214,484
27,715,269
Past due but not impaired Impaired Gross
$
The ageing of trade receivables that are past due and not impaired is as follows:
Up to 1 month 1 to 2 months Over 2 months
$
January 1, 2011 4,318,805 113,408 192,000
January 2, 2010 5,186,764 168,402 479,049
$
4,624,213
5,834,215
Trade receivables that are less than three months past due are not considered impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing of trade receivables that are impaired is as follows:
Over 2 months
January 1, 2011
January 2, 2010
639,252
854,543
$
The impaired receivables mainly relate to customers, who are in unexpectedly difficult economic positions. Management has reviewed the position and determined that a part of these receivables is expected to be recovered. Other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables mentioned above. The Group does not hold any collateral as security.
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31 WINFRESH LIMITED
WINFRESH LIMITED Notes Notesto toConsolidated ConsolidatedFinancial FinancialStatements Statements (Continued) (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed In Eastern Caribbean Dollars)
9.
Provision for impairment of trade receivables The movement in the provision for impairment of receivables is as follows: January 1, 2011 At beginning of year Provisions during the year Write back of provisions during the year At end of year
$
$
854,543 480,311 (695,602) 639,252
January 2, 2010 668,083 186,460 854,543
The creation and release of the provision for impaired receivables has been included in general and administrative expenses in the consolidated statement of comprehensive income. When there is no expectation of recovering additional cash, amounts charged to the allowance account are generally written off against trade receivables. 10.
Related Party transactions and balances The Group is related to four Banana Grower Associations (BGA’s) and the Governments of the Windward Islands (see Note 1) which together own 100% of the Company’s shares. The Group owns 50% of Windward Isles Banana Company Holdings (Jersey) Limited and 50% of Windward Isles Banana Company (UK) Limited. The following transactions were carried out with the above mentioned related parties:
Purchase of goods and services • Purchase of bananas from BGAs • Purchase of fresh produce
$
January 1, 2011
January 2, 2010
59,389,036 -
88,070,546 517,549
Purchases from related parties were carried out on a commercial terms and conditions and at market prices. January 1, January 2, 2011 2010 Key management compensation: Salaries and other short-term b fi
$
4,015,434
2,744,626
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32 WINFRESH LIMITED
WINFRESH LIMITED Notes Notes to to Consolidated Consolidated Financial FinancialStatements Statements (Continued) (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed In Eastern Caribbean Dollars)
10.
Related Party transactions and balances (cont’d) Year end balances arising from sales/purchases of good/services:
Due to related parties Current St. Lucia Banana Corporation Government of Saint Lucia Vincyfresh Limited (formerly Lauders Agro Processors Inc.) National Properties Food City Inc
$
$ Non-current Grenada Banana Cooperative Society Dominica Banana Marketing Corporation
$ $
January 1, 2011
January 2, 2010
1,435,742 4,439,375
1,357,638 4,232,545
15,430 5,890,547
200,000 5,790,183
782,607 121,473 904,080
768,834 121,473 890,307
Balances with related parties are unsecured, non-interest bearing and have no fixed terms or repayment. During the previous financial year the company accepted an offer from the Government of Saint Lucia for the settlement of the amount due by way of transfer of land valued at $4,439,375. The transfer is still being negotiated at the balance sheet date. Loans to joint venture January 1, 2011
January 2, 2010
Loan to joint venture: Windward Isles Banana Company Holdings (Jersey) Limited At beginning of year Foreign exchange loss Fair value adjustment At end of year
$
$
-
10,620,524 (10,315,109) (305,415) -
Loans due from the joint venture are interest free, unsecured and have not specific repayment terms.
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WINFRESH LIMITED WINFRESH LIMITED Notes to to Consolidated Consolidated Financial Financial Statements Statements (Continued) Notes (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
11.
Other Receivables Other receivables include an amount of $845,480 (January 2, 2010- $Nil) due to a subsidiary, which bears interest at LIBOR rate plus 3% per annum and is stated at its fair value as at the balance sheet date.
12.
