Delivering wholesomeness value quality for healthy growth
04
THE WINFRESH GROUP The Winfresh Group consists of the parent company, Winfresh Limited, together with the following subsidiary undertakings and associated companies:
Subsidiary Companies Winfresh (UK) Limited Winfruit Ltd (Subsidiary company of Winfresh (UK) Limited) Windward Isles Banana Company (UK) Ltd (Associated company of Winfresh [UK] Limited) Vincyfresh Limited Sunfresh Limited
Associated Company 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.
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.
Delivering wholesomeness value quality for healthy growth
GROUP DIRECTORS
BUSINESS ADDRESSES
Montgomery Daniel - Chairman Cecil Ryan Vanoulst Jno Charles Deles Warrington James Fletcher Eustace Vitalis Ferron Lowe Gemma Bain-Thomas Bernard Cornibert (Winfresh UK only) Martina Edwin (Winfresh UK only)
Winfresh Agricultural Complex | Odsan | P O Box 115 Castries | Saint Lucia WI Telephone +1 758 457-8600 Fax +1 758 453-1638 Winfresh UK High Cross Lane East | Little Canfield | Essex CM6 1TH | United Kingdom Telephone +44 (0) 1371 877 000 Fax +44 (0) 1371 873 531 E-Mail info@wnfresh.net Web www.winfresh.net
GROUP EXECUTIVES Bernard Cornibert
Chief Executive
Martina Edwin
Company Secretary
Roy Hugh Sales & Marketing Director Phil Collins
Procurement Director
Ashley James Operations Director and Acting Finance Director Errol Reid Technical Director
REGISTERED ADDRESSES 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
AUDITORS Price Bailey LLP 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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Delivering wholesomeness value quality for healthy growth
chairman’s
STATEMENT I am pleased to report on the performance of the Winfresh Group for the year ended December 2011. While I am encouraged by the improvement in performance and results relative to the previous year’s, I remain very much aware that the Group has fallen short of its performance target for this reporting year. Equally, however, we have to recognise the many challenges facing the Group as a whole and the hurdles it has been striving to overcome, both with its core business or principal activities and as well as with those of its constituent members. The full impact of the damages caused by Tropical Storm Tomas, in October 2010, was felt in 2011, the period on which we are reporting. The Group was affected not just by the loss of supplies from crop damages but also by significant damages to plant and machinery, which severely disrupted production and sales for almost the whole of 2011. The problems were exacerbated by the outbreak of Black Sigatoka disease in the banana crops in the main banana producing regions of the Windward Islands. Not only did this affect supplies to the Group but its negative impact on product quality had an even greater financial impact on the Group. It is against this truly awful backdrop that the seemingly poor performance of the Group, in this reporting period, must be assessed. However, notwithstanding those dreadful circumstances, we must now put those behind us and forge ahead with the Group’s plans towards full diversification. We cannot afford to rest on our laurels—we have to identify the areas of weaknesses within the Group and to deal with them decisively. We are in a race with time and it is one the Group cannot afford to lose.
The Group has already started rolling out its new range of products. It will continue to do so slowly in the weeks or months ahead and it will accelerate the process leading up to 2013. We should all be excited by this, not just because of the prospects for growth for the Group but particularly because of the backward linkages this will create with agriculture and the role the Group will play in leading agricultural diversification, processing and marketing in the sub-region. Despite the difficulties and setbacks of the past, we remain confident that the Group is on the right path and hopeful of its success in attaining sustainable growth for the benefit of all of its stakeholders. We ask you to join the Winfresh Group on its journey and hope that you will share in the benefits of its success.
Montgomery Daniel CHAIRMAN
Board of directors First row from the left: Montgomery Daniel, CHAIRMAN (ST VINCENT & THE GRENADINES) | Vanoulst Jno Charles, DIRECTOR (DOMINICA) | Ferron Lowe, DIRECTOR (GRENADA) | Cecil Ryan, DIRECTOR (ST VINCENT & THE GRENADINES) | second row from the left: Eustace Vitalis, DIRECTOR (ST LUCIA) | Deles Warrington, DIRECTOR (DOMINICA) | Gemma Bain-Thomas, DIRECTOR (GRENADA) NOT PHOTOGRAPHED: James Fletcher, DIRECTOR (ST LUCIA) | Renwick Rose, DIRECTOR (ST VINCENT & THE GRENADINES)
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Delivering wholesomeness value quality for healthy growth
Director’s
REPORT
The Directors present their report and consolidated financial statements, in Eastern Caribbean Dollars (XCD), for the Winfresh Group for the period ended 31 December 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 Montgomery Daniel - Chairman Cecil Ryan Vanoulst Jno Charles Deles Warrington Peter Josie Cosmos Richardson Ferron Lowe Gemma Bain-Thomas Bernard Cornibert—Winfresh UK only Martina Edwin—Winfresh UK only
RESULTS AND DIVIDENDS The Group’s results for the period are set out in the statement of comprehensive income on pages 18 and 19. The result after taxation was a loss of $13,047,252, compared to a loss of $53,730,750 in the previous year, of which $10,794,480 was attributable to the owners of the company, against $53,597,299 for previous year. The Group’s consolidated earnings before interest and taxation from operations on its core principal activities was a loss of $16,909,424 (compared to a loss of $45,039,984 for the previous year). However, the Group’s loss, after taxation, was reduced to $10,214,295 (compared to loss of $44,792,732 for the previous year) from the $8,594,215 share of profit ($775,184 in the previous year) from the associated joint venture companies. The Directors do not recommend payment of a dividend for the period.
Delivering wholesomeness value quality for healthy growth
OPERATING AND FINANCIAL REVIEW: The Business of the Group The Group organises the sale of fresh produce in the United Kingdom under the Winfresh brand name. The principal produce traded by the Group hitherto has been bananas. Produce is sourced predominantly from the Windward Islands, but also from other Caribbean and South American countries. Activities include purchasing ex works and loading of the produce in the Windward Islands and shipment to the United Kingdom as well as direct importation from other countries. In the case of bananas, these are ripened at the Group’s specialised ripening facility at Stansted and, finally, distribution and sale to supermarket retailers and secondary wholesalers in the food markets. In addition, the Group has been involved in: •
The production and sales of bottled water and a range of processed foods and juices and beverages, and
•
Research and development into the production, marketing and distribution of non-dairy freezer fruit dessert
OPERATING AND FINANCIAL REVIEW: Business Performance, Principal Risks and Uncertainties Notwithstanding the uplift in overall performance during the year, the challenges with which the Group has been faced in recent years have not abated. The competitive pressures in the retail sectors, exacerbated by the deepening crisis in the financial sectors, continued to keep market prices in check. However, the supply problems from the Group’s principal sources in the Caribbean, which are largely responsible for the loss from operations, continued to be significant determinants of the Group’s performance. Hurricanes and crop diseases are major threats and risks to the Group’s Caribbean supply base and so they remain a source of uncertainty for the year to year performance of the Group. Total volume of bananas purchased from the Windwards Islands was 60.9% lower in the year under review than in the previous period. The main contributing factors were the damages to farms caused by Tropical Storm Tomas in October of 2010 and outbreak of Black Sigatoka disease just as production was recovering from the ravages of the tropical storm. The volume of bananas imported from the Windward Islands accounted for just 16.9 % of the Group’s total purchase, compared to 38.6 % in the previous year.
09 Gross profit from banana trading, before other direct costs for ripening and distribution, was $12,129,138 or 38.7% higher than in the previous trading year. However, total ripening and distribution cost was £3,475,266 or 36.1% higher than in the previous period, thereby completely offsetting any gains in profit before overhead charges. The increase in the ripening and handling costs, in particular, is attributed to the additional labour and materials costs incurred in the post-ripening processing of the bananas as a consequence of the disease and fruit condition problems originating from source, referred to above. There was a 13.9% reduction in the total cost of goods in the year under review, from the previous period. The reduction was attributed to a 15.0% drop in throughput and volumes sales. The reduction in the total cost of goods (fruit) during the period suggested that average fruit cost was broadly in line with that of the previous period. Fairtrade bananas remain a significant part of the Group’s product offer, with Fairtrade accounting for more than 85% of its total banana volume sales in the period. Therefore, the increases in the FLO minimum FOB prices of Fairtrade bananas would inevitably have an impact on supply cost or cost of sales, notwithstanding the overall reduction in fruit cost. The total value of sales for the year was down by 13.8% from the previous period. The drop was very much in line with the percentage reduction in the total cost of sales but marginally lower than the percentage reduction in fruit costs. This meant that average sales price was only marginally higher than in the previous period. The deregulation of the EU banana market and progressing reduction of the import tariff have intensified the competitive pressures and challenges in the market. With the Caribbean still as its predominant supply base, the Group continued to experience supply problems and disruption from those sources. The Group remained exposed to the risks associated with the vulnerability of the Caribbean banana production to frequent short term weather and disease problems, thus making it more challenging for the Group to face up to the competitive pressures of the market. There is not only the risk of short term supply shortages and the attendant problems but the additional, and often significant, costs associated with handling and dealing with problem fruit at the ripening facility.
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Delivering wholesomeness value quality for healthy growth
The Group has put in place measures to deal with the short term disruptions in supplies from its Caribbean sources whether as a result of weather or disease problems and to mitigate losses. In particular, the Group has established a comprehensive recording and accounting system that will enable it to recoup some of the losses arising from supply problems. The business is also exposed to the risks and uncertainties associated with unpredictably in movements of energy costs and currency rates. The Group has made all necessary and appropriate arrangements to reduce the exposure of the business to those and any other known risks and to mitigate potential losses. The Group continued to focus on costs reduction and improving operational efficiency to remain competitive and to deliver service and value to its customers. To that end, the Group embarked on significant reorganisation of its Windward Islands operations with the aim of reducing overheads and administrative expenses. The result was a $4,335,864 (21.0%) reduction in overheads in the year under review compared to the previous year. The Group’s plans to introduce new products on the market were again pushed back while development work continued. The Group recognized the risks and uncertainties associated with the introduction of new products onto the market and so have taken a cautious and systematic approach and followed all necessary and appropriate steps, including timing, to minimize the risk of failure. Bananas still accounted for nearly 100% of the Group’s total turnover in the period under review. The Group completed the expansion of the production facility at its Stansted site. However, the plans to install new banana ripening chambers and to outfit one of the modules for food processing and manufacturing have been put on hold. Following the completion of the expansion of the Stansted facility, the Group’s UK administration arm was moved to the new offices at Stansted. However, the anticipated efficiency savings in UK administration and overheads were not realised immediately because of relocation costs. Sunfresh resumed the production and sale of bottled water during the year following the damages to equipment and disruption in production caused by Tropical Storm Tomas in October 2010.
However, the plant experienced some teething problems on restart and sales were slow on reintroduction into the market. The introduction of juice beverages had to be pushed back until all the initial issues were resolved. Naturally, all of these have had a negative impact on the performance of Sunfresh for year under review and its contribution to the Group’s results. Vincyfresh has developed and produced an impressive range of processed food products but has not been able to raise the scale of production or to generate sales beyond the local market level. Raw materials or input supplies have been a major factor for the setback but there are other operational problem that contributed to the continued sluggish performance, which contributed negatively to the Group’s result in the year under review.
FUTURE DEVELOPMENTS: Objectives and Strategy The Fairtrade labelling Organisation (FLO) has announced further increases in the minimum prices to be paid for Fairtrade bananas. The new prices will come into effect in January 2012. It is a matter of relief to the Group that the increase in the ex-works price of Windward Islands bananas was not the largest among the producer countries. The Group is keen to see a narrowing of the price gap between the Windwards product and those of other supplying countries. The Group have expressed concerns, in the past, at the hitherto widening gap between those prices, which essentially put the Windwards product and the Group at a competitive disadvantage in the market. The Group will take all measures necessary to address the issues affecting the performances of the subsidiary undertakings and to ensure that their contributions to the Group, over time, are in line with the level of investment by the company in those enterprises. In particular, the Group will: a) Launch its Winfresh H2O brand of bottled water in 2012 in the OECS markets;
Delivering wholesomeness value quality for healthy growth
b)
Refit the Sunfresh plant, as necessary, to produce juice and juice beverages from fresh fruit pulp, rather than from concentrates;
The Group directors are confident that the Group will be able to achieve its objectives of taking most of its new range of products to market 2012/13.
c) d)
Refit the La Sagesse plant in Grenada to commence production of premium juices using fresh fruit pulp; Commence first stage fruit and food processing operations in Dominica;
EMPLOYEES AND EMPLOYEE INVOLVEMENT
e) Ramp up production of the most promising of the range of products by Vincyfresh; f) Embark on a comprehensive marketing campaign to promote and distribute the full range of Winfresh branded products in the OECS markets; g) Work closely with the Ministries of Agriculture in the Windward Islands to coordinate agricultural production planning to ensure regularity and adequacy of raw material supplies; h)
Contract farmers to produce and supply specific crops to ensure reliability of raw material supplies
The Group will also advance its discussions with a third party manufacturer with a view to reaching agreement and concluding arrangements for manufacturing of its dairy-free freezer fruit dessert on a significant scale. In particular, the Group will: a) Shelve its plans to manufacture the product at the Stansted facility and avoid, at least for the time being, the capital investment in plant and equipment. b) Have manufacturing, distribution, sales and marketing arrangements in place by the autumn of 2012 and to formally launch the product in the retail trade in the spring of 2013. c) Continue with its original plans to secure a listing with at least one of the major UK supermarket retailers with which to launch the product in the retail sector. This remains necessary in order to achieve the critical mass required for large scale production.
During the year the Group’s policy of providing employees with information about the Group continued through announcements and briefings in which the employees have also been encouraged to present their suggestions and views on the Group’s operations.
CREDITOR PAYMENT POLICY AND PRACTICE The Group’s policy concerning the payment of trade payables (creditors) is to agree the terms of payment with its suppliers when agreeing the terms of each contract; to ensure that suppliers are made aware of these terms by inclusion of the relevant terms in supply contracts where appropriate; and to pay its trade payables in accordance with those contractual obligations. On average and based on the results for the entire period, trade payables at the statement of financial position date represented an average of 25 days worth of purchases compared to 20 days in the previous period.