Intangible assets
Cost As at January 2, 2010 Additions As at January 1, 2011
$
Patents
Goodwill
Total
19,725 19,725
2,546,996 2,546,996
2,566,721 2,566,721
Amortisation As at January 2, 2010 Charge for the year As at January 1, 2011 Carrying Value Balance as at January 1, 2011 Balance as at January 2, 2010
410 410 $ $
19,315 -
2,546,996 -
410 410 2,566,311 -
The goodwill arises on the acquisition of Winfruit Limited by Winfresh (UK) Limited.
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WINFRESH LIMITED WINFRESH LIMITED Notes (Continued) Notes to toConsolidated ConsolidatedFinancial FinancialStatements Statements (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
13. Property, plant and equipment Leasehold improvements Cost Balance at December 28, 2008 Additions Disposals Currency translation adjustment Balance at January 2, 2010
$
Plant and machinery
Computer equipment
Motor vehicles
Total
246,659
680,815 24,162,092 56,996 24,899,903
5,037,907 1,068,404 (1) 111,350 6,217,660
3,727,125 965,437 64,598 4,757,160
2,613,636 674,928 (2,358) 45,986 3,332,192
964,414 485,596 (42,096) 11,470 1,419,384
13,270,556 27,356,457 (44,455) 290,400 40,872,958
246,659 (15,641) (224,141) 6,877
24,899,903 1,808,850 118,717 (607,036) 26,220,434
6,217,660 6,120,026 (11,349) 5,100 (48,873) 12,282,564
4,757,160 288,566 99,324 (34,889) 5,110,161
3,332,192 237,262 (25,462) 3,543,992
1,419,384 441,064 (14,928) (8,540) 1,836,980
40,872,958 8,895,768 (41,918) (724,800) 49,002,008
Accumulated depreciation Balance at December 28, 2008 Charge for the year Balance at January 2, 2010
(2,944) (4,933) (7,877)
(98,938) (268,920) (367,858)
(3,253,066) (900,700) (4,153,766)
(2,738,470) (617,694) (3,356,164)
(1,751,897) (497,052) (2,248,949)
(768,780) (195,089) (963,869)
(8,614,095) (2,484,388) (11,098,483)
Balance at January 2, 2010 Charge for the year Adjustment Balance at January 1, 2011
(7,877) (7,877)
(367,858) (408,404) (118,717) (894,979)
(4,153,766) (982,606) (5,100) (5,141,472)
(3,356,164) (526,250) (99,324) (3,981,738)
(2,248,949) (488,438) (2,737,387)
(963,869) (287,382) (1,251,251)
(11,098,483) (2,693,080) (223,141) (14,014,704)
(1,000) 238,782 243,715
25,325,455 24,532,045 581,877
7,141,092 2,063,894 1,784,841
1,128,423 1,400,996 988,655
806,605 1,083,243 861,739
585,729 455,515 195,634
34,987,304 29,774,475 4,656,461
Balance at January 2, 2010 Additions Disposals Transfers Currency translation adjustment Balance at January 1, 2011
Net book value at January 1, 2011 Net book value at January 2, 2010 Net book value at December 28, 2008
14.
$ $ $
246,659 -
Land and buildings
Office furniture and equipment
Investments in joint ventures and associates
At the beginning of year Additions during the year Associate becoming a subsidiary during the year Share of profit in joint ventures and associates Share of tax in joint ventures and associates Share of actual losses Dividends Currency translation adjustment Provision of diminution in value
$
$
January 1, 2011
January 2, 2010
100,994,537 (2,579,364) 775,184 (526,540) (5,288,385) (3,367,051) (35,769,219) 54,239,162
89,127,690 1,075,270 1,930,485 (10,896,205 ) 19,757,297 100,994,537
24
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WINFRESH LIMITED
WINFRESH LIMITED Notes Notesto to Consolidated ConsolidatedFinancial FinancialStatements Statements (Continued) (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
14.
Investments in joint ventures and associates (Cont’d) The Group’s share of the results of its joint ventures and its share of assets and liabilities are as follows: Assets
Liabilities
Revenues
$
31,392,672
1,025,145
Windward Isles Banana Company (UK) Limited Vincyfresh Limited (formerly Lauders Agro Processors Inc.) $
99,072,552
65,175,940
99,369,825
N/A
N/A
N/A
36,850,230
36,174,399
1,932,365
106,761,677
3,360,744
105,075,675
1,619,719
316,717
324,432
2011 Windward Isles Banana Company Holdings (Jersey) Limited
-
2010 Windward Isles Banana Company Holding (Jersey) Limited $ Windward Isles Banana Company (UK) Limited Vincyfresh Limited (formerly Lauders Agro Processors Inc.) $
Windward Isles Banana Company (UK) Limited (WIBUK) and Windward Isles Banana Company Holdings (Jersey) Limited (WIBJ) are incorporated in the United Kingdom and Jersey respectively, on a 50% joint-venture basis with Fyffes Plc for the acquisition of the banana operating division of the Geest Group of Companies. From December 2010, Vincyfresh Limited (formally Lauders Agro Processors Inc.) became 60% subsidiary of Winfresh Limited (Note 29). The principal activity of Vincyfresh Limited (formally Lauders Agro Processors Inc.) is the processing and exporting of fresh produce. From August 2010, Winfruit Limited became a 75% subsidiary of Winfresh (UK) Limited (Note 29). The principal activity of Winfruit Limited is that of the manufacture and production of a range of non-dairy freezer fruit desserts and the reason for this acquisition was to diversify the Group’s core trading activities. 15.
Investment property On December 31, 2010, Vincyfresh Limited, one of the group companies, purchased a property in Diamond, St. Vincent for $2,936,329. Subsequent to the end of the period, the property was used as the consideration for an investment in a newly incorporated company.
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WINFRESH LIMITED
WINFRESH LIMITED Notesto to Consolidated ConsolidatedFinancial FinancialStatements Statements (Continued) (Continued) Notes January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
16. Trade and other payables
January 1, 2011
January 2, 2010
10,966,076
18,858,287
Other payables
3,288,870
10,136,084
Accrued expenses
6,875,671
122,113
21,130,617
29,116,484
Trade payables
$
$
Included in trade and other payables are balances due to related parties of $2,113,700 (January 2, 2010 - $9,601,866) 17. Loans and borrowings
January 1, 2011
January 2, 2010
Bank loans
$
6,341,100
-
Analysis of loans Wholly repayable within five
$
6,341,100
6,341,100
Loan maturity analysis In more than two years but not more than five years
$
6,341,100
6,341,100
This comprises a bank loan to a subsidiary company which is secured by way of a debenture over the Group’s long leasehold property and improvements, and a guarantee by the ultimate parent company. 18. Deferred income tax asset Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax rate of 28% (January 2, 2010 - 28%). The movement on the tax (asset) account is as follows: January 1, January 2, 2011 2010 At beginning of year Amount (charged)/written back to consolidated statement of income Exchange difference
$
At end of year
$
256,179 (1,392 ) (7,818 ) 246,969
116,034 125,086 15,059 256,179
Deferred taxes arise from decelerated capital allowances in the United Kingdom.
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WINFRESH LIMITED WINFRESH LIMITED Notes to to Consolidated Financial Statements Statements (Continued) Notes Consolidated Financial (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
19. Share capital
January 1, 2011
January 2, 2010
5,000,000 15,000,000 20,000,000
5,000,000 15,000,000 20,000,000
January 1, 2011
January 1, 2010
$
(614,936 ) 6,113,742 220,768 (35,769,219 ) 699,530
1,878,616 2,507,530 46,711 -
$
(29,350,115 )
4,432,857
January 1, 2011
January 2, 2010
51,326 4,126,400 84,772 1,536,394 5,798,892
50,456 10,896,025 74,625 2,054,410 13,075,516
January 1, 2011
January 2, 2010
Authorized: Unlimited ordinary shares Unlimited 5% non-cumulative preference shares Subscribed: 500 ordinary shares h 1,500 - 5%dinon-cumulative preference shares
$ $
20.