POST BALANCE SHEET EVENTS 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.
AUDITORS 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.
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Delivering wholesomeness value quality for healthy growth
12
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.
By the Order of the Board
Martina Edwin COMPANY SECRETARY Approved by the Directors on 15 July 2012
management team
from the left to right: Bernard Cornibert, CHIEF EXECUTIVE | Martina Edwin, Company SECRETARY | Ashley James, Operations Director and Acting Finance Director | Roy Hugh, SALES & MARKETING DIRECTOR | Philip Collins, Procurement Director | Dr Errol Reid, Technical Director
G.Llewellyn Gill & Co. McVane Drive Sans Soucis P.O.Box 546, Castries, St. Lucia. Telephone (758) 451-9251 Facsimile (758) 451-9324 Email gilll@candw.lc
31 JULY 2012
Independent Auditor’s Report TO THE SHAREHOLDERS OF WINFRESH LIMITED Report on the Financial Statements We have audited the accompanying consolidated financial statements of Winfresh Limited which comprise the consolidated balance sheet as of December 31, 2011 and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes. Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We have conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls 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 accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2011 and of its financial performance and its cash flows for the year ended in accordance with International Financial Reporting Standards.
G Llewellyn Gill & Co (for and on behalf of Price Bailey) Chartered Accountants Castries, Saint Lucia
AS OF DECEMBER 31, 2011
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Delivering wholesomeness value quality for healthy growth
December 31 2011 $
January 1 2011 $
Assets Current assets Cash and cash equivalents (Note 6) Held-to-maturity financial assets (Note 7) Trade and other receivables (Note 8) Inventories (Note 10) Due from related parties (Note 11) Deferred tax asset (Note 19)
9,380,019 1,233,120 24,562,013 7,953,475 4,439,375 524,415
13,634,661 1,194,305 22,650,056 8,083,852 5,890,547 246,969
48,092,417
51,700,390
976,008 930,756 2,534,606 47,300,729 56,742,144 2,936,329
904,080 904,377 2,566,311 34,987,304 54,239,162 2,936,329
159,512,989
148,237,953
2,797,074 21,650,693
2,087,419 21,130,617
24,447,767
23,218,036
Non-current liabilities Loans and borrowings (Note 18)
28,278,187
6,341,100
Total liabilities
52,725,954
29,559,136
Non-current assets Due from related parties (Note 11) Other receivables (Note 12) Intangible fixed assets (Note 13) Property, plant and equipment (Note 14) Investments in joint ventures and associates (Note 15) Other investments (Note 16) Total assets Liabilities
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Winfresh Limited
(Expressed in Easterb Caribbean Dollars)
Current liabilities Bank overdraft (Note 6) Trade and other payables (Note 17)
WINFRESH LIMITED AS OF DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
17 January 1 2011 $ January 1 2011 20,000,000 303,217$
(12,742,515) 20,000,000 98,870,859 272,895 (12,742,515) 106,401,239 98,870,859 385,796
(11,756,710) 20,000,000 108,515,761 303,217 (11,756,710) 117,062,268 108,515,761 1,616,549
Total equity Non-controlling interest (Note 25)
106,401,239 106,787,035 385,796
117,062,268 118,678,817 1,616,549
liabilities and shareholders' equity Total equity
159,512,989 106,787,035
148,237,953 118,678,817
Total liabilities shareholders' equity Approved by theand Board of Directors on 15 July 2012.
159,512,989
148,237,953
Equity
Share capital (Note 20) Equity Contributed capital and reserves Currency translation reserve Share capital (Note 20) Retained earnings Contributed capital and reserves Currency translation reserve Retained earnings Non-controlling interest (Note 25)
(CONTINUED)
2011 $ December 31 2011 20,000,000 272,895$
(Expressed in Easterb Caribbean Dollars)
Approved by the Board of Directors on 15 July 2012.
Winfresh Limited
..................................... E Vitalis Director ..................................... E Vitalis Director
(expressed in Eastern Caribbean dollars)
........................................ J L Fletcher Director ........................................ J L Fletcher Director
As of December 31, 2011
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) AS OF DECEMBER 31, 2011 December 31
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Expressed in Easterb Caribbean Dollars)
(Expressed in Eastern Caribbean Dollars)
Delivering wholesomeness value quality for healthy growth
January 2 2011 to December 31 2011 $
January 3 2010 to January 1 2011 $
Banana trading Sales
213,398,228
242,500,372
(201,269,090)
(233,755,709)
12,129,138
8,744,663
Distribution and selling
(13,093,794)
(9,618,528)
Administrative and general expenses
(16,279,032)
(20,614,896)
(17,243,688)
(21,488,761)
(1,086,765)
-
141,567
(29,350,115)
1,279,462
5,798,892
(16,909,424)
(45,039,984)
8,594,215
775,184
Loss before income tax
(8,315,209)
(44,264,800)
Income tax expense (Note 28)
(2,088,183)
(527,932)
(10,403,392)
(44,792,732)
(8,150,620) (2,252,772)
(44,659,281) (133,451)
(10,403,392)
(44,792,732)
Cost of goods sold Profit from banana trading
Finance costs (Note 21) Other gains/(losses), net (Note 22) Other income (Note 23)
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Winfresh Limited
18
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2011
Loss before share of profit in joint ventures, associates and income tax Share of profit in joint ventures and associates (Note 15)
Loss for the year
Loss after taxation attributable to: Owners of the company Non-controlling interest
Loss for the year Other comprehensive loss Currency movement for the year Share of joint venture actuarial losses on defined benefit pension plans (Note 15) Total comprehensive loss for the year
January 2 2011 to December 31 2011 $
January 3 2010 to January 1 2011 $
(10,403,392)
(44,792,732)
(985,805) (1,658,055)
(3,649,633) (5,288,385)
(13,047,252)
(53,730,750)
(10,794,480) (2,252,772)
(53,597,299) (133,451)
(13,047,252)
(53,730,750)
Winfresh Limited
Owners of the company Non-controlling interest
(expressed in Eastern Caribbean dollars)
Total comprehensive loss attributable to:
19
As of December 31, 2011
Delivering wholesomeness value quality for healthy growth
(Expressed in Eastern Caribbean Dollars)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2011
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
20
Share capital
Balance at January 3, 2010
$ 20,000,000
Contributed Currency Retained Total capital translation earnings reserves $ $ $ $ (8,107,077) 170,659,567 336,908 158,429,736
Comprehensive loss: Loss for the year after taxation Share of actuarial loss of joint venture's defined benefit pension schedule
-
-
- (44,792,732) (44,792,732) - (5,288,385) (5,288,385)
Total comprehensive loss
-
-
- (50,081,117) (50,081,117)
Other comprehensive loss: Currency movement for the year
-
-
(3,649,633)
Total comprehensive income
-
-
(3,649,633) (50,081,117) (53,730,750)
Transactions with owners: Amortisation of contributed capital
-
(33,691)
Balance at January 1, 2011
-
-
33,691
(3,649,633)
-
20,000,000
303,217 (11,756,710) 108,382,310 116,928,817
20,000,000
303,217 (11,756,710) 108,515,761 117,062,268
Attributable to:
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
Owners of the parent company Non-controlling interest
1,616,549 118,678,817
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) FOR THE PERIOD ENDED DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
21
-
-
- (10,403,392) (10,403,392) (1,658,055) (1,658,055)
-
-
- (12,061,447) (12,061,447)
Other comprehensive income: Currency movement for the year
-
-
(985,805)
Total comprehensive loss
-
-
(985,805) (12,061,447) (13,047,252)
Transactions with owners: Amortisation of contributed capital
-
(30,322)
Balance at December 31, 2011
-
-
30,322
(985,805)
-
20,000,000
272,895 (12,742,515) 96,351,185 103,881,565
20,000,000
272,895 (12,742,515) 98,870,859 106,401,239
Attributable to: Owners of the parent company Non-controlling interest
385,796 106,787,035
As of December 31, 2011
Comprehensive loss: Loss for the year after taxation Share of actuarial loss of joint venture's defined benefit pension schedule
$ 20,000,000
Winfresh Limited
Balance at January 2, 2011
Contributed Currency Retained Total capital translation earnings reserves $ $ $ $ 303,217 (11,756,710) 108,382,310 116,928,817
(expressed in Eastern Caribbean dollars)
Share capital
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in Eastern Caribbean Dollars)
CONSOLIDATED STATEMENT OF CASH FLOWS Delivering wholesomeness value quality for healthy growth FOR THE YEAR ENDED DECEMBER 31, 2011 December 31 2011 $
January 1 2011 $
Cash flows from operating activities Loss for the year
(8,315,209)
(44,264,800)
Adjustments for: Depreciation (Note 14) Impairment of goodwill Unrealised exchange gain Gain on disposal of property, plant and equipment Loss on disposal of trademarks Interest income Share of profit in joint ventures and associates (Note 15) Provision for diminution in value of investments (Note 15) Discount on acquisition Dividend income Finance costs
3,754,313 27,575 3,116 19,355 (403,373) (8,594,215) 1,085,089
2,341,671 800,000 217,913 (220,768) (155,612) (775,184) 35,769,219 (699,530) (4,126,400) 70,840
(12,423,349)
(11,042,651)
(1,559,454) 72,312 1,379,244 215,144
5,149,105 5,654,602 107,637 (8,879,087)
(12,316,103)
(9,010,394)
2,440 (1,085,088)
(207,422) (70,840)
Net cash used in operating activities
(13,398,751)
(9,288,656)
Cash flows from investing activities Acquisition of subsidiary, net of cash Payments to acquire intangible fixed assets Payments to acquire property, plant and equipment Increase in other investments Interest received Dividends received Proceeds from disposal of property, plant and equipment
(15,411,079) (38,815) 403,373 2,096,150 166,388
(957,726) (803,226) (6,242,646) (9,386) 155,612 4,126,400 56,331
Net cash used in investing activities
(12,783,983)
(3,674,641)
Operating loss before working capital changes (Increase)/decrease in trade and other receivables Decrease in inventories Decrease in amounts due from related parties Increase/(decrease) in trade and other payables Cash used in operating activities
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
Winfresh Limited
22
Income tax refund/(paid) Interest paid
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
6,341,100 -
Net cash generated from investing activities
21,218,437
6,341,100
Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year
(4,964,297) 11,547,242
(6,622,197) 18,169,439
6,582,945
11,547,242
Cash and cash equivalents at end of year (Note 6)
As of December 31, 2011
21,178,406 40,031
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash flows from financing activities New bank loan Loan from related party
Winfresh Limited
January 1 2011 $
(expressed in Eastern Caribbean dollars)
December 31 2011 $
23
DECEMBER 31, 2011 (Expressed in Eastern Caribbean Dollars) Delivering wholesomeness value quality for healthy growth
24
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 and Sunfresh Limited. Winfresh Limited was incorporated under the laws of Saint Lucia and continued under the Company's Act, 1996. The Company commenced trading effective January 1, 1995 with the takeover of the operations formally undertaken by Windward Islands Banana Growers' Association ("WINBAN"). Winfresh (UK) Limited was incorporated under the Companies Act 1985 of the United Kingdom and commenced trading in May 1994 and is a wholly owned subsidiary of Winfresh Limited. Winfruit Limited was incorporated under Companies Act 2006 of the United Kingdom and commenced trading in December 2008. Winfresh (UK) Limited has a 75% holding of the ordinary shares of the company. 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. Winfresh Limited has a 60% holding of the Class "A" common shares of the company. Sunfresh Limited was incorporated under the laws of Saint Lucia and continued under the Company's Act, 1996 and commenced trading in January 2011. Winfresh Limited has a 65% holding of the ordinary shares of the company. Subsequent to the statement of financial position date on 21 May 2012 the company acquired the remainder of the shareholdings in one of its subsidiary companies, Sunfresh Limited. Consequently, Sunfresh Limited is now a fully owned subsidiary of the company. The Company's registered office is located at 99 Chaussee Road, Castries, Saint Lucia.
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
1
Principal activity The principal activity of the Group is the importation, marketing and distribution of bananas and fresh produce, and processing, packaging and distribution of water and fruit juices. Shareholdings The shareholdings 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 Windward Islands: 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 ending December 31, 2011 (January 1, 2011 52 week period ending January 1, 2011).
DECEMBER 31, 2011 (Expressed in Eastern Caribbean value Dollars) quality for healthy growth Delivering wholesomeness
Basis of preparation
(a)
Statement of compliance These Consolidated financial statements have been prepared in accordance with international Reporting Standards (IFRS).
(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 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 estimates are revised and in any future periods affected. In particular, information about assmptions 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:
(e)
Standards and amendments effective and relevant to the Company
Note 3 Note 3 Note 5
The following standards and amendments to existing standards have been published and are mandatory for the Company's accounting period beginning on or after January 2, 2011 or later periods are relevant to the Company. Effective from January 2, 2011: IAS 34 IFRS 1
Interim Financial Reporting - Amendments resulting from May 2010 Annual Improvements to IFRSs First-time adoption of International Financial Reporting Standards - Amendments resulting from May 2010 Annual Improvements to IFRSs.