Other (losses)/gains, net
Foreign exchange gains/(losses) - Unrealised (losses)/gains on translation of balances - Realised losses on transactions Gain on disposal of property, plant and equipment Provision for diminution in value of fixed asset investment Discount on acquisition
21. Other Income
Agency fees and commissions Dividend income Interest income Miscellaneous income
$
$ 22. Non-controlling interest
Minority share of loss for the year Minority share of equity in Sunfruit Limited
$ $
(133,451 ) 1,750,000 1,616,549
-
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WINFRESH LIMITED
WINFRESH LIMITED Notesto to Consolidated ConsolidatedFinancial FinancialStatements Statements (Continued) (Continued) Notes January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
23. Expenses by nature
January 1, 2011
January 2, 2010
$
27,372 218,276 974,759 240,081 425,731 2,341,671 243,374,237 1,314,348 800,000 380,170 122,046 1,114,602 160,336 288,800 88,658 723,819 188,716 9,847,482 93,013 83,103 138,035 217,386 763,990 62,502
81,456 291,760 723,069 78,563 438,555 2,484,388 254,526,236 1,320,376 223,518 1,082,334 833,705 304,685 233,943 595,388 1,840,947 11,938,401 226,851 19,981 252,008 216,924 923,076 30,516
$
263,989,133
278,666,680
$
233,755,709 9,618,528 20,614,896
252,436,494 11,848,298 14,381,888
$ 263,989,133
278,666,680
Notes Advertising and publicity Audit fees Bad debt expenses Bank charges Communication Depreciation and amortisation Direct costs Directors’ fees Impairment of goodwill Information technology support costs Insurance Legal and professional fees Light and heat Other expenses Printing, postage and stationery Rent and service charges Repairs and renewals Salaries and wages Security Subscriptions and donations Subsistence Telephone Travel and entertaining Vehicle expenses Total cost of goods sold, administrative and general expenses
24
Cost of goods sold Distribution and selling Administrative and general expenses Total cost of goods sold, administrative and general expenses
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WINFRESH LIMITED WINFRESH LIMITED
Notes to Consolidated Financial Statements (Continued) Notes to Consolidated Financial Statements (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
24. Employee benefit expenses
Salaries and wages Social security costs Other staff costs
25.
January 1, 2011
January 2, 2010
$
8,393,110 804,221 650,151
10,346,290 836,193 755,918
$
9,847,482
11,938,401
January 1, 2011
January 2, 2010
Income tax expense
Current tax Share of joint venture tax Deferred tax charge
$
526,540 1,392
207,804 (125,086 )
Current tax charge
$
527,932
82,718
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the applicable standard rate as follows:
26.
(Loss)/profit before income tax
$
(44,264,800 )
11,280,252
Tax calculated at standard rate 30% Tax effect of consolidation adjustment Exempt profit Expenses not deductible for tax purposes Deferred tax not recognised Other tax adjustments
$
(13,279,440 ) 13,176,385 99,458 479,852 1,392 50,285 527,932
3,384,076 (2,688,014 ) (570,962 ) 9,882 (13,340 ) (38,924 ) 82,718
$
Pension costs The subsidiary company, Winfresh (UK) Limited, is party to a multi-employer defined benefit pension scheme and the scheme’s actuaries have confirmed to the directors that they will be unable to supply the trustees of the pension scheme with any allocation of the pension scheme’s assets and liabilities between the pension scheme’s participating employers on a reasonably consistent basis. Consequently, in accordance with International Accounting Standard No. 19 (IAS 19) the scheme has been accounted for as if it were a defined contribution pension scheme.
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WINFRESH LIMITED
WINFRESH LIMITED NotestotoConsolidated ConsolidatedFinancial FinancialStatements Statements(Continued) (Continued) Notes January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed in Thousands of Eastern Caribbean Dollars)
27.