Effective from July 1, 2011 IFRS 1 IFRS 1 IFRS 7
First-time adoption of International Financial Reporting Standards - Replacement of 'fixed dates' for certain exceptions with 'the date of transition to IFRSs' First-time adoption of International Financial Reporting Standards - Additional exemption for entities ceasing to suffer from severe hyperinflation Financial Instruments: Disclosures - Amendments enhancing disclosures about transfers of financial assets
Winfresh Limited
Allowances for impairment losses Estimated useful lives of plant property and equipment Determination of fair values of financial assets
(expressed in Eastern Caribbean dollars)
* * *
As of December 31, 2011
2
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
25
DECEMBER 31, 2011
26
Delivering wholesomeness value quality for healthy growth
2
Basis of preparation (e)
(continued)
Standards and amendments effective and relevant to the Company (continued)
At the date of authorisation the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective. IAS 1 IAS 1 IAS 12 IAS 16 IAS 19 IAS 27 IAS 28 IAS 32 IAS 32 IAS 34 IFRS 1 IFRS 1 IFRS 7 IFRS 7
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
IFRS 9 IFRS 9 IFRS 10 IFRS 10 IFRS 11 IFRS 11 IFRS 12 IFRS 12 IFRS 13 IFRIC 20
Presentation of Financial Statements - Amendments to revise the way other comprehensive income is presented Amendments resulting from Annual Improvements 2009-2011 Cycle (comparative information) Income Taxes - Limited scope amendment (recovery of underlying assets) Amendments resulting from Annual Improvements 2009-2011 Cycle (Servicing equipment) Employee Benefits - Amended Standard resulting from the Post-Employment Benefits and Termination Benefits projects Consolidated and Separate Financial Statements Investments in Associates and Joint Ventures Financial Instruments: Presentation - Amendments to application guidance on the offsetting of financial assets and financial liabilities Amendments resulting from Annual Improvements 2009-2011 Cycle (tax effect of equity distributions) Amendments resulting from Annual Improvements 2009-2011 Cycle (interim reporting of segment assets) Amendments for government loan with a below-market rate of interest when transitioning to IFRSs Amendments resulting from Annual Improvements 2009-2011 Cycle (repeat application, borrowing costs) Financial Instruments: Disclosures - Amendments enhancing disclosures about offsetting of financial assets and financial liabilities. Financial Instruments: Disclosures - Amendments requiring disclosures about the initial application of IFRS 9 Financial Instruments - Classification and measurement of financial assets Financial Instruments - Accounting for financial liabilities and derecognition Consolidated Financial Statements Amendments to transitional guidance Joint Arrangements Amendments to transitional guidance Disclosure of Interests in Other Entities Amendments to transitional guidance Fair Value Measurement Stripping Costs in the Production Phase of a Surface Mine
The adoption of these standards is not expected to have a significant impact on the Company's nonconsolidated financial statements.
DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
27
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been constantly applied by the Group entities unless otherwise stated. Consolidation (a)
Subsidiaries Subsidiaries are all 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. 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.
(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 or 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 unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate Unrealised gains on transactions between the Group and its associate are eliminated to the extent of the Group's interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Winfresh Limited
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries are consistent with the policies adopted by the Group.
As of December 31, 2011
Summary of significant accounting policies
(expressed in Eastern Caribbean dollars)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011
28
3
Delivering wholesomeness value quality for healthy growth
Summary of significant accounting policies
(continued)
Consolidation (continued) (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 recognises interests 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 a date not earlier than three months before the date of the balance sheet. Intragroup gains on transactions are eliminated to the extent of the Group's interest in the investee. Intragroup losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Non-controlling interests 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. 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 positioin. 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.
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
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 rate 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 to it 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 for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the consolidated statement of comprehensive income.
DECEMBER 31, 2011 Delivering wholesomeness value quality for healthy growth (Expressed in Eastern Caribbean Dollars)
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. 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 shareholder's equity. Decreases that offset previous increases of the same asset are charged against 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'.
Buildings - (straight-line) Plant and machinery - (straight-line) Office furniture and equipment - (straight-line and reducing balance) 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.
Winfresh Limited
Land is not depreciated. Depreciation on other assets is calculated using the straight-line and reducing balance methods to allocate their costs or revalued amounts to their residual values over their estimated useful lives, as follows:
As of December 31, 2011
(continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of significant accounting policies
(expressed in Eastern Caribbean dollars)
3
29
DECEMBER 31, 2011
30
3
Delivering wholesomeness value quality for healthy growth
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.
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
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 an transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred 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 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 Dividend distribution to the 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. Contributed capital Property, plant and equipment transferred and donated to the Group is included in property, plant and equipment at cost or valuation, and the corresponding credit is recorded in a 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.
DECEMBER 31, 2011 Delivering wholesomeness value quality for healthy growth
31 (continued)
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 to use defined benefit accounting. In accordance with IAS 19 revised, the scheme is accounted for as if it were a defined contribution pension scheme. A defined contribution pension scheme is a 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 periods. The assets of the scheme are held in a separate independently administered fund. The subsidiary's contributions are charged to the statement of income in the year to which they relate.
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.
Foreign currency translation 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 are recognised in the consolidated statement of comprehensive income.
- 18 -
Winfresh Limited
Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is recognised as follows:
As of December 31, 2011
Summary of significant accounting policies
(expressed in Eastern Caribbean dollars)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011
32
Delivering wholesomeness value quality for healthy growth
3
Summary of significant accounting policies
(continued)
Foreign currency translation (continued) b.
Group companies The results and financial position of all of 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 balance sheet presented are translated at the closing rate at the date of that balance sheet;
(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 dates of the transactions); 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 borrowings are taken to shareholder's 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 on sale. Comparatives Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with comparative information. 4
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
Financial risk management Financial risk factors The Group's activities expose it to variety of financial risk: market risk (including currency risk and fair value risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise 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 Group's overall risk management policies and processes focus 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.
DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
33 (continued)
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$1.00 since July 1976. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are nominated in a currency that is not the entity functional currency. The Group purchases its bananas and fresh produce in foreign currency and forward currency contracts are occasionally used for the purchases. All costs denominated in foreign currency are settled using the spot rate. There were no outstanding forward currency contracts at the balance sheet date.
The following table summarises the Group's exposure to foreign currency exchange rate risk at December 31, 2011 US$ $
Stg $
Euro $
Total $
52,912
516,194
8,749,177
61,736
9,380,019
Financial assets Cash and cash equivalents Investments: Loans and receivables Trade and other receivables Due from related parties
1,233,120
-
-
-
1,233,120
2,122,346 5,415,383
851,494 -
21,588,173 -
-
24,562,013 5,415,383
Total financial assets
8,823,761
1,367,688
30,337,350
61,736
40,590,535
US$ $
Stg $
Euro $
Total $
9,302,430 3,724,142
3,198,170
20,961,500 15,534,279
5,433
30,263,930 22,462,024
Total financial liabilities
13,026,572
3,198,170
36,495,779
5,433
52,725,954
Net balance sheet financial position
(4,202,811) (1,830,482)
(6,158,429)
EC$ $ Financial liabilities Bank borrowings and overdraft Trade and other payables
56,303 (12,135,419)
Winfresh Limited
At December 31, 2011
EC$ $
As of December 31, 2011
Risk management
(expressed in Eastern Caribbean dollars)
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011
34
Delivering wholesomeness value quality for healthy growth
4
Risk management a.
(continued)
Market risk (continued)
At January 1, 2011 Total financial assets Total financial liabilities Net balance sheet financial position
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
11,648,793 5,468,764 (5,609,285) (4,771,211) 6,039,508
697,553
27,909,399 (19,178,640) 8,730,759
151,070 45,178,026 - (29,559,136) 151,070
15,618,890
(i)
Foreign exchange risk (continued) At December 31, 2011 if the EC$ had weakened/strengthened by 10% against the Stg/UK pound with other variables held constant, post tax profit for the year would have been $615,843 (January 1, 2011 - $873,076) higher/lower, mainly as a result of foreign exchange gains / losses on translation of Stg/UK pound 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 fair 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 and investments classified as loans and receivables; as well as credit exposure to customers, including trade receivables, balances 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 no significant concentration of 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 nonperformance by these counterparties as at December 31, 2011 and January 1, 2011. 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.
DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
35
b.
(continued)
Credit risk (continued)
Bank
Ratings
December 31 2011 $
Bank 1 Bank 2 Bank 3 Bank 4 Bank 5
B A-1 BBB+ A-1 AA Unrated
220,922 7,391,532 1,448,691 105,759 113,062 94,884
Cash and cash equivalents:
January 1
Ratings
2011 $
BB AA A A AA Unrated
475,874 3,843,565 8,855,541 182,493 87,748 181,176
9,374,850
13,626,397
The rest of the balance sheet item cash and cash equivalent is cash in hand.
Customers
Ratings
December 31 2011 $
1 2 3
Unrated Unrated A-
902,254 2,726,907 1,772,052
Unrated
5,401,213 15,797,263 21,198,476
c.
January 1
Ratings A-3 B AUnrated
2011 $ 7,599,364 2,410,299 892,734 10,902,397 3,048,622 13,951,019
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 months based on the remaining period at the balance sheet date to the contractual maturity date. The contractual undisclosed 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.
Winfresh Limited
Trade receivables - neither past due nor impaired
As of December 31, 2011
Risk management
(expressed in Eastern Caribbean dollars)
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011
36
Delivering wholesomeness value quality for healthy growth
4
Risk management d.
(continued)
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 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. Depreciation replacement cost estimates reflect adjustments for physical deterioration as well as functional and economic obsolescence.
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
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 teh 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 equivalent 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. Trade and other payables Due to the short term nature of the related transactions, the fair values and other payables approximate their carrying amounts at the reporting date.
DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
37
Cash and cash equivalents December 31 2011 $ Cash at bank and in hand
9,380,019
January 1 2011 $ 13,634,661
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following:
Cash at bank and in hand Bank overdraft
January 1 2011 $
9,380,019 (2,797,074)
13,634,661 (2,087,419)
6,582,945
11,547,242
Held-to-maturity financial assets
Term deposit
1,233,120
January 1 2011 $ 1,194,305
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 1, 2011 - 3% and 3.25%) per annum. Term deposits mature within one year.
Winfresh Limited
December 31 2011 $
(expressed in Eastern Caribbean dollars)
7
December 31 2011 $
As of December 31, 2011
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011 (Expressed in Eastern Caribbean Dollars)Delivering wholesomeness value quality for healthy growth
38
Trade and other receivables December 31 2011 $
January 1 2011 $
Trade receivables Less: provision for impairment of trade receivables (Note 9)
21,838,119 (639,643)
19,214,484 (639,252)
Trade receivables - net
21,198,476
18,575,232
2,353,916 1,009,621
2,718,460 1,356,364
24,562,013
22,650,056
Other receivables Prepayments
The credit quality of trade receivables is summarised as follows:
December 31 2011 $
January 1 2011 $
Neither past due nor impaired Past due but not impaired Impaired
16,608,788 4,589,688 639,643
13,951,019 4,624,213 639,252
Gross
21,838,119
19,214,484
The ageing of trade receivables that are past due and not impaired is as follows:
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
8
December 31 2011 $ Up to 1 month 1 to 2 months Over 2 months
January 1 2011 $
4,306,934 127,194 155,560
4,318,805 113,408 192,000
4,589,688
4,624,213
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.
DECEMBER 31, 2011 (Expressedwholesomeness in Eastern Caribbean value Dollars) quality for healthy growth Delivering
The ageing of trade receivables that are impaired is as follows:
Over 2 months
(continued)
December 31 2011 $ 639,643
January 1 2011 $ 639,252
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.
The movement in the provision for impairment of receivables is as follows:
December 31 2011 $
January 1 2011 $
At beginning of year Release provision Provision made during the year
639,252 (7,960) 8,351
854,543 (695,602) 480,311
At end of year
639,643
639,252
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. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash. 10
Inventories
Raw materials Chemicals and additives Packaging materials Finished goods Other supplies
December 31 2011 $
January 1 2011 $
212,331 988,172 6,752,972 -
3,823 573 1,038,956 7,021,677 18,823
7,953,475
8,083,852
Winfresh Limited
Provision for impairment of trade receivables
(expressed in Eastern Caribbean dollars)
9
As of December 31, 2011
Trade and other receivables
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8
39
DECEMBER 31, 2011
40
Delivering wholesomeness value quality for healthy growth
11
Related party transactions and balances The Group is related to the four banana grower associations (BGAs) and the Governments of the Windward Islands (Note 1) which together own 100% of the Company's shares. The Group owns 50% of Windward Isles Banana Company Holdings (Jersey) Limited. The following transactions were carried out with the above mentioned related parties: December 31 2011 $ Purchases of goods and services Purchases of bananas from BGAs
21,265,287
January 1 2011 $ 59,389,036
Purchases from related parties were carried out on commercial terms and conditions and at market prices. December 31 2011 $ Key management compensation Salaries and other short-term benefits Year-end balances arising from sales / purchases of goods / services:
Due from/(due to) related parties
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
Current St. Lucia Banana Corporation Government of Saint Lucia National Properties Food City Inc.
Non-current Grenada Banana Co-operative Society Dominica Banana Marketing Corporation Sunsmart Beverages Inc.
3,002,323
December 31 2011 $
January 1 2011 $ 4,015,434
January 1 2011 $
(9,777) 4,439,375 -
1,435,742 4,439,375 15,430
4,429,598
5,890,547
786,780 121,473 67,755
782,607 121,473 -
976,008
904,080
Balances with related parties are unsecured, non-interest bearing and have no fixed terms of repayment. During previous financial year the company had accepted, in principle, 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.
DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
41
Other loan
December 31 2011 $
January 1 2011 $
At beginning of year Movement during the year
904,377 26,379
904,377
At end of year
930,756
904,377
Winfresh Limited
Included in the above balance is a loan of $886,583 (at January 1, 2011, - $845,480), which bears interest at LIBOR rate plus 3% per annum and is stated at its fair value as at the balance sheet date.
As of December 31, 2011
Other receivables
(expressed in Eastern Caribbean dollars)
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011
42
Delivering wholesomeness value quality for healthy growth
13
Intangible fixed assets
Patents $
Goodwill $
Trademarks $
Total $
423
2,546,996
19,302
2,566,721
At January 1, 2011
423
2,546,996
19,302
2,566,721
At January 1, 2011 Exchange differences Disposals
423 (3) -
2,546,996 (12,763) -
19,302 (19,302)
2,566,721 (12,766) (19,302)
At December 31, 2011
420
2,534,233
-
2,534,653
Amortisation At January 1, 2011 Charge for the period
25
-
385
410
At December 31, 2011
25
-
385
410
At January 1, 2011 Amortisation on disposals Charge for the period
25 22
-
385 (385) -
410 (385) 22
At December 31, 2011
47
-
-
47
Net book value At December 31, 2011
373
2,534,233
-
2,534,606
At January 1, 2011
398
2,546,996
18,917
2,566,311
At January 2, 2010
-
-
-
-
Cost At January 2, 2011 Additions
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
The goodwill arises on the acquisition of Winfruit Limited by Winfresh (UK) Limited.
DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
43
Land and buildings
Plant and machinery
Office furniture and equipment
Computer equipment
Motor vehicles
Total
$
$
$
$
$
$
$
246,659 24,899,903 (607,036) 1,808,850 (223,141) 118,717 (15,641) -
6,217,660 (48,873) 6,120,026 5,100 (11,349)
4,757,160 (34,889) 288,566 99,324 -
3,332,192 (25,462) 237,262 -
1,419,384 40,972,282 (8,540) (724,800) 441,064 8,895,768 (14,928) (41,928)
At 1 January 2011
7,877
26,220,434
12,282,564
5,110,161
3,543,992
1,836,980
49,002,008
At 2 January 2011 Exchange differences Additions Adjustments to costs Disposals
7,877 -
26,220,434 12,282,564 (150,411) (8,808) 11,908,881 2,596,694 (118,717) (5,199) (81,000)
5,110,161 4,053 1,279,264 (99,324) (14,100)
3,543,992 1,718 269,905 (94,451) (17,650)
1,836,980 49,002,008 701 (152,747) 398,442 16,453,186 (467,439) (785,130) (346,965) (459,715)
At 31 December 2011
7,877
37,860,187
14,784,251
6,280,054
3,703,514
1,421,719
64,057,602
Depreciation At 3 January 2010 Adjustment Charge for the period
7,877 -
367,858 118,717 408,404
4,153,766 5,100 982,606
3,356,164 99,324 526,250
2,248,949 488,438
963,869 287,382
11,098,483 223,141 2,693,080
At 1 January 2011
7,877
894,979
5,141,472
3,981,738
2,737,387
1,251,251
14,014,704
At 2 January 2011 Adjustments to depreciation On disposals Charge for the period
7,877 -
894,979 (56,190) 765,173
5,141,472 (5,199) 1,678,803
3,981,738 (99,324) (5,828) 611,020
2,737,387 (94,451) (11,365) 440,109
1,251,251 14,014,704 (467,439) (722,603) (272,348) (289,541) 259,208 3,754,313
At 31 December 2011
7,877
1,603,962
6,815,076
4,487,606
3,071,680
770,672
16,756,873
Net book value At 31 December 2011
-
36,256,225
7,969,175
1,792,448
631,834
651,047
47,300,729
At 1 January 2011
-
25,325,455
7,141,092
1,128,423
806,605
585,729
34,987,304
At 2 January 2010
238,782
24,532,045
2,063,894
1,400,996
1,083,243
455,515
29,774,475
Winfresh Limited
Cost At 3 January 2010 Exchange differences Additions Transfer Disposals
Leasehold improvements
As of December 31, 2011
Property, plant and equipment
(expressed in Eastern Caribbean dollars)
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011 Delivering wholesomeness value quality for healthy growth
44
15
Investments in joint ventures and associates December 31 2011 $
January 1 2011 $
At 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 actuarial losses Dividends Currency translation adjustment Provision for diminution in value
54,239,162 100,994,537 (2,579,364) 8,594,215 775,184 (2,379,130) (526,540) (1,658,055) (5,288,385) (2,096,150) 42,102 (3,367,051) - (35,769,219)
At end of year
56,742,144
54,239,162
The Group's share of the results of its joint ventures and its share of assets and liabilities are as follows: Assets $
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
Liabilities $
Revenues $
At 31 December 2011 Windward Isles Banana Company Holdings (Jersey) Limited Windward Isles Banana Company (UK) Limited
29,471,869 88,667,145
947,460 56,795,184
119,379,370
At 31 December 2010 Windward Isles Banana Company Holdings (Jersey) Limited Windward Isles Banana Company (UK) Limited
31,392,672 93,072,552
1,025,145 65,175,940
99,369,825
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.
DECEMBER 31, 2011 Delivering wholesomeness value quality for healthy growth
45
Other investments
December 31 2011 $
January 1 2011 $
At beginning of year Additions during the year
2,936,329 -
2,936,329 -
At end of year
2,936,329
2,936,329
At December 31, 2010, Vincyfresh Limited, one of the group companies, invested in a property valued at $2,936,329 located at Diamond to operate a snack food factory. On February 28, 2011 Vincyfresh Crisps Ltd was incorporated and on March 18, 2011 the property was registered as being owned by Vincyfresh Crisps Ltd. Vincyfresh Crisps Ltd is a 100% owned subsidiary of Vincyfresh Limited. Vincyfresh Crisps Ltd has not traded since its incorporation .
Trade payables Other payables Accrued expenses
December 31 2011 $
January 1 2011 $
12,027,210 642,243 8,981,240
10,966,076 3,288,870 6,875,671
21,650,693
21,130,617
Included in trade and other payables are balances due to related parties of $2,113,700 (January 1, 2011 $9,601,866).
Winfresh Limited
Trade and other payables
(expressed in Eastern Caribbean dollars)
17
As of December 31, 2011
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2011
46
Delivering wholesomeness value quality for healthy growth
18
Loans and borrowings
Bank loans Other loans
Analysis of loans Wholly repayable within five years
Loan maturity analysis In more than two years but not more than five years
December 31 2011 $
January 1 2011 $
27,466,856 811,331
6,341,100 -
28,278,187
6,341,100
28,278,187
6,341,100
28,278,187
6,341,100
28,278,187
6,341,100
The aggregate amount of loans and borrowings for which security has been given amounted to $27,466,856 (1 January, 2011 - $6,341,100), which are secured by way of a debenture over the subsidiary companies' long leasehold property and improvements, freehold land and buildings and equipment, and guarantees by given the ultimate parent company. Bank loan of $20,961,500 bears interest at LIBOR plus 2.5%; bank loan of $6,505,356 bears interest at 8.5% per annum. Other loans of $811,331 are unsecured, interest free and no fixed repayment terms.