Pension costs (Cont’d) The constitution of the scheme requires a triennial valuation to be performed by an independent actuary and the last such valuation was performed at December 21, 2009. As part of this valuation the trustees has previously produced a Statement of Funding Principles (SFP) in April 2008, which sets out the trustees’ policy for ensuring that the scheme’s statutory funding objective is met. The valuation performed at December 31, 2009 revealed that, on SFP basis, there was a funding deficit of $20,215,000 in the scheme at that date (previous triennial valuation at December 31, 2006 disclosed a funding deficit of $15,269,000 at that date when restated to the SFP basis). In each case the funding level was less than the 90% required by the minimum funding requirements rules. A supplementary IAS 19 report prepared by the independent actuaries at December 31, 2010 estimates that the pension scheme deficit at December 31, 2010 stated on a consistent basis but now also taking into account that effect of IFRS Interpretations Committee Update 14 (IFRIC 14) was $14,771,000. As before, the funding was less than the 90% required by the minimum funding requirements rules. The trustees have determined to keep the pension fund’s investment strategy under close review and the participating employers have determined that they will do all that they can to preserve accrued entitlements within the scheme via an agreed schedule of revised employer contributions. The participating employers are currently in discussion regarding further steps that may be taken to address the deficit in the scheme. The assets of the scheme are held from those of the subsidiary company in an independently administered fund. The pension cost charge in the consolidated statement of comprehensive income represents contributions payable by the subsidiary company to the fund for the period amounted to $375,537 (period to January 02, 2010 - $383,248). Contributions totalling $33,794 (at January 02, 2010 - $39,497) were payable to the fund at the reporting date and are included in other payables.
28.
Commitments The Group has entered into an arrangement with its subsidiary, Winfresh (UK) Limited, whereby it has been agreed that in the event of a disposal of the subsidiary company’s investment in the joint venture, Windward Isles Banana Company (UK) Limited, Winfresh Limited will purchase the investment for a consideration at least equal to its cost value of $63,665,832. The subsidiary company’s share of the net assets in the joint venture at the balance sheet date was $27,897,000 (January 2, 2010 - $33,661,000).
29.
Guarantees The subsidiary company, Winfresh (UK) Limited, has provided payment guarantee to the UK tax authority, HM Revenue & Customs. At the reporting date, the maximum amount under this guarantee totalled $1,056,850 (January 2, 2010 - $1,090,050).
30.
Contingent liabilities
30.1 The Group is contingently liable in respect of disputed liabilities that may be due under the banana contract sales agreement with the banana companies. These amounts are currently being negotiated and the full amount of the liability, if any, cannot be determined at the
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WINFRESH LIMITED
WINFRESH LIMITED NotestotoConsolidated ConsolidatedFinancial FinancialStatements Statements(Continued) (Continued) Notes January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
30.
Contingent liabilities (cont’d)
30.1 (Continued) reporting date. Resolution of these disputed liabilities is expected to result in charges/write backs to the statement of comprehensive income in the period in which this occurs. 30.2 The Group has entered into a recovery plan designed to restore the minimum funding level of the defined benefit pension scheme referred to in Note 25, of which it is one of the participating employers, by the way of a schedule of revised employer contributions. Because the assets and liabilities of the scheme are not segregated, the group’s liability cannot as yet be accurately determined. 30.3 The Group has been in discussion with the tax authorities in Saint Lucia regarding tax exempt status from inception. Because of the strong likelihood that tax exempt status will be granted, income tax liabilities in respect of the group parent company has not been reflected in these financial statements. 31.
Acquisition during the year (1) Winfruit Limited On August 3, 2010 the subsidiary company, Winfresh (UK) Limited, acquired shares in Winfruit Limited and increased its shareholding in this company from 33.33% to 75.00%. Accordingly, Winfruit Limited became a subsidiary undertaking of Winfresh (UK) Limited from that date. Further details are given in note 13. Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows: Book value
Adjustments
Fair value
Patent rights and trademarks Property, plant and equipment Inventories Trade and other receivables Cash Trade and other receivables
$
16,250 78,858 15,168 132,964 30,260 (491,199)
-
16,250 78,858 15,168 132,964 30,260 (491,199 )
Total net liabilities
$
(217,699)
-
(217,699 )
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WINFRESH LIMITED
WINFRESH LIMITED Notesto toConsolidated ConsolidatedFinancial FinancialStatements Statements(Continued) (Continued) Notes January 1, 2011
January 1, 2011
(Expressed in Eastern Caribbean Dollars)
(Expressed in Thousands of Eastern Caribbean Dollars)
31.