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
19
Deferred income tax asset Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax rate of 26% (January 1, 2011 - 28%). The movement on the deferred tax (asset) account is as follows: December 31 2011 $
January 1 2011 $
At beginning of year Consolidated statement of income charge (Note 28) Exchange difference
246,969 288,429 (10,983)
256,179 (1,392) (7,818)
At end of year
524,415
246,969
Deferred taxes arise from decelerated capital allowances in the United Kingdom.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Delivering wholesomeness value quality for healthy growth DECEMBER 31, 2011
47
Subscribed 500 ordinary shares 1,500 5% non-cumulative preference shares
5,000,000 15,000,000
5,000,000 15,000,000
20,000,000
20,000,000
Finance costs January 2 2011 to December 31 2011 $ On bank loans and overdrafts Other interest
22
January 1 2011 $
January 3 2010 to January 1 2011 $
1,052,332 34,433
-
1,086,765
-
Other (losses) / gains, net
Foreign exchange gains / (losses) - Unrealised (losses) / gains on translation of balances - Realised losses on transactions (Loss)/gain on disposal of property, plant and equipment Loss on disposal of intangible assets Provision for diminution in value of fixed asset investment
January 2 2011 to December 31 2011 $
January 3 2010 to January 1 2011 $
(175,500) 339,540 (3,116) (19,357) -
(614,936) 6,113,742 220,768 (35,769,219) 699,530
141,567
(29,350,115)
Winfresh Limited
21
December 31 2011 $
As of December 31, 2011
Share capital
(expressed in Eastern Caribbean dollars)
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2011
48
Delivering wholesomeness value quality for healthy growth
23
Other income January 2 2011 to December 31 2011 $ Agency fees and commissions Dividend income Interest income Miscellaneous income
24
January 3 2010 to January 1 2011 $
19,675 405,049 854,738
51,326 4,126,400 84,772 1,536,394
1,279,462
5,798,892
Financial commitments At 31 December 2011 the company had lease payments due under operating leases as follows: Land and buildings Other December 31 January 1 December 31 January 1 2011 2011 2011 2011 $ $ $ $
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
Operating leases which expire: Within one year Between two and five years
25
Non-controlling interest
Minority share of retained deficit Minority share of pre-acquisition deficit Minority share of equity in subsidiary company
93,032 -
80,075 36,778
179,057 111,406
133,966 309,632
93,032
116,853
290,463
443,598
December 31 2011 $
January 1 2011 $
(2,386,223) (2,182,173) 4,954,192
(133,451) 1,750,000
385,796
1,616,549
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2011 value quality for healthy growth Delivering wholesomeness
49 January 1 2011 $
Direct costs Salaries and wages Directors' fees Rent and service charges Communication Insurance Light and heat Repairs and renewals Security Printing, postage and stationery Advertising and publicity Telephone Information technology support costs Vehicle expenses Travel and entertaining Subsistence Legal and professional fees Audit fees Bank charges Bad debt expenses Other expenses Subscriptions and donations Research and development Impairment of goodwill Depreciation and amortisation
208,124,057 10,929,087 1,401,160 873,207 39,139 439,055 435,833 381,111 97,032 133,262 73,138 205,108 479,209 113,814 635,027 88,387 748,054 533,901 325,154 341,588 350,479 49,616 91,185 3,754,313
243,374,237 9,847,482 1,314,348 723,819 425,731 122,046 160,336 188,716 93,013 88,658 27,372 217,386 380,170 62,502 763,990 138,035 1,114,602 218,276 240,081 974,759 288,800 83,103 800,000 2,341,671
Total cost of goods sold, administrative and general expenses
230,641,916
263,989,133
Cost of goods sold Distribution and selling Administrative and general expenses
201,269,090 13,093,794 16,279,032
233,755,709 9,618,528 20,614,896
Total cost of goods sold, administrative and general expenses
230,641,916
263,989,133
As of December 31, 2011
December 31 2011 $
Winfresh Limited
Expenses by nature
(expressed in Eastern Caribbean dollars)
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011
50
Delivering wholesomeness value quality for healthy growth
27
Employee benefit expenses December 31 2011 $ Salaries and wages Directors' fees Social security costs Other staff costs
28
Income tax expense
January 1 2011 $
9,252,122 1,401,160 877,791 799,174
8,393,110 1,314,348 804,221 650,151
12,330,247
11,161,830
December 31 2011 $
January 1 2011 $
Share of joint venture tax Adjustment for prior year Deferred tax charge (Note 19)
2,379,130 (2,518) (288,429)
526,540
Current tax charge
2,088,183
527,932
1,392
The tax on the Group's profit before tax differs from the theoretical amount that would arise using the applicable standard rate as follows:
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
December 31 2011 $
January 1 2011 $
Loss before income tax
(8,315,209)
(44,264,800)
Tax calculated at standard rate of 30% Tax effect of consolidation adjustments Exempt profit Expenses not deductible for tax purposes Deferred tax not recognised Other tax adjustments
(2,494,563) 2,626,013 (2,234,496) 46,525 2,090,701 2,054,003
(13,279,440) 13,176,385 99,458 479,852 1,392 50,285
2,088,183
527,932
Tax charge
DECEMBER 31, 2011
Delivering wholesomeness value quality for healthy growth
51
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 would 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. The constitution of the scheme requires that a triennial valuation is performed by independent actuaries and the last such valuation was performed at December 31, 2009. As part of this valuation the trustees had 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 the SFP basis, there was a funding deficit of $20,215,000 in the scheme at that date [previous triennial valuation at December 31, 2006 - 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 requirement 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 the effect of IFRS Interpretations Committee Update 14 (IFRIC 14) was $14,771,000. As before, the funding level was less than the 90% required by the minimum funding requirement rules.
The assets of the scheme are held separately 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 $512,823 (period to January 1, 2011 - $375,537). Contributions totaling $21,628 (at January 1, 2011 $6,854) were payable to the fund at the balance sheet date and are included in other payables.
Winfresh Limited
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.
As of December 31, 2011
Pension costs
(expressed in Eastern Caribbean dollars)
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Eastern Caribbean Dollars)
DECEMBER 31, 2011
52
Delivering wholesomeness value quality for healthy growth
30
Guarantees The subsidiary company, Winfresh (UK) Limited, has provided a payment guarantee to the UK tax authority, HM Revenue & Customs. At the balance sheet date the maximum amount payable under this guarantee totalling $1,048,075 (January 1, 2011 - $1,056,850).
31
Contingent liabilities
31.1 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 balance sheet date. Any settlements arising from these disputed liabilities are expected to be accounted for as a charge against income in the period in which the settlement occurs. 31.2 The Group has agreed to continue to provide financial support to a subsidiary undertaking for the foreseeable future, being a period of at least twelve months from the date of approval of these consolidated financial statements, by way of deferment of the amounts owed by the subsidiary undertaking or by other means, so as to enable the subsidiary undertaking to continue in operation as a going concern. At the statement of financial position date the amount owed by this subsidiary undertaking was $1,679,620 (at January 1, 2011 - $656,329), for which no provision for impairment has been made. 31.3 The Group has entered into a recovery plan designed to restore the minimum funding level of the defined benefit pension scheme of which it is one of the participating employers, by way of a schedule of revised employer contributions. At the currently agreed level of contribution the group is liable to make a total employers contribution of $175,860 per year. No provision has been made in these consolidated financial statements in respect of this liability.
(expressed in Eastern Caribbean dollars)
As of December 31, 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Winfresh Limited
(Expressed in Eastern Caribbean Dollars)
32
Post balance sheet events Subsequent to the statement of financial position date on 21 May 2012 the company acquired the remainder of the shareholdings in one of its subsidiary companies, Sunfresh Limited for $1,750. Consequently, Sunfresh Limited is now a fully owned subsidiary of the company.
WINFRESH LIMITED 1st Floor M&C Building Bridge Street, P.O. Box 115 Castries, St. Lucia Tel: +1 758 457-8600 Fax: +1 758 453-1638 www.winfresh.net