Acquisition during the year (Cont’d) (1) Winfruit Limited (Cont’d) Cash Capitalisation of loan account Nominal value of shares acquired Total consideration
$
845,480 1,479,590 4,227 2,329,297
Goodwill on acquisition (Note 12)
$
2,546,996
The main factors leading to the recognition of goodwill were the Group’s desire to assume control of Winfruit Limited’s manufacturing processes and the perceived commercial value and viability of products that are being developed by that company. The operations of Winfruit Limited were still in a product development stage at the reporting date. However, based on their assessment of the retail freezer fruit dessert market, foreseen sales and feedback from various product trials which the company has undertaken, the Directors are confident that, within the foreseeable future, being a period of twelve months from the date of approval of these consolidated financial statements, Winfresh will begin profitable trading operations. Consequently, the Directors do not consider that any provision for impairment of goodwill is required at the balance sheet date. Since the acquisition date, Winfresh Limited has contributed $3,464 to Group revenues and has reduced Group profit by $300,308. If the acquisition had occurred on January 3, 2010, Group revenue would have been increased by $12,073 and Group profit would have been reduced by $1,047,104. (2) Vincyfresh Limited (formally Lauders Agro Processors Inc.) On December 7, 2010 the parent company, Winfresh Limited, acquired shares in Vincyfresh Limited (formerly Lauders Agro Processors Inc.) and increased its shareholding in this company from 40.00% to 60.00%. Accordingly, Vincyfresh Limited (formerly Lauders Agro Processors Inc.) became a subsidiary undertaking of Winfresh Limited from that date. Further details are given at note 13.
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WINFRESH LIMITED WINFRESH LIMITED Notes to to Consolidated Financial Statements Statements (Continued) Notes Consolidated Financial (Continued) January 1, 2011
(Expressed in Eastern Caribbean Dollars)
January 1, 2011
(Expressed in Thousands of Eastern Caribbean Dollars)
31.
Acquisition during the year (Cont’d) (2) Vincyfresh Limited (formally Lauders Agro Processors Inc.) (Cont’d) Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and discount are as follows: Book value Adjustments Fair value $ $ $ Property, plant and equipment Inventories Trade and other receivables Cash Other investment Trade and other receivables
$
1,999,549 52,431 529,175 74,397 2,936,329 (92,351)
-
1,999,549 52,431 529,175 74,397 2,936,329 (92,351 )
Total net liabilities
$
5,499,530
-
5,499,530
Total cash consideration
$
4,800,000
Discount on acquisition (Note 20)
$
699,530
Since the acquisition date, Vincyfresh Limited (formerly Lauders Agro Processors Inc.) has contributed $20,686 to Group revenues and has reduced Group profit by $55,927. If the acquisition had occurred on January 3, 2010, the Group revenue would have been increased by $302,017 and Group profit would have been reduced by $816,540. 32.
Post balance sheet events During the subsequent financial period to the date of approval these consolidated financial statements, the Group has incurred $6,287,146 in respect of further improvements to its land and buildings
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44 WINFRESH LIMITED Notes to Consolidated Financial Statements (Continued) January 1, 2011
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Winfresh
Facing the challenges of diversification
(Expressed in Eastern Caribbean Dollars)
46 WINFRESH LIMITED Notes to Consolidated Financial Statements (Continued) January 1, 2011
Annual Report 2010 1st Floor, M&C Building, Bridge Street, P.O. Box 115, Castries, Saint Lucia W.I. Telephone: + 1 758 457 8600 Fax: + 1 758 453 1638 www.winfresh.net
Winfresh
Facing the challenges of diversification
(Expressed in Eastern Caribbean Dollars)